The Department of Homeland Security (DHS) Office of Operations Coordination and Planning (OPS) published a notice of proposed rulemaking (NPRM) in the Federal Register , on November 15, 2010 at 75 FR 69604, proposing to exempt portions of the system of records from one or more provisions of the Privacy Act because of criminal, civil, and administrative enforcement requirements. The system of records is titled, “DHS/OPS-003 Operations Collection, Planning, Coordination, Reporting, Analysis, and Fusion System of Records.” The DHS/OPS-003 Operations Collection, Planning, Coordination, Reporting, Analysis, and Fusion system of records notice (SORN) was published concurrently in the Federal Register on November 15, 2010 at 75 FR 69689, and comments were invited on both the NPRM and SORN.

DHS/OPS received three comments on the NPRM and three comments on the SORN for a total of six comments.

DHS/OPS received three comments on the NPRM. The first NPRM comment was from an anonymous individual seeking to state an opinion and requested no specific action or amendment related to the proposed rulemaking. The second NPRM comment was from an anonymous individual supporting the proposed rulemaking. The third NPRM comment was from a public interest organization that filed comments on the NPRM and SORN jointly in a comingled fashion and the comments on the SORN and NPRM are addressed as the second SORN comment below.

DHS/OPS also received three comments on the SORN. The first SORN comment was from a media and academic partnership and included the following points: (1) It is difficult for the public to comment on the merits of the proposed rulemaking because so little information is available on fusion centers; (2) the government has failed to make available information requested under FOIA (an issue unrelated to this proposed rulemaking); (3) the proposed system does not adequately protect the public's privacy; (4) the new system will impose significant costs (an issue unrelated to this proposed rulemaking); (5) there is fusion center mission creep (an issue unrelated to this proposed rulemaking); and (6) there are privacy violations in fusion center guidelines (an issue unrelated to this proposed rulemaking). Many of the points raised by this commenter were unrelated to the proposed rulemaking, but the Department will address the above comments in whole. The commenter states that there is “insufficient public information available on fusion centers for the public to adequately evaluate the effect of the proposed information collection system” and “the expense, mission creep, and privacy effects of the proposed database.” In response to the issues raised by this commenter regarding fusion centers: (1) Information on fusion centers can be found on the Department's Web page at www.dhs.gov and in the DHS/ALL/PIA-011 Department of Homeland Security State, Local, and Regional Fusion Center Initiative Privacy Impact Assessment (PIA), December 11, 2008. This PIA provides a detailed discussion and privacy analysis on fusion centers and is available at www.dhs.gov/privacy; (2) the Department is and will continue to be responsive to FOIA requests. FOIA requests may be sent to the Chief Privacy Officer and Chief Freedom of Information Act Officer, Department of Homeland Security, 245 Murray Drive SW., Building 410, STOP-0655, Washington, DC 20528; and (3) the privacy protections of information collected by fusion centers is covered by privacy policies of the fusion center. This DHS/OPS-003 Operations Collection, Planning, Coordination, Reporting, Analysis, and Fusion System of Records is not the system of records exclusively covering information collections by fusion centers. This system of records would only cover information sent to the NOC by fusion centers, as well as other information collections beyond information sent to the NOC by fusion centers. Components of the Department receiving information from fusion centers use their own SORNs on a component-by-component basis and those SORNs can be found at www.dhs.gov/privacy. Each of the officially-designated and operational fusion centers have privacy policies that have been found by DHS to be “at least as comprehensive” as the federal guidelines for protecting privacy within the Information Sharing Environment. Many of these policies are published on the National Fusion Center Association's public Web site at http://www.nfcausa.org. With respect to points 4, 5, and 6, above these are not related to this rulemaking. This NPRM and SORN do not seek to establish a new information technology (IT) database or to collect new information; rather this NPRM and SORN provide transparency to OPS practices by pulling together a variety of already existing records for a single purpose under a specific authority. It is also worth clarifying that this NPRM and SORN do not exclusively cover fusion centers for the Department, although the National Operations Center (NOC) may receive information from a fusion center. Such information may be covered by this NPRM and SORN. Neither the NOC nor OPS is a “Fusion Center.” The purpose of this system of records and its authority are mandated by law (6 U.S.C. 321d) to be “the principal operations center for the Department of Homeland Security.” Through the NOC, OPS provides real-time situational awareness and a common operating picture to the Department's leadership and senior management.

The second SORN comment was from a public interest research center that filed comments on the NPRM and SORN jointly in a comingled fashion and both are addressed in this section. The commenter raised concerns about: (1) Unusually broad purpose; (2) unusually broad authority and sharing; (3) contradictory statements about fusion centers as state and local entities (an issue unrelated to this proposed rulemaking); (4) taking Privacy Act exemptions where disclosure from the individual is withheld; (5) removing the use of the Privacy Act exemptions that address “relevant and necessary;” (6) the new fusion center PIA (an issue unrelated to this proposed rulemaking); and (7) the new suitable retention and disposal standards. Finally, the commenter recommends the creation of an independent oversight mechanism to prevent mission creep and uphold reporting requirements (an issue unrelated to this proposed rulemaking).

In response to the comment on broad purpose, authority, and sharing of this system of records (1 and 2 above), the Department notes that the NOC is authorized by law to be “the principal operations center for the Department of Homeland Security,” (6 U.S.C. 321d) and this system of records allows the NOC to fulfill this mission. Through the NOC, OPS provides real-time situational awareness and a common operating picture to the Department leadership and senior management. The NOC operates 24 hours a day, seven days a week, and 365 days a year and coordinates information sharing to help deter, detect, and prevent terrorist acts and to manage domestic incidents. With regards to point 3, DHS is not being contradictory on the nature of fusion centers, which are state and local entities. This system of records may maintain information received from fusion centers, but only when that information is sent to the NOC by fusion centers. Additional information on fusion centers can be found on the Department's Web page at www.dhs.gov and in the DHS/ALL/PIA-011 Department of Homeland Security State, Local, and Regional Fusion Center Initiative PIA, December 11, 2008, which addresses privacy analysis on fusion centers and is available at www.dhs.gov/privacy.

DHS' decision to take exemptions to the Privacy Act (point 4) are appropriate given the law enforcement nature of the collection and the concern that providing access may give individuals the ability to contravene legitimate law enforcement activities. DHS also notes that as a matter of policy it reviews all Privacy Act requests to determine whether or not it can provide access to the information. With regards to the comments concerns regarding exemptions from the “relevant and necessary” standard (point 5), sufficient means do exist to verify the accuracy of the data and ensure that incorrect data is not used against an individual. System users are trained to verify information obtained from the NOC before including it in any analytical reports. Verification procedures include direct queries to the source databases from which the information was originally obtained, queries of commercial or other government databases when appropriate, and interviews with individuals or others who are in a position to confirm the data. These procedures mitigate the risk posed by inaccurate data in the system and raise the probability that such data will be identified and corrected before any action is taken against an individual. In addition, the source systems from which the NOC obtains information may, themselves, have mechanisms in place to ensure the accuracy of the data prior to the information being shared, as outlined in the ISE.

The commenter expressed concern about the DHS/ALL/PIA-011 Department of Homeland Security State, Local, and Regional Fusion Center Initiative PIA, December 11, 2008 (point 6) and whether it was accurate given this system of records notice. As noted above, this system of records does not cover fusion centers, but may receive information from fusion centers if it is relevant to the purpose of this system of records and the mission of OPS. This PIA is currently under review for possible update as required by law. The commenter expressed concern about the records retention and disposal standards. DHS has an updated records schedule approved by NARA for records contained in this system of records, Steady state (normal day-to-day) records are kept for five years and destroyed. All records that become part of a Phase 2 or 3 event are transferred to the National Archives five years after the event or case is closed for permanent retention in the National Archives (NARA schedule N1-563-11-010).

Finally, the commenter recommended that the Department establish additional independent oversight for fusion centers beyond what currently exists at the Department. This is outside the purview of this rulemaking.

The third and final comment is from a private individual. This individual wrote to the Department to explain the circumstances related to this individual's arrest by a state law enforcement authority resulting in what this individual believes to be faulty information received from a state intelligence center. The individual goes on to detail issues related to the state's fusion center as it applied to this individual's case. The individual requested no specific action or amendment related to the proposed rulemaking and the individual's comments were unrelated to the proposed rulemaking.

After careful consideration of public comments, the Department will implement the rulemaking as proposed, additionally the Department will not update the Systems of Records Notice.

For the reasons stated in the preamble, DHS amends Chapter I of Title 6, Code of Federal Regulations, as follows:

Background

In 1970, Congress passed the Horse Protection Act (15 U.S.C. 1821-1831), referred to below as the Act or the HPA, to eliminate the practice of soring by prohibiting the showing or selling of sored horses. The regulations in 9 CFR part 11, referred to below as the regulations, implement the Act.

In the Act, Congress found and declared that the soring of horses is cruel and inhumane. The Act states that the term “sore” when used to describe a horse means that the horse suffers, or can reasonably expect to suffer, physical pain or distress, inflammation, or lameness when walking, trotting, or otherwise moving as a result of:

• An irritating or blistering agent applied, internally or externally, by a person to any limb of a horse,

• Any burn, cut, or laceration inflicted by a person on any limb of a horse,

• Any tack, nail, screw, or chemical agent injected by a person into or used by a person on any limb of a horse, or

• Any other substance or device used by a person on any limb of a horse or a person has engaged in a practice involving a horse.

The practice of soring horses is aimed at producing an exaggerated show gait for competition. Typically, the forelimbs of the horse are sored, which causes the horse to place its hindlimbs further forward than normal under the horse's body, resulting in its hindlimbs carrying more of its body weight. When the sored forelimbs come into contact with the ground, causing pain, the horse quickly extends its forelimbs and snaps them forward. This gait is known as “the big lick.”

Soring is primarily used in the training of Tennessee Walking Horses, racking horses, and related breeds. Although a gait similar to “the big lick” can be obtained using selective breeding and humane training methods, soring achieves this accentuated gait with less effort and over a shorter period of time. Thus, Congress found and declared that horses shown or exhibited which are sore, where such soreness improves the performance of such horse, compete unfairly with horses which are not sore. Congress further found and declared that the movement, showing, exhibition, or sale of sore horses in intrastate commerce adversely affects and burdens interstate and foreign commerce.

Section 4 of the Act (15 U.S.C. 1823) directs the Secretary of Agriculture to prescribe, by regulation, requirements for the appointment by the management of any horse show, horse exhibition, or horse sale or auction (referred to below as “show management”) of persons qualified to detect and diagnose a horse which is sore or to otherwise inspect horses for the purpose of enforcing the Act. The intent of Congress and the purpose of this provision is to encourage horse industry self-regulatory activity and to allow show management to have the benefit of certain limits upon their liability under the Act if they employ a Designated Qualified Person (DQP) to detect and diagnose soring and to otherwise inspect horses for the purpose of enforcing the Act. The Secretary is further authorized under section 9 of the Act (15 U.S.C. 1828) to issue such rules and regulations as he deems necessary to carry out the provisions of the Act.

Under the regulations, DQPs are trained and licensed to inspect horses for evidence of soreness or other noncompliance with the Act and the regulations in programs sponsored by horse industry organizations or associations (HIOs). An HIO's DQP program must meet the requirements of § 11.7 of the regulations, which include requirements for licensing, training, recordkeeping and reporting, and standards of conduct, among other things. The U.S. Department of Agriculture (USDA) certifies and monitors these programs.

DQPs conduct inspections according to procedures set out in § 11.21 of the regulations. Paragraph (d) of § 11.21 requires the certified DQP organization (i.e., the HIO) under which the DQP is licensed to assess appropriate penalties for violations, as set forth in the rule book of the certified program under which the DQP is licensed, or as set forth by the USDA. In addition to the DQP's report to show management, the HIO must also report all violations to show management.

On May 27, 2011, we published in the Federal Register (76 FR 30864-30868, Docket No. APHIS-2011-0030) a proposal  1 to amend the regulations to require HIOs that license DQPs to assess and enforce minimum penalties for violations of the Act. We stated that the proposal was in response to an audit report  2 issued in September 2010 by the USDA's Office of the Inspector General (OIG) regarding the Animal and Plant Health Inspection Service's (APHIS) administration of the Horse Protection Program and the Slaughter Horse Transport Program. The audit found that APHIS' program for inspecting horses for soring is not adequate to ensure that these animals are not being abused. Due to this ineffective inspection system, the report stated, the Act is not being sufficiently enforced, and the practice of abusing show horses continues. One of the recommendations in the audit report was that APHIS develop and implement protocols to more consistently negotiate penalties with individuals who are found to be in violation of the Act.

We stated that requiring HIOs to implement a minimum penalty protocol would strengthen our enforcement of the Act by ensuring that minimum penalties are assessed and enforced consistently by all HIOs that are certified under the regulations pursuant to section 4 of the Act.

We solicited comments concerning our proposal for 60 days ending July 26, 2011. We received 28,249 comments by that date. These included 27,349 substantively identical form letters submitted by individuals who commented through an animal welfare advocacy group. The comments were from HIOs and gaited horse organizations, other horse organizations, veterinary associations, horse and animal welfare advocacy groups, participants in the horse industry, and the general public.

Many commenters supported the proposed rule and increased enforcement of the Act in general, stating that the horse industry had failed to eliminate soring. Some of these commenters noted that the proposed rule would only affect people who sore horses, not the entire Tennessee Walking Horse industry, and stated that measures such as those we proposed are necessary to ensure that horses are not sored.

Other commenters who supported the proposed rule stated that the HIOs that have not adopted the minimum penalty protocol have created an economic disadvantage for the HIOs who have done so. One commenter stated that requiring less stringent penalties has become a way for HIOs to attract business. These commenters stated that the proposed rule would ensure that soring is properly deterred and punished and that requiring uniform minimum penalties would benefit owners and trainers who reject soring and exhibit sound horses, consistent with the intention of the Act.

Most of the commenters who supported the proposed rule also recommended that we require penalties more stringent than those we had proposed; these comments are discussed below under the heading “Requests for Increases in Proposed Penalties and Addition of Penalties for Other Violations.”

The remaining comments are discussed below by topic.

Of the commenters who opposed the proposed rule, several stated that minimum mandatory penalties are not necessary because the current HIO system is working to prevent sore horses from being shown, exhibited, sold, or auctioned. The commenters stated that current DQP inspections under the HIOs are rigorous and effective. Some stated that the walking horse industry has improved its compliance dramatically in the past 2 to 3 years, with strong enforcement from certain HIOs. Commenters cited high compliance rates for horses entered at DQP-inspected shows.

Several commenters stated that the current penalties that HIOs assess and enforce are effective. Another commenter stated that there is no uncertainty about penalties under the current system, as each HIO has a published penalty structure available to all participants.

Another commenter stated that despite any progress, much work remains to accomplish the goal of eliminating soring, and that the compliance rates cited by other commenters are meaningless for several reasons: (1) The HIOs themselves are reporting the compliance rates; (2) the overall rate includes HIOs committed to the sound, unsored horse along with other HIOs, artificially inflating the compliance rate for the latter; (3) the overall rate does not include horses that are brought to shows, exhibitions, sales, and auctions but not presented for inspection when USDA is present; and (4) the overall rate includes horses that got through inspection by use of drugs.

We have determined that it is necessary to establish minimum penalties to be assessed and enforced by HIOs in this final rule. As discussed in the proposed rule, the OIG audit found that APHIS' program for inspecting horses for soring, specifically the industry self-regulation carried out by DQPs trained by and operating under HIOs that are certified under the regulations, has not been adequate to ensure that these animals are not being abused. The OIG audit indicated that over 30 years of industry self-regulation through the DQP program has failed to eliminate the cruel and inhumane practice of soring, thus necessitating APHIS action to make the industry's self-regulatory efforts more effective.

The compliance rates cited by some commenters are not in and of themselves proof of the effectiveness of HIO enforcement of the Act, for many of the reasons cited by the last commenter. In addition, focusing on compliance rates obscures the fact that substantial numbers of horses are still found to be in violation of the Act each year, meaning that HIO enforcement has not been sufficient to eliminate the cruel and inhumane practice of soring.

One commenter stated that HIO penalties are appropriate and set based on years of experience and the severity of the violation. This commenter stated that DQPs do a better job of enforcement when a single DQP's inspection results in a smaller penalty, because the penalties that would be enforced would not potentially put a person out of business or shut down a training facility that employs several people.

As documented in the OIG audit, DQPs issue substantially more violations when APHIS VMOs are present than when they are not, suggesting that high compliance rates achieved at shows where only HIO DQPs are present may not reflect a decreased prevalence of soring. As this differential exists under the current HIO penalty structures, we do not believe that HIOs with less stringent penalties than those we proposed are ensuring the freer issuance of violations.

One commenter stated that the OIG audit predates the recent increase in HIO enforcement of the Act and that the HIOs currently enforce the Act effectively. Another stated that the OIG audit does not fairly represent the progress the industry has made in the last decade.

The OIG audit was based on data from several years, including a review of show reports from the 2008 season and site visits conducted in 2008. As noted earlier, the conclusions of the audit indicate that over 30 years of industry self-regulation through the DQP program has failed to eliminate the cruel and inhumane practice of soring. Since 2008, our experience in administering the Horse Protection Program does not indicate that there has been a significant change in the circumstances described in the OIG audit.

Many commenters stated that the penalties currently assessed by HIOs exceed those in the Act. (Conversely, two commenters stated that the proposed penalties far exceed those mandated in the Act.)

Regardless of whether the penalties imposed by HIOs exceed those in the Act, the information and data discussed in the proposed rule and directly above indicate that those penalties are not successfully achieving the goal of the DQP and HIO program, which is to end the cruel and inhumane practice of soring. Requiring all HIOs to assess and enforce minimum penalties for violations of the Act will ensure that all HIOs are operating in a consistent manner and will enhance the effectiveness of the Horse Protection Program.

Several commenters stated that the Department does not have the authority to change or modify the penalties in the Act by establishing a minimum penalty protocol in the regulations.

The Act sets out criminal and civil penalties for violations of the Act in section 6 (15 U.S.C. 1825). This section gives the Department authority to pursue criminal and civil penalties against those who violate the Act.

The DQP program, in contrast, was established in the regulations pursuant to section 4 of the Act in order to encourage horse industry self-regulatory activity and to allow show management to have the benefit of certain limits upon its liability under the Act. In addition, APHIS has the authority under section 9 of the Act to issue regulations that impose whatever requirements on the HIOs that APHIS determines to be necessary to enforce the Act and the regulations.

When the DQP program was established over 30 years ago, we granted a formal role in the regulations to HIOs in order to continue encouraging horse industry self-regulatory activity. The requirements for HIOs were promulgated pursuant to section 4 of the Act and thus are within APHIS' authority under the Act. Over the years, the role of HIOs has expanded to include assessing and enforcing penalties for violations of the Act, in accordance with § 11.21(d) of the regulations. However, the industry self-regulatory activity, and in particular the penalties HIOs have assessed and enforced under the regulations, have not been sufficient to end the cruel and inhumane practice of soring.

One issue that has made the HIO penalties less effective than they could have been is the discrepancies that have existed among the penalties assessed and enforced by HIOs for certain offenses, resulting in inconsistent enforcement of the Act. To ensure that the horse industry is effectively working to eliminate the cruel and inhumane practice of soring, in accordance with section 4 of the Act and with the original purpose of the regulations, this final rule requires HIOs to assess and enforce minimum penalties for violations of the Act. The penalties we are requiring HIOs to assess and enforce in this final rule do not exceed the civil penalties provided in the Act, and this final rule does not change the penalties provided in the Act.

One commenter quoted paragraph (c) of section 4 of the Act, which states that the Secretary shall prescribe by regulation requirements for the appointment by the management of any horse show, horse exhibition, or horse sale or auction of persons qualified to detect and diagnose a horse which is sore or to otherwise inspect horses for the purposes of enforcing the Act. The commenter stated that this language indicates that industry inspectors may only “detect,” “diagnose” and “inspect,” and does not provide industry inspectors with the authority to impose any agency penalty whatsoever.

Similarly, two other commenters stated that, because the Act prohibits showing or exhibiting, entering for the purpose of showing or exhibiting, or selling, auctioning, or offering for sale any horse that is sore, all that is required under the Act is that a DQP inspect for soring, notify management when a horse is sore, and provide the appropriate reports. Therefore, these commenters stated, the proposal to require HIOs to assess and enforce minimum penalties is an effort to circumvent the Act.

Some commenters stated that the language of the Act only allows the Secretary to assess and enforce penalties and does not give the Secretary the authority to impose penalties through any other means, including a private organization such as an HIO. One commenter stated that the provisions of paragraph (b) of section 6 show that any penalty structure that an HIO implements is strictly voluntary, although the HIOs have always felt it was in the best interest of the Act to have a penalty structure in place to deter soring. Another commenter stated that the HIOs that currently assess and enforce penalties do so through the power given to them by the exhibitors, and that the Department cannot mandate penalties to be enforced by a private corporation.

Section 9 of the Act authorizes the Secretary to issue such rules and regulations as are deemed necessary to carry out the provisions of the Act. As discussed earlier, the Act itself does not prescribe the creation of HIOs; the Department decided to create them as DQP licensing authorities to further industry self-regulation towards the goal of eliminating the cruel and inhumane practice of soring. The regulations in § 11.21(d) have long indicated that HIOs shall assess appropriate penalties for violators, as set forth in their rulebooks or as set forth by the Department. This final rule sets forth those penalties that we have determined to be appropriate and necessary to eliminate soring, which the HIOs have failed to do. Therefore, this final rule is within the authority granted to the Secretary by the Act.

HIOs that do not wish to cooperate in the effort to eliminate soring by imposing the minimum penalties required in this final rule may withdraw from certification; if an HIO refuses to implement the minimum penalties, we will initiate proceedings to decertify the HIO, as described in § 11.7(g).

Several commenters stated that requiring HIOs to assess and enforce penalties would be inconsistent with the Act's requirement, in paragraph (b) of section 6, that no civil penalty will be assessed unless such person is given notice and opportunity for a hearing before the Secretary of Agriculture with respect to such violation. (Paragraph (b) also sets out a process for review by a court of appeals.) Many of these commenters stated that it was Congress' intent to require the due process described in paragraph (b) to be followed before the imposition of a penalty, and that the proposed rule would take away individuals' rights to due process. Similarly, many commenters stated that HIOs, as private organizations that were established to cooperate with APHIS in the enforcement of the Act, are not required to provide due process for violators.

Some commenters focused on what they perceived to be the HIOs' roles as state actors (organizations acting on behalf of the Government and thus required to provide due process) in the context of the proposed rule's minimum penalty requirements. Two commenters stated that the law is clear that the initial stages of a state-action disciplinary proceeding are delegated to a private party (such as an HIO), the agency that delegated the authority must grant a de novo review of the decision, i.e., a new trial on the merits. One of these commenters additionally stated that the Department would likely be held liable for the actions of HIOs in the imposition of such penalties and any corresponding deprivation of rights of the individuals affected.

One commenter expressed concern that people who show in front of multiple HIOs during the course of a show season would be required to submit to each HIO's appeal process without being able to appeal the decisions to the Secretary or a court of law.

As described earlier, section 4 of the Act provides the Secretary with authority to establish requirements for the appointment of DQPs by management, as Congress envisioned that both public and private horse inspectors would monitor compliance with the Act. Thus, the horse industry in general and HIOs specifically have been playing a role in enforcing the HPA since its inception. Over the years, the role of HIOs has expanded to include assessing and enforcing penalties for violations of the Act. However, we maintained the authority to intervene if the DQPs and the HIOs that licensed the DQPs were not effectively working towards the goal of eliminating the cruel and inhumane practice of soring. This final rule responds to problems associated with discrepancies among HIO penalties by requiring consistent penalties, thus enhancing the effectiveness of the industry's self-regulating efforts.

Paragraph (e) of § 11.25 in this final rule requires each HIO to have an appeals process in its rulebook that is approved by the Department. We will only approve appeals processes that give notice and opportunity for a hearing and that ensure a fair hearing. In addition, we will monitor the appeals processes to ensure that they are working effectively. This will ensure that persons who have penalties assessed by an HIO will have recourse to challenge the penalty within the HIO structure, and thus fulfills the due process requirements of the Act. As currently occurs when HIOs assess and enforce penalties, persons who do not agree with the HIO's decision will be free to bring a suit against the HIO itself.

HIOs currently provide all these functions in accordance with the regulations in § 11.21(d). We do not expect any of these processes or functions to change with the promulgation of minimum required penalties; we are simply specifying penalties in accordance with § 11.21(d).

DQPs find violations of the Act by inspecting horses, and thus penalties will be assessed and enforced on the basis of the results of these inspections. As mentioned earlier, § 11.21 of the regulations sets out inspection procedures for DQPs. Under this section, a DQP must walk and turn the horse being inspected and determine whether the horse moves in a free and easy manner and is free of any signs of soreness. The DQP must also digitally palpate the front limbs of the horse from knee to hoof, with particular emphasis on the pasterns and fetlocks, while observing for responses to pain in the horse. Any pain would indicate that the horse is sore.

The DQP also examines horses to determine whether they are in compliance with the scar rule in § 11.3, and particularly whether there is any evidence of inflammation, edema, or proliferating granuloma tissue. Under § 11.3, the anterior and anterior-lateral surfaces of a horse's pasterns (extensor surface) must be free of bilateral granulomas, other bilateral pathological evidence of inflammation, and other bilateral evidence of abuse indicative of soring; the posterior surfaces of the pasterns (flexor surface), including the sulcus or “pocket,” may show bilateral areas of uniformly thickened epithelial tissue if such areas are free of proliferating granuloma tissue, irritation, moisture, edema, or other evidence of inflammation. If the horse is not free of these symptoms, it is considered to be sore under § 11.3.

The DQP may also carry out additional inspection procedures as he or she deems necessary to determine whether the horse is sore.

In order to ensure that the Act is being properly enforced, APHIS sometimes sends veterinary medical officers (VMOs) to conduct inspections of horses at horse shows, exhibitions, sales, and auctions, whether or not the show, exhibition, sale, or auction is affiliated with an HIO. VMOs follow the same inspection protocol as DQPs do and serve as an independent check on the effectiveness of DQP inspection. In addition, where available, VMOs use thermography to assess whether areas in a horse's forelimbs may be inflamed in a manner characteristic of soring, or x-ray examination to determine whether a horse's bones show signs of stress indicative of soring.

Several commenters opposed the imposition of penalties for what they stated are violations based on subjective inspections, which are often the subject of differences of opinion among VMOs, DQPs, and other parties. These extend to differences of opinion regarding one horse participating in different classes at a horse show. Several added that the evidence from such inspections would be insufficient to obtain convictions in a court of law, which is why, the commenters stated, the USDA has proposed the minimum penalties to be assessed and enforced by HIOs.

Numerous commenters stated that mandatory penalties should not be imposed until an objective scientific determination of when a horse is sore can be made. Several stated that such determinations are not possible with digital palpation, thermography, or x-ray analysis, all of which are subject to inconsistencies in application and interpretation. Several stated that palpation is conducted with the primary goal of inducing a response, or that it is bound to induce a response in horses that are generally skittish at inspection. Others stated that the scar rule is also applied inconsistently.

A few commenters stated that inspections of sound horses do not find any violations. One commenter stated that some HIOs and their DQPs do not follow the standards of the USDA, thus producing inconsistent results in inspections. Another commenter stated that a horse that has been trained in order to develop the natural abilities of the horse, without soring, would not be borderline with respect to compliance with the Act and would thus not be diagnosed differently by different VMOs and DQPs. This commenter stated that the more common problem with respect to subjectivity of digital palpation is DQPs not applying enough pressure during palpation and thus allowing sore horses to be shown, exhibited, sold, or auctioned. Similarly, the commenter stated, the Department has provided clear guidance on the scar rule and it is not difficult to determine whether a horse is in or out of compliance.

Digital palpation is a well-accepted and highly reliable method of determining whether a horse is sore and thus in violation of the Act. In addition, the other inspection methods we use, including examination of the horse's gait, thermography, and x-ray analysis, all have value and are reliable as well, and can provide additional information about whether a horse is sore that may not be available through digital palpation, thus contributing to our effective enforcement of the Act. We welcome suggestions from the public on other potential methods of determining whether horses are sore, and we continue to work with researchers to develop additional methods.

Some of the differences in opinion between DQPs and VMOs that the commenters discussed may be due to incorrect application of the inspection methods. This is why we help conduct DQP training to ensure that all DQPs are aware of the correct procedures for performing inspection. Information on conducting digital palpation is also available in guidance we provide to HIOs. With respect to the scar rule specifically, we train DQPs and VMOs every year to ensure that the scar rule is consistently interpreted, and we make guidance on its interpretation available to anyone who requests it.

The goal of digital palpation is to determine whether pressure applied to the forelimbs of the horse from knee to hoof causes pain. Such pain indicates that the horse is sore. APHIS VMOs conduct palpation with this goal in mind.

A recent study  3 indicates that the amount of pressure applied during digital palpation is not enough to elicit a response in a horse that has not been sored. Under this final rule, if a horse is skittish at inspection, the horse would likely be determined to be unruly under paragraph (d) of § 11.25 and thus would be excused from the class, but would not be determined to be sore.

Based on these considerations, we have determined that the inspection methods that APHIS trains DQPs to administer provide evidence that is sufficiently reliable to serve as the basis for assessing a penalty under this final rule.

Many commenters expressed concern that requiring HIOs to assess and enforce minimum penalties would encourage owners and trainers to show their horses at shows whose management does not appoint a DQP to perform inspections to ensure that sore horses are not shown. As noted earlier, at such shows, show management assumes liability under the Act for any sore horses that are shown, exhibited, sold, or auctioned. These shows are often referred to as “unaffiliated” shows because the show is not affiliated with an HIO that provides a DQP to conduct inspections.

Many of these commenters stated that increasing numbers of horses were being shown at unaffiliated shows, and the proposed rule would accelerate this trend. One commenter stated that there are currently a minimum of 400 unaffiliated shows each season.

Some of these commenters stated that horses shown at unaffiliated shows would not pass the inspections conducted at HIO-affiliated shows. One commenter stated that individuals who have been suspended under the current HIO penalties have shown at unaffiliated shows.

All of these commenters stated that APHIS should emphasize enforcement of the Act at unaffiliated shows, and most stated that inspections at unaffiliated shows should be emphasized in place of finalizing the proposed minimum penalty protocol. Many commenters stated that APHIS inspections at unaffiliated shows have been minimal or nonexistent. One commenter stated that the Department has never pursued a case against the management of an unaffiliated show.

One commenter stated that the penalty protocol should be implemented along with an increased emphasis on enforcement at unaffiliated shows, to best effectuate the purpose of the Act.

We agree with the last commenter. We plan to continue inspections of nonaffiliated shows; at the same time, we are promulgating the minimum penalty protocol in this final rule.

Contrary to the suggestions of many commenters, we do regularly attend unaffiliated shows. Through October 11, 2011, we attended 12 unaffiliated shows, out of a total of 74 shows attended to that point in that year. During the 2010 season, we attended 6 unaffiliated shows out of a total of 59 shows attended. Lists of all shows we have attended in the last 5 years, including unaffiliated shows, are available on the Horse Protection Web site. 4 When evidence warrants, we investigate unaffiliated shows to determine whether prosecution under the Act is warranted. We are planning more of these enforcement activities in the future, as attending unaffiliated shows is essential to the effective enforcement of the Act.

It is also essential that we attend shows that are affiliated with HIOs in order to ensure that the DQPs at those shows are effectively enforcing the Act. Over 700 shows in the 2011 season were affiliated with an HIO. It is APHIS' responsibility to oversee the DQP program to ensure that the HIOs and their DQPs are working effectively to enforce the Act, in accordance with their self-regulatory responsibilities. As mentioned earlier, the OIG audit found the current program is not sufficient to prevent soring, and the audit found in particular that DQPs issue substantially more violations when APHIS VMOs are present than when they are not. This indicates a need for continued oversight.

Paragraph (b) of proposed § 11.25 described various conditions applying to suspensions under the minimum penalty protocol. For violations for which we proposed to require suspensions in § 11.25(c), we proposed in paragraph (b)(1) to require the suspension of individuals including, but not limited to, the owner, manager, trainer, rider, custodian, or seller, as applicable, who are responsible for showing the horse, exhibiting the horse, entering or allowing the entry of the horse in a show or exhibition, selling the horse, auctioning the horse, or offering the horse for sale or auction.

Many commenters objected to suspending the owner, manager, trainer, rider, and custodian for the same violation. Some trainers commented that they exhibit several horses every weekend and could be subject to a suspension penalty if any one of them is found to be in violation of the Act or the regulations. A few commenters stated that owners should not be held responsible for something done to their horses, as owners cannot be with their animals continuously and thus cannot know everything done to an animal while it is being trained.

In addition, some commenters asked us to adjust the language of proposed paragraph (b)(1). One commenter said that words like “can” and “could” need to be replaced with words like “will” and “shall.” Another stated that we should change the proposed text to require the suspension of “all individuals, including but not limited to * * *”

A third commenter stated that the proposed language was at best vague and provides almost no guidance to HIOs about who should be subject to sanctions for any particular violation of the Act. This commenter recommended that we adopt language from the 2007-2009 HPA Operating Plan, 5 which contained language specifying which individuals should be subject to penalties for various offenses.

Section 5 of the Act (15 U.S.C. 1824) prohibits transporting, showing or exhibiting, entering for the purpose of showing or exhibiting, or selling, auctioning, or offering for sale any horse which is sore. It also prohibits an owner from allowing the showing or exhibiting, entering for the purpose of showing or exhibiting, or selling, auctioning, or offering for sale any horse which is sore. Thus, requiring owners to be suspended is consistent with the Act. In addition, as trainers commonly are responsible for showing or exhibiting horses under their care, it is appropriate to require that they be suspended if they fill those roles.

The regulatory text we proposed in paragraph (b)(1) indicated that anyone who is responsible for showing a sore horse, exhibiting such a horse, entering or allowing the entry of such a horse in a show or exhibition, selling such a horse, auctioning such a horse, or offering such a horse for sale or auction must be suspended. We believe that listing the types of people who may be responsible for violations of the Act may have confused readers. In this final rule, we have rewritten paragraph (b)(1) to read as follows: “For the violations listed in paragraph (c) of this section that require a suspension, any individuals who are responsible for showing the horse, exhibiting the horse, entering or allowing the entry of the horse in a show or exhibition, selling the horse, auctioning the horse, or offering the horse for sale or auction must be suspended. This may include, but may not be limited to, the manager, trainer, rider, custodian, or seller, as applicable. In addition, if the owner allowed any activity listed in this paragraph, the owner must be suspended as well.” This is substantively equivalent to the proposed text but indicates more clearly that people must be suspended when they have violated the Act, not simply because they have a certain role with respect to a sore horse.

We understand that trainers often have multiple horses showing at any given time. However, if a trainer shows or exhibits multiple horses, or enters multiple horses for the purpose of showing or exhibiting, and a violation of the Act or the regulations is detected on any of those horses, the trainer should be suspended for at least the minimum period prescribed in § 11.25 for each violation. In addition, paragraph (b)(4) of § 11.25 requires multiple suspensions to be served consecutively, not concurrently. A trainer who sores a horse or otherwise violates the Act should be penalized for the violation to ensure that the Act is effectively enforced.

One commenter stated that APHIS has expressed concerns that the trainer who has committed a violation may not always be charged with that violation, and stated that the proposed suspensions would exacerbate that problem.

As discussed earlier, the trainer of a horse that is inspected and found to be sore or otherwise in violation of the Act will be suspended when he or she shows or exhibits that horse or has entered that horse for the purposes of showing or exhibiting it. The HIOs are responsible for correctly identifying the person who has shown, exhibited, or entered a horse when the HIOs enforce penalties. Concerns have been expressed to APHIS that trainers will name someone else as responsible for a horse that is in violation of the Act or the regulations in order to avoid being penalized themselves. We expect the HIOs to handle this problem as part of their commitment to enforcing the Act.

In paragraph (b)(2), we proposed to provide that, if a horse is found to be bilaterally sore or unilaterally sore, in violation of the scar rule, or in violation of the prohibition against the use of foreign substances, the transporter of the horse may also be suspended if the transporter had reason to believe that the horse was to be shown, exhibited, entered for those purposes, sold, auctioned, or offered for sale.

Two commenters expressed concern that persons transporting horses would not know whether a horse they were transporting was sore or had a scar, and that those persons should not be subject to penalties.

Section 5 of the Act prohibits the shipping, transporting, moving, delivering, or receiving of any horse which is sore with reason to believe that such horse while it is sore may be shown, exhibited, entered for the purpose of being shown or exhibited, sold, auctioned, or offered for sale, in any horse show, horse exhibition, or horse sale or auction. The Act only makes an exception for shipping, transporting, moving, delivering, or receiving of any horse by a common or contract carrier or an employee thereof in the usual course of the carrier's business or employee's employment unless the carrier or employee has reason to believe that such horse is sore. Therefore, our proposed language was consistent with prohibitions in the Act itself. It is appropriate to require suspensions for violations of the Act.

As proposed, paragraph (b)(2) did not directly parallel the language in the Act. We have rewritten paragraph (b)(2) in this final rule so that it more closely parallels the Act. We believe this will make it more clear that such suspensions are required due to violations of the Act.

Normally, a person will receive a penalty for transporting a sore horse if that person is also responsible for showing the horse, exhibiting the horse, entering or allowing the entry of the horse in a show or exhibition, selling the horse, auctioning the horse, or offering the horse for sale or auction. If a horse is found to be sore during preshow inspection and the horse is obviously lame or has open lesions, we would consider the transporter to have had reason to believe that the horse is sore and require the HIO to assess and enforce a penalty, even if the transporter was not responsible for one of the activities listed previously.

Proposed paragraph (b)(3) stated that a person who is suspended must not be permitted to show or exhibit any horse or judge or manage any horse show, horse exhibition, or horse sale or auction for the duration of the suspension.

Three commenters requested that we make changes to this language to expand the scope of activities that are prohibited for suspended persons. Two stated that we should adopt the language on this topic from the 2007-2009 Operating Plan. The Operating Plan stated:

Another commenter stated that proposed paragraph (b)(3) should be changed to clearly prohibit anyone who has been suspended from participating at a horse show in any way other than as a spectator. The commenter stated that this language already exists in the 2010 Points of Emphasis (a guidance document we prepared for HIOs), but should be included in the regulations. Further, the commenter stated, the prohibition from participating should extend to include coaching via electronic or radio communication from the suspended party to anyone working with a horse on the grounds or riding it.

The language in proposed paragraph (b)(3) is taken from the Act (specifically, paragraph (c) of section 6). We believe it is appropriate to include similar language in the regulations. The activities described in the 2007-2009 Operating Plan are all included within the prohibition from showing or exhibiting any horse or judging or managing any horse show, horse exhibition, or horse sale or auction. The 2010 Points of Emphasis states that “a violator on disqualification or suspension may only participate as a spectator at the horse show, horse exhibition, horse sale, or horse auction.” Like the 2007-2009 Operating Plan, it goes on to describe specific parameters of this prohibition, all of which are included within the prohibitions in proposed paragraph (b)(3). We will make guidance regarding the activities in which people who are suspended may not participate available to HIOs after this final rule becomes effective, recognizing that any list of prohibited activities is not necessarily exhaustive.

Paragraph (c) of proposed § 11.25 set out our proposed minimum penalties for each type of violation. We received several comments on the proposed penalties.

A few commenters stated that the only penalty that should be assessed when a horse is found to be in violation of the Act is that the horse should not be allowed to participate in the horse show, exhibition, sale, or auction at which it was inspected. These commenters stated that owners of horses would not continue to engage trainers whose horses were not allowed to participate after inspection, as bringing a horse to a show at which it was not then shown was costly. This process would remove the incentive to employ training methods and devices that violate the Act.

Section 4 of the Act states that the management of any horse show or horse exhibition shall disqualify any horse from being shown or exhibited which is sore or if the management has been notified by a DQP that the horse is sore. Thus, such a penalty is the absolute minimum necessary for shows and exhibitions to comply with the Act. All of the proposed minimum penalties include dismissal of the horse from the horse show, exhibition, sale, or auction at which it was presented for inspection, not just the class for which the inspection was conducted, to provide a further deterrent effect. (The only exception is for a fractious or unruly horse that cannot be inspected; such a horse has not been found to be in violation of the Act and may be reinspected for another class in the same horse show, exhibition, sale, or auction.) However, we have found that the minimal self-regulatory effort of simply dismissing the horse from the horse show, exhibition, sale, or auction has not provided sufficient incentive for individuals to eliminate the cruel and inhumane practice of soring horses. Therefore, we are requiring that HIOs assess and enforce minimum penalties for violations of the Act, to ensure consistent enforcement of the Act.

Several commenters asked generally for changes or additions to the penalty protocol. Some commenters asked that we add fines to the suspension penalties. Some commenters asked that we increase the suspension penalties as well, to provide a more substantial deterrent, and apply a minimum suspension penalty for all violations, rather than varying the penalties based on the type of violation. Some commenters addressed each violation listed in proposed paragraph (c) specifically and asked that the penalties be increased. One commenter stated that the horse on which a violation is found should be suspended for the duration of the suspension of the greatest duration of any other party related to that violation.

For horses that are found to be sore, we proposed to require the shortest suspension penalties for scar rule violations, with increased suspensions for unilateral sore violations and the longest suspensions for bilateral sore violations. A few commenters stated that both unilaterally sored and bilaterally sored horses are considered “sore” for the purposes of the Act and thus equal penalties should be assessed and enforced in both situations. One commenter stated that unilateral sore violations are common to balance out the motion of the horse, and recommended that we add penalties for unilateral scarring as well. Another commenter noted that violations of the scar rule involve evidence of bilateral soring, and recommended that penalties for scar rule violations be set equal to those of a unilaterally sored horse.

We proposed to provide penalties that increase with each violation for bilateral sore, unilateral sore, and scar rule violations, but not for the violations of the equipment-related prohibitions in § 11.2. One commenter requested that we establish penalties that increase with each violation for such violations. In addition, we did not propose to require HIOs to assess and enforce suspension penalties when violations of § 11.2 are discovered before or during the show, exhibition, sale, or auction; several commenters requested that we require penalties for such violations.

Some commenters requested that we add required minimum penalties for violations other than those we included in the proposed rule. Some commenters stated that separate minimum penalties should be established for pressure shoeing, in which the sole of the horse's foot is made sensitive so that standing and walking cause the horse to be in constant pain. Some commenters stated that minimum penalties should be established for providing false information, for stewarding horses (i.e., inflicting pain to distract the horse during DQP or VMO inspection), and swapping horses (i.e., substituting a horse that has not passed inspection for one that has). Some commenters stated that the use of plastic wrap (a common means to apply prohibited substances to the horse's forelimbs) or overweight chains on show grounds should be subject to minimum penalties.

We recognize these commenters' desire to ensure that the minimum penalties established in § 11.25 are adequate to prevent soring and address possible violations of the Act comprehensively. In developing the minimum penalty protocol, APHIS took into account the civil and criminal penalties set forth in the Act; those penalty structures used in previous years, including those penalties included in previous Operating Plans; and input we received from industry stakeholders. The penalties we proposed are consistent with penalties that have historically been required by the industry in its self-regulating capacity, dating back to 2001. Our proposal was intended to reflect this historical understanding of penalties that are appropriate for violations of the Act and require the HIOs to assess and enforce consistent penalties while minimizing disruption to the industry.

For those reasons, we have decided to implement the minimum penalties as proposed. In coming show seasons, we will monitor the effectiveness of each specific penalty at deterring the violation for which the penalty is assessed and enforced. We will also monitor the occurrence of violations for which we did not propose to require a mandatory minimum penalty. If any of the penalties does not have the appropriate deterrent effect, or if we determine that there should be minimum penalties for other types of violations, we may propose changes in the future along the lines that these commenters suggest.

Some commenters asked that we require permanent suspension of all persons associated with violations of the Act, either after some number of violations or upon the first violation. Some commenters also asked us to require permanent prohibition of horses found to be in violation of the Act from participating in horse shows, exhibitions, sales, or auctions. Some commenters supported permanent prohibition particularly for horses found to be in violation of the scar rule, since the evidence of the violation will by definition continue to manifest itself permanently. Other commenters objected to the idea of permanent suspensions on people or permanent prohibitions on horses as unfair.

The Act does not provide APHIS with the authority to permanently disqualify horses that have been scarred from soring from competitions, nor does APHIS have the authority to permanently disqualify repeat violators of the Act. The disqualification provisions and penalty provisions are clearly enumerated in the Act. We would not consider it appropriate to require HIOs to enforce penalties exceeding those in the Act.

One commenter recommended that the parties involved in any and all soring violations be fully and immediately publicly disclosed.

We make lists of people who have been disqualified through USDA action and people who have been suspended through HIO action available on the Horse Protection Web site, at http://www.aphis.usda.gov/animal_welfare/hpa_info.shtml. We will continue to do so after this final rule becomes effective.

One commenter supported penalties for DQPs who ignore violations.

Paragraph (f) of § 11.7 provides a process for the cancellation of a DQP's license in such circumstances.

A few commenters expressed concern about APHIS' characterization of the penalties included in proposed paragraph (c) as minimum penalties. These commenters stated that the phrase “minimum penalties” implies an open door for more penalties to come later. One commenter asked what prevents us from requiring maximum penalties or from taking a horse away from an individual who has a penalty assessed for a minor infraction.

The word “minimum” in the description of the penalties in § 11.25 refers to the fact that HIOs are free to require penalties in excess of the penalties provided in this final rule.

As discussed earlier, the penalties we proposed are consistent with penalties that have historically been assessed and enforced by the HIOs for the violations listed in paragraph (c) of proposed § 11.25. However, we will monitor the effectiveness of the penalty protocol, and we may propose changes to the penalty protocol in the future. The Act does not give us the authority to take a horse away from an individual.

The penalties for bilateral soring, unilateral soring, and violations of the scar rule in proposed paragraph (c) each included more severe penalties for repeat offenders, with the third and subsequent violations of these prohibitions earning the longest suspensions.

Some commenters objected to this approach. Two requested that there be no increase in penalties when a person commits a repeat violation (although one made an exception for a habitual offender). Others stated that violators should revert to first-offender status after remaining violation-free for a certain period of time, thus wiping the slate clean. Two of these commenters compared violations of the Act to traffic violations, stating that the latter are wiped clean after a period of time.

Another commenter asked whether violations would be erased after the suspension is served and any fine required by the HIO is paid. This commenter also asked how violations would accumulate.

Two commenters supported taking into account all violations in a violator's history when assessing penalties. One stated that providing a certain period of time after which previous violations no longer are considered in penalty assessment only matters to violators, especially to those who are or expect to be repeat offenders.

The penalties in this final rule increase in severity for repeat offenders to provide an additional deterrent effect for people who have already shown a willingness to violate the Act. Increasing penalties when a person repeatedly violates established requirements is a common practice to ensure compliance. Violations will accumulate for individuals as they are incurred; there will not be an opportunity to “wipe the slate clean.” We do not consider violations of the Act, which require deliberate effort on the part of the violator to inflict physical pain or distress, inflammation, or lameness on a horse, to be comparable to traffic violations.

One commenter objected to the notion that scar rule penalties should escalate with additional violations only if those violations are found on the same horse. This commenter stated that showing horses that are scarred is as significant a violation as showing horses that are bilaterally sore, and that it undermines the effectiveness of the scar rule if a violator is allowed to serially scar multiple horses without suffering increasing penalties.

The proposal did not state that penalties would escalate with additional violations only if those violations are found on the same horse. Penalties will escalate when an individual is found to have violated the scar rule multiple times, regardless of the horse on which the violation has occurred. For example, if a trainer's horse is found to be in violation of the scar rule and it is the trainer's first offense, the trainer will be suspended for 2 weeks. If a different horse trained by that trainer is found to be in violation of the scar rule, that would count as a second violation for that trainer and result in the trainer's suspension for 1 month. The same escalation process would apply for unilateral or bilateral sore violations. We appreciate the opportunity to clarify this point.

We proposed to require HIOs to assess and enforce penalties for unilateral sore violations in paragraph (c)(2) of the proposal. One commenter stated that the penalty for unilateral soring makes no sense because a person would not sore a horse on only one foot. Such a horse would be unlevel and would not perform properly, and thus would be excused anyway. Two commenters stated that a horse trainer who is soring a horse is not doing so only on one foot, and therefore a unilateral soring violation is more likely caused by the inspection process.

As another commenter noted, unilateral sore violations are often written when a second-leg examination is equivocal. Therefore, a unilateral sore violation may well be evidence of bilateral soring. In addition, masking agents are sometimes applied to a horse's forelimbs in an attempt to numb the horse to pain and thus pass inspection. A horse to which a masking agent has been applied may exhibit a different pain response in one forelimb than in the other. As horses that are unilaterally sore are considered to be sore under the Act, it is appropriate to provide minimum penalties that must be assessed and enforced by HIOs when such violations are found.

We proposed to require HIOs to assess and enforce penalties for scar rule violations in paragraph (c)(3) of the proposal. The proposed penalties were suspensions of 2 weeks for the first offense, 60 days for the second offense, and 1 year for the third offense. One commenter stated that requiring HIOs to assess and enforce a 1-year suspension penalty for a third violation of the scar rule was unfair, due to what the commenter characterized as the subjectivity and inconsistency in the interpretation of the scar rule. The commenter also opposed requiring penalties for unilateral sore violations, stating that such violations are subject to human factors as well as the reaction of the horse to any surrounding stimuli. The commenter recommended that we concentrate on bilateral sore violations.

As discussed earlier, we proposed to require suspensions for scar rule and unilateral sore violations that are shorter than those for bilateral sore violations, based on historical precedent. However, as both horses determined to be in violation of the scar rule and horses that are unilaterally sore are considered sore for the purposes of the Act, it is appropriate to require that HIOs assess and enforce penalties when these violations are discovered.

One commenter stated that, in the Strategic Plan, 6 APHIS treated any open lesion, other than those from self-inflicted injures, as a violation of the scar rule. The commenter stated that there can be no more clear violation of the Act than a horse with an open lesion on the pastern or in the pocket. The commenter stated that it is at best unclear what penalties APHIS expects HIOs to assess and enforce when open lesions are found on a horse.

Open lesions fall within the scope of the Act only when they are indicative of soring. If a horse has open lesions and is also bilaterally or unilaterally sore, the appropriate penalties will apply; if a horse has bilateral open lesions that cause it to be considered sore under the scar rule, it will be penalized as a scar rule violation. As many HIOs have separate penalties for horses with open lesions, though, we should note that this final rule does not prevent HIOs from continuing to assess and enforce such penalties.

We proposed to require HIOs to assess and enforce penalties for violations of the equipment-related prohibitions in § 11.2(b)(1) through (b)(10) and (b)(12) through (b)(17) in paragraph (c)(5) of the proposal.

One commenter stated that exhibitors should not be suspended for all equipment violations. The commenter cited an example of a pleasure horse that had a bit that was one-half inch too long, not intentional and not hurting the horse.

The situation cited by the commenter would not have been a violation of the regulations, as the equipment-related prohibitions in § 11.2(b)(1) through (b)(10) and (b)(12) through (b)(17) contain no reference to the allowable length of bits. The prohibitions in those paragraphs prevent the use of equipment that has been shown to be used to sore horses. Therefore, we consider it appropriate and necessary to require that penalties be assessed and enforced for such violations.

For an unruly or fractious horse that cannot be inspected in accordance with § 11.21, we proposed in paragraph (c)(8) to require the horse to be dismissed from the individual class for which it was to be inspected.

One commenter expressed concern that a fractious horse could result in a violation for which people could be banned for the rest of the show season.

As a fractious horse cannot be inspected in accordance with § 11.21, we have no means of determining whether it is sore. Therefore, we did not propose to require any penalty for such horses beyond dismissal of the horse from the class for which it was being inspected. Such a horse could be entered into and inspected for other classes in the same horse show, exhibition, sale, or auction.

One commenter stated that unruly or fractious horses that cannot be inspected in accordance with § 11.21 should not be considered to be violating the Act, but should simply be deemed “not qualified to compete.”

We agree with this commenter. Because an unruly or fractious horse cannot be inspected to determine whether it is in violation of the Act, it is inaccurate to describe such a situation as a violation of the Act. To separate the requirement that unruly or fractious horses be dismissed from the class for which they are being inspected from the violations of the Act listed in paragraph (c), we have moved the unruly or fractious horse requirement into a new paragraph (d), and we have designated proposed paragraphs (d) and (e) as paragraphs (e) and (f), respectively, in this final rule. We have also added a requirement in paragraph (a) that HIOs that license DQPs enforce the requirement in the new paragraph (d). With these changes, the regulations will require unruly or fractious horses to be dismissed from the class for which they are being inspected without characterizing such horses as being in violation of the Act.

Proposed paragraph (d) of § 11.25 set out a requirement for an appeals process for penalties assessed by an HIO. We proposed to require that, for all appeals, the appeal must be granted and the case heard and decided by the HIO or the violator must begin serving the penalty within 60 days of the date of the violation.

One commenter stated that procedural delays often result in suspensions taking effect during the “off” season when horse shows are not held, which has no negative impact at all on the violators. This commenter suggested that we require HIOs to administer suspensions quickly after a violation has been found in order to further increase the deterrent effect of suspensions, and to require that the suspensions be served during the show season. Another commenter concurred with the recommendation that suspensions be served during the show season, and proposed defining the show season to exclude the months of December, January, and February.

We agree that it is important to administer suspensions quickly after a violation has been found. The requirements in paragraph (d) ensure that, absent an appeal, all penalties will be enforced within 60 days after the violation, which we believe is a reasonable amount of time to allow an appeal to take place if necessary.

After considering requiring suspensions to be served during the show season, we have determined that it would be difficult to track penalties across the different HIOs to ensure both that HIOs are adhering to the 60-day requirement in enforcing their suspensions and that some or all of the suspensions do not occur during the show season. In addition, the show season may vary among HIOs. We are making no changes to the proposed rule in response to these comments. However, we will monitor the HIOs' implementation of the minimum penalty protocol, and if we find that HIOs are attempting to game the system to ensure that a disproportionate number of suspensions are served outside the regular show season, we will change the regulations in order to ensure that the suspension penalties have a stronger deterrent effect.

We also proposed to require the HIO to submit to the Department all decisions on penalty appeals within 30 days of the completion of the appeal.

One commenter stated an assumption that data supporting the decision of the HIO regarding violators must be provided along with the decision; if this is not the case, the commenter recommended that we amend the proposed rule accordingly.

We did intend to require that the HIO provide evidence supporting its decision along with the record of the decision itself when a penalty is overturned on appeal. This will allow APHIS to review the effectiveness of the appeal process. We have added this requirement to the final rule.

Some commenters stated that Federal enforcement proceedings for violations for which HIOs have assessed and enforced a penalty would put violators in double jeopardy.

Paragraph (e) of proposed § 11.25 stated that the Department would retain the authority to initiate enforcement proceedings with respect to any violation of the Act, including violations for which penalties are assessed in accordance with proposed § 11.25, and to impose the penalties authorized by the Act if the Department determines that such actions are necessary to fulfill the purpose of the Act and the regulations. In addition, proposed paragraph (e) indicated that the Department would reserve the right to inform the Attorney General of any violation of the Act or of the regulations.

We will pursue a Federal enforcement proceeding for a violation for which an HIO has assessed and enforced a penalty only when the HIO has not properly assessed and enforced the penalty or the violation is so egregious that it warrants additional enforcement. We must retain the ability to pursue enforcement proceedings in such circumstances to ensure that the Act is effectively enforced in cases where the industry self-regulatory mechanism is not sufficient.

The U.S. Constitution's prohibition against double jeopardy, which in this case refers to being retried for an offense for which one has been found not guilty, applies only to criminal trials. Penalties imposed by HIOs are not criminal penalties, and thus double jeopardy is not relevant to such penalties.

The proposed rule was accompanied by an analysis of the rule's potential economic impacts, including its potential impact on small entities. The analysis concluded that, since the HIOs already administer their own individual penalty protocol for violations of the Act, the proposed rule is not expected to impose additional costs upon HIOs or show participants (other than those individuals who incur more severe penalties because of the rule). The analysis accompanying the proposed rule stated that the proposal would not have a significant economic impact on a substantial number of small entities.

Several commenters expressed concern that the proposed rule would have a significant effect on the horse industry. One commenter stated that the Tennessee Walking Horse industry has a $300 million impact on the economy in Tennessee alone and that many in the industry have already been irreparably harmed. Commenters generally identified a decline in the industry, with some commenters discussing declining sale values for young horses and other commenters who supply goods to the Tennessee Walking Horse industry stating that their business has been down in recent years. One commenter believed that requiring minimum penalties would force him to close his horse business, and that many others would do the same.

Two commenters stated that, as trainers, they had seen a drop in the number of horses that are in training barns. One HIO commented that their inspections have dropped by over 30,000 horses, presumably in recent years.

Several commenters noted that many walking horse shows benefit some kind of charity. These commenters predicted that the proposed rule would lead to charities receiving fewer revenues from such shows due to a lack of participation.

One commenter cited a recent Government Accountability Office (GAO) report, “Horse Welfare: Action Needed to Address Unintended Consequences from Cessation of Domestic Slaughter,”  7 that included an econometric model used to determine what portion of declining horse sale prices may have been due to bans on horse slaughter within the United States. This commenter asked us to conduct a similar analysis analyzing the Department's influence on the decline of the Tennessee Walking Horse industry, as expressed in horse sale prices in Tennessee and Kentucky.

Another commenter stated that the Tennessee Walking Horse industry has declined more than the horse industry in general, due to factors related to the desires of many in the industry to continue soring horses and the desires of others not to be associated with such activities.

We do not believe that minimum penalties for violations of the Act will necessarily have the effect described by these commenters. People who do not violate the Act, for example, will be unaffected; the minimum penalty protocol will only affect violators.

While it is possible that increased penalties for violations of the Act could lead to reduced attendance at shows and exhibitions, this is not the only possible outcome. The minimum penalties could also lead owners and trainers of walking horses, racking horses, and other gaited horses to use training methods that do not involve soring. This would allow for continued attendance at all shows, including those benefitting charities.

The GAO report cited by one commenter used a hedonic model, a type of model that predicts horse prices based on the estimated components of the quality (or value) of the horse. Although some commenters supplied anecdotal data regarding the walking horse industry, we do not have sufficient, broad-based data about the prices of Tennessee Walking Horses, racking horses, and other gaited horses to conduct such an analysis with respect to our enforcement activities.

One commenter stated that his HIO had previously implemented the proposed penalties voluntarily. As a result, the commenter stated, exhibitors who had shown with the HIO the previous year advised the HIO that, due to the subjectivity of the inspection process and the possibility of receiving an undeserved violation, they could not show with the HIO now. The commenter stated that implementation of these penalties has already harmed his organization on a small level and expressed concern about the effects on the whole industry of mandating the penalties in the proposed rule.

This final rule will put all HIOs in an equivalent competitive position with respect to penalties, thus removing the incentive for exhibitors to leave organizations such as the commenter's for another HIO on the basis of the penalties assessed by that HIO (unless an HIO decides to impose penalties greater than those required in § 11.25).

Several commenters stated that the Act says that nothing should be done to harm the horse industry, and that the proposed rule would do exactly that.

We were unable to determine what section of the Act the commenters are referring to. In the Act, however, Congress does find that horses shown or exhibited which are sore, where such soreness improves the performance of such horse, compete unfairly with horses which are not sore. Requiring mandatory minimum penalties for violations of the Act will ensure consistency among HIOs and further the purpose of the Act, which is to eliminate the cruel and inhumane practice of soring.

Some commenters expressed concern about the potential impact on HIOs of the requirement to provide an appeals process. These commenters stated that providing investigative services, gathering witnesses, and then absorbing the cost of lawsuits should a party be dissatisfied with the outcome of an appeal would present prohibitive costs for HIOs.

HIOs have existing structures to support these activities. Many HIOs currently charge fees for appeals in order to cover the costs of such activities. Should there be a significant increase in appeals, we expect that HIOs will be able to handle them.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the changes discussed in this document.

This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available on the Regulations.gov Web site (see footnote 1 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .

Efforts to eliminate soring have been hindered by the non-uniform assessment of penalties for violations of the Act. The rule will require HIOs to adhere to a uniform minimum penalty protocol. Also, the rule will give USDA the authority to decertify HIOs that refuse to implement the minimum penalty protocol.

Since the HIOs already administer a penalty protocol for violations of the Act, the proposed rule is not expected to impose additional costs upon HIOs or show participants (other than those individuals who incur penalties for violating the Act or the regulations).

The uniform penalty protocol may benefit the walking horse industry by:

• Helping to ensure more humane treatment of the horses;

• Reducing uncertainty about penalties for infractions of the Act;

• Enhancing the reputation and integrity of the walking horse industry;

• Providing for more fair competition at shows, which may positively impact attendance and regional economies; and

• Improving the value of the walking horse breeds.

The Small Business Administration's (SBA) small-entity standard for business associations that promote horses through the showing, exhibiting, sale, auction, registry, or any activity which contributes to the advancement of the horse is not more than $7 million in annual receipts (North American Industry Classification System (NAICS) 813910). The SBA small-entity standard for entities involved in Horses and Other Equine Production is $750,000 or less in annual receipts (NAICS 112920), while the small-entity standard is $7 million or less in annual receipts for businesses classified within Support Activities for Animal Production (NAICS 115210). Businesses that may be affected by this rule are likely to be small.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. The Act does not provide administrative procedures which must be exhausted prior to a judicial challenge to the provisions of this rule.

This final rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, we are amending 9 CFR part 11 as follows:

On October 5, 2011 (76 FR 61625), the NRC published a notice of receipt (76 FR 61625) for PRM-26-7. The petitioner requested the NRC to amend its regulations under 10 CFR 26.187(b)(5) to include the Academy as one of the organizations authorized to certify a substance abuse expert.

The NRC received one comment during the public comment period (ADAMS Accession No. ML11341A064), which closed on December 19, 2011. The commenter, a student pursuing a master's degree in social work, provided a statement in support of the Academy's request to amend the NRC's regulations. The commenter stated that by “amending the NRC's regulations to include the Academy as an authorized organization to certify substance abuse experts, more individuals can become qualified to provide addiction counseling. This would hopefully reduce the number of under qualified care providers and ensure that the clients are receiving the highest level of care.”

The NRC determined that the issues raised in PRM-26-7 are appropriate for consideration and will address them in the ongoing 10 CFR part 26 Technical Issues rulemaking. Docket No. PRM-26-7 is closed.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2009-04-12, Amendment 39-15818 (74 FR 8717, February 26, 2009). That AD applies to the specified products. The NPRM published in the Federal Register on July 19, 2011 (76 FR 42607). That NPRM proposed to continue to require replacing the separation link assembly on the applicable entry and service doors with an improved separation link assembly, and doing related investigative and corrective actions if necessary. That NPRM also proposed to add an airplane to the applicability and also remove certain other airplanes from the applicability.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the proposal (76 FR 42607, July 19, 2011) and the FAA's response to each comment.

ANA stated that it has converted seven airplanes to a freighter configuration, not the four that were described in the Actions Since Existing AD Was Issued section of the proposed AD (76 FR 42607, July 19, 2011).

We infer the commenter requested that we revise the applicability of this AD. Airplanes that have been converted to a freighter configuration do not have active escape slides that are affected by the unsafe condition. We have revised paragraph (c) of this AD to apply to airplanes operating in a passenger or passenger/cargo configuration, and to indicate that the requirements of this AD become applicable when an airplane is converted to a passenger or passenger/cargo configuration.

Boeing requested that the description of Boeing Special Attention Service Bulletin 767-25-0428, Revision 2, dated February 4, 2010; and Boeing Special Attention Service Bulletin 767-25-0428, Revision 3, dated October 21, 2010; be revised. Boeing noted that the descriptions given in the Relevant Service Information section of the proposed AD (76 FR 42607, July 19, 2011) do not match the revision descriptions as given in those service bulletins.

We agree to provide clarification. The Relevant Service Information section is intended to describe only major changes made to the service information without describing those changes in detail. In addition, the Relevant Service Information section is not restated in a final rule. Therefore, we have not changed the AD in this regard.

United Airlines (UAL) requested that we provide credit for accomplishing Boeing Special Attention Service Bulletin 767-25-0428, Revision 2, dated February 4, 2010; and Boeing Service Bulletin Information Notice 767-25-0428 IN 03, dated May 6, 2010. Boeing Special Attention Service Bulletin 767-25-0428, Revision 3, dated October 21, 2010, includes the information provided in that information notice.

We partially agree. The content of an information notice is not approved by the FAA and is not intended to be used as a basis for deviation from an FAA-approved service bulletin. We have not revised the AD in this regard. However, we have provided credit for accomplishing Boeing Special Attention Service Bulletin 767-25-0428, Revision 2, dated February 4, 2010, in paragraph (h) of this final rule.

We have revised the wording in paragraph (h) of this AD. This change has not affected the intent of that paragraph.

We have removed table 1 of the proposed AD (76 FR 42607, July 19, 2011). Instead, we have added paragraph (g)(3) of this final rule to specify the applicable service information for accomplishing the actions required by paragraph (g) of this AD.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously—and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (76 FR 42607, July 19, 2011) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (76 FR 42607, July 19, 2011).

We also determined that this change will not increase the economic burden on any operator or increase the scope of the AD.

We estimate that this AD affects 355 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on March 19, 2012 (77 FR 15980). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

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

We reviewed the relevant data and determined that air safety and the public interest require adopting the AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (77 FR 15980, March 19, 2012) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (77 FR 15980, March 19, 2012).

We estimate that this AD will affect 10 products of U.S. registry. We also estimate that it would take about 4 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts would cost about $510 per product.

Based on these figures, we estimate the cost of the AD on U.S. operators to be $8,500, or $850 per product.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

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

Pursuant to the provisions of the 1970 UNESCO Convention, codified into U.S. law as the Convention on Cultural Property Implementation Act (Pub. L. 97-446, 19 U.S.C. 2601 et seq. ), the United States entered into a bilateral agreement with the Republic of Peru on June 9, 1997, concerning the imposition of import restrictions on pre-Columbian archaeological materials of Peru dating to the Colonial period and certain Colonial ethnological material from Peru. On June 11, 1997, the former United States Customs Service published T.D. 97-50 in the Federal Register (62 FR 31713), which amended 19 CFR 12.104g(a) to reflect the imposition of these restrictions, and included a list designating the types of archaeological and ethnological materials covered by the restrictions.

Import restrictions listed in 19 CFR 12.104g(a) are “effective for no more than five years beginning on the date on which the agreement enters into force with respect to the United States. This period can be extended for additional periods not to exceed five years if it is determined that the factors which justified the initial agreement still pertain and no cause for suspension of the agreement exists” (19 CFR 12.104g(a)).

On June 6, 2002, the former United States Customs Service published T.D. 02-30 in the Federal Register (67 FR 38877), which amended 19 CFR 12.104g(a) to reflect the extension of these import restrictions for an additional period of five years until June 9, 2007.

On June 6, 2007, CBP published CBP Dec. 07-27 in the Federal Register (72 FR 31176), which amended 19 CFR 12.104g(a) to reflect the extension of these import restrictions for an additional period of five years.

On November 11, 2011, the Department of State received a request by the Government of Peru to extend the Agreement. After the Department of State proposed to extend the Agreement and reviewed the findings and recommendations of the Cultural Property Advisory Committee, the Assistant Secretary for Educational and Cultural Affairs, State Department, determined that the cultural heritage of Peru continues to be in jeopardy from pillage of archaeological and certain ethnological materials and made the necessary determination to extend the import restrictions for an additional five-year period. Diplomatic notes were exchanged on May 10, 2012, reflecting the extension of those restrictions for an additional five year period. Accordingly, CBP is amending 19 CFR 12.104g(a) to reflect the extension of the import restrictions.

The Designated List of Archaeological and Ethnological Material from Peru covered by these import restrictions is set forth in T.D. 97-50, see 62 FR 31713 dated June 11, 1997. The Designated List and accompanying image database may also be found at the following internet Web site address: http://exchanges.state.gov/heritage/culprop/pefact.html, under “III. Categories of Objects Subject to Import Restriction”, by clicking on “ Designated List ” and on “ Peru section of the Image Database”.

It is noted that the materials identified in T.D. 97-50 as “certain pre-Columbian archaeological materials of Peru dating to the Colonial period and certain Colonial ethnological material from Peru” are referred to in the Determination to Extend as “Archaeological Material from the Prehispanic Cultures and Certain Ethnological Material from the Colonial Period of Peru.” The materials identified in T.D. 97-50 and those identified in the Determination to Extend are the same.

The restrictions on the importation of these archaeological and ethnological materials from Peru are to continue in effect through June 9, 2017. Importation of such materials continues to be restricted unless the conditions set forth in 19 U.S.C. 2606 and 19 CFR 12.104c are met.

This amendment involves a foreign affairs function of the United States and is, therefore, being made without notice or public procedure (5 U.S.C. 553(a)(1)). For the same reasons, pursuant to 5 U.S.C. 553(d)(3), a delayed effective date is not required.

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply.

Because this rule involves a foreign affairs function of the United States, it is not subject to Executive Order 12866.

This regulation is being issued in accordance with 19 CFR 0.1(a)(1).

For the reasons set forth above, part 12 of Title 19 of the Code of Federal Regulations (19 CFR part 12), is amended as set forth below:

I. Background

On October 21, 1998, Congress enacted the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (“the Act” or “the 1998 Act”). Among other things, that Act amended the Gun Control Act of 1968, as amended (18 U.S.C. Chapter 44), to enact the provisions now codified in 18 U.S.C. 922(d)(5)(B) and 922(g)(5)(B). These provisions expanded the list of aliens subject to certain firearms and ammunition prohibitions by proscribing, with certain exceptions, the sale or disposition of firearms or ammunition to, and the possession, shipment, transportation, or receipt of firearms or ammunition by, aliens admitted to the United States under a nonimmigrant visa. These prohibitions became effective upon the date of enactment.

Section 101(a)(15) of the Immigration and Nationality Act (INA), 8 U.S.C. 1101(a)(15), describes various categories of nonimmigrant aliens, including, for example, diplomats, temporary visitors for business or pleasure, foreign students, participants in exchange programs, fiancée(s), and various categories of temporary workers in the United States. Not all nonimmigrant aliens admitted to the United States require a visa; for example, some nonimmigrant aliens may be admitted under the Visa Waiver Program (VWP). See 8 U.S.C. 1187.

Section 922(g)(5)(A) of title 18 makes it unlawful for any person who is an alien illegally or unlawfully in the United States to ship or transport any firearm or ammunition in interstate or foreign commerce, or receive any firearm or ammunition that has been shipped or transported in interstate or foreign commerce, or possess any firearm or ammunition in or affecting commerce. Section 922(d)(5)(A) makes it unlawful for any person to sell or otherwise dispose of a firearm or ammunition to any person knowing or having reasonable cause to believe that the recipient is an alien illegally or unlawfully in the United States.

The 1998 Act amended section 922(g)(5) to expand the list of persons who may not lawfully ship, transport, possess, or receive firearms or ammunition to include, with certain exceptions, aliens admitted to the United States under a nonimmigrant visa, as that term is defined in section 101(a)(26) of the INA (8 U.S.C. 1101(a)(26)). The Act also amended section 922(d)(5) to make it unlawful to sell or dispose of a firearm or ammunition to an alien who has been admitted to the United States under a nonimmigrant visa, as that term is defined in section 101(a)(26) of the INA. There are exceptions to these general rules regarding aliens who have been admitted under nonimmigrant visas. As specified in 18 U.S.C. 922(y)(2), the prohibition does not apply if the nonimmigrant alien is:

“(A) Admitted to the United States for lawful hunting or sporting purposes or is in possession of a hunting license or permit lawfully issued in the United States;

(B) an official representative of a foreign government who is—

(i) accredited to the United States Government or the Government's mission to an international organization having its headquarters in the United States, or

(ii) en route to or from another country to which that alien is accredited;

(C) an official of a foreign government or a distinguished foreign visitor who has been so designated by the Department of State; or

(D) a foreign law enforcement officer of a friendly foreign government entering the United States on official law enforcement business.”

In addition, section 922(y)(3) provides that any individual who has been admitted to the United States under a nonimmigrant visa may receive a waiver from the prohibition contained in section 922(g)(5)(B) if the Attorney General approves a petition for the waiver.

On February 5, 2002, ATF published in the Federal Register an interim final rule implementing the provisions of the 1998 Act relating to firearms disabilities for nonimmigrant aliens (67 FR 5422). On that same date, ATF also published in the Federal Register a proposed rule soliciting comments on the interim regulations (Notice No. 935, 67 FR 5428).

With respect to the scope of the statutory prohibitions for nonimmigrant aliens, which is the sole focus of this final rule, ATF noted in the interim rule that a nonimmigrant visa does not itself provide nonimmigrant status. A visa simply facilitates travel, and expedites inspection and admission to the United States, by showing that the State Department does not believe the individual to be inadmissible and has authorized him or her to apply for admission at a U.S. port of entry. Moreover, ATF asserted that, at that time, just under fifty percent of nonimmigrant aliens required a nonimmigrant visa to enter the United States. Other nonimmigrant aliens fell within various categories that were exempt from the nonimmigrant visa requirement for admission to the United States ( e.g., aliens eligible for travel under the Visa Waiver Program; most Canadian visitors). Finally, ATF explained its belief that it would be inconsistent with the legislative history of the Act to adopt an interpretation of the prohibition that did not include all nonimmigrants lawfully admitted to the United States.

Based on these reasons, ATF interpreted the 1998 Act's statutory prohibitions to apply to any alien in the United States in a nonimmigrant classification, as defined by section 101(a)(15) of the INA (8 U.S.C. 1101(a)(15)). That definition included, in large part, persons visiting the United States temporarily for business or pleasure, persons studying in the United States who maintain a residence abroad, and various categories of temporary foreign workers.

The interim rule also amended the regulations to give the Attorney General or his delegate the authority to require nonresidents bringing firearms and ammunition into the United States for hunting or sporting purposes to obtain an import permit (except for those exempt importations specified in the regulations). 1

The comment period for Notice No. 935 closed on May 6, 2002.

In response to Notice No. 935, ATF received 72 comments. Several commenters disagreed with ATF's broad interpretation that the new prohibitions on transfer and possession of firearms and ammunition in 18 U.S.C. 922(d)(5)(B) and 922(g)(5)(B) applied to all aliens in the United States in a nonimmigrant classification, not just those aliens who were admitted to the United States with a nonimmigrant visa.

For example, one commenter (Comment No. 60) noted that:

Similar concerns were raised by other commenters, including a trade association that represents the interests of importers and exporters of firearms and ammunition on matters that impact the industry.

The U.S. Department of Defense (DOD) also disagreed with ATF's interpretation, particularly with respect to the possible application to foreign military personnel. DOD maintained that the regulations (1) Are contrary to the plain language and legislative history of the Act, (2) are inconsistent with existing ATF regulatory treatment of foreign military personnel, and (3) have the potential to adversely affect national security and the global war on terrorism. DOD also asserted that Canadian and other allied military personnel are not admitted to the United States under a nonimmigrant visa, but rather are part of the Visa Waiver Program or are subject to other regulatory waivers.

ATF also received a number of public comments on other aspects of the interim rule. This final rule is limited solely to the nonimmigrant visa provisions. All other issues raised by the interim rule, and the public comments on those issues, will be addressed in a separate, forthcoming final rule.

Given the commenters' concerns, in 2011 ATF requested the opinion of the Department of Justice's Office of Legal Counsel (OLC) regarding ATF's interpretation in the interim rule that the prohibition in 18 U.S.C. 922(g)(5)(B) applied to any alien who has the status of “nonimmigrant alien,” regardless of whether the alien required a visa in order to be admitted to the United States. Pursuant to 28 U.S.C. 510, the Attorney General has delegated to OLC responsibility for, among other things, preparing the formal opinions of the Attorney General, rendering opinions to the various federal agencies, assisting the Attorney General in the performance of his function as legal advisor to the President, and rendering opinions to the Attorney General and the heads of the various organizational units of the Department of Justice. See 28 CFR 0.25.

In an October 28, 2011 memorandum to ATF, OLC concluded that the plain text of the statute applies only to nonimmigrant aliens who must have visas to be admitted to the United States, not to all aliens with nonimmigrant status: “[t]he statutory reference to nonimmigrants ‘admitted * * * under a nonimmigrant visa’ * * * indicates that Congress intended the firearms disabilities in section 922(g)(5)(B) to apply only to a subset of nonimmigrants—namely those who possess a ‘nonimmigrant visa.’ ”  2 OLC also found no affirmative support in the legislative history for the conclusion that the prohibition applies to all nonimmigrant aliens.

Upon review of the comments and in light of the OLC opinion, the Department is issuing a final rule that applies to the firearms disabilities in section 922(d)(5)(B) and 922(g)(5)(B) only to aliens admitted to the United States under a nonimmigrant visa, as that term is defined in section 101(a)(26) of the INA (8 U.S.C. 1101(a)(26)). Nonimmigrant aliens lawfully admitted to the United States without a visa, pursuant either to the Visa Waiver Program or other exemptions from visa requirements, will not be prohibited from shipping, transporting, receiving, or possessing firearms or ammunition, and the regulations will also no longer proscribe the sale or other disposition of firearms or ammunition to such nonimmigrant aliens. 3

Accordingly, this final rule makes conforming revisions to the regulations in 27 CFR 478.32, 478.44, 478.45, 478.99, 478.120, and 478.124. The final rule also amends the regulations by adding a definition for the term “Nonimmigrant visa” that mirrors the definition in section 101(a)(26) of the INA (8 U.S.C. 1101(a)(26)). ATF will be making conforming changes to the Form 4473 and its instructions. ATF is also making purely clarifying changes to the language of §§ 478.44 and 478.45 to more clearly state the statutory exceptions.

In addition, ATF is adding language in § 478.120(a) (and will also be revising the Form 6NIA) to make clear that nonimmigrants lawfully admitted to the United States without a visa will continue to be required to apply for and obtain an approved Form 6NIA if they are temporarily importing or bringing firearms or ammunition into the United States for lawful hunting or sporting purposes. The amended § 478.120, however, will no longer require nonimmigrant aliens admitted to the United States without a visa to submit documentation that they fall within one of the exceptions in 18 U.S.C. 922(y)(2) or the waiver in section 922(y)(3). 4 The existing provisions of § 478.120 are being recodified in paragraph (b), which deals with aliens who are admitted under a nonimmigrant visa (and who are required to submit such documentation).

In the 2002 interim rule, ATF explained its reasons for imposing a requirement that nonimmigrants bringing firearms and ammunition into the United States for hunting or sporting purposes obtain an import permit. See 67 FR at 5424; see also 27 CFR 478.115(e) (“Notwithstanding the provisions of paragraphs (d) (1), (2), (3), (4) and (5) of this section, the [Attorney General] or his delegate may in the interest of public safety and necessity require a permit for the importation or bringing into the United States of any firearms or ammunition.”). Even though aliens admitted to the United States who did not require a nonimmigrant visa will no longer be subject to the nonimmigrant prohibition on possession of firearms, the 2002 interim rule also cited two additional reasons for requiring all nonimmigrant aliens seeking to bring firearms or ammunition into the United States to obtain import permits: “It will also enable ATF to be aware of non-immigrant aliens who are bringing or attempting to bring firearms or ammunition into the United States. Finally, it will ensure nonimportable firearms and ammunition do not enter the United States.” 67 FR 5424. In short, the permit process is designed to ensure that the nonimmigrant aliens can lawfully possess a firearm in the United States ( i.e., that they do not fall within any of the other statutory prohibitions on possession of firearms) and it gives ATF an opportunity to conduct a background check on the applicant if warranted. 5 Thus, the language of § 478.120(a) makes no change in the status quo for nonimmigrant aliens lawfully admitted to the United States without a visa, except that they will no longer be required to submit documentation that they fall within one of the statutory exceptions for the nonimmigrant prohibition, consistent with the changes being made in this final rule.

The remaining issues raised in the interim rule (including other issues with respect to the regulations in 27 CFR 478.120 on importation of firearms and ammunition), along with a discussion of the comments received in response to these aspects of the interim rule, will be addressed in a separate, forthcoming final rule. 6

This rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation, and with Executive Order 13563, “Improving Regulation and Regulatory Review.” The Department of Justice has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this rule has been reviewed by the Office of Management and Budget (OMB). However, this rule will not have an annual effect on the economy of $100 million, nor will it 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. Accordingly, this rule is not an economically significant rulemaking action for purposes of review under Executive Order 12866.

Further, the Department has assessed both costs and benefits of this rule as required by Executive Order 12866, section 1(b)(6), and has made a reasoned determination that the benefits of this regulation justify the costs. The Department believes that the costs associated with compliance with this final rule are minimal. This final rule does not adversely affect U.S. businesses. This rule will simplify the process for nonimmigrant aliens who were not admitted to the United States under a nonimmigrant visa to purchase and rent items from these businesses for legitimate purposes. There will be negligible cost or time impact on individuals.

This regulation will 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. Therefore, in accordance with section 6 of Executive Order 13132, the Attorney General has determined that this regulation does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform.

The Regulatory Flexibility Act (5 U.S.C. 605-612) requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. The Attorney General has reviewed this regulation and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities.

Most U.S. firearms dealers should not be significantly impacted by this final rule. The restrictions on the purchase of firearms by aliens admitted under a nonimmigrant visa have not changed under this final rule. (The provisions of the interim final rule relating to these aliens, and the public comments concerning these provisions, will be addressed in a separate, forthcoming final rule.) Individuals traveling to the United States with a valid hunting license, or registrations or invitations to trade shows or competitive sporting events, are still able to purchase ammunition and accessories and rent firearms. Additionally, nonimmigrant aliens may purchase firearms for export to their home countries. Moreover, nonimmigrants admitted to the United States who did not require a visa are no longer considered to be prohibited, and accordingly they would not need to avail themselves of the exceptions under 18 U.S.C. 922(y)(2) or the waiver under section 922(y)(3).

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

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

The regulations that are being amended in this final rule revise collections of information covered by the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. ch. 35, and its implementing regulations, 5 CFR part 1320. The collections of information at §§ 478.44, 478.45, 478.120, and 478.124(c)(3)(iii), were approved by OMB under control number 1140-0060 under the interim rule. On November 15, 2011, the Department published a 60-day notice of information collection in the Federal Register advising the public that it was seeking an extension of the currently approved collection (1140-0060) and requesting comments from the public and affected agencies on the information collection (76 FR 70757). The comment period closed on January 17, 2012. On January 20, 2012, the Department published a notice in the Federal Register advising that it was seeking public comment for an additional 30 days (77 FR 3006). The extended comment period closed on February 21, 2012 (77 FR 4828, Jan. 31, 2012). ATF did not receive any comments concerning the information collection. However, ATF has advised OMB of certain changes that needed to be made to the approved information collection as a result of this final rule, e.g., number of respondents, burden hours, etc.

In addition, ATF requested emergency clearance from OMB of revisions to control number 1140-0020 (Form 4473) to conform with these regulatory changes, and OMB approved those revisions on April 13, 2012, for a period of 180 days.

ATF also intends to make revisions to Form 6NIA (approved by OMB under control number 1140-0084), Form 7 (approved by OMB under control number 1140-0018), and Form 7CR (approved by OMB under control number 1140-0038) to conform with the regulatory changes made in this final rule. These information collections will be submitted to OMB for review and approval. In the interim, to ensure that these forms are completed in a way that conforms with this regulation, ATF will distribute an informational notice with the affected forms notifying applicants of the changes and providing clarification as to the proper completion of the forms.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

Copies of the interim rule, the notice of proposed rulemaking (NPRM), all comments received in response to the NPRM, and this final rule will be available for public inspection by appointment during normal business hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., Washington, DC 20226; telephone: 202-648-8740.

The author of this document is James P. Ficaretta, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, Firearms, and Explosives.

Accordingly, for the reasons discussed in the preamble, 27 CFR part 478 is amended as follows:

Section 922(b)(3) of the Gun Control Act of 1968 (GCA), 18 U.S.C. 922(b)(3), makes it unlawful for a Federal firearms licensee (FFL) to sell or deliver any firearm to any nonlicensee who the licensee knows or has reasonable cause to believe does not reside in the State in which the licensee's place of business is located. Exceptions are provided for over-the-counter transfers of a rifle or shotgun to out-of-State residents if the transfers fully comply with the State laws of the buyer and seller, and for loans and rentals of a firearm for temporary use for lawful sporting purposes. Regulations that implement section 922(b)(3) are contained in 27 CFR 478.99(a).

The term “State of residence” is defined in 27 CFR 478.11 as “[t]he State in which an individual resides. An individual resides in a State if he or she is present in a State with the intention of making a home in that State.” In addition, for aliens, the definition also provides that “[a]n alien who is legally in the United States shall be considered to be a resident of a State only if the alien is residing in the State and has resided in the State for a period of at least 90 days prior to the date of sale or delivery of a firearm.” This 90-day length of residency requirement does not apply to U.S. citizens.

Prior to making a transfer of a firearm to a nonlicensed individual who is a resident of the State in which the licensee's business premises are located, the regulations at § 478.124(c) require the licensee to obtain from the transferee (buyer) a completed ATF Form 4473, Firearms Transaction Record, that shows certain information, including whether the transferee is a citizen of the United States, and an affirmative statement as to the transferee's State of residence. In addition, before transferring to such a nonlicensee a firearm, the licensee must obtain from the transferee documentation establishing that the transferee is a resident of the State in which the licensee's business premises are located. That is, each transferee must present proof of residence in the State, in the form of a government-issued identification document (for example, a driver's license or State-issued identification card) containing the person's name, residence address, date of birth, and photograph. In the case of a transferee who is an alien legally in the United States and who is otherwise not prohibited from possessing a firearm, the licensee must additionally obtain from the transferee documentation establishing that the transferee has continuously resided in the State for 90 days. The licensee must also note on the form the documentation used to establish this 90-day period of residency. Examples of acceptable documentation include utility bills or a lease agreement showing that the purchaser has resided in the State continuously for at least 90 days prior to the transfer of the firearm.

Section 478.124(d), relating to the exception for over-the-counter transfers of a shotgun or rifle to out-of-State residents if the transfers fully comply with the State laws of the buyer and seller, requires purchasers to present to the licensee documentation establishing that the transferee is a resident of any State. In the case of a nonlicensee who is an alien lawfully in the United States, the licensee must additionally obtain from the transferee documentation that the transferee has resided in such State continuously for at least 90 days prior to the transfer of the firearm. Again, examples of acceptable documentation include utility bills or a lease agreement showing that the purchaser has resided in the State continuously for at least 90 days prior to the transfer of the firearm.

Section 478.125(f)(2), relating to firearms receipt and disposition by licensed collectors, provides that the licensee must, in the case of a transferee who is an alien legally in the United States (and who is not a licensee), verify the identity of the transferee by examining a valid identification document and obtain from the transferee documentation establishing that the transferee is a resident of the State in which the licensee's business premises are located if the firearm is other than a shotgun or rifle. If the firearm is a shotgun or rifle, the licensee must obtain from the transferee documentation establishing that the transferee is a resident of any State and has resided in such State continuously for at least 90 days prior to the transfer of the firearm.

ATF has received questions from aliens concerning the State of residence requirement. Several aliens have asked why they were prohibited from purchasing a firearm from a Federal firearms licensee, contending that they had lived in the State where the licensee was licensed for more than 90 days. In response to those concerns, ATF issued a ruling clarifying that an FFL may not lawfully transfer a firearm to a nonimmigrant alien unless he or she has resided in a State continuously for at least 90 days immediately prior to the FFL conducting a National Instant Criminal Background Check System (NICS) check (ATF Rul. 2004-1, dated March 22, 2004). In addition, the ruling held that if a NICS check demonstrates a nonimmigrant alien has left the United States during the 90 days immediately preceding the NICS check, the nonimmigrant alien does not satisfy the 90-day State of residency requirement. This is the case even if the nonimmigrant alien has provided other documentation, such as utility bills or a lease agreement, to demonstrate 90 days of residency immediately preceding the NICS check. Although ATF Rul. 2004-1 specifically addresses transfers of firearms to nonimmigrant aliens, the residency requirement applies to all aliens.

During the review process for a related rulemaking proceeding, Department of Justice officials raised legal concerns regarding the 90-day residency requirement for aliens lawfully in the United States who wish to purchase a firearm from an FFL. The Department concluded that, as a matter of law, the definition of “State of residence” in § 478.11, which differentiates between U.S. citizens and aliens, is not a permissible interpretation of section 922(b)(3) of the GCA insofar as it applies a 90-day residency requirement to lawfully present aliens only. See Clark v. Martinez, 543 U.S. 371, 378 (2005) (holding that a single, undifferentiated statutory term cannot be given varying meanings with respect to different categories of persons to which the statutory provision applies). The Department determined that, as a matter of law, nothing in the text of section 922(b)(3) indicates that Congress intended the phrase “State of residence” to have different meanings for different categories of people. Section 922(b)(3) includes the term `reside in' without any further differentiation or specification. The statute might support a range of meanings for the phrase `reside in,' but it does not support an interpretation that gives the phrase different meanings when applied to lawfully present aliens and U.S. citizens.

The Department's determination is based on advice received from its Office of Legal Counsel (OLC) ( See memorandum of January 30, 2012, at http://www.justice.gov/olc/2012/ATF90dayruleFINAL1-30-12.pdf ).

Based on the Department's legal determination that the State of residence requirement imposed by section 922(b)(3) cannot have two different constructions—one that applies to U.S. citizens and another that applies to lawfully present aliens—the Department is publishing this interim final rule to make the necessary changes to existing regulations. This rule amends the regulations in 27 CFR part 478 by removing the 90-day residency requirement in the definition of “State of residence” in § 478.11. The rule also removes the unique proof of residency requirements in §§ 478.124 and 478.125 for aliens purchasing a firearm. Therefore, upon the effective date of this interim final rule, an alien lawfully present in the United States acquiring a firearm will be subject to the same residency and proof of residency requirements that apply to U.S. citizens.

In addition, upon the effective date of this interim final rule, ATF Ruling 2004-1 (approved March 22, 2004) will become obsolete.

This rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), The Principles of Regulation, and with Executive Order 13563, “Improving Regulation and Regulatory Review.” The Department of Justice has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this rule has been reviewed by the Office of Management and Budget (OMB). However, this rule will not have an annual effect on the economy of $100 million, nor will it 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. Accordingly, this rule is not an economically significant rulemaking action as defined by Executive Order 12866.

The interim final rule removes restrictions and lessens burdens on various parties. It removes the 90-day residency requirement applicable only to aliens legally in the United States and not to citizens, as well as the requirement that aliens, but not citizens, purchasing a firearm provide proof of 90 days continuous residency through substantiating documentation (e.g., utility bills or a lease agreement). Upon the rule's effective date, lawfully present aliens and U.S. citizens will be subject to the same residency and proof of residency requirements. This will reduce the time burden on both nonlicensees (i.e., aliens lawfully present in the United States) and licensees from completing the paperwork requirements associated with transferring firearms. As explained below, ATF estimates that this rule will reduce such burdens by approximately 2,457 hours (1,867 hours for nonlicensees + 590 hours for licensees).

The burden placed on all nonlicensees acquiring firearms, including alien purchasers, involves the time it takes to indicate their State of residence on ATF Form 4473. In calendar year 2010, ATF estimates that Form 4473 was completed 14,409,616 times and that it took four seconds for a firearms purchaser to provide his or her State of residence on the form. As such, ATF estimates the total time for firearms purchasers to indicate their State of residence on the form to be approximately 16,010 hours. In the case of an alien purchaser who is legally in the United States, the purchaser must provide the licensee with proof of residency through the use of documentation showing that the individual has resided in the State continuously for at least 90 days prior to the transfer of the firearm. ATF estimates that in calendar year 2010, approximately 23,582 aliens purchased firearms. ATF estimates the burden on alien purchasers to comply with this requirement was approximately 4.75 minutes with an annual burden of approximately 1,867 hours (23, 582 × 4.75 minutes = 1,867 hours). The interim final rule eliminates this burden.

As indicated, the interim final rule also reduces the economic burden on licensees as it relates to Form 4473. According to ATF's National Licensing Center, there are approximately 60,844 Federal firearms licensees engaged in the business of selling firearms. Before transferring a firearm to an alien legally in the United States, the licensee must obtain from the transferee documentation establishing that the transferee has been a resident of the State in which the licensee's business premises are located for at least 90 days and note on the Form 4473 the documentation used for that purpose. ATF estimates the burden placed on a licensee to comply with this requirement to be approximately 1.50 minutes per alien purchaser, with an annual burden of approximately 590 hours (23,582 × 1.50 minutes = 590 hours). The interim final rule removes this burden.

This regulation will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, the Attorney General has determined that this regulation does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This interim final rule is being published with a process for post-promulgation submission of public comments. Pursuant to section 553(b)(3)(B) of the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), the APA's general requirement to allow for public notice and comment prior to the promulgation of a rule does not apply when an agency finds, for “good cause,” that such prior notice and comment procedures are “impracticable, unnecessary, or contrary to the public interest.” The Department of Justice has concluded as a matter of law that the State of residence requirement in the Gun Control Act cannot have two different constructions, one that applies to U.S. citizens and another that applies to lawfully present aliens, because the statutory text applies the requirement, without distinction, to a covered sale or delivery of a firearm to “any person.” This conclusion is compelled by Supreme Court decisions holding that a single undifferentiated statutory term must be given a single interpretation across all of its potential applications. See, e.g., Clark v. Martinez, 543 U.S. 371, 378 (2005); United States v. Santos, 533 U.S. 507 (2008). Section 27 CFR 478.11 does not currently conform with that legal conclusion, because it requires lawfully present aliens to meet an extra requirement in order to demonstrate residency. As a result, there is a discrepancy between the current regulatory definition and the Department's interpretation of the statute on which that definition is based. For as long as that discrepancy persists, a departmental regulation will bar some lawfully present aliens from purchasing firearms on the basis of a requirement the Department has concluded is not consistent with applicable law. Because ATF must, as a matter of law, rectify that discrepancy, pre-publication public comment is unnecessary, and good cause therefore exists for issuing this rule without employing the usual notice and comment procedures of the APA. Additionally, the Attorney General finds that delaying this regulatory action would be contrary to the public interest. The Department, however, welcomes public comment on this interim final rule after the rule is published.

The provisions of the Regulatory Flexibility Act relating to an initial and final regulatory flexibility analysis are not applicable to this rule because the agency was not required to publish a general notice of proposed rulemaking under 5 U.S.C. 553 or any other law.

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, Public Law 104-4.

The regulations that are being amended in this interim final rule revise collections of information covered by the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. ch. 35, and its implementing regulations, 5 CFR part 1320. The collections of information at §§ 478.124 and 478.125 were approved by OMB under control numbers 1140-0020 and 1140-0021 (§ 478.124), and 1140-0032 (§ 478.125). ATF requested emergency clearance from OMB of revisions to control number 1140-0020 (Form 4473) to conform with these regulatory changes, and OMB approved those revisions on April 13, 2012, for a period of 180 days. On October 4, 2011, at ATF's request, the approval on the collection of information under 1140-0021 was discontinued.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

ATF is requesting comments on the interim final rule from all interested persons. ATF is also specifically requesting comments on the clarity of this interim final rule and how it may be made easier to understand.

All comments must reference this document docket number (ATF 22I), be legible, and include your name and mailing address. ATF will treat all comments as originals and will not acknowledge receipt of comments.

Comments received on or before the closing date will be carefully considered. Comments received after that date will be given the same consideration if it is practical to do so, but assurance of consideration cannot be given except as to comments received on or before the closing date.

Comments, whether submitted electronically or on paper, will be made available for public viewing at ATF, and on the Internet as part of the eRulemaking initiative, and are subject to the Freedom of Information Act. Commenters who do not want their name or other personal identifying information posted on the Internet should submit their comment by mail or facsimile, along with a separate cover sheet that contains their personal identifying information. Both the cover sheet and comment must reference this docket number. Information contained in the cover sheet will not be posted on the Internet. Any personal identifying information that appears within the comment will be posted on the Internet and will not be redacted by ATF.

Any material that the commenter considers to be inappropriate for disclosure to the public should not be included in the comment. Any person submitting a comment shall specifically designate that portion (if any) of his comments that contains material that is confidential under law ( e.g., trade secrets, processes, etc. ). Any portion of a comment that is confidential under law shall be set forth on pages separate from the balance of the comment and shall be prominently marked “confidential” at the top of each page. Confidential information will be included in the rulemaking record but will not be disclosed to the public. Any comments containing material that is not confidential under law may be disclosed to the public. In any event, the name of the person submitting a comment is not exempt from disclosure.

Comments may be submitted in any of three ways:

• Mail: Send written comments to the address listed in the ADDRESSES section of this document. Written comments must appear in minimum 12 point font size (.17 inches), include your mailing address, be signed, and may be of any length.

• Facsimile: You may submit comments by facsimile transmission to (202) 648-9741. Faxed comments must:

(1) Be legible and appear in minimum 12 point font size (.17 inches);

(2) Be on 8 1/2 ″ x 11″ paper;

(3) Contain a legible, written signature; and

(4) Be no more than five pages long. ATF will not accept faxed comments that exceed five pages.

• Federal eRulemaking Portal: To submit comments to ATF via the federal eRulemaking portal, visit http://www.regulations.gov and follow the instructions for submitting comments.

Any interested person who desires an opportunity to comment orally at a public hearing should submit his or her request, in writing, to the Director of ATF within the 90-day comment period. The Director, however, reserves the right to determine, in light of all circumstances, whether a public hearing is necessary.

Copies of this interim rule and the comments received will be available for public inspection by appointment during normal business hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., Washington, DC 20226, telephone (202) 648-8740.

The author of this document is James P. Ficaretta, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, Firearms, and Explosives.

Accordingly, for the reasons stated in the preamble, 27 CFR part 478 is amended as follows:

The SLGS program assists state and local government issuers and other entities in complying with the yield restriction and rebate requirements applicable to tax-exempt bonds under the Internal Revenue Code. The SLGS rate on Time Deposit SLGS securities is derived from the Treasury yield curve, less Treasury's administrative costs. As Treasury's costs of administering the SLGS program have decreased so has the amount of the differential that exists between the SLGS rate and the Treasury borrowing rate. The differential was last changed in a 2005 Final Rule (70 FR 37904, June 30, 2005) when Treasury lowered the SLGS rate from 5 basis points below the current Treasury borrowing rates to 1 basis point below current Treasury borrowing rates.

In this rule, Treasury revises the definition of “SLGS rate” and “annualized effective Demand Deposit rate” to address the current extremely low yield environment. The revised definitions will prevent the calculation of the rates for SLGS securities from resulting in negative rates. No change is being made to Treasury's administrative costs. Additionally, to add clarification to part 344, Treasury revises the definition of “Y” in the annualized effective Demand Deposit rate calculation formula to clarify the calculation method to be used during a year that contains a leap day. This revision should not affect issuers' practices and systems.

While the formula for calculating the rate for Demand Deposit SLGS securities remains unchanged under § 344.7(a), the definition of “annualized effective Demand Deposit rate” is being amended. This has the effect of preventing the calculation of the rate for Demand Deposit SLGS securities from resulting in a negative rate. Demand Deposit SLGS securities will continue to bear a rate of interest based on an adjustment of the average yield for three-month (13-week) Treasury bills at the most recent auction. A new rate will be effective on the first business day following the regular auction of 13-week Treasury bills and will continue to be shown in the SLGS rate table. Lastly, Treasury's administrative costs for administering Demand Deposit SLGS securities remain unchanged under § 344.7(a)(2).

Executive Order 12866. This final rule is not a significant regulatory action pursuant to Executive Order 12866, dated September 30, 1993.

Administrative Procedure Act (APA). Because this rule relates to United States securities, which are contracts between Treasury and the owner of the security, this rule falls within the contract exception to the APA, 5 U.S.C. 553(a)(2). As a result, the notice, public comment, and delayed effective date provisions of the APA are inapplicable to this rule.

Regulatory Flexibility Act. The provisions of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., do not apply to this rule because, pursuant to 5 U.S.C. 553(a)(2), it is not required to be issued with notice and opportunity for public comment.

Paperwork Reduction Act (PRA). We ask for no collections of information in this final rule. Therefore, the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ) does not apply.

Congressional Review Act (CRA). This rule is not a major rule pursuant to the CRA, 5 U.S.C. 801 et seq., because it is a minor amendment that is not expected to lead to any of the results listed in 5 U.S.C. 804(2). This rule will take effect upon publication in the Federal Register , after we submit a copy of it to Congress and the Comptroller General.

Accordingly, for the reasons set forth in the preamble, Treasury amends 31 CFR part 344 as follows:

FinCEN exercises regulatory functions primarily under the Currency and Financial Transactions Reporting Act of 1970, as amended by the USA PATRIOT Act of 2001 (the “Act”) and other legislation, which legislative framework is commonly referred to as the Bank Secrecy Act (“BSA”), 2 which authorizes the Secretary of the Treasury (“Secretary”) to require financial institutions to keep records and file reports that “have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings, or in the conduct of intelligence or counterintelligence activities, including analysis, to protect against international terrorism.”  3 The Secretary has delegated to the Director of FinCEN the authority to implement, administer, and enforce compliance with the BSA and associated regulations. 4 FinCEN is authorized to impose AML program requirements on financial institutions. 5

The Money Laundering Suppression Act of 1994 amended the BSA by establishing a system for exempting transactions by certain customers of depository institutions from currency transaction reporting. 6 In general, the statutory exemption system creates two types of exemptions, mandatory and discretionary exemptions. 7 Under 31 U.S.C. 5313(d) (sometimes called the “mandatory exemption” provision), the Secretary is required to provide depository institutions with the ability to exempt from the currency transaction reporting requirement transactions in currency between the depository institution and four specified categories of customers. The four specified categories of customers in the mandatory exemption provision are: (1) Another depository institution; (2) a department or agency of the United States, any State, or any political subdivision of any State; (3) any entity established under the laws of the United States, any State, or any political subdivision of any State, or under an interstate compact between two or more States, which exercises governmental authority on behalf of the United States or any such State or political subdivision; and (4) any business or category of business the reports on which have little or no value for law enforcement purposes.

Under 31 U.S.C. 5313(e) (sometimes called the “discretionary exemption” provision) the Secretary is authorized, but not required, to allow depository institutions to exempt from the currency transaction reporting requirement transactions in currency between it and a qualified business customer. 8 A “qualified business customer,” for purposes of the discretionary exemption provision, is a business that: (A) Maintains a transaction account (as defined in section 19(b)(1)(C) of the Federal Reserve Act) at the depository institution; (B) frequently engages in transactions with the depository institution which are subject to the reporting requirements of subsection (a); and (C) meets criteria that the Secretary determines are sufficient to ensure that the purposes of the BSA are carried out without requiring a report with respect to such transactions. 9

The Secretary was required to establish by regulation the criteria for granting and maintaining an exemption for qualified business customers, 10 as well as guidelines for depository institutions to follow in selecting customers for exemption. 11 The BSA allowed for the guidelines to include a description of the type of businesses for which no exemption would be granted under the discretionary exemption provision. The Secretary also was required to prescribe regulations that require an annual review of qualified business customers and require depository institutions to resubmit information about those customers with modifications if appropriate. 12

The current exemption procedures which are codified at 31 CFR 1020.315, were the result of a six-part rulemaking. 13 The current exemption procedures apply to depository institution customers that fall within one of the classes of exempt persons described in 31 CFR 1020.315(b)(1)-(7), commonly referred to as Phase I and Phase II exemptions. Phase II eligible customers include: (i) “non-listed businesses”  14 and (ii) “payroll customers.”  15 Under the current rules a non-listed business is any other person (i.e., a person not otherwise covered under the exempt person definitions) that (A) Maintains a transaction account at the bank for at least two months; (B) frequently engages in transactions in currency with the bank in excess of $10,000; and (C) is incorporated or organized under the laws of the United States or a State, or is registered as and is eligible to do business with the United States or a State. 16 A “payroll customer” is any other person (i.e., a person not otherwise covered under the exempt person definitions) that: (A) Has maintained a transaction account at the bank for at least two months; (B) operates a firm that regularly withdraws more than $10,000 in order to pay its United States employees in currency; and (C) is incorporated or organized under the laws of the United States or a State, or is registered as and eligible to do business within the United States or a State. 17 A payroll customer is an exempt person “[w]ith respect solely to withdrawals for payroll purposes.”  18

Under the existing CTR exemption rules codified at 31 CFR 1020.315, two separate categories of exempt persons use nearly synonymous terms for definitional purposes—“frequently” for non-listed businesses and “regularly” for payroll customers. To be an exempt non-listed business, a person must, among other things, “frequently engage[] in transactions in currency with the bank in excess of $10,000.”  19 To be an exempt payroll customer, a person must, among other things, “regularly withdraw[] more than $10,000 in order to pay its United States employees in currency.”  20

In the preamble to the December 2008 rulemaking revising the CTR exemption rules, FinCEN interpreted “frequently” to mean five or more transactions a year. 21 This interpretation was, in part, due to the fact that the waiting period for exempting a Phase II customer was being shortened from twelve to two months, as well as an affirmative step toward further simplifying, and thereby encouraging, the greater use of the exemption process. In that rulemaking, FinCEN did not similarly define the term “regularly,” and to date has never formally defined that term in the context of the applicability of the CTR exemption rules to payroll customers.

FinCEN believes that the lack of a specific definition for the term “regularly” may have caused, and may be continuing to cause, some banks not to utilize the exemption for payroll customers. FinCEN recognizes that it has the discretion to use slightly different terms when describing the need for non-listed businesses and payroll customers to make large transactions in currency, and that the term “regularly” can mean something slightly different than “frequently.” However, FinCEN believes that greater clarity and ease of use by banks of the CTR exemption rules weigh in favor of using the same term—i.e, “frequently”—for both categories of exempt persons. 22 In addition, FinCEN believes that utilizing the same term in both contexts will not undermine law enforcement interests because a bank still must take reasonable and prudent steps to assure itself that a person is, in fact, a payroll customer, before utilizing that specific exemption. 23

As a result of substituting the term “frequently” for “regularly” in the context of the payroll customer exemption, FinCEN's prior interpretation of the term “frequently” used in the non-listed business exemption to mean five or more times a year would equally apply to exemption determinations in the payroll customer context. This change is intended to harmonize the exemption standard for payroll customers and non-listed businesses to a single bright-line test that will provide greater ease of application and promote full use of the exemption for payroll customers.

As stated in the December 2008 rulemaking, allowing banks to exempt a Phase II customer after it has conducted five or more reportable cash transactions per year should make it easier for banks to exempt customers that conduct seasonal business, whether as a non-listed business or as a payroll customer. 24 Thus, assuming the other prerequisites are met, a bank could exempt the currency transactions of a payroll customer if the customer withdraws currency five or more times a year in order to pay its employees.

The Administrative Procedure Act (“APA”) allows an agency to dispense with notice and comment when it would be impracticable, unnecessary, or contrary to the public interest. By substituting the term “frequently” for “regularly,” this final rule will make it easier for banks to apply the exemption standard to their payroll customers and promote fuller use of the exemption for these customers. Consequently, this will result in a foreseeable reduction of the compliance burden on banks by eliminating the need to otherwise file a currency transaction report and perform the recordkeeping requirements that go along with such filing. FinCEN believes that this change to the rule is a desirable change for impacted banks, does not adversely impact law enforcement interests, is otherwise noncontroversial, and would not generate meaningful comment. Hence, pursuant to 5 U.S.C. 553(b), FinCEN finds that notice and comment is unnecessary. For the same reasons, this final rule is effective upon publication pursuant to 5 U.S.C. 553(d)(1) and (3).

This regulation is being issued without prior notice and public comment pursuant to the APA (5 U.S.C. 553). For this reason, the collection of information contained in this regulation has been reviewed under the requirements of the Paperwork Reduction Act (44 U.S.C. 3507(j)) and approved by the Office of Management and Budget (OMB) under control number 1506-0004. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

Because no notice of proposed rulemaking is required by the APA (5 U.S.C. 551 et seq. ), or by any other statute, this document is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. It has been determined that the final rule is neither an economically significant regulatory action nor a significant regulatory action for purposes of Executive Orders 13563 and 12866.

Because no notice of proposed rulemaking is required by the APA (5 U.S.C. 551 et seq. ), or by any other statute, FinCEN has determined that it is not required to prepare a written statement under section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4 (March 22, 1995).

For the reasons set forth in the preamble, part 1020 of title 31 of the Code of Federal Regulations is amended as follows:

The United States Postal Service® gives notice that, on May 7, 2012, the Postal Service filed with the Postal Regulatory Commission a notice of a minor classification change to add the Democratic Republic of Timor-Leste (Timor-Leste) to the Mail Classification Schedule (MCS). The Commission concurred with the notice in its Order No. 1351, issued on May 23, 2012. Documents are available at www.prc.gov , Docket No. MC2012-17. Consequently, the Postal Service will revise IMM sections 213.5, 243.1, 292.452, 293.452, the Index of Countries and Localities, the Country Price Groups and Weight Limits, and the Individual Country Listings to add a listing for the Democratic Republic of Timor-Leste (Timor-Leste).

Accordingly, 39 CFR part 20 is amended as follows:

This action affects state and local air pollution control agencies located within the geographic areas covered by the Transport Rule  1 and whose regional haze SIP relied on CAIR  2 as an alternative to BART for sulfur dioxide (SO 2 ) and/or nitrogen oxide (NO X ) for electric generating units (EGUs) subject to BART requirements, or whose regional haze SIP relied on the Transport Rule. Some of the EGUs located in such geographic areas may also be affected by this action in that affected states now have the option of not requiring such EGUs to meet source-specific BART emission limits to which these EGUs otherwise could be subject.

These sources are in the following groups:

In addition to being available in the docket, an electronic copy of this notice will be posted at http://www.epa.gov/ttn/oarpg/new.html under “Recent Actions.”

The information presented in this notice is organized as follows:

Section 169A(b)(2)(A) of the CAA requires states to revise their SIPs to contain such measures as may be necessary to make reasonable progress towards the natural visibility goal, including a requirement that certain categories of existing major stationary sources built between 1962 and 1977 procure, install, and operate BART as determined by the state. 3 Under the Regional Haze Rule, states are directed to conduct BART determinations for such “BART-eligible” sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Rather than requiring source-specific BART controls, states also have the flexibility to adopt an emissions trading program or other alternative program as long as the alternative provides greater reasonable progress towards improving visibility than BART. 40 CFR 51.308(e)(2). The EPA provided states with this flexibility in the Regional Haze Rule, adopted in 1999, and further refined the criteria for assessing whether an alternative program provides for greater reasonable progress in three subsequent rulemakings. 64 FR 35714 (July 1, 1999); 70 FR 39104 (July 6, 2005); 71 FR 60612 (October 13, 2006). These criteria are described below.

Specific criteria for determining if an alternative measure achieves greater reasonable progress than source-specific BART are set out in the Regional Haze Rule at § 51.308(e)(3). 4 The “better-than-BART” test may be satisfied as follows: If the distribution of emissions is not substantially different than under BART, and the alternative measure results in greater emission reductions, then the alternative measure may be deemed to achieve greater reasonable progress. If the distribution of emissions is significantly different, then states are directed to conduct an air quality modeling study to determine differences in visibility between BART and the alternative program for each impacted Class I area for the worst and best 20 percent of days. 5 A test with the following two criteria (the “two-pronged visibility test”) would demonstrate “greater reasonable progress” under the alternative program if both prongs of the test are met:

In May 2005, the EPA published CAIR, which required 28 states and the District of Columbia to reduce emissions of SO 2 and NO X that significantly contribute to, or interfere with maintenance of, the 1997 national ambient air quality standards (NAAQS) for fine particulates and/or ozone in any downwind state. The CAIR established emission budgets for SO 2 and NO X for states that contribute significantly to nonattainment in downwind states and required the significantly contributing states to submit SIP revisions that implemented these budgets. Because such SIP revisions were already overdue, the EPA subsequently promulgated CAIR FIPs for the affected states establishing cap and trade programs for EGUs with opt-in provisions for other sources. States had the flexibility to subsequently adopt SIP revisions mirroring CAIR requirements or otherwise providing emission reductions sufficient to address emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS in other states. Many affected states adopted CAIR-mirroring SIPs, while others chose to remain under CAIR FIPs.

As noted above, the Regional Haze Rule allows states to implement an alternative program in lieu of BART so long as the alternative program has been demonstrated to achieve greater reasonable progress toward the national visibility goal than would BART. The EPA made just such a demonstration for CAIR in revisions to the regional haze program made in 2005. 70 FR 39104. In those revisions, we amended our regulations to provide that states participating in the CAIR cap-and-trade programs under 40 CFR part 96 pursuant to an EPA-approved CAIR SIP or states that remain subject to a CAIR FIP in 40 CFR part 97 need not require affected BART-eligible EGUs to install, operate and maintain BART for emissions of SO 2 and NO X . 40 CFR 51.308(e)(4).

As a result of our determination that CAIR was “better-than-BART,” a number of states in the CAIR region, fully consistent with our regulations, relied on the CAIR cap-and-trade programs as an alternative to BART for EGU emissions of SO 2 and NO X in designing their regional haze implementation plans. These states also relied on CAIR as an element of a long-term strategy for achieving their reasonable progress goals for their regional haze programs.

Following our determination in 2005 that CAIR was “better-than-BART,” the D.C. Circuit Court ruled on several petitions for review challenging CAIR on various grounds. As a result of this litigation, the D.C. Circuit Court remanded CAIR to the EPA but later decided not to vacate the rule. 7 The court thereby left CAIR and CAIR FIPs in place in order to “temporarily preserve the environmental values covered by CAIR” until the EPA replaced it with a rule consistent with the court's opinion. 550 F.3d at 1178. On August 8, 2011, EPA promulgated the Transport Rule, which was to replace CAIR. 8 As promulgated, the Transport Rule would have addressed emissions in 2012 and later years and would have left the requirements of CAIR and the CAIR FIPs in place to address emissions through the end of 2011. The D.C. Circuit, however, on December 30, 2011, stayed the Transport Rule (including the provisions that would have sunset CAIR and the CAIR FIPs) and instructed the EPA to continue to administer CAIR pending the outcome of the court's decision on the petitions for review challenging the Transport Rule. EME Homer City v. EPA, No. 11-1302 (Order).

Many states relied on CAIR as an alternative to BART for SO 2 and NO X for subject EGUs, as allowed under the then-current BART provisions at 40 CFR 51.308(e)(4). These states also relied on the improvement in visibility expected to result from controls planned or already installed on sources in order to meet CAIR provisions in developing their long-term visibility strategy. In addition, many states relied upon their own CAIR SIPs or the CAIR FIPs for their states as legal justification for these planned controls and consequently did not include separate enforceable measures in their long-term strategies (a required element of a regional haze SIP submission) to ensure these EGU reductions. These states also submitted demonstrations showing that no additional controls on EGUs beyond CAIR would be reasonable for the first 10-year implementation period of the regional haze program.

In summary, many of the states in the CAIR-affected region have based a number of required elements of their regional haze programs on CAIR. However, as CAIR has been remanded and only remains in place temporarily, we cannot fully approve these regional haze SIP revisions that have relied on the now-temporary reductions from CAIR. Although CAIR is currently in effect as a result of the December 30, 2011 Order by the U.S. Court of Appeals for the D.C. Circuit staying the Transport Rule, this does not affect the substance of the D.C. Circuit's ruling in 2008 remanding CAIR to the EPA.

The Transport Rule as promulgated would establish Transport Rule trading programs to replace the CAIR trading programs and would sunset the requirements of CAIR and the CAIR FIPs. The Transport Rule, as promulgated, requires 28 states in the eastern half of the United States to significantly improve air quality by reducing EGU SO 2 and NO X emissions that cross state lines and significantly contribute to ground-level ozone and/or fine particle pollution in other states. The rule allows allowance trading among covered sources, utilizing an allowance market infrastructure modeled after existing allowance trading programs. The Transport Rule allows sources to trade emissions allowances with other sources within the same program ( e.g., ozone season NO X ) in the same or different states, while firmly constraining any emissions shifting that may occur by establishing an emission ceiling for each state.

In our proposal, we described a technical analysis that we conducted to determine whether compliance with the Transport Rule would satisfy regional haze BART-related requirements. This technical analysis is the basis of this final action in which we are finalizing our determination that the Transport Rule achieves greater reasonable progress towards the national goal of achieving natural visibility conditions than source-specific BART. For this final rule, an updated sensitivity analysis was conducted to account for subsequent revisions to certain state budgets in the Transport Rule. This analysis is described in section III.B.4 of this notice.

The EPA has based its determination that the Transport Rule will achieve greater reasonable progress than BART on the approach used by the EPA in evaluating whether a similar program, CAIR, would satisfy the regional haze BART-related requirements. As noted above, the Regional Haze Rule, promulgated in 1999, provides states with the flexibility to adopt an emissions trading program rather than requiring source-by-source BART. 40 CFR 51.308(e)(2). Some commenters supported our general approach and agreed that the Transport Rule will provide for greater reasonable progress. Other commenters, however, disagreed with our conclusion that the Transport Rule can be used as an alternative to BART. These commenters argued that we lack authority to make such a determination and that we cannot rely on the Transport Rule because of the current stay of that rule, and that the Transport Rule does not meet the necessary regulatory requirements for an alternative program in lieu of BART. Some commenters argued that we could not conclude that the Transport Rule provides for greater reasonable progress without considering each state's reasonable progress goals. Other commenters took the position that we should fully approve the regional haze SIPs that relied on CAIR to satisfy certain regional haze requirements and that our proposed limited disapproval of the regional haze SIPs was unnecessary.

As described above, in 2005 (70 FR 39104) the EPA amended its Regional Haze Rule to provide that states participating in the CAIR cap-and-trade programs need not require affected BART-eligible EGUs to install, operate and maintain BART for emissions of SO 2 and NO X . 40 CFR 51.308(e)(4). As EPA noted in explaining its reasons for adopting this approach, “[nothing] in the CAA or relevant case law prohibits a State from considering emissions reductions required to meet other CAA requirements when determining whether source-by-source BART controls are necessary to make reasonable progress. Whatever the origin of the emission reduction requirement, the relevant question for BART purposes is whether the alternative program makes greater reasonable progress.” 70 FR at 39143.

The EPA's authority to establish non-BART alternatives in the regional haze program and the specific methodology outlined above for assessing such alternatives have been previously challenged and upheld by the D.C. Circuit. In the first case challenging the provisions in the Regional Haze Rule allowing for states to adopt alternative programs in lieu of BART, the court affirmed our interpretation of CAA section 169A(b)(2) as allowing for alternatives to BART where those alternatives will result in greater reasonable progress than BART. Center for Energy and Economic Development v. EPA, 398 F.3d 653, 660 (D.C. Cir. 2005) (“ CEED ”) (finding reasonable the EPA's interpretation of CAA section 169(a)(2) as requiring BART only as necessary to make reasonable progress). In the second case, Utility Air Regulatory Group v. EPA, 471 F.3d 1333 (D.C. Cir. 2006) (“ UARG ”), the court specifically upheld our determination that states could rely on CAIR as an alternative program to BART for EGUs in the CAIR-affected states. The court concluded that the EPA's two-pronged test for determining whether an alternative program achieves greater reasonable progress was a reasonable one and also agreed with EPA that nothing in the CAA required the EPA to “impose a separate technology mandate for sources whose emissions affect Class I areas, rather than piggy-backing on solutions devised under other statutory categories, where such solutions meet the statutory requirements.” Id. at 1340.

Notwithstanding the decisions of the D.C. Circuit, several commenters argued that the plain language of the CAA precludes the EPA from allowing an alternative to BART. In their comments, these groups claimed that there is no statutory authority to exempt a source from BART, except as provided for in CAA section 169A(c). Under the interpretation of the CAA urged by these commenters, BART must be required at each BART source that causes or contributes to visibility impairment at any Class I area. The commenters point to recent decisions post-dating CEED and UARG in support of their arguments.

The commenters' arguments that the plain language of the CAA precludes reliance on the Transport Rule to satisfy the BART requirements were raised in UARG v. EPA and rejected by the D.C. Circuit when it denied the petitions for review of the EPA's determination that CAIR provided for greater reasonable progress than BART. While the commenter argues that the court's decision “has been undermined by subsequent D.C. Circuit decisions,” we disagree. The decisions cited by the commenter, North Carolina v. EPA, 531 F.3d 896, 906-08 (D.C. Cir. 2008) and NRDC v. EPA, 571 F.3d 1245, 1255-58 (D.C. Cir. 2009) address the requirements of sections 110(a)(2)(D)(i)(I) and 172(c)(1), respectively. Given the differences between the language of these statutory provisions and that of section 169A(b)(2), the courts' interpretation of these other provisions of the CAA do not undermine the two previous rulings of the D.C. Circuit interpreting the visibility provisions of the Act. Similarly, the Supreme Court's conclusions in Massachusetts v. EPA, 549 U.S. 497, 528-29 (2007) regarding the meanings of “each” and “any” do not conflict with or impact the EPA's reading of section 169A(b)(2) of the CAA or the D.C. Circuit's conclusion that the agency's interpretation of the statute is a reasonable one. As the CEED court explained, the EPA interprets this provision to mean that “each SIP's `emission limits, schedules of compliance, and other measures' must `include' BART only `as may be necessary to make reasonable progress toward' national visibility goals.” 398 F.3d 653, quoting 42 U.S.C. 7491(b)(2); see also Central Arizona Water Conservation District v. EPA, 990 F.2d 1531, 1543 (9th Cir. 1993) (upholding the same interpretation of section 169A(b)(2)). We do not agree, therefore, that the EPA's regulations allowing for the adoption of a trading program that provides for greater reasonable progress than BART in place of source-specific BART are inconsistent with the CAA.

These commenters also argue that the EPA can exempt sources from BART only if the EPA complies with the requirements of CAA section 169A(c)(1). This provision of the CAA allows the EPA to exempt a source from the BART requirements, by rule, upon a determination that the source is not reasonably anticipated to cause or contribute to significant visibility impairment. As the commenters note, the appropriate Federal Land Manager(s) must agree with the exemption before it can go into effect.

We do not agree that the provisions governing exemptions to BART apply to our determination that the Transport Rule will make greater reasonable progress than BART. Section 169A(b)(2) of the CAA requires each visibility SIP to contain “such emission limits, schedules of compliance and other measures as may be necessary to make reasonable progress toward the national goal * * * including * * * a requirement that [certain major stationary sources] * * * procure, install, and operate * * * [BART].” Based on this language, in 1999, the EPA concluded that if an alternative program can be shown to make greater reasonable progress toward eliminating or reducing visibility impairment, then installing BART for the purpose of making reasonable progress toward the national goal is no longer necessary. This interpretation of the visibility provisions of the CAA has been upheld three times by the courts, as noted above.

We also received comments arguing that the EPA cannot rely on the Transport Rule as an alternative to BART because the emission reductions do not meet the requirement of 40 CFR 51.308(e)(2)(iv) which provides that “the emission reductions resulting from the emissions trading program * * * will be surplus to those reductions resulting from measures adopted to meet requirements of the CAA as of the baseline date of the SIP.”

We do not agree with the comments that the emissions reductions resulting from the Transport Rule must be “surplus to those measures adopted to meet requirements of the CAA as of the baseline date of the SIP.” We note that the requirements of 40 CFR 51.308(e)(2) are not directly applicable to this action, as the special provisions in the Regional Haze Rule addressing the Transport Rule are codified at 40 CFR 51.308(e)(4). Nonetheless, our determination that the Transport Rule will result in greater visibility improvement than BART is fully consistent with the requirement in 40 CFR 51.308(e)(2)(iv). In promulgating the Regional Haze Rule in 1999, the EPA explained that the “baseline date of the SIP” in this context means “the date of the emissions inventories on which the SIP relies,” 64 FR 35742, which is “defined as 2002 for regional haze purposes,” 70 FR 39143. Any measure adopted after 2002 is accordingly “surplus” under 40 CFR 51.308(e)(2)(iv). This is consistent with the discussion in the preamble to the 1999 Regional Haze Rule indicating that the regional haze program “is being promulgated in a manner that facilitates integration of emission management strategies for regional haze with the implementation of programs for [the 1997 ozone and PM 2.5 ] NAAQS.” 64 FR 35719. The EPA took this approach in the Regional Haze Rule to allow measures needed to attain the then new NAAQS to be “counted” as making “reasonable progress” toward the visibility goal. The Transport Rule was adopted to help areas come into attainment with and maintain the 1997 ozone and PM NAAQS, as well as the 2006 24-hour PM 2.5 NAAQS. The EPA accordingly does not view the requirement in 40 CFR 51.308(e)(2)(iv) as limiting our ability to demonstrate that the Transport Rule reductions are surplus, as defined in the Regional Haze Rule.

Several commenters contended that the EPA cannot rely on the Transport Rule as a BART alternative because implementation of the rule has been stayed. These commenters argue that an alternative program in place of BART must constitute a “requirement,” and be enforceable, and that as long as the Transport Rule is stayed, it cannot qualify as a “requirement” nor can it be enforced. These commenters also claim that because the rule may change if affirmed only in part, the EPA cannot find that the Transport Rule will make greater reasonable progress than BART.

We do not agree that the EPA cannot rely on the Transport Rule because of the stay imposed by the D.C. Circuit. We base this conclusion on both the structure of 40 CFR 51.308(e)(4) and on the long-term focus of our analysis underlying today's rule.

Neither our regulations in 2005 addressing CAIR, nor our regulations in this rule addressing the Transport Rule, require states to participate in or implement these programs or to otherwise include enforceable measures in their regional haze SIPs. In 2005, having determined that CAIR would provide for greater reasonable progress toward the national goal than would BART, the EPA promulgated regulations providing that a state participating in one of the CAIR trading programs “need not require” EGUs to put on BART controls. Similarly, our regulations in this rule provide that a state subject to a Transport Rule FIP (or approved Transport Rule SIP) need not require BART controls on its EGUs. Accordingly, today's regulations addressing the Transport Rule are not “requirements” that a state participate in the interstate transport trading programs. Similarly, a regional haze SIP or FIP that relies on 40 CFR 51.308(e)(4) does not impose enforceable requirements on EGUs. However, a state may take advantage of this provision only if it is subject to an underlying Transport Rule FIP (or SIP approved as meeting the requirements of the trading program). We note that the underlying Transport Rule FIP or SIP does contain the applicable requirements that will ensure that the emissions reductions from the Transport Rule will occur.

We also note that while the Transport Rule is not currently enforceable, the air quality modeling analysis underlying our determination that the Transport Rule will provide for greater reasonable progress than BART is based on a forward-looking projection of emissions in 2014. However, any year up until 2018 (the end of the first regional haze planning period) would have been an acceptable basis for comparing the two programs under the Regional Haze Rule. See 40 CFR 51.308(e)(2)(iii). We anticipate that requirements addressing all significant contribution and interference with maintenance identified in the Transport Rule will be implemented prior to 2018.

We do not agree with the comment that because the Transport Rule is subject to review by the D.C. Circuit, we cannot move ahead with our determination that it provides for greater reasonable progress than BART. We do not view the stay imposed by the D.C. Circuit pending review of the underlying rule as undermining our conclusion that the Transport Rule will have a greater overall positive impact on visibility than BART both during the period of the first long-term strategy for regional haze and going forward into the future. We recognize, as one commenter suggests, that we may be obliged to revisit the regional haze plans that rely on the Transport Rule if the rule is not upheld, or if it is remanded and subsequently revised. However, we do not consider it appropriate to await the outcome of the D.C. Circuit's decision on the Transport Rule before moving forward with the regional haze program as we believe the Transport Rule has a strong legal basis, and given the judicial decree requiring the EPA to meet its statutory obligations to have a FIP or an approved SIP meeting the Regional Haze Rule requirements in place for most states before the end of 2012.

We received comments that our proposed limited disapproval of the regional haze SIPs that rely on CAIR and the proposed FIPs is not necessary. Commenters noted that CAIR remains in place and that SIPs that rely on CAIR are fully consistent with our existing regulations. Some commenters suggested that we revise the Regional Haze Rule to allow states to rely on either CAIR or the Transport Rule to meet the BART requirements.

While the regional haze program is a long-term program that requires states to submit SIPs every 10 years to assure continued reasonable progress toward natural background conditions, the BART requirements or alternatives to BART must be fully implemented by 2018. The required establishment of BART limits, or an alternative to BART, is accordingly undertaken only once. Although CAIR is currently in place as a result of the D.C. Circuit's stay of the Transport Rule, we do not anticipate that CAIR will continue in effect indefinitely. As a result, our determination that CAIR provides for greater reasonable progress than BART is no longer valid. This is because, as a general matter, any source required to install BART controls must maintain the BART control equipment and meet the BART emission limit established in the SIP so long as the source continues to operate. See 40 CFR 51.308(e). As BART would result in emission reductions going forward beyond 2018, our determination that CAIR provides for greater reasonable progress than BART was based on the assumption that the reductions required by CAIR would be enforceable requirements that would also apply going forward to 2018 and beyond. That assumption is no longer appropriate. We are issuing a limited disapproval rather than a full disapproval, however, to allow the states to rely on the emission reductions from CAIR for so long as CAIR is in place.

Each state with a Class I area is required to set goals for each Class I area that provide for reasonable progress towards improving visibility. There must be one goal for the 20 percent best visibility days and one goal for the 20 percent worst visibility days. States take into account a number of factors in establishing reasonable progress targets, including in some cases an analysis of the measures needed to achieve the “uniform rate of progress” 9 over the 10-year period of the SIP and a determination of the reasonableness of such measures. 40 CFR 51.308(d)(1). The Regional Haze Rule does not mandate specific milestones or rates of progress, but instead calls for states to establish goals that provide for “reasonable progress” toward achieving natural background conditions.

Several commenters argued that our determination that the Transport Rule provides for greater reasonable progress than BART is improper because it considers BART in isolation, without reference to the consideration of the reasonable progress goals in the regional haze plans. These commenters contend that BART is critical to the state's ability to reach its reasonable progress goals and that the EPA should have considered the impact of our proposed determination in instances where the states relied on emissions reductions consistent with presumptive BART to meet reasonable progress goals.

The EPA disagrees with the argument that we cannot compare the visibility improvements from Transport Rule against those from BART without considering the reasonable progress goals of each affected regional haze SIP. BART is one measure for addressing visibility impairment, but it is not “the mandatory vehicle of choice.” CEED, 398 F.3d at 660. As such, BART is not a required element of the regional haze SIPs so long as an appropriate alternative achieves greater reasonable progress.

The commenters' suggestion that reasonable progress goals are defined and that each regional haze SIP must accordingly ensure a certain rate of progress toward natural visibility also mischaracterizes the regional haze program. As noted above, the reasonable progress goals for each Class I area are set by the states. States, both in and out of the CAIR region, set their reasonable progress goals based, in part, on anticipated reductions in emissions due to CAIR. In setting reasonable progress goals, these states estimated future emissions in 2018 from a number of sources and source categories, including emissions from EGUs. For sources in the CAIR region, states relied on emissions reductions from CAIR—not BART—to estimate future EGU emissions. As a result, source-specific BART across the CAIR region is clearly not critical to the states' ability to meet the goals in their SIPs. For the small handful of states that were not subject to CAIR but are now subject to the Transport Rule, today's determination that the Transport Rule provides for greater reasonable progress than BART gives those states the opportunity to consider revising their regional haze SIPs to substitute participation in the Transport Rule for source-specific BART. Whether such a revision meets the requirements of the Regional Haze Rule, including the requirement that a plan include such measures as may be necessary to make reasonable progress toward the national goal, would be addressed in a notice and comment rulemaking that would provide an opportunity for review of the adequacy of such an approach. We disagree with the commenters' statement, however, that source-specific BART as a general matter is necessary to ensure reasonable progress.

The technical analysis that the EPA relied on for our proposed and now final determination that the Transport Rule is better than BART is described in detail in the preamble of the proposed rule and in the Technical Support Document (TSD). 10 To provide context for the summary of the public comments and our responses to them, we are providing a summary of the technical analysis in the following sections.

The two-pronged test for determining if an alternative program achieves greater reasonable progress than source-specific BART is set out in the Regional Haze Rule at 40 CFR 51.308(e)(3). The underlying purpose of both prongs of the test is to assess whether visibility at Class I areas would be better with the alternative program in place than without it. Under the first prong, visibility must not decline at any affected Class I area on either the best 20 percent or the worst 20 percent days as a result of implementing the Transport Rule; and, under the second prong the 20 percent best and 20 percent worst days should be considered in determining whether the alternative program under consideration (in the case of this rulemaking, the Transport Rule) produces greater average improvement than source-specific BART over all affected Class I areas. Together, these tests ensure that the alternative program provides for greater reasonable progress than would source-specific BART.

In applying the two-pronged test to the Transport Rule control scenario and the source-specific BART control scenario, we used a future (2014) projected baseline. The 2014 baseline does not include the Transport Rule, BART, or CAIR control programs. As described in the preamble to the proposed rule, the 2014 baseline allows a comparison of visibility conditions as they are expected to be at the time of the program implementation, but in the absence of the program. This ensures that the visibility improvement or possible degradation is due to the programs being compared—source-specific BART and the Transport Rule alternative—and not to other extrinsic factors. Also, under the Regional Haze Rule any program adopted after 2002 is considered “surplus” and eligible to be counted as all or part of an alternative program in place of BART.

As described above, under the second prong of the test, the visibility comparison is over all “affected” Class I areas. The EPA added the term “affected” to clarify that visibility need not be evaluated nationwide. 71 FR 60620. We considered two approaches to identify the Class I areas “affected” by the Transport Rule as an alternative control program to source-specific BART. First, we identified 140 Class I areas represented by 96 Interagency Monitoring of Protected Visual Environments (IMPROVE) monitors in the 48 contiguous states with sufficiently complete monitoring data available to support the analysis. In the first “eastern” approach, we identified as affected Class I areas the 60 Class I areas contained in the eastern portion of the Transport Rule modeling domain. The second approach we considered was a “national” approach in which visibility impacts on 140 Class I areas across the 48 contiguous states were evaluated (including the 60 contained within the Transport Rule region). Consideration of this national region accounted for the possibility that the Transport Rule might have the effect of increasing EGU emissions in the most western portion of the United States due to shifts in electricity generation or other market effects. We noted that the “eastern” Transport Rule modeling grid used a horizontal resolution of 12 km (all 60 “eastern” Class I areas were contained within the 12 km grid). The modeling grid for areas outside of the eastern Transport Rule region used a more coarse horizontal resolution of 36 km.

We requested comment on whether the “affected Class I areas” should be considered to be the 60 Class I areas located in the Transport Rule eastern modeling domain, the larger set of 140 Class I areas in the larger national domain, or some other set. We noted that given the modeling results, the choice between the 60 Class I areas or the 140 Class I areas did not affect our proposed conclusion that both prongs of the two-pronged test are met.

The Transport Rule requires 28 states in the eastern half of the United States to reduce EGU SO 2 and NO X emissions that cross state lines and contribute to ground-level ozone and fine particle pollution in other states. BART, on the other hand, is applicable nationwide and covers 26 industrial categories, including EGUs, of a certain vintage. In our comparison, we sought to determine whether the Transport Rule cap-and-trade program for EGUs will achieve greater reasonable progress than would BART for EGUs only. Therefore, we examined two relevant control scenarios. The first control scenario examined SO 2 and NO X emissions from all EGUs nationwide after the application of BART controls to all BART-eligible EGUs (“Nationwide BART”). In the second scenario, EGU SO 2 and NO X emissions reductions attributable to the Transport Rule were applied in the Transport Rule region and BART controls were applied to all BART-eligible EGUS outside the Transport Rule region (“Transport Rule + BART elsewhere”). For the first prong of the test, the “Transport Rule + BART elsewhere” scenario was compared to the 2014 future year base case. The comparison to the 2014 future year “Base Case” allows the EPA to ensure that the Transport Rule would not cause degradation in visibility from conditions predicted for the year 2014 in the absence of the Transport Rule, BART and CAIR.

For both the “Nationwide BART” scenario and the “Transport Rule + BART elsewhere” scenario, we modeled the presumptive EGU BART limits for SO 2 and NO X emission rates as specified in the BART Guidelines (Guidelines for BART Determinations Under the Regional Haze Rule, 70 FR 39104, July 6, 2005), unless an actual emission rate at a given unit with existing controls is lower. In the latter case, we modeled the lower emission rates. Our analysis assumed that all BART-eligible EGUs were actually subject to BART requirements and that presumptive BART limits would be applied to 100 megawatt (MW) EGUs for SO 2 and 25 MW EGUs for NO X, regardless of the magnitude of their annual total emissions. In our analysis, in both scenarios we constrained certain EGUs by emission limits other than presumptive limits due to a proposed or final regional haze SIP, a proposed or final regional haze FIP, a final consent decree, or state rules. Where we had evidence of more stringent emission limits than the presumptive BART limits, we used them. These units and their emission limits are detailed in the TSD.

There are five states that are subject to the Transport Rule requirements during the ozone season only (Oklahoma, Arkansas, Louisiana, Mississippi and Florida). For these states, in the “Transport Rule + BART elsewhere” scenario post-combustion NO X controls were assumed to operate outside of the ozone season only when required to do so for a reason other than Transport Rule requirements, e.g., a permit condition or a provision of a consent decree. In the “National BART” scenario, BART NO X controls were assumed to operate year-round.

To estimate emissions expected from the scenarios described in section IV, we used the Integrated Planning Model (IPM). 11 The IPM was used in this case to evaluate the emissions impacts of the described scenarios limiting the emissions of SO 2 and NO X from EGUs. The IPM projections of annual NO X and SO 2 emissions from EGUs for the “Transport Rule + BART elsewhere” control scenario were used as inputs to the air quality model to assess the visibility impacts of the emission changes. The IPM projections were based on the state budgets prescribed in the final Transport Rule published on August 8, 2011, and the supplemental proposal published on July 11, 2011. 12 We noted that on October 14, 2011, the EPA issued a proposed notice that would increase NO X and SO 2 budgets for certain states in accordance with revisions to certain unit-level input data. 76 FR 63860. We requested comment on the potential effect of the proposed increases to state budgets. We noted that even with the proposed increases to certain state budgets, we believed that the two-pronged test is satisfied given the still-substantial reductions in emissions under the Transport Rule.

To assess the air quality metrics that are part of the two-pronged test, we used the IPM emission projections as inputs, to an air quality model to determine the impact of “Transport Rule + BART elsewhere” and “Nationwide BART” controls on visibility in the affected Class I areas. To project air quality impacts we used the Comprehensive Air Quality Model with Extension (CAMx) version 5.3. The air quality modeling analysis and related analyses to project visibility improvement are described in more detail in the TSD for the Transport Rule. 13 The visibility projections for each Class I area are presented in the TSD for our proposed action.

We proposed that the “Transport Rule + BART elsewhere” control scenario passed the first prong of the visibility test considering affected Class I areas located in both the “eastern” region of 60 Class I areas and the “national” region of 140 Class I areas We also proposed our determination that the “Transport Rule + BART elsewhere” alternative measure passed the second prong of the test that assesses whether the alternative results in greater average visibility improvement at affected Class I areas compared to the “Nationwide BART” scenario. The “Transport Rule + BART elsewhere” alternative passed the second prong of the test, regardless of which way affected Class I areas are identified.

Many comments supported the EPA's technical analysis and our determination that the Transport Rule satisfies the requirements for an alternative to source-specific BART. Other commenters raised objections to the EPA's determination. Some of these were general legal objections related to the EPA's legal authority for its action and its interpretation of authorizing regulations and statutes. The EPA's response to those general legal objections is discussed above in section III.A. Other objections raised technical issues related to the EPA's emissions and air quality modeling scenarios that were used to compare the results of the Transport Rule control scenario with the source-specific BART control scenario. In this section of the preamble we provide an overview of the EPA's review of these technical comments. Our responses are discussed in detail in the Response to Comments document, which is included in the docket for this rulemaking.

As noted above, the EPA developed two emissions scenarios: A 2014 “Nationwide BART” scenario and a 2014 “Transport Rule + BART elsewhere” scenario. Nationwide emissions were substantially lower under the “Transport Rule + BART elsewhere” scenario. Some commenters asserted that the emissions results for these two scenarios were skewed in favor of the Transport Rule. These commenters asserted that the EPA underestimated the emissions reductions from BART, and overestimated the emission reductions from the Transport Rule. These commenters raise issues generally with the use of presumptive BART limits in the “Nationwide BART” scenario and questioned whether the EPA correctly applied the presumptive BART limits.

The EPA disagrees with commenters asserting that the presumptive BART limits were inappropriate for use in this analysis. While the EPA recognizes that a case-by-case BART analysis may, in some source-specific assessments, result in emission limits more stringent than the presumptive limits, these limits are reasonable and appropriate for use in assessing regional emissions reductions from the BART scenario. This has been the EPA position since 2005. 71 FR 60619 (“the presumptions represent a reasonable estimate of a stringent case BART * * * because * * * they would be applied across the board to a wide variety of units with varying impacts on visibility, at power plants of varying size and distance from Class I areas”). Moreover, as discussed in detail in the Response to Comment document, the EPA believes that these comments overestimate the emissions reductions that would be associated with case-by-case BART because the commenters' assertions of “best” technology for BART ignore other factors, including cost of control and resulting visibility improvement, that are critical components of a source-specific BART analysis.

The EPA also received numerous comments concerning specific units for which the commenters believed the BART limits for SO 2 had been incorrectly applied in IPM. Our review of these comments, which is presented in detail in the Response to Comments document, shows that (with minor exceptions) the EPA correctly applied these presumptive limits. After reviewing these comments and the IPM outputs, we conclude that many of these comments stemmed from an apparent misunderstanding of the EPA's application of the presumptive limits in IPM. Some of the unit-level comments pertained to units less than 100 MW for which the presumptive limits did not apply. Other comments pertained to units that did not meet both the 95 percent removal efficiency and the 0.15 lb/MMBtu rate. For BART-affected units greater than or equal to 100 MW, the EPA's IPM modeling required that they meet a SO 2 emission rate limit of 0.15 lbs/MMBtu or a removal efficiency of 95 percent. As sources are only required to comply with one of these metrics (emission rate or percent removal), the IPM correctly determined that some BART sources could comply with an emission rate higher than 0.15 lb/MMBtu (while meeting the 95 percent FGD removal efficiency requirement) and some could comply with a removal efficiency less than 95 percent (while meeting the emission rate requirement).

The EPA also disagrees with the commenters' assertion that our application of presumptive limits for NO X should have provided for the installation of add-on equipment such as selective catalytic reduction (SCR). For all types of boilers other than cyclone units, the presumptive NO X limits in the EPA's BART guidelines are based only on the use of current combustion control technology including low NO X burners, over-fire air, and coal reburning. 14 70 FR 39134.

Finally, the EPA disagrees with commenters who expressed concerns that the “no-CAIR” base case was inappropriate for use in this analysis. The EPA agrees with commenters' observation that the 2014 base case leads to emission increases relative to current emissions. However, as explained in detail in the preamble to the final Transport Rule, the EPA believes this is a reasonable and appropriate case to use for estimating emissions reductions that are attributable to the Transport Rule, and for estimating air quality concentrations in absence of the Transport Rule. 76 FR 48223.

Under the Regional Haze Rule, the reasonable progress achieved by an alternative program in “affected Class I areas” is compared to the reasonable progress achieved by source-specific BART. In our proposal, the EPA requested comment on whether the “affected Class I areas” should be considered to be (1) The 60 Class I areas located in the Transport Rule eastern modeling domain, (2) the larger set of 140 Class I areas, or (3) some other set. We noted that our air quality modeling results showed that the choice between the 60 Class I areas or the 140 Class I areas did not affect our proposed conclusion that both prongs of the two-pronged test are met.

Some commenters agreed that the EPA can properly rely on an assessment of the 60 Class I areas without referring to the results of the additional 80 Class I areas. These commenters noted, as did the EPA, that because both assessment approaches support the Transport Rule as a lawful and reasonable BART alternative, the EPA may appropriately confirm its determination based on either approach. Other commenters argued that the EPA improperly averaged across all Class I areas. These commenters argued that both the 60 Class I area region and the 140 Class I area region are too broad. These commenters presented information illustrating the “Nationwide BART” scenario to be superior to the Transport Rule alternative if the EPA averaged visibility improvement at the 27 Class I areas west of the Mississippi River but east of the Rocky Mountains. These commenters asserted that the EPA should not average across states, but rather should assume Transport Rule changes in one state at a time, and average the results for areas in (and nearby) that state.

The EPA agrees with comments supporting our approach to identifying the “affected” Class I areas. The EPA agrees that in either case, the analysis shows that the two-pronged test for determining a BART alternative is satisfied. The EPA does not agree that it is necessary to evaluate results for a sub-region such as the 27 Class I areas suggested by some commenters. Given that the Transport Rule affects emissions and air quality over a large region, the EPA believes it is reasonable to consider that entire region in evaluating the Class I areas that are also “affected” by this rule. The possibility of greater visibility improvement due to source-specific BART in specific Class I areas within the region of “affected Class I areas” is inherent to the two-pronged test that has been upheld by the D.C. Circuit Court. As long as the average visibility improves over the entire region and no Class I area experiences degradation, the alternative is an appropriate and approvable alternative to source-specific BART. See 471 F.3d 1333 (D.C. Cir. 2006) (“ UARG ”) (“nothing in § 169A(b)'s `reasonable progress' language requires as least as much improvement in each and every individual area as BART itself would achieve”).

Some commenters noted that five states—Arkansas, Florida, Louisiana, Mississippi and Oklahoma—are covered by the Transport Rule ozone season only, and thus these states are only required to hold allowances and limit statewide NO X emissions during May through September. Commenters expressed concerns that while imposition of BART would require year-round operation of NO X controls, under the Transport Rule there would be no assurance that NO X emission controls would operate during the remaining 7 months of the year. Accordingly, the commenters asserted that for these states the Transport Rule is not “better than BART” because it would allow for a potential degradation during these months, and thus the EPA should consider the Transport Rule to fail the first prong of the two-pronged test.

The EPA carefully considered this comment, and we reviewed the results of our technical analysis to evaluate whether such seasonal differences could occur. For programs which regulate ozone season NO X only, seasonal differences in the emissions rate (lb/ MMBtu) can be seen where a source installs post-combustion controls such as selective catalytic reduction (SCR) or selective non-catalytic reduction (SNCR). It is probable that source owners would not operate the controls in non-ozone season months to avoid the extra cost of control. These effects are indeed seen in the data reported to the EPA. However, where a program results in the imposition of combustion controls such as low-NO X burners and overfire air, the controls are an integral part of the operational design of the EGU. Accordingly, where combustion controls are installed in response to an ozone season-only requirement, the EPA does not expect to see seasonal differences in the lb/MMBtu NO X emission rate.

Our review of the IPM predictions of how EGUs are likely to comply with the Transport Rule indicated that in the “Transport Rule + BART elsewhere” scenario, NO X control in the five ozone season-only states is achieved predominantly by combustion controls rather than post-combustion controls. In the Transport Rule scenario, for four of the five states (Arkansas, Louisiana, Mississippi and Oklahoma), the EPA projects that any additional NO X controls resulting from the Transport Rule would be combustion controls only. Furthermore, as explained above, for the “Nationwide BART” control scenario we applied the presumptive NO X limits to all BART-eligible sources nationwide that were not already equipped with post-combustion controls. According to the EPA's BART guidelines, for all types of boilers other than cyclone units the presumptive BART limits for NO X are based on the use of current combustion control technology. 15 70 FR 39134. For BART sources already equipped with post-combustion controls, we assumed under BART those controls would operate year-round. Therefore, the “Nationwide BART” scenario would result in generally uniform emission rates throughout the year in the five ozone season-only states. As a result, with the exception of Florida, there is no seasonal difference in NO X emission rates between the “Transport Rule + BART-elsewhere” scenario and the “Nationwide BART” scenario. In Florida, the one instance where IPM indicates a season-dependent difference between the two control scenarios, there are some EGUs with existing post-combustion controls (SCR) that the EPA projects would not operate at all unless incentivized to do so by either a source-specific BART requirement or by the Transport Rule, and under the Transport Rule would operate only during the ozone season. Our analysis of the two scenarios appropriately considered this seasonal difference by accounting for higher NO X emissions from those Florida units outside of the ozone season when these controls are projected not to operate in the “Transport Rule + BART elsewhere” scenario. That is, our analysis assumed that post-combustion NO X controls would operate year-round under the “Nationwide BART” scenario and only during May through September in the “Transport Rule + BART elsewhere” scenario. When we analyzed the overall regional emissions reductions under the two scenarios, this did not affect our conclusion that the two-pronged test was satisfied. This outcome is very understandable because over a geographic region this small relative decrease during part of the year in emissions of NO X in the “Transport Rule + BART elsewhere” scenario compared to the “Nationwide BART” scenario has much less effect than the visibility improvement attributable to the very large relative decrease in SO 2 emissions between the two scenarios.

Finally, the EPA notes that in a previous rulemaking that established that CAIR was “better-than-BART” it was also the case that some states subject to CAIR were subject only to ozone-season NO X budgets. In that rulemaking, our air quality analysis had similar results and our final rule established that the CAIR could be relied upon as an alternative to source-specific BART for those states.

Some commenters asserted that the EPA could not issue a final determination that the Transport Rule achieves greater reasonable progress than BART without conducting a new modeling analysis that would correct an error in the emissions for the “Nationwide BART” scenario and that would take into account certain adjustments that the EPA made to some state budgets under the Transport Rule after the air quality modeling runs were completed. Specifically, the commenters noted that the EPA acknowledged in the TSD for the proposal that the emissions analysis for the “Nationwide BART” scenario should have, but did not, apply presumptive BART controls on BART-eligible Gerald Gentleman Unit 2 and that the EPA acknowledged that the Transport Rule scenario in the analysis did not take into account budget revisions for a number of states that were published or proposed subsequent to the promulgation of the Transport Rule in August 2011. The commenters believe that because of these two acknowledged discrepancies in the emissions values used in the air quality modeling for the two scenarios, in combination with additional alleged errors, the EPA cannot issue a final determination unless and until a new analysis is conducted that takes these discrepancies into account.

The EPA disagrees that a re-analysis of the two-pronged test using new air quality modeling is necessary. As noted in the TSD, the EPA does not believe that the omission of Gerald Gentleman Unit 2 from the BART-eligible inventory of 489 units would affect the outcome of our national analysis. 16 This is because the emission reductions from a single EGU in the BART control scenario would not change the average visibility improvement across all affected Class I areas, which is the basis for our determination. The SO 2 emission reduction in question (roughly 12,000 tons of SO 2 per year) represents a relatively small emission change compared to the emissions from the area encompassed by Nebraska and the surrounding six states. Our response to other alleged errors in the BART inventory is presented in the Response to Comment document.

With respect to revisions in state budgets, as we discussed in the TSD accompanying the December 30, 2011 proposal, the post-analysis increases in the state budgets under the Transport Rule had a relatively small impact on the emissions comparison between the two scenarios. 76 FR 8227. We note that in addition to the Transport Rule revisions we discussed in the proposed rule, there have been proposed subsequent adjustments to state budgets. On February 21, 2012, based on comments received on its previous rulemaking proposal, the EPA published revisions to 2012 and 2014 state budgets in Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, New York, Nebraska, Ohio, Oklahoma, South Carolina and Texas, along with revisions to new unit set-asides in Arkansas, Louisiana and Missouri. 77 FR 10342 and 77 FR 10350. 17 While individual state adjustments vary, overall, the total budget increase over the entire Transport Rule region is very small. The EPA believes it is a reasonable expectation that these adjustments would lead to very small impacts on annual and 24-hour PM 2.5 concentrations and, as a consequence, would not have a meaningful impact on the two-pronged test satisfied by the analysis conducted for this rule. A technical analysis of these adjustments may be found in the docket (Docket ID No. EPA-HQ-OAR-2011-0729: Sensitivity Analysis Accounting for Increases in Texas and Georgia Transport Rule State Budgets).

After reviewing the public comments on the proposed rule, the EPA is finalizing its finding that the Transport Rule trading programs will provide greater progress towards regional haze goals than source-specific BART. This finding is based on the results of the two-pronged test for an alternative program. In this case, our analysis demonstrated that the trading programs of the Transport Rule do not cause degradation in any affected Class I area, thus passing the first prong of the test. The second prong of the test assesses whether the “Transport Rule + BART elsewhere” scenario results in greater average visibility improvement at affected Class I areas compared to the “Nationwide BART” scenario. The average visibility improvement of the “Transport Rule + BART elsewhere” alternative was greater than “Nationwide BART” on both the 20 percent best and 20 percent worst days, thus passing the second prong of the test. The determination that the Transport Rule trading programs will provide greater progress towards regional haze goals than source-specific BART applies only to EGUs in the Transport Rule trading programs and only for pollutants covered by the programs in each state. Accordingly, we are revising 40 CFR 51.308(e)(4) by essentially replacing the name of the CAIR with the name of the Transport Rule.

We are also finalizing our proposal that a state that chooses to meet the emissions reduction requirements of the Transport Rule by submitting a complete SIP revision that is approved as meeting the requirements of 40 CFR 52.38 and/or 52.39 also need not require BART-eligible EGUs in the state to install, operate and maintain BART for the pollutants covered by such a trading program in the state.

The results of the “Transport Rule + BART elsewhere” control scenario analysis demonstrate that the use of NO X controls during ozone season only, in the states for which this Transport Rule requirement applies, results in greater visibility improvement than source-specific BART for NO X . Thus, we are finalizing our proposal that a state in the Transport Rule region whose EGUs are subject to the requirements of the Transport Rule trading program only for ozone season NO X is allowed to rely on our determination that the Transport Rule makes greater reasonable progress than source-specific BART for NO X . The states to which this aspect of our final rule applies are Arkansas, Florida, Louisiana, Mississippi and Oklahoma.

We proposed to preserve the language in the regional haze regulations at 40 CFR 51.308(e)(4) that allows states to include in their SIPs geographic enhancements to the trading program to address a situation where BART is required based on RAVI at a Class I area. 18

We received comments recommending that we explicitly state that the Transport Rule as an alternative to BART does not replace the BART analysis that is required to address RAVI certification. The commenter contends that the BART determination for RAVI needs to address the impairment at the specific Class I area or areas, a requirement that is not addressed by the demonstration of regionally-averaged visibility improvement. Other commenters agreed that RAVI BART is critical to remedying existing impairment and must be implemented. This commenter also pointed out that RAVI BART is reactive as it requires FLM to voluntarily take action to address an existing problem. As such, RAVI BART will not result in proactive permitting to avoid degradation and it cannot be relied on to prevent hot spots. Furthermore, according to this commenter, the EPA in its finding that CAIR was better-than-BART explained that even under a BART alternative “* * * CAA section 169A(b)(2)'s trigger for BART based on impairment at any Class I area remains in effect, because a source may become subject to BART based on `reasonably attributable visibility impairment' at any area” (citing 40 CFR 51.302).

The EPA proposed to leave unchanged the existing regulatory language regarding geographic enhancements. The purpose of this language is to allow a market-based system to accommodate actions taken under the RAVI provisions. The EPA first adopted such language in the 1999 Regional Haze Rule, 64 FR 35757, and used it again in issuing regulations addressing our determination that CAIR provides for greater reasonable progress than BART, 70 FR 39156, and again in issuing regulations addressing trading program alternatives to BART in general, 71 FR 60612, 60627. In light of the fact that our proposal did not request comment on the interplay of the RAVI requirements in 40 CFR 51.302-306 with the requirements of the Regional Haze Rule, we are not adopting any clarifying interpretation at this time. As a result, this rulemaking alters neither the authority of a federal land manager to certify reasonably attributable visibility impairment nor the obligation of states (or EPA) to respond to a RAVI certification under 40 CFR Part 51 Subpart P (Protection of Visibility). We expect at a later date to clarify the scope of the RAVI requirements through a rule amendment, general guidance, or action on a SIP or FIP in the context of a specific RAVI case. 19 Whatever the form, we intend to provide an opportunity for public comment before applying a new interpretation.

In this final action we are preserving the language in the regional haze regulations at 40 CFR 51.308(e)(4) that allows states to include in their SIPs geographic enhancements to the trading program to accommodate a situation where BART is required based on RAVI at a Class I area. We are not adopting any clarifying interpretation of this language at this time, but we expect at a later date to clarify the scope of the RAVI requirements through a rule amendment, general guidance, or action on a SIP or FIP in the context of a specific RAVI case.

We proposed a limited disapproval of the regional haze SIPs that have been submitted by Alabama, Florida, Georgia, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, and Texas. In separate notices, the EPA also has proposed a limited disapproval of the regional haze SIP submitted by Virginia that relied on CAIR (77 FR 3691), and has finalized a limited disapproval of the regional haze SIPs submitted by Kentucky (77 FR 19098), Tennessee (77 FR 24392), and West Virginia (77 FR 16937). These states, fully consistent with the EPA's regulations at the time, relied on CAIR requirements to satisfy the BART requirement and the requirement for a long-term strategy sufficient to achieve the state-adopted reasonable progress goals.

We did not propose to disapprove the reasonable progress targets for 2018 that have been set by the states in their SIPs. The reasonable progress goals in the SIPs were set based on modeled projections of future conditions that were developed using the best available information at the time the analysis was done. Given the requirement in 40 CFR 51.308(d)(1)(vi) that states must take into account the visibility improvement that is expected to result from the implementation of other Clean Air Act requirements, states set their reasonable progress goals based, in part, on the emission reductions expected to be achieved by CAIR. As CAIR has now been remanded by the D.C. Circuit, the assumptions underlying the development of the reasonable progress targets have changed; however, because the overall EGU emission reductions from the Transport Rule are larger than the EGU emission reductions that would have been achieved by CAIR, we expect the Transport Rule to provide similar or greater benefits than CAIR. In addition, unlike the enforceable emissions limitations and other enforceable measures in the long-term strategy, see 64 FR 35733, reasonable progress goals are not enforceable measures. Given these considerations, we concluded not to propose disapproval of the reasonable progress goals in any of the regional haze SIPs that relied on CAIR. We noted our intent to act on the remaining elements of the SIP for each state in a separate notice.

Several commenters seem to have interpreted our statement that the EPA was not proposing to disapprove the reasonable progress goals set by affected states to mean that the EPA had proposed to determine that these reasonable progress goals meet the requirements of the Regional Haze Rule. The commenters stated that the EPA cannot reasonably conclude that the Transport Rule achieves reasonable progress. As noted in the proposal, we intend to evaluate the reasonable progress goals for each state when taking action on the remaining elements of their regional haze SIPs. As explained above, we do not consider the remand of CAIR to provide a basis for disapproving the reasonable progress goals set by the states. That determination, however, does not indicate that we intend to approve the targets set by the states without any further consideration. In addition, while we have concluded that the Transport Rule achieves greater reasonable progress than BART, we have not determined, as the commenters suggest, that the Transport Rule alone achieves reasonable progress towards the natural visibility goal.

This action includes a final limited disapproval of the regional haze SIPs submitted by Alabama, Georgia, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Virginia, and Texas. We are not finalizing the limited disapproval for Florida at this time because the state has requested additional time to modify its SIP to address the change in applicability of the Transport Rule to Florida in the final rule published on August 8, 2011, (76 FR 48208) and is actively preparing SIP revisions. 20 The EPA included Florida in the proposed Transport Rule for coverage under both the SO 2 and NO X trading programs, but removed Florida from the SO 2 trading program in the final Transport Rule. Florida was unaware of this modification until publication of the final rule. The EPA has decided to postpone action on Florida's regional haze SIP given this extenuating circumstance, Florida's request for additional time to modify its SIP to address the change in coverage under the Transport Rule, and Florida's continued progress toward submitting a SIP revision.

We proposed FIPs to replace reliance on CAIR requirements with reliance on the trading programs of the Transport Rule as an alternative to BART for SO 2 and NO X emissions from EGUs in the following states' regional haze SIPs: Alabama, Georgia, Indiana, Iowa, Kentucky, Michigan, Missouri, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. We proposed FIPs to replace reliance on CAIR requirements with reliance on the Transport Rule as an alternative to BART for NO X emissions from EGUs in the following states' regional haze SIPs: Florida, Louisiana, and Mississippi.

We proposed that these limited FIPs would satisfy the BART requirement and be a part of satisfying the requirement for a long-term strategy sufficient to achieve the state-adopted reasonable progress goals. The FIPs would apply only to EGUs in the affected states and only to pollutants covered by the Transport Rule program in those states. The proposed FIPs would not alter states' reasonable progress goals or replace these goals.

Similar to the comments received regarding our proposed limited disapprovals, numerous commenters argued that the EPA should not finalize FIPs because, according to the commenters, we cannot rely on the Transport Rule because of the current stay of that rule. Other commenters took the position that we should fully approve the regional haze SIPs that relied on CAIR to satisfy certain regional haze requirements and that our proposed FIPs substituting the Transport Rule as an alternative to source-specific BART in regional haze SIPs are unnecessary.

As explained above in section II.B.2, we do not agree that the EPA cannot rely on the Transport Rule because of the temporary stay imposed by the D.C. Circuit. With respect to reliance on CAIR, as explained in section II.A.3, CAIR has been remanded and only remains in place temporarily; consequently, we cannot fully approve those regional haze SIP revisions that have relied on the now-temporary reductions from CAIR. Although CAIR is currently in place, as a result of the December 30, 2011, Order from the U.S. Court of Appeals for the D.C. Circuit staying the Transport Rule, this does not affect the earlier court ruling remanding CAIR to the EPA. A number of states objected to the EPA's proposed FIP as these states did not receive a finding of failure to timely submit a regional haze SIP. These states requested the allowable time to revise and resubmit their SIP. Other states which also did not receive a finding of failure to timely submit a regional haze SIP did not object to the EPA's proposed FIP. As explained in section VI.C, we have responded to this comment by granting additional time to those states that prefer to revise and resubmit their SIP to the EPA for approval and did not receive a finding of failure to timely submit their regional haze SIP.

In this action, the EPA is finalizing FIPs to replace reliance on CAIR with reliance on the Transport Rule as an alternative to BART in regional haze SIPs of Georgia, Indiana, Iowa, Kentucky, Michigan, Missouri, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. Regional haze SIPs were due in December 2007. Under the CAA, the EPA is required to promulgate a FIP within 2 years after finding that a state has failed to make a required submission or after disapproving a SIP in whole or in part, unless the state first adopts and we have fully approved a SIP. CAA section 110(c)(1). We made a finding on January 15, 2009, that Georgia, Indiana, Michigan, Ohio, Pennsylvania, Texas, and Virginia had failed to timely submit a regional haze SIP. We are finalizing the FIPs for Iowa, Missouri, South Carolina, Tennessee, and West Virginia, even though we are not required by the CAA to do so at this time, because of our understanding based on communications with state officials that this action on our part is their preference. Our adoption of these FIPs at this time avoids the near-term need for additional administrative steps on the part of these states. That is, these states do not have to take any further action on their regional haze SIPs until SIP revisions are due in 2018. However, at any time, states may, and are encouraged to submit a revision to their regional haze SIP incorporating the requirements of the Transport Rule. At that time, we will withdraw the FIP being finalized in this action.

We are not finalizing FIPs, as proposed, for Alabama, Florida, Louisiana, Mississippi, or North Carolina. Rather than a FIP, Alabama, Louisiana, Mississippi, and North Carolina have requested additional time to correct the deficiencies in their SIPs and submit a SIP revision. As these states did not receive a finding of failure to submit a regional haze SIP, the EPA is not required to promulgate a FIP at this time. The EPA will be required to issue a FIP for each state that does not submit an approvable SIP revision that corrects the deficiencies related to reliance on CAIR in time for the EPA to review and approve it within 2 years of this final limited disapproval action. We are not finalizing a FIP, as proposed, for Texas in order to allow more time for the EPA to assess the current Texas SIP submittal. Additional time is required due to the variety and number of BART-eligible sources and the complexity of the SIP. The EPA is also deferring action on the proposed FIP for Florida for the reasons discussed in section V.C.

Based on our finding that the “Transport Rule + BART elsewhere” control scenario passes the two-pronged test, we proposed to determine that the Transport Rule trading program will provide greater progress towards Regional Haze goals than source-specific BART. We noted that the proposed determination would apply only to EGUs in the Transport Rule trading programs and only for the pollutants covered by the programs in each state. Accordingly, we proposed to revise 40 CFR 51.308(e)(4) by essentially replacing the name of CAIR with the name of the Transport Rule.

We also proposed that a state that chooses to meet the emission reduction requirements of the Transport Rule by submitting a complete SIP revision substantively identical to the provisions of the EPA trading program that is approved as meeting the requirements of § 52.38 and/or § 52.39 also need not require BART-eligible EGUs in the state to install, operate, and maintain BART for the pollutants covered by such a trading program in the state.

A number of the states for which we proposed a FIP had previously failed to either submit a visibility SIP or had failed to submit a SIP that could be fully approved under the visibility regulations issued in 1980. See 45 FR 80084 (December 2, 1980). The final regulatory text takes account of this and is not intended to change the findings that have been made in the past with respect to the relevant states' compliance with the requirements of visibility regulations found at 40 CFR 51.302-51.307.

The regulatory text also accounts for final limited approval of the regional haze SIPs of Indiana, Ohio and Virginia that the EPA is finalizing separately, on or about the same day as this action. Including regulatory text that accounts for the final limited approval in this action avoids the need for additional overlapping revisions to the CFR for these states. To ensure that the relevant regulatory text is appropriately revised, we are amending certain regulatory provisions for these states in this action only. 21

We are also making conforming changes to the regulatory text for the regional haze SIPs of Kentucky, Tennessee and West Virginia as the EPA has previously promulgated a final limited approval and final limited disapproval of these SIPs. For Kentucky, in this action we are making conforming changes to the regulatory text in 40 CFR 52.936(a) regarding the limited approval and limited disapproval of Kentucky's SIP. These conforming changes do not affect the substance of the EPA's final action on Kentucky on March 30, 2012 (77 FR 19098). For Tennessee, in this action we are making conforming changes to the regulatory text in 40 CFR 52.2234(a) regarding the limited approval and limited disapproval of Tennessee's SIP. These conforming changes do not affect the substance of EPA's final action on April 24, 2012 (77 FR 24392). For West Virginia, in this action we are making conforming changes to the regulatory text in 40 CFR 52.2533(d) regarding the limited approval and limited disapproval of West Virginia's SIP. These conforming changes do not affect the substance of the EPA's final action on West Virginia on March 23, 2012 (77 FR 16937).

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action” because some may view it as raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. Accordingly, the EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this action.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Burden is defined at 5 CFR 1320.3(b). This action does not include or require any information collection.

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

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

After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This final rule will not impose any requirements on small entities. Rather, this rule would allow states to avoid regulating EGUs in new ways based on the current requirements of the Transport Rule and as such does not impose any new requirements on small entities.

This action contains no federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, 2 U.S.C. 1531-1538) for state, local, or tribal governments or the private sector. The action imposes no enforceable duty on any state, local, or tribal governments or the private sector. Therefore, this action is not subject to the requirements of sections 202 or 205 of the UMRA.

This action is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. This action merely interprets the statutory requirements that apply to states in preparing their SIPs.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This action does not impose any new mandates on state or local governments. Thus, Executive Order 13132 does not apply to this rule. In the spirit of Executive Order 13132 and consistent with EPA policy to promote communications between the EPA and state and local governments, the EPA specifically solicited comments on the proposed rule from state and local officials. We received comments from seven states. These comments are addressed in the final action and in the Response to Comment document.

This rule does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). The rule does not have a substantial direct effect on one or more Indian tribes, since there are no BART-eligible EGU sources on tribal lands in the Transport Rule region. In addition, the CAA does not provide for the inclusion of any tribal areas as mandatory Class I federal areas; thus, tribal areas are not subject to the requirements of the Regional Haze Rule. Furthermore, this rule does not affect the relationship or distribution of power and responsibilities between the federal government and Indian tribes. Thus, Executive Order 13175 does not apply to this action. The EPA specifically solicited additional comment on the proposed action from tribal officials and we received none.

The EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.

This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This action does not establish requirements that directly affect the general public and private sectors. Rather, this rule will allow states to avoid regulating EGUs in new ways based on the current requirements of the Transport Rule, and thus may avoid adverse effects that conceivably might result from such additional regulation of EGUs by states.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, section 12(d), (15 U.S.C. 272 note) directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations when the agency decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, the EPA did not consider the use of any voluntary consensus standards.

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

The EPA has concluded that it is not practicable to determine whether there would be disproportionately high and adverse human health or environmental effects on minority and/or low income populations from this final rule. The PM 2.5 air quality improvements that might be expected under implementation of source-specific BART may differ from the Transport Rule in terms of the emission reductions required at any given source. However, our analysis of the Transport Rule suggests that the regional Transport Rule approach provides widespread health benefits especially among populations most vulnerable to PM 2.5 impacts. This analysis is presented in detail in the Regulatory Impact Analysis for the Transport Rule which is available in the Transport Rule docket EPA-HQ-OAR-2009-0491 and from the main EPA Web page for the Transport Rule available at www.epa.gov/airtransport.

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. The 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 . 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 will be effective August 6, 2012.

Statutory authority for this rule comes from sections 169A and 169B of the CAA (42 U.S.C. 7491 and 7492). These sections require the EPA to issue regulations that will require states to revise their SIPs to ensure that reasonable progress is made toward the national visibility goals specified in section 169A.

For the reasons set forth in the preamble, chapter I of title 40 of the Code of Federal Regulations is amended as follows:

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

This document announces that, on May 16, 2012, OMB approved, for a period of six months, the information collection requirements contained in the Commission's Order, FCC 11-92, published at 77 FR 16688, March 22, 2012. The OMB Control Number is 3060-1169. The Commission sought emergency OMB approval and will now conduct all the regular OMB processes to obtain the full three-year clearance from them. The Commission publishes this notice as an announcement of the effective date of the rules. If you have any comments on the burden estimates listed below, or how the Commission can improve the collections and reduce any burdens caused thereby, please contact Judith B. Herman, Federal Communications Commission, Room 1-C823, 445 12th Street SW., Washington, DC 20554. Please include the OMB Control Number, 3060-1169, in your correspondence. The Commission will also accept your comments via email at PRA@fcc.gov.

To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the FCC is notifying the public that it received emergency OMB approval on May 16, 2012, for the information collection requirements contained in the modifications to the Commission's rules in 47 CFR part 11. Under 5 CFR part 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number.

No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a current, valid OMB Control Number. The OMB Control Number is 3060-1169.

The foregoing notice is required by the Paperwork Reduction Act of 1995, Public Law 104-13, October 1, 1995, and 44 U.S.C. 3507.

The total annual reporting burdens and costs for the respondents are as follows:

OMB Control Number: 3060-1169.

OMB Approval Date: May 16, 2012.

OMB Expiration Date: November 30, 2012.

Title: Part 11—Emergency Alert System, Fifth Report and Order, FCC 12-7.

Form Number: N/A.

Respondents: Business or other for-profit entities, not-for-profit institutions, and state, local or tribal government.

Number of Respondents and Responses: 20 respondents; 20 responses.

Estimated Time per Response: 20 hours.

Frequency of Response: On-occasion reporting requirements and recordkeeping requirements.

Obligation to Respond: Voluntary. The statutory authority for this information collection is found at sections 1, 2, 4(i), 201-205, and 226(h)(1)(A) of the Communications Act of 1934, as amended (Act), 47 U.S.C. 151, 152, 154(i), 201-205, and 226(h)(1)(A).

Total Annual Burden: 400 hours.

Total Annual Cost: N/A.

Nature and Extent of Confidentiality: There is no need for confidentiality.

Needs and Uses: Part 11 contains rules and regulations providing for an emergency alert system (EAS). The EAS provides the President with the capabililty to provide immediate communications and information to the general public during periods of national emergency. The EAS also provides state and local governments and the National Weather Service with the capability to provide immediate communcations and information to the general public concerning emergency situations posing a threat to life and property. In the Order, the Federal Communications Commission (Commission) adopts amendments to its Part 11 rules governing the EAS to more fully codify the existing obligation to process alert messages formatted in the Common Alerting Protocol and to streamline, and to streamline and clarify these rules eliminate superfluous and stale requirements and generally enhance their effectiveness. Some of these amendments modify or clarify existing information collection requirements. Accordingly, the Commission sought and obtained authorization to modify such various information collection requirements that already existed in the Part 11 rules.

The Federal Communications Commission published a document amending 47 CFR 64.606 in the Federal Register of August 5, 2011, (76 FR 47476). The amended rules are necessary to help ensure that the Commission has true and complete information, thereby ensuring that only qualified providers are eligible for compensation from the Interstate TRS Fund (Fund).

As published, the interim regulations inadvertently omitted regulatory text which may prove to be misleading and needs to be corrected accordingly.

Accordingly, 47 CFR part 64 is corrected by making the following correcting amendments: