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

Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053.

FCIC 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.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. 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 UMRA.

It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. Program requirements for the Federal crop insurance program are the same for all producers regardless of the size of their farming operation. For instance, all producers are required to submit an application and acreage report to establish their insurance guarantees and compute premium amounts, and all producers are required to submit a notice of loss and production information to determine the amount of an indemnity payment in the event of an insured cause of crop loss. Whether a producer has 10 acres or 1000 acres, there is no difference in the kind of information collected. To ensure crop insurance is available to small entities, the Federal Crop Insurance Act authorizes FCIC to waive collection of administrative fees from limited resource farmers. FCIC believes this waiver helps to ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.

This final rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or action by FCIC directing the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11, or 7 CFR part 400, subpart J for determinations of good farming practices, as applicable, must be exhausted before any action against FCIC for judicial review may be brought.

This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

This rule finalizes changes to the Common Crop Insurance Regulations (7 CFR part 457), Prune Crop Insurance Provisions that were published by FCIC on December 5, 2011, as a notice of proposed rulemaking in the Federal Register at 76 FR 75805-75809. The public was afforded 60 days to submit comments after the regulation was published in the Federal Register .

A total of 31 comments were received from 2 commenters. The commenters were an insurance provider and an insurance service organization.

The public comments received regarding the proposed rule and FCIC's responses to the comments are as follows:

Comment: A few commenters stated they agree with the proposed change to remove the quality adjustment provisions from the Prune Crop Provisions.

Response: FCIC thanks the commenters for their review of the proposed rule and for their support.

Comment: A few commenters stated the “Background” of the proposed rule indicates that the phrase “varietal group” is being replaced by the word “type” everywhere it appears. It goes on to indicate that prunes are not categorized by varietal group in the Special Provisions rather they are categorized by type. In addition, section 6(c) has been revised to remove the requirements for the insured crop to be grown on tree varieties that were commercially available at set out and on tree varieties that are adapted to the area and replacing those requirements with a list of varieties (assume this means types) as shown in the Special Provision. The current Special Provisions for prunes list the type as “No Type Specified 997.” The commenters asked if there are plans to change the Special Provisions to list all of the insurable types in lieu of “No Type Specified 997” or will there be a separate listing of all of the possible insurable varieties somewhere else in the Special Provisions besides under the “type” designation where all such varieties will be listed to comply with the new proposed rule language.

Response: For ease of administration, FCIC intends to classify the prune types as “Type 997” and then provide a list of all insurable types that qualify as a type 997.

Comment: A few commenters questioned using the word “bearing” in section 3(b)(2). The commenters stated producers are required to report their uninsurable acres and when trees are first planted they will be non-bearing. The commenters asked if it is really the intent for producers to report zero trees on their uninsurable acres. The commenters stated that if the block consists of older trees and younger interplanted trees of the same variety, and the insurance provider only counts the bearing trees, they will have inconsistencies with the acres, the tree spacing, and the density. If producers remove many older trees and replace them with younger trees, they will need to report them on the Producer's Pre-Acceptance Worksheet (PAW) as they have performed cultural practices that will reduce the yield from previous levels. Producers should be required to report all trees and this number should remain constant until they remove trees or plant new trees. Insurance providers should not be required to track only the trees that are bearing and be required to revise this figure each year.

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended change because the public was not given an opportunity to provide comments. No change has been made to the final rule. However, in response to the concerns raised, the information that must be submitted in accordance with section 3(b) is required to establish the producer's actual production history (APH) approved yield and the amount of their coverage. While section 3(b)(2) only requires the bearing trees on insurable and uninsurable acreage to be reported, the number of bearing and non-bearing trees on insurable and uninsurable acreage must be reported on the PAW. Perennial crop policies contain provisions for “bearing trees” to identify such trees that meet the eligibility requirements for insurance coverage. Since premium and indemnity payments are based on the number of trees that meet eligibility requirements, insurance providers are required to track bearing trees as outlined in the Crop Provisions and the Crop Insurance Handbook (CIH). Requiring all trees be reported under section 3(b)(2) would create confusion regarding insurability and could result in the overstatement of premium and liability.

Comment: In regard to section 3(b)(3), a commenter questioned the need to know the planting pattern. This requires space on the PAW that could better be used to ask if the producer is “intending to direct market” any portion of their crop. Insurance providers already capture tree spacing and tree count and this is what is needed to determine if there have been tree removals or acreage reductions.

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended change because the public was not given an opportunity to provide comments. No change has been made to the final rule. However, with respect to the concerns expressed by the commenter, the planting pattern consists of tree spacing and arrangement. FCIC requires the producer to report the planting pattern so the insurance provider can use this information to determine if there is adequate tree spacing for the producer to carry out recommended orchard management practices and to determine the number of trees per acre.

Comment: In regard to section 3(c), a commenter stated there appears to be a lack of consistency between similar perennial crops whose Crop Provisions were recently revised or issued. The Olive, Pear and Macadamia Nut Crop Provisions all contain similar if not the same verbiage as found in the Prune Crop Provisions prior to this Proposed Rule. On the other hand, the Stonefruit Crop Provision language is very similar to the Prune Crop Provision Proposed Rule language with the significant difference in that the results as found in (c)(1), (2) and (3) are hinged upon when the situation “occurred” as opposed to when the situation was “reported.” This is a very significant difference. The commenter proposes some level of similarity and/or consistency be used for this provision for perennial crops.

Response: FCIC agrees with the commenter and the provision has been revised by changing the term “reported” to “occurred.”

Comment: A few commenters stated the last sentence in section 3(c)(3) states “We will reduce the yield used to establish your production guarantee for the subsequent crop year.” The commenters question what if the event that occurred was something that only affects the crop for the year in question and has no carryover effect on the yield into the next year. In this type of situation the yield used to establish the production guarantee for the next year should not be affected by the event that occurred. However, based on the above referenced language, the yield would have to be reduced and reduced by the same amount as determined during the year in which the event occurred. This language needs to be revised to provide the insurance providers with some latitude as to whether the subsequent years yield should be reduced and to what extent it should be reduced. The producer could also have certain events that occur which have some effect on the next year, but the effect is less than the production that was assessed for the year in which the event occurred. Therefore, this sentence needs to be modified to allow the insurance providers to have some flexibility to be able to determine how much, if any, the yield should be reduced for the subsequent crop year.

Response: FCIC agrees with the commenter that some latitude should be allowed to determine if the yield should be reduced in subsequent years. FCIC has revised section 3(c)(3) to state the insurance provider “may” reduce the yield used to establish your production guarantee for the subsequent crop year to reflect any reduction in the productive capacity of the trees.

Comment: A few commenters stated section 3(d) states “You may not increase your elected or assigned coverage level or the ratio of your price election to the maximum price election we offer if a cause of loss that could or would reduce the yield of the insured crop is evident prior to the time that you request the increase.” The commenters feel this is a difficult provision to administer and recommend it be removed from the policy. The PAW contains the following question: “Has damage (i.e., disease, hail, freeze) occurred to Trees/Vines/Bushes/Bog or have cultural practices been performed that will reduce the insured crop's production from previous levels?” If damage has occurred, and the question has been answered “Yes,” the approved APH yield will be adjusted accordingly to reflect the reduced potential production. This question on the PAW appears to address the issues this section is intending to handle. In addition, the sales closing dates are generally established based on the precept that any applications taken by that date will not be subject to adverse selection.

If the decision is made to retain this provision, it might help to clarify what time frame is meant by “* * * if a cause of loss * * * is evident prior to the time that you request the increase.” A cause of loss that occurred the previous crop year would be “prior to the time that you request the increase.” Consider rewriting something like: “Your request to increase the coverage level or price election percentage will not be accepted if a cause of loss that could or would reduce the yield of the insured crop is evident when your request is made.”

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended change because the public was not given an opportunity to provide comments. However, FCIC will consider this change the next time the Prune Crop Provisions are revised. No change has been made to the final rule.

Comment: A few commenters stated the proposed language in section 6(c) states “That are grown on trees [change from “tree varieties”] that: (1) Are listed in the Special Provisions * * *.” The commenters suggested keeping the original “tree varieties” (or “varieties of trees,” if preferred) since the Special Provisions presumably will list the “insurable varieties” (as stated in the “Background”) rather than some other description of “trees.” If this change is not accepted, at the very least section (c)(1) needs to include “varieties” after the word “Are”.

Response: FCIC agrees with the commenters. Since FCIC will list the insurable types of trees in the Special Provisions, the phrase “insurable types” has been added to section 6(c)(1).

Comment: A few commenters stated the 2001 Prune Crop Provisions reads “Are irrigated (except where otherwise provided in the Special Provisions)” but this would be deleted according to the “Background” because insurable practices are listed in the Special Provisions. The commenters question if this is a good argument; if so, why would 6(c)(1) be needed since the tree varieties also are listed in the Special Provisions? The commenters state that generally the Crop Provisions identify irrigated as the insurable practice when non-irrigated is not an equally available practice for the crop. This would seem to be more informative than having the Crop Provisions be silent on that matter and identifying any limitation of insurable practices only in the Special Provisions. The commenters recommended this section of the policy be retained as a part of the Final Rule.

Response: FCIC agrees with the commenters. The original language from section 6(c)(4) requiring crops to be grown on acreage that is irrigated has been retained.

Comment: A few commenters recommended combining sections 8(a)(1) and 8(c) since both identify when coverage begins, (a)(1) for the year of application, and (c) for subsequent crop years.

Response: FCIC agrees with the commenters. Sections 8(a)(1) and 8(c) have been combined under section 8(a)(1).

Comment: A few commenters stated the phrase “after an inspection” should be removed from section 8(b)(1). If damage has not generally occurred in the area where such acreage is located, it should be at the insurance provider's discretion to decide whether the acreage needs an inspection to be considered acceptable. The language in this section already refers to the insurance providers having the ability to consider the acreage acceptable. Since the acreage and production reporting dates are after insurance attaches, the insurance provider may not know if the acreage was acquired after coverage began, but before the acreage reporting date. The insurance provider needs the right to inspect if they deem necessary, but this should not be a requirement. The commenters also recommended additional language be added to section 8(b)(1) to allow insurance providers the opportunity to inspect and insure any additional acreage that is acquired after the acreage reporting date if they wish to do so. Insurance providers should have the opportunity to accept or deny coverage in these types of situations. This would be similar to what is currently allowed for acreage that is not reported per section 6(f) of the Basic Provisions.

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended changes because the public was not given an opportunity to comment. No change has been made to the final rule. However, with respect to acreage acquired after the acreage report, section 6(f) of the Basic Provisions, which allows the insurance provider to determine by unit the insurable crop acreage, share, type and practice, or to deny liability if the producer fails to report all units, would apply. FCIC approved procedures allow the insurance provider to revise an acreage report to increase liability if the crop is inspected and the appraisal indicates the crop will produce at least 90 percent of the yield used to determine the guarantee or amount of insurance for the unit.

Comment: A commenter stated the provision in section 8(c) has been added to most, if not all, of the perennial crops. The commenter agrees with the concept of continuous coverage applying for carryover producers, but has some concerns with language as it currently reads. The present language indicates for each subsequent crop year the policy remains continuously in force, coverage begins on the day immediately following the end of the insurance period for the prior crop year. The commenter raised issues about damage that occurs to next year's buds prior to this year's end of the insurance period date. The commenter asked whether this damage is intended to be covered by this language. For example, assume a producer is insured and a severe hail storm occurs in July. This damage may injure this year's crop as well as the buds that will produce next year's crop. However, this damage would be outside the current insurance period based on the current language. If the intent is to cover this damage for carryover producers, the language should be revised to something along the lines of the language in the Adjusted Gross Revenue handbook which states that insurance providers cover damage that occurred due to insurable causes during the previous crop year. The commenter feels that it will be difficult to assess such damage and that it should be covered under the policy. If this is not the intent, it should be stated very clearly that insurance providers will not cover damage that occurs the previous crop year if such damage occurs prior to the end of the previous year's end of insurance period.

Response: The Prune Crop Provisions do not provide coverage for damage to fruit if the damage occurs outside of the insurance period as provided in section 9(a). FCIC disagrees language should be added to section 8(c) to clarify that coverage is not provided for damage to fruit if the damage occurs outside of the insurance period since this information is already contained in section 9(a). FCIC cannot consider the recommended change to the Prune Crop Provisions to provide coverage for damage that occurs outside of the insurance period since this change was not proposed, the comment does not address a conflict or vulnerability, and the public has not been given an opportunity to provide comments. However, FCIC will consider this change the next time the Prune Crop Provisions are revised. No change has been made to the final rule.

Comment: A commenter recommended that section 9(a)(2) insured cause of loss be clarified as “Fire, due to natural causes, * * * ” (or “Fire, if caused by lightning, * * *”,).

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended changes because the public was not given an opportunity to comment. No change has been made to the final rule. However, section 12 of the Basic Provisions already states all insured causes of loss must be due to a naturally occurring event. In addition, the Federal Crop Insurance Act is clear that only natural causes can be covered under the policy.

Comment: A few commenters stated the language in the second sentence of section 10(b)(2) states in part that “We will conduct an appraisal that will be used to determine your production to count * * *” The commenters recommend that this language be revised as follows: “We will conduct an appraisal that may be used to determine your production to count * * *”. Additional language in this section indicates that “* * * These appraisals, and any acceptable records provided by you, will be used to determine your production to count * * *”. Insurance providers need to maintain the ability to use the actual records if they believe those records are more accurate than the appraisal as noted in this additional language. Therefore, the word “will” should be changed to “may” in order to allow insurance providers the flexibility to apply this language accordingly.

Response: No changes were proposed to this provision and the comment does not address a conflict or vulnerability in the provision. Therefore, FCIC cannot consider the recommended changes because the public was not given an opportunity to provide comments. No change has been made to the final rule. However, this provision is consistent with other Crop Provisions, such as apples, stonefruit and pears, that contain language regarding production that is sold by direct marketing.

Comment: A commenter questioned if it is correct that only prunes meeting the definition of standard prunes will be counted as production to count for claims and APH purposes, and although a producer may sell prunes of lesser quality, such production will not be counted as production to count as described above.

Response: FCIC disagrees that only prunes meeting the definition of standard prunes will be counted as production to count for claims and APH purposes. Only counting standard prunes as production to count regardless of the cause of loss would create a program vulnerability. FCIC proposed to remove the quality adjustment provision to alleviate the time and effort required to apply a quality adjustment factor which ultimately results in zero production to count for harvested substandard prunes damaged due to insured causes of loss. The proposed removal of the quality adjustment provision, which only adjusts the quantity of substandard prunes damaged by insurable causes of loss, was not intended to prevent substandard prunes damaged by uninsurable causes of loss or production sold as standard prunes from being considered as production to count. Therefore, section 11(c)(1) has been revised to clarify that for appraised unharvested production, only prunes meeting the definition of standard prunes will be considered as production to count unless the prunes are damaged due to an uninsurable cause of loss or the prunes or prune acreage meets any of the other conditions described in section 11(c)(1). Section 11(c)(2) has been revised to clarify that for harvested production, prunes meeting the definition of standard prunes, prunes harvested for fresh fruit, prunes sold as standard prunes and prunes damaged due to uninsured causes will be considered as production to count.

In addition to the changes described above, FCIC has made minor editorial changes.

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR part 457 effective for the 2013 and succeeding crop years as follows:

The objectives of this final rule are to:

• Allow the SAC unrestricted access to resources to engage legal counsel, consultants and outside advisors; and

• Clarify that the SAC must have the agreement of the Funding Corporation board of directors in order to appoint, compensate, and retain the external auditor of the combined System-wide reports.

The Farm Credit Act of 1971, as amended (Act), 1 authorizes the FCA to issue regulations implementing the Act's provisions. 2 Our regulations are intended to ensure the safe and sound operations of System institutions and to govern the disclosure of financial information to shareholders of, and investors in, the System. Section 630.6(a) of our existing regulations requires the Funding Corporation to establish and maintain the SAC, including providing monetary and nonmonetary resources for SAC operations. Our existing regulation requires a two-thirds vote of the full Funding Corporation board to deny any SAC request for resources.

In a May 2010 petition, the SAC requested that we amend § 630.6(a) to allow the SAC the unfettered ability to engage outside advisors, consultants and legal counsel in the performance of its duties. In a February 14, 2012, proposed rulemaking, we proposed:

• Removing the requirement that the Funding Corporation Board deny a SAC request for resources by a two-thirds majority vote of the full board;

• The SAC use resources in a manner that would not adversely affect the safety and soundness of the System; and

• Disclosure of resources used by, and the composition of, the SAC. 3

The 60-day comment period for the proposed rule closed on April 16, 2012.

We received comment letters on the proposed rule from each of the four Farm Credit banks, the Farm Credit Council (Council) on behalf of its membership, and a joint letter from the Funding Corporation and the SAC (joint letter). The Farm Credit banks and the Council expressed support for the comments made in the joint letter. We discuss the comments to our proposed rule and our responses below. Unless otherwise discussed in this preamble, those areas of the proposed rule not receiving comment are finalized as proposed.

All commenters supported removing the requirement that a two-thirds majority vote of the full Funding Corporation board of directors was needed to deny a SAC request for resources. Also, commenters supported the requirement that the SAC report at least quarterly to the Funding Corporation board on its use of resources.

Commenters expressed concern with the requirement that the SAC use Funding Corporation resources in a manner that would not adversely affect the safety and soundness of the System. They stated that the safety and soundness provision was not operational and could be subject to different interpretations. One commenter provided an example in which the SAC may choose not to investigate or uncover potential financial wrongdoing because disclosing how it used the resources and the results from the use of those resources may impact the System's cost of funds in a manner that could adversely affect the safety and soundness of the System. The commenter noted that failure of the SAC to investigate or uncover a potential financial wrongdoing could also adversely affect the safety and soundness of the System. We respectfully disagree with comments arguing that the provision may not be operational when there may be a duty to disclose financial wrongdoing which might adversely affect the cost of funds for the System. Uncovering financial wrongdoing and any unavoidable impact would not be contrary to the rule. While the wrongdoing itself may affect safety and soundness, the corrective actions taken to respond to and resolve the wrongdoing would be a positive impact on the safety and soundness of the System and, therefore, not prohibited under the rule. It is the financial wrongdoing that could adversely affect the safety and soundness of the System, not the action taken by the SAC to uncover and correct it.

Commenters stated that requiring the SAC to use Funding Corporation resources in a manner that would not adversely affect the safety and soundness of the System provision would create a standard that is stricter than that applied under governance best practices and should not be required. Some commenters expressed that holding the SAC to a stricter standard in the use of resources may hinder the Funding Corporation's ability to attract and retain SAC members, which could potentially damage the safety and soundness of the System. As the safety and soundness regulator of System institutions, including the Funding Corporation and its SAC, we expect all institutions to use resources according to law and regulations and in a safe and sound manner. We believe using resources accordingly and in such a manner should always be considered a best practice. Further, since the SAC is not composed solely of members of the board of directors as are other System institution audit committees, 4 we want to be clear that the SAC is held to the same safety and soundness standard.

Commenters stated the SAC cannot guarantee that the use of resources would lead directly to results that ensure the safety and soundness of the System. One commenter noted that the requirement may discourage the SAC from engaging outside third parties to assist with investigations or prevent the SAC from seeking their advice. The rule does not require the SAC use of resources guarantee the System's safety and soundness. Instead, the rule requires that the SAC not use Funding Corporation resources in a manner that would adversely affect the safety and soundness of the System or be contrary to law and regulation. We refer again to the example in which the SAC would use resources to uncover financial wrongdoing. The actual act of financial wrongdoing may adversely affect the safety and soundness of the System. The use of resources by the SAC to uncover and correct the wrongdoing may not be considered to have caused the adverse effect, but may help preserve and promote the safety and soundness of the System.

The joint letter asserted that the SAC is already bound by its fiduciary duties to act prudently. The joint letter stated that the Business Judgment Rule allows SAC members to rely on the advice of experts, but the safety and soundness provision would create a judicial and regulatory hindsight that the Business Judgment Rule was meant to deter. The commenter stated that this could potentially lead to a liability for SAC members.

The Business Judgment Rule provides a measure of liability protection to directors, officers, employees, and agents of a corporation when, in the course of decision-making, they place a reasonable reliance on expert advice. When applying the Business Judgment Rule, the courts consider whether the decision-making process involved careful consideration of reasonably available and relevant facts and whether the decision-maker honestly and reasonably believed that the decision was in the best interest of the institution. The safety and soundness of the System is in the best interest of the SAC and the Funding Corporation. We see nothing in the requirement to use Funding Corporation resources in a safe and sound manner that is contrary to the SAC's fiduciary duties or diminishes the protection offered the SAC under the “Business Judgment Rule.” As such, the argument that the provision hinders or otherwise contradicts the principals behind the Business Judgment Rule is not meritorious.

The SAC's use of Funding Corporation resources must have the intended purpose of preserving or promoting the safety and soundness of the System. We do not believe that it is more difficult for the SAC to carry out its responsibilities in a manner that does not adversely affect the System's safety and soundness than it is for other System institution audit committees. However, in consideration of the comments, we are modifying the language to clarify the requirement. The provision as finalized places a positive duty on the SAC to use resources in a lawful manner and to preserve and promote the safety and soundness of the System. This provision does not prevent the Funding Corporation board from developing its own policies and procedures to address the request for and use of resources by the SAC.

All commenters agreed with the proposed clarification that the SAC determines the appointment, compensation, and retention of the external auditor only with the agreement of the Funding Corporation board. However, commenters asked that the rule text make clear that this authority relates to the performance of the audit of the System-wide combined financial statements and not the audit fees related to the performance of the audit of the financial statements of individuals banks and associations. We do not believe any changes are needed to the language in § 630.6(a)(4)(ii). The rule clearly states that the appointment, compensation and retention of the external auditors relates solely to issuing the combined System-wide audit report and not the audit report of individual banks and associations. Our rule at § 620.30(d)(2) gives that authority to the audit committees of individual banks and associations. In addition, in a 2006 rulemaking, we made changes to our rules to limit the authority of the Funding Corporation, and by extension the SAC, to intervene in the activities of any bank or association's external auditor. 5

The joint letter requested that the rule not require Funding Corporation board concurrence for ordinary or recurring external auditor fees. We do not believe this change is necessary because, as previously stated, the Funding Corporation board may develop its own procedures to address the activities of the SAC as long as those procedures do not conflict with law or regulation.

We finalize the provisions of § 630.6(a)(4)(ii)(A) as proposed.

We proposed in § 630.20(n) that Funding Corporation resources used by the SAC be disclosed by category and amount in the annual System-wide report to investors if the total of each expense category for the reporting year was $5,000 or more. The proposed categories included, at a minimum, administrative expenses, contracted legal services, contracted consultants and advisors, and other contracted services performed on behalf of the SAC. We proposed excluding from this section disclosure of the fees paid to the external auditor for issuing System-wide audit reports. That disclosure is required by existing § 630.20(k)(2).

Commenters expressed concern with the additional disclosures proposed in § 630.20(n). Other commenters contended that the disclosure placed a higher standard on the SAC than what is required of entities registered with the Securities Exchange Commission (SEC) or as required by the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley). 6 The joint letter stated the disclosures were unnecessary and explained that as a best practice the SAC follows most SEC disclosure requirements, using a materiality assessment. Commenters suggested disclosures not be required before any investigation or similar inquiry by the SAC is completed. One commenter stated that the disclosures could reveal confidential information and might affect the ability of the SAC to engage outside consultants. The joint letter asserted attorney-client communications would also be compromised.

We believe disclosure of the use of Funding Corporation resources by the SAC provides transparency to System stockholders and investors and strengthens board and management accountability. Further, we believe removing the provision that a two-thirds majority vote of the full Funding Corporation board be required to deny an SAC request for resources necessitates an added level of accountability by the SAC.

We do not believe that disclosing the dollar amount of resources used to hire legal counsel, consultants and other categories of services would compromise confidentiality or attorney-client relations. The provision does not require the disclosure in the annual System-wide report to investors of the name of or service performed by legal counsel, advisors or outside consultants engaged by the SAC. Instead, the provision requires reporting the cost of and benefits to the System from the use of those resources. However, since disclosure of benefits derived from using those resources appears to be the source of commenters' concerns, and considering the safety and soundness constraints placed on the use of resources, we are finalizing the rule with the cost disclosure only and without the requirement to report the benefits of resources used. We expect the SAC to disclose information on the benefit from the use of resources to the Funding Corporation board.

One commenter requested that we limit the definition of external resources to “experts” engaged by the SAC and not include resources used by the SAC for off-site meeting facilities. The commenter stated that the use of these resources should instead be periodically reported to the Funding Corporation board. We respectfully disagree with the suggestion of limiting the disclosure on the SAC's use of resources to only “experts.” The Funding Corporation is required to provide both monetary and nonmonetary resources to the SAC and we proposed disclosures of those resources to ensure that investors are provided transparent and complete disclosure on the use of resources by the SAC. Further, we identified categories of resources based on use, including a disclosure category of “administrative expenses,” which may include either internal or external resources or both. Thus, if the SAC uses Funding Corporation resources for meeting sites, those expenses would be reported in the “administrative expense” category.

One commenter asserted that the $5,000 de minimis reporting threshold was too low and should be increased. We believe this threshold is reasonable given we are removing the requirement for a two-thirds majority vote of the full Funding Corporation board to deny an SAC request for resources. In addition, the threshold resembles other disclosure thresholds contained elsewhere in our rules. We are not increasing the reporting threshold in this final rule.

One commenter requested that we clarify the relationship of the proposed § 630.20(n) exemption from reporting external audit fees for issuance of System-wide audit reports with the existing requirement of § 630.20(k)(2), which requires the disclosure of fees. Existing § 630.20(k)(2) requires disclosure of fees paid to the external auditor during the reporting period for audit services, tax services, and non-audit services. Because § 630.20(k)(2) currently requires disclosure of these fees, we did not also propose requiring a similar disclosure requirement in § 630.20(n). We are revising the language in § 630.20(n) for clarity.

No comments were received on the proposed requirement to disclose in the annual System-wide report to investors the name, experience, and compensation of SAC members. Also, we received no comments on the categories of resources used by the SAC that were identified in the proposed rule and required to be disclosed. We finalize these provisions as proposed.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the FCA hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, Farm Credit System institutions are not “small entities” as defined in the Regulatory Flexibility Act.

For the reasons stated in the preamble, part 630 of chapter VI, title 12 of the Code of Federal Regulations is amended as follows:

NMFS manages the U.S. groundfish fisheries of the exclusive economic zone off Alaska under the Fishery Management Plan for Groundfish of the Gulf of Alaska (GOA) and the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAI). The FMPs were prepared by the North Pacific Fishery Management Council (Council) and approved by the Secretary of Commerce under authority of the Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 1801 et seq. (Magnuson-Stevens Act). The FMPs are implemented by regulations at 50 CFR parts 679 and 680.

This action modifies the equipment and operational requirements for catcher/processor vessels (C/Ps) named on License Limitation Program (LLP) licenses with a Pacific cod catcher/processor hook-and-line endorsement for the Bering Sea, Aleutian Islands, or both Bering Sea and Aleutian Islands. These vessels are commonly known as “freezer longliners.” They also are defined as the “longline catcher processor subsector” in the 2005 Consolidated Appropriations Act (Pub. L. 108-447). In 2011, 33 vessels actively fished under the 37 LLP licenses that met the criteria for the longline C/P subsector. A description of LLP license requirements, management of the longline C/P subsector, and the development of monitoring and enforcement regulations applicable to the longline C/P subsector is described in more detail in the preamble to the proposed rule (77 FR 35925, June 15, 2012) and is not repeated here.

NMFS requires new monitoring and enforcement provisions applicable to vessels participating in the BSAI longline C/P subsector as a result of several pieces of legislation passed by Congress and recent changes to fishery management regulations, including (1) legislation that created a defined class of participants in the BSAI longline C/P subsector—the 2005 Consolidated Appropriations Act (Pub. L. 108-447), (2) regulatory amendments allocating a specific quantity of Pacific cod resources in the BSAI to the defined class of longline C/P subsector participants—detailed in the final rule implementing Amendment 85 to the BSAI FMP (74 FR 56728, November 3, 2009), and (3) legislation that allows BSAI longline C/P subsector participants to receive exclusive catch privileges—the Longline Catcher Processor Subsector Single Fishery Cooperative Act of 2010 (Pub. L. 111-335). In combination, these changes created the opportunity for the longline C/P subsector to form a voluntary fishing cooperative.

Under the voluntary cooperative, members in the longline C/P subsector allocate a proportion of the available Pacific cod resources among their members based on private contractual arrangements. The voluntary cooperative operates as a de facto catch share program because the cooperative includes all members of the subsector and together they control harvest of the sector's allocation of Pacific cod in the BSAI. Vessels fishing under a voluntary cooperative require a higher level of monitoring to ensure accurate reporting of the catch allocated to the subsector.

Catch share programs create new demands for enhanced catch accounting, monitoring, and enforcement. They increase incentives for participants to misreport catch through unauthorized discards or inaccurate catch reports. If catch can be successfully misreported or underreported, the fishing season continues longer than it should, and the vessel owners and operators are able to catch more Pacific cod than are allocated to the subsector. The fact that the vessel owners and operators are fishing under a cooperative contract to maximize the harvest and value of the Pacific cod allocation for a given halibut PSC limit provides additional opportunities for them to communicate and cooperate to underreport catch.

The voluntary cooperative and the CDQ Program present NMFS with similar monitoring and enforcement challenges. Therefore, this action applies the same requirements to longline C/Ps operating in both the CDQ and non-CDQ fisheries. Maintaining the same monitoring measures ensures consistent methods of catch accounting, avoids confusion for observers, and reduces the risk of data processing or catch accounting errors that may occur if monitoring provisions change onboard a vessel while fishing. Additional detail on the need for enhanced monitoring requirements for catch share programs and management of the CDQ Program is provided in the preamble to the proposed rule (77 FR 35925, June 15, 2012) and not repeated here.

The proposed rule for this action was published in the Federal Register on June 15, 2012 (77 FR 35925). The 30-day comment period on the proposed rule ended July 16, 2012. The regulatory provisions implemented by this action are summarized here. Additional information and a description of this action are provided in detail in the preamble to the proposed rule and are not repeated here.

This action affects vessels in the longline C/P subsector when those vessels (1) operate in either the BSAI or GOA groundfish fisheries when directed fishing for Pacific cod is open in the BSAI, or (2) while the vessel is participating in the CDQ fisheries (“groundfish CDQ fishing”). Members of the subsector who do not intend to fish for Pacific cod in the BSAI or to conduct groundfish CDQ fishing during the upcoming calendar year may notify NMFS (“opt out”) and will not be subject to the enhanced monitoring requirements in that calendar year.

Members of the subsector who intend to fish for Pacific cod in the BSAI or to conduct groundfish CDQ fishing in the upcoming calendar year will be required to select one of two monitoring options: carry two observers so that all catch can be sampled, or carry one observer and use a motion-compensated scale to weigh Pacific cod before it is processed. NMFS has examined both options and determined that either option will improve catch accounting on the freezer longliners and provide the data needed to properly manage the Pacific cod and groundfish CDQ fisheries. Vessel owners will be required to select an option prior to November 1 for the upcoming calendar year. Once the selection is made, it will apply for the entire year and the vessel owner will not be able to change it during the year for which it was made.

Under the increased observer coverage monitoring option, the vessel owner and operator will be required to carry two observers and provide an observer sampling station meeting location and space requirements. The vessel operator will be required to use an electronic logbook to report catch at all times during that year. One of the two observers must have a lead level 2 certification. The observers must have the opportunity to sample all sets. A lead level 2 observer must meet minimum time-at-sea requirements. The level 2 requirement ensures that observers have experience at sea; the “lead” requirement ensures that they have had experience with longline or pot gear and that, having taken at least two cruises, they have experience with various fixed-gear operations. Because the data collected by observers is directly used to debit quota accounts, the observer estimates are carefully reviewed and scrutinized by catch share participants. NMFS has found that observers with prior experience with a specific gear type are more likely to collect usable data for quota management.

Under the scales monitoring option, the vessel owner and operator will be required to use a NMFS-approved scale to weigh all Pacific cod, provide and maintain a NMFS-approved electronic monitoring system to monitor sorting and weighing of Pacific cod, carry one lead level 2 observer, and provide an observer sampling station meeting location and space requirements. Each set must be weighed and recorded separately. NMFS will use the weight of all catch that passes over the scale to account for Pacific cod catch. The vessel operator will be required to use an electronic logbook to report catch at all times during that year.

This action also reduces the experience requirements for lead level 2 observers to address concerns raised by the observer providers about a potential shortage of observers as a result of this action. Reducing the experience requirements will increase the pool of qualified lead level 2 observers. The number of sampled sets required for lead level 2 qualification is reduced from 60 sampled sets to 30 sampled sets.

Finally, this action removes the allowance for an “alternative fishing plan” under the CDQ Program. Because this action will standardize the monitoring options for longline C/Ps in both the CDQ and non-CDQ fisheries, the alternative fishing plan regulations are no longer necessary.

NMFS received 3 letters of comment from fishing organizations and 2 letters of comment from the general public addressing 13 distinct topics related to the proposed rule. A summary of the relevant comments and NMFS' responses, follows. No changes were made to the proposed rule as a result of these comments.

Comment 1: The commenter supports the proposed requirements for two observers on longline catcher/processors, but does not support the proposed requirements for the use of a flow scale and a lead level 2 observer because of the difficult work schedule observers must follow when only one observer is aboard and the cost of installing the flow scale and camera equipment onboard.

Response: NMFS acknowledges this comment. The requirements provide vessel owners two options to meet NMFS' monitoring objectives. A vessel owner may select the scales option or the increased observer coverage option depending on which option best meets the vessel's annual fishing plan and is the most cost effective for their vessel. Either monitoring option will result in quality data and enable NMFS to estimate Pacific cod catch in the longline C/P sector. The costs associated with both monitoring options are described in section 1.3 of the EA/RIR (see ADDRESSES ). NMFS agrees that the scale option will increase the complexity of the observer's job and, as described in section 1.3.4 of the EA/RIR (see ADDRESSES ), this is part of the rationale for requiring that the single observer under this option be lead level 2 certified.

Comment 2: The increase in the total number of lead level 2 observers needed to cover the BSAI freezer longline fleet is unsustainable and, in the long term, will lead to a shortage of qualified observers. Further, all freezer longline vessels will choose the scale option in the next two years. When this occurs, the training opportunity for observers to gain lead level 2 experience will no longer be available. If adequate observers are not available in a timely manner the vessel will have to stop fishing and wait for an observer to become available, which will have negative economic consequences.

Response: NMFS disagrees. NMFS acknowledges in section 1.3 of the EA/RIR (see ADDRESSES ) that obtaining lead level 2 observers may be more difficult for fishing vessels than in the past and the demand for fixed gear lead level 2 observers will be much greater than in the past. NMFS notes that there are uncertainties associated with the new observer employment market conditions that we anticipate will accompany the introduction of the restructured observer program (77 FR 23326, April 18, 2012). The proposed action for the restructured observer program would add a funding and deployment system for observer coverage to the existing North Pacific Groundfish Observer Program (Observer Program) and amend existing observer coverage requirements for vessels and processing plants. The new funding and deployment system would allow NMFS to determine when and where to deploy observers according to management and conservation needs. We anticipate the restructured observer program will be implemented in 2013. NMFS also notes that there are additional uncertainties with the freezer longline sector's observer coverage needs as vessel operations evolve under the cooperative's catch share program.

Section 1.3.4 of the EA/RIR (see ADDRESSES ) describes other ways observers can gain lead level 2 experience. While opportunities for obtaining lead level 2 qualifications within the freezer longline fleet will be limited, observers may gain experience aboard the fixed gear catcher vessels, vessels in the affected fleet that choose to “opt out” of fishing under the program, freezer longliners that fish only in the GOA, pot catcher vessels, and pot catcher/processors. However, the EA/RIR (see ADDRESSES ) highlights that the restructured observer program will provide the most new opportunities for observers to acquire lead level 2 certification. In addition, through this action NMFS reduced the number of sampled sets required for lead level 2 certification by half. Both of these factors increase the likelihood that there will be sufficient lead level 2 observers in the long term. The analysis suggests that it is likely that the number of qualified lead level 2 observers will exceed the number required in any given year. The analysis highlights mobilizing fixed gear lead level 2 observers is an essential component to ensuring vessels obtain the observer coverage required without stranding vessels at the dock.

Methods exist to obtain, train, and retain the needed lead level 2 observers as explained in section 1.3.4 of the EA/RIR (see ADDRESSES ). These methods include paying observers higher wages and using the voluntary cooperative's structure to compensate vessels that choose to carry an additional observer to gain the experience required for lead level 2 certification. The cooperative may be able to arrange for its members to compensate some vessels to carry an observer in addition to the lead level 2 observer, and that observer could obtain the sampling experience needed to qualify for a lead level 2 position. The freezer longline fleet may also use the cooperative arrangements to adjust their fishing operations to ensure that a lead level 2 observer is available to the fleet and vessels are not stranded at the dock without observer coverage.

The observer employment market will play a crucial role in ensuring that enough lead level 2 observers are created and mobilized to meet the quantity demanded. Based on the analysis prepared for this action, NMFS anticipates that there will be enough lead level 2 observers to meet the requirements of this monitoring program.

Comment 3: The assumptions in the analysis about the numbers of deployments, days, and sets needed to qualify as a lead level 2 observer for nontrawl gear and the number of days that a lead level 2 observer are needed are inaccurate. NMFS has not accurately estimated the sets per day, and has failed to take account of the impact of total allowable catch (TAC) fluctuations on the need for observers.

Response: NMFS agrees in part. The freezer longline fishery's exact future observer needs are uncertain. The EA/RIR (see ADDRESSES ) uses the best available information to evaluate the potential number of lead level 2 observers that may be available. NMFS has reviewed its sets per day estimates. After this review, NMFS found that it had based its estimates on longline sets rather than longline and pot sets and that it had not adequately distinguished between vessel days when an observer was aboard and vessel days at sea on which gear was retrieved. The EA/RIR (see ADDRESSES ) has been revised to use the broader fixed gear (longline and pot) estimates and the more conservative parameter of vessel days when an observer was aboard. This led to a change in the number of catcher vessel sets per fishing day from 2.63 to 1.87. The new value is known to be a conservative estimate, but NMFS believes it is an improvement from the original value.

NMFS agrees that the freezer longline fleet's observer usage may change from year to year as the TAC changes, or from vessel to vessel depending on the distribution of allocations within the voluntary cooperative. However, in its analysis of the anticipated future demand for observers, NMFS made projections assuming a fleet of the current size fishing for an entire year. This assumption is conservative, because some vessels do not fish the entire year to accommodate changes in crews, maintenance, and product offloads.

The modifications to revise the number of sets per day and the total number of days fished did not change the result of NMFS's analysis of the availability of lead level 2 observers. Therefore, no change in the regulations was made based on this comment.

Comment 4: The analysis did not consider whether the fixed gear lead level 2 observers were also trawl lead level 2 certified. If observers are lead level 2 qualified for both gear types, then they may be deployed into the trawl fishery where they are also required and unavailable to observe aboard fixed gear vessels. Therefore, the analysis may have overestimated the number of lead level 2 observers that will be available to the freezer longliners.

Response: NMFS acknowledges this comment. Section 1.3.4 of the EA/RIR (see ADDRESSES ) describes that, while there were about 208 lead level 2 observers under current qualification requirements, only 39 were needed in 2010-2011. The analysis found that despite the large difference between the number of persons with the qualification and the number of persons used, the industry had difficulty finding enough lead level 2 observers. This difficulty in finding enough lead level 2 observers could be due to many factors, including observers with both trawl and fixed gear lead level 2 certification. While the analysis did not originally discuss the reasons for the difficulties in obtaining lead level 2 observers, it has been modified to include this discussion, including the difficulties that could be associated with finding enough lead level 2 observers because some observers may have both trawl and fish gear lead level 2 certification. Although some vessel operators had problems obtaining lead level 2 observers, NMFS does not have information that suggests this difficulty prevented vessel operators from fishing. As described in the response to comment 3, NMFS cannot guarantee that lead level 2 observers will always be available. Rather, NMFS analyzed available information and assumptions to estimate potential observer availability.

Comment 5: The analysis suggests that the restructured observer program, which will start in 2013, will be a training ground for lead level 2 observers. This is an assumption about a future program that has not yet been implemented and could be wrong. It is possible that the restructured observer program will yield fewer lead level 2 observers at a slower pace than the current observer program. The lead level 2 requirement in this rule should be dropped until the restructured observer program is implemented and has fully functioned for several years.

Response: NMFS agrees that there are uncertainties about the restructured observer program's effect on the availability of lead level 2 observers to the freezer longline fleet, as discussed in section 1.3.4 of the EA/RIR (see ADDRESSES ). However, NMFS disagrees that these uncertainties should delay implementation of this action. The EA/RIR (see ADDRESSES ) acknowledges that the number of observers that will gain experience as a result of the restructured observer program is uncertain; a wide range of observer availability scenarios has been examined in the analysis. NMFS examined different observer coverage levels in the restructured observer program and the resulting observer recruitment levels, as well as different attrition rates, at these different observer recruitment levels.

NMFS cannot delay the implementation of the lead level 2 requirement without delaying all the monitoring requirements in this program. The lead level 2 requirement is an essential component to the suite of monitoring tools created to manage the voluntary cooperative. Without this component the monitoring program will not function as intended. NMFS must implement these monitoring measures as soon as practicable because this fleet has already formed a voluntary cooperative and to achieve the objectives identified in the purpose and need statement.

NMFS will continue to monitor the number of observers that become lead level 2 qualified in the fixed gear fleet in the partial coverage category of the restructured observer program. NMFS could reconsider the monitoring requirements for the freezer longline fleet if there is a future shortage of lead level 2 observers. Any modification to the monitoring provisions in this rule would require a new analysis and rule making. The current best information available to NMFS does not support changes to the proposed rule.

Comment 6: The industry can increase the wages it pays for lead level 2 observers, but this will not lead to sufficient increases in the numbers of observers undertaking this work. Observers are motivated by important non-wage considerations. Even if freezer longliners and observer providers invest the resources to increase the number of lead level 2 observers, there is no certainty that the observer would remain available to the freezer longline fleet.

Response: NMFS does not have statistical information about the responsiveness of observer supply to different types of compensation packages. NMFS recognizes at Section 1.3.4 of the EA/RIR (see ADDRESSES ) that many observers do not recognize observing as a career, that for almost all it is a seasonal job, and that observers are motivated by many things besides their pay.

However, NMFS believes that, in general, wages are an important motivator for work effort. Increased wages are likely to motivate existing lead level 2 observers to work longer seasons, encourage existing observers within the Alaska Region to become fixed gear lead level 2 observers, and to draw qualified biologists, including observers from other regions, into the pool of North Pacific fixed gear lead level 2 observers. Increased wages for observer providers will also be necessary to encourage providers to incur the costs required in nurturing new lead level 2 observers. NMFS acknowledges that paying higher wages to lead level 2 observers will reduce the economic benefits freezer longline operators obtain from their cooperative fishing arrangements.

As discussed in section 1.3.4 of the EA/RIR (see ADDRESSES ), an increase in wages paid for fixed gear lead level 2 observers should increase the number of fixed gear lead level 2 observers and decrease the demand for them as well. Freezer longliner owners could change fishing operations to increase daily production to reduce the number of days each vessel fishes each year and thereby reduce the number of days an observer is required. Vessel owners may also take steps to provide non-monetary benefits to the observers, such as improved living and working conditions to increase an observer's desire to return or to work longer aboard these freezer longliners. NMFS again acknowledges that steps like these would be a cost to freezer longliner owners and would reduce the benefits they obtain from cooperative fishing arrangements.

Comment 7: Lead level 2 observers are not needed in this program, because NMFS can collect quality data on these vessels with the current level of observer coverage. Current training already provides the observer with all of the necessary skills to work on a freezer longliner with scales and accurately provide catch and bycatch information to NMFS on a daily basis.

Response: NMFS disagrees. As stated in section 1.3.4 of the EA/RIR (see ADDRESSES ), lead level 2 observers are required in this program under both the scale option and the increased observer coverage options to ensure that NMFS has quality data available on a haul-by-haul basis. The lead level 2 qualification is required for several reasons:

• Catch share programs create new incentives for operators to circumvent management measures. These incentives can be addressed in part by deploying experienced observers with specialized experience with the gear being deployed. In recent years, observer reports of harassment and intimidation in the freezer longline sector have increased. NMFS believes that, at least partly as a response to the new cooperative arrangements, vessel owners and operators are becoming more interested in haul-by-haul observer data in the freezer longline sector. As a result, some vessel operators are pressuring observers to change sample numbers, sample more, sample less, or sample differently. Experienced observers are more likely to identify vessel operator and crew actions that lead to sampling of unrepresentative sets, be more confident in their sampling decisions, and withstand pressure, particularly when only one observer may be on board.

• Performances issues with new observers can impact NMFS' monitoring of scale performance; of halibut prohibited species catch (PSC) and viability; and of all discard estimates, including Pacific cod. Experienced observers are familiar with different vessel layouts and operations. They can adapt quickly to vessel-specific conditions when assigned to a new freezer longliner. New observers or observers with little experience on fixed gear vessels need extra time to develop the best sampling techniques for that specific vessel. Lack of experience results in unsampled sets or lower data quality. Observers with experience aboard a fixed gear vessel should be able to quickly familiarize themselves with a new vessel and establish an unbiased sampling protocol.

• The scales option requires that only Pacific cod be weighed on the flow scale. Flow scales will be new to freezer longliners and NMFS believes that the sole observer must be a lead level 2 in order to detect and minimize problems that could occur. An observer with this level of experience should have the skills necessary to solve sampling and data collection problems in this new monitoring program. An observer unfamiliar with fixed gear operations will have difficulty determining if the scale is being used correctly. An experienced observer can address scale performance issues with the responsible vessel representatives prior to disembarking the vessel.

Comment 8: The only way to maintain a sustainable supply of lead level 2 observers for the freezer longline fleet in the future is for NMFS to either eliminate the single lead level 2 requirement for most boats, or mandate a lead level 2 observer and require a second observer whose only reason for being on board would be to gain experience toward lead level 2 certification.

Response: NMFS disagrees. As discussed in the response to comment 2, our analysis indicates that a sustainable supply of lead level 2 observers should be available in the short, as well as the long, term. NMFS does not believe that mandating a second observer for training purposes is necessary. To the extent the fleet believes there may be a shortage of trained lead level 2 observers, the cooperative structure of the fleet enables participants to voluntarily work with observer providers to provide training opportunities on board participating vessels. Some of the vessels could also choose to fish under the increased observer coverage option and increase the training opportunities for new observers.

Comment 9: Compared to other fleets that require lead level 2 observers, the Pacific cod freezer longline fleet has relatively low catch rates and less species diversity. NMFS should not rely on the experience in these other fleets as a demonstration for a need for lead level 2 observers for the smaller less productive freezer longliners.

Response: NMFS disagrees. As described in the EA/RIR (see ADDRESSES ) and the response to comment 7, the lead level 2 observer requirement addresses fleet incentives to circumvent management measures, the increased reliance by NMFS and industry for haul-by-haul catch composition and discard information, and the need to monitor compliance with the scale requirements.

Comment 10: The freezer longliner fishery is similar to other fixed gear quota share fisheries, such as the halibut and sablefish individual fishing quota and the Bering Sea crab catcher/processor fleets. No lead level 2 observer requirement exists for these similar fleets.

Response: NMFS disagrees. NMFS did not use the measures implemented in other programs as a rationale for determining the measures necessary for this program. NMFS examined and developed specific monitoring requirements necessary for accurate catch monitoring in the freezer longline fleet based on the specific fishery characteristics. As different programs have been developed, the nature of those programs, their goals, and the history and nature of the fishery prior to rationalization has differed and therefore, NMFS has developed different monitoring requirements for each program. The rationale for a lead level 2 observer is discussed in comment 7 and section 1.3.4 of the EA/RIR (see ADDRESSES ).

Comment 11: The proposed rule and the analysis discount repeated input from industry leaders and the years of experience and knowledge of the entire pool of observer providers. Rather than accept input from these entities, NMFS is choosing to push forward with the requirement for lead level 2 observers based on the position that this is necessary in the case of the freezer longliners because it was found to be necessary in previous rationalized fisheries.

Response: NMFS disagrees. NMFS has considered input from observer providers and freezer longline operators in preparing this final rule. NMFS staff presented the proposed requirements at a fleet meeting in May 2011 and responded to questions about the lead level 2 requirement at that time. NMFS received public testimony regarding the lead level 2 requirements during the October 2011 North Pacific Fisheries Management Council meeting and responded by explaining that the lead level 2 requirement ensures a quality monitoring program for this fishery. Following the October 2011 letter from the observer providers, NMFS contacted several observer providers to further understand their concerns. The EA/RIR (see ADDRESSES ) was revised to add a new section on the lead level 2 requirement analyzing issues raised by providers. The proposed rule for this action (77 FR 35972, June 15, 2012), proposed reducing the number of sampled sets currently required to achieve lead level 2 status. This proposed change directly responded to public input. Finally, because of the public interest in the lead level 2 requirement, NMFS posted the analysis to NMFS Alaska region Web site earlier than required.

As noted in the responses to comments 7 and 10, NMFS the decision to require a lead level 2 observer is not related to requirements in other rationalized fisheries. NMFS acknowledges that the experience gained from these other fisheries has demonstrated the need for lead level 2 observers to address incentives to misreport catch. NMFS determined that requiring observers that have the most experience and knowledge of fishing operations aboard fixed gear vessels was essential to ensure this new and unique program functions as anticipated.

Comment 12: We agree that the scale, 100 percent observer coverage, and camera requirements under the scale option will provide more precise estimates and strengthen management and enforcement under this program.

Response: NMFS agrees that the addition of flow scales, observer sampling stations, video monitoring to ensure all Pacific cod are sorted and weighed correctly, and the requirement for every vessel in this fleet to be observed will serve to improve the catch and fishing effort data in the freezer longline fleet.

Comment 13: The idea that freezer longline vessels could carry an observer in addition to the lead level 2 observer is flawed because Federal law mandates that vessel owners and operators cannot request particular individuals to work on their vessels.

Response: NMFS disagrees. Vessel owners and operators may request from the observer providers additional observers aboard their vessels. The regulations do prohibit vessels from requesting a preference for a specific observer, but there is no prohibition against requesting an additional observer in much the same way vessels currently request observers. In other fleets, vessel owners or operators have voluntarily requested an additional observer to improve data quality and observer working conditions. Similarly, freezer longline vessels have voluntarily taken extra observer coverage to monitor halibut PSC in the GOA fisheries.

No changes to the regulations were made based on public comment. However, NMFS has identified two minor issues that require revisions to the proposed rule. First, this final rule does not include the proposed rule revisions to §§ 679.51, 679.53, and 679.32(c)(3)(i)(E)( 1 ). When this proposed rule was published (June 15, 2012), NMFS expected that the final rule to restructure the Observer Program, which would add these sections, would be in effect. NMFS predicts that the final rule to restructure the Observer Program will be published and effective after this final rule takes effect. Therefore, the proposed revisions to §§ 679.51, 679.53 and 679.32(c)(3)(i)(E)( 1 ) in the proposed rule are reflected as revisions to §§ 679.50 and 679.32(c)(3)(i)(F)( 1 ) in this final rule. The intent and effect of these regulations has not changed.

Second, this final rule corrects an error made in § 679.32(c)(3)(i)(F)( 1 ) in a final rule published on February 8, 2012 (77 FR 6492). NMFS identified the error in July, 2012, after CDQ groups and other affected Pacific cod harvesting entities asked NMFS for clarification on sampling requirements for CDQ sets on vessels using nontrawl gear. When NMFS reorganized the CDQ catch monitoring regulations in the February 8, 2012, final rule, NMFS inadvertently substituted “hook-and-line gear” for “nontrawl gear” in the requirement that each set be sampled by an observer. Because nontrawl gear includes both longline and pot gear, this regulatory amendment unintentionally expanded the requirement that each set be sampled to pot catcher/processors participating in groundfish CDQ fisheries. This was not NMFS' intent. In addition, NMFS carried this error forward in the proposed rule for this action (77 FR 35925; June 15, 2012). NMFS corrects this error by revising § 679.32(c)(3)(i)(F)( 1 ) to remove the requirement that catcher/processors using pot gear to refer only to the observer coverage requirements that apply to these vessels and to remove the requirement that each set be sampled by an observer. This change is consistent with the regulations in effect prior to the error.

Section 3507(c)(B)(i) of the PRA requires that agencies inventory and display a current control number assigned by the Director, OMB, for each agency information collection. Section 902.1(b) identifies the location of NOAA regulations for which OMB approval numbers have been issued. Because this final rule adds a collection-of-information for recordkeeping and reporting requirements, 15 CFR 902.1(b) is revised to reference correctly the new sections resulting from this final rule.

Pursuant to section 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this rule is consistent with the FMPs, other provisions of the Magnuson-Stevens Act, and other applicable law.

Pursuant to 5 U.S.C.553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on the correction to § 679.32(c)(3)(i)(F)( 1 ) that is made in this final rule, as notice and comment is unnecessary and contrary to the public interest. After it received CDQ and affected fishery participants' clarification requests, NMFS recognized that the proposed rule inadvertently carried forward an error in § 679.32(c)(3)(i)(F)( 1 ) that had been made in a previous final rule. This error affects only catcher/processors using pot gear in the groundfish CDQ fisheries. However, the error unintentionally increases observer sampling requirements on these vessels. By letter dated July 31, 2012, NMFS provided the CDQ groups actual notice of the error in the regulations and NMFS' intent to correct the error as soon as possible. Providing prior notice and opportunity to comment is contrary to the public interest. Unless the error is corrected immediately, public confusion regarding sampling requirements would persist and vessels would continue to be required to sample sets at a higher rate than NMFS meant to impose and was anticipated by the fishery participants. The correction will reduce the amount of sampling effort, thus freeing the affected participants from an unintended burden that affects their operations. Further, unless the error is corrected now, affected participants would continue to pay higher observer costs than was intended. No interested party will be adversely affected by this waiver.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Council for Advocacy of the Small Business Administration during the proposed rule stage that this action will not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

This final rule contains collection-of-information requirements subject to the Paperwork Reduction Act (PRA) and which have been approved by the Office of Management and Budget (OMB). The collection-of-information requirements are presented below by OMB control number.

The reporting requirements for the C/P longline or pot gear daily cumulative logbook (DCPL) are removed for certain C/Ps with this final rule; the electronic logbook (see OMB 0648-0515) is used in place of the DCPL by freezer longliners (C/Ps) named on LLP licenses endorsed to catch and process Pacific cod at sea with hook-and-line gear in the BSAI.

The Observer Program requirements are mentioned in this final rule; however, the public reporting burden for this collection-of-information is not directly affected by this final rule.

Public reporting burden is estimated to average 30 minutes for Pacific Cod Monitoring Option or Opt-out Notification Form; 2 hours for Inspection Request for an Electronic Monitoring System; 6 minutes for At-Sea Scales Inspection Request; 2 minutes for notification to observers of at-sea scale tests; 45 minutes for Record of Daily Flow Scale Test; 1 minute for printed output from at-sea scale; and 2 hours for Observer Sampling Station Inspection Request.

LLP license requirements are mentioned in this final rule; however, the public reporting burden for this collection-of-information is not directly affected by this final rule.

Public reporting burden is estimated to average 15 minutes for eLogbook registration and 41 minutes per active response and 5 minutes per inactive response for the C/P longline and pot gear eLogbook.

These reporting burden estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding these burden estimates or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ) and by email to OIRA_Submission@omb.eop.gov, or fax to 202-395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to 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.

For the reasons set out in the preamble, NMFS amends 15 CFR Chapter IX and 50 CFR Chapter VI as follows:

The Commission is extending the expiration date for interim final temporary Rule 15Ba2-6T and Form MA-T under the Exchange Act.

Section 15B(a)(1) of the Exchange Act, 1 as amended by Section 975(a)(1)(B) of the Dodd-Frank Act, 2 makes it unlawful for a municipal advisor to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, unless the municipal advisor is registered with the Commission. Section 15B(a)(2) of the Exchange Act, 3 as amended by Section 975(a)(2) of the Dodd-Frank Act, provides that a municipal advisor may be registered by filing with the Commission an application for registration in such form and containing such information and documents concerning the municipal advisor and any person associated with the municipal advisor as the Commission by rule may prescribe as necessary or appropriate in the public interest or for the protection of investors.

The registration requirement for municipal advisors became effective on October 1, 2010. On September 1, 2010, the Commission adopted interim final temporary Rule 15Ba2-6T under the Exchange Act, 4 which permits municipal advisors to temporarily satisfy the statutory registration requirement by completing Form MA-T  5 through the Commission's public Web site. 6 Rule 15Ba2-6T serves as a transitional step to the implementation of a permanent registration program, makes relevant information available to the public and municipal entities, and permits municipal advisors to continue their business after October 1, 2010.

Under Rule 15Ba2-6T, as initially adopted, all temporary registrations submitted pursuant to that rule would have expired on the earlier of: (1) The date that the municipal advisor's registration is approved or disapproved by the Commission pursuant to a final rule adopted by the Commission establishing another manner of registration of municipal advisors and prescribing a form for such purpose; 7 (2) the date on which the municipal advisor's temporary registration is rescinded by the Commission; or (3) on December 31, 2011. Also, as initially adopted, Rule 15Ba2-6T itself would have expired on December 31, 2011. On December 21, 2011, however, the Commission amended Rule 15Ba2-6T to extend the date on which that rule and Form MA-T would sunset from December 31, 2011, to September 30, 2012. 8 Accordingly, as amended, all temporary registrations submitted pursuant to Rule 15Ba2-6T will expire no later than September 30, 2012. Further, existing Rule 15Ba2-6T will expire on September 30, 2012.

As stated in the Interim Release and the Extension Release, the Commission believes that providing a temporary registration process for municipal advisors, pursuant to an interim final temporary rule, is necessary and appropriate, is consistent with the intent of Congress in enacting Section 975 of the Dodd-Frank Act, and can provide investors and municipal entities with basic and important information while the Commission considers a permanent registration program. 9 As noted above, however, Rule 15Ba2-6T and Form MA-T, as extended, will expire on September 30, 2012. Accordingly, the Commission has determined that it is necessary and appropriate to extend the expiration date of Rule 15Ba2-6T and Form MA-T to September 30, 2013.

The extension will provide a method for municipal advisors to continue to temporarily satisfy the registration requirement under Section 15B of the Exchange Act until the Commission promulgates a final rule that establishes another manner of registration of municipal advisors, prescribes a form for such purpose, and develops an electronic registration system. The extension will prevent a gap between the time at which the temporary rule expires and at which municipal advisors must be registered with the Commission under a permanent registration regime. The Commission notes that it is adopting the amendment to Rule 15Ba2-6T only to extend the expiration date of that rule and, consequently, the expiration date of Form MA-T. The Commission is not making any other amendments to Rule 15Ba2-6T or Form MA-T.

The Commission is amending Rule 15Ba2-6T(e) to provide that all temporary registrations submitted pursuant to Rule 15Ba2-6T will expire on the earlier of: (1) The date that the municipal advisor's registration is approved or disapproved by the Commission pursuant to a final rule adopted by the Commission establishing another manner of registration of municipal advisors and prescribing a form for such purpose; (2) the date on which the municipal advisor's temporary registration is rescinded by the Commission; or (3) on September 30, 2013. The Commission is also amending Rule 15Ba2-6T(f) to provide that the interim final temporary rule will expire on September 30, 2013. Thus, absent further action by the Commission, Rule 15Ba2-6T and Form MA-T will expire on September 30, 2013 at 11:59 p.m. Eastern Time.

As previously noted in the Extension Release, the Commission has considered the seven comment letters received on the Interim Release and, given the limited nature of this extension and the Commission's ongoing process of considering permanent rules for the registration of municipal advisors, the Commission is not making any other changes to Rule 15Ba2-6T and Form MA-T. 10 Making other changes to the temporary registration regime could require municipal advisors relying on the temporary rule and form to make adjustments or amendments to their operations or forms that otherwise may be applicable only until the permanent regime becomes effective. The Commission also notes that the comment letters received in response to the Interim Release were addressed in the Proposing Release and were considered for purposes of the proposed rules for the registration of municipal advisors.

The amendments to Rule 15Ba2-6T will be effective on September 30, 2012. The Administrative Procedure Act (“APA”) generally requires an agency to publish notice of a proposed rulemaking in the Federal Register . 11 This requirement does not apply, however, if the agency “for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  12 The Commission notes that extending the expiration date of the temporary municipal advisor registration regime will not affect the substantive provisions of Rule 15Ba2-6T and Form MA-T. The extension will merely allow municipal advisors to continue to comply with the statutory registration requirement and thus continue to operate as municipal advisors until a permanent registration regime becomes effective. Extending the expiration date of Rule 15Ba2-6T and Form MA-T also will prevent a regulatory gap from developing between the temporary and permanent registration regimes. The extension, consequently, is designed to be temporally limited in scope until the Commission establishes a permanent registration regime for municipal advisors. For these reasons, and the reasons discussed throughout this release, the Commission believes that there is good cause to extend the expiration date of Rule 15Ba2-6T and Form MA-T to September 30, 2013 and to find that notice and solicitation of comment on the extension is impracticable, unnecessary, or contrary to the public interest. 13

The APA also generally requires that an agency publish a substantive rule in the Federal Register not less than 30 days before its effective date. 14 However, this requirement does not apply if the agency finds good cause and publishes such cause with the rule. 15 For reasons similar to those explained above, the Commission finds good cause not to delay the effective date of the extension.

In connection with the adoption of Rule 15Ba2-6T and Form MA-T, the Commission submitted to the Office of Management and Budget (“OMB”) a request for approval of the “collection of information” requirements contained in the temporary rule and form in accordance with the Paperwork Reduction Act of 1995. 16 OMB initially approved the collection of information on an emergency basis with an expiration date of March 31, 2011. The Commission subsequently submitted a request for extension of the approval, and OMB extended the approval to March 31, 2014. The collection of information to which Rule 15Ba2-6T and Form MA-T relates is “Rule 15Ba2-6T and Form MA-T—Temporary Registration of Municipal Advisors.” The OMB control number for the collection of information is 3235-0659. Since the Commission is not amending Rule 15Ba2-6T or the disclosure requirements contained in Form MA-T other than to extend the expiration date for Rule 15Ba2-6T and Form MA-T, this amendment will not change the “collection of information” previously approved by the OMB.

The Commission is sensitive to the costs and benefits of its rules. The Commission has previously considered and discussed the costs and benefits of Rule 15Ba2-6T and Form MA-T. 17 Since the Commission is not amending Rule 15Ba2-6T and Form MA-T other than to extend the expiration date, the Commission believes that the same general analysis will continue to apply for the period of the extension. However, the Commission notes that allowing municipal advisors to continue to comply with the statutory registration requirement until a permanent registration regime becomes effective and preventing a regulatory gap from developing between the temporary and permanent registration regimes are important benefits.

Since the Commission is only extending the expiration date for Rule 15Ba2-6T and Form MA-T and is not substantively changing them, the Commission's estimated burden for each municipal advisor to complete and amend Form MA-T remains unchanged. 18 However, the Commission estimates that as a result of the amendment, approximately 180  19 new municipal advisors will register between October 1, 2012, and September 30, 2013, at a total labor cost of approximately $198,000. 20 With regard to the 180 new municipal advisors and the municipal advisors already registered pursuant to Rule 15Ba2-6T, the Commission estimates that, between October 1, 2012, and September 30, 2013, there will be approximately 96  21 amendments and withdrawals at a total labor cost of approximately $13,000. 22

Section 3(f) of the Exchange Act requires the Commission, whenever it engages in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action would promote efficiency, competition, and capital formation. 23 In addition, Section 23(a)(2) of the Exchange Act requires the Commission, when making rules under the Exchange Act, to consider the impact such rules would have on competition. 24 Section 23(a)(2) of the Exchange Act prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. 25

In the Interim Release, the Commission considered the effects of Rule 15Ba2-6T and Form MA-T on efficiency, competition, and capital formation. 26 Since the Commission is not amending Rule 15Ba2-6T and Form MA-T other than to extend their expiration date, the Commission believes that the same analysis applies and continues to believe that Rule 15Ba2-6T and Form MA-T, as extended, will not result in a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act.

Pursuant to the Exchange Act, and particularly Section 15B (15 U.S.C. 78 o -4), the Commission is amending § 240.15Ba2-6T and restating § 249.1300T of Title 17 of the Code of Federal Regulations in the manner set forth below.

For the reasons set out in the preamble, Title 17, Chapter II, of the Code of Federal Regulations is amended as follows.

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the interim rule. U.S. Customs and Border Protection (CBP) also invites comments that relate to the economic, environmental, or federalism effects that might result from this interim rule. Comments that will provide the most assistance to CBP in developing these regulations will reference a specific portion of the interim rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change. See ADDRESSES above for information on how to submit comments.

On November 22, 2006, the United States and Colombia (the “Parties”) signed the United States-Colombia Trade Promotion Agreement (“CTPA” or “Agreement”), and on June 28, 2007, the Parties signed a protocol amending the Agreement. The CTPA provides for reciprocal trade liberalization between the United States and Colombia. It is a comprehensive, trade opening agreement that will eliminate tariffs and other barriers to trade, open each county's market for service providers, and promote investment.

On October 21, 2011, the President signed into law the United States-Colombia Trade Promotion Agreement Implementation Act (the “Act”), Public Law 112-42, 125 Stat. 462 (19 U.S.C. 3805 note), which approved and made statutory changes to implement the CTPA. Section 103 of the Act requires that regulations be prescribed as necessary to implement the provisions of the CTPA.

On May 14, 2012, the President signed Proclamation 8818 to implement the CTPA. The Proclamation, which was published in the Federal Register on May 18, 2012, (77 FR 29519), modified the Harmonized Tariff Schedule of the United States (“HTSUS”) as set forth in Annexes I and II of Publication 4320 of the U.S. International Trade Commission. The modifications to the HTSUS included the addition of new General Note 34, incorporating the relevant CTPA rules of origin as set forth in the Act, and the insertion throughout the HTSUS of the preferential duty rates applicable to individual products under the CTPA where the special program indicator “CO” appears in parenthesis in the “Special” rate of duty subcolumn. The modifications to the HTSUS also included a new Subchapter XXI to Chapter 99 to provide for temporary tariff-rate quotas and applicable safeguards implemented by the CTPA, as well as modifications to Subchapter XXII of HTSUS Chapter 98. After the Proclamation was signed, CBP issued instructions to the field and the public implementing the Agreement by allowing the trade to receive the benefits under the CTPA effective on or after May 15, 2012.

U.S. Customs and Border Protection (“CBP”) is responsible for administering the provisions of the CTPA and the Act that relate to the importation of goods into the United States from Colombia. Those customs-related CTPA provisions, which require implementation through regulation, include certain tariff and non-tariff provisions within Chapter One (Initial Provisions and General Definitions), Chapter Two (National Treatment and Market Access for Goods), Chapter Three (Textiles and Apparel), Chapter Four (Rules of Origin and Origin Procedures), and Chapter Five (Customs Administration and Trade Facilitation).

Certain general definitions set forth in Chapter One of the CTPA have been incorporated into the CTPA implementing regulations. These regulations also implement Article 2.6 (Goods Re-entered After Repair or Alteration) of the CTPA.

Chapter Three of the CTPA sets forth provisions relating to trade in textile and apparel goods between Colombia and the United States. The provisions within Chapter Three that require regulatory action by CBP are Articles 3.2 (Customs Cooperation and Verification of Origin), Article 3.3 (Rules of Origin, Origin Procedures, and Related Matters), and Article 3.5 (Definitions).

Chapter Four of the CTPA sets forth the rules for determining whether an imported good is an originating good of a Party and, as such, is therefore eligible for preferential tariff (duty-free or reduced duty) treatment under the CTPA as specified in the Agreement and the HTSUS. The basic rules of origin in Section A of Chapter Four are set forth in General Note 34, HTSUS.

Under Article 4.1 of Chapter Four and section 203(b) of the Act, originating goods may be grouped in three broad categories: (1) Goods that are wholly obtained or produced entirely in the territory of one or both of the Parties; (2) goods that are produced entirely in the territory of one or both of the Parties and that satisfy the product-specific rules of origin in CTPA Annex 4.1 (Specific Rules of Origin; change in tariff classification requirement and/or regional value content requirement) or Annex 3-A (Textile and Apparel Specific Rules of Origin) and all other applicable requirements of Chapter Four; and (3) goods that are produced entirely in the territory of one or both of the Parties exclusively from originating materials. Article 4.2 (section 203(c) of the Act) sets forth the methods for calculating the regional value content of a good. Articles 4.3 and 4.4 (section 203(d) of the Act) set forth the rules for determining the value of materials for purposes of calculating the regional value content of a good. Article 4.5 (section 203(e) of the Act) provides that production that takes place in the territory of one or both of the Parties may be accumulated such that, provided other requirements are met, the resulting good is considered originating. Article 4.6 (section 203(f) of the Act) provides a de minimis criterion. The remaining Articles within Section A of Chapter Four consist of additional sub-rules applicable to the originating good concept, involving: fungible goods and materials (Article 4.7; section 203(g) of the Act); accessories, spare parts, and tools (Article 4.8; section 203(h) of the Act); sets of goods (Article 4.9; section 203(m) of the Act); packaging materials and containers for retail sale (Article 4.10; section 203(i) of the Act); packing materials and containers for shipment (Article 4.11; section 203(j) of the Act); indirect materials (Article 4.12; section 203(k) of the Act); transit and transshipment (Article 4.13; section 203(l) of the Act); and consultation and modifications (Article 4.14) . All Articles within Section A are reflected in the CTPA implementing regulations, except for Article 4.14 (Consultation and Modifications).

Section B of Chapter Four sets forth procedures that apply under the CTPA in regard to claims for preferential tariff treatment. Specifically, Section B includes provisions concerning: claims for preferential tariff treatment (Article 4.15); exceptions to the certification requirement (Article 4.16); recordkeeping requirements (Article 4.17); verification of preference claims (Article 4.18); obligations relating to importations (Article 4.19) and exportations (Article 4.20); common guidelines (Article 4.21); implementation (Article 4.22); and definitions of terms used within the context of the rules of origin (Article 4.23). All Articles within Section B, except for Articles 4.21 (Common Guidelines) and 4.22 (Implementation) are reflected in these implementing regulations.

Chapter Five sets forth operational provisions related to customs administration and trade facilitation under the CTPA. Article 5.9 (section 205 of the Act), concerning the general application of penalties to CTPA transactions, is the only provision within Chapter Five that is reflected in the CTPA implementing regulations.

The majority of the CTPA implementing regulations set forth in this document have been included within Subpart T in Part 10 of the CBP regulations (19 CFR Part 10). However, in those cases in which CTPA implementation is more appropriate in the context of an existing regulatory provision, the CTPA regulatory text has been incorporated in an existing Part within the CBP regulations. In addition, this document sets forth several cross-references and other consequential changes to existing regulatory provisions to clarify the relationship between those existing provisions and the new CTPA implementing regulations. The regulatory changes are discussed below in the order in which they appear in this document.

Section 10.31(f) concerns temporary importations under bond. It is amended by adding references to certain goods originating in Colombia for which, as in the case of goods originating in Canada, Mexico, Singapore, Chile, Morocco, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, Costa Rica, Bahrain, Oman, Peru, or Korea, no bond or other security will be required when imported temporarily for prescribed uses. The provisions of CTPA Article 2.5 (Temporary Admission of Goods) are already reflected in existing temporary importation bond or other provisions contained in Part 10 of the CBP regulations and in Chapter 98 of the HTSUS.

Section 10.3001 outlines the scope of Subpart T, Part 10 of the CBP regulations. This section also clarifies that, except where the context otherwise requires, the requirements contained in Subpart T, Part 10, are in addition to general administrative and enforcement provisions set forth elsewhere in the CBP regulations. Thus, for example, the specific merchandise entry requirements contained in Subpart T, Part 10 are in addition to the basic entry requirements contained in Parts 141-143 of the CBP regulations.

Section 10.3002 sets forth definitions of common terms used within Subpart T, Part 10. Although the majority of the definitions in this section are based on definitions contained in Article 1.3 and Annex 1.3 of the CTPA, and section 3 of the Act, other definitions have also been included to clarify the application of the regulatory texts. Additional definitions that apply in a more limited Subpart T, Part 10, context are set forth elsewhere with the substantive provisions to which they relate.

Section 10.3003 sets forth the procedure for claiming CTPA preferential tariff treatment at the time of entry and, as provided in CTPA Article 4.15.1, states that an importer may make a claim for CTPA preferential tariff treatment based on a certification by the importer, exporter, or producer or the importer's knowledge that the good is an originating good. Section 10.3003 also provides, consistent with CTPA Article 4.19.4(d), that when an importer has reason to believe that a claim is based on inaccurate information, the importer must correct the claim and pay any duties that may be due.

Section 10.3004, which is based on CTPA Articles 4.15 and 4.19.4, requires a U.S. importer, upon request, to submit a copy of the certification of the importer, exporter, or producer if the certification forms the basis for the claim. Section 10.3004 specifies the information that must be included on the certification, sets forth the circumstances under which the certification may be prepared by the exporter or producer of the good, and provides that the certification may be used either for a single importation or for multiple importations of identical goods.

Section 10.3005 sets forth certain importer obligations regarding the truthfulness of information and documents submitted in support of a claim for preferential tariff treatment. Section 10.3006, which is based on CTPA Article 4.16, provides that the certification is not required for certain non-commercial or low-value importations.

Section 10.3007 implements CTPA Article 4.17 concerning the maintenance of relevant records regarding the imported good.

Section 10.3008, which reflects CTPA Article 4.19.2, authorizes the denial of CTPA tariff benefits if the importer fails to comply with any of the requirements under Subpart T, Part 10, CBP regulations.

Section 10.3009, which implements CTPA Articles 4.20.1 and 4.17.1, sets forth certain obligations of a person who completes and issues a certification for a good exported from the United States to Colombia. Paragraphs (a) and (b) of § 10.3009, reflecting CTPA Article 4.20.1, require a person who completes such a certification to provide a copy of the certification to CBP upon request and to give prompt notification of any errors in the certification to every person to whom the certification was given. Paragraph (c) of § 10.3009 reflects Article 4.17.1, concerning the recordkeeping requirements that apply to a person who completes and issues a certification for a good exported from the United States to Colombia.

Sections 10.3010 through 10.3012 implement CTPA Article 4.19.5 and section 206 of the Act, which allow an importer who did not claim CTPA tariff benefits on a qualifying good at the time of importation to apply for a refund of any excess duties at any time within one year after the date of importation. Such a claim may be made even if liquidation of the entry would otherwise be considered final under other provisions of law.

Sections 10.3013 through 10.3025 provide the implementing regulations regarding the rules of origin provisions of General Note 34, HTSUS, Chapter Four and Article 3.3 of the CTPA, and section 203 of the Act.

Section 10.3013 sets forth terms that are defined for purposes of the rules of origin as found in section 203(n) of the Act.

Section 10.3014 sets forth the basic rules of origin established in Article 4.1 of the CTPA, section 203(b) of the Act, and General Note 34, HTSUS. The provisions of § 10.3014 apply both to the determination of the status of an imported good as an originating good for purposes of preferential tariff treatment and to the determination of the status of a material as an originating material used in a good which is subject to a determination under General Note 34, HTSUS.

Section 10.3014(a), reflecting section 203(b)(1) of the Act, specifies those goods that are originating goods because they are wholly obtained or produced entirely in the territory of one or both of the Parties.

Section 10.3014(b), reflecting section 203(b)(2) of the Act, provides that goods that have been produced entirely in the territory of one or both of the Parties from non-originating materials, each of which undergoes an applicable change in tariff classification and satisfies any applicable regional value content or other requirement set forth in General Note 34, HTSUS, are originating goods. Essential to the rules in § 10.3014(b) are the specific rules of General Note 34, HTSUS, which are incorporated by reference.

Section 10.3014(c), reflecting section 203(b)(3) of the Act, provides that goods that have been produced entirely in the territory of one or both of the Parties exclusively from originating materials are originating goods.

Section 10.3015 reflects CTPA Article 4.2 and section 203(c) of the Act concerning the basic rules that apply for purposes of determining whether an imported good satisfies a minimum regional value content (“RVC”) requirement. Section 10.3016, reflecting CTPA Articles 4.3, 4.4 and section 203(d) of the Act, sets forth the rules for determining the value of a material for purposes of calculating the regional value content of a good as well as for purposes of applying the de minimis rules.

Section 10.3017, which is derived from CTPA Article 4.5 and section 203(e) of the Act, sets forth the rule by which originating materials from the territory of a Party that are used in the production of a good in the territory of the other Party will be considered to originate in the territory of that other country. In addition, this section also establishes that a good that is produced by one or more producers in the territory of one or both of the Parties is an originating good if the good satisfies all of the applicable requirements of the rules of origin of the CTPA.

Section 10.3018, as provided for in CTPA Article 4.6 and section 203(f) of the Act, sets forth de minimis rules for goods that may be considered to qualify as originating goods even though they fail to qualify as originating goods under the rules specified in § 10.3014. There are a number of exceptions to the de minimis rule set forth in CTPA Annex 4.6 (Exceptions to Article 4.6) as well as a separate rule for textile and apparel goods.

Section 10.3019, as provided for in CTPA Article 4.7 and section 203(g) of the Act, sets forth the rules by which “fungible” goods or materials may be claimed as originating.

Section 10.3020, as provided for in CTPA Article 4.8 and section 203(h) of the Act, specifies the conditions under which a good's standard accessories, spare parts, or tools are: (1) Treated as originating goods; and (2) disregarded in determining whether all non-originating materials undergo an applicable change in tariff classification under General Note 34, HTSUS.

Section 10.3021, as provided for in CTPA Articles 3.3.10 and 4.9 and section 203(m) of the Act, provides that, notwithstanding the specific rules of General Note 34, HTSUS, goods classifiable as goods put up in sets for retail sale as provided for in General Rule of Interpretation 3, HTSUS, will not qualify as originating goods unless: (1) Each of the goods in the set is an originating good; or (2) the total value of the non-originating goods in the set does not exceed 15 percent of the adjusted value of the set, or 10 percent of the adjusted value of the set in the case of textile or apparel goods.

Sections 10.3022 and 10.3023, as provided for in CTPA Articles 4.10 and 4.11 and sections 203(i) and (j) of the Act, respectively, provide that retail packaging materials and packing materials for shipment are to be disregarded with respect to their actual origin in determining whether non-originating materials undergo an applicable change in tariff classification under General Note 34, HTSUS. These sections also set forth the treatment of packaging and packing materials for purposes of the regional value content requirement of the note.

Section 10.3024, as provided for in CTPA Article 4.12 and section 203(k) of the Act, provides that indirect materials, as defined in § 10.3013(h), are considered to be originating materials without regard to where they are produced.

Section 10.3025, as provided for in CTPA Article 4.13 and section 203(l) of the Act, sets forth the rule that an originating good loses its originating status and is treated as a non-originating good if, subsequent to production in the territory of one or both of the Parties that qualifies the good as originating, the good: (1) Undergoes production outside the territories of the Parties, other than certain specified minor operations; or (2) does not remain under the control of customs authorities in the territory of a non-Party.

Section 10.3026 implements CTPA Article 4.18 which concerns the conduct of verifications to determine whether imported goods are originating goods entitled to CTPA preferential tariff treatment. This section also governs the conduct of verifications directed to producers of materials that are used in the production of a good for which CTPA preferential duty treatment is claimed.

Section 10.3027, as provided for in CTPA Article 3.2 and section 208 of the Act, sets forth the verification and enforcement procedures specifically relating to trade in textile and apparel goods.

Section 10.3028 also implements CPTA Articles 3.2 and 4.18, and sections 205, 208 and 209 of the Act and provides the procedures that apply when preferential tariff treatment is denied on the basis of an origin verification conducted under Subpart T of Part 10 of the CBP regulations.

Section 10.3029 implements CTPA Article 4.18.5 and section 205(b) of the Act, concerning the denial of preferential tariff treatment in situations in which there is a pattern of conduct by an importer, exporter, or producer of false or unsupported CTPA preference claims.

Section 10.3030 concerns the general application of penalties to CTPA transactions and is based on CTPA Article 5.9 and section 205 of the Act.

Section 10.3031 implements CTPA Article 4.19.3 and section 205(a)(1) of the Act with regard to an exception to the application of penalties in the case of an importer who promptly and voluntarily makes a corrected claim and pays any duties owing.

Section 10.3032 implements CPTPA Article 4.20.2 and section 205(a)(2) of the Act, concerning an exception to the application of penalties in the case of a U.S. exporter or producer who promptly and voluntarily provides notification of the making of an incorrect certification with respect to a good exported to Colombia.

Section 10.3033 sets forth the circumstances under which the making of a corrected claim or certification by an importer or the providing of notification of an incorrect certification by a U.S. exporter or producer will be considered to have been done “promptly and voluntarily.” Corrected claims or certifications that fail to meet these requirements are not excepted from penalties, although the U.S. importer, exporter, or producer making the corrected claim or certification may, depending on the circumstances, qualify for a reduced penalty as a prior disclosure under 19 U.S.C. 1592(c)(4). Section 10.3033(c) also specifies the content of the statement that must accompany each corrected claim or certification, including any certifications and records demonstrating that a good is an originating good.

Section 10.3034 implements CTPA Article 2.6 regarding duty-free treatment for goods re-entered after repair or alteration in Colombia.

An amendment is made to § 24.23(c) (19 CFR 24.23(c)), which concerns the merchandise processing fee, to implement section 204 of the Act providing that the merchandise processing fee is not applicable to goods that qualify as originating goods under the CTPA.

Part 162 contains regulations regarding the inspection and examination of, among other things, imported merchandise. A cross-reference is added to § 162.0 (19 CFR 162.0), which prescribes the scope of that part, to refer readers to the additional CTPA records maintenance and examination provisions contained in Subpart T, Part 10, CBP regulations.

A conforming amendment is made to § 163.1 (19 CFR 163.1) to include the maintenance of any documentation, as required by section 207 of the Act, that the importer may have in support of a claim for preference under the CTPA as an activity for which records must be maintained. Also, the list of records and information required for the entry of merchandise appearing in the Appendix to Part 163 (commonly known as the “(a)(1)(A) list”) is also amended to add the records that the importer may have in support of a CTPA claim for preferential tariff treatment.

Part 178 sets forth the control numbers assigned to information collections of CBP by the Office of Management and Budget, pursuant to the Paperwork Reduction Act of 1995, Public Law 104-13. The list contained in § 178.2 (19 CFR 178.2) is amended to add the information collections used by CBP to determine eligibility for preferential tariff treatment under the CTPA and the Act.

Under the Administrative Procedure Act (“APA”) (5 U.S.C. 553), agencies generally are required to publish a notice of proposed rulemaking in the Federal Register that solicits public comment on the proposed regulatory amendments, consider public comments in deciding on the content of the final amendments, and publish the final amendments at least 30 days prior to their effective date. However, section 553(a)(1) of the APA provides that the standard prior notice and comment procedures do not apply to an agency rulemaking to the extent that it involves a foreign affairs function of the United States. CBP has determined that these interim regulations involve a foreign affairs function of the United States because they implement preferential tariff treatment and related provisions of the CTPA. Therefore, the rulemaking requirements under the APA do not apply and this interim rule will be effective upon publication. However, CBP is soliciting comments in this interim rule and will consider all comments received before issuing a final rule.

CBP has determined that this document is not a regulation or rule subject to the provisions of Executive Order 12866 of September 30, 1993 (58 FR 51735, October 4, 1993), because it pertains to a foreign affairs function of the United States and implements an international agreement, as described above, and therefore is specifically exempted by section 3(d)(2) of Executive Order 12866. Because a notice of proposed rulemaking is not required under section 553(b) of the APA for the reasons described above, the provisions of the Regulatory Flexibility Act, as amended (5 U.S.C. 601 et seq. ), do not apply to this rulemaking. Accordingly, this interim rule is not subject to the regulatory analysis requirements or other requirements of 5 U.S.C. 603 and 604.

The collections of information contained in these regulations are under the review of the Office of Management and Budget in accordance with the requirements of the Paperwork Reduction Act (44 U.S.C. 3507) under control numbers 1651-0117, which covers many of the free trade agreement requirements that CBP administers, and 1651-0076, which covers general recordkeeping requirements. The addition of the CTPA requirements will result in an increase in the number of respondents and burden hours for this information collection. Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and an individual is not required to respond to, a collection of information unless it displays a valid OMB control number.

The collections of information in these regulations are in §§ 10.3003, 10.3004, and 10.3007. This information is required in connection with general recordkeeping requirements (§§ 10.3007), as well as claims for preferential tariff treatment under the CTPA and the Act and will be used by CBP to determine eligibility for tariff preference under the CTPA and the Act (§§ 10.3003 and 10.3004). The likely respondents are business organizations including importers, exporters and manufacturers.

Estimated total annual burden: 8,000.

Estimated number of respondents: 40,000.

Estimated annual frequency of responses per respondent: 1.

Estimated average annual burden per response: .2 hours.

Comments concerning the collections of information and the accuracy of the estimated annual burden, and suggestions for reducing that burden, should be directed to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. A copy should also be sent to the Trade and Commercial Regulations Branch, Regulations and Rulings, Office of International Trade, U.S. Customs and Border Protection, 799 9th Street NW., 5th Floor, Washington, DC 20229-1179.

This document is being issued in accordance with § 0.1(a)(1) of the CBP regulations (19 CFR 0.1(a)(1)) pertaining to the authority of the Secretary of the Treasury (or his/her delegate) to approve regulations related to certain customs revenue functions.

Accordingly, chapter I of title 19, Code of Federal Regulations (19 CFR chapter I), is amended as set forth below.

The District of Columbia Home Rule Act (DC HRA), Public Law 93-198, granted the Council of District of Columbia (“Council”) with legislative authority over essentially local District matters. After forty-eight (48) months of the passage of the D.C. HRA, the Council had the authority to enact any act, resolution, or rule with respect to any provision of title 23 of the District of Columbia Code (relating to criminal procedure). With respect to any act codified in title 23 of the District of Columbia Code, such act takes effect at the end of the 60-day period beginning on the day such act is transmitted by the Chairman to the Speaker of the House of Representatives and the President of the Senate unless, during such 60-day period, there has been enacted into law a joint resolution disapproving such act.

On June 3, 2011, the District of Columbia Criminal Code Amendments Act of 2010, D.C. Law 18-377, became effective and was codified at D.C. Official Code section 23-1301. Section 210 of this Act amended section 23- 1301 of the District of Columbia Code by striking the phrase “District of Columbia Pretrial Services Agency” wherever it appeared and inserting in its place the phrase “Pretrial Services Agency for the District of Columbia.” This change was made to be consistent with other federal agencies with a local mission focus in the District of Columbia whose names end with “for the District of Columbia,” such as CSOSA and the United States Attorney's Office. All the functions formerly carried out by CSOSA and PSA remain unchanged.

Because this regulation merely implements a change in the name of a government agency and the description of the agency seal, it relates only to agency organization, procedure or practice; therefore, requirements for prior notice and public comment do not apply. 5 U.S.C. 553(b)(3)(A). The limited purpose and effect of this rule also justifies the finding for good cause, pursuant to 5 U.S.C. 553(d)(3), that the rule should take effect immediately.

This final rule does not include or modify a collection of information as defined in 44 U.S.C. 3502(3) of the Paperwork Reduction Act of 1995.

Because the agency is issuing this rule without a proposal and an opportunity for comments, the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) does not apply. In any event, the technical amendments made by this regulation will not have a significant impact on a substantial number of small entities.

This regulation is a rule of agency organization, procedure or practice that does not substantially affect the rights or obligations of non-agency parties. It is therefore not subject to the Congressional Review Act pursuant to 5 U.S.C. 801 and 804(3)(C).

Following consultation with the Office of Management and Budget, a determination was made that this rule does not meet the criteria for a significant regulatory action under Executive Order 12866.

This rule does not have Federalism implications under Executive Order 13132.

For the reasons set forth in the preamble, the Court Services and Offender Supervision Agency for the District of Columbia amends 28 CFR Part 803 as follows:

The Norfolk Southern Corporation, owner and operator of the single-leaf bascule Norfolk Southern #7 Railroad Bridge, mile 5.8, at Chesapeake, VA, has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.997(d), to accommodate lift joint replacement.

Under the current operating schedule the bridge shall be left in the open position at all times and will only be lowered for the passage of trains and to perform periodic maintenance. The Norfolk Southern #7 Bridge, at AIWW mile 5.8, across the Elizabeth River (Southern Branch) in Chesapeake, VA, has a vertical clearance in the closed position to vessels of 7 feet above mean high water.

To facilitate lift joint replacement, the drawbridge will be maintained in the closed-to-navigation position from 6 a.m. to 8 p.m. on October 9, 2012 and again from 6 a.m. to 8 p.m. on October 11, 2012; at all other times the bridge will operate in accordance to its regular operating schedule. The bridge normally operates in the open position with several vessels transiting a week. Coordination with waterway users has been completed.

The Coast Guard will inform the users of the waterway through our Local and Broadcast Notices to Mariners of the opening restrictions of the draw span to minimize transiting delays caused by the temporary deviation. There are no alternate routes available but vessels may pass between 8 p.m. and 6 a.m. during the relevant time period. Mariners able to pass under the bridge in the closed position may do so at any time and the bridge is able to open for emergencies. Mariners are advised to proceed with caution.

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 Coast Guard is issuing this 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 it would be impracticable, since the event requiring the establishment of this safety zone would be over before a comment period would end. The vessels involved in the Coast Guard Ready for Operations exercise have an important and urgent need to perform this training in order to be ready to protect U.S. persons, assets, and waters; it would be impracticable to publish an NPRM before the date of the event.

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 reasons described above, publication of an NPRM would be impracticable. The vessels involved in this Coast Guard exercise have an important and urgent need to perform this training in order to be ready to protect U.S. persons, assets, and waters; and it is not possible to publish an NPRM before the date of the event.

The Coast Guard will be conducting a Ready for Operations (RFO) exercise in the northern part of Hood Canal, WA. During the exercise, tactical vessels will be maneuvering through the Hood Canal from the entrance of Dabob Bay to Foul Weather Bluff. This exercise will include fast moving surface vessels, smoke machines, and pyrotechnics. Blank ammunition, flares and LA51 warning munitions will be used during the exercise. A safety zone is necessary to ensure the safety of the maritime public and vessels participating in the exercise by preventing collisions between exercising vessels and the maritime public, and by keeping the maritime public a safe distance away from potentially startling or disorienting smoke, bright flashes, and loud noises.

The temporary safety zone established by this rule will prohibit any person or vessel from entering or remaining within 500 yards of any vessel involved in the Coast Guard Ready for Operations exercise. Members of the maritime public will be able to identify participating vessels as those flying the Coast Guard Ensign. The COTP may also be assisted in the enforcement of the zone by other federal, state, or local agencies.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. The Coast Guard bases this finding on the fact that the safety zone will be in place for a limited period of time and vessel traffic will be able to transit through the zone from the COTP, Puget Sound or his Designated Representative.

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 term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities; the owners and operators of vessels intending to operate in the waters covered by the safety zone while it is in effect. The rule will not have a significant economic impact on a substantial number of small entities because the safety zone will be in place for a limited period of time and maritime traffic will still be able to transit around the safety zone. Maritime traffic may also request permission to transit through the zone from the COTP, Puget Sound or his Designated Representative.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this 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 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 INTFORMATION 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 involves the establishment of a safety zone. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An 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:

On July 25, 2012, the Department published a notice in the Federal Register (77 FR 43560) inviting comments on the Department's proposal to make certain AIVRS grants effective for more than 60 months under the authority of Section 121(b)(3) of the Rehabilitation Act of 1973, as amended (the Act). The Secretary proposed to waive the requirements of 34 CFR 75.250, which generally limit project periods to 60 months, and of 34 CFR 75.261(c)(2), which restrict project period extensions involving the obligation of additional Federal funds. In that notice, the Secretary also proposed to extend the project period for the eight AIVRS grantees from October 1, 2012, through September 30, 2013. The proposed waivers and extensions would enable the eight AIVRS grantees to request, and continue to receive, Federal funds beyond the 60-month limitation set by 34 CFR 75.250.

There are no substantive differences between the notice of proposed waivers and extensions and this notice of final waivers and extensions.

In the July 25, 2012, notice for the AIVRS program, the Secretary invited comments on the effect these proposed waivers and extensions may have on the AIVRS program and on potential applicants for grant awards under any new AIVRS notice inviting applications, should there be one. We received comments from 13 commenters, 10 of which supported the Department's proposal to waive regulations at 34 CFR 75.250 and 34 CFR 75.261(c)(2) restricting project period extensions past 60 months and restricting extensions that require additional Federal funds and to extend the project period for 8 AIVRS grantees beyond September 30, 2012, so that they could continue to receive Federal funds from October 1, 2012, through September 30, 2013.

Generally, we do not address technical and other minor changes. In addition, we do not address general comments that raise concerns not directly related to the proposed waivers and extensions.

Comment: Three commenters raised a concern that a decision not to run a competition in FY 2012 would preclude tribes that are interested in responding to a notice inviting applications from having the opportunity to apply for a grant and referred to the human capital and fiscal resources that were expended in anticipation of a new competition.

Discussion: The Department has proposed to extend the current AIVRS grantees in response to a recommendation made by the U.S. Government Accountability Office (GAO) in a report titled, “Indian Issues: Federal Funding for Non-Federally Recognized Tribes,” released on May 9, 2012, for the Department to review its interpretation of “reservation” used in determining eligibility under the AIVRS program. 1 GAO raised concerns about the eligibility of State-recognized tribes that are not located on State reservations but rather are located on a defined and contiguous area of land where there is a concentration of tribal members and in which the tribe is providing structured activities and services as identified in their grant application. In order to respond to GAO's recommendation, we believe it is advisable to take time to review carefully the eligibility requirements for this program and to consider the Department's options. Therefore, in order to maintain the status quo while the Department undergoes this review, we have decided to maintain funding to existing AVIRS grantees and not to hold a new competition in FY 2012.

Human capital and fiscal resources that were expended in anticipation of a potential competition in FY 2012 have not been wasted. Application requirements for a FY 2013 competition are not likely to differ substantially from those in previous competitions. As such, application materials developed in anticipation of a potential competition in FY 2012 should be able to be used in the FY 2013 competition.

Changes: None.

Comment: Two commenters expressed concern about the potential effect of the proposed action on the next grant competition. One commenter asked whether the action to extend funding for current programs will decrease the number of grants available to be awarded when a competition is held. The other commenter asked whether this proposal to suspend the current practice of annual grant competitions will place more of our AIVRS programs in competition with each other.

Discussion: The AIVRS program is funded through a set-aside of the funds appropriated for the Vocational Rehabilitation (VR) State Grants program. Assuming a set-aside of at least 1.2 percent of the VR appropriation in FY 2013, the Department's action to extend these grants would not decrease the total number of grants awarded under the AIVRS program. At the end of FY 2013, 32 grants, including the 8 grants that would be extended under this notice, will conclude their current projects. Pending the availability of funds, the Department anticipates holding a grant competition in FY 2013 that would fund a minimum of 32 grants with project periods that would begin in FY 2014. The Department would have awarded the same total number of new grants over the two year period if it had conducted separate competitions in fiscal years 2012 and 2013. Thus, this action will not decrease the number of grants awarded nor should it result in increased competition among AIVRS programs.

Changes: None.

Comment: One commenter asked if tribes will be provided reasonable and adequate time and notice to fully and properly plan for and complete grant submissions.

Discussion: We anticipate that the FY 2013 competition will be announced in time to provide adequate notice and time for applicants to prepare and submit applications.

Changes: None.

Comment: One commenter asked whether applicants would have adequate and reasonable time to prepare a grant submission this year, if these proposed waivers and extensions do not move forward.

Discussion: The AIVRS program will not conduct a grant competition this year because we believe it is advisable to take time to carefully review the eligibility requirements for this program, in response to GAO's recommendation, before holding a new competition. The Department will, instead, waive the regulations that generally limit project periods to 60 months and restrict project period extensions involving the obligation of additional Federal funds. The Department plans to review requests for continuation awards from the eight grantees based on the 2007 notice inviting applications (NIA) and, where appropriate, extend the currently-funded projects through September 30, 2013.

Changes: None.

The eight AIVRS grantees, selected based on the 2007 AIVRS NIA published on March 14, 2007 (72 FR 11851), provide vocational rehabilitation services to American Indians with disabilities who reside on or near Federal or State reservations as authorized by section 121 of the Rehabilitation Act of 1973, as amended (the Act) (29 U.S.C. 741).

The project period for the eight AIVRS grantees was scheduled to end September 30, 2012. However, section 121(b)(3) of the Act provides that the Department has the authority to make an AIVRS grant effective for more than 60 months, pursuant to prescribed regulations. Therefore, for these eight AIVRS grantees, the Secretary waives the requirements of 34 CFR 75.250 and 34 CFR 75.261(c)(2) which limit project periods to 60 months and restrict project period extensions that involve the obligation of additional Federal funds. The Secretary also extends the current project period for the eight AIVRS grantees funded in FY 2007 until September 30, 2013. Finally, the Department will not announce a new AIVRS competition or make new awards in FY 2012.

This action allows the eight AIVRS grantees to request continuation funding in FY 2012. Decisions regarding annual continuation awards will be based on the program narratives, budgets, budget narratives, and program performance reports submitted by these eight AIVRS grantees and on the requirements of 34 CFR 75.253. Any activities to be carried out during the year of continuation awards would have to be consistent with, or be a logical extension of, the scope, goals, and objectives of each grantee's application as approved following the 2007 AIVRS competition. The 2007 AIVRS NIA will continue to govern their projects during the extension year. These current AIVRS grantees may request continuation awards in FY 2012 for project periods through FY 2013.

The Administrative Procedure Act requires that a substantive rule must be published at least 30 days before its effective date, except as otherwise provided for good cause (5 U.S.C. 553(d)(3)). We have not made any substantive changes to the proposal. The Secretary has therefore determined to waive the delayed effective date to ensure timely continuation grants to the entities affected.

The Secretary certifies that this final extension of the project period and waiver will not have a significant economic impact on a substantial number of small entities. The only entities that will be affected are the current grantees and any other potential applicants.

The final waivers and extensions of project periods do not contain any information collection requirements.

This program is not subject to the requirements of Executive Order 12372 and the regulations in 34 CFR part 79.

Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT .

The official version of this document is the document published in the Federal Register . Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.gpo.gov/fdsys . At this site you can view this document, as well as all other documents of this Department published in the Federal Register , in text or Adobe Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov . Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

This document adopts as a final rule without substantive change a proposed rule amending VA regulations. On March 16, 2012, VA published in the Federal Register (77 FR 15650) a proposal to amend its regulations concerning Fisher Houses and other temporary lodging furnished by VA while a veteran is experiencing an episode of care at a VA health care facility. Under 38 U.S.C. 1708, VA may furnish certain persons with temporary lodging in a Fisher House or other appropriate facility in connection with the examination, treatment, or care of a veteran. VA implements its authority under section 1708 in 38 CFR part 60. This authority to provide temporary lodging assists VA in providing appropriate treatment and care to veterans, because individuals receiving such treatment or care often respond better when they are accompanied by relatives, close friends, or caregivers.

Interested persons were invited to submit comments to the proposed rule on or before May 15, 2012, and we received no comments. Therefore, we make no changes based on comments. However, we make minor changes from the proposed rule in certain places in §§ 60.15 and 60.20, because the phrases “VA health care facility,” “VA medical center,” and “VA medical facility” were inadvertently used interchangeably with regards to: Where an application for temporary lodging may be obtained and where a completed application must be returned (§ 60.15(a)); the location of non-utilized beds in VA facilities that may serve as temporary lodging (§ 60.15(b)(3) and § 60.20(d)); the type of VA facility whose Director may determine whether hotels or motels are appropriate temporary lodging (§ 60.15(b)(4)); and where a denied application may be referred (§ 60.15(b)(7)). The intended usage was to refer only to a “VA health care facility” throughout the proposed rule, because this phrase broadly encompasses all VA facilities that are under the jurisdiction of the Veterans Health Administration and VA. By contrast, a “VA medical center” is a specific type of “VA health care facility” that distinctly provides, among other things, 24-hour inpatient care. VA has never limited, and it was not the intent of the proposed rule to limit criteria for temporary lodging, to only be considered in the context of a “VA medical center.”

Use of the broader phrase “VA health care facility” in this final rule reflects current and longstanding VA practice, and the proposed rule emphasized that it would generally reflect current VA practice. See 77 FR 15650, 15652-15653. Additionally, use of the phrase “VA health care facility” is consistent with 38 CFR part 60 prior to this revision, versus the phrase “VA medical facility.” The public therefore should be familiar with the phrase “VA health care facility,” as well as the intent of the proposed rule. Indeed, the fact that we received no comments on the inadvertent usage of the phrases “VA medical center” and “VA medical facility” in the proposed rule indicates that the public did not understand these phrases to propose new limitations regarding temporary lodging provided by VA.

Changes in this final rule to consistently use “VA health care facility” additionally do not broaden substantive criteria for temporary lodging from the proposed rule, because the proposed rule accurately used the phrase “VA health care facility” when describing substantive criteria to the public. Therefore, consistent use of the broader phrase “VA health care facility” in the final rule is not a substantive change from the proposed rule that requires an additional notice and comment period. For instance, the proposed rule clearly stated in § 60.2 that Fisher Houses and other temporary lodging may be located at or near a “VA health care facility.” See § 60.2 as proposed, and unchanged by this final rule, for the definitions of “Fisher House” and “Other temporary lodging,” which base location of temporary lodging at or near a “VA health care facility.” The substantive criteria in proposed § 60.2, related to where temporary lodging may be located, correctly stated that temporary lodging may be located at or near a VA health care setting that is broader than a “VA medical center.” Proposed § 60.15(a), however, incorrectly stated that applications for temporary lodging could be obtained from and returned to only “VA medical center[s].” Proposed § 60.15(a) intended to alert the public that applications for temporary lodging can be obtained from and returned to those places where temporary lodging may be located. Therefore, the final rule must accurately indicate that applications for temporary lodging may be obtained from and returned to a “VA health care facility,” and not only obtained from and returned to a “VA medical center.” See § 60.15(a) as revised by this rulemaking, versus § 60.15(a) as proposed. Accurately stating in the final rule that an application for temporary lodging may be obtained from and returned to a “VA health care facility” versus a “VA medical center” does not affect the location of temporary lodging, and does not affect any other substantive criteria such as eligibility for temporary lodging or access to temporary lodging. The change in this final rule in § 60.15(a) to use the phrase “VA health care facility,” therefore, is not substantive but rather merely standardizes the use of the correct and intended phrase, where otherwise multiple phrases will be confusing.

As another example, the proposed rule clearly stated in § 60.15(b)(5) that “the person responsible for coordinating the Fisher House and other temporary lodging program(s) at the VA health care facility of jurisdiction is responsible for making decisions to grant temporary lodging.” The substantive criteria in proposed § 60.15(b)(5), related to VA staff that decide whether to grant temporary lodging, correctly stated that such staff may work in a VA health care setting that is broader than a “VA medical center.” Proposed § 60.15(b)(7), however, incorrectly stated that if temporary lodging is denied, then the application would be referred to VA staff only “at the VA medical center of jurisdiction to determine if other arrangements can be made.” Proposed § 60.15(b)(7) intended to alert the public that if an application is denied, the application will be referred back to the setting where the original decision was made to determine if other lodging options are available. Therefore, the final rule must indicate that if an application for temporary lodging is denied, that VA will refer the application to a “VA health care facility of jurisdiction” to determine other options, and not limit the referral of the application to only a “VA medical center of jurisdiction.” See § 60.15(b)(7) as revised by this rulemaking, versus § 60.15(b)(7) as proposed. Accurately stating in the final rule that a denied application for temporary lodging is referred back to a “VA health care facility” versus a “VA medical center” does not affect the availability of other lodging options when temporary lodging is denied, and does not affect any other substantive criteria such as eligibility for temporary lodging or access to temporary lodging. The change in this final rule in § 60.15(b)(7) to use the phrase “VA health care facility,” therefore, is not substantive but rather merely standardizes the use of the correct and intended phrase, where otherwise multiple phrases will be confusing.

All other changes to use the broader phrase “VA health care facility” in §§ 60.15 and 60.20 are similarly not substantive, because they merely standardize the use of the correct and intended phrase, where otherwise multiple phrases will be confusing. We amend the language of the proposed rule to remove all mention of a “VA medical center” or “VA medical facility,” and replace those phrases with “VA health care facility” in this final rule.

Therefore, based on the rationale set forth in the proposed rule and above, VA is adopting the proposed rule as a final rule without substantive change.

Title 38 of the Code of Federal Regulations, as revised by this final rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.

Although this action contains provisions constituting collections of information at 38 CFR 60.15, under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or revised collections of information are associated with this final rule. The information collection requirements for § 60.15 are currently approved by the Office of Management and Budget (OMB) and have been assigned OMB control number 2900-0630.

The Secretary hereby certifies that this final rule does not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This final rule directly affects only individuals and will not directly affect small entities. Any impact on small entities involved in the lodging industry would be indirect and insignificant. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analyses requirements of 5 U.S.C. 603 and 604.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) classifies a “significant regulatory action,” requiring review by OMB, unless OMB waives such review as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule 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 (adjusted annually for inflation) in any year. This final rule will have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance program numbers and titles for the programs affected by this document are 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; and 64.024, VA Homeless Providers Grant and Per Diem Program.

For the reasons stated in the preamble, VA is revising 38 CFR part 60 as follows:

On August 26, 2011, EPA published a notice of proposed rulemaking (NPR) which proposed approval of Pennsylvania's adhesives and sealants regulations in order to control emissions of VOCs from the manufacture, sale, use, or application of adhesives, sealants, primers, and solvents (76 FR 53369, August 26, 2011). The formal SIP revision was submitted by the Commonwealth of Pennsylvania through PADEP on January 12, 2011.

Pennsylvania's SIP submission contains amendments to 25 Pa. Code Chapters 121, 129, and 130 relating to general provisions, standards for sources, and standards for products. The SIP revision includes amendments to the existing regulation in 25 Pa. Code section 129.51, general provisions for VOC sources, and adds new provisions under 25 Pa. Code sections 129.77 and 130.701 through 130.708, relating to control of emissions from the use or application of adhesives, sealants, primers and solvents and for the control of emissions of VOCs from the manufacture, sale, use, or application of adhesives, sealants, primers, and solvents. The SIP revision also includes amendments to 25 Pa. Code section 121.1, which contains definitions applicable to 25 Pa. Code sections 129.77 and 130.701 through 130.708.

The SIP revision is based on the Ozone Transport Commission (OTC) model rule, “OTC Model Rule For Adhesives and Sealants,” dated 2006, which was based on the 1998 California Air Resources Board (CARB) reasonably available control technology (RACT) determination which applied to both the manufacture and use of adhesives, sealants, adhesive primers, or sealant primers, in both industrial and manufacturing facilities and in the field. California Air Districts used this determination to develop regulations for this category. EPA addressed this source category with a Control Techniques Guideline (CTG) document “Control Techniques Guidelines for Miscellaneous Industrial Adhesives, EPA-453/R-08-005” in September 2008 (Miscellaneous Industrial Adhesive CTG).

EPA has determined that the SIP revision contains the required elements for a federally enforceable rule: Emission limitations, compliance procedures and test methods, compliance dates, and record keeping provisions. In comparison to the CTG, the OTC model rule and 25 Pa. Code section 129.77 are applicable to all stationary sources including those applications that occur outside of the factory setting in the field. The OTC model rule and 25 Pa. Code sections 129.77 and 130.701 through 130.708 also regulate the VOC content and vapor pressure of surface-preparation and clean-up solvents for which the CTG did not make recommendations other than including work practices. The rationale for EPA's proposed action is explained in the NPR and will not be restated here. On September 26, 2011, EPA received one comment letter on the August 26, 2011 NPR. The complete comment letter submitted by the Graphic Arts Coalition (hereafter referred to as the Commenter) may be found in the docket (EPA-R03-OAR-2011-0617) for today's final action. A summary of the comments and EPA's responses are provided in Section III of this document.

Comment: The Commenter requests that EPA not approve the SIP amendment until PADEP clearly exempts graphic arts operations from the rule. The Commenter believes that adhesives used in printing operations were not considered in PADEP's rulemaking and were not intended to be covered by the revised regulation or by the OTC or EPA. The Commenter believes that all adhesives used in the printing process operation, not only adhesives applied at stations that are physically connected to a printing line, should be excluded from the rule because these adhesives will be captured/controlled under rules applicable to lithographic operations being developed by PADEP.

Response: Pennsylvania's regulation for adhesives and sealants clearly addresses the adhesives and adhesive application activities regulated. In 25 Pa. Code section 129.77 at Tables V and VI, the Commonwealth clearly specified the adhesives for which a VOC limit is set and 25 Pa. Code section 129.77(a) clearly states that the limits apply in Tables V and VI unless excluded by 25 Pa. Code section 129.77(k). Also, the additional terms in 25 Pa. Code section 121.1 define each of the adhesive categories found in Tables V and VI. Thus, we believe the Pennsylvania regulations are clear that the adhesives used in printing operations were considered and that the state intended to cover those adhesives.

EPA addressed a portion of the adhesives and adhesive primers category in the Miscellaneous Industrial Adhesive CTG. EPA's Miscellaneous Industrial Adhesive CTG provides state and local air pollution control authorities information that may assist them in determining RACT for VOCs from miscellaneous industrial adhesive application processes. In developing this Miscellaneous Industrial Adhesive CTG, EPA, among other things, evaluated the sources of VOC emissions from miscellaneous industrial adhesives application processes and the available control approaches for addressing these emissions, including the costs of such approaches. Based on available information and data, EPA provided recommendations for RACT for miscellaneous industrial adhesives. States can use the recommendations in the Miscellaneous Industrial Adhesive CTG to inform their own determination as to what constitutes RACT for VOCs for miscellaneous industrial adhesive application processes in their particular nonattainment areas. The Miscellaneous Industrial Adhesive CTG does not impose any legally binding requirements on any entity nor are States required to adopt the approach that EPA sets forth in a CTG. It provides only recommendations for state and local air pollution control agencies to consider in determining RACT. State and local pollution control agencies are free to implement other technically-sound approaches that are consistent with the CAA and EPA's implementing regulations or are more stringent. Thus, whether or not the CTG expressly addressed the adhesives at issue here is not relevant for determining whether Pennsylvania's rule addressing those adhesives could be approved as part of the SIP.

Section 110(k) of the CAA provides that EPA shall approve a SIP revision submittal if it meets all of the applicable requirements of the CAA. The primary CAA requirement for the adhesives and sealants rule is that Pennsylvania set RACT for the Miscellaneous Industrial Adhesive CTG category. For the reasons outlined in the NPR, EPA believes that Pennsylvania has fulfilled this requirement (76 FR 53369). To the extent that Pennsylvania's rule goes beyond the recommendation of the Miscellaneous Industrial Adhesive CTG, it does not prohibit EPA from approving this rulemaking action. The OTC developed a model rule as part of a regional effort to attain and maintain the eight-hour ozone standard and reduce eight-hour ozone levels. States opting to promulgate rules based on this model rule utilize state-specific administrative requirements and procedures. Similar to CTGs, the OTC model rules are merely recommendations and are not required by the Commonwealth for regulation purposes. However, Pennsylvania's adopted 25 Pa. Code Chapters 121, 129, and 130 are based on the OTC model rule. The Commenter also suggests that these adhesives would be better addressed in a separate rule on which the Commonwealth is currently working. If the Commonwealth determines that the adhesives should be addressed in a different rule, it can request that the SIP be revised. However, the fact that the Commonwealth may choose at some future point to regulate the adhesives under a separate rule is not a basis for disapproving the current rule.

EPA is approving the Pennsylvania SIP revision which includes amendments to 25 Pa. Code section 121.1 “Definitions” and section 129.51(a) “Equivalency.” EPA is also approving the Pennsylvania SIP revisions adding 25 Pa. Code section 129.77 “Control of emissions from the use or application of adhesives, sealants, primers, and solvents” and 25 Pa. Code sections 130.701-130.708 “Adhesives, Sealants, Primers, and Solvents General Provisions.” EPA has determined that 25 Pa. Code sections 129.77 and 130.701 through 130.708 meet the requirement for RACT for the Miscellaneous Industrial Adhesive CTG. EPA has determined that the regulations will result in the reduction of VOC emissions from the affected sources and meet the applicable requirements of the CAA and applicable EPA regulations, guidance, and policy and can therefore be approved.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action pertaining to pertaining to Pennsylvania's control of VOCs from adhesives and sealants may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2) of the CAA.)

40 CFR part 52 is amended as follows:

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

On May 8, 2012, the Maryland Department of the Environment (MDE) submitted a formal SIP revision (#12-04) to EPA pertaining to regulation COMAR 26.11.19.23 “Control of Volatile Organic Compounds Emissions from Vehicle Refinishing.” The SIP revision establishes new volatile organic compounds (VOC) content limits for coating and cleaning solvents used in vehicle refinishing and standards for coating application, work practices, monitoring, and recordkeeping. On July 10, 2012 (77 FR 40550), EPA published a notice of proposed rulemaking (NPR) proposing approval of Maryland's revisions to COMAR 26.11.19.23 “Control of Volatile Organic Compounds Emissions from Vehicle Refinishing” as adopted by the State of Maryland on March 26, 2012. The compliance date of the adopted regulation COMAR 26.11.19.23 is July 1, 2013.

The SIP revision establishes VOC content limits for automotive coatings and cleaning solvents used in vehicle refinishing and standards for coating application, work practices, monitoring, and recordkeeping. Maryland's revisions to COMAR 26.11.19.23 include establishing VOC content limits for 11 categories of automotive coatings and two categories of cleaning solvents which are used in the preparation, application, and drying phases of vehicle refinishing. All affected sources must comply with provisions of this regulation by July 1, 2013. This SIP revision will achieve emission reductions of VOC throughout the State of Maryland.

Maryland's revisions to COMAR 26.11.19.23 are based on the 2009 “Model Rule for Motor Vehicle and Mobile Equipment Non-Assembly Line Coating Operations” (MVMERR) developed in conjunction with member states of the Ozone Transport Commission (OTC). The MVMERR and the adopted regulation COMAR 26.11.19.23 comply with EPA's requirements set forth in 40 CFR Part 59, subpart B “National Volatile Organic Compound Emissions Standards for Automobile Refinish Coatings” and 40 CFR part 63 subpart HHHHHH “National Emission Standards for Hazardous Air Pollutants: Paint Stripping and Miscellaneous Surface Coating Operations at Area Sources.” Specific information concerning revisions to COMAR 26.11.19.23 and the rationale for EPA's proposed action are explained in the NPR and the Technical Support Document for this action, and will not be restated here. No public comments were received on the NPR.

EPA is approving Maryland's revisions to regulation COMAR 26.11.19.23 “Control of Volatile Organic Compounds Emissions from Vehicle Refinishing” adopted by MDE on March 26, 2012, as a revision to the Maryland SIP. The compliance date for this regulation is July 1, 2013.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action, which approves revisions to regulation COMAR 26.11.19.23, may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

40 CFR part 52 is amended as follows:

EPA is taking final action on portions of Mississippi's May 12, 2011, SIP revision to incorporate by reference (IBR)  1 federal requirements for NSR permitting. Mississippi's May 12, 2011, SIP revision includes changes to its air quality regulations in Air Pollution Control, Section 5 (APC-S-5)— Regulations for the Prevention of Significant Deterioration of Air Quality. The May 12, 2011, changes IBR federal PSD permitting regulations promulgated in the final rulemakings entitled “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM 2.5 ),” 73 FR 28321 (May 16, 2008), hereafter referred to as the “NSR PM 2.5 Rule,” and “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 )—Increments, Significant Impact Levels SILs and Significant Monitoring Concentration (SMC),” 75 FR 64864 (October 20, 2010) hereafter referred to as the “PM 2.5 PSD Increment-SILs-SMC Rule”). Additionally, Mississippi's SIP revision requests that EPA remove from the SIP the exclusion language at APC-S-5 (2.7) regarding the NSR PM 2.5 Rule provisions. EPA is not approving in this action: (1) incorporation of the SIL thresholds and provisions promulgated in EPA's PM 2.5 PSD Increment-SILs-SMC Rule, 75 FR 64864 (October 20, 2010); and (2) incorporation of the provision regarding the applicability of the term “particulate matter emissions” when accounting for condensable particles in applicability determinations and in establishing emissions limitations in PSD permits. 2

On July 23, 2012, EPA published a proposed rulemaking to approve the aforementioned changes to Mississippi's NSR PSD program at APC-S-5. See 77 FR 43032. Comments on the proposed rulemaking were due on or before August 22, 2012. No comments, adverse or otherwise, were received on EPA's July 23, 2012, proposed rulemaking. Pursuant to section 110 of the CAA, EPA is now taking final action to approve the changes to Mississippi's NSR PSD program as provided in EPA's July 23, 2012, proposed rulemaking. A summary of the background for today's final action is provided below. EPA's July 23, 2012, proposed rulemaking contains more detailed information regarding the Mississippi SIP revision being approved today, and the rationale for today's final action. Detailed information regarding the PM 2.5 NAAQS and NSR Program can also be found in EPA's July 23, 2012, proposed rulemaking as well as the abovementioned final rulemakings.

EPA finalized the NSR PM 2.5 Rule on May 16, 2008, which revised the NSR program requirements to establish the framework for implementing preconstruction permit review for the PM 2.5 NAAQS in both attainment areas and nonattainment areas (NAAs) that: (1) Require NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) establish significant emission rates for direct PM 2.5 and precursor pollutants (including sulfur dioxide (SO 2 ) and nitrogen oxides (NOx)); (3) establish PM 2.5 emission offsets; (4) provide exceptions to the grandfathering policy for permits being reviewed under the PM 10 surrogate program; and (5) require states to account for gases that condense to form particles (condensables) in PM 2.5 and PM 10 emission limits in PSD or nonattainment NSR (NNSR) permits. Additionally, the NSR PM 2.5 Rule authorized states to adopt provisions in their NNSR rules that would allow interpollutant offset trading. See 73 FR 28321. States were required to provide SIP submissions to address the requirements for the NSR PM 2.5 Rule by May 16, 2011. Mississippi's May 12, 2011, SIP revision addresses only the PSD requirements related to EPA's May 16, 2008, NSR PM 2.5 Rule. 3

In the NSR PM 2.5 Rule, EPA required that major stationary sources seeking permits must begin directly satisfying the PM 2.5 requirements, as of the effective date of the rule, rather than relying on PM 10 as a surrogate, with two exceptions. 4 The first exception is a “grandfathering” provision in the federal PSD program at 40 CFR 52.21(i)(1)(xi). This grandfathering provision applied to sources that had applied for, but had not yet received, a final and effective PSD permit before the July 15, 2008, effective date of the May 2008 final rule. The second exception was that states with SIP-approved PSD programs could continue to implement the Seitz Memo's PM 10 Surrogate Policy for up to three years (until May 2011) or until the individual revised state PSD programs for PM 2.5 are approved by EPA, whichever comes first. On May 18, 2011 (76 FR 28646), EPA took final action to repeal the grandfathering provision at 40 CFR 52.21(i)(1)(xi). This final action ended the use of the 1997 PM 10 Surrogate Policy for PSD permits under the federal PSD program at 40 CFR 52.21. In effect, any PSD permit applicant previously covered by the grandfathering provision (for sources that completed and submitted a permit application before July 15, 2008)  5 that did not have a final and effective PSD permit before the effective date of the repeal will not be able to rely on the 1997 p.m. 10 Surrogate Policy to satisfy the PSD requirements for PM 2.5 unless the application includes a valid surrogacy demonstration. 6 See 76 FR 28646. In its May 12, 2011, SIP revision, Mississippi did not adopt the grandfathering provision at 40 CFR 52.21(i)(1)(xi) into its PSD regulations. Therefore, Mississippi's SIP is consistent with current federal regulations regarding the repeal of the grandfathering provision.

In the NSR PM 2.5 Rule, EPA revised the definition of “ regulated NSR pollutant ” for PSD to add a paragraph providing that “particulate matter (PM) emissions, PM 2.5 emissions and PM 10 emissions” shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures and that on or after January 1, 2011, such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM, PM 2.5 and PM 10 in permits issued. See 40 CFR 51.166(b)(49)(vi), 52.21(b)(50)(vi) and “Emissions Offset Interpretative Ruling” (40 CFR Part 51, Appendix S). On March 16, 2012, EPA proposed a rulemaking to amend the definition of “ regulated NSR pollutant ” promulgated in the NSR PM 2.5 Rule regarding the PM condensable provision at 40 CFR 51.166(b)(49)(vi), 52.21(b)(50)(i) and EPA's Emissions Offset Interpretative Ruling. See 77 FR 15656. The rulemaking proposes to remove the inadvertent requirement in the NSR PM 2.5 Rule that the measurement of condensable “particulate matter emissions” be included as part of the measurement and regulation of “particulate matter emissions.”  7 Mississippi's May 12, 2011, SIP revision adopts EPA's definition for “ regulated NSR pollutant ” for condensables (at 40 CFR 51.166(b)(49)(vi)), including the term “particulate matter emissions,” as promulgated in the NSR PM 2.5 Rule. On June 26, 2012, the State of Mississippi provided a letter to EPA clarifying the State's intent in light of EPA's March 12, 2012, proposed rulemaking and requesting that EPA not approve into the Mississippi SIP the term “particulate matter emissions” (as part of the definition for “ regulated NSR pollutant ”) regarding the inclusion of condensable emissions in applicability determinations and in establishing emissions limitations for PM.

In addition to direct PM 2.5 emissions, pollutants that can contribute to ambient PM 2.5 concentrations (known as “precursors”) include SO 2 , NO x , volatile organic compounds (VOC) and ammonia (all of which undergo chemical reactions to form secondary PM). In the NSR PM 2.5 Rule, EPA established a “presumed-in” approach for NO x as a PM 2.5 precursor. This approach is warranted based on the well-known transformation of NO x into nitrates, coupled with the fact that nitrate concentrations vary significantly around the country. The final NSR PM 2.5 Rule requires that states treat NO x as a PM 2.5 precursor in all areas unless the state demonstrates to the Administrator's satisfaction or EPA demonstrates that emissions of NO x from sources in a specific area are not a significant contributor to that area's ambient PM 2.5 concentrations. 8 See 40 CFR 51.166(b)(49)(i), 51.165(a)(1)(xxxvii) and 52.21(b)(50)(i). If EPA makes such a demonstration, or a state makes such a demonstration and it is approved by EPA, NO x would not be considered a PM 2.5 precursor under the NSR program in that area. If a State or EPA does not make such a demonstration, NO x must be regulated as a precursor under the PSD, NNSR, and minor source programs for PM 2.5. Mississippi's May 12, 2011, SIP revision IBR the provision that NO x is presumed to be a precursor for PM 2.5 . However, MDEQ also submitted to EPA a NO x insignificance demonstration to show that NO x emissions in the State of Mississippi are not contributing significantly to ambient PM 2.5 concentrations in the State. At this time, EPA is still considering Mississippi's NO x insignificance demonstration and will take action on this portion of MDEQ's May 12, 2011, SIP revision in a separate rulemaking.

The PM 2.5 PSD Increment-SILs-SMC Rule provided additional regulatory requirements under the PSD program regarding the implementation of the PM 2.5 NAAQS for NSR, including (1) PM 2.5 increments pursuant to section 166(a) of the CAA to prevent significant deterioration of air quality in areas meeting the NAAQS; (2) SILs used as a screening tool (by a major source subject to PSD) to evaluate the impact a proposed major source or modification may have on the NAAQS or PSD increment; and (3) a SMC, (also a screening tool) used by a major source subject to PSD to determine the subsequent level of data gathering required for a PSD permit application for emissions of PM 2.5 . The SILs and SMC are numerical values that represent thresholds of insignificant, i.e., de minimis, 9 modeled source impacts or monitored (ambient) concentrations, respectively. EPA established such values to be used as screening tools by a major source subject to PSD to determine the subsequent level of PM 2.5 analysis and data gathering required for a PSD permit application. EPA's authority to implement the SILs and SMC for PSD purposes has been challenged by the Sierra Club. Sierra Club v. EPA, Case No 10-1413 (DC Circuit Court). 10

PSD increments prevent air quality in clean areas from deteriorating to the level set by the NAAQS. Therefore, an increment is the mechanism used to estimate “significant deterioration”  11 of air quality for a pollutant in an area. Under section 165(a)(3) of the CAA, a PSD permit applicant must demonstrate that emissions from the proposed construction and operation of a facility “will not cause, or contribute to, air pollution in excess of any maximum allowable increase or allowable concentration for any pollutant.” When a source applies for a permit to emit a regulated pollutant in an area that meets the NAAQS, the state and EPA must determine if emissions of the regulated pollutant from the source will cause significant deterioration in air quality. As described in the PM 2.5 PSD Increment-SILs-SMC Rule, pursuant to the authority under section 166(a) of the CAA, EPA promulgated numerical PSD increments for PM 2.5 as a new pollutant  12 for which NAAQS were established after August 7, 1977, 13 and derived 24-hour and annual PM 2.5 increments for the three area classifications (Class I, II and III) using the “contingent safe harbor” approach. See 75 FR 64869 and ambient air increment tables at 40 CFR 51.166(c)(1) and 52.21(c). In addition to PSD increments for the PM 2.5 NAAQS, the PM 2.5 PSD Increment-SILs-SMC Rule amended the definition at 40 CFR 51.166 and 52.21 for “ major source baseline date” and ” minor source baseline date” (including trigger date) to establish the PM 2.5 NAAQS specific dates associated with the implementation of PM 2.5 PSD increments. See 75 FR 64864.

As mentioned above, the SMC numerical value represents a threshold of insignificant ( i.e., de minimis ) monitored ambient impacts on pollutant concentrations. In the PM 2.5 PSD Increment-SILs-SMC Rule, EPA established a PM 2.5 SMC of 4 µg/m 3 to be used as a screening tool by a major source subject to PSD to determine the subsequent level of PM 2.5 data gathering required for a PSD permit application. Using the SMC as a screening tool, sources may be able to demonstrate that the modeled air quality impact of emissions from the new source or modification, or the existing air quality level in the area where the source would construct, is less than the SMC ( i.e., de minimis ), and as such, may be allowed to forego the preconstruction monitoring requirement for a particular pollutant at the discretion of the reviewing authority.

Recently, the Sierra Club filed suit challenging EPA's authority to implement the PM 2.5 SILs  14 as well as the SMC for PSD purposes as promulgated in the October 20, 2012, rule. Sierra Club v. EPA, Case No. 10-1413, DC Circuit Court. Specifically, regarding the SMC, Sierra Club claims that the use of SMCs to exempt a source from submitting a year's worth of monitoring data is inconsistent with the CAA. EPA responded to Sierra Club's claims in a Brief dated April 6, 2012, which describes the Agency's authority to develop and promulgate SMC. 15 A copy of EPA's April 6, 2010, Brief can be found in the docket for today's final rulemaking at www.regulations.gov using docket ID: EPA-R04-OAR-2012-0081.

EPA is taking final action to approve into the Mississippi SIP portions of the State's May 12, 2011, SIP revision, which IBR the PSD permitting regulations to implement the PM 2.5 NAAQS. Mississippi's regulation APC-S-5 IBR the federal NSR PSD regulations at 40 CFR 51.166 and 52.21 into the Mississippi SIP. In effect, MDEQ's May 12, 2011, SIP revision updates the State's IBR date for APC-S-5 to March 22, 2011, to include PSD permitting regulations promulgated in the NSR PM 2.5 Rule and the PM 2.5 PSD Increment-SILs-SMC Rule in the Mississippi SIP. These changes to Mississippi's regulation APC-S-5 became state effective on June 2, 2011. MDEQ's SIP revision IBR the NSR PM 2.5 Rule PSD provisions at regulation APC-S-5, including: (1) The requirement for NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) significant emission rates for direct PM 2.5 and precursor pollutants (SO 2 and NO X ) and establishing PM 2.5 precursors (as amended at 40 CFR 51.166(b)(23)(i)) for the definition of “ significant” and “ regulated NSR pollutant, ” respectively; and (3) PSD requirement for states to address condensable PM in establishing enforceable emission limits for PM 10 and PM 2.5 (as amended at definition of “ regulated NSR pollutant “at 40 CFR 51.166(b)(49)).

Regarding the condensable provision, in light of Mississippi's request in its June 26, 2012, letter and EPA's intention to amend the definition of “regulated NSR pollutant” as discussed in the March 12, 2012, correction rulemaking, EPA is not taking final action to approve the terminology “particulate matter emissions” into the Mississippi SIP (at APC-S-5) for the condensable provision in the definition of “ regulated NSR pollutant. ” See 77 FR 15656. EPA is, however, taking final action to approve into the Mississippi SIP the remaining condensable requirement at 40 CFR 51.166(b)(49)(vi), which requires that condensable emissions be accounted for in applicability determinations and in establishing emissions limitations for PM 2.5 and PM 10. Mississippi's May 12, 2011, SIP revision did not IBR the grandfathering provision at 40 CFR 52.21(i)(1)(xi) in accordance with the repeal of the PM 2.5 grandfathering provision. Rather, the SIP revision includes new language at APC-S-5(2.7) that excludes the provision for PM 2.5 (at 40 CFR 52.21(i)(1)(xi)) from the PSD program regulations.

As stated in Mississippi's May 12, 2011, SIP revision, NO X will be considered a precursor to PM 2.5 in Mississippi until such time as EPA takes action on the State's NO X insignificance demonstration or upon plan disapproval. As part of MDEQ's May 12, 2011, revision to IBR the federal regulations at 40 CFR 51.166 and 52.21, EPA is taking final action, at this time, to approve into the Mississippi SIP that NO X is a presumed PM 2.5 precursor. EPA is considering Mississippi's NO X insignificance demonstration and will take action on this portion of the May 12, 2011, SIP submission in a separate rulemaking. Mississippi's May 12, 2011, SIP revision also removes from APC-S-5(2.7) language that excludes NSR PM 2.5 Rule permitting requirements from inclusion into the Mississippi SIP. 16 Because MDEQ's May 12, 2011, SIP revision adopts the aforementioned provisions promulgated in the May 16, 2008, NSR PM 2.5 Rule, the exclusion language is no longer necessary.

With respect to the PM 2.5 PSD Increment-SILs SMC Rule, EPA is taking final action to also approve into the Mississippi SIP the PSD increments for PM 2.5 annual and 24-hour NAAQS pursuant to section 166(a) of the CAA and SMC of 4 µg/m 3 for PM 2.5 NAAQS. The May 12, 2011, SIP revision IBR the PM 2.5 increments established in the ambient air increment tables at 40 CFR 51.166(c)(1) and (p)(4) and 52.21(c); the amendments to the “ major source baseline date ” (at 40 CFR 51.166(b)(14)(i)(c)) and 52.21(b)(14)(i)(c)); the “ minor source baseline date ” and establishment of the “trigger date” (40 CFR 51.166(b)(14)(ii)(c) and 52.21(b)(14)(ii)(c)); and the definition of “ baseline area ” (at 40 CFR 51.166(b)(15)(i) and (ii) and 52.21(b)(15)(i) and (ii)).

Regarding the SILs and SMC, EPA's authority to implement the PM 2.5 SILs and SMC is currently the subject of litigation by the Sierra Club. In a brief filed in the DC Circuit on April 6, 2012, EPA described the Agency's authority under the CAA to promulgate and implement the SMCs and SILs de minimis thresholds. Sierra Club v. EPA, Case No 10-1413 DC Circuit. However, EPA is finalizing approval of the promulgated SMC thresholds into the Mississippi SIP because the Agency believes the SMC is a valid exercise of the Agency's de minimis authority as well as the fact they are consistent with EPA's promulgated levels in the PM 2.5 PSD Increment-SILs-SMC Rule. The ongoing litigation may result in the court decision that may require subsequent rule revisions and SIP revisions from Mississippi.

In response to the litigation, EPA requested that the court remand and vacate the new regulatory text at 40 CFR 51.166(k)(2) and 52.21(k)(2) concerning the implementation of SILs for PM 2.5 so that EPA can make necessary rulemaking revisions to that text. 17 In light of EPA's request for remand and vacatur and our acknowledgement of the need to revise the regulatory text presently contained at paragraph (k)(2) of sections 51.166 and 52.21, the Agency has determined at this time not to approve the SILs portion of the MDEQ's May 12, 2011, SIP revision that contains the affected regulatory text in Mississippi's PSD regulations at APC-S-5. EPA will take action on the SILs portion of Mississippi's May 12, 2011, SIP revision in a separate rulemaking once the issue regarding the court case has been resolved. 18

EPA is taking final action to approve portions of Mississippi's May 12, 2011, SIP revisions (with the exception of the term “particulate matter emissions” and the SILs threshold and provisions) that IBR federal regulations amended in the NSR PM 2.5 and the PM 2.5 PSD Increment-SILs-SMC Rules to implement the PM 2.5 NAAQS for the NSR program because they are consistent with section 110 of the CAA and its regulations regarding NSR permitting.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

EPA is taking final action to approve portions of Alabama's May 2, 2011, SIP revision to adopt federal NSR permitting requirements and federal general and transportation conformity regulations into the SIP. Alabama's May 2, 2011, SIP revision includes changes to the regulations at Administrative Code for Division 3: Chapter 335-3-14— Permits and Chapter 335-3-17— Conformity of Federal Actions to State Implementation Plans. These changes adopt federal PSD permitting regulations promulgated in the final rulemakings entitled “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM 2.5 ),” 73 FR 28321 (May 16, 2008), hereafter referred to as the “NSR PM 2.5 Rule” and “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 )—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC),” 75 FR 64864 (October 20, 2010), hereafter referred to as the “PM 2.5 PSD Increment-SILs-SMC Rule.” Additionally, the SIP revision changes the State's general and transportation conformity regulations which incorporate by reference (IBR)  1 the federal conformity updates.

EPA is not approving in this action: (1) NNSR changes amended at rule 335-3-14-.05; 2 (2) SIL thresholds and provisions promulgated in EPA's PM 2.5 PSD Increment-SILs-SMC Rule, 75 FR 64864 (October 20, 2010); 3 and (3) the term “particulate matter emissions” when accounting for condensable particles for PM 2.5 emission limits for the definition of “regulated NSR pollutant,” 77 FR 15656 (March 16, 2012). EPA will consider action on the NNSR changes and SILs provisions separate from this rulemaking.

On August 6, 2012, EPA published a proposed rulemaking to approve the aforementioned changes to Alabama's SIP. See 77 FR 46664. Comments on the proposed rulemaking were due on or before September 7, 2012, and EPA received one off-topic comment. Although EPA has no obligation to respond to such comments, a brief response is provided in section III of this notice.

Pursuant to section 110 of the CAA, EPA is now taking final action to approve the changes to Alabama's SIP as provided in EPA's August 6, 2012, proposed rulemaking. A summary of the background for today's final action is provided below. EPA's August 6, 2012, proposed rulemaking contains more detailed information regarding the Alabama SIP revision being approved today and the rationale for today's final action. Detailed information regarding the PM 2.5 NAAQS and NSR Program can also be found in EPA's August 6, 2012, proposed rulemaking as well as the abovementioned final rulemakings.

On May 16, 2008, EPA finalized the NSR PM 2.5 Rule, which revised the NSR program requirements to establish the framework for implementing preconstruction permit review for the PM 2.5 NAAQS in both attainment areas and nonattainment areas (NAA) that: (1) Require NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) establish significant emission rates for direct PM 2.5 and precursor pollutants (including sulfur dioxide (SO 2 ) and nitrogen oxides (NOx)); (3) establish PM 2.5 emission offsets; (4) provide exceptions to the grandfathering policy for permits being reviewed under the PM 10 surrogate program; and (5) require states to account for gases that condense to form particles (condensables) in PM 2.5 and PM 10 emission limits in PSD NNSR permits. Additionally, the NSR PM 2.5 Rule authorized states to adopt provisions in their NNSR rules that would allow interpollutant offset trading. See 73 FR 28321. States were required to provide SIP submissions to address the requirements for the NSR PM 2.5 Rule by May 16, 2011. Alabama's May 2, 2011, SIP revision addresses both the PSD and NNSR requirements related to EPA's May 16, 2008, NSR PM 2.5 Rule. However, EPA is only taking final action on the PSD portion of the State's May 2, 2011, SIP revision.

In the NSR PM 2.5 Rule, EPA required that major stationary sources seeking permits must begin directly satisfying the PM 2.5 requirements, as of the effective date of the rule, rather than relying on PM 10 as a surrogate, with two exceptions. 4 The first exception is a “grandfathering” provision in the federal PSD program at 40 CFR 52.21(i)(1)(xi). This grandfathering provision applied to sources that had applied for, but had not yet received, a final and effective PSD permit before the July 15, 2008, effective date of the May 2008 final rule. The second exception was that states with SIP-approved PSD programs could continue to implement the Seitz Memo's PM 10 Surrogate Policy for up to three years (until May 2011) or until the individual revised state PSD programs for PM 2.5 are approved by EPA, whichever comes first. On May 18, 2011 (76 FR 28646), EPA took final action to repeal the grandfathering provision at 40 CFR 52.21(i)(1)(xi). This final action ended the use of the 1997 PM 10 Surrogate Policy for PSD permits under the federal PSD program at 40 CFR 52.21. In effect, any PSD permit applicant previously covered by the grandfathering provision (for sources that completed and submitted a permit application before July 15, 2008)  5 that did not have a final and effective PSD permit before the effective date of the repeal will not be able to rely on the 1997 PM 10 Surrogate Policy to satisfy the PSD requirements for PM 2.5 unless the application includes a valid surrogacy demonstration. 6 See 76 FR 28646. In its May 2, 2011, SIP revision, Alabama did not adopt the grandfathering provision at 40 CFR 52.21(i)(1)(xi) into its PSD regulations. Therefore, Alabama's SIP is consistent with current federal regulations regarding the repeal of the grandfathering provision.

In the NSR PM 2.5 Rule, EPA revised the definition of “ regulated NSR pollutant” for PSD to add a paragraph providing that “particulate matter (PM) emissions, PM 2.5 emissions and PM 10 emissions” shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures and that on or after January 1, 2011, such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM, PM 2.5 and PM 10 in permits issued. See 40 CFR 51.166(b)(49)(vi), 52.21(b)(50)(vi) and “Emissions Offset Interpretative Ruling” (40 CFR Part 51, Appendix S). On March 16, 2012, EPA proposed a rulemaking to amend the definition of “ regulated NSR pollutant ” promulgated in the NSR PM 2.5 Rule regarding the PM condensable provision at 40 CFR 51.166(b)(49)(vi), 52.21(b)(50)(i) and EPA's Emissions Offset Interpretative Ruling. See 77 FR 15656. The rulemaking proposes to remove the inadvertent requirement in the NSR PM 2.5 Rule that the measurement of condensable “particulate matter emissions” be included as part of the measurement and regulation of “particulate matter emissions.”  7 On June 18, 2012, the State of Alabama provided a letter to EPA clarifying the State's intent in light of EPA's March 16, 2012, proposed rulemaking and requesting that EPA not approve into the Alabama SIP the term “particulate matter emissions” (as part of the definition for “ regulated NSR pollutant” ) regarding the inclusion of condensable emissions in applicability determinations and in establishing emissions limitations for PM.

The PM 2.5 PSD Increment-SILs-SMC Rule provided additional regulatory requirements under the PSD program regarding the implementation of the PM 2.5 NAAQS for NSR including: (1) PM 2.5 increments pursuant to section 166(a) of the CAA to prevent significant deterioration of air quality in areas meeting the NAAQS; (2) SILs used as a screening tool (by a major source subject to PSD) to evaluate the impact a proposed major source or modification may have on the NAAQS or PSD increment; and (3) a SMC, (also a screening tool) used by a major source subject to PSD to determine the subsequent level of PM 2.5 data gathering required for a PSD permit application. The SILs and SMC are numerical values that represent thresholds of insignificant, i.e., de minimis, 8 modeled source impacts or monitored (ambient) concentrations, respectively. EPA established such values to be used as screening tools by a major source subject to PSD to determine the subsequent level of analysis and data gathering required for a PSD permit application for emissions of PM 2.5 . EPA's authority to implement the SILs and SMC for PSD purposes has been challenged by the Sierra Club. Sierra Club v. EPA, Case No. 10-1413 (D.C. Circuit Court). 9

PSD increments prevent air quality in clean areas from deteriorating to the level set by the NAAQS. Therefore, an increment is the mechanism used to estimate “significant deterioration”  10 of air quality for a pollutant in an area. Under section 165(a)(3) of the CAA, a PSD permit applicant must demonstrate that emissions from the proposed construction and operation of a facility “will not cause, or contribute to, air pollution in excess of any maximum allowable increase or allowable concentration for any pollutant.” When a source applies for a permit to emit a regulated pollutant in an area that meets the NAAQS, the state and EPA must determine if emissions of the regulated pollutant from the source will cause significant deterioration in air quality. As described in the PM 2.5 PSD Increment-SILs-SMC Rule, pursuant to the authority under section 166(a) of the CAA, EPA promulgated numerical PSD increments for PM 2.5 as a new pollutant  11 for which NAAQS were established after August 7, 1977, 12 and derived 24-hour and annual PM 2.5 increments for the three area classifications (Class I, II and III) using the “contingent safe harbor” approach. See 75 FR 64869 and the ambient air increment tables at 40 CFR 51.166(c)(1) and 52.21(c). In addition to PSD increments for the PM 2.5 NAAQS, the PM 2.5 PSD Increment-SILs-SMC Rule amended the definition at 40 CFR 51.166 and 52.21 for “ major source baseline date ” and “ minor source baseline date ” (including trigger date) to establish the PM 2.5 NAAQS specific dates associated with the implementation of PM 2.5 PSD increments. See 75 FR 64864.

The primary purpose of the SILs is to identify a level of ambient impact that is sufficiently low relative to the NAAQS or increments that such impact can be considered insignificant or de minimis. EPA's policy has been to allow the use of the SILs as de minimis thresholds under the NSR programs at 40 CFR 51.165(b) and part 51, appendix S, to determine whether the predicted ambient impact resulting from the emissions increase at a proposed major new stationary source or modification is considered to cause or contribute to a violation of the NAAQS. 13

In the PM 2.5 PSD Increment-SILs-SMC Rule, EPA established the SILs threshold which reflects the degree of ambient impact on PM 2.5 concentrations that can be considered de minimis and would justify no further analysis or modeling of the air quality impact of a source in combination with other sources in the area because the source would not cause or contribute to an exceedance of the PM 2.5 NAAQS or the PM 2.5 increments. See 75 FR 64864. When a proposed major new source or major modification projects (using air quality modeling) a PM 2.5 impact less than the PM 2.5 SILs, the proposed construction or modification is considered to not have a significant air quality impact and would not need to complete a cumulative impact analysis involving an analysis of other sources in the area. Additionally, a source with a de minimis ambient impact would not be considered to cause or contribute to a violation of the PM 2.5 NAAQS or increments.

The October 20, 2010, rule established the PM 2.5 SILs in EPA's existing NNSR regulations at 51.165(b) 14 and the PSD regulations at 40 CFR 51.166(k)(2), 52.21(k)(2) and part 51, appendix S, as optional screening tools that became effective on December 20, 2010. Prior to the October 20, 2010, rule, the concept of a SIL was not previously incorporated into the PSD regulations. Where a PSD source located in such areas may have an impact on an adjacent nonattainment area, the PSD source must still demonstrate that it will not cause or contribute to a violation of the NAAQS in the adjacent area. Where emissions from a proposed PSD source or modification would have an ambient impact in a nonattainment area that would exceed the SILs, the source is considered to cause or contribute to a violation of the NAAQS and may not be issued a PSD permit without obtaining emissions reductions to compensate for its impact. See 40 CFR 51.165(b)(2)-(3). Alabama's May 2, 2011, SIP submittal addresses the PM 2.5 SILs thresholds and provisions promulgated in the October 20, 2010, rule at 40 CFR 51.165(b)(2) and 51.166(k)(2).

As mentioned above, the SMC numerical value represents a threshold of insignificant ( i.e., de minimis ) monitored ambient impacts on pollutant concentrations. In the PM 2.5 PSD Increment-SILs-SMC Rule, EPA established a PM 2.5 SMC of 4 µg/m 3 to be used as a screening tool by a major source subject to PSD to determine the subsequent level of PM 2.5 data gathering required for a PSD permit application. Using the SMC as a screening tool, sources may be able to demonstrate that the modeled air quality impact of emissions from the new source or modification, or the existing air quality level in the area where the source would construct, is less than the SMC ( i.e., de minimis ), and as such, may be allowed to forego the preconstruction monitoring requirement for a particular pollutant at the discretion of the reviewing authority.

Recently, the Sierra Club filed suit challenging EPA's authority to implement the PM 2.5 SILs  15 as well as the SMC for PSD purposes as promulgated in the October 20, 2012, rule. Sierra Club v. EPA, Case No 10-1413, D.C. Circuit Court. Specifically, regarding the SMC, Sierra Club claims that the use of SMCs to exempt a source from submitting a year's worth of monitoring data is inconsistent with the CAA. EPA responded to Sierra Club's claims in a Brief dated April 6, 2012, which describes the Agency's authority to develop and promulgate SMC. 16 A copy of EPA's April 6, 2010, Brief can be found in the docket for today's final rulemaking at www.regulations.gov using docket ID: EPA-R04-OAR-2012-0079.

In addition to the adoption of NSR Federal regulations mentioned above, Alabama's SIP revision updates the State's General and Transportation Conformity regulations  17 at Chapter 335-3-17— Conformity of Federal Actions to State Implementation Plans. Alabama's Conformity regulations at 335-3-17 include Transportation Conformity rules at 335-3-17.01 and General Conformity rules at 335-3-17.02. The May 2, 2011, SIP revision updates Alabama conformity regulations at Chapter 335-3-17 to be consistent with recent updates to federal General Conformity  18 regulations promulgated on April 5, 2010 ( See 75 FR 17254) and transportation conformity regulations regarding implementation of the PM 2.5 and PM 10 nonattainment and maintenance areas.

As was noted previously, EPA proposed approval of portions of Alabama's May 2, 2011, SIP revision on August 6, 2012, and EPA received one off-topic comment. Although EPA is not obligated to respond to off-topic comments, EPA is nonetheless providing a brief response below. The complete comment is available in the docket for this rulemaking action, but a summary of the comment is as follows. The Commenter states that s/he “would like to see the science research they put into this” and suggested that, “an independent review board to look into this with an unbiased opinion.” As was explained in the detailed August 6, 2012, proposed rulemaking and supporting docketed information, EPA is obligated to take action on Alabama's May 2, 2011, SIP revision. The technical and legal basis for today's action was explained in the August 6, 2012, rulemaking, summarized in this final action, and further supported by the additional information provided in the docket for today's rulemaking action. Nothing in the CAA mandates that an independent review board look into today's SIP action. Notably, the comment raises nothing substantively on-point regarding this rulemaking action; but rather, makes broad generalizations that do not appear relevant to today's action.

EPA is now taking final action to approve into the Alabama SIP portions of the State's May 2, 2011, SIP revision to adopt the PSD permitting regulations to implement the PM 2.5 NAAQS, including the NSR PM 2.5 and PM 2.5 Increment-SILs-SMC Rules and changes to the State's General and Transportation Conformity regulations as proposed on August 6, 2012. See 77 FR 46664. ADEM's PSD preconstruction regulations are found at rule 335-3-14-.04 and apply to major stationary sources or modifications constructed in areas designated attainment or unclassifiable/attainment as required under part C of title I of the CAA with respect to the NAAQS. Additionally, rule 335-3-14-.03 establishes general standards for granting permits in the State. ADEM's May 2, 2011, changes to Chapter 335-3-14 were submitted to adopt into the State's NSR permitting program PSD provisions promulgated in the NSR PM 2.5 Rule and the PM 2.5 PSD Increment-SILs-SMC rule. These changes to Alabama's regulations became state effective on May 23, 2011. ADEM's SIP revision adopts the NSR PM 2.5 Rule PSD provisions, including: (1) The requirement for NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) the amendment establishing significant emission rates for direct PM 2.5 and precursor pollutants (SO 2 and NO X ) (at 335-3-14-.04(2)(w)) and recognizing PM 2.5 precursors (at 335-3-14-.04(2)(b) and 335-3-14-.04(2)(w)) as amended at 40 CFR 51.166(b)(23)(i); and (3) the PSD requirement for states to address condensable PM in establishing enforceable emission limits for PM 10 and PM 2.5 (at 353-14-.04(2)(ww)(5)) as amended at 40 CFR 51.166(b)(49). Additionally, Alabama's May 2, 2011, SIP revision did not adopt the grandfathering provision at 40 CFR 52.21(i)(1)(xi) in accordance with the repeal of the PM 2.5 grandfathering provision. As mentioned earlier, EPA anticipates taking action on the May 2, 2011, SIP revision NNSR amendments in a separate rulemaking. Regarding the condensable provision, in light of Alabama's request in its June 18, 2012, letter and EPA's intention to amend the definition of “regulated NSR pollutant” as discussed in the March 16, 2012, correction rulemaking, EPA is not taking final action to approve the terminology “particulate matter emissions” into the Alabama SIP (at 353-14-.04(2)(ww)(5)) for the condensable provision in the definition of “ regulated NSR pollutant.” See 77 FR 15656. EPA is, however, taking final action to approve into the Alabama SIP the remaining condensable requirement at 40 CFR 51.166(b)(49)(vi), which requires that condensable emissions be accounted for in applicability determinations and in establishing emissions limitations for PM 2.5 and PM 10.

With respect to the PM 2.5 PSD Increment-SILs SMC Rule, EPA is taking final action to also approve into the Alabama SIP the PSD increments for the PM 2.5 annual and 24-hour NAAQS pursuant to section 166(a) of the CAA and the SMC of 4 µg/m 3 for the PM 2.5 NAAQS. The May 2, 2011, SIP revision includes: (1) The PM 2.5 increments as promulgated at 40 CFR 51.166(c)(1) and (p)(4) (for Class I Variances) and (2) amendments to the terms “ major source baseline date” (at 353-14-.04(2)(m)) as amended at 40 CFR 51.166(b)(14)(i)(c) and 52.21(b)(14)(i)(c), “ minor source baseline date” (including establishment of the “trigger date”) (at 353-14-.04(2)(n)1), and “ baseline area” (at 353-14-.04(2)(o)) as amended at 51.166(b)(15)(i) and (ii) and 52.21(b)(15)(i).

Regarding the SILs and SMC, EPA's authority to implement the PM 2.5 SILs and SMC is currently the subject of litigation by the Sierra Club. In a brief filed in the D.C. Circuit on April 6, 2012, EPA described the Agency's authority under the CAA to promulgate and implement the SMCs and SILs de minimis thresholds. Sierra Club v. EPA, Case No. 10-1413 D.C. Circuit. However, EPA is finalizing approval of the promulgated SMC thresholds into the Alabama SIP (at rule 335-3-14.04(8)(h)) because the Agency believes the SMC is a valid exercise of the Agency's de minimis authority as well as the fact they are consistent with EPA's promulgated levels in the PM 2.5 PSD Increment-SILs-SMC Rule. The ongoing litigation may result in the court decision that may require subsequent rule revisions and SIP revisions from Alabama.

In response to the litigation, EPA requested that the court remand and vacate the new regulatory text at 40 CFR 51.166(k)(2) and 52.21(k)(2) concerning the implementation of SILs for PM 2.5 so that EPA can make necessary rulemaking revisions to that text. 19 In light of EPA's request for remand and vacatur and our acknowledgement of the need to revise the regulatory text presently contained at paragraph (k)(2) of sections 51.166 and 52.21, the Agency has determined at this time not to approve the SILs portion of ADEM's May 2, 2011, SIP revision that contains the affected regulatory text in Alabama's PSD regulations at rule at rule 335-3-14-04(10)(b). EPA will take action on the SILs portion of Alabama's May 2, 2011, SIP revision in a separate rulemaking once the issue regarding the court case has been resolved. 20 The PM 2.5 PSD Increment-SILs-SMC rule promulgated PM 2.5 SILs thresholds in the NNSR regulations at 40 CFR 51.165(b)(2). Alabama's May 2, 2011, submission also adopts the PM 2.5 SILs thresholds in their general permits provisions at rule 335-3-14-.03(1)(g)  21 to be consistent with amendments to 40 CFR 51.165(b) in the PM 2.5 PSD Increment-SILs-SMC Rule. In light of the facts that EPA did not request the court to remand and vacate language at 51.165(b) and that the agency has explained its authority to develop and promulgate SILs in the brief filed with the D.C. Circuit Court concerning the litigation, EPA is taking final action to approve Alabama's adoption of the PM 2.5 SILs thresholds at 335-3-14-.03(1)(g). EPA notes, however, that the SILs-SMC litigation is ongoing and therefore future Court action may require subsequent rule revisions and SIP submittals from the State of Alabama.

Finally, EPA is taking final action to approve Alabama's changes to the State's General and Transportation conformity regulations to be consistent with Federal regulations. These changes include updating the IBR date at 335-3-17.02 to July 1, 2010, to be consistent with Federal General Conformity rules (as promulgated on April 5, 2010) and to update the Transportation Conformity SIP at 335-3-17-.01 effective May 23, 2011, to include EPA's transportation conformity rule updates regarding implementation of the PM 2.5 and PM 10 nonattainment and maintenance areas.

EPA is taking final action to approve portions of Alabama's May 2, 2011, SIP revisions (with the exception of the term “particulate matter emissions,” the NNSR revisions and the SILs threshold and provisions) adopting federal regulations amended in the NSR PM 2.5 and the PM 2.5 PSD Increment-SILs-SMC Rules to implement the PM 2.5 NAAQS for the NSR program because they are consistent with section 110 of the CAA and its regulations regarding NSR permitting.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 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.

Under FFDCA section 408(g), 21 U.S.C. 346a, 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-2009-0813 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 November 26, 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 (excluding 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 the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2009-0813, 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 statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (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 Registers of January 6, 2010 (75 FR 864) (FRL-8801-5) and March 19, 2010 (75 FR 13277) (FRL-8813-2), EPA issued notices pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of pesticide petitions; (PP 9E7604) by Interregional Research Project Number 4 (IR-4), IR-4 Project Headquarters, 500 College Road East, Suite 201 W, Princeton, NJ 08540 and (PP 9F7655) by Bayer CropScience LP, 2 T. W. Alexander Drive, Research Triangle Park, NC 27709, respectively. The petitions requested that 40 CFR 180.473 be amended by establishing tolerances for residues of the herbicide glufosinate ammonium, butanoic acid, 2-amino-4-(hydroxymethylphosphinyl)- monoammonium salt, and its metabolites, 2-acetylamino-4-methylphosphinico-butanoic acid and 3-methylphosphinico-propionic acid, calculated as the stoichiometric equivalent of 2-amino-4-(hydroxymethylphosphinyl), in or on corn, sweet, forage at 4.0 parts per million (ppm); corn, sweet, kernel plus cob with husks removed at 0.2 ppm; corn, sweet, stover at 6.0 ppm (PP 9E7604); citrus, fruit (crop group 10) at 0.05 ppm; olives at 0.05 ppm; pome, fruit (crop group 11) at 0.10 ppm; and stone fruit (crop group 12) at 0.10 ppm (PP 9F7655). These notices referenced a summary of the petition prepared by Bayer CropScience LP, 2 T. W. Alexander Drive, Research Triangle Park, NC 27709, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notices of filing.

Based upon review of the data supporting the petition, EPA is: (1) Correcting certain crop definitions to comply with current Agency policies; (2) establishing tolerance levels for certain commodities other than the proposed levels; (3) removing the proposed tolerance for plum, prune, dried; (4) modifying the crop group tolerances requested to the revised and expanded citrus fruit group 10-10, pome fruit group 11-10 and stone fruit group 12-12; and 5) revising the tolerance expression for all established commodities to be consistent with current Agency policy. The reasons for these changes are explained in Unit IV. C.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(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. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance 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. * * *”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for glufosinate ammonium including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with glufosinate ammonium follows.

EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Technical grade glufosinate ammonium has low toxicity in the oral, dermal, inhalation studies and is not an eye or dermal irritant or a dermal sensitizer.

Subchronic toxicity studies in rats showed inhibition of glutamate synthetase and lead the Agency to conclude that the changes in brain glutamine synthetase activity are of significant concern for possible neurotoxicity and/or expression of clinical signs. Observed alterations in liver and kidney glutamate synthetase are considered an adaptive response. The primary effects in the mouse subchronic study were increased liver and kidney weights with increases in serum aspartate amino transferase and alkaline phosphatase.

Additional toxicity testing was conducted with the L-isomer of glufosinate ammonium, and degradates glufosinate propanoic acid (MPP), and 2-acetamido-4-methylphosphinico-butanoic acid (NAG). These compounds, tested in subchronic rat, mouse, and dog studies, and in developmental toxicity studies in rat and rabbit, are generally less toxic than the parent compound. However, L-isomer of glufosinate ammonium was found to be slightly more toxic than the racemic parent compound. This finding is not concern since this isomer is included in the toxicity testing of the parent compound at the levels in the technical material.

In chronic studies in the rat, inhibition of brain glutamine synthetase, increased mortality, and increased occurrence of retinal atrophy were noted, as were increased liver and kidney weights. In the mouse, increased mortality was noted, as were changes in glucose levels consistent with changes in glutathione levels. Increased mortality and electrocardiogram alterations were observed in dogs. The developmental toxicity study in the rat produced dilated renal pelvis and/or hydroureter in the fetuses at levels that produced significant increases in hyperactivity and vaginal bleeding in dams. In the rabbit, decreased fetal body weight and increased mortality were observed at 20 milligrams/kilogram/day (mg/kg/day), while in rabbit dams, decreased food consumption, body weight, and body weight gain were observed at 20 mg/kg/day. Since increased fetal mortality was observed in the presence of less severe maternal toxicity in the rabbit developmental study, there is evidence of qualitative increased susceptibility in fetuses.

The reproductive toxicity study in rats indicated postnatal developmental toxicity at the highest dose tested in the form of decrease in viable pups. No parental toxicity was seen at the highest dose tested. Since pup mortality was observed in the absence of parental toxicity, there is evidence of quantitative increased susceptibility in offspring.

There were indications of neurotoxicity in several studies. Of particular concern is that the developmental neurotoxicity study demonstrated alterations in brain morphometrics in the adult offspring exposed in utero or during lactation at dose levels not associated with maternal toxicity. Retinal atrophy was observed in a rat oral study. In the 90-day dietary neurotoxicity study, increases in the incidence of decreased exploratory activity, decreased alertness, and decreased startle response, increased incidence of fearfulness, increased pain response and meiosis were reported. The subchronic dermal toxicity study indicated aggressive behavior, a high startle response and piloerection. The 28-day subchronic inhalation study demonstrated tono-clonic convulsions at the high dose in at least some males. However, in a 37-day dietary neurotoxicity study, there was no evidence of neurotoxicity at doses up to 143.3 mg/kg/day. There was no evidence of neurotoxicity in two acute neurotoxicity studies at doses up to 500 mg/kg/day. Also, there was no evidence of neurotoxicity in White Leghorn hens following an acute dose of up to 10,000 mg/kg. Changes in glutamine synthetase levels were observed in liver, kidney, and brain in rats. The altered electrocardiograms seen in the dog studies imply a possible neuromuscular effect.

There is no concern for immunotoxicity based on an adequate database.

There is no concern for mutagenic activity in several available studies including: Salmonella E. Coli, in vitro mammalian cell gene mutation assays, mammalian cell chromosome aberration assays, in vivo mouse bone marrow micronucleus assays, and unscheduled DNA synthesis assays.

Glufosinate ammonium was classified as “not likely to be a human carcinogen.” There was no evidence of a treatment-related increase in tumors in either rats or mice.

Specific information on the studies received and the nature of the adverse effects caused by glufosinate ammonium as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document “Glufosinate Ammonium. Updated Human Health Risk Assessment for the Proposed New Use of Glufosinate Ammonium in/on Citrus Fruit (Crop Group 10), Pome Fruit (Crop Group 11), Stone Fruit (Crop Group 12), Olives and Sweet Corn”, dated July 25, 2012 at page number 34 in docket ID number EPA-HQ-OPP-2009-0813.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm.

A summary of the toxicological endpoints for glufosinate ammonium used for human risk assessment is shown in the following Table.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to glufosinate ammonium, EPA considered exposure under the petitioned-for tolerances as well as all existing glufosinate ammonium tolerances in 40 CFR 180.473. EPA assessed dietary exposures from glufosinate ammonium in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

Such effects were identified for glufosinate ammonium for females 13 through 50 years old. In estimating acute dietary exposure assessment of glufosinate ammonium, EPA used the Dietary Exposure Evaluation Model software with the Food Commodity Intake Database DEEM-FCID TM , Version 3.10, which incorporates consumption data from USDA's National Health and Nutrition Examination Survey/“What We Eat in America” (NHANES/WWEIA) dietary survey conducted in 2003-2008. The 2003-2008 data are based on the reported consumption of individuals over two non-consecutive survey days.

As to residue levels in food, EPA assumed tolerance level residues for all established and recommended tolerances along with default processing factors, and 100 percent crop treated (PCT) assumptions.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA also used the Dietary Exposure Evaluation Model software with the Food Commodity Intake Database DEEM-FCID TM , Version 3.10.

As to residue levels in food, EPA used anticipated residues based on average residue levels from field trial studies. The DEEM default processing factors were used for all commodities except apple juice, pear juice, grape juice, and raisins, for which factors derived from the processing studies were used in the assessment. One hundred percent crop treated values were used for all proposed new uses and some registered uses. Average PCT estimates were used in the chronic dietary analysis for crops that are currently registered for glufosinate ammonium if available.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that glufosinate ammonium does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and percent crop treated (PCT) information. Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area.

In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.

The Agency estimated the average PCT for existing uses as follows: Almond: 15%; blueberry: 5%; field corn, 5%; grape, 15%; pecan, 1%; potato, 10%; soybean, 1%; walnut, 10%; canola, 25%; cotton, 5%; filbert, 10%; pistachio, 20%; and rice, 1%.

In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and the National Pesticide Use Database for the chemical/crop combination for the most recent 6-7 years. EPA uses an average PCT for chronic dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than one. In those cases, 1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA uses a maximum PCT for acute dietary risk analysis. The maximum PCT figure is the highest observed maximum value reported within the recent 6 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which glufosinate ammonium may be applied in a particular area.

2. Dietary exposure from drinking water. The Agency used refined drinking water exposure models in the dietary exposure analysis and risk assessment for glufosinate ammonium. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of glufosinate ammonium. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm.

Environmental fate studies indicate glufosinate ammonium is relatively stable and is very mobile. The main degradation pathway in water and soil is via microbial action, metabolizing primarily to CO 2 , glufosinate propanoic acid (MPP), 2-methylphosphinico acetic acid (MPA), and 2-acetamido-4-methylphosphinico-butanoic acid (NAG). EPA recently reconsidered the appropriate residues of concern for drinking water to be used in risk assessment and determined that only the parent, glufosinate ammonium is the residue of concern for drinking water. Though MPA is a major degradate in some studies, a 90-day rat feeding study showed no effects at the highest dose tested which is about 100-fold higher than the NOAEL of the parent. Based on the rabbit developmental studies NAG is considered slightly less toxic than the parent. However, it was only observed as a major degradate during photolysis in soil; therefore, its exposure is significantly lower to that of the parent in drinking water. The parent glufosinate ammonium and MPP show different toxicities and therefore should not be aggregated. Moreover, the Agency has determined that the acute concentrations of MPP are not likely to be significantly greater than that of glufosinate in drinking water. However, given the minimal fate data available for MPP that indicates MPP does not degrade in aerobic aquatic environments, it is unclear if this will be true for chronic concentrations of MPP and glufosinate. Since MPP is considered less toxic than the parent compound and should not be aggregated with the parent, EPA concluded that if estimated drinking water concentrations (EDWCs) of MPP are not significantly greater than those for glufosinate, the risk assessment for the parent will be protective of any toxicity associated with exposure to MPP in drinking water.

Previous analyses for glufosinate ammonium demonstrated that the maximum acute and chronic EDWCs result from surface water estimates arising from the rice use; the surface water values for rice are nearly an order of magnitude higher than any surface or ground water values for any other use of glufosinate ammonium. Therefore, a comprehensive refinement of the drinking water assessment for the rice use of glufosinate ammonium, should be protective of other uses.

The Agency estimated acute EDWCs for glufosinate ammonium and MPP using the Tier I Rice Model and Pesticide Flooded Application Model (PFAM) [version 0.70] without the index reservoir. To estimate chronic EDWCs, the acute concentrations from PFAM without the index reservoir were assumed to degrade over a 365-day period, using aerobic aquatic degradation half-lives; thus allowing calculation of average concentrations over a one-year period. This method results in chronic values approximately 76% and 3% lower than the acute values for glufosinate-ammonium and MPP, respectively.

The EDWCs for surface water are expected to be 390 parts per billion (ppb) for glufosinate and 183 ppb for MPP for acute exposures. The EDWCs for surface water are expected to be 95 ppb for glufosinate and 177 ppb for MPP for chronic exposures. The maximum chronic EDWC for rice for MPP is approximately 2X higher than the corresponding value for glufosinate: 177 and 95 ppb, respectively. Since MPP is considered less toxic than the parent compound and should not be aggregated with the parent, EPA concluded that if the EDWCs for MPP are not significantly greater than those for glufosinate, the risk assessment for the parent will be protective of any toxicity associated with exposure to MPP in drinking water. Given the estimated EDWCs for MPP concentrations are not likely to be more than twice the corresponding levels of glufosinate in drinking water, EPA concluded a quantitative risk assessment for MPP in drinking water is not needed. Accordingly, for purposes of acute and chronic dietary analyses, the recommended glufosinate EDWCs are 390 and 95 ppb, respectively.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 390 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 95 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Glufosinate ammonium is currently registered for the following uses that could result in residential exposures: spot treatments of lawns and turf. EPA assessed residential exposure using the following assumptions:

Residential handler exposure is expected to be short-term. Intermediate-term exposures are not likely because of the intermittent nature of applications by homeowners. Dermal and inhalation exposures are possible for applications from mixing/loading/applying liquids with a hose-end sprayer, a backpack sprayer, and a sprinkler can and applications for manually pressurized handgun. However, only the dermal route of exposure was included in the aggregate analysis since potential dermal risks are higher than potential inhalation risks and the EPA determined it is not appropriate to aggregate the dermal and inhalation exposures since the toxicity endpoints are different.

The Agency did not quantify post-application exposures. Post-application exposure is expected to be minimal. Any exposure to children via incidental non-dietary ingestion (i.e., hand-to-mouth, object-to-mouth (turfgrass), and soil ingestion) after application to treated turf is expected to be low since treatments to lawns and turf are limited to spot treatments.

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www.epa.gov/pesticides/trac/science/trac6a05.pdf.

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

EPA has not found glufosinate ammonium to share a common mechanism of toxicity with any other substances, and glufosinate ammonium does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that glufosinate ammonium does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals 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.

1. In general. Section 408(b)(2)(C) of FFDCA 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 based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. The reproductive toxicity study in rats indicated postnatal developmental toxicity at the highest dose tested in the form of decrease in viable pups. No parental toxicity was seen at the highest dose tested. Since pup mortality was observed in the absence of parental toxicity, there is evidence of quantitative increased susceptibility in offspring. Although in the rat developmental toxicity study dilated renal pelvis and hydroureter were observed in fetuses at 250 mg/kg/day, significant toxicity in the dams occurred at lower doses (vaginal bleeding and hyperactivity in the dams at 50 mg/kg/day), doses at which no developmental effects were observed. Therefore, no increased sensitivity was seen in this study.

Since increased fetal mortality was observed in the presence of less significant maternal toxicity in the rabbit developmental study, there is evidence of qualitative increased susceptibility in fetuses. Finally, the developmental neurotoxicity study demonstrated alterations in brain morphometrics in the adult offspring exposed in utero or during lactation at dose levels not associated with maternal toxicity. This shows quantitative sensitivity in the young.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA safety factor were reduced to 1X for acute dietary exposure. For all other exposure scenarios where the developmental neurotoxicity study or the 28-day inhalation study is used as an endpoint for risk assessment, EPA is retaining a 10X FQPA safety factor. That decision is based on the following findings:

i. Although all required studies for glufosinate ammonium have been submitted, the glufosinate ammonium database has a completeness issue in that the developmental neurotoxicity and the 28-day inhalation studies used for risk assessment did not demonstrate NOAELs, and LOAELs were used as endpoints. Therefore, the 10X FQPA safety factor was retained for use of a LOAEL to extrapolate a NOAEL. EPA has reduced the 10X safety factor when relying on a LOAEL in circumstances that suggest that the LOAEL is approaching a NOAEL ( e.g., very minimal effects seen at the LOAEL). EPA, however has no reliable data supporting selection of a different safety factor value other than the default value of 10X for glufosinate ammonium.

ii. Although there were indications of neurotoxicity in several studies, the PODs and safety factors chosen for risk assessment are protective for these effects. The developmental neurotoxicity study showed altered brain morphometrics at the LOAEL, and this study is used in the weight-of-the evidence decision-making process for selection of an endpoint. Applying the 10X FQPA Safety Factor for the LOAEL to NOAEL extrapolation, as well as the 10X inter- and intra-species uncertainty factors, to this LOAEL will be protective against possible neurotoxicity as indicated in the laboratory animal studies.

iii. Although there is evidence that glufosinate ammonium results in increased qualitative or quantitative susceptibility in the developmental neurotoxicity study (rats), a prenatal developmental study (rabbits), and in the 2-generation reproduction study (rats), the PODs selected for risk assessment are protective for these effects because they are either based on clear NOAELs for the effects in young animals or they are based on a LOAEL adjusted by a 10X safety factor to account for the lack of a NOAEL in that study.

iv. There are no residual uncertainties identified in the exposure databases. The acute dietary food exposure assessment was performed based on 100 PCT and tolerance-level residues. The chronic dietary exposure analysis was performed using anticipated residues from field trial data, processing factors, and PCT information. With limited monitoring data available, upper-bound assumptions were used to determine exposure through drinking water sources. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to glufosinate ammonium in drinking water. These assessments will not underestimate the exposure and risks posed by glufosinate ammonium.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to glufosinate ammonium will occupy 39% of the aPAD for females 13-49 years old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to glufosinate ammonium from food and water will utilize 98% of the cPAD for all infants (<1 year old) the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of glufosinate ammonium is not expected.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Glufosinate ammonium is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to glufosinate ammonium.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 1,800 for the general population for mixer/loader/applicators. Because EPA's level of concern for glufosinate ammonium is an MOE of 1,000 or below, these MOEs are not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

An intermediate-term adverse effect was identified; however, glufosinate ammonium is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for glufosinate ammonium.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, glufosinate ammonium is not expected to pose a cancer risk to humans.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to glufosinate ammonium residues.

Two analytical methods have been validated by EPA for enforcement of the currently established tolerances: (1) Method HRAV-5A for the determination of glufosinate ammonium and glufosinate propanoic acid in/on apple, grape, almond, soybean seed, corn grain, and corn forage, and (2) Method BK/01/99 for determination of glufosinate ammonium, N -acetyl-glufosinate, and glufosinate propanoic acid in/on canola seed and sugar beet root.

Based on the similarity in the two methods and the results from the petition method validations (PMVs), EPA concludes that method BK/01/99 is a suitable method for enforcement of sweet corn, stone fruit, pome fruit, citrus fruit, and olive tolerances.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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. 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 MRLs for glufosinate ammonium in or on olives and sweet corn commodities. However, for glufosinate ammonium in or on citrus fruit, pome fruit, and stone fruit, Codex has set MRLs of 0.1, 0.05, and 0.05 ppm, respectively. EPA is establishing tolerances in this action for citrus fruit, pome fruit, and stone fruit, at 0.15, 0.25, and 0.25 ppm, respectively. EPA cannot harmonize these tolerance values with the Codex MRLs because the lower MRLs could be exceeded with the uses petitioned-for in this action.

EPA modified/revised certain IR-4 proposed tolerances for glufosinate ammonium residues. Higher tolerance levels were established for citrus, pome fruit, stone fruit, and olives because EPA concluded that it was appropriate to sum the full level of quantification (LOQ) for each of the three residues of concern in situations where < LOQ residue levels were found. Sweet corn tolerances were amended based on results from the Organization for Economic Co-operation and Development (OECD) tolerance calculation procedures the corn, sweet, K+CWHR tolerance proposed at 0.2 ppm will be established at 0.30 ppm, corn, sweet, forage tolerance proposed at 4.0 ppm will be established at 1.5 ppm. A separate prune tolerance was established as residues in this processed commodity are covered by the stone fruit group tolerance.

Additionally, EPA was petitioned for tolerances on citrus fruit group 10, pome fruit group 11, and stone fruit group 12. In the Federal Register of December 8, 2010 (75 FR 76284) (FRL-8853-8) and Wednesday, August 22, 2012, EPA issued final rules that revised the crop grouping regulations. As part of those actions, EPA expanded and revised the existing citrus fruit group, pome fruit group, and stone fruit group. The revised crop groups are designated as citrus fruit group 10-10, pome fruit group 11-10, and stone fruit group 12-12. As noted in the two crop group rulemakings, it is EPA policy to attempt to conform petitions for crop group tolerances filed prior the finalization of amendments to crop groups to the crop groups, as revised. This was possible in this case because the representative commodities for the crop groups did not change and the increased exposure as a result of the expanded crop groups could be assessed as part of review of the petition. Therefore, consistent with this policy, EPA has assessed and is establishing a tolerance on citrus fruit group 10-10, pome fruit group 11-10, and stone fruit group 12-12.

Finally, EPA has revised the tolerance expression to clarify (1) that, as provided in FFDCA section 408(a)(3), the tolerance covers metabolites and degradates of glufosinate ammonium not specifically mentioned; and (2) that compliance with the specified tolerance levels is to be determined by measuring only the specific compounds mentioned in the tolerance expression.

Therefore, tolerances are established for residues of glufosinate ammonium (butanoic acid, 2-amino-4-(hydroxymethylphosphinyl) monoammonium salt) and its metabolites, 2-(acetylamino)-4-(hydroxymethyl phosphinyl) butanoic acid, and 3-(hydroxymethylphosphinyl) propanoic acid, expressed as 2-amino-4-(hydroxymethylphosphinyl)butanoic acid equivalents in or on corn, sweet, forage at 1.5 ppm; corn, sweet, kernels plus cob with husks removed at 0.30 ppm; corn, sweet, stover at 6.0 ppm; fruit, citrus, group 10-10 at 0.15 ppm; fruit, pome, group 11-10 at 0.25 ppm; fruit, stone, group 12-12 at 0.25 ppm; and olive at 0.15 ppm.

This final rule establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. 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 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, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency 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, the Agency 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) (2 U.S.C. 1501 et seq. ).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 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 Office of Chemical Safety and Pollution Prevention (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, 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-2011-0906 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 November 26, 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 (excluding any Confidential Business Information (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 the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2011-0906, 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 CBI or other information whose disclosure is restricted by statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (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.

In the Federal Register of December 8, 2011 (76 FR 76674) (FRL-9328-8), EPA issued a notice pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 1E7929) by IR-4, 500 College Road East, Suite 201W., Princeton, NJ 08540. The petition requested that 40 CFR 180.601 be amended by establishing tolerances for residues of the fungicide cyazofamid, 4-chloro-2-cyano- N , N -dimethyl-5-(4-methylphenyl)-1 H -imidazole-1-sulfonamide, and its metabolite CCIM, 4-chloro-5-(4-methylphenyl)-1 H -imidazole-2-carbonitrile (CA), expressed as cyazofamid, in or on basil, dried leaves at 80.0 parts per million (ppm); basil, fresh leaves at 30.0 ppm; bean, succulent at 0.4 ppm; bean, succulent, shelled at 0.07 ppm; leafy greens, subgroup 4A at 9.0 ppm; vegetable, fruiting, group 8-10 at 0.40 ppm; and vegetable, tuberous and corm, subgroup 1C at 0.02 ppm. Additionally, the notice requested that EPA remove the tolerances in 40 CFR 180.601 for residues of the fungicide cyazofamid and its metabolite CCIM, expressed as cyazofamid, in or on okra at 0.40 ppm; potato at 0.02 ppm; spinach at 9.0 ppm; and vegetable, fruiting, group 8 at 0.40 ppm, as they will be superseded by inclusion in crop group or subgroup tolerances. That notice referenced a summary of the petition prepared on behalf of IR-4 by ISK Biosciences, the registrant, which is available in the docket, http://www.regulations.gov. Comments were received on the notice of filing. EPA's response to these comments is discussed in Unit IV.C.

Based upon review of the data supporting the petition, EPA has revised the proposed tolerance levels for several commodities. The Agency has also determined that the time-limited tolerance on basil, fresh should be removed. The reasons for these changes are explained in Unit IV.D.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(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. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance 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 * * *.”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for cyazofamid including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with cyazofamid follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Cyazofamid has a low order of acute toxicity via the oral, dermal, and inhalation routes of exposure. It produces minimal but reversible eye irritation, is a slight dermal irritant, and is a weak dermal sensitizer. In subchronic toxicity studies in rats, the kidney appeared to be the primary target organ, with kidney effects including an increased number of basophilic kidney tubules and mild increases in urinary volume, pH, and protein. However, no adverse kidney effects were noted in chronic toxicity studies in rats. There were no toxicity findings up to the limit dose in a subchronic toxicity study in dogs; in the chronic dog toxicity study, increased cysts in parathyroids were observed in males at the limit dose for chronic toxicity testing.

There were no maternal or developmental effects observed in the prenatal developmental toxicity study in rabbits and no maternal, reproductive, or offspring effects in the 2-generation reproductive toxicity study in rats. There was evidence of increased susceptibility following in utero exposure of rats in the prenatal developmental toxicity study at the highest dose tested; developmental effects, including an increased incidence of bent ribs, were observed in the absence of maternal toxicity.

There was no evidence of neurotoxicity or evidence of biologically relevant structural effects on the immune system in any study in the exposure database for cyazofamid. Skin lesions, which may be due to a systemic allergy, were observed in male mice in a carcinogenicity study. There was no evidence of carcinogenicity in the rat or mouse carcinogenicity studies and no evidence that cyazofamid is mutagenic in several in vivo and in vitro studies. Based on the results of these studies, EPA has classified cyazofamid as “not likely to be carcinogenic to humans.”

Specific information on the studies received and the nature of the adverse effects caused by cyazofamid as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document, “Cyazofamid. Human Health Risk Assessment for Proposed New Uses on Leafy Greens (Crop Subgroup 4A), Succulent-Podded and Succulent-Shelled Beans, Basil, Tuberous and Corm Vegetables (Subgroup 1C), and Fruiting Vegetables (Crop Group 8-10) with Updated Residential Risk Estimates of All Existing Residential Uses” at pp. 32-36 in docket ID number EPA-HQ-OPP-2011-0906.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm.

A summary of the toxicological endpoints for cyazofamid used for human risk assessment is shown in Table 1 of this unit. EPA notes that the last final rule for cyazofamid, published in the Federal Register of July 14, 2010 (75 FR 40745) (FRL-8833-1), included endpoints and points of departure for intermediate-term residential scenarios, including postapplication incidental oral exposure for children and dermal exposures for adults. However, the Agency has reevaluated these scenarios and has determined that residential exposure to turf and ornamentals is not likely to occur over an intermediate-term duration (i.e., 1 month to 6 months) for cyazofamid. Additionally, the Agency notes that the last final rule did not include an assessment of adult residential handler exposures. While the label for cyazofamid includes a statement that application by homeowners to residential turf is prohibited, it does not identify the product as a restricted use; therefore, a residential handler exposure assessment for short-term dermal and inhalation exposures was performed to be protective of potential residential handler exposures.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to cyazofamid, EPA considered exposure under the petitioned-for tolerances as well as all existing cyazofamid tolerances in 40 CFR 180.601. EPA assessed dietary exposures from cyazofamid in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. EPA identified such an effect (increased incidence of bent ribs in the rat prenatal developmental toxicity study) for the population subgroup females 13 to 49 years old; however, no such effect was identified for the general population, including infants and children.

In estimating acute dietary exposure for females 13 to 49 years old, EPA used food consumption information from the United States Department of Agriculture (USDA) 1994 to 1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). As to residue levels in food, EPA assumed tolerance-level residues, DEEM TM ver. 7.81 default processing factors and 100 percent crop treated (PCT) for all existing and proposed commodities.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994 to 1996 and 1998 CSFII. As to residue levels in food, EPA assumed tolerance-level residues, DEEM TM ver. 7.81 default processing factors and 100 PCT for all existing and proposed commodities.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that cyazofamid does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and percent crop treated (PCT) information. EPA did not use anticipated residue and/or PCT information in the dietary assessment for cyazofamid. Tolerance level residues and/or 100 PCT were assumed for all food commodities.

2. Dietary exposure from drinking water. Available environmental fate studies suggest cyazofamid is not very mobile and quickly degrades into a number of degradation products under different environmental conditions. Among the three major degradates for cyazofamid (CCIM, CCIM-AM, and CTCA), the two terminal degradates are CCIM and CTCA. The highest estimated drinking water concentrations resulted from modeling which assumed application of 100% molar conversion of the parent into the terminal degradate CTCA. EPA used these estimates of CTCA in its dietary exposure assessments, a conservative approach that likely overestimates the exposure contribution from drinking water.

The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for cyazofamid and its degradates in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of cyazofamid and its degradates. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm.

Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) model for surface water and the Screening Concentration in Ground Water (SCI-GROW) model for ground water, the estimated drinking water concentrations (EDWCs) of CTCA for acute exposures are estimated to be 136 parts per billion (ppb) for surface water and 2.18 ppb for ground water. Chronic exposures for noncancer assessments are estimated to be 133 ppb for surface water and 2.18 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 136 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 133 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Cyazofamid is currently registered for use on turf at golf courses, sod farms, seed farms, college and professional sports fields, residential and commercial lawns, and on ornamental plants in landscapes and those grown in commercial greenhouses and nurseries. EPA assessed residential exposure using the following assumptions: For adult handlers, short-term dermal and inhalation exposures from mixing, loading, and applying cyazofamid in residential areas; for adults, short-term postapplication dermal exposure from contact with treated turf and ornamentals; and for children, short-term postapplication incidental oral exposure to treated turf, including hand-to-mouth activity, object-to-mouth activity, and soil ingestion. No POD was identified for dermal exposures to treated turf for children, since no toxicity was seen in the 28-day dermal toxicity study at the highest dose tested (1,000 milligrams/kilograms/day (mg/kg/day)); therefore, dermal postapplication exposure scenarios were not assessed for children. Based on the residential use profile, adult handler and adult and child postapplication exposures to cyazofamid are expected to be short-term only. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www.epa.gov/pesticides/trac/science/trac6a05.pdf.

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

EPA has not found cyazofamid to share a common mechanism of toxicity with any other substances, and cyazofamid does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that cyazofamid does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals 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 .

1. In general. Section 408(b)(2)(C) of FFDCA 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 based on reliable data 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 (FQPA SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. The prenatal and postnatal toxicology database for cyazofamid includes rat and rabbit developmental toxicity studies and a 2-generation reproductive toxicity study in rats. There was no indication of increased susceptibility, as compared to adults, of rabbit fetuses to in utero exposure in a developmental study or of rat pups in the 2-generation reproduction study. There is evidence of increased quantitative susceptibility following in utero exposure of rats to cyazofamid in the prenatal developmental study; an increased incidence of bent ribs in fetuses at the highest dose tested was noted in the absence of maternal effects.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity database for cyazofamid is complete except for immunotoxicity and subchronic neurotoxicity testing. Recent changes to 40 CFR part 158 imposed new data requirements for immunotoxicity testing (OCSPP Test Guideline 870.7800) and subchronic neurotoxicity testing (OCSPP Test Guideline 870.6200) for pesticide registration. However, the available data for cyazofamid do not show potential for immunotoxicity. Further, there is no evidence of neurotoxicity in any study in the toxicity database for cyazofamid. EPA does not believe that conducting neurotoxicity and immunotoxicity studies will result in a NOAEL lower than the regulatory dose for risk assessment. Consequently, the EPA believes the existing data are sufficient for endpoint selection for exposure/risk assessment scenarios and for evaluation of the requirements under the FQPA, and an additional database uncertainty factor does not need to be applied.

ii. There is no indication that cyazofamid is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional uncertainty factors (UFs) to account for neurotoxicity.

iii. Although there is evidence of increased quantitative susceptibility in the prenatal developmental study in rats, the Agency determined that concern is low because the developmental effect (increased bent ribs) is well identified with a clear NOAEL and LOAEL. In addition, other considerations indicating a low concern include the following: Increased bent ribs are considered a reversible variation rather than a malformation; the effect was noted only at the limit dose of 1,000 mg/kg/day and this endpoint was used to establish the RfD for females 13-49; and the overall toxicity profile indicates that cyazofamid is not a very toxic compound. Therefore, there are no residual concerns regarding developmental effects in the young.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to cyazofamid in drinking water. EPA used similarly conservative assumptions to assess postapplication exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by cyazofamid.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. No adverse effect resulting from a single oral exposure was identified and no acute dietary endpoint was selected. Therefore, cyazofamid is not expected to pose an acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to cyazofamid will occupy 2.5% of the aPAD for females 13 to 49 years old, the population group of concern for acute effects.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to cyazofamid from food and water will utilize 1.5% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of cyazofamid is not expected.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Cyazofamid is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to cyazofamid.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 2,200 for children 1-2 years old and 390 for adults. Because EPA's level of concern for cyazofamid is a MOE of 100 or below, these MOEs are not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). An intermediate-term adverse effect was identified; however, cyazofamid is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for cyazofamid.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, cyazofamid is not expected to pose a cancer risk to humans.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to cyazofamid residues.

An adequate analytical methodology is available to enforce the proposed tolerances. Cyazofamid and the metabolite CCIM are completely recovered (>80% recovery) using the Food and Drug Administration's (FDA) Multi-Residue Protocol D (without cleanup). In addition, a high performance liquid chromatography/ultraviolet detector (HPLC/UV) method is available for use as a single analyte confirmatory method.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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. 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 cyazofamid.

EPA received comments from a private citizen to the notice of filing for cyazofamid, PP# 1E7929, objecting to the establishment of tolerances associated with the petition. In addition, the commenter noted several adverse effects seen in animal toxicology studies for cyazofamid and claims because of these effects no tolerance should be approved.

EPA has found, however, that there is a reasonable certainty of no harm to humans after considering these toxicological studies and the exposure levels of humans to cyazofamid. The Agency understands the commenter's concerns and recognizes that some individuals believe that certain pesticide chemicals should not be permitted in our food. However, the existing legal framework provided by FFDCA section 408 states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. This citizen's comment appears to be directed at the underlying statute and not EPA's implementation of it; the citizen has made no contention that EPA has acted in violation of the statutory framework.

Based on the data supporting the petition, EPA revised the proposed tolerances on several commodities, as follows: Basil, dried leaves from 80 ppm to 90 ppm; bean, succulent from 0.4 ppm to 0.5 ppm; bean, succulent shelled from 0.07 ppm to 0.08 ppm; leafy greens subgroup 4A from 9.0 ppm to 10 ppm; and vegetable, fruiting, group 8-10 from 0.40 ppm to 0.9 ppm. The Agency revised these tolerance levels based on analysis of the residue field trial data using the Organization for Economic Cooperation and Development (OECD) tolerance calculation procedures. Additionally, the Agency has determined that the time-limited tolerance on basil, fresh at 12 ppm should be removed, as it will be superseded by the permanent tolerance on basil, fresh leaves.

Therefore, tolerances are established for residues of cyazofamid, 4-chloro-2-cyano- N,N -dimethyl-5-(4-methylphenyl)-1 H -imidazole-1-sulfonamide, and its metabolite, 4-chloro-5-(4-methylphenyl)-1 H -imidazole-2-carbonitrile, calculated as the stoichiometric equivalent of cyazofamid, in or on basil, dried leaves at 90 ppm; basil, fresh leaves at 30 ppm; bean, succulent at 0.5 ppm; bean, succulent shelled at 0.08 ppm; leafy greens subgroup 4A at 10 ppm; vegetable, fruiting, group 8-10 at 0.9 ppm; and vegetable, tuberous and corm, subgroup 1C at 0.02 ppm. This regulation additionally removes the established permanent tolerances on okra, potato, spinach, and fruiting vegetable group 8, and the time-limited tolerance on basil, fresh because these tolerances are superseded by new crop group or subgroup tolerances established by this action.

This final rule establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. 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 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, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency 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, the Agency 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) (2 U.S.C. 1501 et seq. ).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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.

Under the Federal Food, Drug, and Cosmetic Act (FFDCA) section 408(g), 21 U.S.C. 346a, 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-2012-0171 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 November 26, 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 (excluding 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 the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2012-0171, 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 statute.

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (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 May 9, 2012 (77 FR 27164) (FRL-9345-2), EPA issued a proposed rule, in follow-up to canceled uses or where a commodity is no longer a significant feed item, to revoke specific tolerances for butylate, clethodim, dichlorvos, dicofol, isopropyl carbanilate, methanearsonic acid, methomyl, naled, primisulfuron-methyl, tralomethrin, and ziram, and tolerance exemptions for rotenone, derris, cube roots, and pine oil. Also, it proposed minor revisions to the tolerance expressions for dicofol, methanearsonic acid, methomyl, and tralomethrin, revisions to the nomenclature of specific tolerances for butylate, methomyl, and tralomethrin, and removal of expired tolerances for certain pesticide active ingredients, in accordance with current EPA practice. In addition, it proposed to reinstate popcorn tolerances for metolachlor to remedy an inadvertent omission and cover existing registrations. Also, the proposed rule of May 9, 2012 provided a 60-day comment period which invited public comment for consideration and for support of tolerance retention under FFDCA standards.

In this final rule, EPA is finalizing these tolerance actions, with the exception of the proposed revocations of tolerance exemptions for rotenone, derris, and cube roots, revocation of the dicofol tolerances on tea, and date of expiration/revocation proposed for the methomyl tolerance on grape. EPA is revoking tolerances for butylate, clethodim, dichlorvos, dicofol, isopropyl carbanilate, methanearsonic acid, methomyl, naled, primisulfuron-methyl, tralomethrin, and ziram, and the tolerance exemption for pine oil. The tolerance and tolerance exemption revocations for dichlorvos, naled, and pine oil are consistent with the recommendations in their individual Reregistration Eligibility Decisions (REDs) of 2006.

As part of the tolerance reassessment process, EPA is required to determine whether each of the amended tolerances meets the safety standard of FFDCA. The safety finding determination of “reasonable certainty of no harm” is discussed in detail in each RED for the active ingredient. REDs recommend the implementation of certain tolerance actions, including modifications, to reflect current use patterns, to meet safety findings and change commodity names and groupings in accordance with new EPA policy. Printed copies of many REDs may be obtained from EPA's National Service Center for Environmental Publications (EPA/NSCEP), P.O. Box 42419, Cincinnati, OH 45242-2419; telephone number: 1-800-490-9198; fax number: 1-513-489-8695; Internet at http://www.epa.gov/ncepihom and from the National Technical Information Service (NTIS), 5285 Port Royal Rd., Springfield, VA 22161; telephone number: 1-800-553-6847 or (703) 605-6000; Internet at http://www.ntis.gov. Electronic copies of REDs are available on the Internet at http://www.regulations.gov and http://www.epa.gov/pesticides/reregistration/status.htm.

In this final rule, EPA is revoking certain tolerances and/or tolerance exemptions because either they are no longer needed or are associated with food uses that are no longer registered under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) in the United States. Those instances where registrations were canceled were because the registrant failed to pay the required maintenance fee and/or the registrant voluntarily requested cancellation of one or more registered uses of the pesticide active ingredient. The tolerances revoked by this final rule are no longer necessary to cover residues of the relevant pesticides in or on domestically treated commodities or commodities treated outside but imported into the United States. It is EPA's general practice to issue a final rule revoking those tolerances and tolerance exemptions for residues of pesticide active ingredients on crop uses for which there are no active registrations under FIFRA, unless any person in comments on the proposal indicates a need for the tolerance or tolerance exemption to cover residues in or on imported commodities or legally treated domestic commodities.

EPA has historically been concerned that retention of tolerances that are not necessary to cover residues in or on legally treated foods may encourage misuse of pesticides within the United States.

Generally, EPA will proceed with the revocation of these tolerances on the grounds discussed in Unit II.A. if one of the following conditions applies:

1. Prior to EPA's issuance of a FFDCA section 408(f) order requesting additional data or issuance of a FFDCA section 408(d) or (e) order revoking the tolerances on other grounds, commenters retract the comment identifying a need for the tolerance to be retained.

2. EPA independently verifies that the tolerance is no longer needed.

3. The tolerance is not supported by data that demonstrate that the tolerance meets the requirements under Food Quality Protection Act (FQPA).

This final rule does not revoke those tolerances or tolerance exemptions for which EPA received comments stating a need for the tolerance or tolerance exemption to be retained. Among the comments received by EPA, are the following:

i. Dicofol—Comment by Tea Association of the U.S.A., Inc. The commenter stated that dicofol is used in tea production in countries such as India, China, and Argentina, and requested that EPA not revoke the dicofol tolerances on tea but maintain them for importation purposes.

Agency response. EPA will not revoke the dicofol tolerances in 40 CFR 180.163(a)(1) on “tea, dried” and “tea, plucked leaves” at this time. EPA will address the tea tolerances and the comment received on them in a future document to be published in the Federal Register . However, EPA is finalizing all other amendments (including all other tolerance revocations) proposed concerning dicofol in the Federal Register of May 9, 2012 (77 FR 27164).

ii. Methomyl—Comments by DuPont Crop Protection and the California Grape and Tree Fruit League (CGTFL). DuPont Crop Protection commented that one year is not sufficient time to exhaust methomyl existing stocks for use on grapes. DuPont requested that EPA extend the expiration/revocation date for the methomyl tolerance on grape by a minimum of 3 years (from June 8, 2013 to June 8, 2016). The CGTFL represents California's table grape and deciduous tree fruit growers, packers, and shippers. The CGTFL requested additional time to exhaust existing stocks and suggested a more appropriate expiration/revocation date for the methomyl tolerance on grape would be December 31, 2020.

Agency response. Based upon the comments received by EPA regarding requests for additional time to exhaust existing methomyl end-use stocks for use in or on grapes, and on the Agency's review of methomyl use, EPA is extending the expiration/revocation of the methomyl tolerance in 40 CFR 180.253(a) on grape by more than 3 years from June 8, 2013 to December 31, 2016.

iii. Rotenone—Comments by CERES GmbH, Frutban S.A., Dole Fresh Fruit International, Ltd. (DFFI), and DFFI-Costa Rica. Multiple comments from CERES GmbH (a company headquartered in Germany which offers international certification for organic farming and food processing), Frutban S.A. (an organic banana farm in Ecuador), DFFI, and DFFI-Costa Rica, were received which expressed concerns with EPA's proposal to revoke the U.S. tolerance exemptions for rotenone based insecticides. The commenters stated that there are lots of farmers (especially organic farmers) who rely on rotenone based insecticides on various commodities imported into the United States.

Agency response. Based on the multiple comments by CERES GmbH, Frutban S.A., DFFI, and DFFI-Costa Rica, which stated a continued need for the tolerance exemptions for rotenone for importation purposes into the United States, EPA will not revoke the tolerance exemptions in 40 CFR 180.905 (when applied to growing crops in accordance with good agricultural practice) for rotenone or derris or cube roots at this time. However, because there are no longer any active food-use registrations in the United States and no comments were received by EPA which expressed a need for more time to exhaust existing stocks for domestic use, EPA is not changing its previous determination (as stated in the proposed rule of May 9, 2012) that existing stocks in the United States will be exhausted by August 11, 2012. EPA will note in 40 CFR 180.905 that the tolerance exemptions for rotenone, derris, and cube roots have no U.S. registrations as of March 23, 2011. Also, retaining these tolerance exemptions may require submission of data to demonstrate their safety. EPA believes that residue data from foreign countries, and perhaps other data, may be needed to support import tolerance exemptions for rotenone or derris or cube roots. For example, domestic U.S. residue data are not likely to be representative of growing conditions and use patterns in other countries. EPA published guidances on pesticide import tolerances and residue data for imported food in the Federal Register notices of April 5, 2006 (71 FR 17099) (FRL-7772-1) and June 1, 2000 (65 FR 35069) (FRL-6559-3).

EPA did not receive any specific comments, during the 60-day comment period, on the following pesticide active ingredients: Butylate, clethodim, dichlorvos, (dicofol with the exception of tea), isopropyl carbanilate, naled, primisulfuron-methyl, tralomethrin, and ziram, and pine oil, and any of the active ingredients associated with the removal of expired tolerances. Therefore, with the exception of the changes described in the Agency responses to comments in this final rule, EPA is finalizing the amendments proposed concerning the pesticide active ingredients in the Federal Register of May 9, 2012 (77 FR 27164) (FRL-9345-2). For a detailed discussion of the Agency's rationale for the finalized tolerance actions, refer to the proposed rule of May 9, 2012.

EPA may issue a regulation establishing, modifying, or revoking a tolerance under FFDCA section 408(e). In this final rule, EPA is revoking tolerances as follow-up on canceled uses of pesticides, which is consistent with the tolerance recommendations made in certain REDs.

As stated in the DATES section, this regulation is effective 180 days after the date of publication in the Federal Register . EPA is delaying the effective date of these finalized actions to allow a reasonable interval for producers in exporting members of the World Trade Organization's Sanitary and Phytosanitary Measures Agreement to adapt to the requirements of a final rule. With the exception of butylate, dicofol, methanearsonic acid (and salts), methomyl, tralomethrin, and ziram, EPA believes that existing stocks of the canceled or amended pesticide products labeled for the uses associated with the revoked tolerances and tolerance exemptions have been completely exhausted and that treated commodities have had sufficient time for passage through the channels of trade. EPA is revoking certain tolerances for butylate, dicofol, methanearsonic acid (and salts), methomyl, tralomethrin, and ziram with expiration/revocation dates. EPA believes that these revocation dates allow users to exhaust stocks and allow sufficient time for passage of treated commodities through the channels of trade.

Any commodities listed in the regulatory text of this document that are treated with the pesticides subject to this final rule, and that are in the channels of trade following the tolerance revocations, shall be subject to FFDCA section 408(1)(5), as established by FQPA. Under this unit, any residues of these pesticides in or on such food shall not render the food adulterated so long as it is shown to the satisfaction of the Food and Drug Administration that:

1. The residue is present as the result of an application or use of the pesticide at a time and in a manner that was lawful under FIFRA.

2. The residue does not exceed the level that was authorized at the time of the application or use to be present on the food under a tolerance or exemption from tolerance. Evidence to show that food was lawfully treated may include records that verify the dates that the pesticide was applied to such food.

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. 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 butylate, isopropyl carbanilate (also called propham), methanearsonic acid (and salts), metolachlor, naled, pine oil, primisulfuron-methyl, rotenone (or derris or cube roots), tralomethrin, or MRL for clethodim in or on soybean soapstock, or MRL for dichlorvos on tomato.

The Codex has not established a MRL for ziram per se, but has MRLs for total dithiocarbamates (which includes the dithiocarbamate ziram), determined as carbon disulfide. However, there is no MRL for total dithiocarbamates in or on blackberry.

The Codex has established a MRL for methomyl in or on grapes at 5 milligrams/kilogram (mg/kg). This MRL is the same as the tolerance established for methomyl on grapes in the United States.

The Codex has established MRLs for dicofol in or on cattle meat at 3 mg/kg, eggs at 0.05 mg/kg, poultry meat and cottonseed at 0.1 mg/kg, and cherries at 5 mg/kg. These MRLs and some others are the same as the tolerances established for dicofol in the United States.

The Codex has established MRLs for dicofol in or on various other commodities, including beans, dry at 0.1 mg/kg, citrus fruits at 5 mg/kg, hops, dry at 50 mg/kg, melons, except watermelon at 0.2 mg/kg, pecans and walnuts at 0.01 mg/kg, and peppers and summer squash at 1 mg/kg. These MRLs are all covered by U.S. tolerances at higher levels. These MRLs are different than the tolerances established for dicofol in the United States because of differences in use patterns and/or good agricultural practices.

In this final rule, EPA revokes specific tolerances established under FFDCA section 408. The Office of Management and Budget (OMB) has exempted this type of action (i.e., a tolerance revocation for which extraordinary circumstances do not exist) from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this 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). 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. ), or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq. ). Nor does it require any special considerations as required by Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994); or OMB review or any other Agency action under Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note). Pursuant to the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), the Agency previously assessed whether revocations of tolerances might significantly impact a substantial number of small entities and concluded that, as a general matter, these actions do not impose a significant economic impact on a substantial number of small entities. This analysis was published on December 17, 1997 (62 FR 66020) (FRL-5753-1), and was provided to the Chief Counsel for Advocacy of the Small Business Administration. Taking into account this analysis and available information concerning the pesticides listed in this rule, the Agency hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities. In a memorandum dated May 25, 2001, EPA determined that eight conditions must all be satisfied in order for an import tolerance or tolerance exemption revocation to adversely affect a significant number of small entity importers, and that there is a negligible joint probability of all eight conditions holding simultaneously with respect to any particular revocation. (This Agency document is available in the docket of the proposed rule, as mentioned in Unit II.A.). Furthermore, for the pesticides named in this final rule, the Agency knows of no extraordinary circumstances that exist as to the present revocations that would change EPA's previous analysis. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers, and food retailers, not States. 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). For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled “ Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, 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, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR chapter I is amended as follows:

The FMC amends Part 501 of Title 46 of the Code of Federal Regulations to reflect a change in reporting requirements for Inspectors General of Designated Federal Entities, implemented in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376, July 21, 2010 (Dodd-Frank). In Dodd-Frank, signed into law on July 21, 2010, Congress amended Section 8G of the Inspector General Act of 1978 (IG Act), to provide, as pertinent here, that the term “head of the designated Federal entity” means “the board or commission of the designated Federal entity.” Public Law 111-203, sec. 989B (1)(A), 124 Stat. 1376, 1945. Because Section 8G of the IG Act provides that Inspectors General report to and are under the general supervision of the head of a designated Federal entity, the effect of the changed definition of “head of the designated Federal entity” in the Dodd-Frank amendment is that the FMC's Inspector General reports to and is under the general supervision of the entire Commission. This change in the reporting and supervision of the Inspector General necessitates minor amendments in the Commission's rules dealing with lines of responsibility (46 CFR 501.4), and functions of the organizational components of the Commission (46 CFR 501.5).

With respect to lines of responsibility, 46 CFR 501.4(a) is amended to eliminate the Office of Inspector General from the list of offices that report to the Chairman, and a new paragraph, 46 CFR 501.4(b), is added to reflect that the Inspector General reports to the Commission. With regard to functions of organizational components of the Commission, 46 CFR 501.5(a), which sets out the functions of the Chairman, is amended to eliminate the Office of Inspector General from the list of offices that receive management direction from the Chairman, to remove 46 CFR 501.5(a)(2) from this section, and to renumber 46 CFR 501.5(a)(3) and 46 CFR 501.5(a)(4) as 46 CFR 501.5(a)(2) and 46 CFR 501.5(a)(3) respectively. Finally, 46 CFR 501.5(b), which sets out the functions of the Commissioners, is amended by adding language providing that the Inspector General reports to and is under the general supervision of the Commission, and by adding section 501.5(b)(1) to describe the functions of the Office of Inspector General.

Because the changes made in this Final Rule address only internal agency organization, which do not require notice and public comment pursuant to the Administrative Procedure Act, 5 U.S.C. 553, this rule is published as final. This rule is not a “major rule” under 5 U.S.C. 804(2).

For the reasons stated in the preamble, the Federal Maritime Commission amends 46 CFR part 501 as follows:

Wreckfish is part of the snapper-grouper fishery and is managed under the FMP. The FMP was prepared by the Council and is implemented through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Act.

On January 12, 2012, NMFS published a notice of availability for Amendment 20A and requested comments (77 FR 1908). On March 30, 2012, NMFS published a proposed rule for Amendment 20A and requested public comments (77 FR 19165). The proposed rule and Amendment 20A outline the rationale for the actions contained in this final rule. Amendment 20A was approved by the Secretary of Commerce on April 6, 2012. A summary of the actions implemented by this final rule are provided below.

This final rule revises the wreckfish ITQ program, established in 1992, by defining and reverting inactive wreckfish quota shares, redistributing reverted quota shares to remaining shareholders, establishing a share cap, and establishing an appeals process for redistribution of reverted wreckfish quota shares. The intent of this rule is to achieve OY in the wreckfish commercial sector while maximizing harvest potential and not exceeding the annual catch limit (ACL).

When the Council took final action to approve Amendment 20A in December 2011, there were 20 wreckfish shareholders. Of those 20 shareholders, 13 were considered to be “inactive” and 7 “active” as defined in Amendment 20A. The 13 inactive shareholders held 28.18 percent of the shares, which would be redistributed among the 7 active wreckfish shareholders. After the Council took final action, several share transfers occurred which changed the distribution of shares in the wreckfish commercial sector of the snapper-grouper fishery. As of September 26, 2012, there are 6 active shareholders and 4 inactive shareholders. The active shareholders now hold 98.599 percent of the shares, and the inactive shareholders now hold 1.401 percent of the shares. The proposed rule and Amendment 20A state that 5 percent of the wreckfish quota shares will be set-aside, to resolve any appeals, for a period of 90 days starting on the effective date of the final rule. Due to the share transfers that occurred after the Council took final action to approve Amendment 20A in December 2011, only 1.401 percent of the shares remains “inactive” and thus are available to be reverted and redistributed. Therefore, only 1.401 percent is available as the set-aside to resolve any appeals, and NMFS will redistribute any shares remaining after the appeals process is complete. Any shares remaining after completion of the appeals process, up to 1.401 percent of the shares, will be reverted and redistributed among the remaining active shareholders, depending on the remaining individual shareholder's landings history from April 16, 2006, through January 14, 2011.

NMFS received a total of 13 comments on Amendment 20A and the proposed rule, which include comments from individuals, including those in the recreational sector, restaurant and seafood businesses, and a consulting firm. Comments received regarding the value of the wreckfish ACL, the acceptable biological catch level, and the recreational wreckfish allocation, are related to actions contained in the South Atlantic Comprehensive Annual Catch Limit Amendment (Comprehensive ACL Amendment), and are not in Amendment 20A. The final rule to implement the Comprehensive ACL Amendment (77 FR 15916, March 16, 2012), which became effective April 16, 2012, addressed all comments received on that amendment and its proposed rules. Specific comments related to the actions contained in Amendment 20A and the proposed rule and NMFS' respective responses, are summarized below.

Comment 1: Inactive shares should be allocated to the recreational sector for wreckfish.

Response: The Council did not consider redistributing inactive commercial wreckfish shares to the recreational sector in Amendment 20A. Prior to the implementation of the Comprehensive ACL Amendment on April 16, 2012, a specific allocation of wreckfish for the recreational sector did not exist within the FMP. Due to recreational snapper-grouper fishermen reporting an increased incidence of wreckfish encounters in recent years, and the fact that wreckfish are caught in very deep water, it is assumed all incidentally caught wreckfish by recreational fishermen are released dead. The Council decided to create a wreckfish recreational allocation of five percent in the Comprehensive ACL Amendment to allow recreational fishermen to retain fish, which would otherwise likely die. The recreational ACL is 11,750 lb (5,330 kg) round weight.

The Council chose to redistribute latent (inactive) shares to active commercial participants to optimize commercial wreckfish harvest and minimize latent effort. The Council's decision allows those participants, who are more dependent on wreckfish harvest, to retain their current shares and to be eligible to receive shares from redistribution. The Council chose to redistribute inactive shares to wreckfish shareholders who reported wreckfish landings during the fishing years 2006/2007 through 2010/2011.

Comment 2: Redistributed reverted shares should be based on 50-percent equal allocation in addition to 50-percent landings history for the total wreckfish landings from April 16, 2006, through January 14, 2011.

Response: The Council analyzed and evaluated using that approach, but chose to redistribute reverted shares to remaining shareholders based on landings history only from April 16, 2006, through January 14, 2011. The Council's decision allows those participants who are more dependent on wreckfish harvest to retain their current shares and to be eligible to receive shares from redistribution.

Comment 3: The final outcome of Amendment 20A is questionable since the purchase (or transfer) of inactive shares (those with no recent activity) would render these shares ineligible for redistribution. An analysis of what can be appealed is requested.

Response: One of the purposes of Amendment 20A is to redistribute any inactive shares to active shareholders. After the Council approved Amendment 20A for Secretarial review at its December 2011 meeting, many inactive shares were purchased and transferred to active shareholders. Any inactive shares remaining after implementation of this final rule are available for redistribution. Though the number of shares to be redistributed has changed since the Council took final action (from 28.18 to 1.401 percent of the shares), the items that may be appealed have not changed. The appeals process allows inactive wreckfish shareholders to appeal the reversion of their shares that NMFS considers “inactive”, and active shareholders can appeal the percentage of reverted shares that NMFS redistributes to them. Any shares remaining after completion of the appeals process, up to 1.401 percent of the shares, will be reverted and redistributed among the remaining active shareholders, depending on the remaining individual shareholder's landings history from April 16, 2006, through January 14, 2011.

Comment 4: The 49-percent share cap seems excessive for a public resource.

Response: The Council considered seven alternatives with respect to establishing a share cap in the wreckfish ITQ program: no share cap, and share caps of 15 percent, 25 percent, 49 percent, 65 percent, and the highest percentage of total shares held by a single shareholder after redistribution of inactive quota shares. The Council considered a variety of factors in determining what constitutes an excessive share for this public resource and an appropriate share cap, in the wreckfish ITQ program, including market power in the product, input, and quota share markets, management objectives contained in the Magnuson Stevens Act, and its management objectives for Amendment 20A.

The creation of market power in seafood markets through concentration of wreckfish quota shares is unlikely because wreckfish directly competes against other domestically harvested and imported groupers, snappers, and other fish. Further, most of the important inputs ( e.g., fuel, crew, hooks, line, etc.) used by commercial wreckfish fishermen are also used by commercial fishermen harvesting other species in competition with wreckfish fishermen, recreational fishermen, or the general public. Thus, even if a single shareholder possessed all of the quota shares, that shareholder very likely would not possess any control over input prices because of competition from other buyers.

A share cap implemented in a commercial sector operating under a catch share program customarily applies at the individual rather than the shareholder level. This approach prevents individuals from exceeding the share cap by being or becoming partial or full owners of other entities that also own quota shares, or more specifically share certificates in the case of wreckfish.

With respect to the 49-percent share cap alternative, although this alternative does not allow the historically largest harvester to maintain his recent level of landings, it does allow this individual to come relatively close, particularly if the individual chooses to buy additional shares up to the 49-percent cap. As such, the Council expected this individual to have sufficient quota shares to continue operations after redistribution of the inactive shares. Further, the other individuals were expected to have sufficient shares to maintain or even exceed their recent landings after redistribution of the inactive shares. Thus, the 49-percent share cap alternative was the most likely to ensure the commercial ACL is harvested and OY is attained. The Council thought it was equitable to allow shareholders with greater economic dependence on wreckfish landings to possess relatively more of the quota shares. Given the benefits of the 49-percent share cap alternative relative to the other alternatives, for this public resource, the Council selected a 49-percent share cap.

Comment 5: The appeals process will only be as good as the NMFS wishes that effort to become.

Response: The appeals process included in Amendment 20A allows inactive wreckfish shareholders to appeal the reversion of shares they hold (inactive status), and active shareholders to appeal the percentage of reverted shares redistributed to them. The Regional Administrator will render decisions on appeals based on NMFS logbooks or state landings data if NMFS logbooks are not available. Hardship appeals will not be considered. NMFS finds this appeals process to be appropriate for the commercial wreckfish sector.

The Regional Administrator, Southeast Region, NMFS has determined that the actions contained in this final rule are necessary for the conservation and management of the snapper-grouper fishery in the South Atlantic and that they are consistent with Amendment 20A, the Magnuson-Stevens Act, and other applicable law.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here.

One of the comments addressed in the Supplementary Information section, regarding the distribution of the latent shares that would be revoked, included economic implications and is also addressed here. This comment stated that the latent shares should be retired and not redistributed to other commercial shareholders with the exception that a small unspecified portion should be given to the recreational sector. The final rule for the Comprehensive ACL Amendment, which became effective on April 16, 2012 (77 FR 15916, March 16, 2012), allocated 95 percent of the wreckfish ACL to the commercial sector and 5 percent to the recreational sector. Allocating some portion of latent shares to the recreational sector and retiring the rest would be inconsistent with the allocation established by the Council in the Comprehensive ACL Amendment, would not allow the commercial ACL to be harvested, and would result in reduced economic benefits to commercial small business entities. Therefore, no change has been made to this final rule as a result of this comment.

Because this final rule reduces the set-aside for appeals from 5 percent to 1.401 percent and, more importantly, inactive shareholders hold all of the quota shares being set-aside, active shareholders are not expected to experience any direct, adverse economic effects due to this action. Further, because the inactive shareholders have no gross revenue or profits from commercial fishing for wreckfish, the set-aside of their quota shares in the short-term to resolve appeals would not reduce their gross revenue or profit. Thus, the direct, adverse economic effects on shareholders as a result of this action and final rule will be less than what was estimated in the proposed rule. No other new information has been received that would affect the analysis of impacts on small entities. As a result, a final regulatory flexibility analysis was not required and none was prepared.

This final rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA), which has been approved by OMB under control number 0648-0551. Public reporting burden for the appeals process regarding the redistribution of inactive wreckfish shares is estimated to average 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding these burden estimates or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ) and by email to OIRA_Submission@omb.eop.gov, or fax to 202-395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to 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.

For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:

Amendment 16 to the Northeast (NE) Multispecies Fishery Management Plan requires that a catch overage of a sub-annual catch limit (sub-ACL) or total ACL, triggers an accountability measure (AM) for common pool vessels in the distinct Differential DAS Area where each stock is predominantly caught. The AM is a differential DAS adjustment to all Category A DAS used by common pool vessels, and is applied to the time spent in the applicable DAS counting area where a vessel fishes. The AMs account for the percentage by which the sub-ACL or total ACL is exceeded, and are meant to prevent overages of future catch levels. For example, an overage of the Atlantic halibut sub-ACL requires a differential DAS rate adjustment to be applied to common pool vessels fishing in the area(s) that past catch information shows the majority of the Atlantic halibut is caught. The AM regulation at 50 CFR 648.82(n) also requires applying an additional differential DAS counting factor in an area for a specific stock if the sub-ACL is exceeded again in a subsequent year, to account for both year's overages. For example, if the sub-ACL for Georges Bank (GB) winter flounder was exceeded in FY 2010 by 60 percent and triggered a differential DAS adjustment (1.6) in FY 2011, and the sub-ACL was exceeded again in FY 2011 by 30 percent (requiring a 1.3 differential), then in FY 2012, a differential DAS rate of 2.1 (1.6 × 1.3) would be applied.

Final FY 2011 sector and common pool catch information became available in June 2012. This information showed that in the commercial groundfish fishery (sector and common pool only), the sub-ACL for Atlantic halibut was exceeded by 29 percent. This requires NMFS to implement a differential DAS rate of 1.3 in the Offshore Gulf of Maine (GOM) and the Inshore GB Differential DAS areas as an AM for Atlantic halibut.

Final FY 2011 sector and common pool catch information shows that the sub-ACL for northern windowpane flounder was exceeded by 42 percent. The northern windowpane flounder overage occurred despite a differential DAS rate of 1.3 applied in FY 2011 due to an overage in FY 2010 of 27 percent. As a result, NMFS is required to implement a differential DAS rate of 1.8 (1.3 × 1.4) in the Offshore GB Differential DAS Area as a result of the consecutive FY 2010 and 2011 overages of northern windowpane flounder.

In addition to the commercial groundfish fishery information, NMFS has preliminary FY 2011 catch estimates for other components of the groundfish fishery, i.e., exempted fisheries, non-groundfish vessels (e.g., scallop vessels), and state-only permitted vessels. Based on these preliminary estimates of the other components of the groundfish fishery and final FY 2011 sector and common pool catch information, the total ACL for southern windowpane flounder was exceeded by 135 percent. This overage also requires a differential DAS adjustment for common pool vessels fishing in the area where the stock is predominantly caught. Therefore, a differential DAS rate of 2.4 will be applied to common pool vessels fishing in the Southern New England (SNE)/Mid-Atlantic (MA) Differential DAS Area as an AM for southern windowpane flounder. Further adjustments to the common pool differential DAS rate are possible based on final 2011 catch information for other components of the groundfish fishery.

The regulations allow each sector to carry over into the following fishing year up to 10 percent of its initial allocation for all but one groundfish stock. ACE for GB yellowtail flounder cannot be carried over because catch levels for this stock are set each year by the U.S./Canada Resource Sharing Understanding. In addition, although the New Hampshire and Maine Permit Banks are allocated ACE for each FY, they are not eligible to carry over any amount of uncaught ACE. The following tables show the carryover for each Sector for FY 2011 based on final catch data.