Delegations of Authority

This rule makes changes to existing delegations in 7 CFR parts 2 and 520. The delegations of authority to the Under Secretary for Research, Education, and Economics (REE) in 7 CFR 2.21 and to the Director of the National Institute of Food and Agriculture (NIFA) in 7 CFR 2.66 are amended to reflect the delegation of the authority of the Secretary of Agriculture (Secretary) in section 405 of the Agricultural Research, Extension, and Education Reform Act of 1998 (7 U.S.C. 7625), as added by section 209(b) of the FDA Food Safety Modernization Act, Public Law 111-353, to carry out a competitive grant program within NIFA to provide food safety training, education, extension, outreach, and technical assistance to owners and operators of farms, small food processors, and small fruit and vegetable merchant wholesalers.

The authorities to approve the selection of State directors of extension and memoranda of understanding (MOUs) between land-grant universities and USDA, related to cooperative extension programs, reserved to the Secretary in 7 CFR 2.21(b)(1)(v) and (vi), respectively, are removed. The MOUs, which required USDA approval of extension directors/administrators, have been terminated by USDA due to obsolescence.

The delegations of authority to the Administrator of the National Agricultural Statistics Service in 7 CFR 2.68 are amended to reflect the delegation of authority, currently delegated to the Under Secretary for REE in 7 CFR 2.21(a)(xviii), to enter into agreements with and receive funds from any State, other political subdivision, organization, or individual for the purpose of conducting cooperative research projects, including agricultural statistical survey activities (7 U.S.C. 450a).

Finally, this rule amends Agricultural Research Service (ARS) regulations at 7 CFR 520.4 to correct a reference to the ARS official with delegated responsibility for the establishment of procedures and coordination necessary to carry out the policies and provisions of the National Environmental Policy Act within ARS.

This rule relates to internal agency management. Accordingly, pursuant to 5 U.S.C. 553, notice of proposed rulemaking and opportunity for comment are not required, and this rule may be made effective less than 30 days after publication in the Federal Register. This rule also is exempt from the provisions of Executive Order 12866. This action is not a rule as defined by the Regulatory Flexibility Act, as amended by the Small Business Regulatory Fairness Enforcement Fairness Act of 1996, 5 U.S.C. 601 et seq., or the Congressional Review Act, 5 U.S.C. 801 et seq., and thus is exempt from the provisions of those Acts. This rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Title 7 of the Code of Federal Regulations is amended accordingly as set forth below:

This final rule is issued under Marketing Order No. 930, as amended (7 CFR part 930), regulating the handling of tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule revises the primary inventory reserve capacity and the exemption provisions applicable to handler diversion activities prescribed under the order. This action increases the volume of tart cherries that can be placed in the primary inventory reserve from 50 million pounds to 100 million pounds and revises exemption provisions by limiting diversion credits for new market development and market expansion activities to one year. These changes are intended to facilitate sales and lessen the impact of new market development and market expansion activities on volume restriction calculations. These changes were recommended by the Board at its meetings on September 15, 2011, and November 2, 2011, respectively.

Section 930.55 of the order provides authority for the establishment of a primary inventory reserve as part of the order's volume control provisions. Section 930.50(i) of the order establishes a cap of 50 million pounds on the primary inventory reserve, but provides authority to raise that limit if necessary, provided that any recommendation for change is made by the Board on or before September 30 to become effective for the following crop year.

Section 930.59 of the order authorizes handler diversion. When volume regulation is in effect, handlers may fulfill any restricted percentage requirement in full or in part by acquiring diversion certificates or by voluntarily diverting cherries or cherry products in a program approved by the Board, rather than placing cherries in an inventory reserve. These eligible diversion activities include, in part, use for new market development and market expansion activities.

Section 930.159 of the order's administrative rules specifies methods of handler diversion, including using cherries or cherry products for exempt purposes prescribed under § 930.162. Section 930.162 establishes the terms and conditions of exemption that must be satisfied for handlers to receive diversion certificates for exempt uses. Section 930.162(b) defines the activities which qualify for exemptions including new market development and market expansion. New market development and market expansion activities include, but are not limited to, sales of cherries into markets that are not yet commercially established, product line extensions, or segmentation of markets along geographic or other definable characteristics.

In July 2011, the Board established an ad hoc committee (committee) to examine the volume regulation process under the order and recommend changes that might benefit the industry. The committee made a series of recommendations, mostly administrative in nature, which were discussed by the entire Board at its September and November meetings. The recommended administrative changes were approved by the Board and the changes to the primary reserve and diversion credits for market expansion activities, are the subject of this action.

The order provides for the use of volume regulation to stabilize prices and improve grower returns during periods of oversupply. At the beginning of each season, the Board examines production and sales data to determine whether a volume regulation is necessary and if so, announces free and restricted percentages to limit the volume of tart cherries on the market. Free percentage cherries can be used to supply any available market, including domestic markets for pie filling, water packed, and frozen tart cherries. Restricted percentage cherries can be placed in reserve, marketed through exempt activities, including market expansion, or diverted in orchard or at the processing plant.

When using reserves to meet their restricted percentage, handlers have two inventory reserve pools available, a primary reserve currently limited to 50 million pounds and an unlimited secondary reserve. Reserves allow the industry to mitigate the impact of oversupply in large crop years, while allowing the industry to supply markets in years when production falls below demand. Volume in the secondary reserve cannot be released unless the primary reserve is empty. Most reserve inventory flows in and out of the primary reserve, and it is rarely at zero, making it difficult to release volume from the secondary reserve.

Accessing reserves, particularly at the beginning of a crop year when the new crop has yet to be harvested, has become more important in recent seasons. When the order was promulgated, tart cherries were primarily processed as ingredients or into pie filling and a 50 million pound primary reserve met the needs of the industry. However, dried cherries, juice, and juice concentrate are growing segments of the industry, and some handlers are also manufacturing finished products for retail. The additional processing steps for these new products, as well as the growing variety of retail products have changed reserve needs. At any given time, handlers now hold more volume in reserve.

Additionally, in years when a crop is short or demand exceeds expectations, the Board can vote to issue a reserve release. During the 2010-2011 season, the Board found it necessary to issue two such releases. The Board believes increasing the capacity of the primary reserve to 100 million pounds will facilitate the release of reserve cherries when they are needed. Moving additional reserve volume into the primary pool, which is easier to access, allows the industry to be more responsive to changes in demand and supply, and allows handlers more flexibility in how they utilize the reserve. The intent of this action is not to increase the volume of cherries in reserve, but to shift a greater volume into the primary reserve where it is more accessible to meet handler needs. This change should not impact volume restriction calculations.

Accordingly, at its meeting on September 15, 2011, the Board recommended increasing the capacity of the primary inventory reserve from 50 million pounds to 100 million pounds. Fifteen Board members voted for this change and two abstained.

In addition to discussing the primary reserve, the Board also considered changes to diversion credits. These credits are a handler's alternative to placing fruit in reserve in order to comply with their restricted percentage under volume restriction. The order provides that fruit used for certain exempt purposes, including new market development and market expansion, is eligible to receive diversion credits. Market expansion is defined as an activity that expands the sale of either tart cherries or the products in which tart cherries are an ingredient. The Board currently limits the duration of any diversion credit for new market development and market expansion to three years.

The Board believes that new market development and market expansion activities have been successful in increasing sales. Some Board members expressed that these activities have been very helpful in developing the dried cherry and juice segments. Earlier regulations limited the volume that could receive diversion credit to 10 million pounds. However, the Board believed the limitation could be discouraging expansion and in 2006 recommended removing the diversion credit volume limitations. Since that time, the use of new market development and market expansion activities to meet restricted percentages has grown. The current three-year average for diversion credit for market expansion activities is approximately 35 million pounds a year.

In its discussions of this issue, the Board sought to find a solution that would continue to encourage new market development and market expansion projects, but reduce the impact these credits have on volume restriction calculations. While market expansion activities designated for diversion credit represent about 15 percent of gross sales, these sales are not included in the average sales figure used to determine optimum supply for volume regulation. The Board estimates that limiting credits to one year will lower the annual average credit for market expansion to 16 million pounds, or 19 million pounds below the current average.

With this action, it is anticipated that the difference in volume between the three-year credit and one-year credit for market expansion will shift to free sales helping to reduce the calculated restricted percentage. Using current numbers, assuming that the difference of 19 million pounds will be counted as free sales, this change will reduce the calculated surplus. Reducing the calculated surplus will, in turn, help lower restricted percentages. The Board believes this change will help make the calculations under volume regulation more reflective of industry conditions.

Accordingly, at its November 2, 2011, meeting, the Board voted unanimously to revise exemption provisions applicable to handler diversion activities by limiting diversion credits for market expansion activities to one year, with the time limit beginning with the date of the first shipment. The Board also noted that projects approved prior to this action will be allowed to finish their three-year cycle.

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

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

There are approximately 40 handlers of tart cherries who are subject to regulation under the marketing order and approximately 600 producers of tart cherries in the regulated area. Small agricultural service firms have been defined by the Small Business Administration (SBA) as those having annual receipts of less than $7,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

According to the National Agricultural Statistics Service, and Board data, the average annual grower price for tart cherries during the 2010-11 season was $0.221 per pound, and total shipments were around 270 million pounds. Therefore, average receipts for tart cherry producers were around $99,000, well below the SBA threshold for small producers. In 2010, The Food Institute estimated an f.o.b. price of $0.84 per pound for frozen tart cherries, which make up the majority of processed tart cherries. Using this data, average annual handler receipts were about $5.7 million, also below the SBA threshold for small agricultural service firms. Assuming a normal distribution, the majority of producers and handlers of tart cherries may be classified as small entities.

This rule increases the volume of tart cherries that can be placed in the primary inventory reserve from 50 million pounds to 100 million pounds and revises the exemption provisions pertaining to handler diversion activities by limiting diversion credits for new market development and market expansion activities to one year. These changes are intended to facilitate sales and lessen the impact of such activities on volume restriction calculations. This rule adds § 930.150 to the rules and regulations to establish the increased limit for the primary inventory reserve, and revises § 930.162 of the regulations regarding exemptions as they pertain to handler diversion activities. The authority for these actions is provided in §§ 930.50 and 930.59 of the order. The Board recommended these actions at meetings on September 15, 2011, and November 2, 2011.

The Board believes these changes better align regulations with industry needs and practices, facilitate the release of restricted fruit, and help avoid over-restriction. It is not anticipated that this action will impose additional costs on handlers or growers, regardless of size. Handlers of all sizes could realize a cost savings by not having to store product relegated to the secondary reserve, which is difficult to access.

Further, increasing the maximum volume that can be held in the primary reserve will allow handlers to be more responsive to industry needs by making reserves easier to access in periods of short supply or increased demand, which could facilitate sales. Changes in processing and cherry products have created a situation in which handlers may have more volume on hand at any given time, furthering the need to access reserves. Expanding the volume available in the primary reserve will assist handlers in managing their stocks and should help maintain a steady inventory of finished products to supply retailers and consumers.

Additionally, the Board believes limiting diversion credits for market expansion to one year will move more sales into the free sales category for purposes of computing volume regulations. This should reduce the calculated surplus, and in turn lower restrictions. Lower restrictions allow handlers to have a greater portion of their volume available for free sales. This could facilitate additional sales which could improve returns for growers and handlers.

This rule is expected to benefit producers, handlers, and consumers. The effects of this rule are not expected to be disproportionately greater or less for small handlers or producers than for larger entities.

The Committee discussed alternatives to these changes, including not increasing the primary reserve capacity, as well as eliminating diversion credits for market expansion rather than limiting them to one year. Regarding the change to primary reserve capacity, the Board agreed that changes in the industry necessitated this change and that it was in the industry's best interest to have this change in place by the next season. In discussing the change to diversion credits for market expansion, the Board considered phasing out diversion credits for market expansion altogether. However, some Board members believed that offering diversion credit for these activities had been beneficial to the industry and thus should not be eliminated entirely. The Board believes limiting credits to a maximum of one year would continue to encourage handlers to enter new markets, but lessen the impact on volume restriction calculations. Therefore, these alternatives were rejected.

In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0177, (Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin). No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

Accordingly, this action will not impose any additional reporting or recordkeeping requirements on either small or large tart cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this final rule.

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

In addition, the Board formed a committee to review the order's volume regulation procedures and suggest changes to the Board. This committee held meetings where these issues were discussed in detail. These meetings were public meetings and both large and small entities were able to participate and express their views. The Board's meetings were widely publicized throughout the tart cherry industry and all interested persons were invited to attend and participate in Board deliberations on all issues. Like all Board meetings, the September 15, 2011, and November 2, 2011, meetings were public meetings and all entities, both large and small, were able to express views on these issues.

A proposed rule concerning this action was published in the Federal Register on April 25, 2012 (77 FR 24640). Copies of the rule were emailed to all Board members and tart cherry handlers. Finally, the rule was made available through the Internet by USDA and the Office of the Federal Register. A 15-day comment period ending May 10, 2012, was provided to allow interested persons to respond to the proposal. No comments were received.

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

After consideration of all relevant matter presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

It is further found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register (5 U.S.C. 553) because handlers are already beginning to make plans for the upcoming season. Further, handlers are aware of these changes, which were recommended at public meetings. Also, a 15-day comment period was provided for in the proposed rule.

For the reasons set forth in the preamble, 7 CFR part 930 is amended as follows:

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

This final rule has been reviewed under E.O. 12988, Civil Justice Reform. If this final rule is adopted: (1) Unless otherwise specifically provided, all State and local laws that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule except as specifically prescribed in the rule; and (3) administrative proceedings of the National Appeals Division of the Department of Agriculture (7 CFR part 11) must be exhausted before bringing suit.

The final rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The undersigned has determined and certified by signature on this document that this rule will not have a significant economic impact on a substantial number of small entities. This rulemaking action does not involve a new or expanded program nor does it require any more action on the part of a small business than required of a large entity.

There are no new reporting and recordkeeping requirements associated with this rule.

RHS is committed to complying with the E-Government Act, by promoting the use of the Internet and other information technologies in order to provide increased opportunities for citizen access to Government information, services, and other purposes.

This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for state, local and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of Sections 202 and 205 of the UMRA.

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” RHS determined that the proposed action does not constitute a major Federal action significantly affecting the quality of the environment. Therefore in accordance with the National Environmental Policy Act of 1969, Public Law 91-190, an Environmental Impact Statement is not required.

The programs affected by this regulation are listed in the Catalog of Federal Domestic Assistance under numbers 10.405—Farm Labor Housing Loans and Grants; 10.415—Rural Rental Housing Loans; and 10.427—Rural Rental Assistance Payments.

For the reasons discussed above, this rule does not have significant Federalism implications that warrant the preparation of a Federalism assessment under Executive Order 13132.

These loans are subject to the provisions of E.O. 12372 which require intergovernmental consultation with state and local officials. RHS conducts intergovernmental consultations for each loan in a manner delineated in 7 CFR part 1940, subpart J (available in any Rural Development office and on the Internet at http://www.rurdev.usda.gov ).

In the past, Rural Development based its reserve account on a set percentage of a property's total development cost (TDC). With this final rule Rural Development will now base the reserve account amount on a life-cycle analysis or Capital Needs Assessment (CNA). Either reserve account analysis that meets Rural Development approval will be prepared by a third-party. The reserve account analysis will be used to determine the expected useful life of the building components and furnishings and to determine which building components or furnishings are the most cost efficient over the life of the building. The reserve account deposit level will be maintained through steady deposits to meet the needs of the project as they become due. The exact contribution amounts will be articulated in the borrower's loan agreement. Adjustments may be made at five or ten year intervals, either CNA or as part of the original analysis. Any adjustments that were not reflected in the original loan agreement will be reflected in an amendment to the loan agreement. The requirement for a reserve account analysis will be used for new construction rental housing funded under Sections 514/516 and Section 515 of the Housing Act of 1949. The new requirement is intended to assure quality construction as well as long term viability of the complexes. Reserve levels will be based on life cycle costs or capital needs in order to ensure necessary resources are available when needed to replace essential building components. Current agency regulations require an annual minimum deposit of 1 percent of the TDC be put in a reserve account for FLH and RRH programs. The Agency has found over the years that the 1 percent requirement does not necessarily correlate to the long term needs of the property. This final regulatory change will ensure that reserve accounts properly sized to meet the capital needs anticipated at the time of construction. Due to the administrative burden involved, this change will only affect reserve account requirements of new construction rental housing funded under Sections 515 RRH or Sections 514/516 FLH.

The Agency received the following comments as a result of the publication as a Proposed Rule published in the Federal Register on April 5, 2007 (72 FR 16730-16731).

The Agency received eight responses to the proposed regulatory change. The commentators represented Rural Development employees who work with the Multi-Family Housing Direct Programs, a Multi-Family developer and rental property owner, and Interest Groups. The comments are summarized as follows:

1. Defining the formula that will be used in the life cycle analysis. A commenter suggested defining the formula to be used in the life cycle analysis as this could serve as a chart. Having the chart could alleviate people's resistance to calculating a full life cycle analysis for each component in the Multi Family Housing Direct Projects. Defining the formula could ease the concerns of Multi-Family Housing (MFH) borrowers regarding what basis was used to calculate the life cycle costs.

The Agency does not have a general formula that is used for the life cycle cost analysis. The life cycle cost analysis is a professional report that is performed by a third-party that primarily describes a detailed analysis and review of the components and estimates the replacement cost in the future. The life cycle cost analysis is defined in 7 CFR 3560.11. The Agency reviews the results of the life cycle cost analysis for its acceptability and compliance with the definition contained in 7 CFR 3560.11. The Agency has made no changes in response to this comment.

2. Increasing the Reserve Fund Requirement in excess of 1 percent, addressing the overcharging of gross rental incomes and the over-inflation of property taxes which are causes of underfunded reserve accounts. Two commenters supported increasing the amount of contribution to the reserve account in excess of 1 percent as the commenters think the current system requiring this funding level is flawed and inadequate in regards to providing funding for improvements and/or renovations to existing properties. The comments suggested an increase in the amount of the contribution to the reserve account is a step in the right direction for newly built and rehabilitated properties in the future. Their comments also mentioned the gross overcharging of property management related costs that generally range from 20 percent to 30 percent of gross rental incomes. The private sector residential property management costs typically run less than 8 percent. Lastly, they discussed the over-inflation of property taxes which are causes of underfunded reserve accounts. Management companies and owners do not have a personal risk at stake with the Section 515 property and therefore fail to challenge their annual over-inflated tax bills and assessments. As a result, rent income funding that could be used to properly fund reserve accounts instead goes to the local Government. The Agency will not make a change to the regulation in response to these comments. The goal of the regulation is to move the reserve deposits off a percentage basis and base the reserve account amount on the facts of the CNA or life cycle cost analysis. The Agency agrees that the reserve accounts based on a percentage can be underfunded and the change to the reserve account rule should help with that problem for new construction. While these comments related to operating expense are appreciated, the focus of this change will remain solely on properly sizing reserve accounts.

3. One commentator also agreed with the change to the reserve account requirements as the change would benefit MFH projects by linking reserve account amounts to anticipated needs for repair and replacement of building systems and components instead of the current 1 percent of TDC that are now set-aside in the reserve accounts.

4. Two commentators agreed with the change to the reserve account requirements, but cautioned the Agency that it might be cost prohibitive for smaller properties to review the CNA or life cycle cost analysis every 5 years. In response to this comment, the Agency has added a clause to the regulation that states contributions adjustments can be made every 5 or 10 years based on a revised CNA or as part of the original life cycle cost analysis. So a revised CNA will not be required in 5 years.

5. Addressing the Reserve Requirements during ownership transfers and assumptions and/or subsequent loans. One commenter suggested in addition to reserve requirements for new construction, the rule should address reserve requirements during ownership transfers and assumptions and/or subsequent loans. The Agency does not see a need to adopt this comment because the change to the regulation only addresses new construction and the regulations at 7 CFR 3560.406(d)(5) provide adequate guidance concerning reserve requirements meeting the capital needs of the property when there is an “ownership transfer or sale”. The change in the regulation only concerns new construction so it does not address the reserve requirements in the case of a subsequent loan, with an ownership transfer or sale and without an ownership transfer of sale. The Agency does not plan on making a change to the regulation in response to this comment at this time.

6. Changing the wording in Section 3560.65. A commenter recommended changing the wording in Section 3560.65, as the analysis is really based upon the CNA or the Life Cycle Cost Analysis, prepared by a consultant or architect hired by the developer, not developed by Rural Development. We would note that the language “Acceptable to Rural Development” still allows for the CNA to be prepared by others but establish Rural Development as the final approval authority. The Agency agrees and will make the change to the regulation.

7. Performing a CNA every 5 years, incurring the cost of the assessment and sharing the information. Two commenters suggested that Rural Development perform a CNA every 5 years. The first of the two commenters suggested, if the cost of updating a CNA every 5 years is prohibitive for a specific project, it may be more appropriate to allow the Rural Development staff and the project management to conduct reviews, with a process for resolving disparities in their recommendations. The second of the two commenters suggested the Rural Development program incur the cost of the assessment and share the information and adjust the reserve requirements accordingly, as rents cannot be raised to an amount that will cover all current and future reserve expenses. Utilizing Rural Development staff and project management to update a CNA is a potentially beneficial practice, and the Agency understands that CNAs can be cost prohibitive. Therefore, a revision as to the regulation has been made to allow for contribution adjustments every 5 or 10 years rather than every 5 years. These updated CNAs must be paid for by the borrower and conducted by a third-party.

8. Basing the reserve account deposits on a CNA or Life Cycle Cost Analysis. A commentator agreed that the Agency should base the reserve account deposits on a CNA or life cycle cost analysis. By doing this, MFH projects would have better project cash flow and improved long term performance which would benefit the low-income families residing in these units and provide sufficient reserves to maintain these projects in the long term, as well as the communities in which these projects are located. There is no need to change the rule for this comment.

Therefore, chapter XXXV, Title 7 of the Code of Federal Regulations, is amended as follows:

On December 16, 2010, Lufthansa Technik AG, Weg Beim Jaeger 193, 22335 Hamburg Germany applied for a supplemental type certificate for the installation of large non-structural glass items in the cabin area of the executive interior occupied by passengers and crew in a Boeing Model 737-800. The Boeing Model 737-800, approved under Type Certificate No. A16WE, is a large transport category airplane that is limited to 189 passengers or less, depending on the interior configuration. This specific Boeing Model 737-800 configuration includes seating provisions for 34 passengers.

Under the provisions of Title 14, Code of the Federal Regulations (14 CFR) 21.101, Lufthansa Technik must show that the Boeing Model 737-800, as changed, continues to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A16WE or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. A16WE are as follows: 14 CFR part 25 as amended by Amendments 25-1 through 25-77 with exceptions for the Boeing Model 737-800. In addition, the certification basis includes certain special conditions, exemptions, or later amended sections of the applicable part that are not relevant to these special conditions.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 737-800 because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 737-800 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.101.

The Boeing Model 737-800 will incorporate the following novel or unusual design features: The installation of large non-structural glass items, typically in the form of glass sheets in the cabin area of an executive interior occupied by passengers and crew.

These installations would be for aesthetic purposes, not for safety, in components other than windshields or windows. For these special conditions, a large glass item is 4 kg (approximately 10 pounds) and greater in mass. This limit was established as the mass at which a glass component could be expected to potentially cause widespread injury if it were to shatter or break free from its retention system.

These special conditions address the novel and unusual design features for the use of large non-structural glass in the passenger cabin. These large glass items would be installed in occupied rooms or areas during taxi, take off, and landing, or rooms or areas that occupants do have to enter or pass through to get to any emergency exit. The installations of large non-structural glass items may include, but are not limited to, the following items:

• Glass partitions.

• Glass attached to the ceiling.

• Wall/door mounted mirrors/glass panels.

The existing part 25 regulations only address the use of glass in windshields, instrument or display transparencies, or window applications. The regulations treat glass as unique for special applications where no other material will serve and address the adverse properties of glass.

Section 25.775, “Window and windshields,” provides for the use of glass in airplanes but limits glass to windshields and windows. Furthermore, except for bolted-in windshields, there is limited experience with either adhesive or mechanical retention methods for large glass objects installed in an airplane subject to high loads supported by flexible restraints.

The FAA has accepted the following uses of glass in the passenger cabin under the current regulations:

1. Glass items installed in rooms or areas in the cabin that are not occupied during taxi, take off, and landing, and occupants do not have to enter or pass through the room or area to get to any emergency exit.

2. Glass items integrated into a functional device whose operation is dependent upon the characteristics of glass, such as instrument or indicator protective transparencies, or monitor screens such as liquid crystal display (LCD) or plasma displays. These glass items may be installed in any area in the cabin regardless of occupancy during taxi, take-off, and landing. Acceptable means for these items may depend on the size and specific location of the device.

3. Small glass items installed in occupied rooms or areas during taxi, take off, and landing, or rooms or areas that occupants do have to enter or pass through to get to any emergency exit. For the purposes of these special conditions, a small glass item is less than 4 kg in mass or a group of glass items weighing less than 4 kg in mass.

The glass items in numbers one, two, and three (above) have been restricted to applications where the potential for injury is either highly localized (such as instrument faces) or the location is such that injury due to failure of the glass is unlikely (e.g., mirrors in lavatories). These glass items are subject to the inertia loads contained in § 25.561 and maximum positive differential pressure for items like monitors, but are not subject to these special conditions. They have been found acceptable through project specific means of compliance requiring testing to meet the requirement in § 25.785(d) and by adding a protective polycarbonate layer that covers the glass exposed to the cabin.

The use of glass in airplanes utilizes the one unique characteristic of glass—its capability for undistorted or controlled light transmittance, or transparency. Glass, in its basic form as annealed, untreated sheet, plate, or float glass, when compared to metals, is extremely notch-sensitive, has a low fracture resistance, has a low modulus of elasticity, and can be highly variable in its properties. While reasonably strong, it is not a desirable material for traditional aircraft applications because, as a solo component, it is heavy (about the same density as aluminum). In addition, when glass fails, it can break into extremely sharp fragments that have the potential for injury above and beyond simple impact and have been known to be lethal.

The proposed special conditions address installing glass in much larger sizes than previously accepted and in a multitude of locations and applications, instead of using more traditional aircraft materials. In most, if not all cases, the glass will not be covered with a polycarbonate layer. Additionally, the retention of glass of this size and weight is not amenable to conventional techniques currently utilized in airplane cabins.

The proposed special conditions consider the unusual material properties of glass as an interior material that have limited or prevented its use in the past, and address the performance standards needed to ensure that those properties do not reduce the level of safety intended by the regulations. They address the use of large glass items installed in occupied rooms or areas during taxi, take off, and landing, or rooms or areas that occupants do have to enter or pass through to get to any emergency exit.

The special conditions define a large glass component threshold of 4 kg, which is based on an assessment of the mass dislodged during a high “g” level (as defined in § 25.562) event. Groupings of glass components that total more than 4 kg would also need to be included. The applicable performance standards in the regulations for the installation of these components also apply and should not adversely affect the standards provided below. For example, heat release and smoke density testing should not result in fragmentation of the component.

For large glass components mounted in a cabin occupied by passengers or crew that are not otherwise protected from the injurious effects of failure of the glass component, the following apply:

Material. The glass used must be tempered or otherwise treated to ensure that when fractured, it breaks into small pieces with relatively dull edges. This must be demonstrated by testing to failure. Tests similar to ANSI/SAE Z26.1 section 5.7, Test 7 would be acceptable.

Fragmentation. The glass component construction must control the fragmentation of the glass to minimize the danger from flying glass shards or pieces. Impact and puncture testing to failure must demonstrate this. Tests similar to ANSI/SAE Z26.1 section 5.9, Test 9 adjusted to ensure cracking the glass would be acceptable.

Strength. The glass component, as installed in the airplane, must be strong enough to meet the load requirements for all flight and landing loads and all of the emergency landing conditions in subparts C and D of part 25. In addition, glass components that are located such that they are not protected from contact with cabin occupants must be designed for abusive loading without failure, such as impact from service carts, or occupants stumbling into, leaning against, sitting on, or performing other intentional or unintentional forceful contact. This must be demonstrated by static structural testing to ultimate load except that the critical loading condition must be tested to failure. The tested glass component must have all features that affect component strength, such as etched surfaces, cut or engraved designs, holes, and so forth.

Retention. The glass component, as installed in the airplane, must not come free of its restraint or mounting system in the event of an emergency landing. Based on the characteristics of a large glass component, dynamic tests should be performed to demonstrate that the occupants would be protected up to the load levels required by the certification basis of the airplane. A single test for the most critical loading for the installed component would be sufficient. This may be accomplished by using already accepted methods for dynamic testing.

Analysis may be used in lieu of testing if the applicant has validated the strength models and dynamic simulation models used against static tests to failure and dynamic testing to the above requirements and can predict structural failure and dynamic response and inertial load. The glass material properties must meet § 25.613, “Material strength properties and material design values.” The effect of design details, such as geometric discontinuities or surface finish, must be accounted for in the test/analysis.

Notice of proposed special conditions No. 25-12-01-SC for the Boeing Model 737-800 airplane was published in the Federal Register on May 15, 2012 (77 FR 28533). No comments were received, and the special conditions are adopted as proposed.

As discussed above, these special conditions are applicable to the Boeing Model 737-800. Should Lufthansa Technik apply at a later date for a supplemental type certificate to modify any other model included on Type Certificate No. A16WE to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well.

Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the Federal Register ; however, as the date for the approval of the supplemental type certificate for the Boeing Model 737-800 is imminent, the FAA finds that good cause exists to make these special conditions effective upon issuance.

This action affects only certain novel or unusual design features on one model of airplane. It is not a rule of general applicability, and it affects only the applicant who applied to the FAA for approval of these features on the airplane.

BIS amended the EAR in a final rule on June 19, 2007 (72 FR 33646), creating a new authorization for “Validated end-users” (VEUs) located in eligible destinations to which eligible items may be exported, reexported, or transferred (in-country) under a general authorization instead of a license, in conformance with section 748.15 of the EAR. VEUs may obtain eligible items that are on the Commerce Control List, set forth in Supplement No. 1 to Part 774 of the EAR, without having to wait for their suppliers to obtain export licenses from BIS. Eligible items may include commodities, software, and technology, except those controlled for missile technology or crime control reasons.

The VEUs listed in Supplement No. 7 to Part 748 of the EAR were reviewed and approved by the U.S. Government in accordance with the provisions of section 748.15 and Supplement Nos. 8 and 9 to Part 748 of the EAR. The revisions to Supplement No. 7 to Part 748 set forth in this rule are being made either at the request of the VEUs or pursuant to the U.S. Government's periodic review of VEU authorizations, and were approved by the End-User Review Committee (ERC) following the process set forth in Section 748.15 and Supplement No. 9 to Part 748 of the EAR.

In this rule, BIS amends Supplement No. 7 to Part 748 of the EAR to change the names of existing VEUs Hynix Semiconductor China Ltd. and Hynix Semiconductor (Wuxi) Ltd. and the names of the companies' respective “Eligible destinations” (i.e., facilities) in the People's Republic of China (PRC). Both companies were designated as VEUs on October 12, 2010 (75 FR 62462).

In this rule, the name Hynix Semiconductor China Ltd. is changed to SK hynix Semiconductor (China) Ltd., and the name of the company's existing approved “Eligible destination” is changed from Hynix Semiconductor China Ltd. to SK hynix Semiconductor (China) Ltd. In addition, the name Hynix Semiconductor (Wuxi) Ltd. is changed to SK hynix Semiconductor (Wuxi) Ltd., and the name of the company's existing approved “Eligible destination” is changed from Hynix Semiconductor (Wuxi) Ltd. to SK hynix Semiconductor (Wuxi) Ltd. The addresses of the companies' respective “Eligible destinations” remain the same. These amendments are prompted by factors arising from the companies' normal course of business, and are not the result of activities of concern by the companies.

BIS designated BHA Aero Composite Parts Co. as a VEU on October 19, 2007 (72 FR 59164). On April 29, 2009, BIS amended the authorization by changing the name of the VEU to Boeing Tianjin Composites Co., Ltd. (BTC) (74 FR 19382). In addition, on February 24, 2012, BIS amended BTC's VEU authorization to correct the address of BTC's eligible destination and revise the list of “Eligible items (by ECCN)” that may be exported, reexported, and transferred (in-country) to BTC (77 FR 10953). In this rule, BIS further revises the list of “Eligible items (by ECCN)” that may be exported, reexported, and transferred (in-country) to BTC. This amendment is prompted by factors arising from BTC's normal course of business, and is not the result of activities of concern by BTC.

BTC's list of “Eligible items (by ECCN)” prior to the publication of this rule was:

Since August 21, 2001, the Export Administration Act (the Act) has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended most recently by the Notice of August 12, 2011, 76 FR 50661 (August 16, 2011), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the 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, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. This rule involves collections previously approved by the Office of Management and Budget (OMB) under Control Number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 43.8 minutes to prepare and submit form BIS-748; and for recordkeeping, reporting and review requirements in connection with Authorization VEU, which carries an estimated burden of 30 minutes per submission. This rule is expected to result in a decrease in license applications submitted to BIS. Total burden hours associated with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA) and OMB Control Number 0694-0088 are not expected to increase significantly as a result of this rule.

Notwithstanding any other provisions of law, no person is required to respond nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

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

4. Pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), BIS finds good cause to waive requirements that this rule be subject to notice and the opportunity for public comment because such notice and comment here are unnecessary and contrary to the public interest. In determining whether to grant VEU designations, a committee of U.S. Government agencies evaluates information about and commitments made by candidate companies, the nature and terms of which are set forth in 15 CFR part 748, Supplement No. 8. The criteria for evaluation by the committee are set forth in 15 CFR 748.15(a)(2).

The information, commitments, and criteria for this extensive review were all established through the notice of proposed rulemaking and public comment process (71 FR 38313, July 2, 2006 (proposed rule), and 72 FR 33646, June 19, 2007 (final rule)). Given the similarities between the authorizations provided under the VEU program and export licenses (as discussed further below), the publication of this information does not establish new policy; in publishing this final rule, BIS simply amends three VEU authorizations by updating the names of two end users and revising the “Eligible items (by ECCN)” of another end user. These changes have been made within the established regulatory framework of the Authorization VEU program. Further, this rule does not abridge the rights of the public or eliminate the public's option to export under any of the forms of authorization set forth in the EAR.

Publication of this rule in other than final form is unnecessary because the authorization granted in the rule is consistent with the authorizations granted to exporters for individual licenses (and amendments or revisions thereof), which do not undergo public review. Just as license applicants do, VEU authorization applicants provide the U.S. Government with confidential business information. This information is extensively reviewed according to the criteria for VEU authorizations, as set out in 15 CFR 748.15(a)(2). Additionally, just as the interagency reviews license applications, the authorizations granted under the VEU program involve interagency deliberation and result from review of public and non-public sources, including licensing data, and the measurement of such information against the VEU authorization criteria. Given the thorough nature of the review, and in light of the parallels between the VEU application review process and the review of license applications, public comment on this authorization and subsequent amendments prior to publication is unnecessary. Moreover, because, as noted above, the criteria and process for authorizing and administering VEUs were developed with public comments; allowing additional public comment on this amendment to individual VEU authorizations, which was determined according to those criteria, is unnecessary. Finally, allowing for prior public notice and comment is contrary to the public interest because it could cause confusion with the VEU status of the three companies identified in this rule due to the change of VEU names for two of those companies, and the items that may be exported, reexported or transferred (in-country) without a license to one of those companies.

Section 553(d) of the APA generally provides that rules may not take effect earlier than thirty (30) days after they are published in the Federal Register. BIS finds good cause to waive the requirement of 5 U.S.C. 553(d)(3) to delay the effectiveness of this regulation, because such a delay is unnecessary. BIS simply amends three VEU authorizations by updating the names of two end users and revising the “Eligible items (by ECCN)” of another end user. These changes have been made within the established regulatory framework of the Authorization VEU program. Further, this rule does not abridge the rights of the public or eliminate the public's option to export under any of the forms of authorization set forth in the EAR. Delaying this action's effectiveness could cause confusion with the VEU status of the three companies identified in this rule due to the change of VEU names for two of those companies, and the items that may be exported, reexported or transferred (in-country) without a license to one of those companies. Accordingly, it would be unnecessary and contrary to the public interest to delay this rule's effectiveness.

No other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required under the APA or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable and no regulatory flexibility analysis has been prepared.

Accordingly, Part 748 of the EAR (15 CFR parts 730-774) is amended as follows:

ISCAP is a Presidential appellate panel made up of representatives from the Departments of State, Defense, and Justice, the National Archives and Records Administration, the Office of the Director of National Intelligence, and the National Security Advisor, with an occasional representative from the Central Intelligence Agency. The director of the Information Security Oversight Office (ISOO), a unit of the National Archives and Records Administration (NARA), has been tasked by E.O. 13526 as the Panel's Executive Secretary, and the ISOO staff as the administrative staff supporting the Panel. As a result, the ISCAP bylaws and appellate procedures are published by NARA along with other ISOO regulations.

ISCAP's bylaws were previously published in 2004 as Appendix A to ISOO's Directive 1. When ISOO's directive was updated in 2009, the ISCAP bylaws were not included as an appendix again, and are now being added, along with appellate procedures, for publication as Part 2003. Publishing ISCAP's bylaws and appellate procedures in a separate part will make them easier to find and to use.

This rule is effective upon publication for good cause as permitted by the Administrative Procedure Act (5 U.S.C. 553(d)(3)). NARA believes that delaying the effective date for 30 days is unnecessary as this rule represents minor technical amendments from the previous by-laws as mandated by E.O. 13526.

This direct final rule is not a significant regulatory action for the purposes of E.O. 12866 and has [not] been reviewed by the Office of Management and Budget (OMB). The proposed amendment is also not a major rule as defined in 5 U.S.C. chapter 8, Congressional Review of Agency Rulemaking. As required by the Regulatory Flexibility Act, we certify that this rule will not have a significant impact on a substantial number of small entities because it sets out only the bylaws by which the Panel will operate and the review procedures for Federal agency declassification actions.

For the reasons stated in the preamble, NARA adds 32 CFR part 2003, to read as follows:

The Norfolk Southern Railroad requested a temporary deviation for the Southern Railroad Drawbridge, across the Tennessee River, mile 304.4, at Decatur, AL.

The vertical clearance of the bridge in the closed position is 10.5 feet. The bridge opens on request or by signal as required by 33 CFR 117.5. The deviation period is from 8:00 a.m. to noon and from 12:30 p.m. to 4:30 p.m. July 16 through July 19, 2012. The Coast Guard will inform the public through broadcast notices to mariners of any changes in the schedule for this deviation. During the deviation period new rail joints will be installed which require steel cutting and welding activity on the bridge.

Vessel traffic consists of commercial tows ranging from a single barge to 15-barges and approximately six openings during the deviation period could normally occur. This deviation was coordinated with the commercial waterway users and no objections were expressed. The bridge, in the closed position, does not provide ample clearance for vessels to pass beneath and there are no alternate routes for vessels transiting this section of the Tennessee River.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

The Metro North (Peck) Bridge, across the Pequonnock River, mile 0.3, at Bridgeport, CT, has a vertical clearance in the closed position of 26 feet at mean high water and 32 feet at mean low water. The drawbridge operation regulations are listed at 33 CFR 117.219(b).

The operator of the bridge, Metro North Railroad, requested a temporary deviation from the regulations to facilitate bridge maintenance, miter rail repair, at the bridge. While conducting repairs during a temporary deviation from April 15, 2012 to June 30, 2012, Metro North Railroad discovered that a separate track of rail needed repair. This was unknown during the original project planning.

The waterway users are recreational vessels and commercial lobster boats. The Metro North (Peck) Bridge rarely opens for vessel traffic. The bridge has received no requests to open during the past several years except for bridge testing and repairs.

Under this temporary deviation the Metro North (Peck) Bridge may remain in the closed position from July 9, 2012 through September 30, 2012. Vessels that can pass under the bridge in the closed position may do so at all times.

The waterway users were advised of the requested bridge closure and offered no objection.

In accordance with 33 CFR 117.35(e), the bridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Table of Acronyms DHS Department of Homeland Security FR  Federal Register NPRM Notice of Proposed Rulemaking A. Regulatory History and Information

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable and contrary to the public interest. The final details for this event were not known to the Coast Guard until there was insufficient time remaining before the event to publish an NPRM. Thus, delaying the effective date of this rule to wait for a comment period to run would be both impracticable and contrary to the public interest because it would inhibit the Coast Guard's ability to protect spectators and vessels from the hazards associated with a maritime fireworks display, which are discussed further below.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . For the same reasons discussed in the preceding paragraph, waiting for 30 day notice period run would be impracticable and contrary to the public interest.

The legal basis for the rule is 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Public Law 107-295, 116 Stat. 2064; and Department of Homeland Security Delegation No. 0170.1, which collectively authorizes the Coast Guard to define regulatory safety zones.

Between 10:15 p.m. and 10:45 p.m. on July 8, 2012, a fireworks display will be held on Lake Erie near Conneaut, OH. The Captain of the Port Buffalo has determined that fireworks launched proximate to a gathering of watercraft pose a significant risk to public safety and property. Such hazards include premature and accidental detonations, dangerous projectiles, and falling or burning debris.

With the aforementioned hazards in mind, the Captain of the Port Buffalo has determined that this temporary safety zone is necessary to ensure the safety of spectators and vessels during the Conneaut 4th of July Festival Fireworks. This zone will be effective and enforced from 9:45 p.m. until 11:05 p.m. on July 8, 2012. This zone will encompass all waters of Lake Erie, Conneaut, OH within an 840 foot radius of position 41°58′00.43″ N and 80°33′34.93″ W (NAD 83).

Entry into, transiting, or anchoring within the safety zone is prohibited unless authorized by the Captain of the Port Buffalo or his designated on-scene representative. The Captain of the Port or his designated on-scene representative may be contacted via VHF Channel 16.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We conclude that this rule is not a significant regulatory action because we anticipate that it will have minimal impact on the economy, will not interfere with other agencies, will not adversely alter the budget of any grant or loan recipients, and will not raise any novel legal or policy issues. The safety zone created by this rule will be relatively small and enforced for relatively short time. Also, the safety zone is designed to minimize its impact on navigable waters. Furthermore, the safety zone has been designed to allow vessels to transit around it. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Under certain conditions, moreover, vessels may still transit through the safety zone when permitted by the Captain of the Port.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This temporary final rule may affect the following entities, some of which may be small entities: the owners of operators of vessels intending to transit or anchor in a portion of Lake Erie, Conneaut, OH between 9:45 p.m. to 11:05 p.m. on July 8, 2012.

This safety zone will not have a significant economic impact on a substantial number of small entities because of the minimal amount of time in which the safety zone will be enforced. This safety zone will only be enforced for 90 minutes in a low commercial vessel traffic area. Vessel traffic can pass safely around the zone. Before the effective period, maritime advisories will be issued, which include a Broadcast Notice to Mariners.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding this 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.

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

This rule 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 rule under that Order and have 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 rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

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

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

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

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have determined 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 rule is categorically excluded from further review, under paragraph (34)(g), of Figure 2-1 of the Commandant Instruction because it involves the establishment of a safety zone. A final 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 rule.

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

The Copyright Office has long allowed photographers to register groups or collections of photographs, including groups of either published or unpublished photographs when certain requirements are met. See 37 CFR 202.3(b)(4)(i)(A) and (B).

Moreover, in 2001, after an extensive rulemaking proceeding, the Office adopted a group registration procedure for published photographs that complemented the existing procedure for registering a collection of unpublished works in a single registration. See Registration of Claims to Copyright; Group Registration of Photographs, 66 FR 37142 (July 17, 2001) (codified at 37 CFR 202.3(b)(10)). The result was a new group registration procedure permitting registration of a group of published photographs, all taken by the same photographer and published within the same calendar year, upon submission of an application for registration and a deposit consisting of each of the images covered by the registration. At the same time, the Office liberalized its requirements with respect to acceptable formats of deposits of photographs for registrations of unpublished collections, as well as for the new group registration of published photographs option. See 37 CFR 202.3(b)(1) and 202.20(c)(2)(xx). The 2001 regulations ensured that together, the registration record and the deposit would provide a sufficient record to identify the individual photographic works contained in the registered copyright claim.

Despite the availability of these options, however, some applicants have registered groups of photographs using the registration option for automated databases. The group database registration option was first announced in 1989. See Registration of Claims to Copyright Registration and Deposit of Databases, 54 FR 13177 (March 31, 1989). It has been used to register databases consisting predominantly of photographic images since at least 1997. See, e.g., Registration No. VA 863-785 (Corbis Digital Online Update Group, from March 18-June 30, 1997) (effective date Nov. 6, 1997). A published database may be registered as a compilation, and the group database registration provisions permit a single registration that covers up to three months' worth of updates and revisions to an automated database if all of the updates or other revisions (1) are owned by the same copyright claimant, (2) have the same general title, (3) are similar in their general content, including their subject, and (4) are similar in their organization. 37 CFR 202.3(b)(5). Using this provision, stock photography agencies have registered all the photographs added to their databases within a three-month period when they have obtained copyright assignments from the photographers.

In the interim regulation establishing a pilot program for online applications for group registrations of databases consisting predominantly of photographic authorship, the Office included a requirement that the deposit accompanying such an online submission must include all individual photographs included in the claim. See Interim Rule, Registration of claims of copyright, 76 FR 4072-4076 (January 24, 2011); 37 CFR 202.20(c)(vii)(D)(8).

In addition to establishing the pilot program for online submissions, the interim rule announced that the Office would be reviewing the circumstances and conditions under which database registrations may be made and the extent to which, going forward, such registrations should continue to be deemed to cover not only the compilation authorship ( i.e., the authorship involved in the selection, coordination and arrangement of the data and/or works assembled in a database) but also any or all of the individual works assembled in the database. 1

In the interest of reconciling the deposit requirements for registrations consisting predominantly of photographs, on January 28, 2011, the Office published a notice of proposed rulemaking to extend the requirement of a deposit of all of the individual images included in a claim to cases in which paper applications are used for group registration of databases consisting predominantly of photographic authorship. 76 FR 5106. The amendment would provide that, for any registration of an automated database consisting predominantly of photographs (whether the application is made by paper application or online pursuant to the Interim Regulation), the deposit shall include, in addition to the descriptive statement currently required under § 202.20(c)(2)(vii)(D)(5), all of the photographs included in the copyright claim being registered. 76 FR 5106. Identifying material would not constitute a sufficient deposit. While most applications for group registration of databases consisting predominantly of photographic authorship typically provide all of the photographs in the deposit, some submissions that comply with the current requirements for this group registration option do not include all of the photographs.

The Copyright Office received three comments in response to the notice of proposed rulemaking. The comments generally supported the pilot program, the opportunity to register groups of published images by electronic submission, and the requirement of a more complete deposit.

Comments submitted on behalf of the Picture Archive Council of America (PACA) and Public Knowledge both acknowledged that the proposed amendment would create a more complete public record. PACA specifically noted that a deposit of all photographs would “avoid unnecessary disputes over whether a particular photograph is within the scope of the registration.” Public Knowledge stated that the quick and accurate identification of a copyright owner is necessary for both the public and creators. It asserted that without this information, it is difficult to near impossible for the public to make use of the work, or for creators to be compensated for that use. Public Knowledge commented that the consequences of being unable to identify the owner of a work are “vividly illustrated by the status of orphan works.” Orphan works are works that may be protected by copyright, but cannot be licensed by the public because there is no way to identify or locate the actual owner of the works or the owners of particular rights.

Comments submitted on behalf of the Professional Photographers of America, the Society of Sport & Event Photographers, the Student Photographic Society, Evidence Photographers International Council, and the Stock Artists Alliance (hereinafter “PPA comments”) supported the pilot program and electronic registration options for photographic works in general. However, their comments also expressed concern that the proposed regulation would create “double the effort” for professional photographers who may have “* * * already devised an automated system for cataloguing their creative work.” The comments stated that the new deposit requirements would not create an additional incentive to register a database of images, and that a photographer would be equally served to follow the existing process for registering groups of either published or unpublished work.

Some comments proposed further clarification and/or procedures to improve the registration process in general, as well as improved online searching tools for copyright records.

Based on the reasoning expressed in the Notice of Proposed Rulemaking, and upon consideration of the public comments received, the Copyright Office concludes that when a registration is made for a database consisting predominantly of photographs, and the copyright claim extends to the individual photographs themselves, each of those photographs must be included as part of the deposit accompanying the application. As the Office has previously stated:

While the Copyright Office recognizes that the proposed deposit requirements for automated databases consisting predominately of photographic authorship require the submission of additional material on the part of the photographer, the Office already requires this material for the all other registration options for published and unpublished photographs, as well as for online applications to register photographic databases. Moreover, the prevailing practice with respect to almost all registrations of predominantly photographic databases has been to include all of the photographs in the deposit. 2 The regulation simply aligns the deposit requirements for paper applications to register automated databases that predominantly consist of photographs with the requirements already imposed for all other registration options for groups of photographs and with the prevailing industry practices. Moreover, it creates a better registration record by making it possible to determine which photographs are actually included in a particular group registration.

The Office notes the concerns expressed by commenters related to other registration and public record issues. Although they are outside the scope of the present rulemaking, the Office will take them into account as it endeavors to continue improving the copyright system for the benefit of creators and users of copyrighted works.

Claimants submitting applications for group registration of photographic and other databases that select and arrange works protected by copyright and who intend to include claims in those component works within the scope of the registration are advised that it is in their interest to specifically identify (1) the author of each of the component works, and (2) for each author, the title of each of his or her component works on the application. A number of district courts have ruled that a certificate of registration that does not identify the author and title of a particular work does not cover that particular work. See, e.g., Alaska Stock, LLC v. Houghton Mifflin Harcourt Pub. Co. 2010 WL 3785720, No. 3:09-CV-0061-HRH (D.Alaska,2010); Bean v. Houghton Mifflin Harcourt Publishing Co., 2010 WL 3168624, No. CV10-8034-PCT-DGC, (D.Ariz.,2010); Muench Photography, Inc. v. Houghton Mifflin Harcout Publishing Company, 712 F.Supp.2d 84 (S.D.N.Y.2010) . The Copyright Office is optimistic that those decisions will be overturned on appeal, but applicants who do not specifically identify each author and title run the risk that their registrations will be considered not to extend to each work in the group. And regardless of the outcome of that litigation, specific identification of each author and title creates a more accurate and informative public record. Applicants seeking guidance as to how to identify each author and title on a paper or electronic application should contact the Visual Arts Division at (202) 707-8202.

In the next year, the Office is likely to propose additional regulatory amendments relating to various group registration options, including group registrations of automated databases, in part to address some of the issues that have arisen in the recent litigation.

In consideration of the foregoing, Part 202 of Title 37 of the Code of Federal Regulations is amended to read as follows:

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

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the OCSPP test guidelines referenced in this document electronically, please go to http://www.epa.gov/ocspp and select “Test Methods and Guidelines.”

Under FFDCA section 408(g), 21 U.S.C. 346a(g), any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2010-0805 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before September 7, 2012. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2010-0805, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statue.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), Mail Code: 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001.

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.htm.

Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of February 4, 2011 (76 FR 6465) (FRL-8858-7), EPA issued a notice pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 0F7745) by Pasteuria Bioscience, Inc., 12085 Research Dr., Suite 185, Alachua, FL 32615. The petition requested that 40 CFR part 180 be amended by establishing an exemption from the requirement of a tolerance for residues of Pasteuria reniformis —Pr3 [SD-5834]. This notice referenced a summary of the petition prepared by the petitioner, Pasteuria Bioscience, Inc., which is available in the docket via http://www.regulations.gov. Comments were received on the notice of filing. EPA's response to these comments is discussed in Unit VII.C.

Based upon review of data and other information supporting the petition, EPA modified the active ingredient name. In addition, EPA also changed the commodity to be reflected in the tolerance expression from “in or on all raw agricultural crops” to “in or on all food commodities.” The reasons for these changes are explained in Unit VII.D.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance exemption and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue * * *.” Additionally, FFDCA section 408(b)(2)(D) requires that EPA consider “available information concerning the cumulative effects of [a particular pesticide's] * * * residues and other substances that have a common mechanism of toxicity.”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of a pesticide. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Consistent with FFDCA section 408(b)(2)(D), EPA reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability, and the relationship of this information to human risk. EPA also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Pasteuria, a genus of bacteria, includes several species that have shown potential in controlling plant-parasitic nematodes that attack and cause significant damage to many agricultural crops (see, e.g., the Federal Register of December 28, 1994 (59 FR 66740) (FRL-4923-4), June 30, 2010 (75 FR 37734) (FRL-8831-9), and February 15, 2012 (77 FR 8736) (FRL-9337-2) for final rules that established tolerance exemptions for residues of the nematicides, Pasteuria penetrans (40 CFR 180.1135), Pasteuria usgae (40 CFR 180.1290), and Pasteuria nishizawae —Pn1 (40 CFR 180.1311), respectively). These gram-positive, mycelial, endospore-forming bacteria are mostly obligate parasites (i.e., organisms that depend on particular hosts to complete their own life cycle) of plant-parasitic nematodes, although one Pasteuria species— Pasteuria ramosa —is known to parasitize Daphnia species, which are tiny crustaceans often called “water fleas” due to their flea-like size and appearance (Refs. 1 and 2). Pasteuria species are ubiquitous in most environments and are found in nematodes in at least 80 countries on 5 continents, as well as on islands in the Atlantic, Pacific, and Indian Oceans (Refs. 1 and 2). Higher population densities often occur in areas where there is an ample supply of nematode hosts (e.g., where crops susceptible to nematodes are cultivated) (Refs. 1, 3, 4, and 5). Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was specifically isolated from soil samples collected in the southeastern United States (Ref. 1).

Endospores of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 attach to Rotylenchulus species nematodes at all life stages, except eggs (Ref. 1). After an endospore attaches to the cuticle of a nematode host, a germ tube penetrates the cuticle, and growth and sporogenesis begin in the pseudocoelom of the nematode (Ref. 1). The nematode is eventually filled with cells, mycelial hyphae, and sporangia, which leads to its death (Ref. 1). In light of the demonstrated nematicidal capabilities and host specificity of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, Pasteuria Bioscience, Inc. proposed to register pesticide products intended for use on several food and nonfood crops, primarily as seed or soil treatments, to control the reniform nematode ( Rotylenchulus reniformis ).

All applicable mammalian toxicology data requirements supporting the request for an exemption from the requirement of a tolerance for residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 in or on all food commodities have been fulfilled with data submitted by the petitioner. The results of the acute dermal toxicity and primary dermal irritation tests revealed no toxicity or irritation attributed to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, and these studies received a Toxicity Category IV or III classification (see 40 CFR 156.62). Although infectivity and clearance of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 were not evaluated in the acute oral, pulmonary, and injection toxicity/pathogenicity studies, the results indicated that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was not toxic and/or pathogenic via the tested routes of exposure. Finally, the petitioner has reported that no hypersensitivity incidents occurred during development and testing of this bacterium. The overall conclusions from all toxicological information submitted by the petitioner are briefly described in this unit, while more in-depth synopses of some study results can be found in the associated draft BRAD provided as a reference in Unit IX. (Ref. 1).

1. Acute oral toxicity/pathogenicity—rat (Harmonized Guideline 885.3050; Master Record Identification Number (MRID No.) 481460-09). A supplemental acute oral toxicity/pathogenicity study demonstrated that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was not toxic and/or pathogenic to laboratory rats when administered by oral gavage in a single dose of 1.5 × 10 9 spores per animal.

2. Acute pulmonary toxicity/pathogenicity—rat (Harmonized Guideline 885.3150; MRID No. 481460-10). A supplemental acute pulmonary toxicity/pathogenicity study demonstrated that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was not toxic and/or pathogenic to laboratory rats when administered by intratracheal instillation in a single dose of 1.5 × 10 8 spores per animal.

3. Acute injection toxicity/pathogenicity (intravenous)—rat (Harmonized Guideline 885.3200; MRID No. 481460-11). A supplemental acute injection toxicity/pathogenicity study demonstrated that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was not toxic and/or pathogenic to laboratory rats when administered intravenously in a single dose of 1 × 10 7 spores per animal.

4. Hypersensitivity incidents (Harmonized Guideline 885.3400; MRID No. 481460-12). The petitioner reported that no hypersensitivity incidents, including immediate-type or delayed-type reactions of humans and domestic animals, occurred during research, development, or testing of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3.

5. Acute dermal toxicity—rabbit (Harmonized Guideline 870.1200; MRID No. 481460-14). An acceptable acute dermal toxicity study demonstrated that a test substance containing Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was not toxic to rabbits when dosed at 2,000 milligrams per kilogram (mg/kg) for 24 hours. The dermal median lethal dose, which is a statistically derived single dose that can be expected to cause death in 50% of test animals, was greater than 2,000 mg/kg for male and female rats combined (Toxicity Category III).

6. Primary dermal irritation—rabbit (Harmonized Guideline 870.2500; MRID No. 481460-16). An acceptable primary dermal irritation study demonstrated that a test substance containing Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 was essentially non-irritating to the skin of rabbits (Toxicity Category IV).

In examining aggregate exposure, FFDCA section 408 directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

1. Food exposure. Dietary exposure to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, a naturally occurring soil bacterium (Ref. 1), is anticipated to be negligible. For optimal control of the target pest (reniform nematode), Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 is applied in a manner that facilitates spore movement into or spore placement near the root zone of potentially affected plants. This requires that end users take certain actions, depending on the treatment type, that would inevitably minimize the amount of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 residues on above-ground commodities. That is, although Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 can be applied to soil, plants, or seeds, some seeds are incorporated into the soil immediately after treatment (at-planting, hopper box, planter box, or slurry box seed treatments), and pesticide applications made to plants or the soil are always followed by irrigation to incorporate Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 into the soil. In instances where food commodities develop underground or where treated seed is diverted for food or feed purposes or to process into oil, exposure to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 is a more likely scenario. Regardless of the situation, however, should residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 result in or on food when used as a pesticide in accordance with label directions and good agricultural practices, its lack of toxicity and pathogenicity (as demonstrated in the available data) indicate that no adverse effects are likely to occur with respect to any exposures to such residues (see additional discussion in Unit III.).

2. Drinking water exposure. Exposure to residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 in consumed drinking water is possible but not likely. The proposed use patterns for Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 are soil directed, soil incorporated, and/or seed directed, thereby limiting contact with surface water by drift and runoff. Furthermore, ground water is not expected to have significant exposure to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, given that this microbial pesticide would likely be filtered out by the particulate nature of many soil types as are other microorganisms (Refs. 6, 7, and 8). If Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 were to be transferred to surface or ground waters (e.g., through spray drift or runoff) that are intended for eventual human consumption and directed to wastewater treatment systems or drinking water facilities, it may not survive some of the conditions water is subjected to in such systems or facilities, including chlorination, pH adjustments, and filtration (Refs. 9 and 10). In the remote likelihood that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 is present in drinking water (e.g., water not subject to certain conditions in treatment systems and facilities), its lack of toxicity and pathogenicity demonstrated by the available data indicate that no toxicity, pathogenicity, and/or infectivity is likely to occur with respect to any exposures to residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 in drinking water that might result from pesticide applications made in accordance with label directions and good agricultural practices (see additional discussion in Unit III.).

Given Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3's natural presence in soil (Ref. 1), non-occupational exposure to the bacterium almost certainly is already occurring. Additional non-occupational exposure to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 due to pesticidal applications is not expected because all proposed pesticide end-use products are labeled for use in distinct agricultural settings. Even if additional non-occupational exposures were to occur (e.g., eventual expansion of use sites), the lack of toxicity, pathogenicity, and irritation demonstrated in the available data indicate that no adverse effects are likely to occur with respect to any exposures to such residues that might result from pesticide applications made in accordance with label directions and good agricultural practices (see additional discussion in Unit III.).

Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance exemption, EPA consider “available information concerning the cumulative effects of [a particular pesticide's] * * * residues and other substances that have a common mechanism of toxicity.”

No mechanism of toxicity in mammals has been identified for Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, and Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 does not appear to produce a toxic metabolite against the target pest. For the purposes of this tolerance action, therefore, EPA has assumed that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine chemicals that have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

FFDCA section 408(b)(2)(C) provides that, in considering the establishment of a tolerance or tolerance exemption for a pesticide chemical residue, EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure, unless EPA determines that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act Safety Factor. In applying this provision, EPA either retains the default value of 10X, or uses a different additional or no safety factor when reliable data are available to support a different additional or no safety factor.

Based on the acute toxicity and pathogenicity data discussed in Unit III.B., as well as Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3's host specificity for Rotylenchulus species nematodes, EPA concludes that there are no threshold effects of concern to infants, children, or adults when Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 is used as labeled in accordance with good agricultural practices. As a result, EPA concludes that no additional margin of exposure (safety) is necessary.

Moreover, based on the same data and EPA analysis as presented in this unit, the Agency is able to conclude that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to the residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 when it is used as labeled and in accordance with good agricultural practices as a nematicide. Such exposure includes all anticipated dietary exposures and all other exposures for which there is reliable information. EPA has arrived at this conclusion because, considered collectively, the data and information available on Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 do not demonstrate toxic, pathogenic, and/or infective potential to mammals, including infants and children.

An analytical method is not required for enforcement purposes for the reasons stated in Unit VI. and because EPA is establishing an exemption from the requirement of a tolerance without any numerical limitation.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. In this context, EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

The Codex has not established a MRL for Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3.

Two comments were submitted. An anonymous commenter (EPA-HQ-OPP-2010-0012-0019) generally expressed opposition to EPA granting tolerance exemptions to several petitioners, including Pasteuria Bioscience, Inc. Specifically, this commenter mentioned concern with the prevalence of many toxic chemicals in the environment and lack of information regarding how such chemicals combine. Another commenter (EPA-HQ-OPP-2010-0905-0003) also expressed opposition to granting tolerances and tolerance exemptions for several chemicals, including Pasteuria reniformis —Pr3 (now recognized as Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 instead), that were described in the Federal Register of February 4, 2011 (76 FR 6465) (FRL-8858-7). This commenter stated that the food supply must be rigorously tested, that studies submitted by the chemical industry must be subjected to independent peer review, and that only long-term studies can provide data on the health impact of exposure to the chemicals in the February 4, 2011 Notice of Filing.

Data provided by the petitioner demonstrated that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 is not toxic and/or pathogenic at the doses administered orally, intratracheally, intravenously, and dermally to rats or rabbits (see Unit III.B.). Moreover, since no mechanism of toxicity in mammals has been identified for Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3, and Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 does not appear to produce a toxic metabolite against the target pest, EPA has assumed that Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 does not have a common mechanism of toxicity with other substances. After conducting a comprehensive assessment of the data and information submitted by the petitioner, EPA has concluded there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3. Thus, under the standard in FFDCA section 408(c)(2), a tolerance exemption is appropriate.

Two modifications have been made to the requested tolerance exemption. First, after Pasteuria Bioscience, Inc. petitioned EPA to establish a tolerance exemption for Pasteuria reniformis —Pr3 [SD-5834], EPA reviewed the submitted product identification data and made the following determinations:

1. The active ingredient name was not included in any acceptable taxonomic scheme and

2. Insufficient information was provided to show how this taxonomic position was established as a new species (i.e., reniformis ).

Thus, Pasteuria Bioscience, Inc. submitted additional product identification data and revised the active ingredient name from Pasteuria reniformis —Pr3 [SD-5834] to Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 to accurately represent what was described in this new data (e.g., identification down to this isolate's genus and of its primary target pest, the reniform nematode). With this modification to the active ingredient name, inclusion of the American Type Culture Collection accession number (i.e., SD-5834) was also dropped because Pasteuria Bioscience, Inc. already created a unique isolate identifier (i.e., Pr3). Use of just Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 throughout this document, particularly in the tolerance exemption expression, is now supported by data, is consistent with the representation of this active ingredient in other associated regulatory documents, and should assist in preventing confusion regarding this active ingredient's nomenclature in the future. Second, EPA is changing “in or on all raw agricultural crops” to “in or on all food commodities” to align with the terminology the Agency currently uses when establishing tolerances or tolerance exemptions for residues of pesticide chemicals under the FFDCA.

EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3. Therefore, an exemption from the requirement of a tolerance is established for residues of Pasteuria spp. ( Rotylenchulus reniformis nematode)—Pr3 in or on all food commodities when applied as labeled as a nematicide and used in accordance with good agricultural practices.

This final rule establishes a tolerance exemption under section 408(d) of FFDCA in response to a petition submitted to EPA. 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). Because this final rule has been exempted from review under Executive Order 12866, this final 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), or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes. As a result, this action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, EPA has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, EPA has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4).

This action does not involve any technical standards that would require EPA consideration of voluntary consensus standards pursuant to 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).

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

Therefore, 40 CFR chapter I is amended as follows:

This is a summary of the Commission's Report and Order (R&O), FCC 11-182, adopted and released on December 13, 2011. The full text of this document is available electronically via ECFS at http://fjallfoss.fcc.gov/ecfs/ or may be downloaded at http://transition.fcc.gov/Daily_Releases/Daily_Business/2011/db1214/FCC-11-182A1.doc . (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document is also available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, 445 12th Street SW., Room CY-B402, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. With this Report & Order ( R&O ), we adopt rules to implement the Commercial Advertisement Loudness Mitigation (“CALM”) Act. 1 Among other things, the CALM Act directs the Commission to incorporate into its rules by reference and make mandatory a technical standard, developed by an industry standards development body, that is designed to prevent digital television commercial advertisements from being transmitted at louder volumes than the program material they accompany. 2 As mandated by the statute, the rules apply to digital TV broadcasters, digital cable operators, and other digital multichannel video programming distributors (“MVPDs”). 3 Also per the statute, the rules will take effect one year after adoption, and will therefore be effective as of December 13, 2012. 4 The rules we adopt today are designed to protect viewers from excessively loud commercials and, at the same time, permit broadcasters and MVPDs to implement their obligations in a minimally burdensome manner. As described below, we will require broadcast stations and MVPDs to ensure that all commercials are transmitted to consumers at the appropriate loudness level in accordance with the industry standard. In the event of a pattern or trend of complaints, stations and MVPDs will be deemed in compliance with regard to their locally inserted commercials if they demonstrate that they use certain equipment in the ordinary course of business. 5 For the embedded commercials that stations and MVPDs pass through from programmers, we also establish a “safe harbor” to demonstrate compliance through certifications and periodic testing. This regime will make compliance less burdensome for the industry while ensuring appropriate loudness for all commercials.

2. The CALM Act was enacted into law on December 15, 2010 in response to consumer complaints about “loud commercials.”  6 The Commission has received complaints about loud commercials virtually since the inception of commercial television more than 50 years ago. 7 Indeed, loud commercials have been a leading source of complaints to the Commission since the FCC Consumer Call Center began reporting the top consumer complaints in 2002. 8 One common complaint is that a commercial is markedly louder than adjacent programming. 9 The problem occurs in over-the-air broadcast television programming, as well as in cable, Direct Broadcast Satellite (“DBS”) and other video programming. The text of the CALM Act provides in relevant part as follows:  10

3. The Commission has not regulated the “loudness” of commercials in the past, primarily because of the difficulty of crafting effective rules due to both “the subjective nature” of loudness and the technical limitations of the NTSC standard used in analog television. 18 The Commission has incorporated by reference into its rules various industry standards on digital television, but these standards alone have not described a consistent method for industry to measure and control audio loudness. 19 The loud commercial problem seems to have been exacerbated by the transition to digital television, perhaps because DTV's expanded aural dynamic range allows for greater variations in loudness for cinema-like sound quality. As a result, when content providers and/or stations/MVPDs do not properly manage DTV loudness, the resulting wide variations in loudness are more noticeable to consumers. 20 However, DTV technology also offers industry the opportunity to more easily manage loudness. We note that, because the Recommended Practice we are instructed to incorporate by reference and make mandatory is directed only at digital programming, the rules we adopt in this R&O deal only with commercials transmitted digitally, and do not apply to analog broadcasts or analog MVPD service. 21

4. The television broadcast industry has recognized the importance of measuring and controlling volume in television programming, particularly in the context of the transition to digital television. In November 2009, the Advanced Television Systems Committee (“ATSC”)  22 completed and published the first version of its A/85 Recommended Practice (“the RP”), 23 which was developed to offer guidance to the digital TV industry—from content providers to distributors—regarding loudness control. 24 The RP provides detailed guidance on loudness measurement methods for different types of content ( i.e., short form, long form, or file-based) at different stages of distribution ( i.e., production, post-production and real time production). 25 It specifically provides effective loudness management solutions for “operators”  26 to avoid large loudness variations during transitions between different types of content. 27 If all stations/MVPDs ensure that, inter alia, the loudness of all content is measured using the algorithm required by the RP and transmitted correctly, then consumers will be able to set their volume controls to their preferred listening (loudness) level and will not have to adjust the volume between programs and commercials. 28 The RP, like most ATSC documents, was initially intended for over-the-air TV broadcasters, in particular for AC-3  29 digital audio systems. However, the RP also sets forth the recommended approach that cable and DBS operators and other MVPDs that use AC-3 and non-AC-3 audio systems should employ. 30

5. Compliance with the RP requires industry to use the International Telecommunication Union  31 Radiocommunication Sector (“ITU-R”)  32 Recommendation BS.1770 measurement algorithm. 33 The ITU-R BS.1770 measurement algorithm provides a numerical value that indicates the perceived loudness  34 of the content measured in units of “LKFS”  35 by averaging the loudness of audio signals in all channels over the duration of the content. 36 In the RP, that value is called “dialnorm” (short for “Dialog Normalization”)  37 and is to be encoded as metadata  38 into the audio stream required for digital broadcast television. 39 Stations/MVPDs transmit the dialnorm to the consumer's reception equipment. 40 Specifically, the RP provides operators with three metadata management modes for ensuring that the consumer's equipment receives the correct loudness value. 41

6. The “golden rule” of the RP is that the dialnorm value must correctly identify the loudness of the content it accompanies in order to prevent excessive loudness variation during content transitions on a channel ( e.g., TV program to commercial) or when changing channels. 42 If the dialnorm value is correctly encoded—if it matches the loudness of the content, which depends in turn on accurate loudness measurements—the consumer's receiver will adjust the volume automatically to avoid spikes in loudness. 43

7. In addition to requiring the Commission to incorporate the RP by reference, the CALM Act requires the Commission to incorporate by reference “any successor thereto.”  44 After the CALM Act's enactment, the ATSC approved several relevant changes to the RP. The ATSC approved a first successor document to the RP on May 25, 2011 and approved a second on July 25, 2011. 45 The first successor added Annex J which provides guidance with respect to local insertions for operators using AC-3 audio systems. 46 The second successor added Annex K  47 which in turn provides instructions for operators using non-AC-3 audio systems. 48 The RP states that Annexes J and K “contain all the courses of action necessary to perform effective loudness control of digital television commercial advertising.”  49 Both Annexes state that “[i]t is vital that, when loudness of short form content ( e.g., commercial advertising) is measured, it be measured in units of LKFS including all audio channels and all elements of the soundtrack over the duration of the content.”  50 Since there is no dialnorm metadata in non-AC-3 audio systems, the operator must ensure that the loudness of content measured in LKFS matches the Target Loudness  51 of the delivery channel. 52 In the context of the Annexes, the term “vital” indicates a course of action to be followed strictly (no deviation is permitted). 53 Throughout the RP, the term “should” indicates that a certain course of action is preferred but not necessarily required, 54 and the term “should not” means a certain possibility or course of action is undesirable but not prohibited. 55

8. We initiated this proceeding on May 27, 2011 by issuing a Notice of Proposed Rulemaking (“NPRM”). 56 We sought comment on proposals regarding compliance, waivers, and other implementation issues. As discussed below, after reviewing the concerns expressed in the record, we seek to adopt rules that recognize the distinct role played by stations and MVPDs in the transmission of commercials under the RP. Accordingly, our rules incorporate the RP and make commercial volume management mandatory, as required by the CALM Act, 57 reduce the burden associated with demonstrating compliance in the event of complaints, 58 and reflect the practical concerns described in the rulemaking record. 59

9. We hereby adopt our proposal to incorporate the RP by reference into our rules, 60 as well as our tentative conclusion that the Commission may not modify the RP or adopt other actions inconsistent with the statute's express limitations. 61 In addition, we adopt our tentative conclusion that “ all stations/MVPDs and not only those using AC-3 audio systems” are subject to our rules. 62 We also tentatively concluded in the NPRM that “stations/MVPDs are responsible for all commercials `transmitted' by them.”  63 We conclude that the statute makes each station/MVPD responsible for compliance with the RP as incorporated by reference in our rules with regard to all commercials it transmits to consumers, including both those it inserts and those that are “embedded” in programming it receives from program suppliers. As set forth below, this conclusion is consistent with the statutory language, the legislative history, and the RP. 64

10. Our conclusion rests on our reading of the CALM Act and the RP. As set forth above, the CALM Act directs the Commission to “incorporat[e] by reference and mak[e] mandatory” the RP “only insofar as” it “concerns the transmission of commercial advertisements by a television broadcast station, cable operator, or other multichannel video programming distributor.”  65 As one commenter accurately observes, the RP “relies not on a single entity to control the audio loudness, but rather on an entire `ecosystem' of all participants to ensure that correct audio levels are maintained—ranging from when an advertisement is created through display in a consumer's home.”  66 Consistent with the statute, however, the rules we adopt today are limited to station/MVPD responsibilities under the RP. 67 Our rules are also limited to the RP's methods for controlling the loudness of commercial advertisements—as opposed to regular programming—transmitted by stations/MVPDs to consumers. 68

11. The RP recommends different courses of action for stations/MVPDs to control the audio loudness of commercials depending on whether they are “inserted” or “embedded.” Appendices J and K of the RP summarize station/MVPD responsibilities with regard to the former. 69 With regard to “embedded” content, the RP recommends “[c]ooperation between the content supplier and recipient” in “fixed” dialnorm systems in order to “achieve successful loudness management” and also requires that stations and MVPDs “ensur[e] dialnorm [value] properly reflects the Dialog Level of all content.”  70 The CALM Act requires that our rules “mak[e] mandatory” the RP with regard to commercials transmitted by stations/MVPDs. 71 We conclude, therefore, that the cooperative course of action the RP recommends as to embedded content “concerns the transmission of commercial advertisements” by stations/MVPDs and, therefore, that the CALM Act requires stations/MVPDs to take such actions. 72 As examination of the record reveals, the RP relies on such cooperation for effective loudness control; without it, transmission of “embedded” commercials that comport with the RP would be impractical at best. 73

12. Our conclusion that stations/MVPDs are responsible for compliance with regard to “embedded” as well as “inserted” commercials is consistent with Congressional intent as well as the language of the statute and the RP. Examination of the legislative history reflects that Congress's purpose in regulating the volume of audio on commercials was to “make the volume of commercials and regular programming uniform so consumers can control sound levels.”  74 Our reading of the statute and the RP carries out this purpose by requiring that all commercials transmitted by stations/MVPDs comport with the RP, regardless of whether they are “inserted” or “embedded.” The record reflects that most commercials are not inserted in programming by stations/MVPDs, but rather upstream by broadcast or cable networks; in some cases, more than 95% of the commercials transmitted are embedded within programming when it is sent to stations/MVPDs. 75 Our interpretation carries out Congress's purpose by requiring compliance with the RP's provisions uniformly for all commercials transmitted by stations/MVPDs, not just the minority they happen to insert.

13. We find unpersuasive the arguments of some industry commenters that the responsibility of stations/MVPDS under the CALM Act and the RP is limited to ensuring that those commercials they insert are set to the correct dialnorm value or meet the Target Loudness. 76 Several commenters argue that imposing responsibility on stations/MVPDs for a task the RP “assigns” to others would exceed our statutory authority. 77 We do not disagree. As described above, however, the “practices” described in the RP include actions that stations and MVPDs must take to cooperate with their content providers  78 to ensure that all of the programming they transmit conforms with the RP, including commercials that they pass through in real time. 79 Thus, our interpretation is consistent with the responsibilities set forth in the RP, as well as with the statutory focus on stations and MVPDs, and does not shift responsibilities under the RP from third parties to stations/MVPDs.

14. Some commenters also argue that stations/MVPDs can only be held responsible under the Commission's regulations for actions that the RP identifies as “vital.”  80 We disagree. The Annexes to the RP set forth a variety of “practices,” referred to variously as “vital,” “preferred,” (“should” be followed), and “critical,” which apply to various industry participants. 81 Some of those industry participants are subject to the CALM Act and some are not. The statute, in turn, directs us to make the RP mandatory insofar as it “concerns the transmission of commercial advertisements” by stations/MVPDs. 82 The statute makes no distinction among these types of actions or between commercials “inserted” by stations/MVPDs and others. 83 In light of the fact that the RP covers parties and practices that are outside the scope of the statute, we must exercise considerable care in implementing the statutory directive to incorporate the RP by reference to the extent that it concerns transmission of commercials by stations/MVPDs. Based on our examination of the record, we believe that the most reasonable reading of the statutory language, together with the RP itself, is to make stations/MVPDs responsible for all of the commercials that they transmit, but to recognize that their responsibilities under the RP vary for inserted and embedded content.

15. We also reject the argument that station/MVPD responsibilities under the RP as incorporated into the Commission's rules should be limited to those set forth in Annexes J and K to the RP, adopted after passage of the CALM Act. 84 These Annexes do not purport to describe all practices that concern the transmission of commercials by a station/MVPD, nor do they do so. Rather, we read them as addressing only the actions required when entities insert commercials into programming. They do not override the RP as a whole. 85 Sections 8.1 and 8.3 of the RP, directing stations and MVPDs to themselves take various actions to “ensure” the proper loudness level of all the content they transmit, not just the commercials they insert, provide that such actions are “critical” for compliance with the RP. 86 Moreover, as set forth above, the RP as a whole depends on stations' and MVPDs' cooperation with their programming providers to ensure proper loudness control for the commercials that they transmit. Neither Annex, nor any other amendment to the RP, changes the critical nature of such cooperation.

16. We believe that our reading fulfills the statutory purpose better than the narrow one advocated by some industry commenters. Interpreting the statute such that stations'/MVPDs' responsibility to ensure that they do not transmit loud commercials applies only to those commercials that they insert would render the statute largely meaningless because consistent loudness cannot be achieved without applying the RP to all commercials. That is, commercials cannot be “present[ed] to viewers at a consistent loudness” if only some —and not all—of the commercials conform to the engineering solutions developed in the RP. Simply put, inserting properly modulated commercials next to improperly modulated ones will not solve the loudness problem, and as a practical matter, consumers neither know nor care which entity inserts commercials into the programming stream. Congress did not intend to adopt only part of the industry's technical solution or to exclude from the solution essential elements for its success. To the contrary, Congress intended the Commission to implement the engineering solution with respect to all commercials and to make stations/MVPDs responsible for achieving that solution. 87

17. Some commenters contend that the legislative history of the CALM Act demonstrates that Congress' intent was narrow, aiming at some but not all commercials. These commenters point to earlier, unsuccessful versions of the legislation that would have granted the Commission broad authority to establish loudness standards. 88 We disagree. The “more circumscribed language” of the CALM Act as it was ultimately adopted does not absolve stations/MVPDs of responsibility for the vast majority of commercials they transmit. 89 The legislative history reflects a Congressional decision to require regulation in accordance with the RP in lieu of a broad grant of authority for the Commission to establish technical standards. As indicated above, however, nothing in the statutory language or legislative history reflects that Congress did not intend that the RP be applied to all commercials. 90

I. Background and Proposed Rule

The Federal Acquisition Regulation (FAR) sets forth the uniform regulation for the procurement of supplies and services by Federal departments and agencies (title 48, chapter 1, of the Code of Federal Regulations (CFR)). The Department of the Treasury Acquisition Regulations, which supplement the FAR, are codified at 48 CFR chapter 10.

On July 5, 2011, the Department announced that it will implement the Internet Payment Platform (IPP) no later than the end of fiscal year 2012; with all new payment requests in FY2013 processed using the IPP. The Internet Payment Platform (IPP) is a secure Web-based electronic invoicing and payment system that processes vendor payment data electronically, either through a Web-based portal or electronic submission, and automates the routing and approval workflow within an agency.

The IPP is provided by the Department of the Treasury's Financial Management Service through its fiscal agent, the Federal Reserve Bank of Boston at no cost to vendors or government departments and agencies adopting the platform. The IPP benefits agencies by eliminating the need to file and store paper payment documentation; reducing the time of agency personnel researching and answering payment status questions by providing vendor and department-wide visibility into contract payments.

IPP benefits vendors by reducing time to payment, creating a standard set of electronic data to submit payment requests to the Federal government; reducing costs from having multiple processes and requirements; reducing paper and postage costs, improving cash management by eliminating the time delays associated with submitting and routing paper; and increasing transparency in the payment processes.

The Department will support vendor transition from paper-based payment processes to IPP through a series of webinar and video training on various aspects of the application, including how to view purchase orders, submit invoices, retrieve payment information, set notification preferences, and add users to IPP accounts. The IPP application includes a “Collector User Guide” on vendor landing page. Treasury also operates customer support services email and toll free numbers during business hours, Monday through Friday 8 a.m.-6:30 p.m. Eastern Time.

On February 23, 2012 (77 FR 10714) the Department published a proposed rule that would add a new subpart 1032.70—Electronic Submission and Processing of Payment Requests to establish the IPP. The Department published a correction to the proposed rule on March 5, 2012 (77 FR 13069). The proposed rule prescribed policies and procedures for electronic submission and processing of payment requests. With limited exceptions, the proposed provisions would establish that after October 1, 2012, Treasury will require and contractors will submit payment requests electronically. The rule also proposed a waiver of its provisions and proposed the text of the IPP contract clause.

This proposed rule also included nonsubstantive, technical changes to update the DTAR definition of “bureau” and would add “IPP” to the DTAR list of abbreviations.

In its February 23, 2012, proposed rule, the Department solicited public comments on all aspects of the proposal. The comment period closed on April 23, 2012 and eight comments were received. All of the comments were from private citizens and law school students. This section sets out significant comments raised by the commenters and the Department's responses to these comments. As set forth below, the Department has considered the comments and is adopting the proposed rule without change.

One commenter suggested that the Department should make electronic submission of payments optional for a period of one to two years in order to assess its impact on supplier diversity. The commenter asserted that this would enable the Department to conduct targeted outreach and to take remedial steps before mandating electronic submission, in the event a negative effect on supplier diversity is observed. Another commenter suggested extending the compliance date of the rule until 2013.

The potential exists that, for unforeseen reasons, there may be a small number of entities that may be unable to utilize the IPP upon implementation. For this reason, the Department included the waiver provisions, which will provide ample opportunity for impacted businesses to seek a waiver and if granted, to continue paper-based invoicing procedures. Therefore, the Department is not adopting this change.

Another commenter stated that the IPP should support a longer payment history than 18 months. The commenter noted that the IPP should maintain payment data for at least two years based on the need for contractors to retain records for tax purposes.

The payment history feature in IPP is intended to provide a convenient reference, not to relieve contractors of existing record keeping requirements. IPP permits contractors to download records for this purpose. The Department considers an 18 month payment history sufficient to fulfill the purpose for which the feature is provided, and therefore is not adopting this change.

One commenter opined that the adoption of the IPP needs to be accompanied by an increase in funding for and focus on cyber security. That commenter further stated that the nature of the IPP's format for data transfer makes the need for proper cyber security to be in place before the widespread implementation of the IPP even more critical. The commenter also inquired about the source code for the IPP.

The Department shares the commenter's concerns about cyber security and affirms that it is committed to making every effort to protect the integrity of the information in the system. The commenter's suggestions, however, are outside of the scope of this rulemaking and cannot be addressed in this final rule.

Another commenter suggested that the Department should further support its conclusion that the impact on small entities will be minimal. This commenter stated that the Department should undertake further analysis about the economic impact on small entities before proceeding with the rulemaking.

In the February 23, 2012, proposed rule, pursuant to the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Department certified that the rule, if adopted, would not have a significant economic impact on a substantial number of small entities and solicited comments on the impact that the rule would have on small entities. No comments were received about the impact of the rule on entities of any size. Notwithstanding the commenter's suggestion that further analysis be undertaken, the Department continues to believe that the IPP implementation does not have a significant economic impact on small entities. As explained in section III of this preamble, the move from manual, paper-based processing to electronic processing will not require significant costs. The IPP only requires a computer and Internet access, which all entities that seek to contract with the Treasury Department must use in order to learn of contracting opportunities and obtain solicitations. In addition, the Department expects that small entities that have been using paper-based processing will benefit from the speed and efficiency of the IPP. Therefore, in the absence of any comments that address the impact or demonstrate a significant economic impact of the rule, the Department is not conducting further analysis at this time.

One commenter suggested that the rule should specify what constitutes an “undue burden” sufficient to waive its provisions. Another commenter suggested that the undue burden waiver provides an amorphous standard that may undermine the objectives of the rule.

The Department considers the implementation of the waiver provisions, including time to transition to electronic payment and undue burden, to allow ample opportunity for impacted businesses to make a case for continuing paper-based invoicing procedures. Indeed, the Department does not expect that transition to the IPP will impose an undue burden on any contractor, but has included the waiver provision to provide for any unforeseen difficulties that might occur. Because the Department cannot predict what circumstances, if any, might create the need for waiver, it cannot articulate a more specific waiver standard. If the Department in fact receives a significant number of waiver requests, it will determine if additional changes need to be implemented in the system or in the policy. If appropriate, the Department may provide further clarification about the circumstances and criteria for waiver provisions, including time to transition to electronic payment and undue burden. For these reasons, the Department is not adopting the suggestions to revise the waiver provision.

One commenter suggested that the rule should provide for the clear preservation of IPP-generated electronic records, so that they will be available in the event of a Freedom of Information Act request. Specifically, the commenter suggested that the rule be amended to include either: A provision requiring agencies to preserve IPP-generated electronic records for a set period of time; a provision requiring agency heads to include IPP-generated electronic records within their required record management plans under the Federal Records Act; or a provision requiring the National Archives and Records Administration to amend 36 CFR part 1236 to clearly require that IPP-generated documents be preserved under agency record management plans.

The Department appreciates the commenter's interest in preserving federal records, and notes that the Federal Records Act requires it to retain IPP records regardless of whether or not they are covered by 36 CFR part 1236. The suggestions, however, are outside the scope of this rulemaking and are not adopted in this final rule.

Accordingly, the Department is adopting the proposed rule, as corrected, without further change.

This rule is not a significant regulatory action as defined in section 3(f) of Executive Order 12866. Therefore a regulatory assessment is not required.

The Regulatory Flexibility Act (5 U.S.C. chapter 6) generally requires agencies to conduct an initial regulatory flexibility analysis and a final regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.

It is hereby certified that this rule will not have a significant economic impact on a substantial number of small entities. The IPP will benefit vendors by reducing time to payment, creating a standard set of electronic data to submit payment requests to the federal government; reducing costs associated with adhering to multiple processes and requirements for different federal agencies; reducing paper and postage costs, improving cash management by eliminating the time delays associates with submitting and routing paper; and increasing transparency in the payment processes. The rule is intended to support the implementation of the IPP to streamline the payment processes associated with government contracts and agreements.

Treasury contracts with more than 4,000 small businesses annually. This rule is expected to impact all small businesses that contract with Treasury. While Treasury anticipates that a significant number of small businesses will be impacted, the economic impact is minimal, and outweighed by the economic benefits of IPP. An initial cost to small businesses in terms of changes to manual, paper-based invoicing processes is expected to be recouped by small businesses within a short-term through more efficient submission and reporting of invoices and payments and more timely payments. No additional reporting or recordkeeping requirements for small businesses result from this rule. Staff experienced with the submission of paper-based payment requests will need to learn the process for submitting electronic payment requests. New compliance and reporting requirements are not anticipated, as government and vendor staff will be able to access data and reports directly through the IPP.

This rule is related to, but not in conflict with, following federal rules:

• 31 CFR part 208 requires that most federal payments be made electronically, subject to certain waivers established in the rule.

• The Prompt Payment rule at 5 CFR part 1315 requires vendors to submit Electronic Funds Transfer (EFT) information and a Taxpayer Identification Number (TIN) as part of a proper invoice, unless agency procedures provide otherwise. Late interest penalties do not apply if the vendor has failed to submit this information.

• 48 CFR parts 13, 15, 32 and 52, addresses the use of EFT for federal contract payments and also provides for the collection of banking information from vendors. In particular, the FAR EFT rule provides EFT contract clauses that agencies should use in their contracts with government vendors requiring them to receive payments electronically.

This rule would be implemented in such a manner to complement these rules. One comment was received that suggested that further analysis is necessary, however no comments were received that suggested the economic impact would be significant (see section II.) Accordingly, the undersigned hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities.

The information collections contained in this rule have been previously approved by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501, et seq. ) and assigned OMB control numbers 1505-0081; 1505-0080; and 1505-0107. Under the Paperwork Reduction Act, an agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a valid OMB control number.

Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532 (UMRA), requires that the agency prepare a budgetary impact statement before promulgating any rule likely to result in a federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of UMRA also requires the agency to identify and consider a reasonable number of regulatory alternatives before promulgating the rule. It has been determined that the rule will not result in expenditures by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year.

Accordingly, the Department of the Treasury amends 48 CFR chapter 10 as follows:

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2012 TAC of pelagic shelf rockfish in the Western Regulatory Area of the GOA is 409 metric tons (mt) as established by the final 2012 and 2013 harvest specifications for groundfish of the GOA (77 FR 15194, March 14, 2012).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2012 TAC of pelagic shelf rockfish in the Western Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 389 mt, and is setting aside the remaining 20 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for pelagic shelf rockfish in the Western Regulatory Area of the GOA.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) will apply at all times during a trip.

This action responds to the best available information recently obtained from the fishery. The acting Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest because it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for pelagic shelf rockfish in the Western Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of June 29, 2012.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.