Table of Contents I. Introduction A. Statutory Authority B. Background II. Discussion A. Description of Utility Electric Thermal Storage Programs for Water Heaters B. Discussion of Utility Company Concerns With April 2010 Water Heater Standards III. Public Participation A. Submission of Comments B. Issues on Which DOE Seeks Comment I. Introduction

The following section briefly discusses the statutory authority underlying the U.S. Department of Energy's (DOE's) standards for residential water heaters, as well as some of the relevant historical background related to the establishment of standards for residential water heaters.

Title III, Part B  1 of the Energy Policy and Conservation Act of 1975 (“EPCA” or “the Act”), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) sets forth a variety of provisions designed to improve energy efficiency and establishes the Energy Conservation Program for Consumer Products Other Than Automobiles, 2 a program covering most major household appliances (collectively referred to as “covered products”), which includes the types of residential water heaters that are the subject of today's notice. (42 U.S.C. 6292(a)(4)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(e)(1)) and directed DOE to conduct two cycles of rulemakings to determine whether to amend standards. (42 U.S.C. 6295(e)(4)) Furthermore, under 42 U.S.C. 6295(m), the agency must periodically review its already established energy conservation standards for a covered product. Under this requirement, the next review that DOE would need to conduct must occur no later than six years from the issuance of a final rule establishing or amending a standard for a covered product.

Under EPCA, this program generally consists of four parts: (1) Testing; (2) labeling; (3) establishing Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling consumer products, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6293) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. Id. The DOE test procedures for residential water heaters currently appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix E.

DOE must follow specific statutory criteria for prescribing amended standards for covered products. As indicated above, any amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including residential water heaters, if no test procedure has been established for the product, or (2) if DOE determines by rule that the proposed standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven factors:

1. The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard;

3. The total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;

4. Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

6. The need for national energy and water conservation; and

7. Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)).

EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).

Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when promulgating a standard for a type or class of covered product that has two or more subcategories. DOE must specify a different standard level than that which applies generally to such type or class of products for any group of covered products that have the same function or intended use if DOE determines that products within such group (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)). A rule prescribing an energy conservation standard for a type (or class) of covered products shall specify a level of energy use or efficiency higher or lower than that which applies (or would apply) for such type (or class) for any group of covered products that have the same function or intended use, if the Secretary determines that covered products within such group consume a different kind of energy from that consumed by other covered products within such type (or class); or have a capacity or other performance-related feature that other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class). Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))

Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).

Before being amended by the National Appliance Energy Conservation Act of 1987 (NAECA; Pub. L. 100-12), Title III of EPCA included water heaters equipment as covered products. NAECA's amendments to EPCA established energy conservation standards for residential water heaters, and required that DOE determine whether these standards should be amended. (42 U.S.C. 6295(e)(1); 42 U.S.C. 6295(e)(4)) DOE initially amended the statutorily-prescribed standards for water heaters in 2001 (66 FR 4474 (Jan. 17, 2001)) and amended standards for water heaters for a second time in 2010 (75 FR 20112 (April 16, 2010)) (April 2010 Final Rule).

The energy conservation standards for residential water heaters in the April 2010 Final Rule will apply to products manufactured on or after April 16, 2015. 75 FR 20112. This final rule completed the second amended standards rulemaking for water heaters required under 42 U.S.C. 6295(e)(4)(B). The standards consist of minimum energy factors (EF) that vary based on the storage volume of the water heater, the type of energy it uses ( i.e., gas, oil, or electricity), and whether it is a storage, instantaneous, or tabletop model. 10 CFR 430.32(d). The currently applicable water heater energy conservation standards, as well as those that will be applicable starting April 16, 2015, are set forth in Table I.1 below.

Electric thermal storage (ETS) programs, also known as load shifting or demand response programs, are potentially an effective way for utilities to manage peak demand load by limiting the times when certain appliances are operated. As part of such programs, utilities typically provide an incentive for consumers (such as reduced electricity rates, subsidized cost of a new appliance, or annual fixed payment incentives) to enroll in a program allowing the utility company to control when the appliance cycles on and off. The appliance is cycled on during off-peak hours, and the electricity consumed is stored by the appliance as thermal energy for use during peak demand times. In the case of water heaters, the utility typically offers some incentive for its customers to enroll in the ETS program, and in return the utility is allowed to control the operation of the customer's water heater (typically through using either a timed switch or a radio controlled switch) in a manner that prevents the appliance from turning on during peak load times and forces the water heating operation to occur during off-peak demand times. Several stakeholders (including the National Rural Electric Cooperative Association (NRECA), PJM Interconnection, American Public Power Association (APPA), and Steffes Corporation) have indicated to DOE that the consumer is often responsible for the purchase and installation cost of the water heater, but such cost may be offset in part by the utility, and the utility typically covers the cost of the control technology with no charge to the consumer. Since these programs allow water heating only during non-peak times, the heated water must be stored in the tank to meet consumer needs during peak demand times. Because the water heater cannot operate during peak demand times, these programs typically utilize electric storage water heaters with a larger tanks than would otherwise be required to meet the typical demand required by the consumer. The additional tank storage capacity ensures that the consumer will have enough hot water to meet their needs without the need for power during peak-demand hours.

The Department is aware of numerous ETS load shifting programs for residential water heaters in the United States. According to Great River Energy and Arrowhead Electric Cooperative, there are more than 100 electric cooperatives nationwide that have installed more than 150,000 ETS water heaters in 20 states. Information provided by utilities indicates a similar estimate, as a recent survey showed 109 cooperatives in 22 states using such programs with more than 150,000 water heaters. Additionally, the utilities noted that the number of programs nationwide is growing, with 22 additional cooperatives in 7 other states considering adopting similar programs. As noted above, these programs typically employ large electric storage water tanks capable of heating enough water during off-peak demand times to serve consumers during peak demand times when the water heater would not be powered. These tanks are ideal because they are highly insulated and make use of the heated water as a thermal storage device, storing the energy conducted to the water from the electric resistance element for later use.

DOE believes that ETS programs offer benefits to both utilities and consumers. Because ETS programs force water heating to occur during off-peak times, the energy used for heating water is from sources that are potentially less expensive and less polluting than sources that must be used during peak demand times. The utilities indicated that a survey found that 49 cooperatives use ETS programs to store energy from wind generation and 52 cooperatives use such programs to store electricity generated from hydroelectric sources. The ability to utilize less expensive energy sources reduces operating costs for utilities and results in savings which potentially can be passed on to consumers in the form of lower electricity rates or other financial incentives provided by utilities. The utilities noted that the benefits to consumers include rebates to offset the initial cost of the water heater, discounted utility bills, off-peak pricing, free water heater maintenance, and lower overall rates due to the reduction of the utility's costs. In addition, the utilities noted that benefits to utility companies included reduced wholesale demand charges, reduced costs of operating less efficient peaking generators, less exposure to wholesale spot market prices, reduced capacity obligations, emergency load control system regulation, storage of energy generated by renewable resources during off-peak periods, lower transmission system congestion, and improved distribution system operations. Lastly, the utilities commented that the programs provide benefits to the Nation because they mitigate environmental impacts by lowering carbon emissions from fossil fuel resources through enabling greater penetration and utilization of renewable energy assets, facilitating more efficient operation of existing base load generating plants, and delaying construction of new generating plants.

While DOE recognizes that these programs are valuable to utilities in their efforts to reduce peak demand loads, to consumers in reducing overall costs, and to the Nation in allowing for increased use of renewable energy resources and reduced emissions from fossil fuels, it is not apparent that these programs reduce energy consumption. In fact, DOE believes that the additional standby losses from storing water in a large storage tank and at an increased temperature may increase energy consumption as compared to using a smaller tank and heating the water when it is needed.

The Department is interested in receiving comment and information on utility ETS programs for residential water heaters. In particular, DOE would like to receive data and information on the penetration of such programs throughout the U.S. (i.e., what percentage of total water heaters installed are used in these programs), data on the financial benefits to consumers, and information on the energy savings (if any) or other National benefits that are achieved through the use of such programs. This is identified as issue 1 in section III.B, “Issues on Which DOE Seeks Comment.”

In response to the April 2010 Final Rule amending the energy conservation standards for water heaters, stakeholders ( i.e., NRECA, PJM Interconnection, APPA, and Steffes Corporation) indicated concerns about the energy conservation standard established for electric storage water heaters with tanks having greater than 55 gallons of storage volume and about the impact that such standards would have on existing ETS programs. As discussed above, large electric storage water heaters (over 55 gallons of storage volume) are a key component of utility ETS programs to allow the hot water tank to store enough water to meet consumer demand during peak demand times when the water heater would not be allowed to turn on. As shown in Table I.1, the April 2010 Final Rule established an energy conservation standard that would effectively require the use of heat pump technology to meet the minimum standard for electric storage water heaters with storage volumes above 55 gallons. Although ETS programs may be able to utilize heat pump water heaters (HPWH), utility companies are concerned that the increase in the initial cost of HPWH units as compared to purchasing a smaller electric resistance unit (such as a 50 gallon water heater, which is often adequate for typical residential use) would discourage consumers from participating in load shifting programs. Utilities may not be able to offer enough incentives to overcome the increase in first cost of a large HPWH, resulting in decreased customer participation in ETS programs. In addition, utilities believe the technological differences of heat pump water heaters are such that they may not always be able to fill the same role as large-volume electric resistance water heaters. Utilities have indicated that the ability of electric resistance water heaters to `super heat' water to 170 °F is a key component in increasing the water heater capacity such that it can meet consumer demand without operating during peak times. Utilities contend that heat pump water heaters cannot provide the `super heating' capabilities of electric resistance water heaters because the refrigeration cycle of commercially available heat pump water heaters limits the maximum water temperature due to efficiency and reliability issues with the compressor as the water temperature is raised. While DOE agrees this is true when the water heater operates in the heat pump mode, DOE notes that heat pump water heaters currently on the market are equipped with electric resistance backup heating. The use of the backup resistance elements would allow a heat pump water heater to heat water to a much higher temperature comparable to the temperatures that can be achieved by conventional electric resistance water heaters.

DOE recognizes that the potential elimination of utility ETS programs due to the efficiency requirements in the April 2010 Final Rule for large-volume electric water heaters would have the potential to increase peak-demand load and may impact both utilities and consumers participating in such programs. If consumers who otherwise would have purchased a large-volume electric resistance tank and participated in an ETS program instead purchase a smaller size tank ( e.g., 50-gallon) and do not participate in the ETS program, the result may be reduced cost savings to consumers (as compared to the situation before the water heater standards were amended) and increased peak loads for utilities. DOE notes that increased usage of heat pump water heaters could mitigate some of these concerns because heat pump water heaters are comparatively much more efficient than electric resistance water heaters, which will reduce electricity demand at all times, especially during peak times. In contrast, DOE believes that the use of larger storage tanks for ETS programs may use more electricity than would be consumed if ETS programs were phased out by utilities due to the unavailability of large-volume electric resistance water heaters.

As a result of the concerns with the standards promulgated in the April 2010 Final Rule, some stakeholders have requested that DOE consider the creation of a new product class of electric water heaters for “grid-interactive water heaters.” These stakeholders proposed that such products would be defined as an electric storage water heater that has: (1) A storage tank volume greater than 55 gallons; (2) a control device capable of receiving communication from a grid operator, electric utility, or other energy services company that provides real-time control of the heating element; (3) and agreement to be enrolled in a grid operator, electric utility, or other energy services company program to provide demand response or other electric grid services; and (4) a thermostatic mixing valve if the water heater is capable of heating water greater than 120 °F. DOE is considering its legal authority to promulgate such a rule. As it does so, DOE is seeking additional information regarding the potential effects of the current standard and the potential benefits of the proposals above.

DOE is interested in receiving comment on potential solutions to mitigate the concerns of utility companies described above, including the creation of a new product class for “grid-interactive storage water heater,” as proposed by the utilities. Other possible solutions may include: (1) A waiver system that would allow manufacturers to produce small quantities of electric resistance models at storage volumes above 55 gallons and sell them directly to utilities that operate such programs; (2) using multiple smaller water heaters in place of a single large water heater to satisfy the needs of consumers who participate in these programs; or (3) using large-storage-volume heat pump water heaters to satisfy the needs of consumers who participate in these programs. DOE is interested in receiving comment on the merits and drawbacks of the potential solutions identified, as well as any other potential solutions that could address this issue. This is identified as issue 2 in section III.B, “Issues on Which DOE Seeks Comment.”

DOE will accept comments, data, and information regarding this request for information until the date provided in the DATES section at the beginning of this proposed rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this notice.

Submitting comments via regulations.gov. The regulations.gov web page will require you to provide your name and contact information. Your contact information will be viewable to DOE Building Technologies staff only. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment.

However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.

Do not submit to regulations.gov information for which disclosure is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (CBI)). Comments submitted through regulations.gov cannot be claimed as CBI. Comments received through the Web site will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section below.

DOE processes submissions made through regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that regulations.gov provides after you have successfully uploaded your comment.

Submitting comments via email, hand delivery/courier, or mail. Comments and documents submitted via email, hand delivery, or mail also will be posted to regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information in a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments.

Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery/courier, please provide all items on a CD, if feasible. It is not necessary to submit printed copies. No facsimiles (faxes) will be accepted.

Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.

Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters' names compiled into one or more PDFs. This reduces comment processing and posting time.

Confidential Business Information. According to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery/courier two well-marked copies: One copy of the document marked confidential including all the information believed to be confidential, and one copy of the document marked non-confidential with the information believed to be confidential deleted. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and treat it according to its determination.

Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person which would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.

It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).

DOE considers public participation to be a very important part of the process for developing energy conservation standards. DOE actively encourages the participation and interaction of the public during the comment period in each stage of the rulemaking process. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE in the rulemaking process. Anyone who wishes to be added to the DOE mailing list to receive future notices and information about this rulemaking should contact Ms. Brenda Edwards at (202) 586-2945, or via email at Brenda.Edwards@ee.doe.gov.

Although DOE welcomes comments on any aspect of this request for information, DOE is particularly interested in receiving comments and views of interested parties concerning the following issues:

1. Information on the effects of utility programs designed to reduce peak energy demand by heating water only during off-peak times and storing the water for use during peak demand periods. In particular, DOE is interested in information on the penetration of residential water heater load shifting programs throughout the U.S. ( i.e., what percentage of total water heaters installed are used in these programs), the economic benefits of such programs to consumers, and the energy impacts (if any) or other National benefits that are achieved through the use of such programs.

2. Information on the effects of the amended energy conservation standards for electric storage water heaters with rated storage volumes above 55 gallons on utility programs designed to reduce peak energy demand by heating water only during off-peak times and storing the water for use during peak demand periods.

3. Information on capacity or other performance-related feature(s) for residential water heaters which other water heaters do not have that are used in demand-response programs and whether such feature(s) justifies a separate standard from that which will apply to other electric water heaters with rated storage volumes above 55 gallons.

4. Information on potential solutions that would resolve the concerns of utilities that administer load shifting programs for residential water heaters that require the use of large-volume electric storage water heaters, including the potential approaches identified in this RFI.

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0816; Directorate Identifier 2011-CE-022-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

We proposed to amend 14 CFR part 39 with an earlier NPRM for the specified products, which was published in the Federal Register on August 8, 2011 (76 FR 48045). That earlier NPRM proposed to require actions intended to address the unsafe condition for the products listed above.

Since that NPRM (76 FR 48045, August 8, 2011) was issued, TECNAM found that the replacement part number could cause a deformation of the emergency accumulator, so TECNAM has developed a modification for the landing gear extension emergency accumulator and revised the service information to include instructions for that modification.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD No.: 2012-0043, dated March 19, 2012 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

Costruzioni Aeronautiche TECNAM has issued Service Bulletin No. SB 80-CS, dated January 2, 2012. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

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

Certain changes described above expand the scope of the earlier NPRM. As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on the proposed AD.

We estimate that this proposed AD will affect 7 products of U.S. registry. We also estimate that it would take about 7 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $1,300 per product.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $13,265, or $1,895 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 proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

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

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

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

(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 proposes to amend 14 CFR part 39 as follows:

Comments Invited

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

We propose to adopt a new AD for the BHTI Model 205A, 205A-1, and 205B helicopters with power cable assemblies, part number (P/N) 205-075-902-017 and P/N 205-075-911-007. The AD would require replacing the power cable assemblies with airworthy power cable assemblies, P/N 205-075-265-103 and 205-075-265-105S, and replacing associated parts included in the starter/generator cable kit, P/N CT205-07-94-1. After the power cable assemblies and associated parts are replaced, the AD would require performing a continuity test at the power cable connections using a multimeter. This proposal is prompted by the determination that the connector can deteriorate, causing a short in the connector P81 (J81) pins. This condition, if not corrected, could result in a fire in the starter/generator, smoke in the cockpit that could reduce visibility, and subsequent loss of structural integrity and helicopter control.

We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

We have reviewed BHTI Alert Service Bulletin (ASB) No. 205-07-94, Revision A, dated December 8, 2008, for Model 205A and 205A-1 helicopters; and BHTI ASB No. 205B-08-50, dated December 8, 2008, for the Model 205B helicopter. These ASBs describe procedures for replacing the power cable assemblies and associated parts. The ASBs specify that operators can obtain a starter/generator cable kit that contains the required replacement parts.

This proposed AD would require, within six months, replacing the power cable assemblies and associated parts with airworthy parts contained in the starter/generator kit, and performing a continuity test using a multimeter. The actions would be required to be accomplished by following specified portions of the ASBs described previously.

We estimate that this proposed AD would affect 31 helicopters of U.S. registry. The proposed actions would take about 10 work-hours per helicopter to accomplish at an average labor rate of $85 per work hour. Required parts would cost about $12,654 for the power cable assembly replacement kit. Based on these figures, the cost of the proposed AD on U.S. operators would be $13,504 per helicopter, or $418,624 for the fleet.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; 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.

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

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

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2012-0561 and Airspace Docket No. 12-AEA-7) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov .

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2012-0561 and Airspace Docket No. 12-AEA-7.” The postcard will be date/time stamped and returned to the commenter.

Comments on environmental and land use aspects to should be directed to: Director of Environmental and Natural Resource Division, U.S. Army Garrison, Fort A.P. Hill, VA, 22427; telephone: 804-633-8223.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/ .

You may review the public docket containing the proposal, any comments received and any final disposition in person at the Dockets Office (see ADDRESSES section for address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Operations Support Group, Eastern Service Center, Federal Aviation Administration, 1701 Columbia Ave., College Park, GA 30337.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

Fort A.P. Hill has a continuing requirement to conduct training in the use of various high- angle weapons systems. This training cannot be contained within the current 5,000-foot MSL ceiling of restricted area R-6601. Currently, this training is conducted in a controlled firing area (CFA) situated above R-6601. However, the FAA determined that the activities no longer meet the criteria for a CFA. As a result, military units have had to cancel high-angle weapon system training. Recurring training in these events is necessary to maintain currency. This training is even more critical for units that are preparing to deploy into a theater of operations where the use of these tactics is required.

The FAA is proposing an amendment to 14 CFR part 73 to expand the vertical limits and the time of designation for restricted area R-6601, Fort A.P. Hill, VA. R-6601 currently extends from the “surface to 5,000 feet MSL,” with a time of designation of “0700 to 2300 local time daily; other times by NOTAM at least 48 hours in advance.”

The proposed new restricted airspace would extend up to 9,000 feet MSL and would consist of three sub-areas designated R-6601A, R-6601B and R-6601C. R-6601A would extend from the surface to but not including 4,500 feet MSL, instead of the current 5,000 feet MSL for R-6601. R-6601B would extend from 4,500 feet MSL to but not including 7,500 feet MSL; and R-6601C would extend from 7,500 feet MSL to 9,000 feet MSL. Subdividing the airspace in this manner would allow activation of only that portion of restricted airspace required for training while leaving the remaining airspace available for other users. In addition, a Letter of Agreement would be concluded between the using and controlling agencies stipulating that the controlling agency can recall the airspace in the event of Severe Weather Avoidance Plan (SWAP) implementation, weather diverts and emergencies.

R-6601A would have the same lateral boundaries as the original R-6601. R-6601B and R-6601C would overlie the boundaries of R-6601A, except at the northeast end where the shared R-6601B and R-6601C boundary would be moved southwesterly approximately 3/4 mile from R-6601A's northeastern boundary. This would provide a buffer between R-6601B and C and the centerline of VOR Federal airway V-386.

The proposed time of designation for R-6601A would be changed from the current “0700 to 2300 local time daily,” to “0700 to 0200 local time daily,” an increase of three hours daily. In addition, the advance NOTAM requirement for activation of R-6601A at other times would be reduced from the current 48 hours to 24 hours. The time of designation for both R-6601B and R-6601C would be “By NOTAM 24 hours in advance.”

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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.

This rulemaking is promulgated under the authority described in SubtitleVII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would restructure the restricted airspace at Fort A.P. Hill, VA, to support essential military training activities.

This proposal will be subjected to an environmental analysis in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” prior to any FAA final regulatory action.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 73 as follows:

On July 15, 2011, as part of the Administration's ongoing Export Control Reform Initiative, BIS published a proposed rule (76 FR 41958) (herein “the July 15 proposed rule”) that set forth a framework for how articles the President determines, in accordance with section 38(f) of the Arms Export Control Act (AECA) (22 U.S.C. 2778(f)), would no longer warrant control on the United States Munitions List (USML) and would be controlled on the Commerce Control List (CCL) in Supplement No. 1 to Part 774 of the Export Administration Regulations (EAR). On November 7, 2011, BIS published a rule (76 FR 68675) proposing several changes to the framework initially proposed in the July 15 rule.

Following the structure of the July 15 and November 7 proposed rules, this proposed rule describes BIS's proposal for controlling under the EAR and its CCL military training equipment and related articles now controlled by the ITAR's USML under Category IX but that would no longer be so controlled if the State Department's proposed revision to the Category were to become final. The changes described in this proposed rule and the State Department's proposed companion rule to Category IX of the USML are based on a review of Category IX by the Defense Department, which worked with the Departments of State and Commerce in preparing the proposed amendments. The review was focused on identifying the types of articles that are now enumerated in USML Category IX that are either (i) inherently military and otherwise warrant control on the USML or (ii) common to non-military training equipment applications, possess parameters or characteristics that provide a critical military or intelligence advantage to the United States, and almost exclusively available from the United States. If an article satisfied one or both of those criteria, the article remained on the USML. If an article did not satisfy either standard but was nonetheless a type of article that is, as a result of differences in form and fit, “specially designed” for military applications, it was identified in the new ECCNs proposed in this notice. The licensing requirements and other EAR-specific controls for such items described in this notice would enhance national security by permitting the U.S. Government to focus its resources on controlling, monitoring, investigating, analyzing, and, if need be, prohibiting exports and reexports of more significant items to destinations, end uses, and end users of greater concern than our NATO allies and other multi-regime partners.

Pursuant to section 38(f) of the AECA, the President shall review the USML “to determine what items, if any, no longer warrant export controls under” the AECA. The President must report the results of the review to Congress and wait 30 days before removing any such items from the USML. The report must “describe the nature of any controls to be imposed on that item under any other provision of law.” 22 U.S.C. 2778(f)(1).

In the July 15 proposed rule, BIS proposed creating a series of new ECCNs to control items that would be removed from the USML, or that are items from the Munitions List of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies List (Wassenaar Arrangement Munitions List or WAML) that are already controlled elsewhere on the CCL. The proposed rule referred to this series as the “600 series” because the third character in each of the new ECCNs would be a “6.” The first two characters of the 600 series ECCNs serve the same function as any other ECCN as described in § 738.2 of the EAR. The first character is a digit in the range 0 through 9 that identifies the Category on the CCL in which the ECCN is located. The second character is a letter in the range A through E that identifies the product group within a CCL Category. In the 600 series, the third character is the number 6. With few exceptions, the final two characters identify the WAML category that covers items that are the same or similar to items in a particular 600 series ECCN.

This proposed rule would create four such ECCNs: 0A614, 0B614, 0D614, and 0E614. ECCN 0A614 would control military training equipment and specific “parts,” “components,” and “accessories and attachments” therefor. ECCN 0B614 would control test, inspection, and production “equipment,” including related “parts,” “components,” and “accessories and attachments,” for the “production” or “development” of commodities controlled by ECCN 0A614 or articles controlled by USML Category IX. ECCN 0D614 would control “software” for the “development,” “production,” operation or maintenance of items controlled by ECCNs 0A614 or 0B614. ECCN 0E614 would control “technology” for the “development,” “production,” operation, installation, maintenance, repair or overhaul of commodities controlled by ECCNs 0A614 or 0B614 or “software” controlled by ECCN 0D614.

The revisions in this rule are part of Commerce's retrospective plan under EO 13563 completed in August 2011. Commerce's full plan can be accessed at: http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules .

BIS will publish additional Federal Register notices containing proposed amendments to the CCL that will describe proposed controls for additional categories of articles the President determines no longer warrant control under the USML. The State Department will publish concurrently proposed amendments to the USML that correspond to the BIS notices. BIS will also publish proposed rules to further align the CCL with the WAML and the Missile Technology Control Regime Equipment, Software and Technology Annex.

Proposed ECCN 0A614 would impose national security (NS Column 1), regional stability (RS Column 1), and anti-terrorism controls on military training “equipment” not controlled by the USML and on most “parts,” “components,” and “accessories and attachments” “specially designed” for such military training “equipment.” ECCN 0A614 also would apply the same controls to “parts,” “components,” and “accessories and attachments” for military training “equipment” controlled by Category IX of the USML unless such “parts,” “components,” or “accessories and attachments” are specifically controlled by the USML or another ECCN on the Commerce Control List. Notes to proposed ECCN 0A614 would identify how specific commodities would be classified under ECCN 0A614, including simulators for non-combat military aircraft, certain radar training units, and training “equipment” for ground military operations. ECCN 0A614.y would impose only anti-terrorism controls on specific “parts,” “components,” and “accessories and attachments” that are “specially designed” for a commodity controlled by ECCN 0A614 and not specified elsewhere in the CCL.

Proposed ECCN 0B614 would impose national security (NS Column 1), regional stability (RS Column 1), and anti-terrorism controls on test, inspection and production equipment, and on “parts,” “components,” and “accessories and attachments” therefor, that are “specially designed” for the “production” of commodities controlled by ECCN 0A614 or USML Category IX. ECCN 0B614.y would impose only anti-terrorism controls on specific “parts,” “components,” and “accessories and attachments” that are “specially designed” for a commodity controlled by ECCN 0B614 and not specified elsewhere in the CCL.

Proposed ECCN 0D614 would impose national security, (NS Column 1), regional stability (RS Column 1), and anti-terrorism (AT Column 1) controls on “software” “specially designed” for the “development,” “production,” operation or maintenance of commodities controlled by ECCNs 0A614 or 0B614 (except the .y paragraphs of these ECCNs). ECCN 0D614.y would impose only anti-terrorism controls on specific “software” that is “specially designed” for the “production,” “development,” operation or maintenance of commodities controlled by ECCNs 0A614.y or 0B614.y.

Proposed ECCN 0E614 would impose national security (NS Column 1), regional stability (RS Column 1), and anti-terrorism (AT Column 1) controls on “technology” “required” for the “development,” “production,” operation, installation, maintenance, repair, or overhaul of commodities controlled by 0A614 or 0B614, or software controlled by 0D614 (except the .y paragraphs of these ECCNs). ECCN 0E614.y would impose only anti-terrorism controls on specific “technology” that is “required” for the “production,” “development,” operation, installation, maintenance, repair or overhaul of commodities controlled by ECCNs 0A614.y or 0B614.y or software controlled by ECCN 0D614.y.

Proposed new ECCNs 0A614, 0B614, 0D614 and 0E614 also would contain a paragraph “.y.99” that would control any item that meets all of the following criteria: (i) The item is not listed on the CCL; (ii) the item was previously determined to be subject to the EAR in an applicable commodity jurisdiction determination issued by the U.S. Department of State; and (iii) the item would otherwise be controlled under one of these 0x614 ECCNs because, for example, the item was “specially designed” for a military use.

To implement the regional stability controls that apply to the four new “600 series” ECCNs noted above, this proposed rule would revise § 742.6(a)(1) of the EAR to apply the RS Column 1 licensing policy to items classified under ECCNs 0A614, 0B614, 0D614 and 0E614 (except the .y paragraphs).

The July 15 proposed rule, as modified by the November 7 proposed rule, would preclude use of License Exception STA for end-items in 600 series ECCNs unless eligibility for such use was applied for and approved by BIS. This proposed rule would exempt end items classified under ECCN 0A614 (military training “equipment”) and classified under ECCN 0B614 (test, inspection and production “equipment” for military training “equipment”) from that requirement. BIS notes this proposed policy by including in the STA paragraphs of these two ECCNs a statement that reads: “Paragraph (c)(1) of License Exception STA (§ 740.20(c)(1)) may be used for items in 0A614 without the need for a determination described in § 740.20(g).” This provision would prevail over the elements of the July 15 proposed rule, as modified by the November 7 proposed rule, that indicated that “600 series” “end items” may not be exported, reexported or transferred pursuant to License Exception STA unless those end items have been identified by BIS in writing or published as an eligible item for License Exception STA in response to a License Exception STA eligibility request in accordance with § 740.20(g) of the EAR.

All comments must be in writing and submitted via one or more of the methods listed under the ADDRESSES caption to this notice. All comments (including any personal identifiable information) will be available for public inspection and copying. Those wishing to comment anonymously may do so by submitting their comment via regulations.gov and leaving the fields for identifying information blank.

As referenced above, the purpose of the July 15 proposed rule was to set up the framework to support the transfer of items from the USML to the CCL. To facilitate that goal, the July 15 proposed rule contained definitions and concepts that were meant to be applied across categories. However, as BIS undertakes rulemakings to move specific categories of items from the USML to the CCL, there may be unforeseen issues or complications that may require BIS to reexamine those definitions and concepts. The comment period for the July 15 proposed rule closed on September 13, 2011. In the November 7 proposed rule, BIS proposed several changes to those definitions and concepts. The comment period for the November 7 proposed rule closed on December 22, 2011.

To the extent that this rule's proposals affect any provision in either of those proposed rules or any provision in either of those proposed rules affect this proposed rule, BIS will consider comments on those provisions so long as they are within the context of the changes proposed in this rule.

BIS believes that the following aspects of the July 15 proposed rule and the November 7 proposed rule are among those that could affect this proposed rule:

• De minimis provisions in § 734.4;

• Restrictions on use of license exceptions in §§ 740.2, 740.10, 740.11, and 740.20;

• Change to national security licensing policy in § 742.4;

• Licensing policy in § 742.4(b)(1)(ii);

• Addition of 600 series items to Supplement No. 2 to Part 744—List of Items Subject to the Military End-Use Requirement of § 744.21;

• Addition of U.S. arms embargo policy regarding 600 series items set forth in § 742.4(b)(1)(ii) (national security) of the July 15 proposed rule to § 742.6(b)(1) (regional stability) of the November 7 proposed rule; and

• Definitions of terms in § 772.1.

The July 15 proposed rule would impose certain unique de minimis requirements on items controlled under the new 600 series ECCNs. Section 734.3 of the EAR provides, inter alia, that under certain conditions, items made outside the United States that incorporate items subject to the EAR are not subject to the EAR if they do not exceed a de minimis percentage of controlled U.S.-origin content. Depending on the destination, the de minimis percentage can be either 10 percent or 25 percent. The military training “equipment” and the test, inspection and production “equipment” for military training “equipment” that would be subject to the EAR as a result of this proposed rule would become eligible for de minimis treatment.

Military training “equipment” and test, inspection, and production “equipment” therefor currently on the USML that would be classified under ECCNs 0A614 and 0B614 would become eligible for several license exceptions, including STA, which would be available for exports to certain government agencies of NATO and other multi-regime close allies. The exchange of information and statements required under STA is substantially less burdensome than are the license application requirements currently required under the ITAR, as discussed in more detail in the “Regulatory Requirements” section of this proposed rule. None of the military training “equipment” or test, inspection and production “equipment” therefor that would be controlled by ECCNs 0A614 or 0B614 would be subject to the provision in the July 15 proposed rule that proposes to preclude the use of License Exception STA for “600 series” end items unless approval for such use is sought from and granted by BIS. The items covered by this rule also would be eligible for the following license exceptions: LVS (limited value shipments), up to $1500; TMP (temporary exports); and RPL (servicing and parts replacement).

The Administration has stated since the beginning of the Export Control Reform Initiative that the reforms will be consistent with U.S. obligations to the multilateral export control regimes. Accordingly, the Administration will, in this and subsequent proposed rules, exercise its national discretion to implement, clarify, and, to the extent feasible, align its controls with those of the regimes. This proposed rule would align controls on the items that it adds to the CCL by placing them in new 600 series ECCNs ending in “14” to parallel Category ML14 on the Wassenaar Arrangement Munitions List (“ ‘Specialised equipment for military training' or for simulating military scenarios, simulators specially designed for training in the use of any firearm or weapon specified by ML.1 or ML.2, and specially designed components and accessories therefor”). Items in proposed ECCN 0A614 are covered by WAML Category ML 14.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as extended by the Notice of August 12, 2011, 76 FR 50661 (August 16, 2011), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222.

1. 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, distribute 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. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

2. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid OMB control number. This proposed rule would affect two approved collections: Simplified Network Application Processing System (control number 0694-0088), which includes, among other things, license applications, and License Exceptions and Exclusions (0694-0137).

As stated in the proposed rule published at 76 FR 41958 (July 15, 2011), BIS believes that the combined effect of all rules to be published adding items to the EAR that would be removed from the ITAR as part of the administration's Export Control Reform Initiative would increase the number of license applications to be submitted by approximately 16,000 annually, resulting in an increase in burden hours of 5,067 (16,000 transactions at 17 minutes each) under control number 0694-0088.

Military training “equipment,” related test, inspection, and production “equipment,” “parts,” “components,” “accessories and attachments,” “software” and “technology” formerly on the USML would become eligible for License Exception STA under this rule. As stated in the July 15 proposed rule, BIS believes that the increased use of License Exception STA resulting from combined effect of all rules to be published adding items to the EAR that would be removed from the ITAR as part of the administration's Export Control Reform Initiative would increase the burden associated with control number 0694-0137 by about 23,858 hours (20,450 transactions @ 1 hour and 10 minutes each).

BIS expects that this increase in burden would be more than offset by a reduction in burden hours associated with approved collections related to the ITAR. The largest impact of the proposed rule would likely apply to exporters of replacement parts for military training “equipment” that has been approved under the ITAR for export to allies and regime partners. Because, with few exceptions, the ITAR allows exemptions from license requirements only for exports to Canada, most exports of such parts, even when destined to NATO and other close allies, require specific State Department authorization. Under the EAR, as proposed in this notice, such parts as well as non-combat military trainers, certain radar trainers and training “equipment” for ground military operations along with related test, inspection, and production “equipment” would become eligible for export to NATO and other multi-regime allies under License Exception STA. Use of License Exception STA imposes a paperwork and compliance burden because, for example, exporters must furnish information about the item being exported to the consignee and obtain from the consignee an acknowledgement and commitment to comply with the EAR. However, the Administration understands that complying with the burdens of STA is likely less burdensome than applying for licenses. For example, under License Exception STA, a single consignee statement can apply to an unlimited number of products, need not have an expiration date, and need not be submitted to the government in advance for approval. Suppliers with regular customers can tailor a single statement and assurance to match their business relationship rather than applying repeatedly for licenses with every purchase order to supply reliable customers in countries that are close allies or members of export control regimes or both.

Even in situations in which a license would be required under the EAR, the burden is likely to be reduced compared to the license requirement of the ITAR. In particular, license applications for exports of technology controlled by ECCN 0E614 are likely to be less complex and burdensome than the authorizations required to export ITAR-controlled technology, i.e., Manufacturing License Agreements and Technical Assistance Agreements.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et seq., generally requires an agency to prepare an initial regulatory flexibility analysis (IRFA) of any rule subject to the notice and comment rulemaking requirements under the Administrative Procedure Act (5 U.S.C. 553) or any other statute. However, under section 605(b) of the RFA, however, if the head of an agency certifies that a rule will not have a significant impact on a substantial number of small entities, the RFA does not require the agency to prepare a regulatory flexibility analysis. Pursuant to section 605(b), the Chief Counsel for Regulation, Department of Commerce, submitted a memorandum to the Chief Counsel for Advocacy, Small Business Administration, certifying that this proposed rule, if promulgated, will not have a significant impact on a substantial number of small entities.

The Bureau of Industry and Security (BIS) does not collect data on the size of entities that apply for and are issued export licenses. Although BIS is unable to estimate the exact number of small entities that would be affected by this rule, it acknowledges that this rule would affect some unknown number.

This proposed rule is part of the Administration's Export Control Reform Initiative. Under that initiative, the United States Munitions List (22 CFR part 121) (USML) would be revised to be a “positive” list, i.e., a list that does not use generic, catch-all controls on any part, component, accessory, attachment, or end item that was in any way specifically modified for a defense article, regardless of the article's military or intelligence significance or non-military applications. At the same time, articles that are determined to no longer warrant control on the USML would become controlled on the Commerce Control List (CCL). Such items, along with certain military items that currently are on the CCL, will be identified in specific Export Control Classification Numbers (ECCNs) known as the “600 series” ECCNs. In addition, some items currently on the Commerce Control List would move from existing ECCNs to the new 600 series ECCNs. In practice, the greatest impact of this rule on small entities would likely be reduced administrative costs and reduced delay for exports of items that are now on the USML but would become subject to the EAR. This rule addresses Category IX articles, which are: military training “equipment,” “parts,” “components,” and “accessories and attachments” therefor; test, inspection, and production “equipment” for military training “equipment” and “parts,” “components” and “accessories and attachments” therefor; and related “software” and “technology.” Training “equipment” related to certain inherently military functions would remain on the USML. However, parts, components, and “accessories and attachments” for that “equipment” would be included on the CCL unless expressly controlled on the USML. Such parts and components are more likely to be produced by small businesses than are complete items of training equipment, and would in many cases become subject to the EAR. Moreover, officials of the Department of State have informed BIS that license applications for such parts and components are a high percentage of the license applications for USML articles reviewed by that department.

Changing the jurisdictional status of Category IX items would reduce the burden on small entities (and other entities as well) through:

In addition, parts and components controlled under the ITAR remain under ITAR control when incorporated into foreign-made items, regardless of the significance or insignificance of the item, discouraging foreign buyers from incorporating such U.S. content. The availability of de minimis treatment under the EAR may reduce the incentive for foreign manufacturers to avoid purchasing U.S.-origin parts and components.

Many exports and reexports of the Category IX articles that would be placed on the CCL, as proposed in this rule, particularly parts and components, would become eligible for license exceptions that apply to shipments to U.S. Government agencies, shipments valued at less than $1,500, parts and components being exported for use as replacement parts, temporary exports, and License Exception Strategic Trade Authorization (STA), reducing the number of licenses that exporters of these items would need. License exceptions under the EAR would allow suppliers to send routine replacement parts and low level parts to NATO and other close allies and export control regime partners for use by those governments and for use by contractors building equipment for those governments or for the U.S. Government without having to obtain export licenses. Under License Exception STA, the exporter would need to furnish information about the item being exported to the consignee and obtain a statement from the consignee that, among other things, would commit the consignee to comply with the EAR and other applicable U.S. laws. Because such statements and obligations can apply to an unlimited number of transactions and have no expiration date, they would impose a net reduction in burden on transactions that the government routinely approves through the license application process that the License Exception STA statements would replace.

Even for exports and reexports in which a license would be required, the process would be simpler and less costly under the EAR. When a USML Category IX article is moved to the CCL, the number of destinations for which a license is required would remain unchanged. However, the burden on the license applicant would decrease because the licensing procedure for CCL items is simpler and more flexible than the license procedure for USML articles.

Under the USML licensing procedure, an applicant must include a purchase order or contract with its application. There is no such requirement under the CCL licensing procedure. This difference gives the CCL applicant at least two advantages. First, the applicant has a way of determining whether the U.S. government will authorize the transaction before it enters into potentially lengthy, complex and expensive sales presentations or contract negotiations. Under the USML procedure, the applicant will need to caveat all sales presentations with a reference to the need for government approval and is more likely to have to engage in substantial effort and expense only to find that the government will reject the application. Second, a CCL license applicant need not limit its application to the quantity or value of one purchase order or contract. It may apply for a license to cover all of its expected exports or reexports to a particular consignee over the life of a license (normally two years, but may be longer if circumstances warrant a longer period), reducing the total number of licenses for which the applicant must apply.

In addition, many applicants exporting or reexporting items that this rule would transfer from the USML to the CCL would realize cost savings through the elimination of some or all registration fees currently assessed under the ITAR's licensing procedure. Currently, ITAR applicants must pay to use the ITAR licensing procedure even if they never actually are authorized to export. Registration fees for manufacturers and exporters of articles on the USML start at $2,500 per year, increase to $2,750 for organizations applying for one to ten licenses per year and further increases to $2,750 plus $250 per license application (subject to a maximum of three percent of total application value) for those who need to apply for more than ten licenses per year. There are no registration or application processing fees for applications to export items listed on the CCL. Once the Category IX items that are the subject to this rulemaking are removed from the USML and added to the CCL, entities currently applying for licenses from the Department of State would find their registration fees reduced if the number of ITAR licenses those entities need declines. If an entity's entire product line is moved to the CCL, then its ITAR registration and registration fee requirement would be eliminated.

De minimis treatment under the EAR would become available for all items that this rule proposes to transfer from the USML to the CCL. Items subject to the ITAR remain subject to the ITAR when they are incorporated abroad into a foreign-made product regardless of the percentage of U.S. content in that foreign made product. Foreign-made products that incorporate items that this rule would move to the CCL would be subject to the EAR only if their total controlled U.S.-origin content exceeded 10 percent. Because including small amounts of U.S.-origin content would not subject foreign-made products to the EAR, foreign manufacturers would have less incentive to avoid such U.S.-origin parts and components, a development that potentially would mean greater sales for U.S. suppliers, including small entities.

BIS is still considering comments made in response to the July 15 rule pertaining to these proposed new de minimis levels and, as noted above, will consider de minimis -related comments to this proposed rule provided they are in the context of this proposed rule. However, BIS believes that increased burden imposed by those actions will be offset substantially by the reduction in burden attributable to the moving of items from the USML to CCL and the compliance benefits associated with the consolidation of all WAML items subject to the EAR in one series of ECCNs.

BIS is unable to determine the precise number of small entities that would be affected by this rule. Based on the facts and conclusions set forth above, BIS believes that any burdens imposed by this rule would be offset by a reduction in the number of items that would require a license, increased opportunities for use of license exceptions for exports to certain countries, simpler export license applications, reduced or eliminated registration fees and application of a de minimis threshold for foreign-made items incorporating U.S.-origin parts and components, which would reduce the incentive for foreign buyers to design out or avoid U.S.-origin content. For these reasons, the Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule, if adopted in final form, would not have a significant economic impact on a substantial number of small entities. Accordingly, no IRFA is required, and none has been prepared.

For the reasons stated in the preamble, parts 742 and 774 of the Export Administration Regulations (15 CFR parts 730-774) are proposed to be amended as follows:

Under the Federal Food, Drug, and Cosmetic Act (sec. 409(b)(5) (21 U.S.C. 348(b)(5))), notice is given that a food additive petition (FAP 2A4796) has been jointly filed by Gruma Corporation, Spina Bifida Association, March of Dimes Foundation, American Academy of Pediatrics, Royal DSM N.V., and National Council of La Raza, c/o Alston & Bird, LLP, 950 F Street NW., Washington, DC 20004-1404. The petition proposes to amend the food additive regulations in § 172.345 Folic acid (folacin) (21 CFR 172.345) to provide for the safe use of folic acid in corn masa flour.

The Agency has determined under 21 CFR 25.32(k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

The Directorate of Defense Trade Controls (DDTC), U.S. Department of State, administers the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130). The items subject to the jurisdiction of the ITAR, i.e., “defense articles,” are identified on the ITAR's U.S. Munitions List (USML) (22 CFR 121.1). With few exceptions, items not subject to the export control jurisdiction of the ITAR are subject to the jurisdiction of the Export Administration Regulations (“EAR,” 15 CFR parts 730-774, which includes the Commerce Control List (CCL) in Supplement No. 1 to Part 774), administered by the Bureau of Industry and Security (BIS), U.S. Department of Commerce. Both the ITAR and the EAR impose license requirements on exports and reexports. Items not subject to the ITAR or to the exclusive licensing jurisdiction of any other set of regulations are subject to the EAR.

The Departments of State and Commerce described in their respective Advanced Notices of Proposed Rulemaking (ANPRM) in December 2010 the Administration's plan to make the USML and the CCL positive, tiered, and aligned so that eventually they can be combined into a single control list (see “Commerce Control List: Revising Descriptions of Items and Foreign Availability,” 75 FR 76664 (December 9, 2010) and “Revisions to the United States Munitions List,” 75 FR 76935 (December 10, 2010)). The notices also called for the establishment of a “bright line” between the USML and the CCL to reduce government and industry uncertainty regarding export jurisdiction by clarifying whether particular items are subject to the jurisdiction of the ITAR or the EAR. While these remain the Administration's ultimate Export Control Reform objectives, their concurrent implementation would be problematic in the near term. In order to more quickly reach the national security objectives of greater interoperability with U.S. allies, enhancing the defense industrial base, and permitting the U.S. Government to focus its resources on controlling and monitoring the export and reexport of more significant items to destinations, end-uses, and end-users of greater concern than NATO allies and other multi-regime partners, the Administration has decided, as an interim step, to propose and implement revisions to both the USML and the CCL that are more positive, but not yet tiered.

Specifically, based in part on a review of the comments received in response to the December 2010 notices, the Administration has determined that fundamentally altering the structure of the USML by tiering and aligning it on a category-by-category basis would significantly disrupt the export control compliance systems and procedures of exporters and reexporters. For example, until the entire USML was revised and became final, some USML categories would follow the legacy numbering and control structures while the newly revised categories would follow a completely different numbering structure. In order to allow for the national security benefits to flow from re-aligning the jurisdictional status of defense articles that no longer warrant control on the USML on a category-by-category basis while minimizing the impact on exporters' internal control and jurisdictional and classification marking systems, the Administration plans to proceed with building positive lists now and afterward return to structural changes.

This proposed rule would revise USML Category IX, covering military training equipment, to further the national security objectives set forth above and to more accurately describe the articles within the category in order to establish a “bright line” between the USML and the CCL for the control of these articles.

The title of the category is changed to indicate that it covers training equipment only. Training on a defense article would be a defense service covered under the category in which the defense article is enumerated.

Paragraph (a) is to list all the types of training equipment covered in the category.

Paragraph (b) is also revised to more specifically describe the items (simulators) controlled therein. Radar target generators are to be controlled in Category XI(a). Infrared scene generators are to be controlled in Category XII(c).

Tooling and production equipment, currently controlled in paragraph (c), are to be covered on the CCL in proposed ECCN 0B614.

The most significant aspect of this more positive, but not yet tiered, proposed USML category is that it does not contain controls on all generic parts, components, accessories, and attachments (currently captured in paragraph (d)) that are in any way specifically designed or modified for a defense article, regardless of their significance to maintaining a military advantage for the United States. These items are to be subject to the new 600 series controls in Category 0 of the CCL, to be published separately by the Department of Commerce. Parts, components, accessories, or attachments of a simulator that are common to the simulated system or end-item are to be controlled under the same USML Category or CCL ECCN as the parts, components, accessories, and attachments of the simulated system or end-item.

Although one of the goals of the export control reform initiative is to describe USML controls without using design intent criteria, a few of the controls in the proposed revision nonetheless use the term “specially designed.” It is, therefore, necessary for the Department to define the term. Two proposed definitions have been published to date.

The Department first provided a draft definition for “specially designed” in the December 2010 ANPRM (75 FR 76935) and noted the term would be used minimally in the USML, and then only to remain consistent with the Wassenaar Arrangement or other multilateral regime obligation or when no other reasonable option exists to describe the control without using the term. The draft definition provided at that time is as follows: “For the purposes of this Subchapter, the term `specially designed' means that the end-item, equipment, accessory, attachment, system, component, or part (see ITAR § 121.8) has properties that (i) distinguish it for certain predetermined purposes, (ii) are directly related to the functioning of a defense article, and (iii) are used exclusively or predominantly in or with a defense article identified on the USML.”

The Department of Commerce subsequently published on July 15, 2011, for public comment, the Administration's proposed definition of “specially designed” that would be common to the CCL and the USML. The public provided more than 40 comments on that proposed definition on or before the September 13 deadline for comments. The Departments of State, Commerce, and Defense are now reviewing those comments and related issues, and the Departments of State and Commerce plan to publish for public comment another proposed rule on a definition of “specially designed” that would be common to the USML and the CCL. In the interim, and for the purpose of evaluation of this proposed rule, reviewers should use the definition provided in the December ANPRM.

As the U.S. Government works through the proposed revisions to the USML, some solutions have been adopted that were determined to be the best of available options. With the thought that multiple perspectives would be beneficial to the USML revision process, the Department welcomes the assistance of users of the lists and requests input on the following:

(1) A key goal of this rulemaking is to ensure the USML and the CCL together control all the items that meet Wassenaar Arrangement commitments embodied in Munitions List Category 14 (WA-ML14). To that end, the public is asked to identify any potential lack of coverage brought about by the proposed rules for Category IX contained in this notice and the new Category 0 ECCNs published separately by the Department of Commerce when reviewed together.

(2) The key goal of this rulemaking is to establish a “bright line” between the USML and the CCL for the control of these articles. The public is asked to provide specific examples of articles whose jurisdiction would be in doubt based on this revision.

The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States Government and that rules implementing this function are exempt from § 553 (Rulemaking) and § 554 (Adjudications) of the Administrative Procedure Act (APA). Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department is publishing this rule with a 45-day provision for public comment and without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function. As noted above, and also without prejudice to the Department position that this rulemaking is not subject to the APA, the Department previously published a related Advance Notice of Proposed Rulemaking (RIN 1400-AC78), and accepted comments for 60 days.

Since the Department is of the opinion that this rule is exempt from the rulemaking provisions of 5 U.S.C. 553, it does not require analysis under the Regulatory Flexibility Act.

This proposed amendment does not involve a mandate that will 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 year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This proposed amendment has been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.

This proposed amendment 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 Executive Order 13132, it is determined that this proposed amendment does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this proposed amendment.

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, distributed 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. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

The Department of State has reviewed the proposed amendment in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, Executive Order 13175 does not apply to this rulemaking.

Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid OMB control number. This proposed rule would affect the following approved collections: (1) Statement of Registration, DS-2032, OMB No. 1405-0002; (2) Application/License for Permanent Export of Unclassified Defense Articles and Related Unclassified Technical Data, DSP-5, OMB No. 1405-0003; (3) Application/License for Temporary Import of Unclassified Defense Articles, DSP-61, OMB No. 1405-0013; (4) Nontransfer and Use Certificate, DSP-83, OMB No. 1405-0021; (5) Application/License for Permanent/Temporary Export or Temporary Import of Classified Defense Articles and Classified Technical Data, DSP-85, OMB No. 1405-0022; (6) Application/License for Temporary Export of Unclassified Defense Articles, DSP-73, OMB No. 1405-0023; (7) Statement of Political Contributions, Fees, or Commissions in Connection with the Sale of Defense Articles or Services, OMB No. 1405-0025; (8) Authority to Export Defense Articles and Services Sold Under the Foreign Military Sales (FMS) Program, DSP-94, OMB No. 1405-0051; (9) Application for Amendment to License for Export or Import of Classified or Unclassified Defense Articles and Related Technical Data, DSP-6, -62, -74, -119, OMB No. 1405-0092; (10) Request for Approval of Manufacturing License Agreements, Technical Assistance Agreements, and Other Agreements, DSP-5, OMB No. 1405-0093; (11) Maintenance of Records by Registrants, OMB No. 1405-0111; (12) Annual Brokering Report, DS-4142, OMB No. 1405-0141; (13) Brokering Prior Approval (License), DS-4143, OMB No. 1405-0142; (14) Projected Sale of Major Weapons in Support of Section 25(a)(1) of the Arms Export Control Act, DS-4048, OMB No. 1405-0156; (15) Export Declaration of Defense Technical Data or Services, DS-4071, OMB No. 1405-0157; (16) Request for Commodity Jurisdiction Determination, DS-4076, OMB No. 1405-0163; (17) Request to Change End-User, End-Use, and/or Destination of Hardware, DS-6004, OMB No. 1405-0173; (18) Request for Advisory Opinion, DS-6001, OMB No. 1405-0174; (19) Voluntary Disclosure, OMB No. 1405-0179; and (20) Technology Security/Clearance Plans, Screening Records, and Non-Disclosure Agreements Pursuant to 22 CFR 126.18, OMB No. 1405-0195. The Department of State believes there will be minimal changes to these collections. The Department of State believes the combined effect of all rules to be published moving commodities from the USML to the EAR as part of the Administration's Export Control Reform would decrease the number of license applications by approximately 30,000 annually. The Department of State is looking for comments on the potential reduction in burden.

Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, part 121 is proposed to be amended as follows:

Table of Acronyms DHS Department of Homeland Security FR Federal Register NPRM Notice of Proposed Rulemaking A. Public Participation and Request for Comments

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

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

To submit your comment online, go to http://www.regulations.gov, type the docket number (USCG-2012-0482) in the “SEARCH” box and click “SEARCH.” Click on “Submit a Comment” on the line associated with this rulemaking.

If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change the rule based on your comments.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type the docket number (USCG-2012-0482) in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rulemaking. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

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

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

On September 29, 2012 from 7 a.m. to 11 a.m., Without Limits Coaching will sponsor “Swim Harbor Island” on the waters adjacent to and surrounding Harbor Island in Wrightsville Beach, North Carolina. The swim event will consist of up to 200 swimmers swimming a 3.5 mile course around Harbor Island in Wrightsville Beach, North Carolina. To provide for the safety of participants, spectators and other transiting vessels, the Coast Guard will temporarily restrict vessel traffic in the event area during this event.

The Coast Guard is proposing establishing a safety zone on the navigable waters of the Atlantic Intracoastal Waterway 550 yards north and south of the U.S. 74/76 Bascule Bridge, mile 283.1, latitude 34°13′06″ North, longitude 077°48′44″ West, at Wrightsville Beach, North Carolina. Participants will enter the Atlantic Intracoastal Waterway at the Dockside Marina on the west bank of the Atlantic Intracoastal Waterway south of the U.S. 74/76 Bascule Bridge at Wrightsville Beach, North Carolina, and swim north and clockwise around Harbor Island returning to the Dockside Marina. To provide for the safety of participants, spectators and other transiting vessels, the Coast Guard will temporarily restrict vessel traffic in the event area during this event.

In an effort to enhance safety of event participants the channel in the vicinity of the U.S. 74/76 Bascule Bridge at Wrightsville Beach, North Carolina will remain closed during the event on September 29, 2012 from 7 a.m. to 11 a.m. The Coast Guard will temporarily restrict access to this section of Atlantic Intracoastal Waterway during the event. In the interest of participant safety, general navigation within the safety zone will be restricted during the specified date and times. Except for participants and vessels authorized by the Coast Guard Captain of the Port or his representative, no person or vessel may enter or remain in the regulated area.

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

This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. Although this regulation will restrict access to the area, the effect of this rule will not be significant because the regulated area will be in effect for a limited time, from 7 a.m. to 11 a.m., on September 29, 2012. The Coast Guard will provide advance notification via maritime advisories so mariners can adjust their plans accordingly. The regulated area will apply only to the section of Atlantic Intracoastal Waterway in the immediate vicinity of U.S. 74/76 Bascule Bridge at Wrightsville Beach, North Carolina. Coast Guard vessels enforcing this regulated area can be contacted on marine band radio VHF-FM channel 16 (156.8 MHz).

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered the impact of this proposed rule on small entities. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule will not have a significant economic impact on a substantial number of small entities. This proposed rule will affect the following entities, some of which may be small entities: The owners or operators of recreational vessels intending to transit the specified portion of Atlantic Intracoastal Waterway from 7 a.m. to 11 a.m. on September 29, 2012.

This proposed rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This proposed rule will only be in effect for four hours from 7 a.m. to 11 a.m. The regulated area applies only to the section of Atlantic Intracoastal Waterway in the vicinity of the U.S. 74/76 Bascule Bridge at Wrightsville Beach, North Carolina. Vessel traffic may be allowed to pass through the regulated area with the permission of the Coast Guard Patrol Commander. In the case where the Patrol Commander authorizes passage through the regulated area, vessels shall proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the swim course. The Patrol Commander will allow non-participating vessels to transit the event area once all swimmers are safely clear of navigation channels and vessel traffic areas. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT , above. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the “For Further Information Contact” section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

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

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

We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves implementation of regulations within 33 CFR Part 100 that apply to organized marine events on the navigable waters of the United States that may have potential for negative impact on the safety or other interest of waterway users and shore side activities in the event area. This special local regulation is necessary to provide for the safety of the general public and event participants from potential hazards associated with movement of vessels near the event area. This rule is categorically excluded from further review under paragraph 34(h) of Figure 2-1 of the Commandant Instruction. A preliminary environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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

In 2009, Secretary of Agriculture Tom Vilsack called for restoring forestlands to protect water resources, the climate, and terrestrial and aquatic ecosystems. The Forest Service spends significant resources on NEPA analyses and documentation for a variety of land management projects. The Agency believes that it is possible to improve the efficiency of the NEPA process to speed the pace of forest and watershed restoration, while not sacrificing sound environmental analysis.

For decades, the Forest Service has implemented terrestrial and aquatic restoration projects. Some of these projects encompassed actions that promoted restoration activities related to floodplains, wetlands and watersheds, or past natural or human-caused damage. The Forest Service has found that under normal circumstances the environmental effects of some restoration activities have not been individually or cumulatively significant. The Forest Service's experience predicting and evaluating the environmental effects of the category of activities outlined in this proposed rule has led the Agency to propose supplementing its NEPA regulations by adding three new categorical exclusions for activities that achieve soil and water restoration objectives.

The Forest Service's proposed categorically excluded actions promote hydrologic, aquatic, and landscape restoration activities. All three categorical exclusions involve activities that are intended to maintain or restore ecological functions and better align the Agency's regulations, specifically its categorical exclusions, with the Agency's current activities and experiences related to restoration.

The restoration of lands occupied by unmaintained non-system roads and trails (National Forest System Roads and Trails are defined at 36 CFR 212.1) is important to promote hydrologic, aquatic, and watershed restoration. Activities that restore lands occupied by a road or trail may include reestablishing former drainage patterns, stabilizing slopes, restoring vegetation, blocking the entrance to the road, installing waterbars, removing culverts, removing unstable fills, pulling back road shoulders, and completely eliminating the road bed by restoring natural contours and slopes. The Forest Service experience is that the majority of issues associated with road and trail decommissioning arise from the initial decision whether to close a road or trail to public use rather than from implementing individual restoration projects.

The Forest Service believes it is appropriate to establish soil and water restoration categorical exclusions based on NEPA implementing regulations at 40 CFR § 1500.4(p) and 1500.5(k), which identify a categorical exclusion as a means to reduce paperwork and delays in project implementation, and the Agency's abundance of information showing that the majority of these identified restoration actions have no significant impacts.

Pursuant to CEQ's implementing regulations at 40 CFR § 1507.3 and the November 23, 2010, CEQ guidance memorandum on “Establishing, Applying, and Revising Categorical Exclusions under the National Environmental Policy Act,” the Forest Service gathered information supporting establishment of these three categorical exclusions using the following four methods:

(1) The Forest Service reviewed EAs that implemented actions that were entirely or partially covered under one of the proposed categorical exclusions. This review showed that these projects did not individually or cumulatively result in a significant effect on the human environment.

(2) The Forest Service consulted with professional staff and experts who have experience leading interdisciplinary teams and conducting environmental analysis of project proposals, implementing restoration activities, guiding the development and execution of restoration programs, and studying the techniques, effects, and outcomes associated with soil and water restoration activities. The experience of these professional staff included persons from every Forest Service and nearly every geographic region across the United States, including Alaska.

(3) The Forest Service also studied peer-reviewed scientific analyses, research papers, and monitoring reports about activities identified under these categorical exclusions.

(4) Finally, the Forest Service reviewed categorical exclusions adopted by eight other federal agencies that cover activities that are comparable in size and scope and that are implemented under similar natural resource conditions with similar environmental impacts to those covered under the categories in this proposed rule.

Based on this review, the Forest Service finds that the proposed categorical exclusions would not individually or cumulatively have significant effects on the human environment. The Agency's finding is predicated on data from implementing comparable past actions; the expert judgment of the responsible officials who made the findings for the projects reviewed for this supporting statement; information from other professional staff and experts, and scientific analyses; a review and comparison of similar categorical exclusions implemented by other federal agencies; and the Forest Service's experience implementing soil and water restoration activities and subsequent monitoring of potential associated impacts. Additional information is available at http://www.fs.fed.us/emc/nepa/restorationCE.

Actions relying on one of these categorical exclusions remain subject to agency requirements to conduct scoping and require a determination that there are not extraordinary circumstances that would otherwise require documentation in an EA or EIS. These proposed categorical exclusions would require a project or case file and decision memo, including, in part, a rationale for using the categorical exclusion and a finding that extraordinary circumstances do not require documentation in an EA or EIS.

The intent of the proposed rule is to increase administrative efficiency in connection with conducting important restoration activities on National Forest System lands while assuring that no significant environmental effects occur. The proposed amendment of Forest Service NEPA Regulations (36 CFR 220.6) concerns NEPA documentation for certain types of soil and water restoration activities. The Council on Environmental Quality does not direct agencies to prepare a NEPA analysis or document before establishing agency procedures that supplement the CEQ regulations for implementing NEPA. Agencies are required to adopt NEPA procedures that establish specific criteria for, and identification of, three classes of actions: Those that require preparation of an EIS; those that require preparation of an EA; and those that are categorically excluded from further NEPA review (40 CFR 1507.3(b)). Categorical exclusions are one part of those agency procedures, and therefore establishing categorical exclusions does not require preparation of a NEPA analysis or document. Agency NEPA procedures are internal procedural guidance to assist agencies in the fulfillment of agency responsibilities under NEPA, but are not the agency's final determination of what level of NEPA analysis is required for a particular proposed action. The requirements for establishing agency NEPA procedures are set forth at 40 CFR 1505.1 and 1507.3. The determination that establishing categorical exclusions does not require NEPA analysis and documentation has been upheld in Heartwood, Inc. v. U.S. Forest Service, 73 F. Supp. 2d 962, 972-73 (S.D. Ill. 1999), aff'd, 230 F. 3d 947, 954-55 (7th Cir. 2000).

This proposed rule has been reviewed under USDA procedures and Executive Order 12866 on regulatory planning and review. The Office of Management and Budget has determined that this is not a significant rule. The proposed rule would not have an annual effect of $100 million or more on the economy, nor would it adversely affect productivity, competition, jobs, the environment, public health or safety, or state or local government. This proposed rule would not interfere with an action taken or planned by another agency, nor would it raise new legal or policy issues. Finally, this proposed rule would not alter the budgetary impacts of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients of such programs.

This proposed rule has been considered in light of the Regulatory Flexibility Act (5 U.S.C. 602 et seq. ). The Agency has determined that this proposed rule would not have a significant economic impact on a substantial number of small entities as defined by the Act because the proposed rule would not impose recordkeeping requirements; it does not affect their competitive position in relation to large entities; and it would not affect their cash flow, liquidity, or ability to remain in the market.

The Agency has considered this proposed rule under the requirements of Executive Order 13132, “Federalism.” The Agency has concluded that the proposed rule conforms with the federalism principles set out in this Executive Order; would not impose any compliance costs on the states; and would not have substantial direct effects on the states or the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, the Agency has determined that no further assessment of federalism implications is necessary.

Pursuant to Executive Order 13175 of November 6, 2000, “Consultation and Coordination with Indian Tribal Governments,” the Agency has assessed the impact of this proposed rule on Indian Tribal governments and has determined that it would not significantly or uniquely affect communities of Indian Tribal governments. The proposed rule deals with requirements for NEPA analysis and has no direct effect on occupancy and use of National Forest System lands. The Agency has also determined that this proposed rule would not impose substantial direct compliance costs on Indian Tribal governments or preempt Tribal law. Therefore, it has been determined that this proposed rule would not have Tribal implications requiring advance consultation with Indian Tribes.

This proposed rule has been analyzed in accordance with the principles and criteria contained in Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights.” The Agency has determined that the proposed rule would not pose the risk of a taking of protected private property.

The Agency has reviewed this proposed rule under Executive Order 12988 of February 7, 1996, “Civil Justice Reform.” After adoption of this proposed rule, (1) all state and local laws and regulations that conflict with this rule or that would impede full implementation of this rule would be preempted; (2) no retroactive effect would be given to this proposed rule; and (3) the proposed rule would not require the use of administrative proceedings before parties could file suit in court challenging its provisions.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), which the President signed into law on March 22, 1995, the Agency has assessed the effects of this proposed rule on state, local, and Tribal governments and the private sector. This proposed rule would not compel the expenditure of $100 million or more by any state, local, or Tribal government or anyone in the private sector. Therefore, a statement under section 202 of the act is not required.

The Agency has reviewed this proposed rule under Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.” The Agency has determined that this proposed rule does not constitute a significant energy action as defined in the Executive Order.

This proposed rule does not contain any additional record keeping or reporting requirements or other information collection requirements as defined in 5 CFR part 1320 that are not already required by law or not already approved for use, and therefore, imposes no additional paperwork burden on the public. Accordingly, the review provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and its implementing regulations at 5 CFR part 1320 do not apply.

For the reasons set out in the preamble, the Forest Service proposes to amend part 220 of title 36 of the Code of Federal Regulations as follows:

In the final rules section of this Federal Register, EPA is approving the State's SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action, no further activity is contemplated. If EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

For additional information, see the direct final rule which is located in the rules section of this Federal Register .

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

Table 1 lists the rule addressed by this proposal with the date that it was adopted by the local air agency and submitted by the California Air Resources Board (CARB).

On March 13, 2012, EPA determined that the submittal for SJVUAPCD Rule 4682 met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.

We approved an earlier version of Rule 4682 into the SIP on June 13, 1995 (60 FR 31086). The SJVUAPCD adopted revisions to the SIP-approved version on September 20, 2007 and CARB submitted them to us on March 7, 2008. On July 15, 2011 (76 FR 41745), we proposed a limited approval and limited disapproval of the 2007 version of SJVUAPCD Rule 4682. However, the 2011 version of the rule superseded the 2007 version, and we do not intend to finalize action on the 2007 version.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control VOC emissions. Rule 4682 was designed to reduce emissions of VOCs from the manufacturing, processing and storage of products composed of polystyrene, polyethylene, and polypropylene. EPA's technical support document (TSD) has more information about this rule.

Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major source in nonattainment areas (see sections 182(a)(2) and (b)(2)), and must not relax existing requirements (see sections 110(l) and 193). The SJVUAPCD regulates an ozone nonattainment area (see 40 CFR part 81), so Rule 4682 must fulfill RACT.

Guidance and policy documents that we use to evaluate enforceability and RACT requirements consistently include the following:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

3. “Averaging Times for Compliance With VOC Emission Limits—SIP Revision Policy,” memorandum from John R. O'Connor, OAQPS, dated January 20, 1984.

On July 15, 2011 (76 FR 41745), we proposed a limited approval and limited disapproval of a previous version of SJVUAPCD Rule 4682. We determined that the rule largely fulfills the relevant criteria summarized above. The rule improves the SIP by clarifying language, adding definitions, and adding control requirements. The rule also improves the SIP by adding requirements for compliance plans, record keeping, and testing. The rule is generally clear and contains appropriate monitoring, reporting, and recordkeeping requirements to ensure that emission limits are adequately enforceable. We found our approval of the submittal would comply with CAA section 110(l), because the proposed SIP revision would not interfere with the on-going process for ensuring that requirements for RFP and attainment of the National Ambient Air Quality Standards are met, and the submitted SIP revision is at least as stringent as the rule previously approved into the SIP. While we found the rule largely fulfilled relevant Clean Air Act 110 and Part D requirements, we identified one deficiency.

The rule established an emission limit of 2.4 pounds of VOC per 100 pounds of total material processed, as averaged on a monthly basis. EPA generally cannot approve compliance periods exceeding 24 hours unless specific criteria are met, including a clear explanation of why the application of RACT is not economically or technically feasible on a daily basis. The District revised the rule and added supporting documentation to address the deficiency.

The District identified two major processes covered by Rule 4682, extrusion foam and expanded polystyrene molding production, and split the rule requirements by process type. Both processes are still subject to an emission limit of 2.4 pounds of VOC per 100 pounds of total material processed, calculated over a monthly period. Expandable polystyrene molding facilities, however, are now subject to an additional emission limit of 3.4 pounds of VOC per 100 pounds of total material processed, calculated daily. Based on the evaluation of the revision, we propose that Rule 4682 is consistent with RACT and the criteria for approving averaging times exceeding 24 hours. The TSD has detailed information on our evaluation.

On January 10, 2012, EPA partially approved and partially disapproved the RACT SIP submitted by California on June 18, 2009 for the SJV extreme ozone nonattainment area (2009 RACT SIP), based in part on our conclusion that the State had not fully satisfied CAA section 182 RACT requirements for polystyrene manufacturing operations. See 77 FR 1417, 1425 (January 10, 2012). Final approval of Rule 4682 would satisfy California's obligation to implement RACT under CAA section 182 for this source category for the 1-hour ozone and 1997 8-hour ozone NAAQS and thereby terminate all CAA sanction and Federal Implementation Plan (FIP) implications of our RACT SIP action as it relates to polystyrene manufacturing.

The TSD describes additional rule revisions that we recommend for the next time the local agency modifies the rule but are not currently the basis for rule disapproval.

Because EPA believes the submitted rule fulfills all relevant requirements, we are proposing to fully approve it as described in section 110(k)(3) of the Act. We will accept comments from the public on this proposal for the next 30 days. Unless we receive convincing new information during the comment period, we intend to publish a final approval action that will incorporate this rule into the federally enforceable SIP.

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

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

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

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

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

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

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

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

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

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

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

Table 1 lists the rules addressed by this proposal with the dates that they were amended by the local air agency and submitted by the California Air Resources Board (CARB).

On March 13, 2012, EPA determined that the submittal for SJVUAPCD Rule 4402 and SJVUPACD Rule 4625 met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.

On July 7, 2011 (76 FR 39777), we finalized a limited approval into the SIP of earlier versions of Rule 4402 and 4625 because these rules largely fulfilled relevant CAA requirements. We simultaneously finalized a limited disapproval of these rules, identifying several rule deficiencies. The SJVUAPCD adopted revisions to the SIP-approved versions on December 15, 2011 and CARB submitted them to us on February 23, 2012.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control VOC emissions. The submitted Rule 4402, Crude Oil Production Sumps, controls VOC emissions from sumps by prohibiting first stage sumps, requiring covers, requiring recordkeeping, and limiting emergency pit use. The submitted Rule 4625, Wastewater Separators, controls VOC emissions from wastewater separators at refineries by requiring inspections, removing exemptions, and requiring recordkeeping. The rules were revised largely to address the deficiencies identified in EPA's July 7, 2011 limited disapproval. EPA's technical support documents (TSDs) have more information about these rules.

Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each major source in nonattainment areas (see sections 182(b)(2) and 182(f)), and must not relax existing requirements (see sections 110(l) and 193). The SJVUAPCD regulates an ozone nonattainment area (see 40 CFR part 81), so Rules 4402 and 4625 must fulfill RACT.

Guidance and policy documents that we use to evaluate enforceability and RACT requirements consistently include the following:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook).

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

3. “Technical Support Document for Suggested Control Measure for the Control of Organic Compound Emissions from Sumps Used in Oil Production Operations,” California Air Resources Board, August 11, 1988.

We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. The TSDs have more information on our evaluation and explain how the revised submittal adequately addresses all deficiencies identified in our previous limited disapproval by revisions to the rule and/or the District's supporting documentation.

We recommend SJVUAPCD develop a more current inventory of all oil production sumps, ponds, and pits in the District for its next ozone plan. This inventory could identify the number of sumps and ponds by size, type (lined, unlined, excavation, above ground, etc.), VOC content and operator production rate. The TSDs describe additional rule revisions that we recommend for the next time the local agency modifies the rules but are not currently the basis for rule disapproval.

Because EPA believes the submitted rules fulfill all relevant requirements, we are proposing to fully approve them as described in section 110(k)(3) of the Act. We will accept comments from the public on this proposal for the next 30 days. Unless we receive convincing new information during the comment period, we intend to publish a final approval action that will incorporate these rules into the federally enforceable SIP. If we finalize this action as proposed, this action would terminate all sanction and FIP clocks associated with our July 2011 limited disapproval.

On January 10, 2012, EPA partially approved and partially disapproved the RACT SIP submitted by California on June 18, 2009 for the SJV extreme ozone nonattainment area (2009 RACT SIP), based in part on our conclusion that the State had not fully satisfied CAA Section 182 RACT requirements for crude oil production sumps and refinery wastewater separators. See 77 FR 1417, 1425 (January 10, 2012). Final approval of Rule 4402 and 4625 would satisfy California's obligation to implement RACT under CAA section 182 for this source category for the 1-hour ozone and 1997 8-hour ozone NAAQS and thereby terminate both the sanctions clocks and the Federal Implementation Plan (FIP) clock associated with these rules.

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

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

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

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

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

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

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

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

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

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

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

You may be potentially affected by this action if you manufacture, import, process, or use products that contain living microorganisms subject to TSCA, especially if you know that your products contain or may contain T. reesei. Potentially affected entities may include, but are not limited to:

• Manufacturers, importers, or processors of chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the list of chemical substances excluded by TSCA section 3(2)(B) and the applicability provisions in § 725.105(c) for SNUR related obligations. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127; see also 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. Importers of chemical substances subject to these SNURs must certify their compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of a proposed or final SNUR are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see §  725.920), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

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

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

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

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

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

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

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

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

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

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

EPA is proposing this SNUR for the genetically modified microorganism identified generically as T. reesei (MCAN J-10-2). This proposed rule would require persons to notify EPA at least 90 days before commencing the manufacture, import, or processing of the microorganism for any activity designated as a significant new use.

Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” (see 40 CFR part 725, subparts L and M). EPA must make this determination by rule after considering all relevant factors, including the TSCA section 5(a)(2) factors, listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture, import, or process the chemical substance for that use. Persons who must report are described in § 725.105(c).

EPA has interpreted the TSCA section 3(2) definition of “chemical substance” as authorizing EPA to regulate microorganisms under TSCA. See the Federal Register issue of April 11, 1997 (62 FR 17910) (FRL-5577-2).

General provisions for SNURs for microorganisms appear in 40 CFR part 725, subpart L. These provisions describe persons subject to the proposed rule, recordkeeping requirements, exemptions to reporting requirements, and applicability to uses occurring before the effective date of the final rule. Provisions relating to user fees appear at 40 CFR part 700. Persons subject to this SNUR must comply with the notice requirements under TSCA section 5(a)(1)(A) and must submit a MCAN, using the procedures set out in 40 CFR part 725, subpart D, and additional “Significant New Uses of Microorganisms” procedures at 40 CFR part 725, subpart L.

Under 40 CFR part 725, EPA has adopted a more narrow interpretation of the TSCA section 5(h)(3) exemption for small quantities used in research than it has for other chemical substances under 40 CFR part 721. Under § 725.3, EPA has defined small quantities solely for research and development as “quantities of a microorganism manufactured, imported, or processed or proposed to be manufactured, imported, or processed solely for research and development that meet the requirements of § 725.234.” Any other research and development activity of a microorganism subject to a SNUR must comply with the TSCA section 5(a)(1)(A) notification requirements unless that activity has been excluded from coverage under the SNUR. See § 725.3, subparts E and F of 40 CFR part 725, and the April 11, 1997 Federal Register document. Once EPA receives a SNUN, EPA may take regulatory action under TSCA section 5(e), 5(f), 6, or 7 to control the activities for which it has received the SNUN. If EPA does not take action, EPA is required under TSCA section 5(g) to explain in the Federal Register its reasons for not taking action.

Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

• The projected volume of manufacturing and processing of a chemical substance.

• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

To determine what would constitute a significant new use for the chemical substance that is the subject of this proposed SNUR, EPA considered the available information relating to the four bulleted factors listed in TSCA section 5(a)(2) factors listed in this unit, and other relevant factors. This includes relevant information about the toxicity of the chemical substance and likely human exposures and environmental releases associated with possible uses. See the risk assessment in the docket under docket ID number EPA-HQ-OPPT-2010-0994 for this information and other relevant factors.

EPA is proposing to establish significant new use and recordkeeping requirements for only the microorganism identified generically as T. reesei, genetically modified as described in MCAN J-10-2. This will be codified in 40 CFR part 725, subpart M. Any T. reesei microorganism with genetic modifications other than those described in MCAN J-10-2 would not be subject to this SNUR and will require submission and EPA review of a separate MCAN.

Chemical name: Trichoderma reesei (MCAN J-10-2) (generic).

Chemical Abstracts Service (CAS) Registry Number: Not available.

Use: The MCAN states that the generic (non-confidential) use of the microorganism will be to produce enzymes for ethanol production.

Basis for action: When used to produce enzymes that can release sugars from de-lignified plant materials, human and environmental exposures to live T. reesei cells are low, due to the containment and inactivation procedures specified in the MCAN. These containment and inactivation procedures are consistent with standard industry practices and those delineated in 40 CFR 725.422(d). These procedures include the use of equipment to minimize aerosol releases from the facility, and the use of inactivation methods that reduce the number of viable cells by at least 6 logs (i.e., 10 6 ) in the liquid and solid waste streams. More importantly, the manufacturing process described in the MCAN relies on the typical submerged standard industrial fermentation process for enzyme production, wherein the microorganism is grown in liquid broth culture in the absence of solid materials or solid surfaces, the fermentation is terminated prior to the microorganism entering the stationary phase of growth, and the enzyme is separated from the microbial biomass which is inactivated prior to disposal. Therefore, EPA determined that the proposed manufacturing, processing, or use of the microorganism as described in the MCAN is not expected to present an unreasonable risk. However, EPA has determined that use of the microorganism under other conditions may result in adverse human health and environmental effects. Specifically, where growth on solid plant material or insoluble substrate occurs, T. reesei has been shown to produce a secondary metabolite known as paracelsin, which is a peptaibol. Peptaibols are small linear peptides of 1,000-2,000 Daltons characterized by a high content of the non-proteinogenic amino acid alpha-amino-isobutyric acid (Aib), with a N -terminus that is typically acetylated, and a C -terminus that is linked to an amino alcohol, which is usually phenylalaninol, or sometimes valinol, leucinol, isoleucinol, or tryptophanol. Peptaibols are associated with a wide variety of biological activities and have antifungal, antibacterial, sometimes antiviral, antiparasitic, and neurotoxic activity. Paracelsin has been shown to have toxicity toward mammalian cells such as hemolytic activity on human erythrocytes and cytotoxicity to rat adrenal medulla PC12 (pheochromocytoma) cells. Paracelsin has also been shown to exhibit cytotoxicity to Gram-positive bacteria, to human erythrocytes, and to other mammals such as aquatic indicator species. Additional information relating to the assessment of this chemical substance and paracelsin, including a sanitized EPA risk assessment and a list of references used, is available in the docket under docket ID number EPA-HQ-OPPT-2010-0994.

Recommended testing: EPA has determined that the results of the following studies would help characterize any potential human health and environmental effects of the MCAN substance:

1. Investigation of whether paracelsin will be produced, and at what levels if the genetically modified T. reesei is grown on various plant biomass materials for different durations under various fermentation conditions in cellulosic biomass facilities.

2. If paracelsin is produced, a study of whether paracelsin would be denatured/inactivated during production and processing.

3. If paracelsin is released from the facility, a study of whether paracelsin would be degraded/inactivated during wastewater treatment.

4. If released to the environment, studies on the persistence, stability, dissemination, accumulation, and the potential resulting biological activity of paracelsin with exposure to aquatic and terrestrial organisms in the environment.

5. Studies to determine the ability of the MCAN microorganism to survive in the environment relative to the survival of the unmodified parent or recipient strain, and to assess its competitiveness with other fungi in the environment. This study may require some supplementation with one or more carbon sources and the use of various soil types.

6. A study to determine survival of the fungus during an anaerobic fermentation for production of ethanol by an ethanologen, and survival of the fungus during ethanol distillation or at the distillation temperature for ethanol.

CFR citation: 40 CFR 725.1077.

During review of the specific T. reesei, modified as described in MCAN J-10-2, EPA determined that certain fermentation conditions, other than the typical submerged standard industrial fermentation process for enzyme production described in Unit IV., could result in increased exposures thereby constituting a “significant new use.” Specifically, EPA is concerned that where growth on solid plant material or insoluble substrate occurs, T. reesei has been shown to produce a secondary metabolite known as paracelsin, which is associated with a variety of toxic effects to mammalian and bacterial cells. Use of the MCAN microorganism without the specific containment or inactivation controls listed in the MCAN, described in Unit IV., may result in adverse human health and environmental effects. Based on the descriptions of manufacturing, processing, and use in the MCAN J-10-2, the Agency believes that uses of the organism covered by the proposed definition of a significant new use are not currently ongoing.

EPA is proposing this SNUR for a chemical substance that has undergone review to achieve the following objectives with regard to the significant new uses designated in this proposed rule:

• EPA would receive notice of any person's intent to manufacture, import, or process a listed chemical substance for the described significant new use before that activity begins.

• EPA would have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing, importing, or processing a listed chemical substance for the described significant new use.

• EPA would be able to determine whether regulation of prospective manufacturers, importers, or processors of a listed chemical substance is warranted pursuant to TSCA sections 5(e), 5(f), 6, or 7, and impose any necessary requirements before the described significant new use of that chemical substance occurs.

Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available electronically at http://www.epa.gov/opptintr/existingchemicals/pubs/tscainventory/index.html.

To establish a significant “new” use, EPA must determine that the use is not ongoing. EPA solicits comments on whether any of the uses proposed as significant new uses are ongoing.

As discussed in the Federal Register issue of April 24, 1990 (55 FR 17376), EPA has decided that the intent of TSCA section 5(a)(1)(B) is best served by designating a use as a significant new use as of the date of publication of the proposed rule rather than as of the effective date of the final rule. If uses begun after publication of the proposed rule were considered ongoing rather than new, it would be difficult for EPA to establish SNUR notice requirements because a person could defeat the SNUR by initiating the significant new use before the proposed rule became final, and then argue that the use was ongoing before the effective date of the final rule. Thus, any persons who begin commercial manufacture, import, or processing activities with the microorganism that would be regulated through this proposed rule will have to cease any such activity before the effective date of the final rule, if and when finalized. To resume their activities, these persons would have to comply with all applicable SNUR notice requirements and wait until the notice review period, including all extensions, expires.

EPA has promulgated provisions to allow persons to comply with this proposed SNUR before the effective date. If a person were to meet the conditions of advance compliance under 40 CFR 725.912(a), the person would be considered exempt from the requirements of the SNUR.

EPA recognizes that TSCA section 5 does not require developing any particular test data before submission of a SNUN. There are two exceptions:

1. Development of test data is required where the chemical substance subject to the SNUR is also subject to a test rule under TSCA section 4 (see TSCA section 5(b)(1)).

2. Development of test data may be necessary where the chemical substance has been listed under TSCA section 5(b)(4) (see TSCA section 5(b)(2)).

In the absence of a TSCA section 4 test rule or a TSCA section 5(b)(4) listing covering the chemical substance, persons are required only to submit test data in their possession or control and to describe any other data known to or reasonably ascertainable by them (see 40 CFR 725.25(a)(2)). However, upon review of MCANs and SNUNs, the Agency has the authority to require appropriate testing. In this case, EPA recommends persons, before performing any testing, to consult with the Agency pertaining to protocol selection.

The recommended testing specified in Unit IV. may not be the only means of addressing the potential risks for the chemical substance. However, SNUNs submitted without any test data may increase the likelihood that EPA will respond by taking action under TSCA section 5(e), particularly if satisfactory test results have not been obtained from a prior submission. EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

• Human exposure and environmental release that may result from the significant new use of the chemical substance.

• Potential benefits of the chemical substance.

• Information on risks posed by the chemical substance compared to risks posed by potential substitutes.

Persons subject to this SNUR must comply with the notice requirements under TSCA section 5(a)(1)(A) and must submit a MCAN, using the procedures set out in 40 CFR part 725, subpart D, and additional “Significant New Uses of Microorganisms” procedures at 40 CFR part 725, subpart L. SNUNs must be submitted to EPA on EPA Form No. 6300-07, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 725.25 and 40 CFR 725.27. E-PMN software is available electronically at http://www.epa.gov/opptintr/newchems.

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers, importers, and processors of the chemical substance subject to this proposed rule. EPA's complete Economic Analysis is available in the docket under docket ID number EPA-HQ-OPPT-2010-0994.

This proposed rule would establish a SNUR for a chemical substance that was the subject of a MCAN. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993).

According to the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable. EPA would amend the table in 40 CFR part 9 to list the OMB approval number for the information collection requirements contained in this proposed rule. This listing of the OMB control numbers and their subsequent codification in the CFR satisfies the display requirements of PRA and OMB's implementing regulations at 5 CFR part 1320.

The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action would not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Collection Strategies Division, Office of Environmental Information (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

On February 18, 2012, EPA certified pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), that promulgation of a SNUR would not have a significant economic impact on a substantial number of small entities where the following are true:

1. A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

2. The SNUN submitted by any small entity would not cost significantly more than $8,300.

A copy of that certification is available in the docket for this proposed rule.

This proposed rule is within the scope of the February 18, 2012 certification. Based on the Economic Analysis discussed in Unit IX. and EPA's experience promulgating SNURs (discussed in the certification), EPA believes that the following are true:

• A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

• Submission of the SNUN would not cost any small entity significantly more than $8,300. Therefore, the promulgation of the SNUR would not have a significant economic impact on a substantial number of small entities.

Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reason to believe that any State, local, or Tribal government would be impacted by this proposed rule. As such, EPA has determined that this proposed rule would not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of sections 202, 203, 204, or 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4).

This action would not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999).

This proposed rule would not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This proposed rule would not significantly nor uniquely affect the communities of Indian Tribal governments, nor would it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this proposed rule.

This action is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

This proposed rule is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

In addition, since this action does not involve any technical standards, 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), does not apply to this action.

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Therefore, it is proposed that 40 CFR chapter I be amended as follows:

This is a summary of a Public Notice released by the Wireline Competition Bureau, the Wireless Telecommunications Bureau, and the Office of General Counsel on May 25, 2012. The full text of this document is available for public inspection and copying during regular business hours in the Commission's Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. The complete text of this document also may be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street SW., Room CY-B402, Washington, DC 20554, telephone (202) 488-5300, facsimile (202) 488-5563 or via email FCC@BCPIWEB.com . The full text may also be downloaded at http://www.fcc.gov . Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/ .

Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

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

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

Documents will be available for public inspection and copying during business hours at the FCC Reference Information Center, Portals II, Room CY-A257, 445 12th Street SW., Washington, DC 20554. The documents may also be purchased from BCPI, telephone (202) 488-5300, facsimile (202) 488-5563, TTY (202) 488-5562, email fcc@bcpiweb.com .

People with Disabilities: 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 & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

The Commission has designated this proceeding as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. 47 CFR 1.1200 et seq.; Amendment of Certain of the Commission's Part 1 Rules of Practice and Procedure and Part 0 Rules of Commission Organization, Notice of Proposed Rulemaking, 25 FCC Rcd 2430, 2439-40 (2010). Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with § 1.1206(b) of the Commission's rules. In proceedings governed by § 1.49(f) of the Commission's rules or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

This Public Notice seeks comment on the privacy and data security practices of mobile wireless service providers with respect to customer information stored on their users' mobile communications devices and the application of existing privacy and security requirements to that information. Since the Commission last solicited public input on this question five years ago, technologies and business practices have evolved dramatically. The devices consumers use to access mobile wireless networks have become more sophisticated and powerful, and their expanded capabilities have at times been used by wireless providers to collect information about particular customers' use of the network—sometimes, it appears, without informing the customer. Service providers' collection and use of this information may be a legitimate and effective way to improve the quality of wireless services. At the same time, the collection, transmission, and storage of this customer-specific network information raise new privacy and security concerns.

Section 222 of the Communications Act of 1934, as amended, establishes the duty of every telecommunications carrier to “protect the confidentiality of proprietary information of, and relating to * * * customers.” Further, every carrier must protect “customer proprietary network information” (CPNI) that it receives or obtains by virtue of its provision of a telecommunications service and may use, disclose, or permit access to such information only in limited circumstances. The Commission is charged with enforcing those obligations.

In 2007, the Commission updated its rules implementing these statutory obligations to address the practice of “pretexting” and to reaffirm that carriers are responsible for taking all reasonable steps to protect their customers' private information. At the same time, the Commission adopted a Further Notice of Proposed Rulemaking to address another emerging privacy issue: the obligations of mobile carriers to secure the privacy of customer information stored in mobile communications devices. Although the Commission's particular focus in 2007 was on carriers' duty to erase customer information on mobile equipment prior to refurbishing the equipment, the issue of customer information on mobile devices has recently gained greater prominence. In particular, carriers recently have acknowledged using software embedded or preinstalled on wireless devices to collect information about the performance of the device and the provider's network.

Comparing the record collected by the Commission five years ago to the publicly available facts today highlights the need to refresh our record. In response to the 2007 Further Notice, AT&T Inc., for example, emphasized consumers' control of the information residing on their devices, stating: “[D]ecisions about what personal data to store, or not to store, on a mobile device rest with the consumer. Carriers do not typically have access to such information and play no role in determining what information a consumer chooses to store on mobile devices or how that information is used. Indeed, in some respects, mobile communications devices are becoming more like computers, laptops, personal digital assistants and other devices that permit customers to store their information. In the same vein that consumers erase information stored on those devices (or shred paper copies of bills or other documents that contain personal information), consumers are necessarily in the best position to know what data they have stored on their mobile devices and to take responsibility for safeguarding and erasing that information before disposal or recycling the device.” Sprint similarly stated in 2007 that “[w]ireless carriers are not well-positioned to guarantee the privacy of customer information stored on devices” because those devices are manufactured by suppliers and “in the physical control and custody of customers.”

In recent months, it has become clear that these submissions are badly out of date. Mobile carriers are directing the collection and storage of customer-specific information on mobile devices. In response to questions from Congress concerning its use of Carrier IQ software, AT&T explained that it gathers customer-specific data as an “enhance[ment of] its network reporting capabilities” and to collect information about its network from the perspective of its users' devices, “a view that cannot be obtained from the network alone.” Answering the same questions, Sprint identified a “legitimate need to deploy and use diagnostic software in the maintenance and operation of [Sprint's] services” and described how Sprint worked with the software vendor to customize data collection for Sprint's devices and network. T-Mobile likewise stated that it uses software on its customers' mobile devices to “assist[] T-Mobile in improving our customers' wireless experience by capturing and analyzing a narrow set of data related to some of the most common issues our customers experience.” The data collected in this manner may be shared with a third party for purposes of network diagnostics or improving customer care.

Commission staff has itself inquired into practices of mobile wireless service providers with respect to information stored on their customers' mobile communications devices. The staff's inquiry has focused on possible harms to consumers and on what service provider obligations, if any, apply or should apply under section 222 and other provisions of law within the Commission's jurisdiction. In light of these developments, we now seek to refresh the record in this docket concerning the practices of mobile wireless service providers with respect to information stored on their customers' mobile communications devices. How have those practices evolved since we collected information on this issue in the 2007 Further Notice? Are consumers given meaningful notice and choice with respect to service providers' collection of usage-related information on their devices? Do current practices serve the needs of service providers and consumers, and in what ways? Do current practices raise concerns with respect to consumer privacy and data security? How are the risks created by these practices similar to or different from those that historically have been addressed under the Commission's CPNI rules? Have these practices created actual data-security vulnerabilities? Should privacy and data security be greater considerations in the design of software for mobile devices, and, if so, should the Commission take any steps to encourage such privacy by design? What role can disclosure of service providers' practices to wireless consumers play? To what extent should consumers bear responsibility for the privacy and security of data in their custody or control?

Specifically with respect to section 222, we seek comment on the applicability and significance in this context of telecommunications carriers' duty under section 222(a) to protect customer information. Further, the definition of CPNI in section 222(h)(1) includes information “that is made available to a carrier by the customer solely by virtue of the carrier-customer relationship,” a phrase that on its face could apply to information collected at a carrier's direction even before it has been transmitted to the carrier. We seek comment on this analysis. We further seek comment on which, if any, of the following factors are relevant to assessing a wireless provider's obligations under section 222 and the Commission's implementing rules, or other provisions of law within this Commission's jurisdiction, and in what ways: whether the device is sold by the service provider; whether the device is locked to the service provider's network so that it would not work with a different service provider; the degree of control that the service provider exercises over the design, integration, installation, or use of the software that collects and stores information; the service provider's role in selecting, integrating, and updating the device's operating system, preinstalled software, and security capabilities; the manner in which the collected information is used; whether the information pertains to voice service, data service, or both; and the role of third parties in collecting and storing data.

Are any other factors relevant? If so, what are these other factors, and what is their relevance? What privacy and security obligations should apply to customer information that service providers cause to be collected by and stored on mobile communications devices? How does the obligation of carriers to “take reasonable measures to discover and protect against attempts to gain unauthorized access to CPNI” apply in this context? What should be the obligations when service providers use a third party to collect, store, host, or analyze such data? What would be the advantages and disadvantages of clarifying mobile service providers' obligations, if any, with respect to information stored on mobile devices—for instance through a declaratory ruling? What are the potential costs and benefits associated with such clarification?

NHTSA published a notice on June 24, 1996 (61 FR 32411) fully discussing the rulemaking history of 49 CFR Part 594 and the fees authorized by the Imported Vehicle Safety Compliance Act of 1988, Public Law 100-562, since recodified at 49 U.S.C. 30141-47. The reader is referred to that notice for background information relating to this rulemaking action. Certain fees were initially established to become effective January 31, 1990, and have been periodically adjusted since then.

We are required to review and make appropriate adjustments at least every two years in the fees established for the administration of the RI program. See 49 U.S.C. 30141(e). The fees applicable in any fiscal year (FY) are to be established before the beginning of such year. Ibid. We are proposing fees that would become effective on October 1, 2012, the beginning of fiscal year (FY) 2013. The statute authorizes fees to cover the costs of the importer registration program, to cover the cost of making import eligibility decisions, and to cover the cost of processing the bonds furnished to the Department of Homeland Security (Customs). We last amended the fee schedule in 2010. See final rule published on August 11, 2010 at 75 FR 48608. Those fees apply to Fiscal Years 2011 and 2012.

Proposed fees are based on time and costs associated with the tasks for which the fees are assessed. The fees proposed in this notice reflect the freeze in General Schedule salary rates since January 2010 and the slight increases in indirect costs attributed to the agency's overhead costs since the fees were last adjusted.

Section 30141(a)(3) of Title 49, U.S. Code provides that RIs must pay the annual fees established “to pay for the costs of carrying out the registration program for importers. * * *” This fee is payable both by new applicants and by existing RIs. To maintain its registration, each RI, at the time it submits its annual fee, must also file a statement affirming that the information it furnished in its registration application (or in later submissions amending that information) remains correct. 49 CFR 592.5(f).

To comply with the statutory directive, we reviewed the existing fees and their bases in an attempt to establish fees that would be sufficient to recover the costs of carrying out the registration program for importers for at least the next two fiscal years. The initial component of the Registration Program Fee is the fee attributable to processing and acting upon registration applications. We have tentatively determined that this fee should be increased from $320 to $330 for new applications. We also have tentatively determined that the fee for the review of the annual statement should be increased from $195 to $201. The proposed adjustments reflect our time expenditures in reviewing both new applications and annual statements with accompanying documentation, and the small increases in indirect costs attributed to the agency's overhead costs in the two years since the fees were last adjusted.

We must also recover costs attributable to maintenance of the registration program that arise from the need for us to review a registrant's annual statement and to verify the continuing validity of information already submitted. These costs also include anticipated costs attributable to the possible revocation or suspension of registrations and reflect the amount of time that we have devoted to those matters in the past two years.

Based upon our review of these costs, the portion of the fee attributable to the maintenance of the registration program is approximately $475 for each RI. When this $475 is added to the $330 representing the registration application component, the cost to an applicant for RI status comes to $805, which is the fee we propose. This represents an increase of $10 over the existing fee. When the $475 is added to the $201 representing the annual statement component, the total cost to an RI for renewing its registration comes to $676, which represents an increase of $6.

Sec. 594.6(h) enumerates indirect costs associated with processing the annual renewal of RI registrations. The provision states that these costs represent a pro rata allocation of the average salary and benefits of employees who process the annual statements and perform related functions, and “a pro rata allocation of the costs attributable to maintaining the office space, and the computer or word processor.” For the purpose of establishing the fees that are currently in existence, indirect costs are $20.67 per man-hour. We are proposing to increase this figure by $0.99, to $21.66. This proposed increase is based on the difference between enacted budgetary costs within the Department of Transportation for the last two fiscal years, which were higher than the estimates used when the fee schedule was last amended, and takes into account other projected increases over the next two fiscal years.

Section 30141(a)(3)(B) also requires registered importers to pay other fees the Secretary of Transportation establishes to cover the costs of “making the decisions under this subchapter.” This includes decisions on whether the vehicle sought to be imported is substantially similar to a motor vehicle that was originally manufactured for importation into and sale in the United States and certified by its original manufacturer as complying with all applicable FMVSS, and whether the vehicle is capable of being readily altered to meet those standards. Alternatively, where there is no substantially similar U.S. certified motor vehicle, the decision is whether the safety features of the vehicle comply with, or are capable of being altered to comply with, the FMVSS based on destructive test information or such other evidence that NHTSA deems to be adequate. These decisions are made in response to petitions submitted by RIs or manufacturers, or on the Administrator's own initiative.

The fee for a vehicle imported under an eligibility decision made in response to a petition is payable in part by the petitioner and in part by other importers. The fee to be charged for each vehicle is the estimated pro rata share of the costs in making all the eligibility decisions in a fiscal year. The agency's direct and indirect costs must be taken into account in the computation of these costs.

Since we last amended the fee schedule, the overall number of vehicle imports by RIs has increased, while the number of petitions has remained approximately the same. The total number of vehicles that RIs imported between 2009 and 2011 more than doubled from approximately 10,000 to 23,000, respectively. Over the same period, the number of vehicles imported under an import eligibility petition that was submitted by an RI (as opposed to an import eligibility decision initiated by the agency) increased from 485 in 2009 to 514 in 2010. That number subsequently decreased to 404 in 2011. Because the number of petitions has remained level over the past two years—averaging 12 per year—the agency has devoted approximately the same amount of staff time reviewing and processing import eligibility petitions.

Based on these trends, the pro rata share of petition costs assessed against the importer of each vehicle covered by the eligibility decision will decrease. We project that for FY 2013 and 2014, the agency's costs for processing these 12 petitions will be $45,591. The petitioners will pay $4,600 of that amount in the processing fees that accompany the filing of their petitions, leaving the remaining $40,991 to be recovered from the importers of the approximately 404 vehicles projected to be imported under petition-based import eligibility decisions. Dividing $40,991 by 404 yields a pro rata fee of $101 for each vehicle imported under an eligibility decision that results from the granting of a petition. We are therefore proposing to decrease the pro rata share of petition costs that are to be assessed against the importer of each vehicle from $158 to $101, which represents a decrease of $57. The same $101 fee would be paid regardless of whether the vehicle was petitioned under 49 CFR 593.6(a), based on the substantial similarity of the vehicle to a U.S.-certified model, or was petitioned under 49 CFR 593.6(b), based on the safety features of the vehicle complying with, or being capable of being modified to comply with, all applicable FMVSS.

We are proposing no increase in the current fee of $175 that covers the initial processing of a “substantially similar” petition. Likewise, we are also proposing to maintain the existing fee of $800 to cover the initial costs for processing petitions for vehicles that have no substantially similar U.S.- certified counterpart. In the event that a petitioner requests an inspection of a vehicle, the fee for such an inspection would remain $827 for vehicles that are the subject of either type of petition.

The importation fee varies depending upon the basis on which the vehicle is determined to be eligible. For vehicles covered by an eligibility decision on the agency's own initiative (other than vehicles imported from Canada that are covered by import eligibility numbers VSA-80 through 83, for which no eligibility decision fee is assessed), we are proposing that the fee remain $125. NHTSA determined that the costs associated with previous eligibility determinations on the agency's own initiative would be fully recovered by October 1, 2012. We propose to apply the fee of $125 per vehicle only to vehicles covered by determinations made by the agency on its own initiative on or after October 1, 2012.

Section 30141(a)(3) also requires a registered importer to pay any other fees the Secretary of Transportation establishes “to pay for the costs of—(A) processing bonds provided to the Secretary of the Treasury * * *.” upon the importation of a nonconforming vehicle to ensure that the vehicle would be brought into compliance within a reasonable time, or if it is not brought into compliance within such time, that it be exported, without cost to the United States, or abandoned to the United States.

The Department of Homeland Security (Customs) exercises the functions associated with the processing of these bonds. To carry out the statute, we make a reasonable determination of the costs that Department incurs in processing the bonds. In essence, the cost to Customs is based upon an estimate of the time that a GS-9, Step 5 employee spends on each entry, which Customs has judged to be 20 minutes.

When the fee schedule was last amended, we projected General Schedule salary raises to be effective in January 2011 and 2012. Based on our projections over the next two fiscal years, we are proposing that the processing fee be decreased by $0.84, from $9.93 per bond to $9.09. This decrease reflects the fact that GS-9 salaries have been frozen since we last amended the fee schedule in 2010. The $9.09 proposed fee would more closely reflect the direct and indirect costs that should be associated with processing the bonds.

In lieu of sureties on a DOT conformance bond, an importer may offer United States money, United States bonds (except for savings bonds), United States certificates of indebtedness, Treasury notes, or Treasury bills (collectively referred to as “cash deposits”) in an amount equal to the amount of the bond. 49 CFR 591.10(a). The receipt, processing, handling, and disbursement of the cash deposits that have been tendered by RIs cause the agency to consume a considerable amount of staff time and material resources. NHTSA has concluded that the expense incurred by the agency to receive, process, handle, and disburse cash deposits may be treated as part of the bond processing cost, for which NHTSA is authorized to set a fee under 49 U.S.C. 30141(a)(3)(A). We first established a fee of $459 for each vehicle imported on and after October 1, 2008, for which cash deposits or obligations of the United States are furnished in lieu of a conformance bond. See the Final Rule published on July 11, 2008 at 73 FR 39890.

The agency considered its direct and indirect costs in calculating the fee for the review, processing, handling, and disbursement of cash deposits submitted by importers and RIs in lieu of sureties on a DOT conformance bond. We are proposing to decrease the fee from $514 to $495, which represents a decrease of $19. The factors that the agency has taken into account in proposing the fee include time expended by agency personnel, the slight increase in overhead costs, and the reduction in projected salary costs based on the General Schedule salary freeze since January 2010.

Each RI is currently required to pay $17 per vehicle to cover the costs the agency incurs in reviewing a certificate of conformity. We estimate that these costs will decrease from $17 to an average of $12 per vehicle. Although our overhead costs increased, the salary and benefit costs are less than our previous projections based on the General Schedule salary freeze. The number of certificates of conformity submitted for agency review has increased. This has decreased the agency's cost attributed to the review of each certificate of conformity. Based on these estimates, we are proposing to decrease the fee charged for vehicles for which a paper entry and fee payment is made, from $17 to $12, a difference of $5 per vehicle. However, if an RI enters a vehicle through the Automated Broker Interface (ABI) system, has an email address to receive communications from NHTSA, and pays the fee by credit card, the cost savings that we realize allow us to significantly reduce the fee to $6. We propose to apply the fee of $6 per vehicle if all the information in the ABI entry is correct.

Errors in ABI entries not only eliminate any time savings, but also require additional staff time to be expended in reconciling the erroneous ABI entry information to the conformity data that is ultimately submitted. Our experience with these errors has shown that staff members must examine records, make time-consuming long distance telephone calls, and often consult supervisory personnel to resolve the conflicts in the data. We have calculated this staff and supervisory time, as well the telephone charges, to amount to approximately $57 for each erroneous ABI entry. Adding this to the $6 fee for the review of conformity packages on automated entries yields a total of $63, representing no increase in the fee that is currently charged when there are one or more errors in the ABI entry or in the statement of conformity.

The proposed effective date of the final rule is October 1, 2012.

Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993), provides for making determinations whether a regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and to the requirements of the Executive Order. The Order defines a “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

NHTSA has considered the impact of this rulemaking action under Executive Order 12866 and the Department of Transportation's regulatory policies and procedures. This rulemaking is not significant. Accordingly, the Office of Management and Budget has not reviewed this rulemaking document under Executive Order 12886. Further, NHTSA has determined that the rulemaking is not significant under Department of Transportation's regulatory policies and procedures. Based on the level of the fees and the volume of affected vehicles, NHTSA currently anticipates that if made final, the costs of the proposed rule would be so minimal as not to warrant preparation of a full regulatory evaluation. The action does not involve any substantial public interest or controversy. If made final, the rule would have no substantial effect upon State and local governments. There would be no substantial impact upon a major transportation safety program. A regulatory evaluation analyzing the economic impact of the final rule establishing the registered importer program, adopted on September 29, 1989, was prepared, and is available for review in the docket.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever an agency is required to publish a notice of proposed rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effect of the rule on small entities (i.e., small businesses, small organizations, and small governmental jurisdictions). The Small Business Administration's regulations at 13 CFR Part 121 define a small business, in part, as a business entity “which operates primarily within the United States.” (13 CFR § 121.105(a)). No regulatory flexibility analysis is required if the head of an agency certifies that the rule would not have a significant economic impact on a substantial number of small entities. The SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule would not have a significant economic impact on a substantial number of small entities.

The agency has considered the effects of this proposed rulemaking under the Regulatory Flexibility Act, and certifies that if the proposed amendments are adopted they would not have a significant economic impact upon a substantial number of small entities.

The following is NHTSA's statement providing the factual basis for the certification (5 U.S.C. 605(b)). The proposed amendments would primarily affect entities that currently modify nonconforming vehicles and that are small businesses within the meaning of the Regulatory Flexibility Act; however, the agency has no reason to believe that these companies would be unable to pay the fees proposed by this action. In most instances, these fees would not be changed or be only modestly increased (and in some instances decreased) from the fees now being paid by these entities. Moreover, consistent with prevailing industry practices, these fees should be passed through to the ultimate purchasers of the vehicles that are altered and, in most instances, sold by the affected registered importers. The cost to owners or purchasers of nonconforming vehicles that are altered to conform to the FMVSS may be expected to increase (or decrease) to the extent necessary to reimburse the registered importer for the fees payable to the agency for the cost of carrying out the registration program and making eligibility decisions, and to compensate Customs for its bond processing costs.

Governmental jurisdictions would not be affected at all since they are generally neither importers nor purchasers of nonconforming motor vehicles.

Executive Order 13132 on “Federalism” requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications.” Executive Order 13132 defines the term “policies that have federalism implications” to include regulations that 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.” Under Executive Order 13132, NHTSA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or NHTSA consults with State and local officials early in the process of developing the proposed regulation.

The proposed rule would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government as specified in Executive Order 13132. Moreover, NHTSA is required by statute to impose fees for the administration of the RI program and to review and make necessary adjustments in those fees at least every two years. Thus, the requirements of section 6 of the Executive Order do not apply to this rulemaking action.

NHTSA has analyzed this action for purposes of the National Environmental Policy Act. The action would not have a significant effect upon the environment because it is anticipated that the annual volume of motor vehicles imported through registered importers would not vary significantly from that existing before promulgation of the rule.

Pursuant to Executive Order 12988 “Civil Justice Reform,” the agency has considered whether this proposed rule would have any retroactive effect. NHTSA concludes that this proposed rule would not have any retroactive effect. Judicial review of a rule based on this proposal may be obtained pursuant to 5 U.S.C. 702. That section does not require that a petition for reconsideration be filed prior to seeking judicial review.

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted for inflation with the base year of 1995). Before promulgating a rule for which a written assessment is needed, Section 205 of the UMRA generally requires NHTSA to identify and consider a reasonable number of regulatory alternatives and to adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of Section 205 do not apply when they are inconsistent with applicable law. Moreover, Section 205 allows NHTSA to adopt an alternative other than the least costly, most cost- effective or least burdensome alternative if the agency publishes with the final rule an explanation why that alternative was not adopted. Because a final rule based on this proposal would not require the expenditure of resources beyond $100 million annually, this action is not subject to the requirements of Sections 202 and 205 of the UMRA.

Executive Order 12866 and the President's memorandum of June 1, 1998, require each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:

If you have any responses to these questions, please include them in your comments on this document.

Under the Paperwork Reduction Act of 1995, a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid OMB control number. Part 594 includes collections of information for which NHTSA has obtained OMB Clearance No. 2127-0002, a consolidated collection of information for “Importation of Vehicles and Equipment Subject to the Federal Motor Vehicle Safety, Bumper and Theft Prevention Standards,” approved through 01/31/2014. This proposed rule, if made final, would not affect the burden hours associated with Clearance No. 2127-0002 because we are proposing only to adjust the fees associated with participating in the registered importer program. These proposed new fees will not impose new collection of information requirements or otherwise affect the scope of the program.

Executive Order 13045 applies to any rule that (1) is determined to be “economically significant” as defined under E.O. 12866, and (2) concerns an environmental, health, or safety risk that NHTSA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, we must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned rule is preferable to other potentially effective and reasonably feasible alternatives considered by us. This rulemaking is not economically significant and does not concern an environmental, health, or safety risk.

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) directs NHTSA to use voluntary consensus standards in its regulatory activities unless doing 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, such as the Society of Automotive Engineers (SAE). The NTTAA directs the agency to provide Congress, through the OMB, explanations when we decide not to use available and applicable voluntary consensus standards.

In this proposed rule, we propose to adjust the fees associated with the registered importer program. We propose no substantive changes to the program nor do we propose any technical standards. For these reasons, Section 12(d) of the NTTAA would not apply.

Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the docket number of this document in your comments.

Your comments must not be more than 15 pages long. 49 CFR 553.21. We established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments.

Please submit two copies of your comments, including the attachments, to Docket Management at the beginning of this document, under ADDRESSES . You may also submit your comments electronically to the docket following the steps outlined under ADDRESSES .

If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.

If you wish to submit any information under a claim of confidentiality, you should submit the following to the NHTSA Office of Chief Counsel (NCC-110), 1200 New Jersey Avenue SE., Washington, DC 20590: (1) A complete copy of the submission; (2) a redacted copy of the submission with the confidential information removed; and (3) either a second complete copy or those portions of the submission containing the material for which confidential treatment is claimed and any additional information that you deem important to the Chief Counsel's consideration of your confidentiality claim. A request for confidential treatment that complies with 49 CFR Part 512 must accompany the complete submission provided to the Chief Counsel. For further information, submitters who plan to request confidential treatment for any portion of their submissions are advised to review 49 CFR Part 512, particularly those sections relating to document submission requirements. Failure to adhere to the requirements of Part 512 may result in the release of confidential information to the public docket. In addition, you should submit two copies from which you have deleted the claimed confidential business information, to Docket Management at the address given at the beginning of this document under ADDRESSES .

We will consider all comments that Docket Management receives before the close of business on the comment closing date indicated at the beginning of this notice under DATES. In accordance with our policies, to the extent possible, we will also consider comments that Docket Management receives after the specified comment closing date. If Docket Management receives a comment too late for us to consider in developing the proposed rule, we will consider that comment as an informal suggestion for future rulemaking action.

You may read the comments received by Docket Management at the address and times given near the beginning of this document under ADDRESSES .

You may also see the comments on the Internet. To read the comments on the Internet, go to http://www.regulations.gov and follow the on-line instructions provided.

You may download the comments. The comments are imaged documents, in either TIFF or PDF format. Please note that even after the comment closing date, we will continue to file relevant information in the Docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically search the Docket for new material.

The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. You may use the RIN that appears in the heading on the first page of this document to find this action in the Unified Agenda.

In consideration of the foregoing, NHTSA proposes to amend 49 CFR part 594 as follows:

TSA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from this rulemaking action. See ADDRESSES above for information on where to submit comments.

With each comment, please identify the docket number at the beginning of your comments. TSA encourages commenters to provide their names and addresses. The most helpful comments reference a specific portion of the rulemaking, explain the reason for any recommended change, and include supporting data. You may submit comments and material electronically, in person, by mail, or fax as provided under ADDRESSES , but please submit your comments and material by only one means. If you submit comments by mail or delivery, submit them in an unbound format, no larger than 8.5 by 11 inches, suitable for copying and electronic filing.

If you would like TSA to acknowledge receipt of comments submitted by mail, include with your comments a self-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

TSA will file all comments to our docket address, as well as items sent to the address or email under FOR FURTHER INFORMATION CONTACT , in the public docket, except for comments containing confidential information and sensitive security information (SSI). 1 Should you wish your personally identifiable information redacted prior to filing in the docket, please so state. TSA will consider all comments that are in the docket on or before the closing date for comments and will consider comments filed late to the extent practicable. The docket is available for public inspection before and after the comment closing date.

Do not submit comments that include trade secrets, confidential commercial or financial information, or SSI to the public regulatory docket. Please submit such comments separately from other comments on the rulemaking. Comments containing this type of information should be appropriately marked as containing such information and submitted by mail to the address listed in FOR FURTHER INFORMATION CONTACT section.

TSA will not place comments containing SSI in the public docket and will handle them in accordance with applicable safeguards and restrictions on access. TSA will hold documents containing SSI, confidential business information, or trade secrets in a separate file to which the public does not have access, and place a note in the public docket explaining that commenters have submitted such documents. TSA may include a redacted version of the comment in the public docket. If an individual requests to examine or copy information that is not in the public docket, TSA will treat it as any other request under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Department of Homeland Security's (DHS') FOIA regulation found in 6 CFR part 5.

Please be aware that anyone is able to search the electronic form of all comments in any of our dockets by the name of the individual who submitted the comment (or signed the comment, if an association, business, labor union, etc., submitted the comment). You may review the applicable Privacy Act Statement published in the Federal Register on April 11, 2000 (65 FR 19477) and modified on January 17, 2008 (73 FR 3316).

You may review TSA's electronic public docket on the Internet at http://www.regulations.gov. In addition, DOT's Docket Management Facility provides a physical facility, staff, equipment, and assistance to the public. To obtain assistance or to review comments in TSA's public docket, you may visit this facility between 9:00 a.m. to 5:00 p.m., Monday through Friday, excluding legal holidays, or call (202) 366-9826. This docket operations facility is located in the West Building Ground Floor, Room W12-140 at 1200 New Jersey Avenue SE., Washington, DC 20590.

You can get an electronic copy using the Internet by—

(1) Searching the electronic Federal Docket Management System (FDMS) Web page at http://www.regulations.gov;

(2) Accessing the Government Printing Office's Web page at http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR to view the daily published Federal Register edition; or accessing the “Search the Federal Register by Citation” in the “Related Resources” column on the left, if you need to do a Simple or Advanced search for information, such as a type of document that crosses multiple agencies or dates; or

(3) Visiting TSA's Security Regulations Web page at http://www.tsa.gov and accessing the link for “Research Center” at the top of the page.

In addition, copies are available by writing or calling the individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to identify the docket number of this rulemaking.

Approximately 2 million workers, including Coast Guard-credentialed merchant mariners, port facility employees, longshore workers, truck drivers, and others requiring unescorted access to secure areas of maritime facilities and vessels regulated under the Maritime Transportation Security Act (MTSA) 2 must successfully complete an STA and hold a TWIC in order to enter secure areas without an escort. 3 TSA conducts the STA and issues the credential, and the Coast Guard enforces the use of TWIC at MTSA-regulated facilities.

As part of the process for obtaining a TWIC, applicants must pay a fee made up of three segments: Enrollment Segment, Full Card Production/Security Threat Assessment Segment, and Federal Bureau of Investigation (FBI) Segment. 4 Most applicants pay the Standard TWIC Fee, which includes all three segments. Applicants who have completed a comparable threat assessment, such as the threat assessment TSA conducts on commercial drivers with a HME, pay a reduced TWIC Fee. 5

In the TSA Hazardous Materials Endorsement Threat Assessment Program (HME Program), TSA conducts an STA for any driver seeking to obtain, renew, or transfer a hazardous materials endorsement (HME) on a state-issued commercial driver's license (CDL). The program was implemented to meet a statutory requirement that prohibits states from issuing a license to transport hazardous materials (hazmat) in commerce unless a determination has been made that the driver does not pose a security risk. The Act further requires that the risk assessment include checks of criminal history records, legal status, and relevant international databases. 6

Applicants for an HME pay a fee to cover the (1) costs of performing and adjudicating STAs, appeals, and waivers (Threat Assessment Fee); (2) the costs of collecting and transmitting fingerprints and applicant information (Information Collection Fee); and (3) the fee charged by the FBI to perform a criminal history records check (CHRC), called the FBI Fee. 7 States that choose to collect applicant information directly and submit it to TSA may charge applicants a State fee for that service, and TSA has no regulatory authority to control or determine that fee.

These TWIC and HME fee amounts, which reimburse TSA for the costs of administering the programs, are specifically identified in current 49 CFR 1572.403 (state collection of HME fees), 1572.405 (TSA collection of HME fees), and 1572.501 (collection of TWIC fee). After receiving and evaluating public comments, TSA proposes to publish a final rule that removes specific fee amounts for these programs in 49 CFR part 1572, and instead publish any revisions to fee schedules in the Federal Register . These revisions to 49 CFR part 1572 will enable TSA to meet its statutory mandate to recover the costs of these programs, continue to fund these programs on an ongoing basis, provide notice to affected stakeholders of any revisions to the fees, and meet contractual obligations with vendors.

This proposed rule consists of an administrative revision. Therefore, there are no industry costs associated with the proposal. TSA costs for implementing the proposed rule would consist of administrative costs largely covered by current operations and therefore considered de minimis.

MTSA required DHS to issue regulations to prevent individuals from entering secure areas of vessels or MTSA-regulated port facilities unless such individuals undergo a successful STA and hold TWICs. In addition, nearly all credentialed merchant mariners are required to hold these transportation security cards. 8 MTSA also required DHS to establish a waiver and appeals process for persons found to be ineligible for the required transportation security card. 9

Under 49 U.S.C. 5103a, a State is prohibited from issuing or renewing a commercial driver's license (CDL) unless the Secretary of Homeland Security has first determined that the driver does not pose a security threat warranting denial of the HME. 10 HME program regulations require States to choose between two fingerprint collection options: (1) the State collects and transmits the fingerprints and applicant information of drivers who apply to renew or obtain an HME; or (2) the State chooses to have a TSA agent to collect and transmit the fingerprints and applicant information of such drivers. 11 Under the regulations, States were required to notify TSA in writing of their choice by December 27, 2004, and are required to maintain that choice for at least three years.

Congress directed TSA to collect user fees to cover the costs of its vetting and credentialing programs. 12 TSA must collect fees to pay for conducting or obtaining a CHRC; reviewing pertinent law enforcement databases, and records of other governmental and international agencies; reviewing and adjudicating requests for waivers and appeals of TSA decisions; and any other costs related to conducting the STA or providing a credential.

The statute requires that any fee collected must be available only to pay for the costs incurred in providing services in connection with performing the STA or providing the credential. The funds generated by the fee do not have a limited period of time in which they must be used; as fee revenue and service costs do not always match perfectly for a given period, a program may need to carry over funding from one fiscal year to the next to ensure that sufficient funds are available to continue normal program operations. TSA will comply with the The Chief Financial Officers (CFO) Act of 1990 13 and Office of Management and Budget Circular A-25, 14 regularly reviewing the fee program to ensure that fees correctly recover, but do not exceed, the full cost of services and make appropriate adjustments to the fees.

The following table identifies current fees for obtaining a TWIC  15 or HME. 16

TSA has a statutory obligation to recover its costs for the HME and TWIC STA programs through user fees. These fees reimburse TSA for the costs of administering the program. Pursuant to the general user fee statute (31 U.S.C. 9701) and OMB circular A-25, TSA establishes user fees after providing the public notice and an opportunity to comment on the amount of the fee and the methodology TSA used to develop the fee amount.

The methodology and considerations supporting TWIC fee determinations are explained in detail in the preamble to the TWIC Final Rule. 18 The standard TWIC fee includes cost components associated with enrollment and credential issuance; threat assessment and adjudication including appeals and waivers; card production; TSA program and systems costs; and the FBI fee to conduct the CHRC.

The methodology and considerations supporting the HME fee determinations were explained in detail in the preamble to the HME Fees Final Rule. 19 The standard HME fee includes cost components associated with enrollment; threat assessment and adjudication including appeals and waivers; TSA program and systems costs; and the FBI fee to conduct the CHRC. States have the option to collect and transmit an applicant's biographic and biometric information directly to TSA, or the State may elect to use the TSA agent to collect and transmit applicant biographic and biometric data. For States that collect applicant data themselves, the enrollment component of the fee may vary by State, but other costs (threat assessment and adjudication costs, TSA program and system costs, FBI CHRC costs) will remain the same regardless of State.

In finalizing these methodologies, TSA considered comments from individual commercial drivers; labor organizations; trucking industry associations; State Departments of Motor Vehicles; associations representing the agricultural, chemical, explosives, and petroleum industries; and associations representing State governments. 20 TSA does not intend to change the methodologies for determining these fees.

As explained in the methodology discussion for the TWIC and HME rules, there are certain factors that could cause changes in the fees, such as inflation. Fees could also be affected by cost changes in contractual services for enrollment, adjudication, credentialing and other factors. For example, as explained in the methodologies proposed for TWIC and HME fees, 21 TSA uses contract services to support the TWIC and HME STA programs, including enrollment services, adjudication support, credentialing, technology development, technology operations and maintenance, and customer service support. When the pertinent contracts for services are amended or renegotiated, 22 the fees may be affected. Cost variations, such as changes in the number of enrollments, could also affect fees.

In addition, pursuant to the Chief Financial Officers Act of 1990 (Pub. L. 101-576, 104 Stat. 2838, Nov. 15, 1990), DHS/TSA is required to review fees no less than every two years (31 U.S.C. 3512). Upon review, if TSA finds that the fees are either too high (that is, total fees exceed the total cost to provide the services) or too low (total fees do not cover the total costs to provide the services) TSA must adjust the fee.

As previously discussed, TSA has a statutory requirement to sustain the HME and TWIC STA programs through user fees. Currently, TSA is at risk of having to suspend issuance of credentials to meet HME or TWIC program requirements or decreasing services until a rule change is completed to reflect any changes in fee amounts. To address this issue, TSA is proposing to revise existing regulations to ensure that TSA can continue to fund these programs on an ongoing basis, provide notice to affected stakeholders of any revisions to the fees, and meet contractual obligations with vendors.

TSA is proposing to amend 49 CFR 1572.403(a) (state collection of HME fees), 1572.405(a) (TSA collection of HME fees), and 1572.501(b) (collection of TWIC fees) to remove references to specific fee amounts, and instead publish any revisions to fee schedules in the Federal Register .

These amendments would make the provisions for HME and TWIC fees consistent with regulations regarding fees for STAs collected under 49 CFR part 1540, subpart C (related to civil aviation security). They would also be consistent with methods for communicating changes for fees required by the FBI  23 and the Federal Emergency Management Agency. 24

These proposed revisions would not affect FBI fees, as specified in 49 CFR 1572.403(a)(2) (state collection of HME fees), 1572.405(a)(3) (TSA collection of HME fees), and 1572.501(b)(3). The proposed revisions would also not affect the ability of a State to collect any other fees that it may impose on an individual who applies to obtain or renew an HME, as specified in current 49 CFR 1572.403(b)(3).

The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ) requires that TSA consider the impact of paperwork and other information collection burdens imposed on the public and, under the provisions of PRA sec. 3507(d), obtain approval from the Office of Management and Budget (OMB) for each collection of information it conducts, sponsors, or requires through regulations. TSA has determined that this proposed rule does not affect current information collection requirements associated with the affected regulatory provisions.

TSA has two collection requirements relevant to this rulemaking. For TWIC purposes (OMB 1652-0047), TSA collects information needed to process TWIC enrollment and conduct the STA. At the enrollment center, applicants verify their biographic information and provide identity documentation, biometric information, and proof of immigration status (if required). This information allows TSA to complete a comprehensive STA. If TSA determines that the applicant is qualified to receive a TWIC, TSA notifies the applicant that their TWIC is ready for activation. Once activated, this credential will be used for identification verification and access control. TSA also conducts a survey to capture worker overall satisfaction with the enrollment process; this optional survey is provided during the activation period. For purposes of the HME (OMB 1652-0027), the collection involves applicant submission of biometric and biographic information for TSA's STA in order to obtain the HME on a CDL issued by the States and the District of Columbia. Both of these collections are currently pending renewal.

Changes to Federal regulations must undergo several types of economic analyses. First, Executive Orders (E.O.s) 13563 and 12866 direct agencies to assess the 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, reducing costs, harmonizing rules, and promoting flexibility. Second, the Regulatory Flexibility Act of 1980 requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (19 U.S.C. 2531-2533) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this act requires agencies to consider international standards and, where appropriate to use them as the basis for U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation).

In conducting these analyses, TSA provides the following conclusions and summary information:

1. TSA has determined that this rulemaking is not a “significant regulatory action” as defined in E.O. 12866;

2. TSA has certified that this rulemaking would not have a significant impact on a substantial number of small entities;

3. TSA has determined that this rulemaking imposes no significant barriers to international trade as defined by the Trade Agreement Act of 1979; and

4. TSA has determined that this rulemaking does not impose an unfunded mandate on state, local, or tribal governments, or on the private sector as defined by the Unfunded Mandates Reform Act (UMRA).

The basis for these conclusions is set forth below.

This proposed rule consists of an administrative revision. Therefore, there are no industry costs associated with the proposal. TSA costs for implementing the proposed rule would consist of administrative costs largely covered by current operations and therefore considered de minimis.

By statute, TSA must sustain the HME and TWIC STA programs through user fees. The proposed revisions to existing regulations would increase TSA's flexibility to modify fees, as necessary, to ensure that STA, enrollment and credentialing fees reflect their associated costs, thus creating a more efficient process. This ability would facilitate the continual and ongoing funding of the TWIC and HME programs, allow TSA to timely meet contractual obligations with vendors, and still provide sufficient notice to affected stakeholders of any revisions to the fees.

Absent the ability to amend fees through notice rather than rulemaking, TSA is less likely to make timely changes to fees when associated costs change, such as contracts or vendor pricing, and when such changes are made, there is an increased likelihood that they would be more dramatic. Amending fees through notice would allow for more incremental changes and reduce the risk of TSA suspending issuance of credentials to meet HME or TWIC program requirements or decreasing services until a rule change is completed to reflect the new fee amount.

When an agency issues a proposed rulemaking, the Regulatory Flexibility Act (RFA) requires the agency to “prepare and make available for public comment an initial regulatory flexibility analysis” which will “describe the impact of the proposed rule on small entities,”  25 Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, small not-for-profit organizations, and small governmental jurisdictions. Individuals and States are not included in the definition of a small entity.

The proposed rule is an administrative revision to 49 CFR 1572 Subpart E (“Fees for Security Threat Assessments for Hazmat Drivers”) and Subpart F (“Fees for Security Threat Assessments for Transportation Worker Identification Credential (TWIC)”) and does not impose any additional direct costs on the maritime or hazardous material transportation industries, including costs incurred by small entities. Therefore, TSA certifies that this rulemaking would not have a significant economic impact on a substantial number of small entities. However, TSA invites comments from members of the public who believe there would be a significant impact.

Small entities impacted by current HME and TWIC fee collection regulations, which this proposed rule is revising, include maritime industries associated with ports ( i.e., vessels and facilities) regulated under the MTSA. Specifics on impacted entities are provided in the TWIC Implementation in the Maritime Sector Final Rule Regulatory Impact Assessment published December 21, 2006. 26 Using the North American Industry Classification System (NAICS) codes and information from the 2007 Economic Census, 27 TSA identified 11,395 covered entities of which 90 percent (10,206) are considered small based on Small Business Administration (SBA) standards. Truck drivers who transport hazardous materials required to obtain a HME as a supplement to their CDL are also impacted by the current HME and TWIC fee collection regulations. 28 Some transportation companies hauling hazardous materials (in other words, for-hire contractors transporting hazardous materials) may be impacted by the HME requirement. TSA assumes firms engaging in truck transportation of hazmat are generally found in the specialized freight trucking industry (NAICS code 4842). Economic Census 2007 data  29 indicates 39,023 entities operating under NAICS code 4842 of which 99.6 percent (38,868) would be considered small based on SBA size standards (revenues of $25.5 million or less). Therefore, the current HME and TWIC fee collection regulations, which this proposed rule is revising, impacts a substantial number of small entities. However, as stated previously, this proposed rule is an administrative change and does not result in any additional direct costs on the maritime or hazmat industry, including costs incurred by small entities in those industries. As such, TSA certifies that the proposed rule would not have a significant economic impact on a substantial number of small entities.

The Trade Agreement Act of 1979 prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. TSA has assessed the potential effect of this rulemaking and as TSA has determined that there are no associated industry costs, it does not impose significant barriers to international trade.

The Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final rule that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.”

This rulemaking does not contain such a mandate. The requirements of Title II of the Act, therefore, do not apply and TSA has not prepared a statement under the Act.

TSA has analyzed this final rule under the principles and criteria of E.O. 13132, Federalism. We determined that this action will not have a substantial direct effect on the States, or the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government, and, therefore, does not have federalism implications.

TSA has reviewed this action for purposes of the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has determined that this action will not have a significant effect on the human environment.

The energy impact of the action has been assessed in accordance with the Energy Policy and Conservation Act (EPCA), Public Law 94-163, as amended (42 U.S.C. 6362). We have determined that this rulemaking is not a major regulatory action under the provisions of the EPCA.

For the reasons set forth in the preamble, the Transportation Security Administration proposes to amend part 1572 of Chapter XII of Title 49, Code of Federal Regulations, as follows:

Background

On May 23, 2012, NMFS published a proposed rule at 77 FR 30486 that would revise existing regulations on the handling of information required to be maintained as confidential under the Magnuson-Stevens Act. The purposes of the proposed rule is to make both substantive and non-substantive changes necessary to comply with the MSA as amended by the 2006 Magnuson-Stevens Fishery Conservation and Management Reauthorization Act (MSRA) and the 1996 Sustainable Fisheries Act (SFA). In addition, the rule proposes to address some significant issues that concern NMFS' application of the MSA confidentiality provision to requests for information.

NMFS received several requests from fishery management councils and representatives of fishing and environmental organizations to extend the comment period on the proposed rule in order to allow the councils and other organizations to review the proposed rule and solicit feedback from their members. We have considered these requests and conclude that a 60-day extension is appropriate.