I. Background

Under section 6511 of the Organic Foods Production Act of 1990 (OFPA), as amended, (7 U.S.C. 6501-6522), the National Organic Program (NOP) is authorized to implement regulations that require accredited certifying agents to conduct residue testing of organically produced agricultural products. Section 6506 of the OFPA also requires that the NOP include provisions for periodic residue testing by certifying agents of agricultural products produced or handled in accordance with the NOP.

Residue testing plays an important role in organic certification by providing a means for monitoring compliance with the NOP and by discouraging the mislabeling of agricultural products. Testing of organically produced agricultural products is promulgated in section 205.670 of the NOP regulations (7 CFR part 205). This section provides that the Secretary, State organic programs, and certifying agents may require preharvest or postharvest testing of any agricultural input used or agricultural product to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s))” when there is reason to believe that the agricultural input or product has come into contact with a prohibited substance or has been produced using excluded methods.

The Agricultural Marketing Service (AMS) is issuing this final rule in response to an audit of the NOP which was conducted in March 2010 by the USDA Office of Inspector General (OIG). 1 As part of the audit, the OIG visited four certifying agents accredited by the NOP. The audit found that none of the four certifying agents visited conducted periodic residue testing. The OIG indicated that these certifying agents noted that they considered residue testing to be required by the regulations only under certain circumstances.

AMS conducted a review of this issue in response to the OIG audit. AMS concluded that, under section 6506 of the OFPA, accredited certifying agents are required to conduct residue testing of organic products on a regular and reoccurring basis, as well as when there is reason to believe contamination has occurred, and that the regulations be revised as provided for in this rulemaking.

On June 23 and June 24, 2010, the NOP conducted two webinar trainings with certifying agents on periodic residue testing under the NOP. The objective of the webinar was to present an overview of requirements for periodic residue testing under the OFPA and the NOP. The NOP also solicited feedback from the certifying agents who participated in the webinar. Of the certifying agents accredited at that time, 55 individuals registered to participate in the webinar. Ten participants in the webinar provided written feedback to the NOP in response to the information provided. These comments were considered in the development of this final rule.

On April 29, 2011, AMS published a proposed rule for periodic residue testing (76 FR 23914). The rule proposed that certifying agents, on an annual basis, must sample and conduct residue testing from a minimum of five percent of the operations that they certify. The proposed rule included a 60 day comment period. Comments were also specifically requested on the information collection burden that would result from the proposed action. The NOP received over 30 written comments in response to the proposed rule.

Comments in response to the proposed rule were received from certified organic operations, certifying agents, consumers, trade associations, organic associations, and various industry groups.

The majority of commenters supported residue testing in general, and offered comments regarding the role of the National Organic Standards Board (NOSB), sampling rates, sample selection, costs and costs estimates, testing methodology, data collection, and reporting requirements.

Four comments specifically addressed the information collection and recordkeeping requirements of this action pursuant to the Paperwork Reduction Act (44 U.S.C. 3501-3520) (PRA).

AMS received one comment from a certifying agent requesting an extension of the comment period. Since the proposed rule included a 60 day comment period and because the NOP previously conducted two webinar trainings with certifying agents on periodic residue testing on June 23 and June 24, 2010, we did not agree that an extension of the comment period was warranted.

Seven commenters indicated that they did not believe that AMS has the authority to issue a rule on residue testing under the OFPA without a recommendation from the NOSB.

The NOSB is a federal advisory committee established by the Secretary of Agriculture under section 6518 of the OFPA to assist in the development of standards for substances to be used in organic production and to advise the Secretary on other aspects of the implementation of the NOP.

The commenters cited section 6518 of the OFPA which states “the Board shall advise the Secretary concerning the testing of organically produced agricultural products for residues caused by unavoidable residual environmental contamination.”

Additionally, two commenters cited a 1990 report of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, which indicates that the NOSB would be most knowledgeable on the subject of levels of acceptable residues of prohibited materials for organic food, and that the Committee intends that the NOSB shall advise the Secretary concerning appropriate residue levels and testing methods for organic products. 2

AMS disagrees with the commenters' claims that AMS does not have the authority to issue a rule in this area. This final rule is issued under the authority of the OFPA at section 6506(a)(6) which requires periodic residue testing by certifying agents. This rule does not amend any provisions or thresholds related to the maximum allowable pesticide residue for organic food or thresholds related to unavoidable residual environmental contamination (UREC). The existing NOP regulations regarding UREC at section 205.671 were based on a recommendation adopted by the NOSB at its meeting June 1-4, 1994 in Santa Fe, New Mexico. 3 UREC is defined under section 205.2 of the NOP regulations as background levels of naturally occurring or synthetic chemicals that are present in the soil or present in organically produced agricultural products that are below established tolerances. This rule does not amend this existing definition.

AMS received twelve comments on the issue of the amount of sampling or number of samples. The proposed rule indicated that certifying agents would be required, on an annual basis, to sample and conduct residue testing from a minimum of five percent of the operations that they certify. The proposed rule indicated that residue testing conducted for causative reasons, such as complaint-driven testing, or testing when there was reason to suspect contamination, would not be counted towards the minimum percentage required.

Based on the comments received, AMS believes that using a percentage of certified operations to determine sample selection offers the simplest implementation for certifying agents and ensures that all certifying agents conduct a minimal level of residue testing. Further discussion of the comments received is provided below.

AMS received five comments requesting that all residue testing conducted by a certifying agent be counted towards the five percent minimum requirement, including compliance testing, investigative testing, risk-based sampling, and random sampling. One commenter indicated that establishing random testing at five percent would make it more difficult to do other types of testing (e.g. risk-based, compliance testing) because of the costs involved. Several commenters indicated that compliance, investigative, and risk-based testing would yield more meaningful results than random testing.

One comment from a certifying agent indicated that it did not support revising the rule to include compliance or investigative testing as part of the five percent requirement. Based on experience in taking samples for both purposes, the commenter indicated that the concern from certifying agents that the proposed rule would be a disincentive to conduct compliance or investigative testing was unfounded.

The NOP accepts the majority of the commenters' suggestions to include all testing towards the minimum requirement. Any residue testing performed by a certifying agent may be counted towards the minimum requirement for residue testing, provided that the certifying agent samples and tests from a minimum of five percent of the operations it certifies on an annual basis.

AMS received two comments requesting a phase-in period for the testing requirements. One commenter suggested testing a portion of the five percent minimum percentage of operations in 2012, and the full percentage of operations in 2013. The commenter noted that a phase-in would enable certification agents to plan budgets, develop office procedures, and train staff and inspectors. The commenter also noted that a phase-in would enable the NOP to assess the effectiveness of the testing program. AMS received one comment requesting a phase-in of three percent for the first two years, which could be reevaluated and adjusted accordingly in the future.

AMS has considered the commenters' suggestion for a phase-in of the implementation and compliance date of the final rule and has issued this final rule with an effective date of January 1, 2013. Certifying agents must be fully compliant with the five percent requirement for the 2013 calendar year. The NOP understands that a minority of accredited certifying agents currently conduct residue testing on a regular, periodic basis. However, the NOP notes that certifying agents are already required, under section 205.504(b)(6) of the NOP regulations, to have procedures and trained staff in place for investigations of pesticide drift, complaints, or when reason to believe a product has come into contact with a prohibited substances. As evidence of their expertise and ability, certifying agents are also already required to submit a copy of the procedures to be used for sampling and residue testing pursuant to section 205.670 as an accreditation requirement.

One commenter noted that the number of operations that would be sampled under the proposed rule was small relative to the total number of operations. The commenter noted that sampling based on the number of operations does not account for differences in sizes of the operations, and suggested that sampling be based upon size and quantity, rather than the number of operations. The commenter suggested that AMS have an unbiased group determine sampling methodology using proper scientific and statistical techniques. The commenter noted that, unless AMS uses a sound basis in choosing the number, size, and site of the samples, any conclusions drawn from the testing would be invalid.

Another commenter suggested that AMS should require sampling based on a percentage of products, rather than a percentage of operations.

Two comments indicated that the five percent number was arbitrary and not statistically valid, but did not offer an alternative method for determining sampling size.

AMS disagrees. Basing sampling on a percentage of operations reduces the burden on the certifying agents by providing a clear and simple formula for how to comply with the regulations. The five percent requirement satisfies AMS's intent to discourage the mislabeling of agricultural products and provide a means for monitoring compliance with the NOP.

Under the final rule, certifying agents have the discretion to select operations for residue testing based on criteria such as size of operation, quantity of products produced, previous compliance issues, or other risk factors. Certifying agents are knowledgeable about the risk factors affecting the operations it certifies; therefore, it is appropriate for a certifying agent to determine what operations should be tested under this action.

AMS received three comments requesting that AMS lower the minimum percentage of operations to be tested from five percent to three percent due to costs. One of the commenters stated that the costs of testing would be passed on indirectly to farmers and processors in the form of higher certification fees. Another commenter stated that requiring three percent, rather than five percent, would allow the certifying agent more latitude for doing risk-based and compliance sampling.

In the final rule, AMS allows for both periodic testing and compliance sampling to be counted towards the minimum requirement, but has retained the minimum percentage of operations to be tested at five percent annually.

AMS has considered the comment that this action may indirectly increase costs to certified operations if certifying agents increase their certification fees to recover costs from increased residue testing. This action implements periodic residue testing in a way that should minimize the direct costs to certifying agents and any indirect costs to certified operations while still meeting the objectives of implementing periodic residue testing as required by OFPA. Additional details on the costs, benefits, and alternatives considered are discussed in the section titled Executive Order 12866 and Executive Order 13563.

AMS notes that lowering the percentage below five percent does not have an impact on the smallest quartile of certifying agents that certify fewer than thirty operations to the NOP per year, since they are required to sample a minimum of one operation under either scenario.

One comment from a consumer group indicated that AMS should reserve the right to raise the percentage for a specific certifying agent if residue testing shows that a certifying agent has an unusually high number of positive results. AMS believes that the regulations provide sufficient flexibility for the NOP to address issues that may arise on a case-by-case basis, and therefore, no modifications are necessary to the regulations.

One commenter requested that AMS review the residue testing data in five years to see if the percentage of operations tested could be reduced. AMS notes that the final rule does not prohibit AMS from reconsidering the percentage of operations required for compliance at a later date based on new information, but this would be under a separate rulemaking action.

AMS received one comment from a certifying agent regarding the role of State organic programs under the proposed rule. AMS currently has one State organic program in California. The commenter requested that testing conducted by a State program should offset the certifying agents' requirement in that State. AMS disagrees. Under the OFPA, certifying agents are required to conduct residue testing. AMS believes that requiring certifying agents to test from five percent of certified operations on an annual basis is reasonable, and that testing conducted by other organizations, including State organic programs or other private testing programs, should not offset this requirement under the OFPA.

AMS received nine comments regarding the selection of operations for residue testing. Several commenters requested clarification on selection of operations and whether it is AMS' intent to have certifying agents select operations at random or use other criteria. It is not AMS' intent for this final rule to require certifying agents to select operations at random. AMS is not specifying how certifying agents should select operations for residue testing in order to provide flexibility to the certifying agency. Instead, AMS is providing discretion to the certifying agent to select operations. Operation selection for residue testing may include risk factors such as number of products produced, split operations, size of the operation, high-value or high-risk crops, or other criteria deemed appropriate by the certifying agent.

Three commenters indicated that certifying agents should not select the operations for residue testing since this may be an inherent conflict of interest. Commenters suggested that the NOP or other third-party groups select the operations. AMS disagrees. Certifying agents are already required to implement procedures to prevent conflict of interests as a condition of accreditation under the NOP regulations (§ 205.501(a)(11)). AMS also conducts regular audits of certifying agents to ensure compliance with NOP accreditation requirements including preventing conflicts of interest. AMS does not have reason to believe that selection of operations for purposes of periodic residue testing would be different from any other certification work carried out by certifying agents with respect to conflict of interest.

Several commenters suggested utilizing a system of statistical sampling methods for operation selection, such as that used by the AMS Pesticide Data Program. AMS disagrees. It is not AMS' intent to assemble data and draw conclusions based on statistical sampling techniques, as the sampling performed by certifying agents will vary considerably due to the worldwide diversity of operations which are certified to the NOP. Certifying agents have the discretion to sample from higher risk operations, which may yield results that are not representative of all organic operations.

AMS received eight comments regarding the selection of samples for residue testing. The commenters requested changes in the rule to clarify that residue sampling may be performed on samples which are not finished products, such as soil samples, tissue samples, or water.

Commenters noted that preharvest sampling may be more meaningful when sampling is risk-based or for investigative testing (e.g., when use of a prohibited substance is suspected). In addition, commenters suggested that preharvest testing of tissue samples, soil, or water may be more appropriate at certain times during the growing season.

AMS agrees with the commenters' suggestions and has amended the regulatory text accordingly to clarify that testing may be conducted preharvest or postharvest, and that residue testing is not limited to salable products only. The final rule specifies the types of materials for sampling that are currently listed in section 205.403(c)(3) for on-site inspections. This may include collection and testing of soil; water; waste; seeds; plant tissue; and plant, animal, and processed products samples. AMS notes that, in the case of pesticide residue testing, tolerances are established by the Environmental Protection Agency (EPA) for specific harvested commodities. These tolerances enable the certifying agent to take appropriate enforcement action, if warranted, for the harvested commodity. If a prohibited residue is detected in a sample where there is not an established tolerance, such as soil, water, or other plant tissues, follow-up testing of the harvestable product may be needed for the certifying agent to determine the appropriate enforcement action.

Additionally, AMS notes that certifying agents currently have the authority to collect samples under section 205.403(c) which states that “The on-site inspection of an operation must verify: (3) That prohibited substances have not been and are not being applied to the operation through means which, at the discretion of the certifying agent, may include the collection and testing of soil; water; waste; seeds; plant tissue; and plant, animal, and processed products samples.”

AMS received one comment requesting that processed products which are to be sold or labeled as “organic” or “made with organic (specified ingredients or food group(s))” be excluded from residue testing requirements. The commenter states that testing would not pinpoint the source of contaminants in processed, multi-ingredient products. In certain cases, the source of a residue detected in a multi-ingredient processed product may be more difficult to identify; however, we have retained the allowance for testing processed products to allow certifying agents the flexibility of sampling processed products when it may be useful to determine compliance with the regulations.

AMS received eight comments regarding reporting requirements. Several commenters requested clarification on the use of the term “promptly” in reporting results to the AMS Administrator (Administrator). The proposed rule did not specify a reporting time period and retained the term “promptly” from the existing NOP requirements at section 205.670.

Several commenters also requested a distinction between reporting violative versus non-violative sample results. The commenters suggested that violative samples (i.e., samples with residues detected) could be reported to the Administrator as the information was received, but requested that non-violative samples (i.e., where no residues are detected) be reported on a more infrequent basis, such as quarterly or annually. One commenter requested that reporting be required on at least an annual basis, but not more than twice annually. Two commenters requested that the NOP require all results to be reported and incorporated into a dataset that would be available to the public.

After further consideration, AMS has amended the reporting requirements required under section 205.670 in order to reduce the reporting burden on certifying agents. This rule eliminates the requirement that certifying agents must submit all residue testing results to the Administrator or State organic program's governing State official. AMS does not intend to consolidate residue testing data from certifying agents and does not need reporting of residue testing results as the mechanism to ensure that certifying agents are meeting the requirement periodic residue testing.

AMS intends to verify compliance of certifying agents with the requirements for periodic residue testing as part of the existing accreditation process. Accreditation requirements at section 205.504(b)(6) require certifying agents to have administrative policies and procedures, including procedures to be used for sampling and residue testing pursuant to § 205.670. Certifying agents are also required to submit an annual report to the Administrator on or before the anniversary date of the issuance of notification of accreditation which includes a complete and accurate update of information submitted pursuant to §§ 205.503 and 205.504. In order to verify that certifying agents are implementing this rule in advance of regularly scheduled on-site audits, AMS intends to require, as authorized under section 205.510(a)(3), certifying agents to submit in their next annual report a description of the measures implemented in the previous year and any measures to be implemented in the coming years to meet the requirements in this rule for periodic residue testing. In addition, AMS notes that certifying agents should continue to maintain the complete results of laboratory analyses for residues of pesticides and other prohibited substances conducted during the current and three preceding calendar years, as required by section 205.504(b)(5)(iii).

The final rule also clarifies the reporting requirements when test results indicate that a specific agricultural product contains pesticide residues or environmental contaminates that exceed the Food and Drug Administration's (FDA) or EPA's regulatory tolerances. Under section 6506 of the OFPA, certifying agents, to the extent that they are aware of a violation of applicable laws relating to food safety, are required to report such violation to the appropriate health agencies. This is promulgated in section 205.670(e), amended by this final rule at 205.670(g), of the NOP regulations, which requires reporting to the Federal health agency whose regulatory tolerance or action level has been exceeded. The NOP issued a policy memo on reporting health and safety violations to stakeholders and interested parties. 4 This final rule clarifies the reporting requirements at 205.670(g), but does not change the responsibility for reporting by certifying agents when residues are found in excess of federal regulatory tolerances established by EPA or FDA. The final rule indicates that certain residue testing results that are in violation of EPA or FDA requirements must be reported to the appropriate State health agency or foreign equivalent. This change in the regulations is intended to recognize the role of State agencies, or their foreign equivalents, in responding to residues in violation of tolerance requirements.

One comment from a certifying agent that operates outside of the United States indicated that reporting test results that exceed federal regulatory tolerances is under the operator's responsibility. The commenter indicated that, as a certifying agent, it would check to make sure reporting was done correctly by the operation, and that the certifying agent would inform the NOP. AMS disagrees. Under the OFPA (7 U.S.C. 6506), certifying agents, to the extent that they are aware of a violation of applicable laws relating to food safety, are required to report such violation to the appropriate health agencies. This requirement is promulgated at section 205.670 of the regulations. This final rule clarifies the reporting requirements, but does not change the responsibility for reporting by certifying agents.

In addition to the reporting requirements outlined in the final rule, the NOP published, on June 13, 2011 in the Federal Register (76 FR 34180), the availability of draft guidance entitled, NOP 5028—Responding to Results from Pesticide Residue Testing, that outlines the actions to be taken by accredited certifying agents if test results from residue analysis show evidence of prohibited substance(s) in or on the product. The notice included a 60-day comment period, which closed on August 12, 2011. After review of the comments received, the NOP intends to publish final guidance on this issue in the NOP Handbook, as described under Related Documents. Under section 205.671, when residue testing detects prohibited substances that are greater than five percent of the EPA's tolerance for the specific residue detected or unavoidable residual environmental contamination, the agricultural product must not be sold, labeled, or represented as organically produced. This final rule does not change this existing requirement. The draft guidance document provides information to certifying agents on how to respond to results that indicate residues of prohibited substances and how to report results that are in violation of FDA or EPA's regulatory tolerances as required by section 205.670(g).

AMS received one comment from a certified operation regarding the testing of wild crops. The commenter requested an exemption from the requirement for periodic residue testing for wild crops on the basis that EPA tolerances are not established for most herbs in commerce. The commenter suggests that the absence of established tolerances places wild crops at disproportionate risk of enforcement actions as a result of the detection of trace amounts of unavoidable contamination (e.g., drift) of unknown origin. AMS disagrees. One of the purposes of periodic residue testing is to provide a means for monitoring compliance with the NOP by discouraging the mislabeling of agricultural products. AMS has determined that all crops should be included within the scope of periodic residue testing to serve as a deterrent for mislabeling (e.g., to deter substitution of conventionally produced herbs for organic wild-crop harvested herbs).

The commenter also requested written clarification as to how unavoidable pesticide residue contamination of wild crops would be addressed under the regulation in the absence of EPA-established tolerances for most plant species. A clarification is included in the draft guidance NOP 5028—Responding to Results from Pesticide Residue Testing, as described below under Related Documents.

AMS received one comment from an organic industry group in Canada which opposed the proposed rule. The commenter stated that the United States and Canada are currently signatories to an equivalency determination for organic products, and that the imposition of a costly measure on the United States' side, without a corresponding rule in Canada, could lead the identification of this regulatory change as a critical variance which would impede trade. Residue testing is required under the European Union's (EU) organic standards and, in 2011, Canada and the EU signed an organic equivalency determination that does not include any critical variances related to residue testing. In addition, certifying agents accredited under the NOP must already conduct sampling and laboratory testing in instances where contamination is suspected under sections 205.403(c)(3) and 205.670(b). AMS does not anticipate that this requirement for periodic residue testing will impact the United States' equivalency determination with Canada.

AMS received eighteen comments regarding estimates of the costs of testing. In the proposed rule, AMS had estimated the cost at $500 per sample, and estimated that the costs may represent approximately 1% of a certifying agent's operating budget.

Several commenters stated their belief that residue testing at the certifying agent's own expense was a disincentive to residue testing, and that the OFPA did not directly address who must pay for testing. A comment from a certifying agent who certifies operations to the organic standards of the EU, the Japanese Agricultural Standard (JAS), and the NOP, indicated that the regulations of the EU and JAS do not oblige the certifying agent to pay for pesticide analyses; instead, the cost is directly passed on to the operator. The commenter suggested that the NOP adopt this same approach and indicated that it encourages certifying agents to take the amount of samples which is necessary, and not just what is required by the regulations. Another commenter expressed support for this model. Section 205.670(b) currently provides that preharvest and postharvest testing is conducted at a certifying agent's expense. Similar to that provision, it is reasonable that periodic residue testing also be conducted at the certifying agent's expense, and therefore no changes are made to the final rule based on these comments.

Several commenters requested a more thorough analysis of the costs of implementing periodic residue testing. A more detailed analysis of the costs associated with this action is provided under the section titled Executive Order 12866 and Executive Order 13563. AMS notes that a minority of certifying agents currently conduct periodic residue testing at or above the minimum levels established by this final rule and there would be no additional costs associated with this action for those certifying agents. The majority of certifying agents, however, would need to allocate additional resources for the costs associated with periodic residue testing. AMS received one comment from a certifying agent operating outside of the United States which indicates that it currently tests 20-25% of its certified operations, which is above the minimum level specified in this final rule.

One comment from a laboratory indicated that AMS' estimated $500 cost for analysis was high by a factor of two or more, and that it may be able to perform this analysis for certifying agents at $250 per sample or less. The commenter's estimate appears to be limited to the direct laboratory costs of residue analysis, and does not include the additional related costs that AMS has included in the estimated costs per sample.

Several commenters indicated that the costs may disproportionally affect smaller certifying agents, since they would not be able to receive quantity discounts. Some laboratories may offer discounts to its higher-volume clients, including certifying agents. However, AMS also notes that lowering the percentage below five percent does not have an impact on the smallest quartile of certifying agents that certify fewer than thirty operations per year, since they are required to sample a minimum of one operation annually.

One commenter suggested an alternative funding mechanism, such as having pesticide manufacturers and producers of genetically modified seed pay for the costs of testing. AMS does not have the statutory authority to institute this type of third-party funding model.

AMS received several comments requesting clarification on the purpose of residue testing.

AMS is publishing this final rule to implement the requirements of the OFPA for periodic residue testing by certifying agents. Residue testing plays an important role in organic certification by providing a means for monitoring compliance with the NOP regulations and by discouraging the mislabeling of agricultural products.

AMS does not intend to integrate results into a single dataset, as was requested by some commenters. To minimize the reporting burden for certifying agents, this final rule does not require that certifying agents submit copies of test results to the Administrator; however, certifying agents continue to be required to report certain test results that are found in excess of federal regulatory tolerances or action levels for pesticide residues or environmental contaminants to the appropriate health agency under the section 205.670(g). This final rule does not require reporting of testing data to the Administrator since this action is not intended as a data collection mechanism to draw conclusions about residues in organic products in general. AMS will verify compliance of certifying agents with this rule under the existing requirements for accreditation as discussed in the response to comments on Reporting Requirements.

The NOP also notes that this final rule does not amend the existing requirement that results of all analyses and tests performed under section 205.670 be made available for public access, unless the testing is part of an ongoing compliance investigation. The public may access sampling results obtained by certifying agents under the existing regulations.

AMS received four comments regarding types of residues that would be considered acceptable targets for testing under the rule.

On February 2, 2011, the NOP published NOP 2611-1, Prohibited Pesticides for NOP Residue Testing, on the NOP Web site in the NOP Handbook. This document provides a list of target pesticides to certifying agents that conduct pesticide residue testing of organically produced agricultural products. This document is available at the NOP Web site at http://www.ams.usda.gov/nop and is discussed below under Related Documents. AMS has not included a specific list of pesticide residues that could be tested for in the regulations. This is intended to allow flexibility in revising the list of target pesticide residues as new pesticides enter the market. In addition, this flexibility allows the NOP to respond more quickly to observed trends in detection of residues on specific commodities.

The NOP does not intend for certifying agents to test every sample for all residues on the list of target pesticides. Instead, the list is provided as a reference for a number of pesticides which are prohibited under the NOP regulations, and that may be detected by a laboratory that conducts multi-residue analysis of agricultural products.

AMS received one comment that indicated that this list would serve as a “cheat sheet” for operations seeking to willfully violate the NOP regulations. AMS disagrees. The document provides a list of pesticide residues most commonly found on conventional commodities, based on data obtained from the AMS Pesticide Data Program. This list is intended to instruct certifying agents and laboratories on which residues would be the most useful targets for multi-residue analysis of agricultural products. The regulations and guidance documents do not prohibit a certifying agent from testing for other residues if the presence of a specific pesticide is suspected.

Four commenters requested clarification on testing for genetically modified organisms (GMOs). AMS does not intend for the testing conducted under section 205.670 to be limited to pesticides residues. Under the existing provisions at section 205.670, certifying agents have the flexibility to test for a range of prohibited materials and excluded methods, including, but not limited to, pesticides, hormones, antibiotics, and GMOs. AMS notes that, under section 205.671, thresholds for unavoidable residual environmental contamination are established only for pesticides residues.

The final rule maintains the current requirement under section 205.670 that chemical analysis must be made in accordance with the methods described in the most current edition of the Official Methods of Analysis of the AOAC International   5 or other current applicable validated methodology for determining the presence of contaminants in agricultural products. On February 2, 2011, the NOP provided instructions on laboratory selection criteria for pesticide residue testing to certifying agents. These instructions are further described below under Related Documents and are available on the NOP Web site at http://www.ams.usda.gov/nop. AMS anticipates that these instructions will change over time in response to advances in testing methodology, analytical instrumentation, and residue detection techniques.

AMS received several comments regarding ISO 17025 accreditation of laboratories. This accreditation is mentioned in NOP 2611, Laboratory Selection Criteria for Pesticide Residue Testing, which is further discussed under Related Documents and is available on the NOP Web site at http://www.ams.usda.gov/nop. No comments requested the incorporation of ISO 17025 accreditation into the regulatory text. The comments are under consideration for future revision of the instruction documents and are not impacted by this rulemaking action.

The proposed rule requested comments on the information collection and recordkeeping requirements required by the proposed amendments to section 205.670. Comments were specifically invited on (1) whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

AMS received four comments specifically on the issue of information collection burden. Two comments indicated that they were unclear whether the estimated time is accurate and that more data and analysis was needed. One commenter suggested that the NOSB should hear from the various stakeholders in public forums before AMS considers the accuracy of the estimate. One commenter indicated that the estimate of 1.74 hours appears to be low, especially when foreign operations and imported products are considered, but did not offer an alternative estimate for the number of hours or data to support a different estimate.

Two comments indicated that submission of report copies, or laboratory summaries of test results, should be sufficient to demonstrate compliance with the requirement. In order to reduce the information collection burden on certifying agents, AMS has removed the requirement that test results be reported to the Administrator. AMS has retained the requirement that test results that indicate a specific agricultural product contains pesticide residues or environmental contaminants that exceed the Food and Drug Administration's or the Environmental Protection Agency's regulatory tolerances be reported to the appropriate health agency.

AMS intends to verify compliance of certifying agents with the requirements for periodic residue testing as part of the existing accreditation process, rather than by requiring submission of residue testing results. Accreditation requirements at section 205.504(b)(6) require certifying agents to have administrative policies and procedures, including procedures to be used for sampling and residue testing pursuant to § 205.670. Certifying agents are also required to submit an annual report to the Administrator on or before the anniversary date of the issuance of notification of accreditation which includes a complete and accurate update of information submitted pursuant to §§ 205.503 and 205.504. In order to verify that certifying agents are implementing this rule in advance of regularly scheduled on-site audit of certifying agents, AMS intends to require, as authorized under section 205.510(a)(3), certifying agents to submit in their next annual report a description of the measures implemented in the previous year and any measures to be implemented in the coming years to meet the requirements in this rule for periodic residue testing.

AMS received one comment that indicated that the proposed rule did not identify what would be done with the information collected. A response is provided above under the section, Purpose of Testing—Changes Requested But Not Made.

One comment suggested that existing testing programs, such as the AMS Pesticide Data Program, should be used to the extent possible. The commenter also suggested that AMS should partner with the FDA and various State agencies that currently conduct residue testing programs. AMS notes that testing conducted by other third-parties does not eliminate the requirement under OFPA for residue testing by certifying agents. AMS believes that requiring certifying agents to conduct residue testing from a minimum of five percent of the operations they certify is a reasonable number which ensures that all certifying agents, regardless of the number of operations they certify, are responsible for some level of regular testing at reasonable cost.

One comment indicated that certifying agents would prefer to submit test results on a quarterly basis. In this final rule, AMS has removed the requirement for reporting results of residue testing, with the exception of results that exceed certain federal regulatory requirements established by EPA or FDA. AMS notes that certifying agents should maintain the complete results of laboratory analyses for residues of pesticides and other prohibited substances conducted during the current and three preceding calendar years, as required by section 205.504(b)(5)(iii).

AMS received four comments on instruction documents that the NOP has published in the NOP Handbook regarding residue testing. The instruction documents are discussed under Related Documents. These comments are beyond the scope of this rulemaking; however, they are under consideration for future revision of the instruction documents through a separate action.

A proposed rule was published in the Federal Register on April 29, 2011 (76 FR 23914). Additional documents related to this final rule include the Organic Foods Production Act (OFPA), as amended (7 U.S.C. 6501-6522) and its implementing regulations (7 CFR part 205). The March 2010 USDA Office of Inspector General audit report of the National Organic Program is available as Audit Report 01601-03-Hy. 6

The NOP has also published three instruction documents related to residue testing as part of the NOP Handbook: (1) Sampling Procedures for Residue Testing (NOP 2610), (2) Laboratory Selection Criteria for Pesticide Residue Testing (NOP 2611), and (3) Prohibited Pesticides for NOP Residue Testing (NOP 2611-1). The goal of the NOP Handbook is to provide those who own, manage, or certify organic operations with guidance, instructions, and policy memos that can assist them in complying with the NOP regulations. The most recent edition of the NOP Handbook is available for viewing and downloading through the NOP Web site at http://www.ams.usda.gov/nop.

The three instruction documents are meant to inform certifying agents about best practices for conducting residue testing of organically produced agricultural products. NOP 2610, Sampling Procedures for Residue Testing, contains recommended procedures for product sampling, including documentation, recommended sample sizes, shipping conditions to the laboratory, and chain of custody requirements. NOP 2611, Laboratory Selection Criteria for Pesticide Residue Testing, contains instructions for certifying agents in selecting a qualified laboratory for pesticide residue testing, including accreditation, quality assurance, proficiency testing, and reporting guidelines. NOP 2611-1, Prohibited Pesticides for NOP Residue Testing, is a list of pesticide residues that certifying agents can provide to laboratories which conduct pesticide residue testing of agricultural products. The three instruction documents were effective immediately upon their issuance and publication on February 2, 2011.

On June 13, 2011, the NOP published draft guidance, NOP 5028—Responding to Results from Pesticide Residue Testing, that outlines the actions to be taken by accredited certifying agents if test results from residue analysis show evidence of prohibited substance(s) in or on the product. A notice on the availability of draft guidance was published in the Federal Register (76 FR 34180) with a 60 day comment period. The comment period closed on August 12, 2011, and comments are under review by the NOP. After review of the comments received, the NOP intends to publish the final guidance in the NOP Handbook.

Members of the public who wish to request that the agency issue, reconsider, modify, or rescind a guidance or instruction document may do so by sending an email to NOP.Guidance@ams.usda.gov or by mailing a letter to Standards Division, National Organic Program, U.S. Department of Agriculture, Room 2646-So. (Stop 0268), 1400 Independence Ave. SW., Washington, DC 20250-0268.

OFPA authorizes AMS to administer the NOP. Under the NOP, AMS oversees national standards for the production and handling of organically produced agricultural products.

Section 6506 of the OFPA requires periodic residue testing by certifying agents of agricultural products that have been produced on certified organic farms and handled through certified organic handling operations to determine whether such products contain any pesticide or other nonorganic residue or natural toxicants. This section also requires certifying agents to report violations of applicable laws relating to other federal tolerance requirements (e.g., pesticide residues in excess of FDA action levels or EPA tolerances) to the appropriate health agencies. Additional information on reporting health and safety violations has been previously provided by the NOP to stakeholders and interested parties. 7 This information is available on the NOP Web site at http://www.ams.usda.gov/nop.

Section 6511 of the OFPA requires the Secretary, the applicable governing State official, and the certifying agent to utilize a system of residue testing to test products sold or labeled as organically produced.

Section 6511 of the OFPA also allows the Secretary, the applicable governing State official, or the certifying agent to require preharvest tissue testing of any crop grown on soil suspected of harboring contaminants.

Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This action has been determined not significant for purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget.

NOP is authorized to implement regulations that require accredited certifying agents to conduct residue testing of organically produced agricultural products (7 U.S.C. 6511). In addition, section 6506 of the OFPA requires that the NOP include provisions for periodic residue testing by certifying agents of agricultural products produced or handled in accordance with the NOP. This final rule ensures that all certifying agents conduct a minimal level of residue testing.

Residue testing plays an important role in organic certification by providing a means for monitoring compliance with the NOP and by discouraging the mislabeling of agricultural products. Testing of organically produced agricultural products is promulgated in section 205.670 of the NOP regulations. This section provides that the Secretary, State organic programs, and certifying agents may require preharvest or postharvest testing of any agricultural input used or agricultural product to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s))” when there is reason to believe that the agricultural input or product has come into contact with a prohibited substance or has been produced using excluded methods.

AMS is issuing this final rule in response to an audit of the NOP which was conducted in March 2010 by the USDA's OIG. 8 As part of the audit, the OIG visited four certifying agents accredited by the NOP. The OIG indicated that these certifying agents noted that they considered residue testing to be required by the regulations only under certain circumstances.

AMS conducted a review of this issue in response to the OIG audit. AMS concluded that, under 7 U.S.C. section 6506 of the OFPA, accredited certifying agents are required to conduct residue testing of organic products on a regular and reoccurring basis, as well as when there is reason to believe contamination has occurred.

The primary objective of this rule is to align the NOP regulations with the requirement for residue testing of organic products under OFPA. This final rule ensures that all certifying agents conduct a minimum level of residue testing.

Alternatives to this final rule that were considered include (1) maintaining the status quo; (2) distinguishing periodic residue testing from risk-based testing for purposes of calculating the percentage of operations to be tested annually; (3) requiring testing at an alternate level of 25% of the operations certified by a certifying agent; and (4) testing all certified operations annually.

In addition, proposals for testing at a reduced sampling rate, and testing scaled to the size of operation or to the number of certified organic products were suggested by commenters and are discussed under the above section, Number of Samples—Changes Requested But Not Made . AMS believes that calculating the samples based on a percentage of operations reduces the burden on the certifying agents by providing a clear and simple formula for how to comply with the regulations. AMS has not specified how certifying agents must select operations for residue testing to provide flexibility and discretion to the certifying agent in how to most efficiency and effectively implement the minimum testing required under the rule. Operation selection for residue testing may include risk factors such as number of products produced, split operations, size of the operation, split operations (i.e., operations that produce or handle both organic and nonorganic agricultural products), previous non-compliances, high-value or high-risk crops, or other criteria deemed appropriate by the certifying agent.

The first alternative of maintaining the status quo was not considered feasible due to a finding identified in an audit report issued by USDA's OIG in March 2010. 9 In response to the OIG audit, AMS conducted a review of the residue testing requirements in OFPA and the NOP regulations. AMS concluded that, under section 6506 of the OFPA, accredited certifying agents are required to conduct residue testing of organic products on a regular and reoccurring basis, as well as when there is reason to believe contamination has occurred, and that the regulations be revised as provided for in this rulemaking.

The second alternative distinguishes between periodic residue testing and risk-based testing for purposes of calculating the percentage of operations to be tested annually. This alternative was discussed in the proposed rule published April 29, 2011 (76 FR 23914). The proposed rule indicated that certifying agents would need to sample a minimum of five percent of their certified operations annually, and that such testing would be in addition to any testing conducted when there was reason to believe that the agricultural product had come into contact with a prohibited substance (e.g., investigative or complaint-driven testing). This alternative would result in higher costs to the certifying agent, since costs associated with other types of testing would be in addition to costs for periodic testing. After consideration of the comments received, AMS believes that the final rule offers more flexibility by allowing both complaint-driven and periodic residue testing to count toward the sample minimum. This final rule should also minimize the burden on certifying agents by removing the need to distinguish between different types of testing.

The third alternative of requiring certifying agents to test 25% of the operations they certify annually was also considered. This target is based a statistically based sample size based upon the rate of detection of residues in organic products sampled through the AMS Pesticide Data Program (PDP). The costs associated with this alternative and that would be imposed on certifying agents are estimated at $3.70 million annually, based on an estimated $492 in costs to the certifying agent per operation tested across 7,530 certified operations (25% of 30,118). The costs associated with testing 25% of operations are significantly higher than the costs of sampling 5% of operations under the final rule. AMS determined that using a statistically based sample size is not necessary to achieve the regulatory objective of this action and would impose unnecessary additional direct costs to certifying agents.

The fourth alternative of sampling all operations annually was also considered as an alternative to the five percent minimum requirement. The costs associated with this alternative are estimated at $14.82 million annually, based on an estimated $492 in costs per operation for 30,118 certified operations. The objectives for periodic residue testing can be met by sampling a subset of operations annually, and therefore, the additional costs that would be required to test all operations are unnecessary.

AMS is aware that a minority of accredited certifying agents are currently conducting periodic residue testing at or above the minimum levels established by this final rule. In 2011, the NOP received pesticide residue results from 13 accredited certifying agents. Seven of the certifying agents that reported results to the NOP were based in the United States and six were based internationally. The NOP also understands that there may be additional certifying agents that are currently conducting residue testing that do not report results to the NOP, or that submit results only when a prohibited residue is detected.

The number of results reported to the NOP in 2011 represents a sampling rate of less than 1% of certified operations. The majority of results reported to the NOP in 2011 were received from certifying agents which are headquartered outside of the United States, where periodic residue testing is a requirement under international organic standards (e.g., the EU). AMS received one comment on the proposed rule from a certifying agent operating outside of the United States which indicates that it currently tests 20-25% of its certified operations.

AMS received one comment from a certifying agent that indicated that it has a history of sampling and testing products for more than 20 years. This commenter supported the five percent testing requirement as outlined in the proposed rule and did not support revising the rule to include compliance or investigative testing as part of the five percent. AMS also received one comment from a certifying agent that had increased their testing program for residues within the last two years and requested that the proposed rule be revised to allow sampling from sources other than the agricultural product (e.g. samples of soil, water, seeds) to be counted towards the minimum testing requirement. Under this final rule, sampling from a range of sources as indicated in sections 205.670(b) and (c) may be counted towards the minimum testing requirement.

This final rule clarifies a provision of OFPA and the regulations issued thereunder that requires periodic residue testing of organically produced agricultural products by accredited certifying agents. The rule ensures consistency of the regulations with OFPA by ensuring that all certifying agents are conducting residue testing of organic products on a regular reoccurring basis. Residue testing plays an important role in organic certification by providing a means for monitoring compliance with the NOP and by discouraging the mislabeling of agricultural products. This action further ensures the integrity of products produced and handled under the NOP regulations.

This final rule increases the amount of residue testing currently conducted by most accredited certifying agents. Direct costs to the certifying agents include the cost of sample analysis (i.e., laboratory costs), sample packaging and shipping costs, and the staff costs associated with sample collection by an inspector, review and maintenance of sample results, and reporting costs. In addition, some certifying agents indicated that the proposed action would also increase their training costs for review staff and field inspectors. AMS is unable to ascertain how certification fees may shift in response to this action because of the diversity of fee structures used by certifying agents.

The total direct cost of this action is estimated to be $741,000 annually. This estimate is based on a sampling rate of five percent of certified operations. There were an estimated 30,118 operations certified under the NOP in 2011. The five percent sampling requirement would result in sample collection from approximately 1,506 operations per year. AMS has estimated the total costs to the certifying agent at $492 per sample as detailed in Table 1.

Sample collection costs (inspector costs) are estimated at $20.36 per sample. This estimate is based on an estimated 1.0 labor hour per sample at $20.36 per hour. The hourly rate is estimated based on the mean hourly wage for agricultural inspectors as published by the Bureau of Labor Statistics. 10 This classification was selected as an occupation with similar duties and responsibilities to that of an organic inspector. Such duties and responsibilities include inspection of agricultural commodities, processing equipment, and facilities, to ensure compliance with regulations and laws governing health, quality, and safety.

Sample shipping boxes and supplies are estimated at $40 per sample, based on a costs associated with a pilot project for pesticide residue sampling conducted by the NOP in conjunction with the AMS Pesticide Data Program. Shipping costs are estimated at $25 per sample. AMS notes that these costs are an average and may vary depending on the sample type and shipping distance to laboratory.

Labor costs associated with review of sample results are estimated at $16.21 per sample. This estimate is based on an estimated 0.5 labor hour per sample at $32.42 per hour. The hourly rate is estimated based on the mean hourly wage for auditors as published by the Bureau of Labor Statistics. 11 This classification was selected as an occupation with similar duties and responsibilities to that of a certifying agent. Such duties and responsibilities include conducting reviews of operations against accepted standards and evaluating audit or inspection findings for compliance.

If certifying agents receive sample results which are in excess of EPA or FDA regulatory tolerances, the certifying agent must promptly report such data to the Federal health agency (i.e., EPA or FDA) whose regulatory tolerance or action level has been exceeded. Test results that exceed federal regulatory tolerances must also be reported to the appropriate State health agency or foreign equivalent. This requirement is clarified in this final rule under § 205.670(g); however, this is not a new requirement under this action and additional costs not expected from this clarification. AMS expects that the majority of tested organic products will not have detectable residues of prohibited pesticide substances, based on historical data from the AMS Pesticide Data Program.

AMS believes that this rate of testing provides the benefits at reasonable cost to certifying agents. AMS recognizes that a minority of certifying agents conduct residue testing on a regular basis, and that certifying agents not currently conducting testing will need to account for these costs as a cost of doing business.

In consideration of training costs, the NOP notes that, while this action expands the amount of testing of organically produced agricultural products to include a requirement that is regular and periodic in scope, certifying agents are already required, under section 205.504(b)(6), to have procedures in place for sampling and residue testing pursuant to section 205.670. Certifying agents must already be conducting sampling and laboratory testing in instances where contamination is suspected under section 205.403(c)(3) and section 205.670(b). Therefore, AMS does not believe that additional training costs are imposed by this final rule.

Executive Order 12988 instructs each executive agency to adhere to certain requirements in the development of new and revised regulations in order to avoid unduly burdening the court system. This final rule is not intended to have a retroactive effect.

States and local jurisdictions are preempted under the OFPA from creating programs of accreditation for private persons or State officials who want to become certifying agents of organic farms or handling operations. A governing State official would have to apply to USDA to be accredited as a certifying agent, as described in section 6514(b) of the OFPA. States are also preempted under sections 6503 through 6507 of the OFPA from creating certification programs to certify organic farms or handling operations unless the State programs have been submitted to, and approved by, the Secretary as meeting the requirements of the OFPA.

Pursuant to section 6507 of the OFPA, a State organic certification program may contain additional requirements for the production and handling of organically produced agricultural products that are produced in the State and for the certification of organic farm and handling operations located within the State under certain circumstances. Such additional requirements must: (a) Further the purposes of the OFPA, (b) not be inconsistent with the OFPA, (c) not be discriminatory toward agricultural commodities organically produced in other States, and (d) not be effective until approved by the Secretary.

Pursuant to section 6519 of the OFPA, this final rule would not alter the authority of the Secretary under the Federal Meat Inspection Act (21 U.S.C. 601-624), the Poultry Products Inspection Act (21 U.S.C. 451-471), or the Egg Products Inspection Act (21 U.S.C. 1031-1056), concerning meat, poultry, and egg products, nor any of the authorities of the Secretary of Health and Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C. 301-392), nor the authority of the Administrator of the EPA under the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136-136(y)).

Section 6520 of the OFPA provides for the Secretary to establish an expedited administrative appeals procedure under which persons may appeal an action of the Secretary, the applicable governing State official, or a certifying agent under this title that adversely affects such person or is inconsistent with the organic certification program established under this title. The OFPA also provides that the U.S. district court for the district in which a person is located has jurisdiction to review the Secretary's decision.

This final 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.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) requires agencies to consider the economic impact of each rule on small entities and evaluate alternatives that would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the market. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small business will not be unduly or disproportionately burdened. Section 605 of RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

Pursuant to the requirements set force in the RFA, AMS performed an economic impact analysis on small entities in the final rule published in the Federal Register on December 21, 2000 (65 FR 80548). AMS has also considered the economic impact of this final rule on small entities. AMS certifies that this rule would not have a significant economic impact on a substantial number of small entities.

Small agricultural service firms, which include producers, handlers, and accredited certifying agents, have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $7,000,000 and small agricultural producers are defined as those having annual receipts of less than $750,000.

According to Economic Research Service (ERS) data, based on information from USDA accredited certifying agents, the number of certified U.S. organic crop and livestock operations totaled nearly 13,000 and certified organic acreage exceeded 4.8 million acres in 2008. 12 ERS, based upon the list of certified operations maintained by the NOP, estimated the number of certified handling operations was 3,225 in 2007. 13 AMS estimates that there were 30,118 operations certified to the NOP in 2011. USDA has 93 accredited certifying agents that provide certification services to producers and handlers under the NOP. A complete list of names and addresses of certifying agents may be found on the AMS NOP Web site at: http://www.ams.usda.gov/nop . AMS believes that most of these entities would be considered small entities under the criteria established by the SBA.

This final rule will affect all certifying agents by requiring that each agent conduct residue testing from a minimum of five percent of the operations they certify on an annual basis. This level was chosen to ensure that all certifying agents, regardless of the number of operations they certify, are responsible for some level of regular residue testing at reasonable cost. Under section 205.670, certifying agents have been responsible for expenses associated with preharvest and postharvest testing; this requirement also applies to expenses for periodic residue testing in this final rule. To estimate the annual costs associated with instituting periodic residue testing, the NOP conducted a preliminary assessment of costs at different minimum testing requirements (i.e., 5%, 25%, and 100% of certified operations).

Under this new action with a five percent minimum testing requirement, the two certifying agents with the largest number of certified operations (approximately 2,100 operations each in 2009) are required to collect a minimum of 105 samples. Smaller certifying agents (those certifying fewer than 30 operations) are required to collect and test at least 1 sample on an annual basis. In 2010, approximately one-third of accredited certifying agents certified fewer than 30 operations to the NOP. 14 Over half of all certifying agents certified fewer than 200 operations in 2010 and are required to sample 10 or fewer operations annually under this final rule.

At a five percent minimum testing requirement, the costs of sampling are estimated from approximately $492 to 51,106 per certifying agent per year based on the average cost of $492 per sample and the range in the number of operations certified by different certifying agents. Additional costs may be required to follow up on results if prohibited substances are detected. AMS expects that the majority of results will be for samples with no prohibited residues detected, based on historical data from the AMS Pesticide Data Program.

AMS is establishing a five percent testing level in this final rule because this level is expected to be, in most cases, no more than two percent of a given certifying agent's operating budget, a level that can be considered a reasonable cost to the organic industry given the benefits of residue testing in discouraging the mislabeling of agricultural products. Furthermore, the number of samples required at a five percent level is consistent with the amount of residue sampling already being conducted by some certifying agents. As a percentage of a certifying agent's total operating costs, this estimate was revised upward from one percent to two percent, based on public comment received in response to the proposed rule. Comments included a summary of data from an association representing certifying agents, and included data from 25 certifying agents. The range of costs was reported at between 1% and 11% of a certifying agent's overall operating budget, with one certifying agent reporting that the cost of one sample would account for 11% of their total operating costs for the year and one certifying agent reporting that the cost for three samples would account for 1% of their total operating costs. The majority of these certifying agents estimated the costs associated with this action to account for no more than 2% of their operating budget annually.

Alternatives to this final rule that were considered include (1) maintaining the status quo; (2) distinguishing periodic residue testing from risk-based testing for purposes of calculating the percentage of operations to be tested annually; (3) requiring testing at an alternate level of 25% of the operations certified by a certifying agent; and (4) testing all certified operations annually.

These are discussed in detail above under Alternatives Considered . AMS determined that the alternatives of a statistically based sample size (i.e., 25% of operations annually) or testing all operations annually were not practical due to the costs and the uneven burden that could be placed upon smaller certifying agents in either scenario.

The U.S. sales of organic food and beverages have grown from $3.6 billion in 1997 to nearly $21.1 billion in 2008. 15 Between 1990 and 2008, organic food sales have historically demonstrated a growth rate between 15 to 24 percent each year. In 2010, organic food sales grew 7.7%. 16

The NOP is authorized under OFPA to implement regulations that require accredited certifying agents to conduct residue testing of organically produced agricultural products (7 U.S.C. § 6511). In addition, the OFPA requires that the NOP include provisions for periodic residue testing by certifying agents of agricultural products produced or handled in accordance with the NOP (7 U.S.C. § 6506). This final rule ensures that all certifying agents conduct a minimal level of residue testing.

Residue testing plays an important role in organic certification by providing a means for monitoring compliance with the NOP and by discouraging the mislabeling of agricultural products. Testing of organically produced agricultural products is promulgated in section 205.670 of the NOP regulations. This section provides that the Secretary, State organic programs, and certifying agents may require preharvest or postharvest testing of any agricultural input used or agricultural product to be sold, labeled, or represented as “100 percent organic,” “organic,” or “made with organic (specified ingredients or food group(s))” when there is reason to believe that the agricultural input or product has come into contact with a prohibited substance or has been produced using excluded methods.

However, AMS has concluded that, under 7 U.S.C. § 6506 of the OFPA, accredited certifying agents are required to conduct residue testing of organic products on a regular and reoccurring basis, as well as when there is reason to believe contamination has occurred.

The final rule is necessary to clarify a requirement of OFPA that certifying agents conduct periodic residue testing of organic products. The final rule will increase the amount of residue testing that certifying agents must conduct when compared to the current regulations. This final rule ensures that certifying agents are conducting a minimal level of residue testing on a regular and reoccurring basis.

The cost of testing is to be borne by the applicable certifying agent and is considered a cost of doing business.

The population that is directly impacted by this final rule is accredited certifying agents. The USDA has 93 certifying agents who provide certification services to producers and handlers under the NOP. A complete list of names and addresses of certifying agents may be found on the AMS NOP Web site at: http://www.ams.usda.gov/nop . AMS believes that most accredited certifying agents would be considered small entities under the criteria established by the SBA. Approximately 30,118 operations worldwide were certified to the NOP standard in 2011; certified operations may be indirectly impacted by this action as additional operations will be subject to residue testing by certifying agents.

For certifying agents who are not currently conducting residue testing at the minimum levels specified in the final rule, this action will increase costs. AMS has estimated costs at $492 per sample. At an estimated cost of $492 per sample and a sampling rate of 5% of certified operations, certifying agents would need to budget an estimated $25 per certified operation for testing costs. The total costs of residue testing are estimated at approximately $492 to $51,106 per certifying agent per year based on the average cost of $492 per sample and the range in the number of operations certified by different certifying agents. Additional costs may be required to follow up on results if prohibited substances are detected. The portion of the total estimated costs would be considered new or additional costs as a result of this action is not known, as a minority of certifying agents are already conducting residue testing of organic products and have budgeted for these costs under their existing fee structures. If these costs have not been previously budgeted for by the certifying agent, it will need to account for these costs as part of their cost of business.

To reduce additional inspector costs associated with sample collection, AMS has not specified which operations must be sampled annually or when the samples must be collected. This is intended to provide flexibility to the certifying agent implement a schedule for sample collection in the most efficient manner.

The final rule will increase costs for certifying agents who are not currently performing residue testing at the minimal levels specified in this rule. Some certifying agents may increase their certification fees for its clients to pay for additional costs associated with residue testing. At an estimated cost of $492 per sample and a sampling rate of 5% of certified operations, certifying agents would need to budget approximately $25 per operation for testing costs.

This final rule clarifies a provision of OFPA and the regulations issued thereunder that requires periodic residue testing of organically produced agricultural products by accredited certifying agents. The final rule expands the amount of residue testing of organically produced agricultural products by clarifying that sampling and testing are required on a regular basis. The final rule requires that certifying agents, on an annual basis, sample and conduct residue testing from a minimum of five percent of the operations that they certify.

AMS believes that the benefits of residue testing in protecting organic integrity and ensuring compliance with the regulations outweigh the estimated costs.

In accordance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) that implement the Paperwork Reduction Act (44 U.S.C. 3501-3520) (PRA), the information collection requirements associated with the NOP have been previously approved by OMB and assigned OMB control number 0581-0191. A new information collection package was submitted to OMB at the proposed rule stage for approval of 776 hours in total burden hours to cover this new collection and recordkeeping burden of the amendments to section 205.670 of this final rule. Between the proposed rule and this final rule, there is a reduction of 350 hours based on comments received. Upon OMB's approval of this new information collection, the NOP intends to merge this collection into currently approved OMB Control Number 0581-0191.

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

AMS has reviewed this rule in accordance with the Department Regulation 4300-4, Civil Rights Impact Analysis (CRIA), to address any major civil rights impacts the rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, AMS has determined that this rule has no potential for affecting certified operations or certifying agents in protected groups differently than the general population of certified operations and certifying agents. This rulemaking was initiated to clarify a regulatory requirement and enable consistent implementation and enforcement.

Protected individuals have the same opportunity to participate in the NOP as non-protected individuals. The NOP regulations prohibit discrimination by certifying agents. Specifically, section 205.501(d) of the current regulations for accreditation of certifying agents provides that “No private or governmental entity accredited as a certifying agent under this subpart shall exclude from participation in or deny the benefits of the NOP to any person due to discrimination because of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital or family status.” Section 205.501(a)(2) requires “certifying agents to demonstrate the ability to fully comply with the requirements for accreditation set forth in this subpart” including the prohibition on discrimination. The granting of accreditation to certifying agents under section 205.506 requires the review of information submitted by the certifying agent and an on-site review of the certifying agent's operation. Further, if certification is denied, section 205.405(d) requires that the certifying agent notify the applicant of their right to file an appeal to the AMS Administrator in accordance with section 205.681. These regulations provide protections against discrimination, thereby permitting all handlers, regardless of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital or family status, who voluntarily choose to adhere to the final rule and qualify, to be certified as meeting NOP requirements by an accredited certifying agent. This final rule in no way changes any of these protections against discrimination.

For the reasons set forth in the preamble, 7 CFR part 205 is amended as follows:

The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions are impracticable because these procedures would significantly delay issuance of the design approval and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On April 5, 2012, Flight Structures, Inc. applied for a supplemental type certificate for installing seats that include non-traditional, large, non-metallic panels in Boeing Model 757 series airplanes. The Boeing Model 757 series airplanes, currently approved under Type Certificate No. A2NM, are swept-wing, conventional tail, twin-engine, turbo-fan-powered, single aisle, medium-sized transport category airplanes.

The applicable regulations to airplanes currently approved under Type Certificate No. A2NM do not require seats to meet the more stringent flammability standards required of large, non-metallic panels in the cabin interior. At the time the applicable rules were written, seats were designed with a metal frame covered by fabric, not with large, non-metallic panels. Seats also met the then-recently-adopted standards for flammability of seat cushions. With the seat design being mostly fabric and metal, the contribution to a fire in the cabin had been minimized and was not considered a threat. For these reasons, seats did not need to be tested to heat release and smoke emission requirements.

Seat designs have now evolved to occasionally include non-traditional, large, non-metallic panels. Taken in total, the surface area of these panels is on the same order as the sidewall and overhead stowage bin interior panels. To provide the level of passenger protection intended by the airworthiness standards, these non-traditional, large, non-metallic panels in the cabin must meet the standards of Title 14, Code of Federal Regulations (14 CFR), part 25, Appendix F, parts IV and V, heat release and smoke emission requirements.

Under the provisions of § 21.101, Flight Structures, Inc. must show that the Boeing Model 757 series airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A2NM or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. A2NM are as follows:

For Boeing Model 757-200 series airplanes—part 25, as amended by Amendment 25-1 through Amendment 25-45. In addition, an equivalent safety finding exists with respect to § 25.853(c), Compartment interiors.

For Boeing Model 757-300 series airplanes—part 25, as amended by Amendment 25-1 through Amendment 25-85 with the exception listed: Section 25.853(d)(3), Compartment interiors, at Amendment 25-72.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 757 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

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

In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 757 series airplanes must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

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

The Boeing Model 757 series airplanes will incorporate the following novel or unusual design features: These models offer interior arrangements that include passenger seats that incorporate non-traditional, large, non-metallic panels in lieu of the traditional metal frame covered by fabric. The flammability properties of these panels have been shown to significantly affect the survivability of the cabin in the case of fire. These seats are considered a novel design for transport category airplanes that include Amendment 25-61 and Amendment 25-66 in the certification basis, and were not considered when those airworthiness standards were established.

The existing regulations do not provide adequate or appropriate safety standards for seat designs that incorporate non-traditional, large, non-metallic panels in their designs. In order to provide a level of safety that is equivalent to that afforded to the balance of the cabin, additional airworthiness standards, in the form of special conditions, are necessary. These special conditions supplement § 25.853. The requirements contained in these special conditions consist of applying the identical test conditions required of all other large panels in the cabin, to seats with non-traditional, large, non-metallic panels.

A non-traditional, large, non-metallic panel, in this case, is defined as a panel with exposed-surface areas greater than 1.5 square feet installed per seat place. The panel may consist of either a single component or multiple components in a concentrated area. Examples of parts of the seat where these non-traditional panels are installed include, but are not limited to seat backs, bottoms and leg/foot rests, kick panels, back shells, credenzas and associated furniture. Examples of traditional exempted parts of the seat include: arm caps, armrest close-outs such as end bays and armrest-styled center consoles, food trays, video monitors, and shrouds.

“Exposed” is considered to include panels that are directly exposed to the passenger cabin in the traditional sense, and panels that are enveloped, such as by a dress cover. Traditional fabrics or leathers currently used on seats are excluded from these special conditions. These materials must still comply with § 25.853(a) and § 25.853(c) if used as a covering for a seat cushion, or § 25.853(a) if installed elsewhere on the seat. Non-traditional, large, non-metallic panels covered with traditional fabrics or leathers will be tested without their coverings or covering attachments.

In the early 1980s, the FAA conducted extensive research on the effects of post-crash flammability in the passenger cabin. As a result of this research and service experience, the FAA adopted new standards for interior surfaces associated with large surface area parts. Specifically, the rules require measurement of heat release and smoke emission (part 25, Appendix F, parts IV and V) for the affected parts. Heat release has been shown to have a direct correlation with post-crash fire survival time. Materials that comply with the standards (i.e., § 25.853 titled “Compartment interiors” as amended by Amendment 25-61 and Amendment 25-66) extend survival time by approximately two minutes over materials that do not comply.

At the time these standards were written, the potential application of the requirements of heat release and smoke emission to seats was explored. The seat frame itself was not a concern because it was primarily made of aluminum and there were only small amounts of non- metallic materials. It was determined that the overall effect on survivability was negligible, whether or not the food trays met the heat release and smoke requirements. The requirements therefore did not address seats. The preambles to both the Notice of Proposed Rule Making, Notice No. 85-10 (50 FR 15038, April 16, 1985) and the Final Rule at Amendment 25-61 (51 FR 26206, July 21, 1986), specifically note that seats were excluded “because the recently-adopted standards for flammability of seat cushions will greatly inhibit involvement of the seats.”

Subsequently, the Final Rule at Amendment 25-83 (60 FR 6615, March 6, 1995) clarified the definition of minimum panel size: “It is not possible to cite a specific size that will apply in all installations; however, as a general rule, components with exposed-surface areas of one square foot or less may be considered small enough that they do not have to meet the new standards. Components with exposed-surface areas greater than two square feet may be considered large enough that they do have to meet the new standards. Those with exposed-surface areas greater than one square foot, but less than two square feet, must be considered in conjunction with the areas of the cabin in which they are installed before a determination could be made.”

In the late 1990s, the FAA issued Policy Memorandum 97-112-39, Guidance for Flammability Testing of Seat/Console Installations, October 17, 1997. That memo was issued when it became clear that seat designs were evolving to include large, non-metallic panels with surface areas that would impact survivability during a cabin fire event, comparable to partitions or galleys. The memo noted that large surface area panels must comply with heat release and smoke emission requirements, even if they were attached to a seat.

If the FAA had not issued such policy, seat designs could have been viewed as a loophole to the airworthiness standards that would result in an unacceptable decrease in survivability during a cabin fire event.

In October 2004, an issue was raised regarding the appropriate flammability standards for passenger seats that incorporated non-traditional, large, non-metallic panels in lieu of the traditional metal covered by fabric. The Seattle Aircraft Certification Office and Transport Standards Staff reviewed this design and determined that it represented the kind and quantity of material that should be required to pass the heat release and smoke emissions requirements. We have determined that special conditions would be promulgated to apply the standards defined in § 25.853(d) to seats with large, non-metallic panels in their design.

As discussed above, these special conditions are applicable to the Boeing Model 757 series airplanes. Should Flight Structures, Inc. apply at a later date for a supplemental type certificate to modify any other model included on Type Certificate No. A2NM to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on the Boeing Model 757 series of airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Boeing Model 757 series airplanes modified by Flight Structures, Inc.

1. Except as provided in paragraph 3 of these special conditions, compliance with 14 CFR part 25, Appendix F, parts IV and V, heat release and smoke emission, is required for seats that incorporate non-traditional, large, non-metallic panels that may either be a single component or multiple components in a concentrated area in their design.

2. The applicant may designate up to and including 1.5 square feet of non-traditional, non-metallic panel material per seat place that does not have to comply with special condition Number 1, above. A triple seat assembly may have a total of 4.5 square feet excluded on any portion of the assembly (e.g., outboard seat place 1 square foot, middle 1 square foot, and inboard 2.5 square feet).

3. Seats do not have to meet the test requirements of 14 CFR part 25, Appendix F, parts IV and V, when installed in compartments that are not otherwise required to meet these requirements. Examples include:

a. Airplanes with passenger capacities of 19 or less,

b. Airplanes that do not have § 25.853, Amendment 25-61 or later, in their certification basis and do not need to comply with the requirements of 14 CFR 121.312, and

c. Airplanes exempted from § 25.853, Amendment 25-61 or later.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on August 16, 2012 (77 FR 49394). That NPRM proposed to correct an unsafe condition for the specified products. The Mandatory Continuing Airworthiness Information (MCAI) states:

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (77 FR 49394, August 16, 2012) or on the determination of the cost to the public.

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

• Are consistent with the intent that was proposed in the NPRM (77 FR 49394, August 16, 2012) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (77 FR 49394, August 16, 2012).

We estimate that this AD will affect 83 products of U.S. registry. We also estimate that it will take about 7 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $49,385, or $595 per product.

In addition, we estimate that any necessary follow-on actions would take about 2 work-hours and require parts costing $0, for a cost of $170 per product. We have no way of determining the number of products that may need these actions.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM (77 FR 49394, August 16, 2012), the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM published in the Federal Register on May 19, 2011 (76 FR 28914). That NPRM proposed to require incorporating a design change to the rudder control system and/or other systems to address the unsafe condition.

Since we issued the NPRM (76 FR 28914, May 19, 2011), Airbus has issued the following service information:

• Airbus Mandatory Service Bulletin A300-22-6055, Revision 01, including Appendix 01, dated May 31, 2012

• Airbus Service Bulletin A300-22-6054, including Appendix 01, dated June 20, 2012

• Airbus Service Bulletin A300-22-6056, dated April 25, 2012

• Airbus Service Bulletin A300-31-6140, dated May 4, 2012

• Airbus Mandatory Service Bulletin A310-22-2064, Revision 01, including Appendix 01, dated May 31, 2012

• Airbus Service Bulletin A310-22-2063, including Appendix 01, dated June 20, 2012

• Airbus Service Bulletin A310-22-2065, dated April 25, 2012

• Airbus Service Bulletin A310-31-2144, dated May 4, 2012

These service bulletins describe procedures related to the SRIW modification. The procedures include installing a SRIW device, activating the SRIW device, upgrading the flight control computer to introduce the SRIW logic, and upgrading the flight warning computer. We have revised paragraph (g) in this final rule to allow accomplishment of this modification as an optional method of compliance with the requirements of the AD.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the proposal (76 FR 28914, May 19, 2011) and the FAA's response to each comment.

The National Transportation Safety Board (NTSB) and Air Line Pilots Association, International (ALPA), support the intent of the NPRM (76 FR 28914, May 19, 2011).

UPS and FedEx requested that we withdraw the NPRM (76 FR 28914, May 19, 2011).

UPS stated that, in light of its existing operational and monitoring processes, the cost of the NPRM (76 FR 28914, May 19, 2011) would be a severe and unnecessary burden relative to its benefit. UPS stated that its flightcrews operate the airplanes in a manner that would not warrant the need for the proposed systems. UPS described its A300 flight training program, flight operations quality assurance (FOQA) program, and manual changes that were prompted by the incidents, and added that its training and awareness programs have been enhanced to specifically address the inherent high-speed sensitivity or response of the A300 rudder control system. UPS concluded that its flight training program emphasizes proper use of the rudder for which the rudder has been certified, and its robust FOQA program coupled with a review of maximum lateral loading from actual flights demonstrates that UPS flightcrews do not induce heavy side loading with improper rudder use. In addition, UPS stated that the FAA has already taken numerous actions to address this safety issue.

FedEx stated that its current flightcrew training practices have ensured elimination of excessive rudder pedal inputs on FedEx's Model A300-600 and A310 series airplanes. FedEx further detailed that it has monitored and recorded events of lateral G exceedences at FedEx as a result of FAA AD 2002-06-09, Amendment 39-12686 (67 FR 13259, March 22, 2002; corrected at 67 FR 51459, August 8, 2002), and all such events have been a result of something other than pilot rudder pedal input.

Although the FAA agrees with the importance of enhanced training and operational awareness of Model A300 and A310 rudder pedal sensitivity, we disagree to withdraw the NPRM (76 FR 28914, May 19, 2011). The National Transportation Safety Board (NTSB) found that the rudder pedal's sensitivity contributed to the American Airlines flight 587 accident, and, during a recent upset on an airplane with a similar system, the pilot made excessive pedal input, thinking he was actually correcting an airplane malfunction. Even with significant emphasis on training and rudder pedal sensitivity awareness, however, there have been additional full rudder pedal reversal occurrences on airplanes with similar rudder control systems. We have concluded that training alone is inadequate, and we have determined that a modification such as the pedal travel limiter unit (PTLU) or other design modification is necessary to address the unsafe condition. We have not changed the final rule regarding this issue. Based on the best information available on possible flightcrew training and possible design modifications, we have identified the need to incorporate a design change that will further address this unsafe condition. In addition, the FAA has tasked a joint authority-industry group to recommend criteria that might be used to evaluate other models. Upon acceptance of appropriate criteria, the FAA will begin to assess other in-service airplanes. Currently, the group is scheduled to complete its work in late 2013. See the FAA's response to the comments under “Request to Expand Applicability” in this final rule.

In addition to supporting design enhancements to prevent inadvertent rudder over control, ALPA stated there should continue to be emphasis on the appropriate use of rudder in training programs.

The FAA agrees with the commenter that training programs are beneficial. Since the American Airlines Flight 587 accident, the FAA has emphasized training with letters to all affected operators notifying them of concerns regarding the need for industry-wide pilot knowledge and training on proper use of rudder pedals, in addition to the potential consequences of some maneuvers that might exceed the structural limits of the vertical tail. The FAA also tasked a working group to help develop specific training programs for rudder usage on all transport category airplanes. The FAA has also added language in section 25.1583(a)(3) of the Federal Aviation Regulations (14 CFR 25.1583(a)(3)) to warn against control reversals. Training will continue to be emphasized in the future; however, the intent of this AD is to require a design change be made to the airplane to correct the unsafe condition. We have not changed this final rule regarding this issue.

Airbus suggested that, in lieu of the PTLU design modification discussed in the NPRM (76 FR 28914, May 19, 2011), we revise the NPRM to add another way to comply—by installing a warning light on the glareshield directly in front of each pilot and an associated “stop rudder inputs” aural warning, in addition to revising the airplane flight manual and reinforced flightcrew training. Airbus noted that flightcrew failure to use proper techniques was a contributing factor to the excessive rudder pedal inputs.

According to Airbus, its warning system will deter pilots from continuing the application of rapid alternating and large rudder pedal inputs, and is a more suitable solution than the PTLU modification proposed by the FAA.

We acknowledge Airbus's suggested solution, which was unavailable for consideration at the time we issued the NPRM (76 FR 28914, May 19, 2011). Following the receipt of the Airbus comments, the FAA has evaluated the Airbus alternative and found the “stop rudder inputs” warning (SRIW) modification combined with suitable flightcrew training programs provides an acceptable mitigation for the unsafe condition. As stated previously, we agree to change this final rule to allow the SRIW modification as an optional method of compliance with the requirements of the AD. In addition, since we issued the NPRM, the European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2012-0088, dated June 25, 2012, to require installation of the SRIW modification on Model A300-600 and A310 series airplanes to address this unsafe condition.

Francis Gentile requested that we revise the NPRM (76 FR 28914, May 19, 2011) to include, as one way to comply with the NPRM, the option to tape a yaw string onto the front windows to give the pilot maximum feedback against excessive yaw and pilot-induced oscillation.

We disagree with this request. The unsafe condition presents itself with dynamic yaw excursions linked to rudder pedal reversals. Yaw indicators already present on the flight deck have not proven effective in previous rudder pedal reversal events.

Mr. Gentile also suggested adhering a pointed cone on each rudder pedal to give the pilot the progressive feedback sensation of force applied to the pedal and possibly cause pain in the ball of the foot or a twisting ankle to deter the pilot from making inputs or at least alert the pilot to stop making such an input. The commenter pointed out that this solution might be less expensive than the proposed modification. The commenter noted that the cone might also interfere with other pedal functions such as braking.

We do not agree with this comment. The commenter has provided an unproven design suggestion. There is no evidence that such devices would be effective at preventing the unsafe condition. The rudder pedals are used normally for taxiing and flying the airplane. Adding cone devices to the pedals may interfere with normal pedal usage. There are certain safety-critical conditions where it is necessary for the pilot to apply rapid hard pedal inputs. Anything that interferes with the pilot's ability to make necessary inputs could reduce safety. Such devices might also defeat the purpose of the pedal adjustment feature that allows shorter or taller pilots to use the pedal, and affect appropriate steering and braking. Under the provisions of paragraph (h) of this AD, however, we will consider requests for approval of different compliance methods if sufficient data are submitted to substantiate that the change would provide an acceptable level of safety.

We have not changed the AD regarding these issues.

Airbus questioned the basis for the NPRM (76 FR 28914, May 19, 2011)—that rudder pedal sensitivity is limited to Model A300-600 and A310 series airplanes. Airbus added that rapid alternating and large pilot rudder inputs while enroute are inappropriate and have the potential to be unsafe for a wider fleet of large transport airplanes. Airbus identified several resources supporting this position.

We infer that Airbus wants us to expand the applicability of the NPRM (76 FR 28914, May 19, 2011), or otherwise consider similar rulemaking to extend to other airplane models and airplanes produced by other manufacturers. While the FAA has not determined that an unsafe condition exists on other airplanes, we are considering a number of factors on other airplanes, including pedal reversals, pedal sensitivity, and airplane dynamics and fin loads. NTSB Safety Recommendation A-04-56 recommends developing a revised standard to ensure safe handling qualities in the yaw axis throughout the flight envelope, including limits for rudder pedal sensitivity. Currently an FAA aviation rulemaking advisory committee (ARAC) has been assigned to evaluate this safety recommendation. Pending the ARAC recommendation, the FAA will determine whether other airplanes have a similar unsafe condition that needs to be addressed by rulemaking or airworthiness actions. We have not changed the final rule regarding this issue.

Airbus requested that we revise the applicability of the NPRM (76 FR 28914, May 19, 2011) to remove Model A310-200 airplanes because their remaining service life is short.

We disagree with the request. Service life projections vary among operators and are difficult to accurately determine. Airbus did not provide any specific service life projections. In addition, the utilization rate of these airplanes is low, which can preserve and extend their life. We therefore do not consider this request to have adequate justification. We have not changed the final rule regarding this issue.

FedEx requested that we extend the proposed compliance time to account for development time for the PTLU.

We disagree with the request. We have determined that the unsafe condition warrants corrective action within the specified time frame. If developing the PTLU and incorporating the mandated changes require additional time, the FAA may consider revising the AD to extend the compliance time, or provide such relief through approval of an AMOC to extend the compliance time of the AD according to the provisions of paragraph (h) of this AD. We have not changed the final rule regarding this issue.

FedEx requested that we revise the compliance time in the NPRM (76 FR 28914, May 19, 2011) to allow time to incorporate new maintenance procedures to accommodate the proposed modification. Based on past experience, FedEx considered the proposed 48-month compliance time unrealistic to account for changes in maintenance programs. FedEx also requested that we extend the proposed compliance time to 72 months to allow time to revise the master minimum equipment list (MMEL) to support dispatch reliability of the newly installed system. UPS stated that at least 6 years would be needed to install the PTLU on its fleet.

We disagree with the FedEx proposal. In determining the appropriate compliance time for this AD, we considered many factors, including those related to maintenance program adjustments. Further, once the PTLU is developed and ready for incorporation on the fleet, operators may request MMEL relief via an AMOC request to the AD. We determined that the compliance time, as proposed, will maintain the necessary level of safety and allow adequate time for operators to modify their maintenance program. We have not changed the final rule regarding this issue.

Airbus requested that we revise the proposed compliance time to consider the Airbus design service goals (DSGs) for the affected airplanes. Airbus provided a proposed grace period for any airplane close to its DSG value near the end of the compliance time, until the airplane's certificate of airworthiness is withdrawn.

We disagree with the request. This AD includes all airplanes that have the defined unsafe condition regardless if the airplane is currently in operation, or has been removed from service. As Airbus has described the operators may choose to further invest in the airplanes and operate them in what Airbus calls the extended service goals (ESG). This AD does not prevent an airplane from being operated beyond the DSG so a grace period for any airplane close to its DSG does not maintain an adequate level of safety. Under the provisions of paragraph (h) of this final rule, however, we will consider requests to approve an extension of the compliance time if sufficient data are submitted to substantiate that the extension would also provide an acceptable level of safety. We have not changed the final rule regarding this issue.

Two commenters expressed concern about the length of time it has taken to develop and mandate a fix for the unsafe condition.

The NTSB, although encouraged by the various actions being considered to address the unsafe condition, was concerned about the lack of a definitive fix for the rudder system. Since the exact details of the PTLU fix have not yet been available, the NTSB could not determine the benefit of this system. The NTSB was also concerned about the amount of time spent to make the design change available to operators.

Geoffrey Barrance also questioned this timeframe, and asked whether we have new information about the need to mandate a modification of the rudder system.

The FAA understands the NTSB concern about the lack of definitive PTLU design information provided with the NPRM (76 FR 28914, May 19, 2011), and the concern about the amount of time that has transpired to make a design change available to operators. As stated in the NPRM, there were no service instructions available at that time to address the unsafe condition. However, the FAA determined that taking additional time to develop service information before beginning the corrective action notification process was not in the public's interest. Since the date of the NPRM publication, Airbus has developed a design change that is a more cost-effective solution than the originally planned PTLU, which has also received design approval by the EASA and the FAA.

Geoffrey Barrance acknowledged the FAA's possible reluctance to limit the corrective action to a single technical approach, but questioned why it would take 3 years to mandate installation of the PTLU.

We have established a compliance time of 4 years to implement the required design change, including an estimated 3-year timeframe for developing and approving a modification that ensures that parts and installation instructions are available. The FAA is confident that a modification will be available in a timely manner and that the compliance time, as proposed, will leave adequate time for operators to implement the changes required by this AD. We have not changed the final rule regarding this issue.

Based on its request for an alternative solution to the unsafe condition, Airbus requested changes to the Discussion section of the NPRM (76 FR 28914, May 19, 2011).

Where the NPRM (76 FR 28914, May 19, 2011) referred to events of “excessive rudder pedal inputs” that resulted in high vertical stabilizer loads, Airbus suggested that we recharacterize the events as “excessive rapid alternating and large pilot rudder pedal inputs.” Airbus described the reported conditions that support this finding.

Where the NPRM (76 FR 28914, May 19, 2011) describes the PTLU as one option under consideration for the modification to the rudder control system, Airbus suggested that we also state that the PTLU has no effect on crew awareness that rapid alternating and larger rudder inputs addressed in section 25.1583 of the Federal Aviation Regulations (14 CFR 25.1583) are always inappropriate. Airbus stated that if a flightcrew were to perform such inputs, the loads created would be lower for an airplane fitted with a PTLU than one without a PTLU. But the flightcrew would still have the potential to add to the loads in the same direction induced on the vertical stabilizer by an increasing sideslip. Airbus concluded that high loads to the vertical stabilizer will occur anyway if the pilot continues to use the inappropriate piloting technique, but a given level of high loads and the associated hazard will be reached a few seconds later for an airplane fitted with a PTLU.

We agree that the requested changes might clarify the background information of the NPRM (76 FR 28914, May 19, 2011). The Discussion section, however, is not restated in a final rule, so we have not changed the final rule regarding this issue.

Francis Gentile requested that we add a journal article to the AD docket. This article indicated the need for design improvements to relieve the limited adaptive capability of pilots.

We acknowledge the commenter's request, but the article was not part of the AD development process and would serve no purpose in the AD docket. In light of potential proprietary issues and the appropriateness of posting this type of article in the AD docket, we have not changed the final rule regarding this issue.

ALPA requested an evaluation of rudder pedal sensitivity and means to prevent inadvertent over control.

The FAA has already tasked the ARAC to consider general rulemaking in 14 CFR part 25 to address pedal sensitivity as well as several other considerations to ensure that pilot-commanded pedal reversals are safe or precluded, or that the system design reduces the likelihood of pedal reversals. We have not changed the final rule regarding this issue.

The NTSB requested information on Airbus's development of a flight deck warning light that does not incorporate any mechanical changes to the rudder system. The NTSB is concerned that a warning light alone will not rectify the unsafe condition.

The SRIW warning modification consists of a prominent warning light and a loud verbal warning directing the pilot to cease inputs to the rudder. After reviewing the design, analyses, and simulator demonstrations, the FAA has concluded that these alerts, taken together, are compelling, timely, and will prevent the flightcrew from continuing the inappropriate rudder inputs prior to exceeding the ultimate design loads that could result in failure of the vertical stabilizer. The FAA has determined that the SRIW modification, combined with suitable flightcrew training programs, provides an acceptable mitigation for the unsafe condition.

As explained previously, we have changed the final rule to include the SRIW modification as one approved method for complying with this AD.

Airbus noted that the NPRM (76 FR 28914, May 19, 2011) included estimated costs only for the PTLU installation. Airbus requested that we revise the NPRM to include the estimated costs to install an alert warning system. UPS asserted that the NPRM underestimated the costs of the proposed modification, which would involve upgrading computers and installing warning light consoles, switching relays, and associated interconnect wiring.

We agree to revise the cost estimate. Cost information for the alert warning system was not available when we issued the NPRM (76 FR 28914, May 19, 2011). As one of the modifications accepted by the FAA, it should be included. We have revised the Costs of Compliance section accordingly in this final rule.

Airbus requested that we revise paragraph (d) of the NPRM (76 FR 28914, May 19, 2011) to add ATA Code 31, Instruments, to reflect Airbus's proposal to install a crew warning as one way to comply with the NPRM.

We agree with the request and rationale. We have changed paragraph (d) in this final rule accordingly.

Mr. Barrance asked whether the NPRM (76 FR 28914, May 19, 2011) addressed NTSB SRs A-04-56 and A-04-57, and whether failure to refer to SR A-04-58 was an omission.

An FAA ARAC is considering general rulemaking to address rudder pedal sensitivity, including factors beyond those specified in this AD. This AD is in response to SRs A-04-058, A-04-044, and A-04-063. We have not changed the final rule regarding this issue.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We also determined that these changes will not increase the economic burden on any operator or increase the scope of the AD.

We estimate that this AD will affect 215 airplanes of U.S. registry.

The unsafe condition may be addressed by installing a PTLU or alert warning system, although these may not be the only acceptable methods. The following table provides the estimated costs for U.S. operators to comply with this AD, based on preliminary information provided by the manufacturer.

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

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

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

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

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

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

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

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

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

Discussion

On May 11, 2012, at 77 FR 27663, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 to include an AD that would apply to AAI crosstubes installed on Agusta Model AB412 and AB412EP, and Bell Model 205A, 205A-1, 205B, 212, 412, 412CF, and 412EP helicopters during production or based on an STC. That NPRM proposed to require creating a component history card or equivalent record and counting and recording the total number of landings for the crosstubes. It also proposed to require inspecting the crosstubes and replacing them if a crack or other damage exists. The proposed requirements were intended to prevent failure of a crosstube, collapse of the landing gear, and subsequent loss of control of the helicopter.

The NPRM was prompted by two reports from the field of crosstube failures. AAI issued Alert Service Bulletin AA-08055, Revision B, dated August 12, 2009 (ASB) to provide procedures for repetitively inspecting the high forward crosstubes to detect this condition.

We gave the public the opportunity to participate in developing this AD, but we received no comments on the NPRM (77 FR 27663, May 11, 2012).

We have reviewed the relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

We reviewed the AAI ASB, which specifies establishing a takeoff/landing history, recurrent visual and fluorescent penetrant inspections of the crosstubes, and dimensional inspections of the skid gear. We have also reviewed AAI Instructions for Continued Airworthiness (ICA) for Crosstubes, Report No. AA-01136, Revision K, dated February 15, 2012, which contains the information necessary for inspection and maintenance of each crosstube installed on the Agusta and Bell helicopters.

We estimate that this AD will affect 115 helicopters of U.S. Registry and that operators will incur the following costs to comply with this AD:

• Creating a historical record and determining the number of landings will require a half work hour at an average labor rate of $85 per hour for a cost per helicopter of about $42 and a cost to the U.S. operator fleet of $4,830 per inspection cycle.

• Preparing and inspecting the crosstube will require 8.5 work hours at an average labor rate of $85 per hour for a cost per helicopter of about $722 and a cost to the U.S. operator fleet of $83,030 per inspection cycle.

• Performing the dimensional inspection of the skid gear will require 1 work hour at an average labor rate of $85 per hour for a cost per helicopter of $85 and a cost to the U.S. operator fleet of $9,775 per inspection cycle.

• Fluorescent penetrant inspecting the crosstube will require 24 work hours at an average labor rate of $85 per hour for a cost per helicopter of $2,040 and a cost to the U.S. operator fleet of $234,600 per inspection cycle.

• If required, replacing a crosstube with an airworthy crosstube will require 10 work hours at an average labor rate of $85, required parts will cost $9,315, for a cost per helicopter of $10,165.

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

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

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

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

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

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

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

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

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on May 8, 2012 (77 FR 26998). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

We gave the public the opportunity to participate in developing this AD. We considered the comments received.

US Airways requested that we delete the requirement to complete Appendix 01 of Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011, which is the form for reporting inspection results to Airbus. US Airways stated that accomplishing this reporting is burdensome and does not improve the safety aspects of the inlet cowl inspections.

We agree because reporting is voluntary. Airbus has concurred that EASA AD 2011-0062, dated April 4, 2011, does not require reporting of the inspection findings and that it is Airbus's intent that reporting should be done on a voluntary basis. We have changed the final rule throughout to exclude Appendix 01 when referring to Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011.

US Airways requested that the piccolo tube link inspection be completely independent for each inlet cowl, and that a conservative approach could be incorporated in the NPRM (77 FR 26998, May 8, 2012) to allow only one broken piccolo tube link on an inlet cowl if the cowl remains in service on an airplane. US Airways stated that more than one broken piccolo tube link would mandate removal of the cowl prior to further flight. US Airways explained that the inspection results tie the serviceability of cowl being inspected to the condition of the inlet cowl installed on the other engine of the airplane. US Airways asserted that this will require a difficult and unnecessarily complicated management plan by an operator. US Airways reasoned that the serviceability of the inlet cowl being inspected should be determined independently of the inlet cowl installed on the other engine, and that Table 3 “Detailed Inspection of the Broken Piccolo Tubes Links” of Paragraph 1.E., “Compliance,” of Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011, contains 20 different scenarios related to the number of broken piccolo tube links in both the left and right inlet cowls and flight cycles achieved on each inlet cowl. US Airways stated that the left and right engines and nacelles are completely separate and designed to individually provide continued propulsion to the airplane in the event of failure of one engine; and that this is the basis of the FAA extended operations (ETOPS) rules.

We disagree with changing the piccolo tube link inspection requirements, and allowing one piccolo tube link broken on each inlet cowl. The criteria and corrective actions specified in Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011, represent the conditions for the safe operation of the airplane. Only one piccolo tube link broken on the airplane is allowed. The commenter did not provide sufficient data to substantiate that its request would provide an acceptable level of safety. Once we issue this AD, any person may request approval of an alternate methods of compliance (AMOC) under the provisions of paragraph (k) of this AD. We have not changed the AD in this regard.

US Airways recommended a change in the OBA and forward bulkhead inspection criteria, as follows.

• Cracks up to 9 inches in length on the OBA would be acceptable.

• Cracks up to 2 inches in length on the forward bulkhead would be acceptable.

• Re-inspection of the OBA and forward bulkhead would be required at subsequent intervals not to exceed 2,500 flight cycles.

• Replace the inlet cowl for any OBA crack of 22 inches or greater or any forward bulkhead crack of 13 inches or greater, would be required prior to further flight.

• Replace the inlet cowl for an OBA crack greater than 15 inches, but less than 22 inches, or any forward bulkhead crack greater than 9 inches, but less than 13 inches, within 100 flight cycles.

We disagree because Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011, which references Rolls-Royce Service Bulletin RB.211-71-AG416, dated September 3, 2010, provides the inspection criteria and allowable conditions for the safe operation of the airplane. The commenter did not present sufficient data to substantiate that the crack lengths in its first and second recommendations would provide an acceptable level of safety. Actions suggested by the commenter in its third, fourth, and fifth recommendations are already reflected in paragraphs (i)(1)(ii), (i)(2)(i), and (i)(2)(ii) of this AD. However, operators may request approval of an AMOC under the provisions of paragraph (k) of this AD if sufficient data are submitted to substantiate that the change would provide a acceptable level of safety. We have not changed the AD in this regard.

US Airways recommended a simpler re-inspection management plan of inspecting any engine inlet cowl that has achieved more than 5,000 flight cycles since new at repeat intervals not to exceed 2,500 flight cycles. US Airways stated that the engine inlet cowl inspection should follow Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011; and Rolls-Royce Service Bulletin RB.211-71-AG416, dated September 3, 2010; regarding the inspection schedule of the piccolo tube, the piccolo tube links, the OBA, and the forward bulkhead.

We disagree because Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011, which references Rolls-Royce Service Bulletin RB.211-71-AG416, dated September 3, 2010, specifies the repetitive inspection intervals for the safe operation of the airplane, which depend on the crack size. If the crack is within allowable limits, the inspection interval may be greater or less than 2,500 flight cycles as recommended by the commenter. Insufficient justification was submitted to substantiate a 2,500-flight-cycle inspection interval. However, under the provisions of paragraph (k) of this AD we will consider requests for an AMOC if sufficient data is submitted to justify an extended inspection interval for certain limits. We have not changed the AD in this regard.

Airbus requested that we change the word “engine” to “aircraft” in paragraph (h)(2) of the NPRM (77 FR 26998, May 8, 2012).

US Airways requested that we clarify the instructions in paragraph (h)(3) of the NPRM (77 FR 26998, May 8, 2012) by revising “* * * and the opposite intake cowl of the same engine has * * *,” to state “* * * and the intake cowl of the opposite engine has * * *.”

We agree to clarify paragraphs (h)(2) and (h)(3) of this AD. We changed the word “engine” to “airplane” in paragraphs (h)(2) and (h)(3) of the AD, since each engine has one inlet cowl.

Airbus requested that we remove the information that a broken piccolo tube could lead to in-flight damage of the engine and reduced TAI performance from the unsafe condition statement in the NPRM (77 FR 26998, May 8, 2012).

We agree with the commenter's requested wording change of the unsafe condition statement in this AD. In addition, we have revised the unsafe condition statement in this AD to match the unsafe condition statement defined in Airbus Mandatory Service Bulletin A330-71-3025, dated January 10, 2011. We have changed the Summary and Discussion sections, and paragraph (e) of the AD.

Airbus requested that we lower the repetitive inspection interval for the OBA and forward bulkhead inspections from 450 flight cycles to 250 flight cycles, and from 400 flight cycles to 200 flight cycles respectively. The commenter stated that these lower inspection intervals will be introduced in the forthcoming revisions of the Airbus and Rolls-Royce service information.

We disagree to change the repetitive inspection intervals in this AD. We have determined that the compliance times required by this AD adequately address the identified unsafe condition. However, if additional data are presented that would justify a shorter compliance time, we might consider further rulemaking on this issue. New revisions of the service information referenced in this AD have not been released. We have not changed the AD in this regard.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously, except for minor editorial changes. We have determined that these changes:

• Are consistent with the intent that was proposed in the NPRM (77 FR 26998, May 8, 2012) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (77 FR 26998, May 8, 2012).

Based on the service information, we estimate that this AD affects about 14 products of U.S. registry. We also estimate that it takes about 10 work-hours per engine to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of the AD on U.S. operators to be $11,900 per engine, or $850 per engine.

In addition, we estimate that any necessary follow-on actions would take about 16 work-hours per engine for a cost of $1,360 per engine. We have received no definitive data that would enable us to provide material cost estimates for the on-condition actions specified in this AD. We have no way of determining the number of products that might need these actions.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM (77 FR 26998, May 8, 2012), the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on July 11, 2012 (77 FR 40826). That NPRM proposed to correct an unsafe condition for the specified products. The Mandatory Continuing Airworthiness Information (MCAI) states:

We gave the public the opportunity to participate in developing this AD. We have considered the comment received.

Mesa Airlines requested that paragraph (i) of the NPRM (77 FR 40826, July 11, 2012), regarding credit for the previous actions, be revised to include credit for Bombardier Maintenance Review Board Report 57-10-305, Task 000-53-170-501, Detailed Inspection of the Wing-to-Fuselage Attachment Fittings—FS708.00, FS752.00, and FS797.00 at LBL45.0 and RBL45.0, as compliance for the initial inspection specified in paragraph (g) of the NPRM.

We disagree with the request to give credit for the initial inspection by accomplishing the task specified by the commenter. The intent of this AD is to ensure cotter pin installation, and while Task 000-53-170-501 inspects for corrosion and general condition of the wing attachment fittings, it does not specify inspecting the cotter pins. Therefore, the cotter pins could be missed during the inspection in Task 000-53-170-501. We have not changed the AD in this regard.

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

• Are consistent with the intent that was proposed in the NPRM (77 FR 40826, July 11, 2012) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (77 FR 40826, July 11, 2012).

We estimate that this AD will affect 366 products of U.S. registry. We also estimate that it will take about 5 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $155,550, or $425 per product.

We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD. We have no way of determining the number of products that may need these actions.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM (77 FR 40826, July 11, 2012), the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

On August 22, 2012, the FAA published a direct final rule that would have amended the scope of its chapter III regulations to give operators of Class 3 advanced high-power rockets the option of applying for a chapter III launch license or permit, or continuing to operate under 14 CFR chapter I, part 101. The direct final rule would have been strictly voluntary. Only those operators that wished to apply under chapter III for a license needed to do so. However, once an operator accepted an FAA license or permit, part 101 would no longer have applied, and the operator would have been governed by the provisions of chapter III for those rockets.

The Commercial Space Launch Act provides that the United States should encourage private sector launches, reentries, and associated services. The FAA initiated the direct final rule primarily to support those launch operators that, under contract with NASA, were required by NASA to obtain an FAA launch license. Because the rule was strictly voluntary, the FAA believed there was good cause to issue it as a direct final rule.

The FAA is withdrawing the direct final rule because the agency received several adverse comments. In brief, the commenters raised issues concerning the potential cost to small businesses and the government, both in terms of the resources necessary for preparing and evaluating applications and in terms of the conditional payment of excess claims commonly referred to as “indemnification.” Others expressed doubts about whether amateur rockets could ever meet chapter III requirements, whether applying those requirements to smaller vehicles made sense or was necessary, and whether safety issues were created.

Withdrawal of Amendment No. 400-4 does not preclude the FAA from a rulemaking on the subject in the future or committing the agency to any future course of action.

The FAA withdraws Amendment No. 400-4 published at 77 FR 50584 on August 22, 2012.

OSHA requests comments on all issues related to this direct final rule, including economic, paperwork, or other regulatory impacts of this rule on the regulated community. If OSHA receives no significant adverse comment, OSHA will publish a Federal Register document confirming the effective date of this direct final rule and withdrawing the companion proposed rule published in the “Proposed Rules” section of today's Federal Register . Such confirmation may include minor stylistic or technical changes to the document. For the purpose of judicial review, OSHA views the date of confirmation of the effective date of this direct final rule as the date of promulgation.

In direct final rulemaking, an agency publishes a direct final rule in the Federal Register with a statement that the rule will go into effect unless the agency receives significant adverse comment within a specified period. The agency may publish an identical proposed rule at the same time. If the agency receives no significant adverse comment in response to the direct final rule, the rule goes into effect. OSHA typically confirms the effective date of a direct final rule through a separate Federal Register notice. If the agency receives a significant adverse comment, the agency withdraws the direct final rule and treats such comment as a response to the proposed rule. An agency typically uses direct final rulemaking when an agency anticipates that a rule will not be controversial.

For purposes of this direct final rule, a significant adverse comment is one that explains why the amendments to OSHA's digger-derrick exemption would be inappropriate. In determining whether a comment necessitates withdrawal of the direct final rule, OSHA will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process. OSHA will not consider a comment recommending an additional amendment to be a significant adverse comment unless the comment states why the direct final rule would be ineffective without the addition. Furthermore, OSHA will not consider a comment requesting any narrowing of the existing digger-derrick exemption to be a significant adverse comment because narrowing the existing exemption is beyond the scope of this rulemaking. Moreover, a comment requesting an expansion of the exemption to encompass activities not related to digger-derrick use by electric utilities also would be beyond the scope of this rulemaking, and OSHA will not consider such a comment to be a significant adverse comment unless the commenter explains why the provisions of the direct final rule, as these provisions apply to digger derricks, would be ineffective without the expansion.

In addition to publishing this direct final rule, OSHA is publishing a companion proposed rule in the “Proposed Rules” section of today's Federal Register . The comment period for the proposed rule runs concurrently with that of the direct final rule. OSHA also will treat comments received on the companion proposed rule as comments regarding the direct final rule. Likewise, OSHA will consider significant adverse comment submitted to the direct final rule as comment to the companion proposed rule. Therefore, if OSHA receives a significant adverse comment on either this direct final rule or the proposed rule, it will publish a timely withdrawal of this direct final rule and proceed with the companion proposed rule. In the event that OSHA withdraws the direct final rule because of significant adverse comment, OSHA will consider all timely comments received in response to the direct final rule when it continues with the proposed rule. After carefully considering all comments to the direct final rule and the proposal, OSHA will decide whether to publish a new final rule. OSHA determined that the subject of this rulemaking is suitable for direct final rulemaking. OSHA originally included the digger-derrick exemption in the proposed Cranes and Derricks in Construction standard as a result of negotiated rulemaking involving stakeholders from many affected sectors. The existing rule for Cranes and Derricks in Construction, subpart CC of 29 CFR 1926, exempts the majority of digger derricks used in the telecommunications and electric-utility industries from the requirements of that subpart. Because the revision specified in this direct final rule extends the exemption to a small number of digger derricks used in the electric-utility industry, and does not impose any new costs or duties, OSHA does not expect objections from the public to this rulemaking action.

A “digger derrick” or “radial boom derrick” is a specialized type of equipment designed to install utility poles. A digger derrick typically is equipped with augers to drill holes for the poles and with a hydraulic boom to lift the poles and set them in the holes. Employers also use the booms to lift objects other than poles; accordingly, electric utilities, telecommunication companies, and their contractors use booms both to place objects on utility poles and for general lifting purposes at worksites (Docket ID OSHA-2007-0066-0139.1). When OSHA promulgated subpart V (Power Transmission and Distribution) in 1972, it excluded digger derricks from certain requirements of 29 CFR 1926, subpart N, the predecessor to the current 29 CFR 1926, subpart CC, standard.

OSHA developed the proposed standard for cranes and derricks in construction through a negotiated rulemaking involving stakeholders from many affected sectors. The proposed standard included a limited exemption for digger derricks (73 FR 59714, 59916 (Oct. 9, 2008)). After the publication of the proposed rule, OSHA received many comments criticizing the scope of the exemption because the scope applied to digger derricks designed for the electric-utility industry, and then only when used to dig holes for utility work. Commenters noted that customary use of the digger derrick also involved placing a pole in the hole and attaching transformers and other items to the pole. Commenters complained that the exemption would be largely meaningless unless it also encompassed these functions. Several representatives of the telecommunications industry noted that the industry used digger derricks routinely for similar purposes, and requested that OSHA expand the digger-derrick exemption to encompass telecommunications work in addition to electric-utility work (Docket ID OSHA-2007-0066-0234 and OSHA-2007-0066-0129.1).

When OSHA issued the final Cranes and Derricks in Construction rule, it noted concerns about the scope of the exemption, and broadened the scope of the exemption (see 75 FR 47906, 47924-47926, and 48136 (Aug. 9, 2010)). Current subpart CC, therefore, exempts digger derricks used by both the electric-utility and the telecommunications industries, and encompasses all pole work in these industries, including placing utility poles in the ground and attaching transformers and other equipment to the poles (see 29 CFR 1400(c)(4)). In that exemption, OSHA clarifies that digger derricks in construction that are exempt from subpart CC must still comply with the applicable worker protections in the OSHA standards governing electric-utility and telecommunications work at §§ 1910.268 and 1910.269. The existing exemption in § 1926.1400(c) states that the subpart does not cover digger derricks when used for augering holes for poles carrying electric and telecommunication lines, placing and removing the poles, and for handling associated materials to be installed on or removed from the poles. Digger derricks used in work subject to 29 CFR part 1926, subpart V, must comply with 29 CFR 1910.269. Digger derricks used in construction work for telecommunication service (as defined at 29 CFR 1910.268(s)(40)) must comply with 29 CFR 1910.268.

When the activities are exempt from subpart CC of 29 CFR 1926, they must still comply with all other applicable construction standards, such as 29 CFR 1926, subpart O (Motor Vehicles, Mechanized Equipment, and Marine Operations), and subpart V. 1

On October 6, 2010, Edison Electrical Institute petitioned for review of the Cranes and Derricks in Construction standard in the U.S. Court of Appeals for the District of Columbia. During subsequent discussions with OSHA, EEI provided new information to OSHA regarding the use of digger derricks in the electric-utility industry and the resulting impact on the utilities' operations under the current digger-derrick exemption in subpart CC. According to EEI, the exemption from subpart CC covers roughly 95 percent of work conducted by digger derricks in the electric-utility industry (see OSHA-2012-0025-0004 for EEI Dec. 7, 2010, letter, page 2). The majority of the work under the remaining five percent is work that is closely related to the exempted work. Id. For example, when electric utilities use digger derricks to perform construction work involving pole installations, the same digger-derrick crew that performs the pole work typically installs pad-mount transformers on the ground as part of the same power system as the poles. While the pole work is exempt under 29 CFR 1926.1400(c)(4), the placement of the pad-mount transformer on the ground is not.

Furthermore, in comparison to currently exempted pole work, OSHA believes most (if not all) of the remaining five percent of work is at least as safe. Weight measurements provided by EEI demonstrate that transformers placed on a pad on the ground are roughly the same weight as, or in some cases lighter than, the weight of the transformers lifted onto the poles, or the poles themselves (see OSHA-2012-0025-0003 for EEI handout, “Typical Weights” chart). 2 In addition, electric utilities typically place distribution transformers in a right of way along front property lines, close to a roadway, or along rear property lines, irrespective of whether the transformers are pole- or pad-mounted. In those cases, the lifting radius of a digger derrick placing a transformer on a pad is similar to the lifting radius of a digger derrick placing a transformer on a pole. Consequently, the lifting forces on a digger derrick should be approximately the same regardless of whether the transformer is pole- or pad-mounted (see, e.g., OSHA-2012-0025-0003). Finally, the approximate height of the transformer relative to the employee installing the transformer is the same for the two types of transformers. An employee installing a pad-mounted transformer is on the ground, near the pad, whereas an employee installing a pole-mounted transformer is either on the pole, or in an aerial lift, near the mounting point for the transformer. In either case, the transformer would be around the same height as the employee.

Because the same workers generally perform both types of work, utility employers must, when the standard becomes fully effective in November 2014, incur the cost of meeting all other requirements in subpart CC, including the operator-certification requirements, for those workers to perform the five percent of the work not currently exempted. The result could be a sizable cost (about $21.6 million annually) for an activity that does not appear significantly more dangerous than the type of activity that OSHA already exempted. (See Section IV.B. (Final Economic Analysis and Final Regulatory Flexibility Act Analysis) in this preamble for a summary of these costs.) OSHA did not consider this result when it promulgated the standard.

OSHA acknowledges the arguments that there are minimal safety benefits attributable to imposing the standard's requirements on the remaining five percent of non-exempted work; moreover, the exempted digger-derrick operations are still subject to the protections afforded to workers by OSHA's electric-utility and telecommunications standards (§ 1910.269, subpart V of 29 CFR 1926, and § 1910.268, respectively). OSHA also notes that the largest labor organization for workers in the electric-utility industry, the International Brotherhood of Electrical Workers, participated in settlement discussions, corroborated the general validity of the information provided by EEI, and actively supported EEI's request for an expanded digger-derrick exemption. In light of these factors, OSHA is removing the burdens on employers for the remaining five percent of non-exempted work, and revising the digger-derrick exemption to include all digger derricks used in construction work subject to 29 CFR 1926, subpart V. Based on its estimates in the Final Economic Analysis in the 2010 final rule, the Agency determined that expanding the exemption for digger derricks will enable employers in NAICS 221120 to avoid compliance costs of about $15.9 million per year, while employers in NAICS 221110 will avoid about $5.7 million per year, for a total cost savings of about $21.6 million annually.

When the Agency promulgated the final Cranes and Derricks in Construction rule, OSHA's primary concern about extending the digger-derrick exemption beyond pole work was that such an extension would provide employers with an incentive to use digger derricks on construction sites to perform construction tasks normally handled by cranes—tasks that are beyond the original design capabilities of a digger derrick. In discussing this concern, OSHA stated, “[T]he general lifting work done at those other worksites would be subject to this standard if done by other types of lifting equipment, and the same standards should apply as apply to that equipment * * *.” (75 FR 47925). OSHA acknowledges that revising the exemption would extend the digger-derrick exemption to include some work at substations. However, EEI indicated that the employers in the electric-utility industry limit such uses to assembly or arrangement of substation components, and that these employers use other types of cranes instead of digger derricks to perform lifting and installation work at substations (see OSHA-2012-0025-0005 for Jan. 2011 EEI letter). If OSHA finds that, should this direct final rule become a final rule, employers are using digger derricks increasingly for other tasks, the Agency may revisit this issue and adjust the exemption accordingly. The Agency also recognizes that, because the exemption only applies to work subject to the electrical-power and telecommunications standards, employers cannot use digger derricks within this exemption to perform unrelated tasks such as the construction of a building or the foundation or structural components of a substation before the installation of electric power-transmission or power-distribution equipment. A digger derrick used for this type of construction will still be subject to the requirements in 29 CFR 1926, subpart CC, and operators will have to be certified in accordance with § 1926.1427.

OSHA is revising the exemption in 29 CFR 1926.1400(c)(4) to include within the exemption “any other work subject to subpart V of 29 CFR part 1926.” This revision expands the exemption to remove from coverage under subpart CC of 29 CFR 1926 the types of non-pole, digger-derrick work described by EEI. OSHA is not expanding the exemption for pole work performed by employers in the telecommunications industry because no party raised or requested such an exemption in the litigation; therefore, this issue is outside the scope of this rulemaking.

The Agency also is making several minor clarifications to the text of the exemption. First, OSHA is making a minor grammatical clarification by replacing “and” with “or” in the phrase “poles carrying electric or telecommunication lines” (emphasis added). This revision will ensure that the regulated community does not misconstrue the exemption as limited to poles that carry both electric and telecommunications lines. This clarification is consistent with OSHA's explanation in the preamble of the Cranes and Derricks in Construction final rule (see 75 FR 47925).

Second, OSHA is adding the phrase “to be eligible for this exclusion” at the beginning of the sentence requiring compliance with § 1910.268 and subpart V of 29 CFR 1926, respectively. This revision limits the exemption to the use of digger derricks that comply with the requirements in subpart V or § 1910.268; if an employer uses a digger derrick for subpart V or telecommunications work without complying with all of the requirements in subpart V or § 1910.268, then the work is not exempt, and the employer must comply with all of the requirements of subpart CC of 29 CFR 1926. This clarification is consistent with OSHA's explanation of the exemption in the preamble of the final rule (see 75 FR 47925-47926).

Third, OSHA is replacing the reference to § 1910.269 with a reference to 29 CFR 1926, subpart V. The current exemption in § 1926.1400(c)(4) requires employers using digger derricks for work covered by subpart V to comply with the requirements in § 1910.269. However, in the 2010 final rule for Cranes and Derricks in Construction, OSHA also revised 29 CFR 1926.952(c)(2) of subpart V to require digger derricks used for the purposes exempted from subpart CC to comply with § 1910.269. Thus, although the revised exemption in this direct final rule specifies compliance with subpart V instead of § 1910.269, there is no substantive revision to digger derricks used for augering holes and handling associated materials. The primary purpose for this revision is to harmonize the § 1926.1400(c)(4) exemption with 29 CFR 1926.952(c)(2) to ensure that non-pole digger-derrick work covered by subpart V receives the same protections as pole work covered by subpart V.

As part of this harmonizing process, OSHA also is revising the corresponding provision in subpart V that requires compliance with § 1910.269 for all digger-derrick work exempted from subpart CC, including §§ 1910.269(p) (Mechanical equipment), 1910.269(a)(2) (Training), and 1910.269(l) (Working on or near exposed energized parts) (see new 29 CFR 1926.952(c)(2)). When OSHA promulgated subpart CC of 29 CFR 1926 in 2010, the Agency also revised § 1926.952(c)(2) in subpart V of its construction standards (75 FR 48135). The revision mirrored the terminology in the digger-derrick exemption in § 1926.1400(c)(4), and required employers using digger derricks so exempted to comply with § 1910.269 (Electric power generation, transmission, and distribution). In making this revision, the Agency noted that it added specific minimum clearance-distance requirements, which are applicable to subpart V work, to the cranes and derricks in construction rules at subpart CC, and explained that it revised § 1926.952(c) to require digger derricks to comply with § 1910.269 to provide “comparable safety requirements” (75 FR 47921).

As revised, paragraph § 1926.952(c)(2) requires employers using digger derricks for subpart V work and, thus, not subject to the requirements of subpart CC of 29 CFR 1926, to comply with the requirements in § 1910.269. OHSA also is clarifying that paragraph (c)(2) applies in addition to, not in place of, the general requirement in § 1926.952(c) that all equipment (including digger derricks) must comply with subpart O of 29 CFR 1926. As noted in the preamble to the subpart CC final rule, OSHA currently is developing a rule that will amend subpart V to avoid inconsistencies between subpart V of the construction standards and § 1910.269 (see 70 FR 34822 (June 15, 2005)). Pending completion of that rulemaking, digger derricks excluded from subpart CC of 29 CFR 1926 will be subject to the same requirements regardless of whether employers use them for work covered by subpart V or work covered by § 1910.269, and regardless of whether employers use them for pole work or other subpart V work.

The purpose of the Occupational Safety and Health Act of 1970 (OSH Act; 29 U.S.C. 651 et al. ) is “to assure so far as possible every working man and woman in the Nation safe and healthful working conditions and to preserve our human resources” (29 U.S.C. 651(b)). To achieve this goal, Congress authorized the Secretary of Labor to promulgate and enforce occupational safety and health standards (29 U.S.C. 654(b), 655(b)). An occupational safety or health standard is a standard that “requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment and places of employment” (29 U.S.C. 652(8)). A standard is reasonably necessary or appropriate within the meaning of Section 652(8) if it substantially reduces or eliminates significant risk (see Industrial Union Department, AFL-CIO v . American Petroleum Institute, 448 U.S. 607 (1980)).

This direct final rule does not impose any additional requirements on employers. Because OSHA previously determined that the Cranes and Derricks in Construction standard substantially reduces a significant risk (see 75 FR 47913), it is unnecessary for the Agency to make additional findings on risk for the purposes of this minor amendment to the digger-derrick exemption (see, e.g., Public Citizen Health Research Group v. Tyson, 796 F.2d 1479, 1502 n.16 (DC Cir. 1986) (rejecting the argument that OSHA must “find that each and every aspect of its standard eliminates a significant risk”).

When it issued the final rule for Cranes and Derricks in Construction, OSHA prepared a Final Economic Analysis (FEA) as required by the Occupational Safety and Health Act of 1970 (“OSH Act”; 29 U.S.C. 651 et seq. ) and Executive Orders 12866 and 13563. OSHA also published a final regulatory flexibility analysis as required by the Regulatory Flexibility Act (5 U.S.C. 601-612).

In the FEA for the final rule (OSHA-2007-0066-0422), the Agency estimated that there were about 10,000 crane operators in NAICS 221110 Electric Power Generation, and about 20,000 crane operators in NAICS 221120 Electric Power Transmission, Control, and Distribution. OSHA based these figures on estimates of the number of construction work crews in these industries from its subpart V FEA, with an allowance (to assure maximum flexibility) that there be three trained crane operators for every work crew. Based on submissions to the record, OSHA estimated that 85 percent of these 30,000 operators (25,500) worked on digger derricks, while 15 percent of the operators operated truck-mounted cranes, or boom trucks; therefore, a total of 25,500 digger-derrick operators would require operator certification.

In its FEA for the final rule, OSHA estimated that the total costs for NAICS 221110 would be $6.7 million ($4 million for operator certification), and the total costs for NAICS 221120 would be $18.7 million annually ($8.7 million for operator certification) (see FEA Table B-9 in the Aug. 9, 2010, FR notice). Fully exempting digger derricks from the scope of the standard also eliminates costs for other activities besides operator certification, such as inspections and power-line safety. In the original FEA, the two main cost components for an industry were the number of crane operators and the number of jobs involving cranes. The original FEA estimated that digger derricks represented 85 percent of operators, and 85 percent of jobs involving cranes. OSHA, therefore, estimates that digger derricks account for 85 percent of the costs attributed to NAICS 221110 and NAICS 221120. Applying this 85 percent factor to the total costs for the industries yields costs for digger derricks of $5.7 million per year in NAICS 221110 and $15.9 million per year in NAICS 221120, for a total of $21.6 million per year. 3

This direct final rule will eliminate nearly all of the estimated $21.6 million per year in costs associated with digger derricks. These estimated cost savings may be slightly overstated because OSHA noted in its FEA that the cost assumptions might not represent the most efficient way to meet the requirements of the rule. However, OSHA wanted to assure the regulated community that, even with somewhat overstated cost estimates, the rule would still be economically feasible.

In its original FEA (OSHA-2007-0066-0422), OSHA reported an average of 0.5 crane-related fatalities per year in SIC codes NAICS 221110 and NAICS 221120. However, the original FEA did not indicate that any of these fatalities involved digger derricks or other equipment covered by the standard. Moreover, in light of the information provided by EEI, there is no indication that the additional five percent of digger-derrick activity exempted through this rulemaking poses any hazard greater than the hazard posed by the digger-derrick activities OSHA already exempted in the 2010 final rule.

Because this direct final rule estimates cost savings of $21.6 million per year, this direct final rule is not economically significant within the meaning of Executive Order 12866 (58 FR 51735). The rule does not impose additional costs on any private-sector or public-sector entity, and does not meet any of the criteria for an economically significant or major rule specified by Executive Order 12866 and the relevant statutes. This rule is not a “major rule” under Section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ).

OSHA developed this direct final rule consistent with the provisions of Executive Orders 12866 and 13563. Accordingly, this direct final rule follows closely the principle of EO 13563 that agencies should use new data developed after completion of a rulemaking (retrospective analysis) to determine if a regulation “should be modified, streamlined, expanded, or repealed.” In this case, review of data submitted after completion of the initial rulemaking provided OSHA with the opportunity to streamline a rule by dropping its application to digger derricks, thereby saving the industry an estimated $21.6 million per year. As described previously, this action removes duties and costs for the electric-utility industry, and does not impose any new duties on any employer. Because small entities will have reduced costs as a result of this direct final rule, the Agency certifies that the final standard would not impose significant economic costs on a substantial number of small entities.

A standard is technologically feasible when the protective measures it requires already exist, when available technology can bring the protective measures into existence, or when that technology is reasonably likely to develop (see American Textile Mfrs. Institute v. OSHA, 452 U.S. 490, 513 (1981) (ATMI); American Iron and Steel Institute v. OSHA, 939 F.2d 975, 980 (DC Cir. 1991) (AISI)). This direct final rule does not require any additional protective measures. In the original FEA, OSHA found the standard to be technologically feasible (75 FR 48079). OSHA concludes that this revision is feasible as well because it reduces or removes current requirements on employers.

When OSHA issued the final rule on August 9, 2010, the Agency submitted an Information Collection Request (ICR) to OMB titled Cranes and Derricks in Construction (29 CFR Part 1926 Subpart CC). On November 1, 2010, OMB approved the ICR under OMB Control Number 1218-0261, with an expiration date of November 30, 2013. Subsequently, in December 2010, OSHA discontinued the Cranes and Derricks Standard for Construction (29 CFR 1926.550) ICR (OMB Control Number 1218-0113) because the new ICR superseded this ICR. In addition, OSHA retitled the new ICR to Cranes and Derricks in Construction (29 CFR Part 1926, Subpart CC and Subpart DD).

This direct final rule, which expands the digger-derrick exemption, does not require any additional collection of information or alter the substantive requirements detailed in the 2010 ICR. The only impact on the collection of information will be a reduction in the number of entities collecting information. Accordingly, OSHA does not believe it is necessary to submit a new ICR to OMB. OSHA will identify any reduction in burden hours when it renews the ICR.

Interested parties may comment on OSHA's determination that this direct final rule contains no additional paperwork requirements by sending their written comments to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for OSHA, Office of Management and Budget, Room 10235, 726 Jackson Place NW., Washington, DC 20503. The Agency also encourages commenters to submit their comments on this paperwork determination to OSHA, along with their other comments on this direct final rule, within the specified comment period.

OSHA notes that a federal agency cannot conduct or sponsor a collection of information unless it is approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq. and the agency also displays a currently valid OMB control number for the collection of information, and that the public need not respond to a collection of information requirement unless the agency displays a currently valid OMB control number. Also, notwithstanding any other provisions of law, no person shall be subject to a penalty for failing to comply with a collection of information requirement if the requirement does not display a currently valid OMB control number.

OSHA reviewed this direct final rule in accordance with the Executive Order on Federalism (Executive Order 13132 (64 FR 43255 (Aug. 10, 1999))), which requires that Federal agencies, to the extent possible, refrain from limiting state policy options, consult with states prior to taking any actions that would restrict state policy options, and take such actions only when clear constitutional authority exists and the problem is national in scope. Executive Order 13132 provides for preemption of state law only with the expressed consent of Congress. Federal agencies must limit any such preemption to the extent possible.

Under Section 18 of the OSH Act, Congress expressly provides that states may adopt, with federal approval, a plan for the development and enforcement of occupational safety and health standards. The OSH Act refers to states that obtain federal approval for such a plan as “State Plan States” (29 U.S.C. 667). Occupational safety and health standards developed by State Plan States must be at least as effective in providing safe and healthful employment and places of employment as the federal standards. Subject to these requirements, State Plan States are free to develop and enforce under state law their own requirements for safety and health standards.

OSHA previously concluded that its promulgation of subpart CC complies with Executive Order 13132 (75 FR 48128 and 48129). Because the current rulemaking does not impose any additional burdens, that analysis applies to the revision of the digger-derrick exemption. Therefore, this direct final rule complies with Executive Order 13132. In states without OSHA-approved state plans, any standard developed from this direct final rule would impact state policy options in the same manner as every standard promulgated by OSHA. In states with OSHA-approved state plans, this rulemaking does not limit state policy options.

When federal OSHA promulgates a new standard or more stringent amendment to an existing standard, the 27 states and U.S. territories with their own OSHA-approved occupational safety and health plans must amend their standards to reflect the new standard or amendment, or show OSHA why such action is unnecessary, e.g., because an existing state standard covering this area is at least as effective in protecting employees as the new federal standard or amendment (29 CFR 1953.5(a)). The state standard must be at least as effective in protecting employees as the final federal rule. State Plan States must issue the standard within six months of the promulgation date of the final federal rule. When OSHA promulgates a new standard or amendment that does not impose additional or more stringent requirements than an existing standard, State Plan States are not required to amend their standards, although OSHA may encourage them to do so.

The 27 states and U.S. territories with OSHA-approved occupational safety and health plans are: Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming. Connecticut, Illinois, New Jersey, New York, and the Virgin Islands have OSHA-approved State Plans that apply to state and local government employees only.

The amendments made in this direct final rule do not impose any new requirements on employers. Accordingly, State Plan States are not required to amend their standards to incorporate the expanded exemption specified in this direct final rule, but they may do so if they so choose.

When OSHA issued the final rule for Cranes and Derricks in Construction (75 FR 48130), it reviewed the rule according to the Unfunded Mandates Reform Act of 1995 (UMRA; 2 U.S.C. 1501 et seq. ) and Executive Order 13132 (64 FR 43255 (Aug. 10, 1999)), and concluded that the final rule did not meet the definition of a “Federal intergovernmental mandate” under the UMRA. OSHA's standards do not apply to state or local governments except in states that have voluntarily adopted state plans. OSHA further noted that the rule imposed costs of over $100 million per year on the private sector and, therefore, required review under the UMRA for those costs; the Agency determined that its Final Economic Analysis met that requirement. Id.

As discussed above in Section IV.B. (Final Economic Analysis and Final Regulatory Flexibility Act Analysis) of this preamble, this direct final rule reduces expenditures by private-sector employers. For the purposes of the UMRA, OSHA certifies that this direct final rule does not mandate that state, local, or tribal governments adopt new, unfunded regulatory obligations, or increase expenditures by the private sector of more than $100 million in any year.

OSHA reviewed this direct final rule in accordance with Executive Order 13175 (65 FR 67249 (Nov. 9, 2000)), and determined that it does not have “tribal implications” as defined in that order. This direct final rule does not have substantial direct effects 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.

David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC 20210, authorized the preparation of this notice. OSHA is issuing this direct final rule under the following authorities: 29 U.S.C. 653, 655, 657; 40 U.S.C. 3701 et seq.; 5 U.S.C. 553; Secretary of Labor's Order No. 1-2012 (77 FR 3912, Jan. 25, 2012); and 29 CFR part 1911.

For the reasons stated in the preamble of this direct final rule, OSHA is amending 29 CFR part 1926 as follows:

Electronic and Facsimile Availability

This document and additional information concerning OFAC are available from OFAC's Web site ( www.treasury.gov/ofac ). Certain general information pertaining to OFAC's sanctions programs also is available via facsimile through a 24-hour fax-on-demand service, tel.: 202/622-0077.

On May 16, 2012, the President issued Executive Order 13611 (77 FR 29533, May 18, 2012) (“E.O. 13611”), invoking the authority of, inter alia, the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. ) and the National Emergencies Act (50 U.S.C. 1601 et seq. ).

The Department of the Treasury's Office of Foreign Assets Control (“OFAC”) is issuing the Yemen Sanctions Regulations, 31 CFR part 552 (the “Regulations”), to implement E.O. 13611, pursuant to authorities delegated to the Secretary of the Treasury in E.O. 13611. A copy of E.O. 13611 appears in Appendix A to this part.

The Regulations are being published in abbreviated form at this time for the purpose of providing immediate guidance to the public. OFAC intends to supplement this part 552 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy. The appendix to the Regulations will be removed when OFAC supplements this part with a more comprehensive set of regulations.

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 of September 30, 1993, and the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting, Procedures and Penalties Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

For the reasons set forth in the preamble, the Department of the Treasury's Office of Foreign Assets Control adds part 552 to 31 CFR chapter V to read as follows:

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

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. 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 section 408(g) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 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-2012-0755 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 January 8, 2013. 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-2012-0755, 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.

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

EPA, on its own initiative, in accordance with FFDCA sections 408(e) and 408(l)(6), 21 U.S.C. 346a(e) and 346a(1)(6), is establishing time-limited tolerances for combined residues of dinotefuran, (RS)-1-methyl-2-nitro-3-((tetrahydro-3-furanyl)methyl)guanidine, including its metabolites and degradates, in or on pome fruits and stone fruits at 1.0 part per million (ppm). These time-limited tolerances expire on December 31, 2015.

Section 408(l)(6) of FFDCA requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under FIFRA section 18. Such tolerances can be established without providing notice or period for public comment. EPA does not intend for its actions on FIFRA section 18 related time-limited tolerances to set binding precedents for the application of FFDCA section 408 and the safety standard to other tolerances and exemptions. Section 408(e) of FFDCA allows EPA to establish a tolerance or an exemption from the requirement of a tolerance on its own initiative, i.e., without having received any petition from an outside party.

Section 18 of FIFRA authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” EPA has established regulations governing such emergency exemptions in 40 CFR part 166.

Several States requested emergency exemptions claiming that the abrupt increase and spread of damaging populations of the Brown Marmorated Stink Bug (BMSB) resulted in an urgent and non-routine pest control situation. The available insecticides for BMSB control are either ineffective, adversely impact integrated pest management programs, and/or have use limitations that make them unsuitable for season-long control of BMSB. The States asserted that without the use of dinotefuran as an additional pest management tool for pome and stone fruit orchards, uncontrolled infestations of BMSB are likely to result in economic losses in excess of 20%. After having reviewed the submissions, EPA determined that an emergency condition exists for these States, and that the criteria for approval of the emergency exemptions were met. EPA authorized specific exemptions under FIFRA section 18 for the use of dinotefuran on pome fruits and stone fruits for control of the BMSB in Delaware, Maryland, New Jersey, North Carolina, Pennsylvania, Virginia, and West Virginia.

Consistent with the need to move quickly on the emergency exemptions in order to address an urgent non-routine situation and to ensure that the resulting food is safe and lawful, EPA is issuing these tolerances without notice and opportunity for public comment as provided in FFDCA section 408(l)(6). Although these time-limited tolerances expire on December 31, 2015, under FFDCA section 408(l)(5), residues of the pesticide not in excess of the amounts specified in the tolerances remaining in or on pome fruits and stone fruits after that date will not be unlawful, provided the pesticide was applied in a manner that was lawful under FIFRA, and the residues do not exceed a level that was authorized by these time-limited tolerances at the time of that application. EPA will take action to revoke these time-limited tolerances earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

Because these time-limited tolerances are being approved under emergency conditions, EPA has not made any decisions about whether dinotefuran meets FIFRA's registration requirements for use on pome fruits and stone fruits or whether permanent tolerances for this use would be appropriate. Under these circumstances, EPA does not believe that these time-limited tolerance decisions serve as a basis for registration of dinotefuran by a State for special local needs under FIFRA section 24(c). Nor do these tolerances by themselves serve as the authority for persons in any State other than Delaware, Maryland, New Jersey, North Carolina, Pennsylvania Virginia, and West Virginia to use this pesticide on the applicable crops under FIFRA section 18 absent the issuance of an emergency exemption applicable within that State. For additional information regarding the emergency exemptions for dinotefuran, contact the Agency's Registration Division at the address provided under FOR FURTHER INFORMATION CONTACT .

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 * * *.”

As part of its evaluation of the emergency exemption applications, EPA assessed the potential risks presented by residues of dinotefuran in or on pome fruits and stone fruits. In doing so, EPA considered the safety standard in FFDCA section 408(b)(2), and EPA decided that the necessary tolerances under FFDCA section 408(l)(6) would be consistent with the safety standard and with FIFRA section 18.

EPA has evaluated the use of dinotefuran on pome fruits and stone fruits, as well as various other crops, and recently established tolerances for similar use patterns, in the Federal Register issue of September 12, 2012 (77 FR 56133) (FRL-9359-6) in association with requests for tolerances to support registrations of dinotefuran under section 3 of FIFRA.

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 dinotefuran including exposure resulting from the tolerances established by this action.

In the September 12, 2012 Federal Register issue, EPA published a final rule establishing tolerances for residues of dinotefuran in 40 CFR 180.603(a) in or on berry, low growing, except strawberry, subgroup 13-07H; fruit, small, vine climbing, except fuzzy kiwifruit, subgroup 13-07F; onion, bulb, subgroup 3-07A; onion, green, subgroup 3-07B; peach; tea, dried; vegetable, tuberous and corm, subgroup 1C; and watercress. A summary of the toxicological endpoints for dinotefuran used for human risk assessment is discussed in Units III.A. and B. of the September 12, 2012 final rule.

The human health risk assessment used to support the September 12, 2012 final rule (“Dinotefuran: Human Health Risk Assessment for Proposed Section 3 Uses on Tuberous and Corm Vegetables Subgroup 1C, Onion Subgroup 3-07A, Onion Subgroup 3-07B, Small Fruit Subgroup 13-07F, Berry Subgroup 13-07H, Peach, and Watercress, And a Tolerance on Imported Tea”), took into account the assumption that dinotefuran would be used on pome fruits and stone fruits pursuant to emergency exemptions.

Therefore the aggregate risks for dinotefuran for this action are not changed from those discussed in the September 12, 2012 final rule.

In its aggregate assessment of exposures and risks associated with dinotefuran, EPA concluded the following: That the acute dietary exposure from food and water to dinotefuran will occupy 5.8% of the acute population adjusted dose (aPAD) for children 1-2 years old, the population group receiving the greatest exposure; that chronic exposure to dinotefuran from food and water will utilize 2.6% of the chronic population adjusted dose (cPAD) for children 1-2 years old, the population group receiving the greatest exposure; and that the combined short-term risk from food, water, and residential exposures result in an aggregate margin of exposure (MOE) of 3,000 for children 1-2 years old from hand to mouth exposure from treated turf, the scenario with the highest exposure. Because EPA's level of concern for dinotefuran is a MOE of 100 or below, the MOEs are not of concern. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, dinotefuran is not expected to pose a cancer risk to humans.

Therefore, EPA concluded that there is a reasonable certainty that no harm will result to the general population and to infants and children from aggregate exposure to dinotefuran residues. Refer to the September 12, 2012 final rule, available at http://www.regulations.gov, for a summary of the aggregate risk assessments and determination of safety. A more detailed discussion of the aggregate risk assessments and determination of safety may be found at http://www.regulations.gov in the document titled “Revised: Dinotefuran: Human Health Risk Assessment for Proposed Section 3 Uses on Tuberous and Corm Vegetables Subgroup 1C, Onion Subgroup 3-07A, Onion Subgroup 3-07B, Small Fruit Subgroup 13-07F, Berry Subgroup 13-07H, Peach, and Watercress, And a Tolerance on Imported Tea” in docket ID number EPA-HQ-OPP-2011-0433.

EPA relies upon those risk assessments and the findings made in the Federal Register document in support of this action.

There are several analytical methods available for determination of residues of dinotefuran and its metabolites. For determination of dinotefuran and its metabolites, DN, 1-methyl-3-(tetrahydro-3-furylmethyl)guanidine, and UF, 1-methyl-3-(tetrahydro-3-furylmethyl)urea, a high performance liquid chromatography/tandem mass spectrometry (HPLC/MS/MS) method is available. For the determination of residues of dinotefuran only, an HPLC/ultraviolet (UV) detection method is available. For the determination of only the metabolites (DN and UF), HPLC/MS and HPLC/MS/MS methods are available. These methods are adequate to enforce the tolerance expression.

The methods 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.

There are currently no Codex, Canadian or Mexican MRLs established for dinotefuran.

Therefore, time-limited tolerances are established for residues of dinotefuran, (RS)-1-methyl-2-nitro-3-((tetrahydro-3-furanyl)methyl)guanidine, including its metabolites and degradates, in or on fruit, pome, group 11 and fruit, stone, group 12 at 1.0 ppm. These tolerances expire on December 31, 2015.

EPA is also revising 40 CFR 180.603(b) to use the same systematic chemical name for dinotefuran as is presently used in 40 CFR 180.603(a), for purposes of consistency within the section and with EPA's policy regarding chemical nomenclature.

This final rule establishes tolerances under FFDCA sections 408(e) and 408(l)(6). 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 in accordance with FFDCA sections 408(e) and 408(l)(6), such as the tolerances 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:

Each year, the United States is struck by natural disasters, which may include events such as storms, earthquakes, volcanic eruptions, and landslides, as well as events that occur from various other causes, such as fires, floods, and explosions. When a locality is, or will be, overwhelmed by the magnitude of the damage from any such event, the community turns to the State for help. If it is evident that the situation is or will be beyond the combined capabilities of local and State resources, the Governor may request that the President declare that an emergency or major disaster exists in the State, under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 42 U.S.C. 5121-5207.

If the President declares an emergency or major disaster and authorizes Public Assistance, FEMA may award Public Assistance grants to assist State and local governments (including Indian Tribal governments) and certain private nonprofit (PNP) organizations as defined in subpart H of 44 CFR part 206 (collectively referred to as “applicants,” “grantees,” or “subgrantees”). Public Assistance grants assist State, Tribal, and local governments with the response to and recovery from the declared event. Specifically, the Public Assistance program provides assistance for debris removal, emergency protective measures, and permanent restoration of public infrastructure. FEMA refers to debris removal and emergency protective measures as “emergency work.” FEMA also categorizes these types of work as Category A (debris removal) and Category B (emergency protective measures). Category B includes debris removal costs that are incurred as emergency protective measures, such as clearing debris to establish immediate emergency access. Permanent restoration of infrastructure, which FEMA refers to as “permanent work,” includes several categories, including Roads and Bridges (Category C), Water Control Facilities (Category D), Buildings and Equipment (Category E), Utilities (Category F), and Parks, Recreational Facilities, and Other Items (Category G). This rulemaking applies to debris removal activities only (Categories A and B).

Sections 403(a)(3)(A), 407 and 502(a)(5) of the Stafford Act authorize FEMA to provide assistance to eligible applicants to remove debris from public and private property following a Presidential major disaster or emergency declaration, when in the public interest. See 42 U.S.C. 5170b(a)(3)(A), 5173, and 5192. Removal must be necessary to eliminate immediate threats to lives, public health and safety, eliminate immediate threats of significant damage to improved public or private property, or ensure the economic recovery of the affected community-at-large. See 44 CFR 206.224. The debris must be the direct result of the disaster and located in the disaster area, and the applicant must have the legal responsibility to remove the debris. To ensure these requirements are met, FEMA has issued extensive guidance on oversight processes and procedures to monitor debris removal activities.

In the immediate aftermath of an event, the removal of debris is a critical aspect of a community's economic recovery and return to normalcy. Debris blocks roadways prohibiting the passage of police, fire, and medical teams. Debris slows repairs and reconstruction of essential buildings and homes. It also may cause health and safety problems if left to fall on passersby, grow mold, or foster insect infestation.

Between January 1, 1999, and December 1, 2010, FEMA obligated an annual average of 3,940 Project Worksheets (PWs) and $675,534,796 for Category A, Debris Removal for major disasters and emergency declarations. This figure does not include Category B debris removal work, including work to remove debris blocking emergency response; therefore, the total amount of debris removal funded during this time period is even higher.

The Fiscal Year (FY) 2007 Department of Homeland Security Appropriations Act (Appropriations Act), Public Law 109-295, authorized FEMA to conduct a Public Assistance Pilot Program to reduce the costs to the Federal government of providing debris-related assistance to States and local governments, increase flexibility in the administration of assistance, and expedite the provision of assistance under sections 403(a)(3)(A), 502(a)(5), and 407 of the Stafford Act. FEMA implemented four of the six Pilot procedures authorized by the Appropriations Act for the administration of Public Assistance grants. The four initiatives that FEMA offered as part of the Pilot were: grants based on estimates (for Category A and C-G large projects up to $500,000); an increased Federal cost share for debris removal projects for applicants with a FEMA-approved debris management plan; reimbursement of straight-time wages for applicant force account labor performing disaster related debris removal work; and a debris recycling initiative. The Appropriations Act also gave FEMA the authority to waive regulations and policies to implement the Public Assistance Pilot Program. It allowed State and local governments to participate in the Public Assistance Pilot Program on a voluntary basis. Public Assistance applicants were not required to use the Pilot procedures, but could elect to use one or more of the Pilot procedures for one or more of its projects. The Appropriations Act did not authorize the participation of private non-profit applicants in the Pilot Program. FEMA was prohibited from approving any Pilot projects after December 31, 2008, and was required to submit a report to Congress regarding the effectiveness of the Pilot Program. On May 20, 2009, FEMA submitted the report, entitled “FEMA Public Assistance Pilot Program Fiscal Year 2009 Report to Congress.”

This rule implements one of the debris-related Pilot Program procedures, Force Account Labor, for disaster-related debris and wreckage removal work for any major disaster or emergency declared by the President on or after October 27, 2012, in response to Hurricane Sandy.

Under the current Public Assistance program, FEMA only pays overtime for an applicant's own labor forces and equipment, referred to as “force account labor,” performing debris removal work. The regular time (also called “straight-time”) salaries and benefits of permanently employed personnel are not eligible in calculating allowable costs. See 44 CFR 206.228(a)(2). However, FEMA reimburses reasonable costs associated with a debris contract, including the cost of contract workers' regular time as well as overtime. This creates an incentive for applicants to contract for debris removal work, even after relatively small events which could have been handled in part, or entirely, by an applicant's employees. For over a decade, State and local applicants have requested reimbursement for straight-time salaries for their force account labor who are pulled away from their normal day-to-day work to perform debris removal operations. In response to these requests and under the Force Account Labor procedure of the Pilot Program, FEMA reimbursed the straight-time salaries and benefits of the applicant's employees who performed disaster-related debris and wreckage removal work. FEMA's objective in reimbursing force account labor was to provide applicants the opportunity and incentive to use their own employees for debris removal activities in situations where applicants determine that is the most appropriate method to perform the work. In addition, FEMA wanted to evaluate whether debris removal operations and monitoring performed by force account labor was less costly and more efficient than contractor operations.

Feedback received on the Public Assistance Pilot Program indicated that the Force Account Labor procedure resulted in administrative benefits. States and FEMA Regional Offices reported that grant applicants who utilized this procedure relied less on contractors, which resulted in fewer complaints and negotiation over costs and scopes of work and thus eliminated delays in accomplishing the work. FEMA also found that the Force Account Labor procedure provided applicants an incentive to monitor debris removal activities of contractors with its regular employees, rather than enter into contracts to perform the work. Indeed, ninety percent of all applicants participating in the Public Assistance Pilot Program requested reimbursement for straight- or regular time salary and benefits for their permanent employees who performed at least some of the monitoring or debris removal activities. This large participation rate, coupled with reporting from the States and FEMA Regions, shows that reimbursing straight-time for an applicant's regular employees who performed debris removal work provided an incentive for applicants to complete debris removal work themselves rather than entering into contracts to perform the work.

The Force Account Labor procedure of the Public Assistance Pilot Program also resulted in cost and time savings. Funding straight- or regular time force account labor costs provided applicants an incentive to manage debris operations more effectively and decreased the number of contractors required to both perform debris operations and monitor debris removal contractors. Not only did it reduce contractor costs, but it also allowed applicants to stop paying for contract equipment, and use their own equipment for debris operations. Funding the straight-time of an applicant's employees also provided additional flexibility to local governments, allowing them to use a combination of contracting and force account labor for debris removal work.

In addition, because applicants started debris operations more expeditiously, and reduced or eliminated delays related to procuring and mobilizing contractors, the force account provision of the Pilot Program resulted in faster obligation of funding from FEMA. FEMA obligated funds for debris removal projects that used the Force Account Labor procedure in 60 percent less time than for those that used contractors for debris removal projects.

This rule implements the Force Account Labor procedure of the Public Assistance Pilot Program for debris removal work related to Hurricane Sandy, a catastrophic disaster event of unprecedented magnitude and severity. The geographic depth of this storm is exceptional, covering major portions of the Mid-Atlantic and Northeast, and bringing devastation to much of the Eastern seaboard. In response to this event, FEMA is promulgating this rule to accelerate the nation's recovery by maximizing the use of force account labor. A 2011 Department of Homeland Security Inspector General Report recommended that FEMA implement the force account labor procedure in some form, especially for an event of this magnitude, which would assist in reducing the occurrence of waste, fraud, and abuse.

This rule revises 44 CFR 206.228(a)(2) to allow the reimbursement of straight-or regular-time salaries and benefits of a grantee's or subgrantee's permanently employed personnel for debris removal work due to Hurricane Sandy performed under the Stafford Act's Major Disaster Assistance Programs (sections 403 and 502) or Emergency Assistance Programs (section 407). In order to receive reimbursement, force account labor employees must work exclusively on Hurricane Sandy debris removal. They cannot combine Hurricane Sandy debris removal with their normal work-related tasks or any other tasks, including tasks related to emergencies or major disasters declared by the President before October 27, 2012. Finally, reimbursement is restricted to 30 consecutive calendar days. These provisions will provide an incentive to applicants to maximize the use of their force account labor, thus lessening the need to secure and oversee contract labor, and encouraging them to allot 100 percent of the work time of their regular staff to Hurricane Sandy debris removal, thereby contributing to a quicker and more efficient recovery.

Eligible activities include disaster-related debris and wreckage removal work for any major disaster or emergency declared by the President on or after October 27, 2012, in response to Hurricane Sandy under Category A, Debris Removal, and/or Category B, Emergency Protective Measures. Emergency work is that work which must be performed to reduce or eliminate an immediate threat to life, protect public health and safety, and to protect improved property that is threatened as a result of the disaster. See 44 CFR 206.225. Debris removal work, whether labeled as Category A or Category B, must be in the public interest. See 44 CFR 206.224. In practice, FEMA treats debris removal work the same whether it is under Category A or under Category B. Therefore, this rule makes straight-or regular-time salaries and benefits for an eligible applicant's force account labor eligible in calculating the cost of eligible Category A and/or Category B debris removal work. This rule does not allow for the reimbursement of straight- or regular time salaries and benefits of a grantee's or subgrantee's permanently employed personnel for any other emergency protective measures under Category B.

Non-Substantive Changes.

This rule adds a reference to “grantee” in paragraph (a)(2) of section 206.228; it currently only refers to “subgrantees.” The eligibility of force account labor costs outlined in 44 CFR 206.228(a)(2) applies to grantees as well as subgrantees. The State, in most cases, acts as the grantee for the Public Assistance Program. Applicants who are successful in obtaining Public Assistance are identified as “subgrantees.” Since State, Tribal, and local government agencies are eligible applicants for Public Assistance, States may act as the grantee, as well as the subgrantee. While most work is performed by the subgrantees, it is possible that grantees could perform eligible debris removal and/or permanent work, and therefore incur straight-time force account labor costs for those activities. To be more accurate, this rule adds “grantee” to paragraph (a)(2) of section 206.228. The rule also establishes a cross reference to the exception for host state evacuation and sheltering in 44 CFR 206.202.

FEMA has good cause to publish this interim final rule without notice and comment under 5 U.S.C. 553(b)(3)(B), as it would be impracticable, unnecessary and contrary to the public interest. The impacts of Hurricane Sandy illustrate the need for promulgating this rule as quickly as possible. Between October 28, 2012 and October 31, 2012, Hurricane Sandy produced widespread wind, storm surge, flood, and snow damage to the Mid-Atlantic and Northeast regions of the United States. Before Hurricane Sandy had even made landfall the President issued emergency declarations for nine States, authorizing Federal resources to assist those States with their preparations for the historic storm. Hurricane force winds were experienced along portions of the coasts from Virginia to Massachusetts. On October 29, 2012, Hurricane Sandy made landfall as a post-tropical cyclone with maximum sustained winds of 85 miles per hour, which corresponds to a strong Category 1 hurricane on the Saffir Simpson Scale. Landfall occurred very close with high tide in many areas, resulting in substantial storm surge including almost 14 feet in New York City, and the Holland and Brooklyn-Battery tunnels remain closed due to flooding as of October 30, 2012. Thus far, Sandy is responsible for 30 fatalities in the United States, with search and rescue operations still ongoing.

Efficient and effective debris operations are arguably the single most important step toward community recovery following a major disaster—the ability of residents to return and live in a safe and healthy environment depends on the quality of the debris response. Since 2000, the Public Assistance Program awarded over $8 billion in grant funding—nearly 20 percent of all Public Assistance grants obligated during the period—to reimburse eligible applicants for debris removal. In addition, over $3 billion has been expended on Direct Federal Assistance related to debris removal. While the full scope of the damage from Sandy has yet to be determined, United States Army Corps of Engineering modeling estimates that a Category 1 hurricane making landfall in approximately the same area as Sandy could result in an excess of 27.3 million cubic yards of debris, spread across nine states and the District of Columbia.

Removing the current disincentive to applicants using their own employees for debris removal operations will encourage applicants to use their own labor forces to perform debris work that may be done more quickly, more efficiently, and at less cost than going through a procurement process and bringing in debris removal contractors.

This rule implements a procedure that has already been thoroughly tested through a Pilot Program in which any eligible State or local government was welcome to participate. Over 4,000 applicants chose to participate, and FEMA's analysis of the Pilot program indicated that it was very beneficial to those applicants. State and local governments that participated in the Pilot program were highly supportive of this procedure. In addition, the Department of Homeland Security's Office of Inspector General has recommended that this procedure be implemented in some form.

Due to the widespread, significant impact of disasters like Hurricane Sandy, and given that the procedure implemented by this interim final rule was extensively tested during the Public Assistance Pilot Program, FEMA has determined that it would be impracticable, unnecessary, and contrary to the public interest to delay putting the provisions of this interim final rule in place until a public notice and comment process has been completed. We find good cause to waive the notice of proposed rulemaking and to issue this final rule on an interim basis. We will accept public comments on this interim final rule for 60 days.

We are also dispensing with the Administrative Procedure Act requirement that a new rule not take effect until 30 days after it is issued. Instead, this rule is effective October 27, 2012, to allow the maximum benefit for Hurricane Sandy debris removal operations. Immediate effectiveness is authorized because this is a substantive rule granting an exception to the prohibition on reimbursing Public Assistance applicants for their straight-time force account labor costs associated with debris removal in response a major disaster or emergency. In addition, for the reasons set forth above, there is good cause to make the procedure implemented by this rule effective immediately.

CEQ regulations provide for Federal agencies to establish categories of actions that do not individually or cumulatively have a significant impact on the human environment which do not require an environmental assessment or environmental impact statement. 40 CFR 1508.4. FEMA's “List of exclusion categories” at 44 CFR 10.8(d)(2)(ii) categorically excludes the preparation, revision, and adoption of regulations related to actions that qualify for categorical exclusions. Further, essential assistance under section 403 and debris removal under section 407 of the Stafford Act are categorically excluded at 44 CFR 10.8(d)(2)(xix)(B) and (C). These categorical exclusions cover all debris removal actions under the Stafford Act.

Finally, FEMA has evaluated the potential for extraordinary circumstances as required in 44 CFR 10.8(d)(3) and determined that the procedure authorized under this rule does not change its environmental effect. The straight-time force account labor provision does not change the nature or extent of debris removal activities reimbursed by FEMA. The potential for reimbursement of straight-time force account labor provides applicants with more flexibility to perform debris removal work with their own employees in addition to, or in place of, contractors, but does not affect the eligibility of debris removal actions under this program. An environmental assessment was not prepared for this rulemaking action because a categorical exclusion applies and no extraordinary circumstances exist.

As required by the Paperwork Reduction Act of 1995 (PRA), as amended, 44 U.S.C. 3501 et seq., an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number. The collection of information associated with the Public Assistance program is approved under OMB Control No. 1660-0017, which expires on April 30, 2013. This rule does not contain any new collections of information.

Executive Orders 13563 and 12866 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget.

The rule provides (unquantified) benefits that are vitally important to further FEMA's mission. This rule increases efficiency, flexibility, and reduces the costs of performing debris removal work after Hurricane Sandy. The rule affects States, Indian Tribal governments, local governments, as well as certain private non-profit organizations that have been affected by Hurricane Sandy, by maximizing the use of force account labor for debris removal, thus accelerating the recovery process.

Review of FEMA's existing debris regulations revealed that they could be expanded to provide for more efficient and timely debris removal after a disaster. As discussed earlier in this preamble, the reimbursement of force account labor for debris removal under the Pilot Program greatly improved efficient and timely debris removal. In reimbursing force account labor, FEMA provided applicants with an incentive to perform the work in-house, as well as improve oversight of debris removal operations. Therefore, FEMA is expanding the debris regulations to incorporate this procedural improvement into the debris removal program in response to Hurricane Sandy.

Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), sets forth principles and criteria that agencies must adhere to in formulating and implementing policies that have federalism implications, that is, 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.” Federal agencies must closely examine the statutory authority supporting any action that would limit the policymaking discretion of the States and, to the extent practicable, must consult with State and local officials before implementing any such action.

FEMA has reviewed this rule under Executive Order 13132 and has concluded that this rule does not have federalism implications as defined by Executive Order 13132. FEMA has determined that this rule does not significantly affect the rights, roles, and responsibilities of States, and involves no preemption of State law nor does it limit State policymaking discretion. This rulemaking amends a voluntary grant program that may be used by State, local and Tribal governments and eligible private nonprofit organizations to receive Federal grants to assist in the recovery from disasters. States are not required to seek grant funding, and this rulemaking does not limit their policymaking discretion.

Under Executive Order 12898, as amended “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, Feb. 16, 1994), FEMA has undertaken to incorporate environmental justice into its policies and programs. Executive Order 12898 requires each Federal agency to conduct its programs, policies, and activities that substantially affect human health or the environment, in a manner that ensures that those programs, policies, and activities do not have the effect of excluding persons from participation in, denying persons the benefit of, or subjecting persons to discrimination because of their race, color, or national origin or income level.

The purpose of this rule is to implement a debris-related Public Assistance Pilot Program procedure. This rule reimburses straight- or regular time wages for the permanent employees of Public Assistance applicants while they perform disaster-related debris and wreckage removal activities related to Hurricane Sandy for a period of 30 consecutive calendar days. Reimbursing straight- or regular time for an applicant's permanent employees who perform debris removal work will provide an incentive for applicants to complete debris removal work themselves rather than entering into contracts to perform the work. Removing debris expeditiously provides value to the American people by creating safer communities and reducing loss of life and property, enables communities to recover more rapidly from disasters, and lessens the financial impact of disasters on individuals, the United States Department of the Treasury, State, local and Tribal communities.

No action that FEMA can anticipate under this rule will have a disproportionately high and adverse human health or environmental effect on any segment of the population. Accordingly, the requirements of Executive Order 12898 do not apply to this rule.

FEMA has reviewed this rule under Executive Order 13175 “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, Nov. 9, 2000). Under Executive Order 13175, FEMA may not issue a regulation that has Tribal implications, that imposes substantial direct compliance costs on Indian Tribal governments, and that is not required by statute. In reviewing this rule, FEMA finds that because Indian Tribal governments are potentially eligible applicants under the Public Assistance Program, this rule does have “tribal implications” as defined in the Executive Order. However, eligibility to receive reimbursement for force account labor for debris removal operations will 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 rule does not impose substantial direct compliance costs on Indian Tribal governments nor does it preempt tribal law, impair treaty rights nor limit the self-governing powers of Indian Tribal governments.

Under the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, and section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601 note, agencies must consider the impact of their rulemakings on “small entities” (small businesses, small organizations and local governments). 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. This rule does not require a notice of proposed rulemaking and therefore is exempt from the requirements of the RFA.

The Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1501 et seq., requires each Federal agency, to the extent permitted by law, to prepare a written assessment of the effects of any Federal mandate in a proposed or final agency 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 one year. UMRA exempts from its definition of “Federal intergovernmental mandate” regulations that establish conditions of Federal assistance or provide for emergency assistance or relief at the request of any State, local, or Tribal government. Therefore, this rule is not an unfunded Federal mandate under that Act.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, “Civil Justice Reform” (61 FR 4729, Feb. 7, 1996), to minimize litigation, eliminate ambiguity, and reduce burden.

FEMA has reviewed this rule under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights” (53 FR 8859, Mar. 18, 1988) as supplemented by Executive Order 13406, “Protecting the Property Rights of the American People” (71 FR 36973, June 28, 2006). Sections 403(a)(3)(A) and 407 of the Stafford Act, 42 U.S.C. 5170b and 5173, respectively, provide FEMA authority to fund debris removal from private property provided that the State or local government arranges an unconditional authorization for removal of the debris, and agrees to indemnify the Federal government against any claim arising from the removal. The regulations implementing Sections 403 and 407 of the Stafford Act at 44 CFR 206.224 establish the requirement that debris removal be in the “public interest” in order to be eligible for reimbursement. Generally, debris removal from private property following a disaster is the responsibility of the property owner. However, large-scale disasters may deposit enormous quantities of debris on private property over a large area resulting in widespread immediate threats to the public-at-large. In these cases, the State or local government may need to enter private property to remove debris to: Eliminate immediate threats to life, public health, and safety; eliminate immediate threats of significant damage to improved property; or ensure economic recovery of the affected community to the benefit of the community-at-large. In these situations, debris removal from private property may be considered to be in the public interest and thus may be eligible for reimbursement under the Public Assistance Program. See 44 CFR 206.224. FEMA will work with States affected by a disaster to designate those areas where the debris is so widespread that removal of the debris from private property is in the “public interest” pursuant to 44 CFR 206.224, and thus is eligible for FEMA Public Assistance reimbursement on a case-by-case basis. This rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630.

FEMA is sending the rule to Congress and to the Government Accountability Office pursuant to the Congressional Review of Agency Rulemaking Act (Congressional Review Act)(CRA), Public Law 104-121, 110 Stat. 873 (March 29, 1996) (5 U.S.C. 801 et seq). This rule is not a “major rule” within the meaning of the CRA. Furthermore, Section 808 of the CRA allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. As stated previously, FEMA has made such a good cause finding, including the reasons therefore.

For the reasons discussed in the preamble, the Federal Emergency Management Agency amends 44 CFR part 206 as follows:

This is a summary of the Commission's Report and Order, FCC 12-126, adopted on October 10, 2012 and released on October 12, 2012. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., CY-A257, Washington, DC 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street SW., Room CY-B402, Washington, DC 20554. To request these documents in accessible formats (computer diskettes, large print, audio recording, and Braille), send an email to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. With this Report and Order ( Order ), we amend our rules to allow cable operators to encrypt the basic service tier in all-digital cable systems if they comply with certain consumer-protection measures. As discussed below, this rule change will benefit consumers who can have their cable service activated and deactivated from a remote location. By allowing remote activation and deactivation, we expect our amended rules will result in benefits to both cable operators and consumers by significantly reducing the number of truck rolls associated with provisioning service and significantly reducing the need for subscribers to wait for service calls to activate or deactivate cable service. At the same time, we recognize that this rule change will adversely affect a small number of cable subscribers who currently view the digital basic service tier without using a set-top box or other equipment. If a cable operator decides to encrypt the digital basic tier, then these subscribers will need equipment to continue viewing the channels on this tier. To give those consumers time to resolve the incompatibility between consumer electronics equipment (such as digital television sets) and newly encrypted cable service, we require operators of cable systems that choose to encrypt the basic service tier to comply with certain consumer protection measures for a period of time. In addition, we note that this rule change may impact the ability of a small number of subscribers that use certain third-party equipment that is not CableCARD compatible to access channels on the basic service tier. To address this issue, we require the six largest incumbent cable operators to comply with additional requirements that are intended to ensure compatibility with certain third-party-provided equipment used to access the basic tier.

2. Background. In the Cable Television Consumer Protection and Competition Act of 1992 (“1992 Cable Act”), Congress sought to make sure that consumer electronics equipment could receive cable programming and that compatibility issues did not limit the premium features of that equipment. Section 17 of that law added section 624A to the Communications Act of 1934, as amended. Section 624A requires the Commission to issue regulations to assure compatibility between consumer electronics equipment and cable systems. In 1994, the Commission implemented the requirements of section 624A in part by adding § 76.630(a) to its rules. Section 76.630(a) prohibits cable operators from scrambling or encrypting signals carried on the basic tier of service. Encryption is an essential component of a conditional access system, which cable operators use to ensure that subscribers receive only the services that they are authorized to receive. Nevertheless, the Commission determined that this rule would significantly advance compatibility by ensuring that all subscribers would be able to receive basic tier signals “in the clear” and that basic-only subscribers with cable-ready televisions would not need set-top boxes. The Commission concluded that “[t]his rule also will have minimal impact on the cable industry in view of the fact that most cable systems now generally do not scramble basic tier signals.”

3. In the mid-1990's, cable operators began to upgrade their systems to offer digital cable service in addition to analog cable service (hybrid service). More recently, many cable operators have transitioned to more efficient all-digital service, freeing up spectrum to offer new or improved products and services like higher-speed Internet access and high definition programming. After a cable operator transitions to an all-digital system, most of its subscribers have at least one cable set-top box or retail CableCARD device in their homes. We expect that the percentage of homes with set-top boxes or retail CableCARD devices will continue to increase as more cable operators eliminate analog service from their systems in favor of more efficient digital service.

4. The percentage of homes with set-top boxes or CableCARD devices is high because most cable systems now scramble most of their signals. As cable operators began to transition programming on their cable programming service tier (“CPST”) to digital, many program carriage agreements required cable operators to encrypt that programming as a condition of carriage. In addition, cable operators use encryption as part of their conditional access system to ensure that cable service is available only to those who have paid for it. Particular methods of encryption, however, vary across cable systems, which could lead to incompatibility between consumer devices and cable service. In 2003, the Commission adopted the CableCARD standard to address this incompatibility problem. The CableCARD, which subscribers must lease from their cable provider either as a part of a leased set-top box or separately for use in a compatible retail television or set-top box, decrypts the cable services. At present, over 78 percent of all cable subscribers have at least one leased set-top box or retail CableCARD device in their home. Cable operators who offer only digital service indicate that all of their subscribers have at least one leased set-top box or retail CableCARD device. Some cable subscribers rely on QAM tuners in television sets and consumer electronics devices that allow access to unencrypted digital cable service without additional equipment, but, based on the record before us, we believe that few consumers rely on them for primary access to cable service. The fact that most cable subscribers already have a cable set-top box or retail CableCARD device significantly reduces the number of subscribers who benefit from the prohibition on encryption of the basic service tier in all-digital systems in contrast to systems that carry analog service.

5. Our rules state that requests for waiver of the encryption prohibition “must demonstrate either a substantial problem with theft of basic tier service or a strong need to scramble basic signals for other reasons.” Prior to 2010, the Commission had waived the rule based only on theft of service. Recently, the Commission has received several requests for waiver of the rule prohibiting encryption of the basic service tier based on the argument that the rule imposes more burdens than benefits as cable operators transition to all-digital systems. The petitioners argue that there are very few people who subscribe only to the basic service tier in all-digital systems, and that access to the basic tier would therefore be unaffected by encryption for the overwhelming majority of subscribers to such systems because they already have a set-top box or CableCARD-equipped retail device. Furthermore, they contend, encrypting the basic service tier in an all-digital system would eliminate the need for many service calls because it would allow cable operators to enable and disable cable service remotely, activating and deactivating the encryption capability of set-top boxes and CableCARDs from the headend rather than visiting subscribers' homes. Today, cable operators typically must manually connect and disconnect the cable that runs to a home to activate or deactivate service and use traps to block access to particular channels. If the cable operator were allowed to encrypt every signal, the operator could keep every home connected to the cable plant regardless of whether the home subscribes to cable service. In addition, the operator could ensure that only paid subscribers are able to access the service by authorizing and deauthorizing CableCARDs, or other legitimate devices, as people subscribe to or cancel cable service.

6. In January 2010, the Media Bureau granted a conditional waiver of the rule that prohibits encryption of the basic service tier to Cablevision with respect to Cablevision's New York City systems, which are all-digital. The Bureau based its decision on the fact that encryption of the basic service tier on Cablevision's all-digital systems would allow Cablevision to enable and disable cable service remotely. The Bureau also found that remote activation and deactivation of cable service would “reduce[ ] costs for Cablevision, improve[ ] customer service, and reduce[ ] fuel consumption and CO2 emissions.” Remote activation and deactivation, the Bureau concluded, would reduce installation costs for Cablevision's subscribers and also benefit these subscribers by reducing the number of occasions when they must wait at home for a service call, as compared to unencrypted cable systems. The Bureau reasoned that Cablevision would sufficiently address the problem of incompatibility with consumer electronics “by providing basic-only subscribers with set-top boxes or CableCARDs without charge for significant periods of time.” Finally, the Bureau also concluded that the waiver would “provide an experimental benefit that could be valuable in the Commission's further assessment of the utility of the encryption rule,” and therefore required Cablevision to file three reports detailing the effect of encryption on subscribers. Four cable operators have filed similar petitions for waiver with the Commission's Media Bureau since the release of the Cablevision Waiver.

7. In the wake of these petitions as well as requests from Public Knowledge and Media Access Project for the Commission to deal with the basic service tier encryption issue by launching a rulemaking proceeding, the Commission issued a Notice of Proposed Rulemaking in October 2011. The Commission proposed to allow cable operators to encrypt the basic service tier in all-digital systems, subject to conditions that would minimize disruption for affected subscribers by providing a transition period in which to make informed choices about purchasing or leasing new equipment to continue accessing service. Based on the reports that Cablevision submitted as a condition of its waiver, the Commission in the Encryption NPRM predicted that the rule change would reduce truck rolls and service calls with modest adverse effects on few subscribers. We received comments or reply comments on the Encryption NPRM from 34 parties, and a number of subsequent ex parte filings. The parties' positions are described in the ensuing Discussion.

8. Discussion. Because of the public benefits associated with allowing all-digital cable operators to encrypt the basic service tier, we amend our rule to permit this practice as long as the cable operator complies with certain consumer protection measures. Encryption of all-digital cable service will allow cable operators to activate and deactivate cable service remotely, thus relieving many consumers of the need to schedule appointments when they sign up for or cancel cable service. In addition, encryption will reduce the number of truck rolls necessary for manual installations and disconnections, reduce service theft, and establish regulatory parity between cable operators and their satellite competitors, who are not subject to the encryption rule. We find these benefits offset the increased burdens that may result from encryption of the basic service tier. Recognizing, as noted above, that some consumers rely on unencrypted basic tier service, we adopt narrowly tailored consumer protection measures to help ease the transition to encrypted service for those consumers. In the sections below, we first discuss which systems will be allowed to encrypt the basic service tier. Then we discuss the benefits associated with permitting all-digital cable operators to encrypt the basic service tier, as well as the burdens associated with our rule change and consumer protection measures we adopt to mitigate those burdens. Finally, we discuss the legal basis for the rule changes.

9. Systems Eligible to Encrypt. In the Encryption NPRM, the Commission proposed to allow encryption of the basic service tier only with respect to all-digital systems “because remote activation and deactivation of cable service, and its attendant benefits, are only feasible in all-digital systems.” For this reason, we limit encryption eligibility of the basic tier to all-digital systems. The Commission proposed to define an “all-digital” system as one in which “no television signals are provided using the NTSC system.” As explained below, we adopt our proposed definition, finding that it will best achieve our goal of facilitating remote activation and deactivation of cable service “while minimizing interference with the special functions of subscribers' television sets.”

10. Commenters suggested several substantive changes to our proposed rule. Several commenters suggested that we extend encryption eligibility to cable operators that offer unencrypted analog “barker channels.” Mikrotec and Inter Mountain Cable suggested that operators should be allowed to encrypt the basic service tier as long as all “programming” on the basic tier is transmitted digitally and “if that condition is met, then there should be no concern that the system otherwise uses analog modulation.” They also suggest that eligibility to encrypt should be determined subscriber-by-subscriber, not on a system-by-system basis, because cable operators may elect to transition portions of systems to all-digital piecemeal, and the rule should not discourage that practice.

11. We believe the best criterion for eligibility to encrypt the basic service tier is that the system carries only digital signals aside from unencrypted analog barker channels. Encryption on hybrid systems (that is, systems that transmit signals in analog and digital) would not generate the benefits associated with encryption on all-digital systems because the analog portion of the system will still require truck rolls to activate and deactivate service and the Commission does not have a separated security solution like CableCARD to ensure that retail devices can access scrambled analog cable programming. Therefore, permitting hybrid systems to encrypt would not result in the type of benefits that justify easing the encryption requirement for all-digital systems. We do not believe that it is practical to adopt Mikrotec and Inter Mountain Cable's proposal to determine eligibility for encryption on a consumer-by-consumer basis, because encryption disparity on a consumer-by-consumer basis could lead to consumer confusion: Under this proposal, one subscriber could be subject to encryption (and the commensurate consumer-protection measures described below), while his neighbor could face no encryption and be able to access channels on the basic service tier. The administrative burdens of determining the applicability of the rule would also make such a proposal unreasonable. Therefore, we believe that our rule, which determines eligibility for encryption on a system-wide basis, is more reasonable and will better serve the public interest.

12. Benefits of Permitting Basic Service Tier Encryption. Remote Activation and Deactivation. Based on examination of the record, we are persuaded that allowing encryption of the basic service tier on all-digital systems will reduce the need for many consumers to schedule a service call and wait for the cable technician to arrive before initiating or terminating their cable service. ACA states in its comments that physical connection and disconnection of cable service in all-digital systems is “unnecessary but for the existence of the basic service tier encryption prohibition.” Comcast predicts that encrypting the basic service tier will allow the company to perform nearly half of its activations and 90 percent of its deactivations remotely. Cablevision reports that, since it received waiver of the encryption prohibition, 99.5 percent of its deactivations were performed remotely and a growing number of its new customers are eligible for remote activation. The result for consumers is that in many cases they will no longer need to rearrange their schedules to wait for cable technicians to arrive at their homes in order to activate and deactivate their cable service, making activation and deactivation of service much more convenient.

13. In addition to the projected time savings for subscribers because of remote activation and deactivation, the record is replete with secondary benefits that cable operators and their customers will realize as a result of remote service change. These include savings for cable operators because of a reduction in the need to dispatch service technicians to customers' homes. For example, commenters assert that reduced costs due to truck rolls and system maintenance will save cable operators money that they can use to “invest in innovative new products that customers demand and highly value.” In addition, Comcast states that, with remote activation and deactivation, “technicians would need to access drop lines less frequently, thereby reducing `wear-and-tear' on the lines and the need for maintenance.” Many commenters also highlight the benefits remote activation and deactivation will have on vehicle traffic and the environment. Microtek and Inter Mountain Cable even suggest that these increased efficiencies could lead to lower rates for subscribers.

14. Reduction of Theft and Piracy. Another benefit of basic tier encryption is the likely reduction in theft of cable service. In 2004, NCTA estimated that five percent of homes passed receive unauthorized cable service, which equates to five billion dollars in unrealized revenue that cable operators could dedicate to offering improved services. The resulting reduction in cable operator revenues may increase the rates operators charge their subscribers. In addition, Comcast explains that theft of service reduces the quality of cable service because thieves sometimes access the cable system by splitting cables and adding unauthorized taps, which degrade connections and can lead to signal leakage and lower broadband speeds. This unauthorized splicing also can add to wear-and-tear on the cable system and increase the need for maintenance. Encryption of the basic service tier will discourage thieves from splicing cable lines as it will not enable viewing of the signals without leasing an authorized set-top box or CableCARD from the operator. Encryption of the basic service tier could also benefit channels that are carried on the basic service tier, as developers of high-value content may be more willing to make the content available to basic service tier channels if they are encrypted and less susceptible to piracy.

15. Regulatory Parity. Several commenters emphasized that the proposed rule change will increase regulatory parity between cable operators and satellite providers, which are not subject to the encryption rule. Commenters explain that the technology and market landscapes were quite different when the rule was adopted, when consumers had a reasonable expectation that they would be able to connect their televisions directly to a coaxial cable without the need for a set-top box. In the years since enactment of the 1992 Cable Act, consumer expectations have changed substantially. First, cable operators have introduced new and innovative services, such as video on demand and pay-per-view services, that cannot be accessed by digital subscribers without an authorized set-top box or, in some instances, a CableCARD. As a result, almost all digital subscribers already use set-top boxes or CableCARDs to access cable service. Second, since the 1992 Cable Act, satellite television operators have begun to offer video programming services to tens of millions of subscribers, who access these services through the use of one or more converter boxes. Our rules do not prohibit satellite operators from encrypting their services, and therefore they are able to make service changes remotely and in real time. Cable operators argue that this puts them at a regulatory disadvantage vis-à-vis their competitors that are not constrained by the requirements of § 76.630(a). We believe that by amending our encryption rule we will reduce this regulatory disparity and enable all-digital cable operators to provide a similar level of customer service as their MVPD competitors.

16. Consumer Protection Measures to Reduce Burdens on Subscribers. Although we expect our rule change will affect relatively few subscribers, we nonetheless adopt consumer protection measures to mitigate any resulting harm to subscribers who are impacted by encryption of the digital basic tier. This rule change will impact the few digital cable subscribers who access the basic service tier without a set-top box or CableCARD: They will need to obtain a set-top box or CableCARD from their cable operator once the operator encrypts the basic service tier. To give these consumers time to assess their options to access encrypted cable service, we will require cable operators that choose to encrypt to offer affected subscribers equipment necessary to receive the encrypted programming without charge for a limited time, and to notify their subscribers about encryption and the equipment offers. In addition, we require the six largest incumbent cable operators to offer equipment that is compatible with IP-enabled clear-QAM devices provided by third parties. We intend that this requirement will provide an opportunity for affected consumers to make informed choices about whether to purchase a CableCARD-compatible device, lease a set-top box from their cable operator, or use another method to access the broadcast and other channels carried on the basic service tier (for example, by accessing the signals over-the-air or via another MVPD). As we explained in the Encryption NPRM, such an opportunity will minimize the impact of encryption on clear-QAM users by offering a transition period during which they can continue to access the basic tier without an additional equipment charge while they consider their options for device compatibility. In this section, we identify the small class of subscribers that encryption may affect and adopt two categories of measures to protect those subscribers: Transitional equipment requirements and notice requirements.

17. Subscribers That May Be Affected by Encryption of the BST. The Commission concluded in 1994 that adopting the basic service tier encryption prohibition “will have minimal impact on the cable industry in view of the fact that most cable systems now generally do not scramble basic tier signals.” Today our examination of the record reflects that relaxing the encryption prohibition for all-digital systems will have minimal impact on consumers because most subscribers do not rely on the clear-QAM tuners in their devices to access basic tier signals. Nevertheless, we recognize that lifting the encryption prohibition may impact some cable subscribers who use clear-QAM devices to access the basic tier, such as subscribers who use second or third television sets to access unencrypted digital basic service tier service without set-top boxes or CableCARDs and subscribers that use third-party provided IP-enabled devices that have clear-QAM tuners. Several cable subscribers and equipment manufacturers filed comments claiming that our rule change would have a negative impact on them. These subscribers explain that they rely on clear-QAM tuners in their electronic devices (such as computers and television sets) to access basic tier programming, and that because they have more than two devices on which to view BST programming (e.g., they have multiple televisions in their home), their monthly bills will increase because they will need a greater number of converter boxes than afforded under the free box conditions that the Commission proposed in the Encryption NPRM. We are concerned about the effect of this rule change on the small group of subscribers who access unencrypted basic service tier programming through clear-QAM receivers, but, at the same time, recognize that no consumer protection measure could fully satisfy every affected subscriber. Nonetheless, we believe that the consumer-protection measures outlined below are appropriate and necessary to minimize disruption to affected subscribers by providing a reasonable transition period to make informed choices about the options available to access the basic tier.

18. Transitional Equipment Requirements Applicable to All Cable Operators. To limit the costs that affected consumers may face due to encryption, we adopt our proposed consumer-protection measures that require a cable operator that chooses to encrypt the basic service tier to: (i) Offer to existing subscribers who subscribe only to the basic service tier and do not use a set-top box or CableCARD, the subscriber's choice of a set-top box or CableCARD on up to two television sets without charge for two years from the date of encryption; (ii) offer existing subscribers who subscribe to a level of service above “basic only” but use an additional television set to access only the basic service tier without the use of a set-top box or CableCARD at the time of encryption, the subscriber's choice of a set-top box or CableCARD on one television set without charge for one year from the date of encryption; and (iii) offer existing subscribers who receive Medicaid, subscribe only to the basic service tier, and do not use a set-top box or CableCARD, the subscriber's choice of a set-top box or CableCARD on up to two television sets without charge for five years from the date of encryption. These consumer protections apply to televisions and devices connected to the cable system at the time of encryption. To ensure that any subscriber likely to be affected by encryption has adequate time to consider these offers, we will require cable operators to keep the offer open to subscribers for at least 30 days before the date the operator begins encrypting the first basic tier channel on the channel lineup and for at least 120 days after that date. NCTA suggested that the offer extend for only 30 days after the date that encryption begins. We believe that 30 days after the date of encryption would not afford affected consumers sufficient time to learn about the effect of encryption and the consumer-protection measures available to them and act on the information. Furthermore, because encryption will affect only a very small number of subscribers, the consumer protection measures we adopt will not be unduly onerous on cable operators. We expect these transitional protections will substantially mitigate the costs to affected subscribers while they consider alternative means for accessing the basic service tier.

19. Equipment Requirements Applicable to Top Six Incumbent Cable Operators. A few commenters assert that the free equipment conditions described above do not mitigate any disruption because some consumers may own third-party provided IP-enabled devices that do not have the ability to decrypt cable signals. Therefore, these commenters call for the Commission to reject the proposed rule, or adopt special measures to mitigate disruption to consumers that use those third-party devices. Specifically, these parties complain that existing cable set-top boxes and DTAs are not compatible with IP-enabled devices because they do not output signals in a manner that third-party-provided IP-enabled devices can access. Accordingly, such devices would not be compatible with the operator's free equipment offering—i.e., there would be no connection by which such devices could access the basic tier channels—thus rendering such devices useless if a cable operator chooses to encrypt the basic tier. Commenters assert that such devices were purchased or manufactured on the expectation that unencrypted basic service tier QAM signals would continue to be available from cable operators. The record indicates that at least four companies have developed products that rely on customers' ability to access clear-QAM signals, and that a relatively small number of consumers have purchased these devices for this capability. As explained above, however, we anticipate the impact of encryption of the basic tier on the public at large will be minimal because the record indicates that only a small number of consumers rely on clear-QAM devices to access the basic tier. And the record further indicates that subscribers who use IP-enabled clear-QAM devices that would be incompatible with the free equipment offerings by cable operators represent an even smaller subset of clear-QAM users.

20. To mitigate any harm to the small group of consumers that may use such devices, NCTA's six largest incumbent cable members—serving 86 percent of all cable subscribers—have committed to adopt, prior to encrypting, a solution that would provide basic service tier access to third-party provided IP-enabled clear QAM devices. Pursuant to this commitment, these six cable operators will make basic service tier channels available either via connection from operator-supplied equipment or by providing access to the operator's security technology. Specifically, these cable operators have proposed to either (i) provide a converter box with “standard home networking capability” that can provide IP-enabled clear QAM devices access to basic service tier channels on the same terms proposed in the Encryption NPRM (“Option 1”), or (ii) enable IP-enabled clear QAM devices to access basic service tier channels without any additional hardware through the use of commercially available software upgrades (“Option 2”). NCTA proposed to sunset these commitments three years after we adopt this Order unless the Commission extends them. Boxee and CEA argue that these commitments do not sufficiently support the operation of IP-enabled clear QAM devices. Instead, they advocate that all cable operators should be required to make the basic service tier available to IP-enabled devices without additional hardware. CEA further encourages the Commission not to sunset the commitments after three years. The AllVid Alliance suggests that the Commission initiate a Notice of Proposed Rulemaking seeking comment on “a nationally-portable common IP-based interface from MVPD services to consumer devices.”

21. We believe that the commitments from the six largest incumbent cable operators will be sufficient to address the compatibility issue concerning IP-enabled devices and achieve the objectives of section 624A of the Act—i.e., to ensure compatibility between cable service and consumer electronics equipment. We do not extend the additional equipment requirement to smaller cable operators because we do not believe it is necessary at this time. As noted above, based on the current record, only a small number of consumers rely on IP-enabled devices to access the basic tier and thus we expect this particular compatibility problem to be extremely limited in scope. Because the six largest incumbent cable operators subject to the rule serve 86 percent of all cable subscribers nationwide, we expect most consumers that use such devices will have ready access to the necessary equipment. Moreover, large cable operators generally dictate equipment features to manufacturers and commonly get priority in delivery of that equipment. We anticipate that the large operators' demand for this equipment eventually will lead all equipment to include this functionality in the marketplace, and thus the equipment small cable operators provide will eventually include the IP functionality as well, regardless whether they specify this particular feature. Nonetheless, we may revisit this issue if the equipment market does not develop as expected or if we find that small cable operators do not make their service compatible with these consumer devices.

22. Contrary to Boxee's argument, nothing in section 624A requires that consumer equipment compatibility be achieved by means of a hardware-free solution. Under the equipment measure we adopt today, the vast majority of consumers will be able to access service that is encrypted using a commercially available security technology or via equipment with standard home-networking capability in much the same way they do today. In fact, if this standard home-networking capability is connected to a wireless home network, the consumer experience could improve because consumers will be able to access basic service tier channels without physically connecting a device to a coaxial plug from the wall. Thus, mandating a hardware-free solution is not necessary to protect consumers in the context of the instant proceeding.

23. We adopt these commitments as required preconditions to encrypting by the top six incumbent cable operators with slight modifications and clarifications. These conditions will automatically sunset three years from the release date of this Order unless the Media Bureau (“Bureau”) determines prior to this date that the IP-enabled device protections remain necessary to protect consumers. We believe that a future review of these rules is warranted because the market for these IP-based devices is nascent and it is unclear whether consumer demand for this equipment will flourish. Accordingly, we delegate authority to the Bureau to initiate a review two years after the release of this Order to decide whether these IP-enabled device protections remain necessary to protect consumers or whether it is appropriate to sunset the IP-enabled device protections. If the Bureau does not release an order extending these protections within three years from the release date of this Order, then the consumer protection measures concerning IP-enabled devices detailed above will no longer apply to the top-six cable operators for purposes of encryption of the basic service tier. In deciding whether the sunset is appropriate, the Bureau shall consider the costs to cable operators and the benefits to consumers, whether competitive services are available, regulatory parity between cable and other MVPDs, the state of technology and the marketplace, and cable operators' efforts to meet these commitments and ensure compatibility. The Bureau shall also consider whether the IP-enabled device protections should be extended to small cable operators.

24. Second, we add some clarifying language to address Boxee and CEA's concerns that cable operators could use licenses to limit retail device manufacturers from building compatible devices. Any license terms that cable operators require for the “standard home networking capability” used to offer access to the basic service tier in Option 1 and the “requirements necessary (including any authentication processes)” in Option 2 must be made available on a good faith basis. In adopting this “good faith” licensing requirement, we intentionally do not specify any particular technology or technology licensing model (e.g., we do not require or specify “fair, reasonable, and non-discriminatory” licensing, as that term has been interpreted in other contexts, as urged by Boxee and CEA). Third, we require the operators that choose to offer access to the basic service tier using Option 1 to “publicly disclose the DLNA profile or other protocol that is being used for the home-networking capability on such operator-supplied equipment.” Such a requirement is necessary to ensure that third-party manufacturers have the information necessary to build a device that works with cable-provided equipment. We also remind cable operators that § 76.640(b)(4)(iii) of our rules, which goes into effect in December of this year, requires all high definition set-top boxes (except for one-way, non-recording set-top boxes) to include an IP-compatible output based on an open industry standard that provides for audiovisual communications including service discovery, video transport, and remote control command pass-through standards for home networking. We believe that these additional consumer protection measures will ease the transition to encrypted service for the vast majority of the small subset of customers that rely on third-party provided IP-enabled devices to access the basic service tier.

25. Other Issues. Public Knowledge and Media Access Project state in their comments that there have been no complaints from customers in Cablevision's encrypted systems about “hidden fees” related to the free device offers, and they anticipate that cable operators “intend to act in good faith.” Out of an abundance of caution, however, they suggest we affirmatively state that cable operators may not impose service fees (such as “digital access fees” or “outlet fees”) in lieu of rental fees for the free devices. Consistent with Public Knowledge and Media Access Project's suggestion, we clarify that boxes provided by cable operators that choose to encrypt the basic service tier must be provided without any additional service charges related to the equipment.

26. Public Knowledge and Media Access Project also suggest that we tie the low-income condition to Lifeline/Linkup eligibility because Medicaid eligibility can vary from state to state. We reject that suggestion as unnecessary. As several commenters point out, Medicaid eligibility presents an easily verifiable, bright-line test, and is less likely to cause confusion among subscribers and cable customer service representatives.

27. We also reject calls from some commenters to require free equipment in perpetuity for existing subscribers, and not to limit free boxes to existing subscribers. The consumer protection measures we adopt are intended to mitigate the disruption that may be experienced by current cable subscribers. We do not agree that free equipment is necessary for new subscribers: Given the movement to digital services, many subscribers have become accustomed to leasing set-top devices, and that trend seems likely to continue. Furthermore, we agree with NCTA that unnecessarily burdensome conditions such as free devices for all new subscribers could discourage cable operators from encrypting and prevent the public from realizing the benefits that stem from cable operators' ability to remotely activate and deactivate service which benefits most subscribers. Accordingly, we do not condition this rule change on cable operators' supplying free devices in perpetuity to existing subscribers or to new subscribers.

28. Certain commenters express concern about the impact that basic service tier encryption could have on institutional subscribers and schools in particular. They suggest that the Commission extend the free-device consumer protections to institutional subscribers to prevent the rule change from placing a financial burden on them. Cable operators, however, suggest that these commenters conflate encryption with digitization, and we agree. As cable operators transition to all-digital service, these institutional subscribers will need devices to convert digital signals to analog regardless of whether the service is encrypted unless the institutional subscribers use television sets with clear-QAM tuners and only use those televisions to access the basic service tier. Furthermore, Comcast argues that cable operators establish agreements with local institutions on a case-by-case basis, and that each franchising authority negotiates consumer protection measures to meet its needs. We are persuaded that it is unnecessary to adopt consumer-protection measures with respect to institutional subscribers, because we expect that cable operators will continue to work with local institutions—and may be required to do so by franchising authorities—to ensure that the institutions' needs will be met. We emphasize that our rules are not intended to limit or preempt existing, renegotiated, or future franchise agreements that provide institutional subscribers more equipment on different terms than our rules require for residential subscribers. We expect that cable operators will work closely with local franchising authorities and institutions to ensure that any disruption institutional subscribers experience as a result of encryption will be minimized.

29. ACA and BendBroadband express concern about the effect that the conditions will have on small cable operators. We agree with ACA and BendBroadband that in some instances the benefits of encryption may be outweighed by the burdens of administrative upgrades to account for the new billing procedures needed to offer free devices for a limited period of time. We note, however, that the decision to encrypt the basic service tier will be a voluntary decision made at the sole discretion of the cable operator under the rules we adopt here. Thus, each cable operator may use its business judgment to decide whether, and when, the benefits of encryption outweigh the costs of upgrading billing software and providing equipment to its subscribers to ease the transition to encrypted service.

30. Notification Requirements. Based on the record, we believe that notification requirements are also necessary to protect consumers. Therefore, we will require cable operators to notify their subscribers about the planned encryption and the device offers at least 30 days before the date encryption of the basic tier commences. We will also require cable operators to notify their subscribers at least 30 days, but no more than 60 days, before the end of the free device transitional period. These notifications are necessary to make the device-based consumer protection measures meaningful to consumers; the measures would be meaningless if affected consumers were not made aware of the offers.

31. NCTA proposed that our rules require cable operators to notify their subscribers about encryption and free device offers at least 30 days prior to the date encryption of the basic service tier commences. Several commenters supported NCTA's proposal, and we agree that it is important to identify when cable operators must notify their subscribers about encryption. Therefore, we will require cable operators to notify their subscribers that they will encrypt at least 30 days before the date encryption of the basic service tier commences, at which time they must also include information about the transitional device requirements set forth in Section 76.630. The notice must state:

On (DATE), (NAME OF CABLE OPERATOR) will start encrypting (INSERT NAME OF CABLE BASIC SERVICE TIER OFFERING) on your cable system. If you have a set-top box, digital transport adapter (DTA), or a retail CableCARD device connected to each of your TVs, you will be unaffected by this change. However, if you are currently receiving (INSERT NAME OF CABLE BASIC SERVICE TIER OFFERING) on any TV without equipment supplied by (NAME OF CABLE OPERATOR), you will lose the ability to view any channels on that TV.

If you are affected, you should contact (NAME OF CABLE OPERATOR) to arrange for the equipment you need to continue receiving your services. In such case, you are entitled to receive equipment at no additional charge or service fee for a limited period of time. The number and type of devices you are entitled to receive and for how long will vary depending on your situation. If you are a (INSERT NAME OF CABLE BASIC SERVICE TIER OFFERING) customer and receive the service on your TV without (NAME OF CABLE OPERATOR)-supplied equipment, you are entitled to up to two devices for two years (five years if you also receive Medicaid). If you subscribe to a higher level of service and receive (INSERT NAME OF CABLE BASIC SERVICE TIER OFFERING) on a secondary TV without (NAME OF CABLE OPERATOR)-supplied equipment, you are entitled to one device for one year.

You can learn more about this equipment offer and eligibility at (WEBPAGE ADDRESS) or by calling (PHONE NUMBER). To qualify for any equipment at no additional charge or service fee, you must request the equipment between (DATE THAT IS 30 DAYS BEFORE ENCRYPTION) and (DATE THAT IS 120 DAYS AFTER ENCRYPTION) and satisfy all other eligibility requirements.

32. We believe that 30 days' notice will provide a reasonable opportunity for affected consumers to avail themselves of free device offers in advance of basic service tier encryption without unduly burdening cable operators. In addition, at least 30 days, but no more than 60 days, before the end of the free device transitional period, a cable operator that encrypts must notify subscribers that have taken advantage of the transitional period that the period is ending as follows:

You currently receive equipment necessary to descramble or decrypt the basic service tier signals (either a set-top box or CableCARD) free of charge. Effective with the (MONTH/YEAR) billing cycle, (NAME OF CABLE OPERATOR) will begin charging you for the equipment you received to access (INSERT NAME OF CABLE BASIC SERVICE TIER OFFERING) when (NAME OF CABLE OPERATOR) started encrypting those channels on your cable system. The monthly charge for the (TYPE OF DEVICE) will be (AMOUNT OF CHARGE).

33. While our rule prescribes the language that cable operators must use to notify their subscribers about encryption and the device-based protection measures, we leave open the option for cable operators to supplement this notice as they see fit. We will not require the six largest incumbent cable operators to provide special notice to their subscribers about the availability of IP-enabled device compatibility, though they must comply with existing notice requirements. Third-party IP-enabled device manufacturers have an economic incentive to ensure their customers are aware of the functions and features of their devices, e.g., provide notice to their customers in marketing materials about the need to obtain IP-enabled equipment from their cable operator and the special equipment the six largest incumbent cable operators are required to offer their subscribers under Commission rules.

34. Public Knowledge and Media Access Project proposed that we require operators to notify subscribers when their free device period is ending on each monthly bill for the three months preceding the end of the transition period. We agree that preventing “bill shock” is important, and § 76.1603(d) of our rules requires cable operators to provide written notice of any increase in price to be charged for equipment necessary to access the basic service tier at least 30 days before the increase is effective. We do not believe that the three notices that Public Knowledge and Media Access Project propose are necessary. But we are concerned that cable operators could notify their subscribers too early in the transition period to render notification essentially meaningless. Therefore, we believe it is important to define the window for notices more precisely so that affected subscribers are notified no more than 60 days before the end of the transitional free-device period. At that time, affected subscribers can determine the course that best suits their circumstances. Some subscribers may opt to continue their current level of service and pay for the additional equipment charges. Other subscribers may choose to reduce their level of service or terminate their existing cable service and pursue a competitive alternative that better meets their service needs and budgets.

35. The New York City Department of Information Technology and Telecommunications (NYC DoITT) argues that, because Cablevision's encryption of its New York City systems is nascent, the Commission cannot be sure of the long-term effects that basic service tier encryption may have. Therefore, NYC DoITT encourages the Commission to make this rule change temporary. We agree that we cannot predict how our rule change will affect the cable industry and subscribers with absolute certainty. The information before us indicates, however, that this rule change will result in the substantial public interest benefits discussed above and that any additional burdens imposed on a limited number of subscribers will be tempered by the consumer protection measures adopted herein. The Commission will keep apprised of the consequences of the rule change and, if the situation develops differently than predicted, we can revisit the issue on our own initiative or in response to a petition for rulemaking. In the future, we may seek information from the operators that have chosen to encrypt to ensure that the expected benefits are being achieved and any burdens to consumers are being minimized. However, nothing in the record persuades us that it is necessary to build a sunset into the rule.

36. Legal Basis. Section 624A of the Communications Act provides the Commission broad authority to make changes to our encryption rule and to impose the consumer-protection measures we adopt today. Congress's objective in enacting section 624A was to ensure compatibility between cable systems and consumer TV (receiving and recording) equipment, consistent with the need to prevent theft of cable service. Section 624A(b)(2) directs the Commission to “determine whether and, if so, under what circumstances to permit cable systems to scramble or encrypt signals or to restrict cable systems in the manner in which they encrypt or scramble signals.” Section 624A(d) directs the Commission to periodically review and modify regulations adopted pursuant to section 624A “to reflect improvements and changes in cable systems, television receivers, video cassette recorders and similar technology.” The record suggests that to achieve the statutory goals of section 624A a blanket ban on encryption is no longer necessary, and that changes in cable technology justify relaxing the rule for all-digital cable systems, provided consumer protection measures are addressed. As explained above, cable technology is markedly different than it was when the Commission first adopted the encryption prohibition set forth in § 76.630. For example, the transition to all-digital systems means that encryption of the basic service tier will permit remote activation and deactivation of cable service resulting in significant savings of time and resources for both cable operators and the vast majority of cable customers. Furthermore, as discussed below, the CableCARD standard provides an avenue for consumers to purchase consumer electronics devices that are compatible with digital cable service, which achieves Congress' stated goal in section 624A.

37. Relaxing the encryption rule in this manner will not impede section 624A's goal of compatibility between consumer electronics equipment and cable systems. The Commission has adopted a standard that allows for “plug and play” compatibility between consumer electronics devices and cable systems. This standard provides a clear path for device manufacturers to follow if they wish to build devices that are compatible with digital cable systems and can access all linear digital cable services. Montgomery County, Maryland argues that the CableCARD standard is not successful, and that the Commission should endeavor to relieve compatibility problems, rather than compound them. According to Montgomery County, relaxing the encryption rule will lead to compatibility problems because consumers will no longer be able to use clear-QAM tuners on non-primary television sets. However, the Commission has already adopted a solution for compatibility between consumer electronics equipment and digital cable: The CableCARD standard is intended to allow consumers to buy compatible retail devices to access all linear digital cable services as opposed to the basic-only service that clear-QAM tuners can access without additional equipment. Indeed, the Commission's cable-ready labeling rules prohibit device manufacturers from labeling their devices as “digital cable ready” unless they comply with the CableCARD standards. Thus, under our existing rules, manufacturers should not have indicated to consumers that devices could receive digital cable service unless those devices were, in fact, CableCARD-compatible. Therefore, we disagree with Montgomery County's characterization that encryption will lead to an abundance of compatibility problems due to the rule changes adopted herein. Section 624A(c)(1)(B) expressly directs the Commission to consider “the costs and benefits to consumers of imposing compatibility requirements on cable operators.” As discussed above, the costs associated with a blanket encryption prohibition in all-digital systems greatly outweigh the anticipated benefits to consumers, particularly in light of the consumer protection measures we are also adopting. Furthermore, in 2010, the Commission adopted changes to the CableCARD rules, including streamlined device approval procedures, a self-installation option, and a prohibition on price discrimination against CableCARD devices, that should increase the retail availability and the quality of experience for CableCARD devices and further increase compatibility between consumer electronics and cable service by ensuring that retail devices can access all linear digital cable services. Given these technological and rule changes, we conclude that a complete prohibition on basic service tier encryption in all-digital systems is no longer necessary to ensure compatibility between consumer electronics devices and cable service, provided certain consumer protection measures are satisfied.

38. We also conclude that the requirement in section 623(b)(3)(A) of the Act to base any price or rate standards for equipment installation and leasing on actual cost does not bar the Commission from imposing the consumer protection measures set forth in § 76.630(a)(1)(ii)-(vi) of our new rules. The commenters who addressed our legal authority agree that the consumer protection measures—which are adopted as a transitional measure and implicate a limited number of affected customers—do not run afoul of section 623 of the Communications Act, and we did not receive any comments claiming that the consumer protection measures, as structured, would violate section 623. These measures are not being imposed as a regulation of equipment rates under section 623. Rather, the consumer protection measures are being adopted pursuant to section 624A(b)(2)'s broad grant of authority to the Commission to determine “under what circumstances to permit cable systems to scramble or encrypt signals or to restrict cable systems in the manner in which they encrypt or scramble signals.” We have determined that relaxing the encryption prohibition should be permitted for all-digital systems, provided the potential harm to affected consumers is minimized. Our new rule permits a cable operator to elect to abide by the encryption prohibition without having any obligation to offer subscribers equipment for a transitional period. It is only when a cable operator chooses to encrypt the basic service tier that it is required to comply with the requisite regulatory conditions (by providing set-top boxes at no cost to affected subscribers for a limited transitional period). Thus, this requirement is imposed as a condition of a cable operator's voluntary election to encrypt the basic service tier, and not as a rate regulation imposed under section 623(b)(3)(A).

39. Waiver Requests. As mentioned above, the Commission has pending before it four petitions for waiver of the encryption ban. These petitions have been pending for more than a year. Petitioners seek immediate relief, claiming that they face extraordinary theft of service. We find good cause to grant these waiver requests effective upon release of this Order to prevent further delay. For the reasons set forth above, these waivers are conditioned upon the petitioners' complying with the consumer protection requirements discussed in this Order.

40. Conclusion. We conclude that allowing cable operators to encrypt the basic service tier in all-digital systems will result in substantial, tangible benefits to both consumers and cable operators with minimal countervailing burdens on affected subscribers. We believe that the consumer-protection measures that we adopt will mitigate any burdens that encryption will have on the limited number of consumers that may be affected by the instant rule change.

41. Paperwork Reduction Act Analysis. The Report and Order in this document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

42. Final Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act, the Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Report and Order. The FRFA is set forth below.

43. Congressional Review Act. The Commission will send a copy of this Third Report and Order in a report to be send to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

44. Ordering Clauses. Accordingly, it is ordered that, pursuant to the authority contained in sections 1, 4(i), 4(j), 303(r), 601, and 624A of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303(r), 521, and 544a, this Report and Order is adopted.

45. It is further ordered that, pursuant to the authority contained in sections 1, 4(i), 4(j), 303(r), 601, and 624A of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303(r), 521, and 544a, Part 76 of the Commission's rules is amended as set forth in the rules and is effective December 10, 2012. It is our intention that all of the rule changes adopted in this order are interdependent and inseparable and that if any provision of the rules, or the application thereof to any person or circumstance, are held to be unlawful or invalid, the remaining rule changes adopted herein shall not be effective.

46. It is further ordered that, pursuant to § 1.3 of the Commission's rules, 47 CFR 1.3, the requests for waiver of § 76.630(a) of the Commission's rules, 47 CFR 76.630(a), filed by RCN Corporation, Mikrotec CATV, LLC, Inter Mountain Cable, Inc., and Coaxial Cable TV are granted, to the extent described herein and conditioned as set forth above.

47. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

48. It is further ordered that the Commission shall send a copy of this Report and Order in a report to be sent to Congress and the General Accounting Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

49. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rule Making (NPRM). The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. No commenting parties specifically addressed the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. The Commission will send a copy of the R&O, including this FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. In addition, the R&O and FRFA (or summaries thereof) will be published in the Federal Register .

50. Need for, and Objectives of the Proposed Rules. With this Report and Order, the Commission amends its rules to allow cable operators to encrypt the basic service tier in all-digital cable systems if they comply with certain consumer-protection measures. This rule change will benefit consumers who can have their cable service activated and deactivated from a remote location. By allowing remote activation and deactivation, we expect our amended rules will result in benefits to both cable operators and consumers by significantly reducing the number of service calls associated with provisioning service and significantly reducing the need for subscribers to wait for service calls to activate or deactivate cable service. At the same time, we recognize that this rule change will adversely affect a small number of cable subscribers who currently view the digital basic service tier without using a set-top box or other equipment. If a cable operator decides to encrypt the digital basic tier, then these subscribers will need equipment to continue viewing the channels on this tier. To give those consumers time to resolve the incompatibility between consumer electronics equipment (such as digital television sets) and newly encrypted cable service, we require operators of cable systems that choose to encrypt the basic service tier to comply with certain consumer protection measures for a period of time. The Commission concludes that allowing cable operators to encrypt the basic service tier in all-digital systems will lead to benefits like decreased service calls and theft of service, with few associated burdens on consumers. Therefore the Commission believes that this rule change will reduce burdens on small entities. The Commission predicts that encryption of the basic service tier will not substantially affect compatibility between cable service and consumer electronics equipment for most subscribers because over 75 percent of subscribers already have set-top boxes to decrypt the signals. Because the rule is voluntary—a cable operator with an all-digital system may choose whether to encrypt that system—each cable operator may decide whether the benefits of encryption (which include reduced service calls and reduced theft) outweigh the cost of providing its subscribers with the equipment they will need to continue viewing the channels on the basic service tier.

51. The need for FCC regulation in this area derives from changing technology in the cable services market. When the Commission adopted technical rules in the 1990s, digital cable service was in its infancy, and therefore the rules were adopted with analog cable service in mind. Today, digital cable service is common, and the encryption rule does not translate well in systems that offer all-digital service. Therefore, the Commission will allow all-digital cable operators to encrypt the basic service tier.

52. We recognize that some consumers subscribe only to a cable operator's digital basic service tier and currently are able to do so without using a set-top box or other equipment. Similarly, there are consumers that may have a set-top box on a primary television but access the unencrypted digital basic service tier on second or third televisions in their home without using a set-top box or other equipment. Although we expect the number of subscribers in these situations to be extremely small, these consumers may be affected by lifting the encryption prohibition for all-digital cable systems. To address this problem, we conclude that operators of all-digital cable systems that choose to encrypt the basic service tier must comply with certain consumer protection measures for a limited period of time in order to minimize any potential subscriber disruption, including a requirement that the six largest cable operators offer IP-enabled set-top boxes to subscribers as part of these protections.

53. The Commission believes that the rule will save small entities money. The consumer protection element of the rule—the requirement that cable operators offer existing basic tier customers set-top boxes without charge for certain lengths of time—does associate a cost with the rule. But the Commission believes that the financial benefit to small cable operators in reduced truck rolls and theft of services will far outweigh that cost. Furthermore, because the decision of whether to encrypt the basic tier is voluntary, small businesses will be able to make a business decision about whether to encrypt.

54. Legal Basis. The authority for the action proposed in this rulemaking is contained in sections 1, 4(i) and (j), 303(r), 601, and 624A of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i) and (j), 303(r), 521, and 544a.

55. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the proposed rules. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental entity” under Section 3 of the Small Business Act. In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (“SBA”).

56. Cable and Other Program Distribution. Since 2007, these services have been defined within the broad economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies.” The SBA has developed a small business size standard for this category, which is: All such firms having 1,500 or fewer employees. According to Census Bureau data for 2007, there were a total of 955 firms in this previous category that operated for the entire year. Of this total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000 employees or more. Thus, under this size standard, the majority of firms can be considered small and may be affected by rules adopted pursuant to the NPRM.

57. Cable Companies and Systems (Rate Regulation Standard). The Commission has also developed its own small business size standards for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. As of 2008, out of 814 cable operators, all but 10 (that is, 804) qualify as small cable companies under this standard. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Current Commission records show 6,000 cable systems. Of these, 726 have 20,000 subscribers or more, based on the same records. We estimate that there are 5,000 small systems based upon this standard.

58. Cable System Operators (Telecom Act Standard). The Communications Act of 1934, as amended, also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” There are approximately 63.7 million cable subscribers in the United States today. Accordingly, an operator serving fewer than 637,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that the number of cable operators serving 637,000 subscribers or less is also 804. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

59. Direct Broadcast Satellite (“DBS”) Service. DBS service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic “dish” antenna at the subscriber's location. DBS, by exception, is now included in the SBA's broad economic census category, “Wired Telecommunications Carriers,” which was developed for small wireline firms. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. However, the data we have available as a basis for estimating the number of such small entities were gathered under a superseded SBA small business size standard formerly titled “Cable and Other Program Distribution.” The definition of Cable and Other Program Distribution provided that a small entity is one with $12.5 million or less in annual receipts. Currently, only two entities provide DBS service, which requires a great investment of capital for operation: DIRECTV and EchoStar Communications Corporation (“EchoStar”) (marketed as the DISH Network). Each currently offer subscription services. DIRECTV and EchoStar each report annual revenues that are in excess of the threshold for a small business. Because DBS service requires significant capital, we believe it is unlikely that a small entity as defined by the SBA would have the financial wherewithal to become a DBS service provider. We seek comments that have data on the annual revenues and number of employees of DBS service providers.

60. Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed transmission paths without using any public right-of-way. They acquire video programming and distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV systems or PCOs are now included in the SBA's broad economic census category, “Wired Telecommunications Carriers,” which was developed for small wireline firms. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. However, the data we have available as a basis for estimating the number of such small entities were gathered under a superseded SBA small business size standard formerly titled “Cable and Other Program Distribution.” The definition of Cable and Other Program Distribution provided that a small entity is one with $12.5 million or less in annual receipts. As of June 2004, there were approximately 135 members in the Independent Multi-Family Communications Council (IMCC), the trade association that represents PCOs. The IMCC indicates that, as of June 2006, PCOs serve about 1 to 2 percent of the multichannel video programming distributors (MVPD) marketplace. Individual PCOs often serve approximately 3,000-4,000 subscribers, but the larger operations serve as many as 15,000-55,000 subscribers. In total, as of June 2006, PCOs serve approximately 900,000 subscribers. Because these operators are not rate regulated, they are not required to file financial data with the Commission. Furthermore, we are not aware of any privately published financial information regarding these operators. Based on the estimated number of operators and the estimated number of units served by the largest 10 PCOs, we believe that a substantial number of PCOs may have been categorized as small entities under the now superseded SBA small business size standard for Cable and Other Program Distribution.

61. Open Video Services. The open video system (“OVS”) framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers. The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, OVS falls within the SBA small business size standard covering cable services, which is “Wired Telecommunications Carriers.” The SBA has developed a small business size standard for this category, which is: All such firms having 1,500 or fewer employees. According to Census Bureau data for 2007, there were a total of 3,188 firms in this previous category that operated for the entire year. Of this total, 3,144 firms had employment of 999 or fewer employees, and 44 firms had employment of 1000 employees or more. Thus, under this size standard, most cable systems are small and may be affected by rules adopted pursuant to the NPRM. In addition, we note that the Commission has certified some OVS operators, with some now providing service. Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or local OVS franchises. The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, again, at least some of the OVS operators may qualify as small entities.

62. Computer Terminal Manufacturing. “Computer terminals are input/output devices that connect with a central computer for processing.” The SBA has developed a small business size standard for this category of manufacturing; that size standard is 1,000 or fewer employees. According to 2007 Census Bureau data, there were 42 establishments in this category that operated during 2007. Only 3 had more than 100 employees. Consequently, we estimate that all of these establishments are small entities.

63. Other Computer Peripheral Equipment Manufacturing. Examples of peripheral equipment in this category include keyboards, mouse devices, monitors, and scanners. The SBA has developed a small business size standard for this category of manufacturing; that size standard is 1,000 or fewer employees. According to 2007 Census Bureau data, there were 647 establishments in this category that operated in 2007. Of these, only 62 had more than 100 employees. Consequently, we estimate that the majority of these establishments are small entities.

64. Audio and Video Equipment Manufacturing. The SBA has classified the manufacturing of audio and video equipment under in NAICS Codes classification scheme as an industry in which a manufacturer is small if it has less than 750 employees. Data contained in the 2007 U.S. Census indicate that 491 establishments operated in that industry for all or part of that year. In that year, 376 establishments had between 1 and 19 employees; 80 had between 20 and 99 employees; and 35 had more than 100 employees. Thus, under the applicable size standard, a majority of manufacturers of audio and video equipment may be considered small.

65. Description of Reporting, Recordkeeping and Other Compliance Requirements. The rules adopted in the Order will require cable operators to notify their subscribers about offers of free equipment associated with encryption. The rule also requires a cable operator to notify its subscribers when those subscribers are subject to charges at the end of the free equipment period.

66. Steps Taken To Minimize Significant Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

67. As an alternative to the rules the Commission adopted, the Commission considered leaving the current rule in place—with the result that no cable operator would realize the benefits of encryption—or exempting small cable companies from the consumer protection rules that require encrypting cable operators to provide certain subscribers with free set-top boxes for a limited time. The Commission rejected leaving the rule in place because that alternative would not lead to the benefits of reduced service calls and reduced cable theft. The Commission rejected exempting small cable companies from the consumer protection rules because it concluded that the protections are necessary to give affected consumers time to consider how to make consumer electronics equipment (such as digital television sets) compatible with newly encrypted cable service. For these reasons, the Commission concluded that basic service tier encryption prohibition should be relaxed. The Commission also concluded that transitional consumer protection measures are necessary to serve the limited number of consumers who currently access unencrypted cable service without the use of a set-top box.

68. Federal Rules Which Duplicate, Overlap, or Conflict With the Commission's Proposals. None.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 76 as follows:

We announce the availability of our final Supplemental Environmental Impact Statement on the Translocation of Southern Sea Otters (final SEIS). The final SEIS evaluates options for continuing, revising, or terminating the southern sea otter translocation program (52 FR 29754, Aug. 11, 1987). The document describes the proposed action and alternatives under consideration and discloses the direct, indirect, and cumulative environmental effects of each of the alternatives.

The final SEIS reevaluates the effects of the southern sea otter translocation plan, as described in the U.S. Fish and Wildlife Service's 1987 environmental impact statement on our program for translocation of southern sea otters (May 8, 1987, 52 FR 17486). Using information obtained over the decades since the program's implementation, we evaluate the impacts of alternatives to the current translocation program, including termination or revisions to the program. The need for action stems from our inability to meet the goals of the southern sea otter translocation program. Contrary to the primary recovery objective of the program, the translocation of sea otters to San Nicolas Island has not resulted in an established population sufficient to repopulate other areas of the range should a catastrophic event affect the mainland population. Additionally, maintenance of a management zone has proven to be more difficult than anticipated and hinders or may prevent recovery of the southern sea otter.

We consider six alternatives, including a No Action Alternative. Alternative 1 resumes implementation of the 1987 southern sea otter translocation program as originally defined. Alternative 2 resumes implementation of the 1987 southern sea otter translocation program but reduces the size of the management zone. Alternatives 3A, 3B, and 3C allow for the natural range expansion of southern sea otters through termination of the 1987 translocation program, including its associated translocation zone and management zone, but differ in the actions to be taken with sea otters existing in these zones upon termination of the program. Alternative 3A requires the short-term removal of sea otters from both the management zone and the translocation zone before natural range expansion is allowed. Alternative 3B requires the short-term removal of sea otters from the translocation zone only. The Service's preferred alternative (Alternative 3C) is to allow for the natural range expansion of sea otters through termination of the 1987 translocation program and to allow sea otters existing in the former translocation and management zones to remain there.

We have afforded other government agencies and the public extensive opportunity to participate in the preparation of this EIS. On July 27, 2000, we published in the Federal Register a notice of intent to prepare a SEIS on the southern sea otter translocation program (65 FR 46172). The notice of intent announced that public scoping meetings would be held on August 15, 2000, in Santa Barbara, California, and on August 17, 2000, in Monterey, California. In April 2001, we published a scoping report and distributed it to scoping meeting participants and other interested parties (the scoping report is included as Appendix E to the final SEIS).

We announced the availability of the draft SEIS and the beginning of the public comment period on October 7, 2005 (70 FR 58737). The comment period was originally scheduled to end on January 5, 2006 (70 FR 58737). On December 30, 2005, we extended the comment period to March 6, 2006 (70 FR 77380), based on requests for a 30-day or 60-day extension of the comment period by fishing and environmental groups. We accepted oral and written testimony during public hearings held in Santa Barbara, California, on November 1, 2005, and Monterey, California, on November 3, 2005. During the 5-month comment period, we received approximately 20,000 comments from interested individuals and organizations.

Continuing efforts to resolve stakeholder concerns forestalled publication of a final SEIS for several years. On September 30, 2009, two environmental groups filed suit against the Service under provisions of the Administrative Procedure Act, alleging that we had unreasonably delayed a decision on the translocation program. Publication of a final SEIS on the translocation program is part of the settlement agreement we reached with plaintiffs on November 23, 2010.

In order to ensure that our analysis reflects current conditions, we revised the draft SEIS. We announced the availability of a revised draft SEIS and a proposed rule to implement the preferred alternative on August 26, 2011 (76 FR 53381). Appendix G to the revised draft SEIS included a list of commenters, summaries of comments received on the draft SEIS, and our responses to those comments. The comment period for the revised draft SEIS was originally scheduled to end on October 24, 2011 (76 FR 53381). On November 4, 2011, we announced a reopening of the comment period until November 21, 2011 (76 FR 68393), based on a request for a 45-day extension by the California Sea Urchin Commission. We were unable to grant the full 45-day extension because we required sufficient time to consider public comments and to revise the SEIS as appropriate while still meeting court settlement deadlines; however, the reopened comment period allowed us to accept public comments for 18 additional days. We accepted oral and written testimony during public hearings held in Ventura, California, on September 27, 2011; Santa Barbara, California, on October 4, 2011; and Santa Cruz, California, on October 6, 2011. Approximately 190 people attended the public hearings, and 68 provided testimony.

In the 78 days during which comments were accepted, we received 6,843 comment letters, postcards, and emails from interested individuals and organizations. Among the comment letters were 5 petitions with 12,514 signatories.

Appendix G to the final SEIS includes a list of commenters, summaries of comments received on the revised draft SEIS, and our responses to those comments.

This notice is provided pursuant to Fish and Wildlife Service regulations for implementing the National Environmental Policy Act of 1969 (40 CFR 1506.6).

The reef fish fishery of the Gulf is managed under the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (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 Fishery Conservation and Management Act (Magnuson-Stevens Act). The Magnuson-Stevens Act provides the legal authority for the promulgation of interim regulations under section 305(c) (16 U.S.C. 1855(c)).

Section 305(c)(2) of the Magnuson-Stevens Act provides the Council the authority to request interim measures, if necessary, to reduce overfishing. On April 19, 2012, the Council requested that NMFS implement a temporary rule to reduce overfishing of gray triggerfish in the Gulf while the Council and NMFS develop Amendment 37 to the FMP. Amendment 37 will contain permanent measures to end overfishing of the gray triggerfish stock. On May 14, 2012, NMFS published the final temporary rule (77 FR 28308) to implement measures to reduce overfishing of gray triggerfish in the Gulf and requested public comment. The interim measures implemented revised commercial and recreational ACLs and ACTs and revised the AMs for the recreational sector. Through the final temporary rule, the commercial sector ACL was reduced to 64,100 lb (29,075 kg), round weight, and the commercial ACT (commercial quota) was reduced to 60,900 lb (27,624 kg), round weight. The recreational sector ACL was reduced to 241,200 lb (109,406 kg), round weight, and the recreational ACT was reduced to 217,100 (98,475 kg), round weight. Additionally, the temporary rule established an in-season AM for the gray triggerfish recreational sector that prohibits the recreational harvest of gray triggerfish (a recreational sector closure) after the recreational ACT is reached or projected to be reached.

The Council requested an extension of the interim rule on August 23, 2012, to ensure that management measures remain in effect for gray triggerfish to reduce overfishing while more permanent measures are developed through Amendment 37. Section 305(c)(3)(B) of the Magnuson-Stevens Act allows for interim measures to be extended for one additional period of 186 days provided that the public has had an opportunity to comment on the interim measures and the Council is actively preparing a plan amendment to address the overfishing on a permanent basis.

Amendment 37 is scheduled to be implemented early in the 2013 fishing year.

Section 305(c)(3)(B) of the Magnuson-Stevens Act requires that the public has an opportunity to comment on interim measures after the regulation is published and the Council is actively preparing a plan amendment to address overfishing on a permanent basis. Therefore, NMFS solicited comments in the May 14, 2012, final temporary rule. NMFS received comments from a total of 11 entities on the final temporary rule. The following is a summary of the substantive comments NMFS received and NMFS' respective responses. Similar comments have been grouped together.

Comment 1: Personal observations do not support the stock assessment findings that the stock is overfished and undergoing overfishing. Therefore, there is no reason for the temporary rule.

Response: Gray triggerfish are known to be highly site specific and so it is possible that gray triggerfish abundance is greater in some areas of the Gulf than in others. However, both the 2006 benchmark and 2011 update Southeast Data, Assessment, and Review (SEDAR) assessments of the gray triggerfish stock used data from a variety of sources throughout the Gulf. Both of these assessments, which are considered the best available science, indicate the stock size is too low (overfished) and that too many fish are being caught and landed (overfishing). The Magnuson-Stevens Act requires the Council and NMFS to end overfishing and allow the stock to recover; therefore, the Council and NMFS are obligated to revise the gray triggerfish rebuilding plan to achieve these objectives.

Comment 2: Personal observations support that gray triggerfish abundances are low, but the cause of the reduction in abundance is not due to overfishing. Reductions in abundance are due to the number of red snapper feeding on juvenile reef fish, including gray triggerfish.

Response: The 2011 SEDAR update assessment indicated that for 2005-2009, gray triggerfish recruitment has been less than average. However, the reason for the reduced recruitment is currently unknown. At this time, there is no evidence to support that low gray triggerfish recruitment is a result of red snapper predation.

Comment 3: Rather than closing gray triggerfish recreational harvest when the ACL is reached, a reduced recreational bag limit should have been implemented to avoid any closures.

Response: In evaluating long-term measures to reduce the recreational harvest of gray triggerfish in Amendment 37, the Council is evaluating reduced recreational bag limits. However, their analyses indicate that even if the bag limit were reduced to 1-fish per person per day from the current 20-fish reef fish aggregate bag limit, some type of seasonal closure is needed to reduce harvest consistent with reductions needed for the rebuilding plan. The Council is evaluating a combination of these measures in Amendment 37 to the FMP.

Comment 4: The 2011 SEDAR gray triggerfish update stock assessment did not account for changes in gray triggerfish fishing as a result of the increase in the minimum size limit and the requirement to use circle hooks.

Response: The 2011 SEDAR update assessment did account for the increase from 12-inches (30.5 cm), total length, to 14-inches (35.6 cm), fork length. This change was noted in the regulatory history section in the final 2011 SEDAR update assessment report. The effects of the size limit change were reflected in length data from fishery-dependent sampling programs after August 4, 2008, when Amendment 30A to the FMP became effective and these measures were implemented (73 FR 38139, July 3, 2008). Although the effects of circle hooks on gray triggerfish fishing were not specifically examined in the 2011 update assessment, the 2011 SEDAR update stock assessment showed declines in both the commercial and recreational harvest starting in 2005, well before the circle hook requirement went into effect on June 1, 2008. Therefore, other factors are responsible for the declining gray triggerfish stock. In addition, differences between catch-per-unit-effort estimates between the 2011 SEDAR update assessment and the 2006 SEDAR benchmark assessment did not vary by much, suggesting the change to circle hooks has had little effect on gray triggerfish fishing.

Comment 5: The gray triggerfish commercial sector should be closed until the gray triggerfish stock recovers.

Response: The temporary rule reduces overfishing of the gray triggerfish stock while the Council develops a rebuilding plan in Amendment 37. In rebuilding overfished stocks, the Magnuson-Stevens Act requires that regulations shall “allocate both overfishing restrictions and recovery benefits fairly and equitably among sectors of the fishery” (Magnuson-Stevens Act section 304(e)(4)(B)). The action proposed in the comment would place all overfishing restrictions to the commercial sector, and as the stock recovers, allocate these benefits to the recreational sector. Thus, this action would not be fair and equitable and would not conform to the Magnuson-Stevens Act.

Additionally, the current allocation between the commercial and recreational sector is 29 percent and 71 percent, respectively. Given the needed reduction in gray triggerfish harvest from 2011 levels to 2012 levels is approximately 50 percent, closing the commercial sector would not achieve the needed reduction in harvest that would allow the stock to recover by 2017, the end year of the 10-year gray triggerfish rebuilding plan. Therefore, even with an established commercial closure, recreational measures would still need to be implemented for the stock to recover within the allotted time of the rebuilding plan.

The Administrator, Southeast Region, NMFS, (RA) has determined that the interim measures this temporary rule extends are necessary for the conservation and management of the Gulf gray triggerfish stock, until more permanent measures are implemented, and is consistent with the Magnuson-Stevens Act and other applicable laws. The Council and NMFS are developing Amendment 37 to the FMP to establish long-term measures to end the overfishing of Gulf gray triggerfish and rebuild the stock. Amendment 37 and its associated regulations are still being implemented and are not expected to become effective until the 2013 fishing year.

This temporary rule has been determined to be not significant for purposes of E.O. 12866.

This temporary rule is exempt from the procedures of the Regulatory Flexibility Act because the rule is issued without opportunity for prior notice and comment.

An EA was prepared for the interim measures contained in the May 14, 2012, final temporary rule (77 FR 28308). The EA analyzed the impacts of reduced harvest through the 2012 fishing year, which includes the impacts related to extending the interim rule. Therefore, the impacts of continuing the interim measures through this extension have already been considered. Copies of the EA are available from NMFS (see ADDRESSES ).

The Assistant Administrator for Fisheries, NOAA (AA) finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and opportunity for public comment on this temporary rule extension. Providing prior notice and opportunity for public comment would be contrary to the public interest. This rule would continue interim measures implemented by the May 14, 2012, final temporary rule, for not more than an additional 186 days beyond the current expiration date of November 10, 2012. The conditions prompting the initial temporary rule still remain, and more permanent measures to be completed through Amendment 37 have not yet been finalized. Failure to extend these interim measures, while NMFS finalizes the more permanent measures in Amendment 37, would result in additional overfishing of the Gulf gray triggerfish stock, which is contrary to the public interest and in violation of National Standard 1 of the Magnuson-Stevens Act.

For the aforementioned reasons, the AA also finds good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness of this rule.

Background

At the August 2012 Mid-Atlantic Fishery Management Council (Council) meeting, several longfin squid industry members expressed concern that the current 2012 acceptable biological catch (ABC) for butterfish (3,622 mt) was too conservative, and that the butterfish mortality cap on the longfin squid fishery derived from this ABC may close the longfin squid fishery prior to the end of the 2012 fishing year. In response to this concern, and in light of the Council's Scientific and Statistical Committee's (SSC) recommended butterfish ABC for the 2013 fishing year (8,400 mt), the Council requested that the SSC reconsider its butterfish ABC recommendation for 2012. The SSC met on September 13, 2012, and revised its 2012 butterfish ABC recommendation to 4,200 mt based on the information that supported their 2013 ABC recommendation, and noted that the additional mortality at the end of the 2012 fishing year should not result in overfishing. The recommendation of 4,200 mt represents the projected butterfish mortality on November 1, 2012 (2,800 mt), plus the prorated mortality that would have been allocated for the months of November and December (700 mt per month) if the SSC had recommended a 2012 ABC of 8,400 mt (2,800 mt + (700 mt × 2) = 4,200 mt).

A detailed summary of the SSC's rationale for its 2013 butterfish ABC recommendation is available in its May 2012 Report (available, along with other materials from the SSC discussion, at: http://www.mafmc.org/meeting_materials/SSC/2012-05/SSC_2012_05.htm ), and will be discussed in the documentation for the 2013 MSB specifications recommendations. It is summarized below because of its relevance to this action.

Because of the uncertainty in the most recent butterfish stock assessment, on April 6, 2012, the Council requested that NMFS Northeast Fisheries Science Center (NEFSC) offer additional analysis of the butterfish stock to aid the SSC in the ABC setting process for the 2013 fishing year. The NEFSC analysis (May 2, 2012, also available with the SSC meeting report) applied ranges of a number of different factors (such as natural mortality and survey catchability) to develop a range of likely stock biomasses that would be consistent with recent survey results and observed butterfish catch. The NEFSC also examined a range of fishing mortalities that would result from these biomass estimates. The SSC used the NEFSC analysis, along with guidance (Patterson, 1992) that suggests maintaining a natural mortality/fishing mortality ratio of 67 percent for small pelagic species, to develop a proxy overfishing limit (OFL) for butterfish. Consistent with the 2010 butterfish assessment, the SSC assumed a high level of natural mortality (M = 0.8) and applied the 67-percent ratio to result in a fishing mortality of F = 0.536, which the SSC used as a proxy maximum fishing mortality rate threshold for butterfish. In the NEFSC analysis, a catch of 16,800 mt would only lead to fishing mortality rates higher than F = 0.536 (i.e., rates consistent with overfishing based on the maximum fishing mortality rate threshold proxy) under very extreme assumptions. The SSC therefore adopted 16,800 mt as a proxy OFL. The SSC buffered the proxy OFL by 50 percent to reach the butterfish ABC of 8,400 mt. Its justification for this buffer noted that the short life history of butterfish gives limited time for management to respond to adverse patterns, that recruitment of butterfish is highly variable and uncertain, that the stock status of butterfish is unknown, and that butterfish are susceptible to environmental and ecosystem variability, in particular inter-annual variability in natural mortality.

Based on the SSC's revised recommendation, the Council met on September 14, 2012, and recommended an increase of the butterfish ABC and annual catch limit (ACL) to 4,200 mt for the remainder of the 2012 fishing year (until December 31, 2012). The Council recommended maintaining the current 10-percent buffer for management uncertainty and set an annual catch target (ACT) of 3,780 mt (a 520-mt increase over the current ACT of 3,260 mt).

The Council also recommended re-specifying the butterfish mortality cap at 3,165 mt, and the butterfish domestic annual harvest (DAH) and domestic annual processing (DAP) at 872 mt. The current butterfish mortality cap on the longfin squid fishery is 2,445 mt, and the Council proposed using the entire 520 mt added to the ACT to increase the butterfish mortality cap, as well as transferring 200 mt from the current DAH (1,072 mt) to the cap, for a total increase of 720 mt (2,445 mt + 520 mt + 200 mt = 3,165 mt). Butterfish landings and the butterfish cap are tracked in parallel such that all landings count against the DAH for quota monitoring, while all butterfish catch (landings and discards) by vessels that land over 2,500 lb (1.13 mt) of longfin squid count against the butterfish mortality cap. The Council requested that 200 mt of the current DAH be moved to the butterfish mortality cap to balance the use of butterfish in the mortality cap and the directed fishery, while constraining overall catch within the ABC. Current landing trends suggest that total 2012 butterfish landing should not exceed 650 mt, thus transferring an additional 200 mt from the DAH into the butterfish cap would allow for additional longfin squid landings without constraining butterfish landings.

NMFS found that there is sufficient scientific justification for the Council's recommendations, and is implementing the revised specifications as recommended. The authority for this rulemaking is 50 CFR 648.22(e), which allows the Regional Administrator to adjust specifications during the fishing year, in consultation with the Council, by publishing notification in the Federal Register . The allocations for Research Set-Aside (RSA) and joint venture processing (JVP) remain as specified in the interim final butterfish specifications (77 FR 16472; March 21, 2012). The total allowable level of foreign fishing (TALFF) for butterfish is only specified to address bycatch by foreign fleets targeting mackerel TALFF. Because there was no mackerel TALFF specified in the final 2012 specifications for mackerel, butterfish TALFF is also set at zero.

The Administrator, Northeast Region, NMFS, determined that these specifications are necessary for the conservation and management of the butterfish fishery and that they are consistent with the Magnuson-Stevens Fishery Conservation and Management Act and other applicable laws.

The Assistant Administrator for Fisheries, NOAA, finds good cause under section 553(b)(B) of the Administrative Procedure Act to waive the requirement that NMFS provide prior notice of this rule and an opportunity for comment because they are contrary to the public interest. Allowing time for prior notice and public comment would be contrary to the public interest because of the unnecessary economic harm it would cause to the longfin squid fishery. The interim final 2012 butterfish specifications will aid the longfin squid fishery because the rule will increase the butterfish mortality cap in that fishery to 3,165 mt (a 720-mt increase from status quo). Recently available data indicate that the butterfish biomass has sufficiently increased to allow NMFS to increase the butterfish mortality cap without risking harm to the species. This action did not allow for prior public comment because the request for Council reconsideration of the 2012 butterfish specifications, the SSC's scientific review process, and the determination could not have been completed any earlier, due to the inherent time constraints associated with the process. While the information supporting this change became available during the specifications setting process for the 2013 fishing year in May 2012, the need to use this information to adjust the 2012 butterfish specifications only became apparent in August 2012, after high squid availability and rapid utilization of the lower (2,445-mt) butterfish mortality cap made the possibility of a Trimester III longfin squid closure imminent. The request to consider the applicability of the SSC's 2013 butterfish ABC recommendation to the 2012 fishing year was made on August 16, 2012. The SSC met to review this request on September 13, 2012, which was the earliest possible date that they could meet given public notice requirements necessary to schedule and convene SSC meetings. Similarly, the Council met to consider the SSC's revised recommendation and recommend the adjustment to the butterfish ABC at the earliest possible date given public notice requirements, which was September 14, 2012. Allowing time for prior public notice and comment in addition to that offered through the Council process would further delay the use of available scientific information to increase the butterfish mortality cap on the longfin squid fishery, which negates direct benefits to the longfin squid fleet.

The Assistant Administrator for Fisheries also finds good cause under section 553(d) of the Administrative Procedure Act to waive the 30-day delay in effectiveness for this action. Increasing the butterfish mortality cap should allow for the longfin squid fishery to operate for the duration of the 2012 fishing year. Longfin squid migrate throughout their range and have sporadic availability. The fleet is quick to target longfin squid aggregations when they do appear, and is capable of landing over 550 mt in a single week. Analysis of this year's fishing activity indicates that longfin squid was particularly abundant this spring and summer, and historical availability patterns suggest that longfin squid abundance could remain high until the close of the fishing year on December 31, 2012. Only 11,598 mt of the 22,220 mt longfin squid quota has been harvested as of October 31, 2012, meaning that 52.1 percent of the quota remains to be harvested during the final 2 months of the fishing year. Closing the longfin squid fishery during the 30-day delay period prior to the implementation of this rule could prevent the harvest of a significant amount of longfin squid quota. With current squid prices at $1 per pound, the lost revenue from such a closure (up to 1,200 mt of the remaining 10,622 mt of longfin squid quota—the average monthly squid landings for the 2012 fishing year) could amount to $2.6 million, which would negate any benefit of implementing this rule. As noted above, allowing the longfin squid fishery to extend its fishing activity through the end of the 2012 fishing year will not result in harm to the butterfish population. Moreover, the fishing entities affected by this rule need not change their practice or gear, or make any other modifications to come into compliance with this action. These fishing vessels can continue to fish as they do now without any change after this rule goes into effect.

The Council prepared an EA for the 2012 specifications, and the NOAA Assistant Administrator for Fisheries concluded that there will be no significant impact on the human environment as a result of this rule. A copy of the EA is available upon request (see ADDRESSES ).

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

This rule is exempt from the procedures of the Regulatory Flexibility Act to prepare a regulatory flexibility analysis because the rule is issued without opportunity for prior public comment.