The regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-56, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests. The regulations currently allow for the importation of both Ya pears ( Pyrus bretschneideri ) and fragrant pears ( Pyrus sp. nr. communis ) from China.

The national plant protection organization (NPPO) of China requested that the Animal and Plant Health Inspection Service (APHIS) amend the regulations to allow sand pears  1 ( Pyrus pyrifolia ) from China also to be imported into the United States.

As part of our evaluation of China's request, we prepared a pest risk assessment (PRA), titled “Importation of Fresh Fruit of Chinese Sand Pear, Pyrus pyrifolia, from China, including the Special Administrative Regions of Hong Kong and Macau, into the Entire United States, Including all Territories” (July 2009). The PRA evaluated the risks associated with the importation of sand pears into the United States from China, and identified 16 pests of quarantine significance present in China that could be introduced into the United States through the importation of sand pears. The PRA presented a number of potential options to mitigate the risks posed by these plant pests. Based on these options, we prepared a risk management document (RMD). The RMD recommended specific measures to mitigate these risks.

Based on the recommendations of the RMD, on December 16, 2011, we published a proposed rule  2 in the Federal Register (76 FR 78168-78172, Docket No. APHIS-2011-0007) to authorize the importation of sand pears from China into the United States. We solicited comments concerning the proposed rule for 60 days ending February 14, 2012. We received five comments by that date. They were from the NPPO of China, a State department of agriculture, an organization representing State departments of agriculture, a technical committee representing the U.S. pear industry, and a private citizen. The comments we received are discussed below, by topic.

The PRA identified the following pests of quarantine significance as being likely to follow the pathway on imported sand pears from China:

• Acrobasis pyrivorella, pear fruit moth.

• Alternaria gaisen Nagano, the cause of black spot of pear.

• Amphitetranychus viennensis (Zacher), Hawthorn spider mite.

• Aphanostigma iaksuiense (Kishida), an aphid.

• Bactrocera dorsalis, Oriental fruit fly.

• Caleptrimerus neimongolensis Kuang and Geng, a mite.

• Carposina sasakii Matsumora, peach fruit moth.

• Ceroplastes japonicus Green, Japanese wax scale.

• Ceroplastes rubens Maskell, red wax scale.

• Congothes punctiferalis (Guenée), yellow peach moth.

• Grapholita inopinata, Manchurian fruit moth.

• Guignardia pyricola (Nose) W. Yamamoto, a phytopathogenic fungus.

• Monilinia fructigena Honey in Whetzel, the cause of brown rot.

• Phenacoccus pergandei Cockerell, a mealybug.

• Planococcus kraunhiae (Kuwana), a mealybug.

• Venturia nashicola Tanaka & Yamamoto, pear scab fungus.

One commenter stated that recent research conducted on diseases of Malus spp. has discovered that the causal agent of apple and pear ring spot, which had long been considered to be G. pyricola (Nose) W. Yamamoto, is in fact Botryosphaeria dothidea. The commenter pointed out that B. dothidea is widely prevalent in the United States, and stated that it thus should not be considered a pest of quarantine significance. The commenter also stated that, based on this research, G. pyricola should not be considered a pest of quarantine significance for sand pears from China. The commenter cited a peer-reviewed article  3 (referred to below as Tang et al. ) detailing the research that had been conducted.

We agree that Tang et al. provides evidence in support of B. dothidea being a causal agent of apple ring spot. However, we do not consider this evidence sufficient to remove G. pyricola from the list of pests of quarantine significance for sand pears from China. The research detailed in Tang et al. appears to have focused primarily on Malus spp. Researchers included only a few fungi of Pyrus spp. for evaluation, and the discussion section of Tang et al. refers exclusively to fungi isolated from Malus spp. It is even unclear whether B. dothidea was the only Botryosphaeria species that researchers isolated from Pyrus spp.

The scope and nature of the research conducted on Pyrus spp. is unclear in Tang et al. In order for us to consider removing G. pyricola from the list of pests of quarantine significance for sand pears from China, Tang et al. would have to specify that the research conducted on Malus spp. is directly applicable to Pyrus spp. It does not do so; hence we continue to consider G. pyricola a pest of quarantine significance for sand pears from China.

Another commenter stated that the list of pests of quarantine significance for sand pears from China should be expanded to include two additional pests, Alternaria yaliinficiens, a phytopathogenic fungus, and Monilia polystroma, the cause of Asiatic brown rot. The commenter pointed out that A. yaliinficiens is frequently detected on Ya pears in China, and M. polystroma, a well-documented pest of sand pears, is known to exist in China.

We have been able to find no evidence suggesting that sand pears are a host of A. yaliinficiens, and the commenter did not provide any references on this subject. Ya pears are Pyrus bretschneideri, a separate species from sand pears.

We agree that M. polystroma is known to exist in China, and sand pears are a known host of this pest. However, to date, M. polystroma has only been detected in Heilongjiang province. This province does not produce sand pears for export and is geographically isolated from the provinces in China that account for the bulk of pear exports from China, Hebei and Shandong. There is, moreover, no evidence of artificial spread of M. polystroma within China. For these reasons, at this time, we do not consider M. polystroma likely to follow the pathway of sand pears imported from China. We will, however, continue to monitor the presence of M. polystroma in China and, if necessary, take appropriate action to prevent its introduction.

A commenter asked that the PRA be updated to include a list of all pests of quarantine significance that have been detected on sand pears from China exported to other countries.

Foreign countries are free to designate plant pests as being of quarantine significance, without reference to the designations of other countries. Thus, there is no guarantee that a foreign country's pest list for sand pears is equivalent to our own. Moreover, foreign countries' conditions for importation of fruits and vegetables often vary significantly from those of the United States. Accordingly, a foreign country's pest interception data for a particular commodity should not be considered a reliable predictor of possible pest interceptions for that same commodity at ports of entry within the United States. We are therefore not amending the PRA in the manner requested by the commenter.

The same commenter pointed out that the PRA contained a list of pest interceptions on Ya and fragrant pears from China imported into the United States between 1995 and 2009, but this list did not include information for 2010 or 2011. The commenter also pointed out that the list did not group detections based on the port of entry at which the pest was detected. The commenter asked that the list be updated to include information through 2011 and to sort this information by port of entry.

We do not consider such updates to be necessary. Interceptions in 2010 and 2011 do not disclose any additional pests of quarantine significance that had not previously been detected on the pears. Moreover, the list was provided in order to illustrate the starting point from which we conducted our evaluation of the pests of quarantine significance that could follow the pathway on sand pears from China imported into the United States. Hence, changing the scope of the list or its presentation would not alter the results of our evaluation.

One commenter stated that, based on the number of pests of quarantine significance likely to follow the pathway on sand pears imported into the United States from China, the plant pest risk associated with the importation of sand pears from China was significant, and we should therefore not authorize such importation.

Similarly, two commenters stated that the proposed conditions for importation of sand pears from China in the proposed rule did not take into consideration the unique climate of Florida, which the commenters asserted is more conducive to the establishment of fruit flies than that of other States. The commenters pointed out that imported fruit containing dead fruit fly larvae had been discovered in Florida, and stated that these detections call into question the efficacy of APHIS' systems approaches for these pests.

We agree that there are many pests on the pest list for sand pears from China, and one of these, B. dorsalis, could become established in Florida, if introduced. However, for the reasons described in the RMD that accompanied the proposed rule, we have determined that the measures specified in the proposed rule will effectively mitigate the risk associated with the importation of sand pears from China into any area of the United States. The commenters did not provide any evidence suggesting that the mitigations are not effective.

To that end, we note that the discovery of dead larvae in imported fruit does not call into question the efficacy of the systems approaches under which the fruit has been imported. Rather, it suggests the systems approaches have been effective in neutralizing the larvae.

A commenter asked whether the proposed rule had provisions that would address the risk that V. nashicola or M. fructigena would follow the pathway on sand pears from China.

As detailed in the RMD that accompanied the proposed rule, there are several provisions of the proposed rule that address the risk posed by phytopathogenic fungi such as V. nashicola and M. fructigena. These include: Registration of places of production and packinghouses with the NPPO of China, inspections for quarantine pests at set intervals, bagging of fruit, safeguarding, labeling, and importation in commercial consignments.

One commenter stated that fertility management, that is, the use of nutrient-rich soil composed primarily of decaying organic matter, has been demonstrated to be effective in reducing population densities of certain plant pests on host plants. The commenter suggested that fertility management be explored as an alternative to the systems approach of the proposed rule, or, at least, certain provisions of that approach.

APHIS will continue to monitor the efficacy of this and other possible mitigation measures for sand pears from China. If we determine alternate measures to be effective in reducing the risk associated with the importation of sand pears from China, we may initiate rulemaking to add them to the regulations.

In the proposed rule, we proposed to require all sand pears imported into the United States from China to be grown at places of production that are registered with the NPPO of China. We also proposed that the NPPO of China would have to inspect registered places of production prior to harvest for signs of infestations and allow APHIS to monitor the inspections. Finally, we proposed that, if any of the pests of quarantine significance likely to follow the pathway on sand pears from China were detected at a registered place of production, we could reject individual consignments from that place of production or prohibit the importation of sand pears from the place of production for the remainder of the season.

The NPPO of China stated that it had entered into a memorandum of understanding (MOU) with APHIS regarding inspections of sand pears that would take place at ports of entry in the United States if the proposed rule was finalized. The NPPO stated that it was their understanding that these port-of-entry inspections obviated pre-harvest inspections of registered places of production. Accordingly, the NPPO asked that we modify the proposed rule to remove references to such pre-harvest inspections.

We are making no change in response to this comment. The MOU referenced by the NPPO pertains to general inspections of imported fruits and vegetables that APHIS conducts in accordance with § 319.56-3 of the regulations. As specified in the MOU, such inspections are meant to complement, rather than supplant, the provisions of the proposed rule, including pre-harvest inspections of registered places of production. Moreover, we note that such pre-harvest inspections are necessary not only to prevent infested fruit from being imported to the United States, but also so that APHIS has assurances that places of production have implemented and are maintaining all provisions of the proposed rule that pertain to them, such as bagging of sand pears destined for export to the United States.

In our December 2011 proposed rule, proposed paragraph (f)(1) of § 319.56-55 contained minimum requirements for the trapping systems that places of production and packinghouses would need to have in place for B. dorsalis in order to export sand pears from areas in China south of the 33rd parallel to the United States. Additionally, proposed paragraph (f)(4) proposed to require pears from such areas to be treated in accordance with 7 CFR part 305, which contains our requirements governing approved treatments of imported commodities.

Since the proposed rule was issued, we have adopted a general Agency policy of adding minimum trapping requirements to operational workplans. Among other reasons, this allows us to change the frequency and distance at which traps must be placed in response to changes in population densities for B. dorsalis in an exporting region. We have also begun to add standards for application of treatments to operational workplans; among other reasons, this allows us to prescribe in greater detail best practices for the application of various treatments.

Hence, in this final rule, we are amending paragraph (f)(1) to specify that the trapping systems must meet the requirements of the operational workplan, and (f)(3) to specify the treatments must be applied in accordance with not only 7 CFR part 305 but also the operational workplan.

In the proposed rule, we proposed to add the conditions governing the importation of sand pears from China as § 319.56-55. In this final rule, they are added as § 319.56-57.

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

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

In accordance with 5 U.S.C. 604, we have performed a final regulatory flexibility analysis, which is summarized below, regarding the economic effects of this rule on small entities. Copies of the full analysis are available on the Regulations.gov Web site (see footnote 2 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .

This rule will amend the regulations to allow, under certain conditions, the importation into the United States of sand pear from China. This fruit is produced in the United States in limited quantities, primarily in Illinois, Virginia, West Virginia, and Maryland.

Farms producing pears are classified within the North American Industry Classification System under Other Noncitrus Fruit Farming. The average 2007 market value of crops sold by farms classified within the industry Fruit and Tree Nut Farming (which includes Other Noncitrus Fruit Farming) was less than $188,000, an amount well below the Small Business Administration's small-entity standard of annual receipts of not more than $750,000. We infer that the majority of farms producing pears, including sand pears, are small entities.

China is expecting to export 24,000 metric tons of sand pear annually to the United States. This amount is less than 5 percent of average annual production of all varieties of pear produced in the United States. We do not know the quantity or value of sand pear produced in the United States, or the quantity or value of sand pear imported from other countries. Nor do we know the substitutability of sand pear for other types of pears produced domestically. While the United States is a net exporter of pears overall, it is likely that the U.S. supply of sand pear is largely imported. Without information on the domestic and foreign quantities supplied and the substitutability of sand pear for other pear varieties, we are unable to evaluate potential effects of the rule for U.S. producers.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection or recordkeeping requirements included in this rule have been approved by the Office of Management and Budget (OMB) under OMB control number 0579-0390.

The Animal and Plant Health Inspection Service is committed to compliance with the EGovernment 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. For information pertinent to E-Government Act compliance related to this rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 851-2908.

Accordingly, we are amending 7 CFR part 319 as follows:

Validated end-users (VEUs) are those entities located in eligible destinations to which eligible items may be exported, reexported, or transferred (in-country) under a general authorization instead of a license. VEUs and their respective eligible destinations and eligible items are identified in Supplement No. 7 to Part 748 of the EAR. VEUs may obtain eligible items without having to wait for their suppliers to obtain export licenses from BIS.

VEUs are reviewed and approved by the U.S. Government in accordance with the provisions of Section 748.15 and Supplement Nos. 8 and 9 to Part 748 of the EAR. The End-User Review Committee (ERC), composed of representatives from the Departments of State, Defense, Energy and Commerce, and other agencies, as appropriate, is responsible for administering the VEU program.

On April 17, 2012, BIS published a rule soliciting public comments on two proposed amendments to Section 748.15 of the EAR (Authorization Validated End-User (VEU)) (77 FR 22689). BIS proposed requiring persons exporting, reexporting, or transferring (in-country) under Authorization VEU to send written notification to the recipient VEU with details about their shipment within seven days of the shipment. In addition, BIS proposed explicitly clarifying in the EAR that VEUs that are subject to item-specific conditions and have received items subject to such conditions under Authorization VEU would no longer be bound by the conditions associated with the items if the items no longer require a license for export or reexport to the VEU's location or become eligible for shipment under a license exception to the destination. BIS received comments from two entities, which are summarized and responded to below.

Comment 1: Both commenters indicated their overall support for the proposed changes and the VEU authorization as a whole. One commenter specifically noted that Authorization VEU had benefited a VEU and its supplier by allowing the purchase and supply of equipment to proceed without the additional lead-time issues often caused by potentially lengthy government approvals.

Response: BIS appreciates this input regarding the VEU program, particularly in light of BIS's efforts to improve the program and make it more effective for U.S. exporters.

Comment 2: Both commenters explained that individual shipments may include items shipped under “multiple authorizations” including Authorization VEU. They asked BIS to clarify that proposed paragraph (g) of Section 748.15 would only require that shippers notify VEUs of items shipped under Authorization VEU and not of items shipped under other authorizations in the same shipment as VEU items. Specifically, one commenter recommended that notification be required to include “a list of the VEU authorized contents and a list of their respective ECCNs.”

Response: BIS recognizes that individual shipments may include items authorized for shipment or transfer under Authorization VEU as well as items being shipped under other EAR authorizations, such as licenses or license exceptions. BIS intends that the notification be required only for items shipped under Authorization VEU and not for any other items shipped with the VEU-authorized items. BIS has amended the text of Section 748.15(g) to specify that the notification requirement applies only to the “VEU-authorized” items in a shipment and to specify that the list suggested by the commenter be included as part of the notification.

Comment 3: Both commenters asked BIS to review its approach to the timing and frequency of notifications under Section 748.15(g). Both commenters recommended that BIS permit consolidated notifications under Authorization VEU, rather than require separate notifications for each shipment under Authorization VEU. Specifically, one commenter provided a semiconductor industry-specific example of the multiple transfers of an integrated circuit's layout or design that may be necessary between a semiconductor foundry and its customer to correct design flaws prior to production. The commenter suggested that the exporter should be required to provide only a single notification for such shipments. In addition, both commenters asked that BIS clarify that notification may be made before shipment occurs. One of the commenters specifically suggested that the timing be modified to “no later than seven days after shipment or as mutually agreed in writing by both parties.” This commenter further suggested that BIS could require that the terms of VEU notification be included in Section 748.15(e), which requires that exporters and reexporters obtain from VEUs certifications regarding end use and compliance with VEU requirements. The commenter expressed that this approach would maximize benefits and minimize burdens associated with notification, and would ensure transparency and help to verify compliance.

Response: BIS has reviewed the timing and frequency of notifications and agrees that exporters, reexporters and transferors (in-country) should have the option to consolidate notifications to VEUs when multiple shipments are made under Authorization VEU. BIS therefore has included this as an option in Section 748.15(g). Further, as the timeframe for notification that is appropriate for one VEU and shipper may be inappropriate for others, BIS agrees with the commenter who suggested that notification be within a timeframe that is mutually agreed to in writing by both parties. That mutual agreement must, however, be reached prior to the shipment or transfer. With reference to the comment proposing that BIS require the notification to be included in the certification required under Section 748.15(e) of the EAR, BIS notes that the 748.15(e) certification is required under the EAR only in advance of the first shipment by a supplier to a VEU under Authorization VEU and at no other time thereafter and that while provision of the 748.15(e) certification is the sole responsibility of the VEU, advance agreement on the notification schedule is the responsibility of both the VEU and the shipper. Although a VEU and a shipper may agree to include the notification schedule in the certification, BIS will not require that the schedule be included in the certification. BIS has revised Section 748.15(g) by providing that notifications should be made within a timeframe agreed to in writing by the VEU and the shipper in advance of the initial shipment and has removed the reference to “within seven calendar days” of the shipment. With this modification, BIS clarifies its original intent to permit notification in advance of shipment.

Comment 4: One commenter expressed concern regarding BIS's explanation in the proposed rule that, “BIS intends to improve the ability of VEUs to determine which authorization their suppliers utilized. This will enable VEUs to better determine which set of conditions governs their use of the received item(s) more efficiently, thereby increasing the VEUs' compliance.” The commenter asked that BIS modify this explanation to make clear that the notification requirement's purpose is not to require that companies be able to distinguish between identical items sent under a VEU authorization and other types of authorization. The commenter noted that when identical parts and materials shipped or transferred under different authorizations are commingled within inventories, some VEUs ensure compliance with U.S. law by meeting the requirements of the most restrictive conditions associated with a particular stock-keeping unit (SKU) and keep track of the total quantity of items received under a specific authorization through first-in-first-out (FIFO) and other standard inventory accounting methods.

Response: The use of Authorization VEU requires VEUs to track items received under Authorization VEU, but does not require VEUs to distinguish between identical items sent under Authorization VEU and other types of shipping authorizations. BIS understands that, as a practical matter, individual items in inventory may not be easily or efficiently tracked, and that there are VEUs that fulfill their requirements under Authorization VEU by meeting the most restrictive conditions associated with a particular SKU and tracking the total quantity of items received under a specific authorization through the standard inventory accounting methods described by the commenter.

Comment 5: One commenter encouraged BIS to consider expanding the scope of Authorization VEU by implementing the VEU program in countries other than China and India.

Response: BIS is taking this comment under advisement and is not responding to it here as it is outside the scope of BIS's proposed rule.

In this rule, BIS adopts the amendment to the EAR proposed on April 17, 2012 (77 FR 22689) with some changes. In the April rule, BIS proposed amending Section 748.15 by adding paragraph (g) to require persons exporting, reexporting, or transferring (in-country) under Authorization VEU to send written notification to the recipient VEU with details about their shipment within seven days of the shipment. The April proposal also specified that the notification must include a list of the VEU-authorized contents of the shipment and the quantity of such items that are being, have been, or will be shipped to the respective VEUs, as well as a list of the applicable Export Control Classification Numbers (ECCNs) for VEU-authorized items included in the shipment. This final rule adopts the notification requirement in § 748.15 while making a change from the proposed rule by providing that notification must be made within a timeframe agreed to in writing by the VEU and the persons exporting, reexporting or transferring (in-country), rather than within seven days of the shipment as proposed in the April rule. This final rule also adds that the VEU and the persons exporting, reexporting or transferring (in-country) must agree to the notification timeframe in advance of shipment under Authorization VEU.

As discussed in the proposed rule, the purpose of this new requirement is to enhance the ability of VEUs to comply with the requirements of the VEU program. This amendment to the EAR is not the result of non-compliance with VEU requirements by existing VEUs. With this amendment to the EAR, BIS intends to improve the ability of VEUs to determine which shipments are made to them under Authorization VEU. The use of Authorization VEU requires VEUs to track items received under Authorization VEU, but does not require VEUs to distinguish between identical items sent under Authorization VEU and other types of shipping authorizations. Accordingly, this amendment will enable VEUs to better determine which set of conditions governs their use of the received item(s) more efficiently, thereby better enabling the VEUs' compliance with the EAR.

With this rule, BIS is not requiring a specific form of communication ( e.g., fax, email, letter) for the notification, but does require that it be in a written format. Similarly, the VEU and the shipper may determine if notifications need to be made for each Authorization VEU shipment or whether multiple shipments may be the subject of a consolidated notification. As noted above, the notification must be conveyed to the VEU within the time period agreed to in writing by the VEU and the persons exporting, reexporting or transferring (in-country) the VEU items in advance of the initial shipment. VEUs are required to maintain the notifications they receive and exporters and reexporters are required to maintain the notifications they send pursuant to their recordkeeping requirements.

In the proposed rule, BIS also proposed amending Section 748.15(h) to clarify that VEUs that are subject to item-specific conditions and have received items subject to such conditions under Authorization VEU are no longer bound by the conditions associated with the items if the items no longer require a license for export or reexport to the VEU's authorized location or become eligible for shipment under a license exception to the destination. This amendment is the same, in effect, as existing Section 750.7(i) (Terminating license conditions), which generally applies to exporters and reexporters who have shipped under license. No public comments were received on this proposal, and the proposed regulatory text is being adopted with minimal changes, described below.

To supplement the proposed regulatory text, BIS is adding phrasing in paragraph (h) to clarify that when the EAR are amended such that items previously exported, reexported or transferred (in-country) to a VEU under Authorization VEU would be eligible for shipment to the VEU under a License Exception, the items received under Authorization VEU become subject to the terms and conditions of the applicable License Exception and not the original conditions associated with export, reexport or transfer under Authorization VEU. In addition, when the EAR are amended such that items previously exported, reexported or transferred (in-country) to a VEU under Authorization VEU would remain subject to the EAR but become eligible for export without a license under the EAR, the items received under Authorization VEU may only be exported, reexported, transferred (in-country) or disposed of in accordance with the EAR. These two statements are not substantive and were added only in the interest of clarifying the scope of new paragraph (h) on requirements under the EAR. These new sentences also parallel existing Section 750.7(i) (Terminating license conditions).

In the proposed rule, BIS further proposed adding new paragraph (i) is to Section 748.15 to remind exporters that records requirements for shipments that were made under Authorization VEU prior to the removal of a license requirement or the availability of a license exception remain subject to the review requirements of paragraph (f)(2) of section 748.15 on and after the date that the license requirement was removed or the license exception became applicable. No public comments were received on this provision, and BIS is adopting paragraph (i) as proposed.

Since August 21, 2001, the Export Administration Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp., p. 783 (2002)), as extended most recently by the Notice of August 15, 2012 (77 FR 49699, August 16, 2012), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, 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 determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provisions of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This final rule involves information collections previously approved by the OMB under control number 0694-0088, “Multi-Purpose Application”, which carries a burden hour estimate of 45.8 minutes to prepare and submit form BIS-748, which involves requirements in connection with Authorization VEU. BIS revised the burden hour estimate shown for the 0694-0088 collection by two minutes to include the notification requirement proposed in this rule. This revision does not represent a significant increase in burden hours for submitting information under the collection.

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

4. The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this rule would not have a significant economic impact on a substantial number of small entities. The basis for the certification was published in the preamble to the proposed rule and is not repeated here. BIS received no comments or new information regarding the certification. Therefore, a final regulatory flexibility analysis is not required and none has been prepared.

Administrative practice and procedure, Exports, Reporting and recordkeeping requirements.

Accordingly, part 748 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

NESDIS operates NOAA's National Data Centers for Climate, Geophysics, Oceans, and Coasts. Through these Data Centers, NESDIS provides and ensures timely access to global environmental data from satellites and other sources, provides information services, and develops science products.

NESDIS maintains some 1,300 data bases containing over 2,400 environmental variables at three National Data Centers and seven World Data Centers. These centers respond to over 2,000,000 requests for these data and products annually from over 70 countries. This collection of environmental data and products is growing rapidly, both in size and sophistication, and as a result the associated costs have increased.

Users have the ability to access the data offline, online and through the NESDIS e-Commerce System (NeS) online store. Our ability to provide these data, information, products and services depends on user fees.

The new fee schedule lists both the current fee charged for each item and the new fee to be charged to users that will take effect beginning January 31, 2013. The schedule applies to the listed services provided by NESDIS on or after this date, except for products and services covered by a subscription agreement in effect as of this date that extends beyond this date. In those cases, the increased fees will apply upon renewal of the subscription agreement or at the earliest amendment date provided by the agreement.

NESDIS will continue to review the user fees periodically, and will revise such fees as necessary. Any future changes in the user fees and their effective date will be announced through notice in the Federal Register .

This rule has been determined to be not significant for purposes of E.O. 12866. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking and the opportunity for public participation are inapplicable because this rule falls within the public property exception of subparagraph (a)(2) of section 553, as it is limited only to the assessment of fees, per 15 U.S.C. 1534, that accurately reflect the costs of providing access to publicly available environmental data, information, and related products. Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 5 U.S.C. 553 or by any other law, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no Regulatory Flexibility Analysis is required and none has been prepared.

For the reasons set forth above, 15 CFR part 950 is amended as follows:

The regulations that are the subject of these corrections are under section 168 of the Internal Revenue Code.

As published on December 27, 2011 (76 FR 81060), TD 9564 contains errors which may prove to be misleading and are in need of clarification.

Accordingly, 26 CFR part 1 is amended by making the following correcting amendments.

On December 11, 2012, the Coast Guard published in the Federal Register an interim temporary final rule establishing a safety zone around the Gilmerton Bridge center span barge (77 FR 73541). Inadvertently, this rule included an error in the enforcement dates of the safety zone.

As stated in the Federal Register publication of the interim temporary final rule, the rule is effective from January 7 through January 16, 2013. That publication listed the enforcement dates of the rule beginning at 6:00 a.m. on January 7, 2013 through January 11, 2013, with inclement weather dates of January 12, 2013 through January 16, 2013. However, due to a clerical error, the regulatory text of the rule stated that the regulation will be enforced starting at 6 a.m. on January 3, 2012 through January 7, 2013 with inclement weather dates of January 8, 2013 through January 12, 2013.

Upon publication of the temporary interim final rule in the Federal Register , the Coast Guard became aware of the errors in the text relating to the enforcement period. This notice corrects those errors by restoring the correct enforcement dates.

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

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency, for good cause, finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(d)(3), the Coast Guard finds good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The details of the President's intended travel to Hawaii were not made available to the Coast Guard in sufficient time to issue a notice of proposed rulemaking. Due to the need for immediate action, the restriction of vessel traffic is necessary to protect the President and his family members; therefore, a 30-day notice period is impracticable. Delaying the effective date would be contrary to the security zone's intended objectives of protecting high-ranking officials, mitigating potential terroristic acts and enhancing public and maritime safety and security. Publishing a Notice of Proposed Rulemaking (NPRM) and delaying the effective date would be contrary to the public interest since the occasion would occur before a notice-and-comment rulemaking could be completed, thereby jeopardizing the safety of the President of the United States, members of his family members, and other senior government officials. The COTP finds that this temporary security zone needs to be effective by December 17, 2012, to ensure the safety of the President of the United States and members of his official party visiting the Kailua Bay area on the eastern coast of Oahu, Hawaii.

From December 17, 2012, through January 6, 2013, the President of the United States and his family members plan to visit near the Kailua Bay shoreline on Oahu, Hawaii. This position is located adjacent to U.S. navigable waters in the Honolulu Captain of the Port Zone. The Coast Guard is establishing this security zone to ensure the safety of the President of the United States and his family members.

This temporary final rule is effective from 6 a.m. HST on December 17, 2012 through 10 p.m. HST on January 6, 2013. The security zone area is located within the Honolulu Captain of the Port Zone (See 33 CFR 3.70-10) and covers all U.S. navigable waters in the Kailua Bay on the west side of a line connecting Kapoho Point and continuing at a bearing of 240° (true) to the southwestern corner of Kailuana Loop; as well as the nearby channel from its entrance at Kapoho Point to a point 150-yards to the southwest of the N. Kalaheo Avenue Road Bridge. This zone extends from the surface of the water to the ocean floor. This zone will include the navigable waters of the channel beginning at point 21°24′56″ N, 157°44′58″ W, then extending to 21°25′26″ N, 157°44′21″ W (Kapoho Point) including all the waters to the west of a straight line to 21°25′11″ N, 157°43′34″ W (Kailuana Loop), and then extending back to the original point 21°24′56″ N, 157°44′58″ W.

Two (2) yellow buoys and a shore-side marker will be placed in proximity of the security zone along the security zone boundary and one (1) orange boom will be placed at the channel boundary southwest of the N. Kalaheo Avenue Road Bridge as visual aids for mariners and the public to approximate the zone. An illustration of the security zone will be made available on www.regulations.gov in docket for this rulemaking, USCG-2012-1038.

In accordance with the general regulations in 33 CFR part 165, Subpart D, no person or vessel will be permitted to transit into or remain in the zone except for authorized support vessels, aircraft and support personnel, or other vessels authorized by the Captain of the Port. Any Coast Guard commissioned, warrant, or petty officer, and any other Captain of the Port representative permitted by law, may enforce the zone. Vessels, aircraft, or persons in violation of this rule would be subject to the penalties set forth in 33 U.S.C. 1232 and 50 U.S.C. 192.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. The Coast Guard expects the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. This expectation is based on the limited duration of the zone, the limited geographic area affected by it, and the lack of commercial vessel traffic affected by the zone.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule will have a significant economic impact on a substantial number of small entities. 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 will affect the following entities, all of which are small entities: the owners or operators of six jet-ski and para-sailing companies. These companies will only be affected during the arrival and departure of the President of the United States through Honolulu International Airport. Notice to enforce the security zone is not provided to the Coast Guard more than 12 hours before the President arrives or departs.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on small entities. This security zone would not have a significant economic impact on these small entities for the following reasons: this security zone will be activated, and thus subject to enforcement, for six hours for the President's arrival and for six hours for his departure. Once the Coast Guard is notified of the need to enforce the security zone, all six of the affected jet-ski and para-sailing companies will be contacted and made aware of the security zone enforcement. Additionally, marine advisories will be issued to notify mariners of the enforcement of the security zone. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule will have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule will economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking.

If the rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact LCDR Scott O. Whaley at (808) 522-8264 ext. 352. The Coast Guard will not retaliate against small entities that question or complain about this temporary final rule or any policy or action of the Coast Guard.

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

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

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction. This regulation establishes one security zone. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

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

Executive Summary: Purpose: The AIA provides that: (1) The Office may set or adjust any patent fee, provided that the aggregate revenue generated by patent fees recovers only the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (including administrative costs); and (2) most fees set or adjusted under this authority are reduced by fifty percent for small entities and by seventy-five percent for micro entities. The AIA also adds a new section to Title 35 of the United States Code that defines a “micro entity.” The rules of practice currently have provisions pertaining to small entity status, as the patent laws provided a small entity discount prior to the Leahy-Smith America Invents Act. This final rule revises the rules of practice to implement the “micro entity” provisions added by the Leahy-Smith America Invents Act.

Summary of Major Provisions: The Office is adding a provision to the rules of practice pertaining to micro entity status. The provision sets out the requirements to qualify as a micro entity tracking the statutory requirements for a micro entity set forth in section 10 of the Leahy-Smith America Invents Act. The provision also sets out procedures relating to micro entity status that largely track the regulatory requirements and procedures in 37 CFR 1.27 for small entity status. These new procedures pertain to claiming micro entity status, paying patent fees as a micro entity, notifying the Office of loss of micro entity status, and correcting payments of patent fees paid erroneously in the micro entity amount. The procedures for claiming micro entity status require the filing of a certification of entitlement to micro entity status. The Office is developing forms (paper and electronic) for use by members of the public to provide a certification of micro entity status. The procedures for paying fees as a micro entity provide that a micro entity certification need only be filed once in an application or patent, but that a fee may be paid in the micro entity amount only if the applicant or patentee is still entitled to micro entity status on the date the fee is paid. The procedures pertaining to notifying the Office of loss of micro entity status and correcting payments of patent fees paid erroneously in the micro entity amount track the corresponding small entity provisions for notifying the Office of loss of small entity status and correcting payments of patent fees paid erroneously in the small entity amount.

Costs and Benefits: This rulemaking is not economically significant as that term is defined in Executive Order 12866 (Sept. 30, 1993).

Background: The AIA was enacted into law on September 16, 2011. See Public Law 112-29, 125 Stat. 283 (2011). Section 10(a) of the AIA provides that the Office may set or adjust by rule any patent fee established, authorized, or charged under title 35, United States Code, provided that aggregate patent fees recover only the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents (including administrative costs). See 125 Stat. at 316. Section 10(b) of the AIA provides that “the fees set or adjusted under [section 10(a)] for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents shall be reduced by 50 percent with respect to the application of such fees to any small entity that qualifies for reduced fees under [35 U.S.C.] 41(h)(1) * * *, and shall be reduced by 75 percent with respect to the application of such fees to any micro entity as defined in [35 U.S.C.] 123.” See 125 Stat. at 316-17. The patent laws provided in 35 U.S.C. 41(h) for small entities prior to the Leahy-Smith America Invents Act. Section 10(g) of the AIA adds a new 35 U.S.C. 123 to define a “micro entity.” See 125 Stat. at 318-19.

35 U.S.C. 123(a) provides one basis under which an applicant may establish micro entity status. 35 U.S.C. 123(d) provides another basis under which an applicant may establish micro entity status. Each will be discussed in turn.

35 U.S.C. 123(a) provides that the term “micro entity” means an applicant who makes a certification that the applicant: (1) Qualifies as a small entity as defined in 37 CFR 1.27; (2) has not been named as an inventor on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid; (3) did not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and (4) has not assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census. See 125 Stat. at 318. 35 U.S.C. 123(a) provides one basis under which an applicant may establish micro entity status.

The Office will indicate the income level that is three times the median household income for the calendar year most recently reported by the Bureau of the Census (the income threshold set forth in 35 U.S.C. 123(a)(3) and (a)(4)) on its Internet Web site, with its Independent Inventor resource information, and on the Office's certification of micro entity status (gross income basis) form (Form PTO/SB/15A). The Office will also make available resources to micro entities to help navigate the new micro entity procedures.

35 U.S.C. 123(b) provides that an applicant is not considered to be named on a previously filed application for purposes of 35 U.S.C. 123(a)(2) if the applicant has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant's previous employment. See id.

35 U.S.C. 123(c) provides that if an applicant's or entity's gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant's or entity's gross income exceeds the threshold specified in 35 U.S.C. 123(a)(3) or (4). See 125 Stat. at 319.

35 U.S.C. 123(d) provides that a micro entity shall also include an applicant who certifies that: (1) The applicant's employer, from which the applicant obtains the majority of the applicant's income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education. See id. As explained earlier, 35 U.S.C. 123(a) provides one basis under which an applicant may establish micro entity status, and 35 U.S.C. 123(d) provides another basis under which an applicant may establish micro entity status.

35 U.S.C. 123(e) provides that in addition to the limits imposed by this section, the Director has the discretion to impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section if the Director determines that such additional limits are reasonably necessary to avoid an undue impact on other patent applicants or owners or are otherwise reasonably necessary and appropriate. 35 U.S.C. 123(e) also provides that at least three months before any limits proposed to be implemented pursuant to 35 U.S.C. 123(e) take effect, the Director shall inform the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate of any such proposed limits. See id.

The micro entity provisions of 35 U.S.C. 123 are currently in effect. However, no patent fee is currently eligible for the seventy-five percent micro entity reduction as no patent fee has yet been set or adjusted under section 10 of the Leahy-Smith America Invents Act. The Office is in the process of proposing to set or adjust patent fees under section 10 of the AIA in a separate rulemaking. See Setting and Adjusting Patent Fees, 77 FR 55028 (Sept. 6, 2012). The fees set or adjusted by the Office under section 10 of the AIA for filing, searching, examining, issuing, appealing, and maintaining a patent application and patent will be reduced by: (1) Fifty percent for an applicant or patentee who establishes small (but not micro) entity status in the patent application or patent; and (2) seventy-five percent for an applicant or patentee who establishes micro entity status in the patent application or patent.

The Office plans to rely upon the applicant's certification of micro entity status (except where it conflicts with the information contained in the Office's records, such as where Office records indicate that the applicant is named as an inventor on more than four previously filed and unassigned nonprovisional patent applications) and will not require any additional documents from the applicant concerning the applicant's entitlement to claim micro entity status. This practice is similar to small entity practice where the Office generally does not question a claim of entitlement to small entity status. See 37 CFR 1.27(f); see also Manual of Patent Examining Procedure § 509.03 (8th ed. 2001) (Rev. 9, Aug. 2012) (MPEP).

The Office does not plan to provide advisory opinions on whether a particular entity is entitled to claim micro entity status. See MPEP § 509.03. The Office, however, is providing the following information concerning procedures for micro entity status under 35 U.S.C. 123:

35 U.S.C. 123 uses the term “applicant” throughout, which was virtually synonymous with “inventor” on September 16, 2011 (the date of enactment of the AIA as well as the effective date of 35 U.S.C. 123). 35 U.S.C. 118, however, as amended effective on September 16, 2012, by Section 4 of the AIA, now permits an application to be made by a person to whom the inventor has assigned or is under an obligation to assign the invention. In addition, a person who otherwise shows sufficient proprietary interest in the matter may make an application for patent on behalf of and as agent for the inventor. Thus, 35 U.S.C. 118 now allows a person other than the inventor to file an application as the applicant if the inventor has assigned or is under an obligation to assign the invention to the person or if the person shows sufficient proprietary interest in the matter. Note also that as of March 16, 2013, 35 U.S.C. 100 will be amended to provide new and specific definitions of the terms “inventor,” “joint inventor,” and “coinventor.”

35 U.S.C. 123 does not explicitly preclude an assignee-applicant under 35 U.S.C. 118 from claiming micro entity status under 35 U.S.C. 123(a) or (d), although some provisions of 35 U.S.C. 123(a) and (d) refer to an applicant who is a natural person inventor rather than a juristic entity. See 35 U.S.C. 123(a)(2) (provides that a micro entity applicant under 35 U.S.C. 123(a) must not have “been named as an inventor on more than 4 previously filed patent applications”) and 123(d)(1) (provides that the term micro entity includes an applicant who certifies that “the applicant's employer, from which the applicant obtains the majority of the applicant's income, is an institution of higher education” as defined by section 101(a) of the Higher Education Act of 1965). In addition, 35 U.S.C. 123(a), (b) and (d) specifically refer to a situation in which the applicant has assigned rights in the invention to an assignee. See 35 U.S.C. 123(a)(4) (provides that a micro entity applicant under 35 U.S.C. 123(a) must not have “assigned, granted, or conveyed, and is not under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity” exceeding a specified gross income); 35 U.S.C. 123(b) (provides that an applicant is not considered to be named on a previously filed application for purposes of 35 U.S.C. 123(a)(2) if “the applicant has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant's previous employment”); and 35 U.S.C. 123(d)(2) (provides that the term micro entity includes an “applicant [who] has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications” to an institution of higher education as defined by section 101(a) of the Higher Education Act of 1965). Finally, the legislative history of 35 U.S.C. 123 includes a reference to micro entities as inventors and not the assignees of inventors. See H.R. Rep 112-98 at 50 (2011) (describing micro entities as “a group of inventors” and “truly independent inventors”). Nevertheless, 35 U.S.C. 123 does not explicitly preclude an assignee-applicant under 35 U.S.C. 118 from claiming micro entity status for an application under 35 U.S.C. 123(a) or 123(d), provided there is compliance with the applicable micro entity criteria. Each applicant must qualify for micro entity status, and any other party holding rights in the application must qualify for small entity status. See 37 CFR 1.29 (h). Note that a party who qualifies for micro entity status necessarily qualifies for small entity status, as under 37 CFR 1.29 a micro entity must first qualify as a small entity under 37 CFR 1.27.

An “institution of higher education,” as that term is used in 35 U.S.C. 123(d), is defined in the Higher Education Act of 1965 (20 U.S.C. 1001(a)). Section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001) provides that: “For purposes of this chapter, other than subchapter IV, the term `institution of higher education' means an educational institution in any State that—(1) Admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, or persons who meet the requirements of section 1091(d)(3) of this title; (2) is legally authorized within such State to provide a program of education beyond secondary education; (3) provides an educational program for which the institution awards a bachelor's degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by the Secretary; (4) is a public or other nonprofit institution; and (5) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted pre-accreditation status by such an agency or association that has been recognized by the Secretary for the granting of pre-accreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.” Section 103 of the Higher Education Act of 1965 (20 U.S.C. 1003) provides “the term `State' includes, in addition to the several States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Mariana Islands, and the Freely Associated States” and that the Freely Associated States means the “Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.”

The Office is setting out in the rules of practice the requirements for micro entity status and procedures for claiming micro entity status, paying patent fees as a micro entity, notifying the Office of loss of micro entity status, and correcting payments of patent fees paid erroneously in the micro entity amount. The Office is also developing forms for use by members of the public to provide a certification of micro entity status. The procedures track the corresponding provisions in 37 CFR 1.27 and 1.28 for small entities, except where the small entity procedure is not appropriate for micro entity status under the provisions of 35 U.S.C. 123. For example, 35 U.S.C. 123 requires a certification as a condition for an applicant to be considered a micro entity. Thus, the process in 37 CFR 1.27(c)(3) for establishing small entity status by payment of certain fees in the small entity amount cannot be made applicable to establishing micro entity status, and the process in 37 CFR 1.28(a) for a refund based upon subsequent establishment of small entity status is not applicable where there is subsequent establishment of micro entity status. In addition, 35 U.S.C. 123(a)(3) and (a)(4) require that the income level be met for the calendar year preceding the calendar year in which the applicable fee is paid. Thus, the provision in 37 CFR 1.27(g)(1) that the applicant need only determine continued eligibility for small entity status for issue and maintenance fee payments, but can pay intervening fees at small entity rate without determining whether still entitled to small entity status, cannot be made applicable to payment of patent fees as a micro entity.

The following is a discussion of the amendments to Title 37 of the Code of Federal Regulations, Part 1.

Section 1.29: Section 1.29 is added to implement procedures for claiming micro entity status.

Since 35 U.S.C. 123(a) through (d) specify the requirements to qualify as a micro entity, the provisions in §§ 1.29(a) through (d) generally track the provisions of 35 U.S.C. 123(a) through (d).

Section 1.29(a) implements the provisions of 35 U.S.C. 123(a), and includes reference to inventors or joint inventors where appropriate. Section 1.29(a) provides that an applicant claiming micro entity status under 35 U.S.C. 123(a) must certify that: (1) The applicant qualifies as a small entity as defined in § 1.27; (2) neither the applicant nor the inventor nor a joint inventor has been named as the inventor or a joint inventor (see 35 U.S.C. 100) on more than four previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid; (3) neither the applicant nor the inventor nor a joint inventor, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census; and (4) neither the applicant nor the inventor nor a joint inventor has assigned, granted, or conveyed, nor is under an obligation by contract or law to assign, grant, or convey, a license or other ownership interest in the application concerned to an entity that, in the calendar year preceding the calendar year in which the applicable fee is being paid, had a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986, exceeding three times the median household income for that preceding calendar year, as most recently reported by the Bureau of the Census. See also § 1.29(h) (each applicant must qualify for micro entity status, and each other party holding rights in the invention must qualify for small entity status).

Section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)) provides that: “[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust.” The median household income for calendar year 2011 (the year most recently reported by the Bureau of the Census) was $50,054. See Income, Poverty, and Health Insurance Coverage in the United States in 2011 at pages 5 and 31 (Table A-1) (Sept. 2012). Thus, the income level specified in §§ 1.29(a)(3) and (a)(4) (three times the median household income) is $150,162 for calendar year 2011 (the year most recently reported by the Bureau of the Census).

If an application names more than one applicant or inventor, each applicant and each inventor must meet the requirements of § 1.29(a) for the applicants to file a micro entity certification under § 1.29(a) in the application. It would not be appropriate to file a micro entity certification under § 1.29(a) for the application if there were more than one applicant or inventor and not all of the applicants and inventors qualified as micro entities under 35 U.S.C. 123(a): e.g., (1) an applicant or inventor exceeded the gross income levels; (2) an applicant or inventor had more than four other nonprovisional applications; or (3) an applicant or inventor had assigned, granted, or conveyed the application or was under an obligation to do so, to an entity that exceeds the gross income levels. Additionally, the income level requirement in 35 U.S.C. 123(a)(3) applies to each applicant's and inventor's income separately ( i.e., the combined gross income of all of the applicants and inventors need not be below the income level in 35 U.S.C. 123(a)(3)). Further, the assignment requirement in § 1.29(a)(4) applies to each applicant and inventor ( i.e., if an applicant or inventor assigns or is obligated to assign the invention to more than one assignee ( e.g., half interest in the invention to two assignees), each of the assignees must meet the income limit specified in § 1.29(a)(4)). Note also that in this context an inventor ordinarily should qualify as a small entity under §§ 1.29(a)(1) and 1.27(a)(1). Under § 1.27(a)(1), an inventor generally is a small entity and retains such status even if the inventor assigns some rights to another small entity. Similarly, to obtain micro entity status, § 1.29(h) requires that any non-applicant assignee be a small entity.

Section 1.29(b) implements the provisions of 35 U.S.C. 123(b). Section 1.29(b) provides that an applicant, inventor, or joint inventor is not considered to be named on a previously filed application for purposes of § 1.29(a)(2) if the applicant, inventor, or joint inventor has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application as the result of the applicant's, inventor's, or joint inventors previous employment.

Section 1.29(c) implements the provisions of 35 U.S.C. 123(c). Section 1.29(c) provides that if an applicant's, inventor's, joint inventor's, or entity's gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant's, inventor's, joint inventor's, or entity's gross income exceeds the threshold specified in § 1.29(a)(3) or (a)(4). The Internal Revenue Service reports the average currency exchange rate (Yearly Average Currency Exchange Rates) on its Internet Web site ( http://www.irs.gov/businesses/small/international/article/0,,id=206089,00.html ).

Section 1.29(d) implements the provisions of 35 U.S.C. 123(d). Section 1.29(d) provides that an applicant claiming micro entity status under 35 U.S.C. 123(d) must certify that: (1) The applicant qualifies as a small entity as defined in § 1.27; and (2)(i) the applicant's employer, from which the applicant obtains the majority of the applicant's income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (ii) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education. To the extent that 35 U.S.C. 123(d) (unlike 35 U.S.C. 123(a)) does not expressly require that an applicant qualify as a small entity under § 1.27, the Office is invoking its authority under 35 U.S.C. 123(e) to expressly require that a party claiming micro entity status via 35 U.S.C. 123(d) qualify as a small entity under § 1.27. The legislative history of 35 U.S.C. 123 refers to micro entities as a subset of small entities, namely, “truly independent inventors.” See H.R. Rep 112-98 at 50 (“[t]he Committee was made aware, however, that there is likely a benefit to describing—and then accommodating—a group of inventors who are even smaller [than small entities], in order to ensure that the USPTO can tailor its requirements, and its assistance, to the people with very little capital, and just a few inventions, as they are starting out. This section of the Act defines this even smaller group—the micro-entity—that includes only truly independent inventors”). Thus, permitting an applicant who does not qualify as a small entity to take advantage of the benefits of micro entity status via 35 U.S.C. 123(d) would be inconsistent with the purposes of micro entity provisions of 35 U.S.C. 123. The statute and its legislative history do not, for example, contemplate a for-profit, large entity applicant becoming a “micro entity” (and thus obtaining a 75 percent discount) merely by licensing or assigning some interest (even merely a nominal or miniscule interest) to an institution of higher education. Accordingly, the Office has determined that requiring all micro entities to qualify as small entities is reasonably necessary and appropriate to ensure that applicants who do not qualify as a small entity do not inappropriately attempt to take advantage of micro entity status. See also § 1.29(h) (each applicant must qualify for micro entity status, and each other party holding rights in the invention must qualify for small entity status).

Section 1.29(e) provides that micro entity status must be established in an application in by filing a certification in writing that complies with either § 1.29(a) or § 1.29(d) and that is signed in compliance with § 1.33(b). Section 1.29(e) also contains provisions for a micro entity that correspond to the provisions of § 1.27(c)(4) for a small entity. Section 1.29(e) provides that: (1) Status as a micro entity must be specifically established by an assertion in each related, continuing, and reissue application in which status is appropriate and desired; (2) status as a small or micro entity in one application or patent does not affect the status of any other application or patent, regardless of the relationship of the applications or patents; and (3) the refiling of an application under § 1.53 as a continuation, divisional, or continuation-in-part application (including a continued prosecution application under § 1.53(d)), or the filing of a reissue application, requires a new certification of entitlement to micro entity status for the continuing or reissue application.

Section 1.29(f) contains provisions for a micro entity that correspond to the provisions of § 1.27(d) for a small entity. Section 1.29(f) provides that a fee may be paid in the micro entity amount only if it is submitted with, or subsequent to, the submission of a certification of entitlement to micro entity status.

Section 1.29(g) contains provisions for a micro entity that correspond to the provisions of § 1.27(e) for a small entity. Section 1.29(g) provides that a certification of entitlement to micro entity status need only be filed once in an application or patent, and that micro entity status, once established, remains in effect until changed pursuant to § 1.29(i). However, a fee may be paid in the micro entity amount only if status as a micro entity as defined in § 1.29(a) or (d) is appropriate (which requires that status as a small entity is also appropriate) on the date the fee is being paid. Thus, while an applicant is not required to provide a certification of entitlement to micro entity status with each fee payment once micro entity status has been established in an application, the applicant must still be entitled to micro entity status to pay a fee in the micro entity amount at the time of all payments of fees in the micro entity amount.

For micro entity status under 35 U.S.C. 123(a), the applicant must determine that the applicant and each inventor or joint inventor still meet the applicable conditions of 35 U.S.C. 123(a) and § 1.29(a) to claim micro entity status. For example, the applicant must determine that neither the applicant nor inventor nor joint inventor has had a change in gross income that exceeds the gross income threshold in 35 U.S.C. 123(a)(3) (a new determination must be made each year because gross income may change from year to year, and micro entity status is based upon gross income in the calendar year preceding the calendar year in which the applicable fee is being paid). In addition, the applicant must determine that neither the applicant nor inventor nor joint inventor has made, or is obligated by contract or law to make, an assignment, grant, or conveyance to an entity not meeting the gross income threshold in 35 U.S.C. 123(a)(4), and that no new inventor or joint inventor has been named in the application who does not meet the conditions specified in 35 U.S.C. 123(a) and § 1.29(a)). For micro entity status under 35 U.S.C. 123(d), the applicant must determine that each applicant and inventor still complies with 35 U.S.C. 123(d) and § 1.29(d) ( e.g., still obtains the majority of his or her income from an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)). Section 1.29(g) also provides that where an assignment of rights or an obligation to assign rights to other parties who are micro entities occurs subsequent to the filing of a certification of entitlement to micro entity status, a second certification of entitlement to micro entity status is not required.

Section 1.29(h) contains provisions for a micro entity that correspond to the provisions of § 1.27(f) for a small entity. Section 1.29(h) provides that prior to submitting a certification of entitlement to micro entity status in an application, including a related, continuing, or reissue application, a determination of such entitlement should be made pursuant to the requirements of § 1.29(a) or 1.29(d). Section 1.29(h) also indicates that each applicant must qualify for micro entity status under § 1.29(a) or 1.29(d), and that any other party holding rights in the application must qualify for small entity status under § 1.27. As discussed previously, a party who qualifies for micro entity status necessarily qualifies for small entity status, as under § 1.29(a)(1) and (d)(1) a micro entity must first qualify as a small entity under § 1.27. Section 1.29(h) also indicates that the Office will generally not question certification of entitlement to micro entity status that is made in accordance with the requirements of § 1.29.

Section 1.29(i) contains provisions for a micro entity that correspond to the provisions of § 1.27(g)(2) for a small entity. Section 1.29(i) provides that notification of a loss of entitlement to micro entity status must be filed in the application or patent prior to paying, or at the time of paying, any fee after the date on which status as a micro entity as defined in § 1.29(a) or 1.29(d) is no longer appropriate. The notification that micro entity status is no longer appropriate must be signed by a party identified in § 1.33(b). Payment of a fee in other than the micro entity amount is not sufficient notification that micro entity status is no longer appropriate.

Section 1.29(i) further provides that a notification that micro entity status is no longer appropriate will not be treated as a notification that small entity status is also no longer appropriate unless it also contains a notification of loss of entitlement to small entity status under § 1.27(f)(2). Thus, an applicant or patentee who files a notification that micro entity status is no longer appropriate will be treated as a small entity by default unless the notification also contains a notification of loss of entitlement to small entity status under § 1.27(f)(2).

Section 1.29 finally provides that once a notification of a loss of entitlement to micro entity status is filed in the application or patent, a new certification of entitlement to micro entity status is required to again obtain micro entity status.

Section 1.29(j) contains provisions for a micro entity that correspond to the provisions of § 1.27(h) for a small entity. Section 1.29(j) provides that any attempt to fraudulently establish status as a micro entity, or pay fees as a micro entity, shall be considered as a fraud practiced or attempted on the Office, and that establishing status as a micro entity, or paying fees as a micro entity, improperly, and with intent to deceive, shall be considered as a fraud practiced or attempted on the Office.

Section 1.29(k) contains provisions for a micro entity that correspond to the provisions of § 1.28(c) for a small entity. Section 1.28(c) permits an applicant or patentee to correct the erroneous payment of a patent fee in the small entity amount if status as a small entity was established in good faith, and fees as a small entity were paid in good faith. See DH Tech. Inc. v. Synergystex Int'l Inc., 154 F.3d 1333 (Fed. Cir. 1998). Section 1.29(k) provides that if: (i) An applicant or patentee establishes micro entity status in an application or patent in good faith; (ii) the applicant or patentee pays fees as a micro entity in the application or patent in good faith; and (iii) applicant or patentee later discovers that such micro entity status either was established in error, or that the Office was not notified of a loss of entitlement to micro entity status as required by § 1.29(i) through error, the error will be excused upon compliance with the separate submission and itemization requirements of § 1.29(k)(1) and the deficiency payment requirement of § 1.29(k)(2).

Section 1.29(k)(1) provides that any paper submitted under § 1.29(k) must be limited to the deficiency payment (all fees paid in error) required for a single application or patent. Section 1.29(k)(1) provides that where more than one application or patent is involved, separate submissions of deficiency payments ( e.g., checks) and itemizations are required for each application or patent. Section 1.29(k)(1) also provides that the paper must contain an itemization of the total deficiency payment and include the following information: (1) Each particular type of fee that was erroneously paid as a micro entity, ( e.g., basic statutory filing fee, two-month extension of time fee) along with the current fee amount for a small or non-small entity; (2) the micro entity fee actually paid, and the date on which it was paid; (3) the deficiency owed amount (for each fee erroneously paid); and (4) the total deficiency payment owed, which is the sum or total of the individual deficiency owed amounts as set forth in § 1.29(k)(2).

Section 1.29(k)(2) provides that the deficiency owed, resulting from the previous erroneous payment of micro entity fees, must be paid. The deficiency owed for each previous fee erroneously paid as a micro entity is the difference between the current fee amount for a small entity or non-small entity, as applicable, on the date the deficiency is paid in full and the amount of the previous erroneous micro entity fee payment. The total deficiency payment owed is the sum of the individual deficiency owed amounts for each fee amount previously and erroneously paid as a micro entity. This corresponds to the procedure for fee deficiency payments based upon the previous erroneous payment of patent fees in the small entity amount. See § 1.28(c)(2)(i) (“[t]he deficiency owed for each previous fee erroneously paid as a small entity is the difference between the current full fee amount (for non-small entity) on the date the deficiency is paid in full and the amount of the previous erroneous (small entity) fee payment”).

Section 1.29(k)(3) provides that if the requirements of §§ 1.29(k)(1) and (k)(2) are not complied with, such failure will either be treated at the option of the Office as an authorization for the Office to process the deficiency payment and charge the processing fee set forth in § 1.17(i), or result in a requirement for compliance within a one-month non-extendable time period under § 1.136(a) to avoid the return of the fee deficiency payment.

Section 1.29(k)(4) provides that any deficiency payment (based on a previous erroneous payment of a micro entity fee) submitted under § 1.29(k) will be treated as a notification of a loss of entitlement to micro entity status under § 1.29(i).

Comments and Responses to Comments: The Office published a notice on May 30, 2012, proposing to change the rules of practice to implement the micro entity provisions of the AIA. See Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR 31806 (May 30, 2012). The Office received twenty-seven written comments (from intellectual property organizations, industry, law firms, individual patent practitioners, and the general public) in response to this notice. There were some comments received that related to practice before the agency but not related to the proposed changes to the rules of practice to implement the micro entity provisions of the AIA, and these comments have been forwarded to the Office of Innovation Development for further consideration. The Office is always interested to hear feedback from the public concerning ways in which it can assist small and independent inventors. The comments germane to the proposed changes to the rules of practice to implement the micro entity provisions of the AIA and the Office's responses to the comments follow:

Comment 1: One comment stated that there are several instances in 35 U.S.C. 123 and proposed § 1.29 where the term “applicant” is inapplicable to an organization and must really be referring to the inventor(s) ( e.g., a certification that “applicant” has not been named as an “inventor” in more than four previously filed applications, references to applicant's previous employment or employer). One comment indicated that the term “applicant” should be used in an interchangeable manner so as to mean either the inventor(s) or a company to which the patent application is assigned (i.e., the rules should refer to “applicant or inventor”) in view of the AIA's change to 35 U.S.C. 118. That comment further indicated, however, that the ability to vary from the statute “may be limited.” One comment similarly indicated that the final rules should replace all instances of “applicant” and “applicant's” with “inventor” and “inventor's” in § 1.29(a) (second instance), (b), (c), (d)(1), (d)(2)(i), and (d)(2)(ii) in view of the AIA's change to 35 U.S.C. 118. One comment stated that in the case of university inventions, the university typically is the applicant and this creates anomalies in proposed § 1.29(d), since the institution (university) logically cannot make the certifications required under § 1.29(d)(2)(i) and (d)(2)(ii) (that the employer from which the university obtains the majority of its income is an institution of higher education as defined by section 101(a) of the Higher Education Act of 1965, or that the university itself has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application).

Response: The Office specifically invited public comment in the notice of proposed rulemaking on the issue of whether the term “inventor” should be used in place of “applicant” at any instance in the proposed micro entity rules. See Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR at 31808. The Office agrees that some, though not all, provisions of 35 U.S.C. 123 refer to a situation where an inventor is the applicant. The micro entity provisions of 35 U.S.C. 123 were enacted as part of the AIA, which also revised the patent laws to provide a specific definition of the term “inventor” and to change who may be the applicant for a patent. See 125 Stat. at 285 (defining “inventor”) and 293-97 (changing the patent laws to distinguish between who may apply for a patent as the applicant and who must be named as the inventor); see also 35 U.S.C. 100; 35 U.S.C. 118. The Office does not consider it appropriate either to amend the language of 35 U.S.C. 123 as incorporated into the corresponding provisions of § 1.29 or to somehow view the terms “applicant” and “inventor” as interchangeable in all instances under 35 U.S.C. 123. See Brown v. Gardner, 513 U.S. 115, 118 (1994) (presumption that a given term is used to mean the same thing throughout a statute). As discussed previously, while some of the provisions in 35 U.S.C. 123(a) and (d) refer to an inventor-applicant, 35 U.S.C. 123 does not explicitly preclude an assignee-applicant under 35 U.S.C. 118 from claiming micro entity status under 35 U.S.C. 123(a) or (d), provided there is compliance with the applicable micro entity criteria by each applicant. However, each applicant must qualify for micro entity status, and any other party holding rights in the application must qualify for small entity status. See 37 CFR 1.29(h).

Comment 2: One comment stated that it is possible that the legislative intent of 35 U.S.C. 123(a)(2) was that an applicant should satisfy this criterion so long as the applicant has fewer than four previously filed applications in which micro entity fees were paid. One comment stated that the four application limit under 35 U.S.C. 123(a)(2) should apply only to applications filed within the past twenty years or so. One comment stated that it would make sense for the term “inventor” in § 1.29(a)(2) to refer to an applicant who has had the opportunity to claim micro entity status in four previously filed patent applications. One comment indicated that § 1.29(a)(2) should be amended to provide that if an application is entitled to micro entity status, then continuation and divisional applications of that parent application should normally be entitled to micro entity status without counting the parent application or any parallel filed continuing or divisional patent applications in the same patent family toward the four application limit.

Response: Section 1.29(a)(2) tracks the provisions of 35 U.S.C. 123(a)(2) with the clarification to reference non-applicant inventors and joint inventors. 35 U.S.C. 123(a)(2) provides a certification that the applicant, inter alia, “has not been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications * * * for which the basic national fee under 35 U.S.C. 41(a) was not paid.” This provision refers to when an inventor-applicant has been named as an inventor in a previous application, including as one in a group of joint inventors. See 35 U.S.C. 100. An applicant that is not an inventor would plainly not violate this criteria. Moreover, this provision has been clarified to refer to an inventor or joint inventor who is not the applicant. 35 U.S.C. 123(a)(2) by its express terms does not, however, provide for exceptions to this four-application limit suggested by the comments. In addition, while 35 U.S.C. 123(e) authorizes the Office to place additional limits on who may qualify as a micro entity under 35 U.S.C. 123, it does not authorize the Office to remove limitations contained in 35 U.S.C. 123.

Comment 3: One comment suggested expanding the scope of the § 1.29(b) exception to applications counted toward the four application limit in § 1.29(a)(2) by including applications assigned to the inventor's current employer when the invention is outside the current employer's scope of employment with the inventor.

Response: Section 1.29(b) tracks the provisions of 35 U.S.C. 123(b) with the clarification to reference non-applicant inventors and joint inventors. 35 U.S.C. 123(b) provides that an applicant is not considered to be named on a previously filed application for purposes of 35 U.S.C. 123(a)(2) if the applicant has assigned, or is under an obligation by contract or law to assign, all ownership rights in the application “as the result of applicant's previous employment.” Thus, the exception in 35 U.S.C. 123(b) by its express terms does not apply to applications assigned to a current employer. In addition, as discussed previously, while 35 U.S.C. 123(e) authorizes the Office to place additional limits on who may qualify as a micro entity under 35 U.S.C. 123, it does not authorize the Office to remove limitations contained in 35 U.S.C. 123.

Comment 4: One comment noted that the Office has indicated that it will publish the income level that is three times the median household income for the calendar year most recently reported by the Bureau of the Census, but that 35 U.S.C. 123(a) (and § 1.29(a)) require that applicants use the median household income data for “the calendar year preceding the calendar year in which the applicable fee is being paid.” The comment expressed concern that median household income data for a given year is not reported by the Bureau of the Census until the succeeding year. One comment suggested that § 1.29(a)(3) be amended to provide that an applicant may rely on his or her most recently filed income tax return regardless of whether the most recently filed tax return accounted for the previous calendar year's gross income.

Response: Section 1.29(a)(3) tracks the provisions of 35 U.S.C. 123(a)(3) with the clarification to reference non-applicant inventors and joint inventors. 35 U.S.C. 123(a)(3) provides that each inventor's gross income “in the calendar year preceding the calendar year in which the applicable fee is being paid” must not exceed “three times the median household income for that preceding calendar year as most recently reported by the Bureau of the Census.” 35 U.S.C. 123(a)(3) does not provide for an applicant to simply rely on his or her most recently filed income tax return if the most recently filed tax return does not pertain to the calendar year preceding the calendar year in which the applicable fee is being paid. The Office will post on its Internet Web site the U.S. dollar amount that equals three times the median household income as most recently reported by the Bureau of the Census. Thus, the Office's Internet Web site will contain the U.S. dollar amount that equals three times the median household income as most recently reported by the Bureau of the Census as provided for in § 1.29(a)(3) and 35 U.S.C. 123(a)(3).

Comment 5: One comment requested guidance as to what effect marital status has on “gross income” in terms of § 1.29(a)(3), and whether the inventor's tax return is filed jointly or separately changes the amount of “gross income” for purposes of meeting the requirement of proposed § 1.29(a)(3). The comment also indicated that in community property states, the law may be construed such that the inventor/applicant has assigned his or her rights in part to the spouse, as a matter of law. Another comment stated that marital status of an individual applicant may have an impact on the assignment or ownership rights in an invention and the gross income of the applicant, and that it may require an opinion from an accountant or tax attorney with respect to the applicant's income.

Response: The Office reads the “gross income” requirement contained in 35 U.S.C. 123(a)(3) and § 1.29(a)(3) with respect to a married person as applying to the amount of income the person would have reported as gross income if that person were filing a separate tax return (which includes properly accounting for that person's portion of interest, dividends, and capital gains from joint bank or brokerage accounts), regardless of whether the person actually filed a joint return or a separate return for the relevant calendar year. Additionally, the Office does not consider a spouse's ownership interest in a patent application or patent arising by operation of residence in a community property state as falling within the ambit of 35 U.S.C. 123(a)(4) and § 1.29(a)(4) because the spouse's ownership interest arises by operation of state law, rather than an assignment, grant, conveyance, or obligation to assign, grant, or convey.

Comment 6: One comment questioned the situation where the applicant's income is not in U.S. dollars and the applicable currency exchange rate is applied to determine the applicant's gross income in U.S. dollars in accordance with § 1.29(c), whether the applicant's gross income in terms of U.S. dollars should be compared to three times the median household income for the preceding calendar year in the United States, or should be compared to the median household income for the preceding calendar year in the country in which the applicant obtained income.

Response: In all cases, the inventor's gross income in the previous calendar year must be compared to the U.S. dollar amount equaling three times the median household income as most recently reported by the Bureau of the Census (which will be posted on the Office's Internet Web site) at the time the applicable fee is being paid in order to meet the gross income requirement of § 1.29(a)(3).

Comment 7: One comment suggested that the language “that calendar year” in proposed § 1.29(c) should be changed to “the preceding calendar year” to clarify that applicants whose income is not in U.S. dollars must apply the currency exchange rate from the preceding calendar year when calculating income in U.S. dollars in order to determine whether the proposed § 1.29(a)(3) “gross income” requirement is met.

Response: Section 1.29(c) tracks the provisions of 35 U.S.C. 123(c) with the clarification to reference non-applicant inventors and joint inventors. The phrase “that calendar year” in 35 U.S.C. 123(c) and § 1.29(c) means “the preceding calendar year” as previously recited in 35 U.S.C. 123(c) and § 1.29(c).

Comment 8: One comment indicated that foreign applicants should be directed to make a “good faith attempt” to estimate their gross income in terms of U.S. tax law.

Response: 35 U.S.C. 123(c) provides that if an applicant's or entity's gross income in the preceding calendar year is not in United States dollars, the average currency exchange rate, as reported by the Internal Revenue Service, during that calendar year shall be used to determine whether the applicant's or entity's gross income exceeds the threshold specified in 35 U.S.C. 123(a)(3) or (4). 35 U.S.C. 123 does not provide any alternative basis, such as a good faith estimation as suggested by the comment, for determining whether an applicant or entity meets the gross income requirement of 35 U.S.C. 123(a)(3). For an applicant or entity whose previous calendar year's gross income was received partially in U.S. dollars and partially in non-United States currency, the gross income amount in non-United States currency must be converted into U.S. dollars in accordance with § 1.29(c) and then added to the gross income amount in U.S. dollars to determine whether the applicant or entity meets the gross income requirement of § 1.29(a)(3).

Comment 9: One comment suggested that the definition of micro entity status should be broadened to benefit even more small inventors than those who meet the requirements of 35 U.S.C. 123(a).

Response: The legislative history includes a statement that Congress developed the micro entity provision to benefit truly independent inventors, people with very little capital and just a few inventions, who are just starting out. See H.R. Rep 112-98 at 50. Small entity inventors who do not meet the micro entity requirements of 35 U.S.C. 123 may still claim small entity status and receive the fifty percent small entity fee reduction. In any event, as discussed previously, while 35 U.S.C. 123(e) authorizes the Office to place additional limits on who may qualify as a micro entity under 35 U.S.C. 123, it does not authorize the Office to remove limitations contained in 35 U.S.C. 123 or expand the scope of 35 U.S.C. 123 to include more small entities.

Comment 10: Several comments objected to the requirement under § 1.29(d)(1) that in order to qualify for micro entity status under § 1.29(d), the applicant must qualify as a small entity as defined in § 1.27 in addition to meeting one of the requirements under § 1.29(d)(2)(i) or (d)(2)(ii).

Response: 35 U.S.C. 123(e) provides that in addition to the limits imposed by 35 U.S.C. 123, the Director may, in the Director's discretion, impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section if the Director determines that such additional limits are reasonably necessary to avoid an undue impact on other patent applicants or owners or are otherwise reasonably necessary and appropriate. The Office has determined that requiring all micro entities to qualify as small entities (§ 1.29(d)(1)) is reasonably necessary and appropriate to ensure that applicants who do not qualify as a small entity do not inappropriately attempt to take advantage of micro entity status. As discussed in the notice of proposed rulemaking, the legislative history of 35 U.S.C. 123 includes a statement that micro entity status is directed to a subset of small entities, namely, “truly independent inventors.” See H.R. Rep 112-98 at 50.

Comment 11: Several comments indicated that § 1.29(d)(2)(ii) should provide that the rights transferred or owed to an institution of higher education should be substantial. The comments indicated that institutions of higher education are generally non-practicing entities or that applicants could engage in sham transfers of a de minimus interest to an institution of higher education, and suggested the Office use its authority under 35 U.S.C. 123(e) to ensure the transfer of rights is for a substantial purpose. One comment indicated that micro entity status by a grant of rights to an institution of higher education under § 1.29(d)(2)(ii) should not be available to an institution of higher education and that without such a limitation, institutions of higher education could simply grant rights to each other and thereby qualify their patent for micro entity status.

Response: As discussed previously, the Office is requiring that all micro entities qualify as small entities (§ 1.29(d)(1)) to ensure that applicants who do not qualify as a small entity do not inappropriately attempt to take advantage of micro entity status. This requires that any person or entity claiming micro entity status not have assigned, granted, conveyed, or licensed, and be under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person, concern, or organization which would not qualify for small entity status as a person, small business concern, or nonprofit organization. See § 1.27(a). The Office plans to closely monitor the percentage of applicants claiming small entity status under 35 U.S.C. 123(d) and will propose additional limits under the authority provided in 35 U.S.C. 123(e) if it appears that a substantial number of applicants are engaging in sham transactions with institutions of higher education to obtain micro entity status.

Comment 12: One comment indicated that 35 U.S.C. 123(d) is unclear as to whether it was intended to cover a separate non-profit corporation, research foundation, or other institution that is legally separate from an institution of higher education but whose stated mission is to represent that institution of higher education, to act on its behalf, and/or commercialize the intellectual property of that institution of higher education. The comment suggested that a research foundation should be treated as a qualifying institution of higher education for purposes of micro entity status if the research foundation is acting on behalf of a university which is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965. Another comment suggested that the Office consider expanding the scope of § 1.29(d) to include technology transfer organizations whose primary purpose is to facilitate the commercialization of technologies developed by one or more institutions of higher education as defined by section 101(a) of the Higher Education Act of 1965. Another comment suggested that micro entity status be made available to applicants whose inventions are co-owned with Federal Government research laboratories and that patent applications on inventions made solely or jointly by Federal laboratory personnel should be considered in the same manner as applications made solely by personnel at academic research laboratories. Another comment suggested amending § 1.29(d) to extend the definition of “institution of higher education” to include certain nonprofit scientific or educational organizations that are not institutions of higher education “as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))” as required by 35 U.S.C. 123(d). Another comment suggested that the Office interpret “institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a))” as it appears in 35 U.S.C. 123(d) to include institutions of higher education set forth in subsection (b) of 20 U.S.C. 1001, thus making micro entity status available to institutions that grant only graduate degrees if they otherwise qualify as institutions of higher education under 20 U.S.C. 1001(a).

Response: 35 U.S.C. 123(d) provides that a micro entity shall also include an applicant who certifies that: (1) The applicant's employer, from which the applicant obtains the majority of the applicant's income, is an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)); or (2) the applicant has assigned, granted, conveyed, or is under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular applications to such an institution of higher education. Consistent with the discussion above and in the notice of proposed rulemaking about the statutory terms “applicant” and “inventor,” note that the statutory criteria in 35 U.S.C. 123(d) ordinarily would not be met by an institution of higher education that is itself an assignee-applicant. Also, while 35 U.S.C. 123(e) authorizes the Office to place additional limits on who may qualify as a micro entity under 35 U.S.C. 123, it does not authorize the Office to remove limitations contained in 35 U.S.C. 123 such as to expand the scope of 35 U.S.C. 123(d) to include a separate, non-profit corporation, research foundation, technology transfer organization, Federal Government research laboratory, other non-profit scientific or educational organization, institution of higher education as defined in section 101(b) of the Higher Education Act of 1965, or other institution that is legally separate from an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 as suggested by the comments. An entity or institution must meet the definition of an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 for an applicant employed by, or who has assigned or is under an obligation to assignee to, the entity or institution, to be eligible for micro entity status under 35 U.S.C. 123(d).

Comment 13: Several comments indicated that the proposed rules show a bias in favor of institutions of higher education and against independent inventors because an independent inventor has to meet certain criteria to be entitled to micro entity status.

Response: Both independent inventors under 35 U.S.C. 123(a) and those employed by or under a legal or contractual obligation to assign, grant, or convey an interest in an application to an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 under 35 U.S.C. 123(d), must meet certain criteria to be eligible for micro entity status. Specifically, the applicant must qualify as a small entity as defined in § 1.27. In addition, as to 35 U.S.C. 123(d) either the applicant's employer, from which the applicant obtains the majority of the applicant's income, must be an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), or the applicant must have assigned, granted, conveyed, or be under an obligation by contract or law, to assign, grant, or convey, a license or other ownership interest in the particular application to such an institution of higher education. The income and application filing criteria specified in § 1.29(a) tracks the criteria in 35 U.S.C. 123(a).

Comment 14: One comment questioned whether micro entity status will be available to foreign applicants.

Response: Micro entity status is available to any applicant (foreign or domestic alike) who meets the requirements of 35 U.S.C. 123 and § 1.29. Notably, 35 U.S.C. 123(d) provides that an institution must meet the definition of an institution of higher education as defined in section 101(a) of the Higher Education Act of 1965 for micro entity status to be obtained based upon the applicant's employment at or the applicant's assignment or obligation to the institution. One criteria of the definition of “institution of higher education” set forth in section 101(a) of the Higher Education Act of 1965 is that the institution must be located in a “State.” Section 103 of the Higher Education Act of 1965 provides that the term “State” as used in section 101(a) “includes the several States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the United States Virgin Islands, and the Freely Associated States” and that the Freely Associated States means the “Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.”

Comment 15: Several comments urged deletion of the requirement in § 1.29(e) that micro entity status be specifically established by a new certification in each related continuing and reissue application. One comment indicated that unless the Office removes the provision in proposed § 1.29(g) that a fee may be paid in the micro entity amount only if status as a micro entity is appropriate on the date the fee is paid, the Office should remove the requirement in proposed § 1.29(e) that status as a micro entity must be specifically established in each related, continuing and reissue application in which status is appropriate and desired. One comment stated that § 1.29(e) contains an error in that contrary to its language, status as a micro entity in one application does affect the status of other applications. The commenter, however, suggests retaining language in § 1.29(e) stating that micro entity status must be specifically established in each continuing and divisional application in which status is appropriate and desired.

Response: The Office shares the concerns of the comments that the small entity and micro entity regulations and procedures be as simple as possible. For this reason, the Office is making the micro entity provisions as consistent with the small entity provisions as possible, including the provisions pertaining to claiming small entity status in related continuing and reissue applications. See § 1.27(c)(4). In addition, 35 U.S.C. 123 requires that the applicant make a certification under 35 U.S.C. 123(a) or (d) to qualify for micro entity status. An applicant's ability to meet the requirements in 35 U.S.C. 123(a) or (d) may change over time. For example, from a first application to a related continuing or reissue application, an applicant's gross income (35 U.S.C. 123(a)(3)) and employment (35 U.S.C. 123(d)(1)) may change, and the number of applications naming the applicant as an inventor (35 U.S.C. 123(a)(2)) will change with the filing of a related continuing or reissue application. Therefore, the Office is concerned about permitting micro entity status to automatically carry over into a related continuing or reissue application without the certification required by 35 U.S.C. 123(a) or (d). Finally, while being named as an inventor in other applications may affect an applicant's ability to claim micro entity status in an application, status as a micro entity in one application does not affect the status of other applications. Finally, as discussed previously, the Office plans to seek additional public comment on the micro entity provisions after the Office and the public have gained experience with the micro entity procedures in operation, and will pursue further improvements to the micro entity procedures in light of the public comment and its experience with the micro entity procedures.

Comment 16: One comment stated that § 1.29 is unclear as to who must sign the micro entity certification in applications with more than one applicant. The comment suggested that § 1.29 be amended to make clear that each applicant must meet the requirements of 35 U.S.C. 123(a) or (d) for the applicants to file a micro entity certification in the application. Further, the comment suggested that §§ 1.29(a) and (d) be revised to state that “each applicant so establishing such status must certify that that applicant” meets all the requirements in order to establish micro entity status. One basis given for this suggestion is that joint applicants will generally not be privy to each other's private financial information, and should not be required to submit a certification as to the qualification of their joint applicants.

Response: Section 1.29(e) provides that a micro entity status certification must be signed in compliance with § 1.33(b). Section 1.33(b) requires that amendments and other papers filed in the application be signed by: (1) A patent practitioner of record; (2) a patent practitioner not of record who acts in a representative capacity under the provisions of § 1.34; or (3) the applicant (§ 1.42). Section 1.33(b) further provides that all papers submitted on behalf of a juristic entity must be signed by a patent practitioner unless otherwise specified. If the application names more than one inventor and the joint inventors are the applicant under § 1.42(a), a micro entity status certification must be signed by: (1) A patent practitioner of record; (2) a patent practitioner not of record who acts in a representative capacity under the provisions of § 1.34; or (3) all of the inventors.

Comment 17: One comment suggested amending § 1.29(f) to include language permitting the micro entity certification to be filed in response to a notice of fee deficiency mailed by the Office.

Response: Certification of micro entity status can be made at any stage of prosecution, or at any time before or with payment of a maintenance fee after the patent issues. However, a fee may be paid in the micro entity amount only if it is submitted with, or subsequent to, the submission of a certification of entitlement to micro entity status.

Comment 18: Several comments argued that there should be no need to recertify small entity status if micro entity status is lost, because the applicant had to certify small entity status to qualify as a micro entity and the applicant should continue to qualify for small entity status after losing micro entity status.

Response: Section 1.29(i) as adopted in this final rule provides that a notification that micro entity status is no longer appropriate will not be treated as a notification that small entity status is also no longer appropriate unless it also contains a notification of loss of entitlement to small entity status under § 1.27(f)(2). An applicant or patentee who files a notification that micro entity status is no longer appropriate will be treated as a small entity by default unless the notification also contains a notification of loss of entitlement to small entity status under § 1.27(f)(2), thus minimizing burdens on small entity applicants and patentees. An applicant or patentee who is no longer a micro entity or a small entity must provide both a notification under § 1.29(i) of loss of entitlement to micro entity status and a notification under of § 1.27(f)(2) of loss of entitlement to small entity status.

Comment 19: A number of comments indicated that the proposed requirement in § 1.29(g) to determine continued qualification for micro entity status each time a fee is paid was overly burdensome. One comment indicated that this proposed requirement would inevitably lead to additional cost to applicants in prosecuting applications before the Office. Several comments suggested that § 1.29(g) be revised to be similar to small entity practice such that once micro entity status is acquired, fees can continue to be paid in the micro entity amount until the issue fee or any maintenance fee is due, or that micro entity status be permitted to be maintained throughout the calendar year in which micro entity status was established without regard to continued qualification. The comments indicated that an entity that licenses multiple patent applications will need to confirm that each licensee does not have a gross income that exceeds three times the median household income for the preceding calendar year, and that an entity with a patent application naming multiple inventors will need to confirm that each inventor for each application does not have a gross income that exceeds three times the median household income for the preceding calendar year. One comment alternatively suggested that micro entity status be maintained by applicants through the end of a calendar year, even if there has been a change in income status during the calendar year that disqualifies the applicant from a continued claim to micro entity status.

Response: 35 U.S.C. 123(a) does not allow for a provision similar to small entity practice under which once micro entity status is acquired, fees can continue to be paid in the micro entity amount until the issue fee or any maintenance fee is due or that micro entity status be maintained throughout the calendar year in which micro entity status was established without regard to continued qualification. 35 U.S.C. 123(a) requires that a micro entity “not [have] been named as an inventor on more than 4 previously filed patent applications, other than applications filed in another country, provisional applications under 35 U.S.C. 111(b), or international applications for which the basic national fee under 35 U.S.C. 41(a) was not paid” and “not, in the calendar year preceding the calendar year in which the applicable fee is being paid, have a gross income, as defined in section 61(a) of the Internal Revenue Code of 1986 (26 U.S.C. 61(a)), exceeding three times the median household income for that preceding calendar year.” 35 U.S.C. 123(a)(2) and (a)(3). Finally, while applicants with complex licensing arrangements may consider confirming the status of each licensee challenging, this is more a function of the complexity of the licensing arrangement than any complexity in the requirement that a fee may be paid in the micro entity amount only if status as a micro entity as defined in § 1.29(a) or § 1.29(d) is appropriate on the date the fee is being paid.

Comment 20: Several comments objected to the statement in proposed § 1.29(h) that “[i]t should be determined that all parties holding rights in the invention qualify for micro entity status.” One comment stated that proposed § 1.29(h) appears to require an opinion that all parties holding rights in the invention qualify for micro entity status. One comment indicated that because “parties” could include an applicant under 35 U.S.C. 118 not qualifying as a micro entity but filing an application on behalf of an inventor qualifying as a micro entity, the statement should be deleted. Another comment indicated that the sentence cited from § 1.29(h) is redundant and/or inconsistent with the statute as 35 U.S.C. 123(a)(4) expressly includes such a limitation whereas 35 U.S.C. 123(d) does not. The comment also indicated that the sentence cited from § 1.29(h) is inconsistent with § 1.29(d) which would otherwise allow any entity that qualifies for small entity status to obtain the benefits of micro entity status by assigning, granting, or conveying, a license or other ownership interest to a qualified institution of higher education. The comment suggested amending the sentence cited from § 1.29(h) by replacing “qualify for micro entity status” with “qualify for small entity status,” or alternatively, replacing the phrase “all parties holding rights to the invention” with “all applicants.” One comment indicated that “invention” is not the equivalent of “application,” and thus the word “invention” in the phrase “all parties holding rights to the invention” should be changed to “application,” or the Office should provide guidance on the meaning of the expression “rights in the invention.”

Response: The Office is revising this provision to indicate that each applicant must qualify for micro entity status under § 1.29(a) or § 1.29(d), and that each other party holding rights in the application must qualify for small entity status under § 1.27. Note that § 1.27(a)(3) provides for small entity status with respect to nonprofit organizations and is applicable to universities or other institutions of higher education. See § 1.27(a)(3)(ii)(A). 35 U.S.C. 123(e) provides that in addition to the limits imposed by 35 U.S.C. 123, the Director may, in the Director's discretion, impose income limits, annual filing limits, or other limits on who may qualify as a micro entity pursuant to this section if the Director determines that such additional limits are reasonably necessary to avoid an undue impact on other patent applicants or owners or are otherwise reasonably necessary and appropriate. As discussed previously, the Office has determined that requiring all micro entities to qualify as small entities and that all other parties holding rights in the invention qualify for small entity status is reasonably necessary and appropriate to ensure that applicants who do not qualify as a small entity do not inappropriately attempt to take advantage of micro entity status.

Comment 21: One comment indicated that § 1.29(h) is an advisory opinion, and not a statement of any requirement, and thus should be deleted.

Response: Section 1.29(h) requires that each applicant qualify for micro entity status under § 1.29(a) or § 1.29(d), and that each other party holding rights in the application qualify for small entity status under § 1.27, in order for the applicant to make a certification of entitlement to micro entity status. With respect to the small entity status requirement, § 1.27(a) requires that any person or entity claiming small entity status not have assigned, granted, conveyed, or licensed, and is under no obligation under contract or law to assign, grant, convey, or license, any rights in the invention to any person, concern, or organization which would not qualify for small entity status as a person, small business concern, or nonprofit organization.

Comment 22: Several comments indicated that proposed § 1.29(i) is overly burdensome. One comment indicated that proposed § 1.29(i) would require that possible loss of entitlement to micro entity status be evaluated each time a fee is to be paid. One comment stated that the cost of compliance defeats the Congressional purpose of providing for micro entity status and thus proposed § 1.29(i) should be stricken.

Response: Section 1.29(i) requires only that a notification of a loss of entitlement to micro entity status must be filed in the application or patent prior to paying, or at the time of paying, any fee after the date on which status as a micro entity as defined in § 1.29(a) or § 1.29(d) is no longer appropriate. As discussed previously, § 1.29(g) provides that a fee may be paid in the micro entity amount only if status as a micro entity as defined in § 1.29(a) or § 1.29(d) is appropriate on the date the fee is being paid. Section 1.29(i) provides a necessary step for documentation of the cessation of micro entity status.

Comment 23: One comment suggested that § 1.29(i) be amended to permit payments for entity status other than micro entity as sufficient notification of loss of entitlement to micro entity status, without additional correspondence to the Office.

Response: Office experience with small entity payments is that some small entities will occasionally pay patent fees in the full (non-small entity) amounts inadvertently. If mere payment of fees in the full or small entity amount is treated as a notification of loss of entitlement to micro entity status, a micro entity who inadvertently paid a patent fee in the full or small entity amount will thereafter no longer be treated as a micro entity. This could result in increased costs for entities that are entitled to claim micro entity status, and there would be a lack of clear documentation on whether micro entity status has ceased.

Comment 24: Several comments indicated that proposed § 1.29(j) is vague because the proposed rule does not define what constitutes fraud. The comments indicated that the Office should amend the rule to make clear what would constitute fraud. One comment stated that fraud is a legal conclusion including proof of mental state. One comment stated that some small entities not qualifying for micro entity status under § 1.29(a) may be tempted to marginally align with a university in order to take benefit under § 1.29(d), and requested that the Office clarify whether such a strategy would be considered a fraud, even if the letter of the rules is met. One comment requested guidance on what penalties the Office anticipates enforcing in the event that a fraudulent certification is made.

Response: Section 1.29(j) provides that “[a]ny attempt to fraudulently establish status as a micro entity, or pay fees as a micro entity, shall be considered as a fraud practiced or attempted on the Office,” and that “[i]mproperly, and with intent to deceive, establishing status as a micro entity, or paying fees as a micro entity, shall be considered as a fraud practiced or attempted on the Office.” The language in § 1.29(j) parallels the corresponding small entity provision in § 1.27(h), and thus terms “fraudulently” and “fraud” in § 1.29(j) have the same meaning as the terms “fraudulently” and “fraud” in § 1.27(h). The definition of common law fraud is based on the definition discussed by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). See Unitherm Food Systems, Inc. v. Swift-Ekrich, Inc., 375 F.3d 1341, 1358 (Fed. Cir. 2004); In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 807 (Fed. Cir. 2000). Applicants questioning how to resolve close situations or what penalties may result from a fraudulent certification should consider that: (1) The Federal Circuit has noted that an applicant would be “foolish” to claim small entity status if there is the slightest doubt about an applicant ' s entitlement to claim small entity ( DH Tech., 154 F.3d at 1343); (2) depending on future developments in the case law, it is possible that a patent could be held unenforceable as a consequence of a fraud or inequitable conduct relating to a micro entity or small entity certification (this was clearly possible for small entity certifications prior to the Federal Circuit's decision in Therasense, Inc. v. Becton, Dickinson and Co., 649 F.3d 1276 (Fed. Cir. 2011) (s ee, e.g., Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223 (2007), and Ulead Systems, Inc. v. Lex Computer Management Corp., 351 F.3d 1120 (Fed. Cir. 2003)), but the Federal Circuit has not yet decided the question of whether a false declaration of small entity status could constitute inequitable conduct under the Therasense standard ( see Outside the Box Innovations, LLC v. Travel Caddy, Inc., 695 F.3d 1285, 1294 (Fed. Cir. 2012); see also Therasense, 649 F.3d at 1299, n.6 (O'Malley, J., concurring in part and dissenting in part)); and (3) there can be further significant penalties for fraud ( e.g., 35 U.S.C. 257(e) (provides that the matter shall be referred to the Attorney General if the Director becomes aware that a material fraud on the Office may have been committed in connection with a patent that is the subject of a supplemental examination).

Comment 25: One comment stated that with respect to the provisions relating to fraudulent certification (§§ 1.29(g) through (k)), it would be beneficial to clarify the depth of inquiry which is considered acceptable ( e.g., good faith attempt) for a representative of an applicant to obtain in order to sign a certification. The comment indicated that it would be too burdensome on a practitioner to expect more than obtaining verbal affirmation from an applicant that the applicant meets the guidelines for obtaining micro entity status.

Response: The depth of inquiry required for any paper presented to the Office, including a micro entity status certification, is specified in § 11.18. Specifically, § 11.18(b) provides that by presenting to the Office or hearing officer in a disciplinary proceeding (whether by signing, filing, submitting, or later advocating) any paper, the party presenting such paper, whether a practitioner or non-practitioner, is making two certifications. The first certification is that all statements made therein of the party's own knowledge are true, all statements made therein on information and belief are believed to be true, and all statements made therein are made with the knowledge that whoever, in any matter within the jurisdiction of the Office, knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact, or knowingly and willfully makes any false, fictitious, or fraudulent statements or representations, or knowingly and willfully makes or uses any false writing or document knowing the same to contain any false, fictitious, or fraudulent statement or entry, shall be subject to the penalties set forth under 18 U.S.C. 1001 and any other applicable criminal statute, and further that violations of the provisions of this section may jeopardize the probative value of the paper. See § 11.18(b)(1). The second certification is that to the best of the party's knowledge, information and belief, formed after an inquiry reasonable under the circumstances: (1) The paper is not being presented for any improper purpose, such as to harass someone or to cause unnecessary delay or needless increase in the cost of any proceeding before the Office; (2) the other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence, or if specifically so identified, are reasonably based on a lack of information or belief. See § 11.18(b)(2).

Comment 26: Several comments suggested eliminating the requirement under proposed § 1.29(k) that any deficiency payment include an itemization and an accounting of the total deficiency payment. One comment indicated that proposed § 1.29(k) should be revised to parallel the rule that applies to an error in paying a small entity fee when the large entity fee should have been paid. The comment alternatively proposed that the rules could be amended to require: (1) One base fee for rectifying the failure to correct micro entity status, and (2) an accounting of when the change of status occurred.

Response: The fee deficiency payment provisions of § 1.29(k) track the small entity fee deficiency payment provisions of § 1.28(c). The Office needs the itemization to properly apply the fee deficiency payment so that the Office's records for the application or patent will properly show which fees have been paid for the application or patent and in what amount.

Comment 27: One comment suggested the Office establish a database of the various certification types and permit annual updating of applicant status, rather than individual application status. Another comment suggested that § 1.29 be amended to provide for micro entity status certifications contained in patent application assignments recorded under part 3 of 37 CFR.

Response: The suggestions are not currently feasible as inventor or assignee names are not always stated consistently from application to application (either in application papers or in assignment cover sheets). The suggestions will be considered if the Office moves to adopt a system under which there are unique inventor and applicant-assignee designations.

Comment 28: One comment indicated that many practitioners who have participated in the LegalCORPS Inventor Assistance Program (a pilot patent law pro bono program developed with the support of the Office) have seen first-hand that many inventors qualifying for free legal assistance through the program will not be able to file applications electronically, due in part to being unable to make electronic payments via deposit account or credit card. The comment suggested that the final rule could address this issue by providing for electronic filing of documents along with a written certification by the applicant that any fees associated with that filing are being submitted by check deposited in the U.S. mail on the date of application filing.

Response: Electronic filing remains a viable filing option for micro entities, even if the applicant does not have a deposit account at the Office and even if the applicant does not have sufficient access to credit to enable payment by credit card. Fees may be paid by electronic funds transfer (EFT), which requires nothing more than a checking account. However, before making any payments by EFT, an EFT profile must be created at the Office “Office of Finance On-Line Shopping Page” at https://ramps.uspto.gov/eram/. To begin, click the link titled “Create or Modify an EFT Profile” on the “Office of Finance On-Line Shopping Page.” It is important that micro entities and other applicants file their applications electronically via EFS-Web in order to avoid the non-electronic filing fee under § 1.10, which is $400 (and $200 for small and micro entities). Additionally, a small or micro entity that files an application in paper (versus electronically via EFS-Web) will not receive the discount (currently $97.00) available only to small entities that file a patent application electronically.

A. Regulatory Flexibility Act: For the reasons set forth herein, the Deputy General Counsel for General Law of the United States Patent and Trademark Office has certified to the Chief Counsel for Advocacy of the Small Business Administration that changes in this final rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 605(b). The Office did not receive public comments on this certification.

This final rule revises the rules of practice to allow a subset of small entities— i.e., micro entities—to pay further reduced fees, namely, a seventy-five percent discount. This final rule sets out procedures pertaining to claiming micro entity status, paying patent fees as a micro entity, notification of loss of micro entity status, and correction of payments of patent fees paid erroneously in the micro entity amount. This final rule maintains the criteria in 35 U.S.C. 123(a) and (d) for entitlement to file a certification of micro entity status (note also the requirement in 37 CFR 1.29(d)(1) that an applicant claim small entity status in compliance with 37 CFR 1.27 in order to claim micro entity status; see also 37 CFR 1.29(h), 35 U.S.C. 123(e)). This rule also includes clarifications under 37 CFR 1.29(a) to refer to non-applicant inventors and joint inventors. The micro entity procedures in this final rule track to the extent feasible the corresponding small entity procedures under 37 CFR 1.27. Thus, the burden to all entities, including small entities, imposed by this final rule is no greater than those imposed by the pre-existing regulations pertaining to claiming small entity status: paying patent fees as a small entity, notification of loss of small entity status, and correction of payments of patent fees paid erroneously in the small entity amount.

Requiring that an applicant claim small entity status in compliance with 37 CFR 1.27 in order to claim micro entity status under 37 CFR 1.29(d)(1) will not have a significant economic impact on a substantial number of small entities. The Office uses the Small Business Administration business size standard for the purpose of paying reduced patent fees in 13 CFR 121.802 as the size standard when conducting an analysis or making a certification under the Regulatory Flexibility Act for patent-related regulations. See Business Size Standard for Purposes of United States Patent and Trademark Office Regulatory Flexibility Analysis for Patent-Related Regulations, 71 FR 67109, 67109 (Nov. 20, 2006). A small entity for purposes of the Regulatory Flexibility Act analysis is a small entity for purposes of paying reduced patent fees. Therefore, requiring in 37 CFR 1.29(d)(1) that an entity claim small entity status in compliance with 37 CFR 1.27 in order to claim micro entity status will preclude only an applicant or patentee who is a large entity ( i.e., not a small entity) from claiming micro entity status.

The Office estimates that a minority percentage of small entity applications will be filed by paying micro entity fees under this final rule. Based upon the data in the Office's Patent Application Locating and Monitoring (PALM) system, of the approximately 2,498,000 nonprovisional patent applications (utility, plant, design, and reissue) and requests for continued examination filed in total over the last five fiscal years, small entity fees were paid in approximately 669,000 (26.8 percent). Thus, an average of approximately 500,000 nonprovisional patent applications and requests for continued examination have been filed each year for the last five fiscal years, with small entity fees being paid in approximately 134,000 of the nonprovisional patent applications and requests for continued examination filed each year.

As indicated above, this rule provides a procedure for small entities to attain a 75 percent reduction in fees as a micro entity, as provided by statute. The procedures for micro entity status track the existing procedures for small entity status. While the rule impacts the entire universe of small entity applications and patents, the rule is necessary for implementing a further reduction in fees, which is entirely beneficial, and no other provision has an economic impact on the affected small entities.

B. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

C. Executive Order 13563 (Improving Regulation and Regulatory Review): The Office has complied with Executive Order 13563. Specifically, the Office has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rule; (2) tailored the rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole, and provided on-line access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes.

One comment argued that the rulemaking fails to comply with Executive Order 13563 on the grounds that: (1) The Office did not conduct a burden/benefit analysis which includes realistic professional services fees for patent practitioners, the time involved in understanding and complying with the rule, and the sanctions imposed by rule; (2) proposed 37 CFR 1.29 fails to consider the value to society of university inventions, for which 35 U.S.C. 123(d) seeks to provide specific benefits, and which imposes no limits on how a university might seek to exploit its rights; and (3) proposed 37 CFR 1.29 imposes significant burdens for the affected applicants, and is thus not tailored to impose the least burden on society consistent with obtaining the regulatory objectives.

The Office considered costs and benefits to applicants claiming micro entity status (including universities), as well as to all other applicants and the Office in this rulemaking. Executive Order 13563 reaffirms Executive Order 12866. This rulemaking was deemed by OMB as not economically significant as that term is defined in Executive Order 12866 (Sept. 30, 1993). Therefore, the regulatory analysis provided in section 6(a)(3)(C) of Executive Order 12866 and OMB Circular A-4 is inapplicable to this rulemaking. The Office, however, did conduct the regulatory analysis provided in section 6(a)(3)(C) and OMB Circular A-4 for the related rulemaking to set and adjust patent fees under section 10 of the Leahy-Smith America Invents Act. 37 CFR 1.29 does impose the least burden on society consistent with obtaining the regulatory objectives by permitting an applicant to self-certify entitlement to micro entity status, and does not require any further information or certification from the applicant provided that the applicant remains entitled to micro entity status. In addition, having micro entity procedures which track the pre-existing small entity procedures to the extent practicable is less burdensome than fashioning new micro entity procedures. Finally, while having no requirements would arguably impose the least burden on an entity seeking the benefit of micro (or small) entity status, it would not impose the least burden on society overall and would not obtain the regulatory objectives of creating the beneficial option of micro entity status with a seventy-five percent fee reduction as provided by statute.

Revising the regulations as suggested by the comment would expand the scope of micro entity status beyond what the statute allows. It also would not meet the regulatory objectives of ensuring that a for-profit, large entity applicant not become a “micro entity” (and thus obtaining a seventy-five percent discount) merely by licensing or assigning some interest (nominal or otherwise) to an institution of higher education. The Office received comments (including in response to the section 10 rulemaking) in support of the Office imposing additional requirements under 35 U.S.C. 123(e) to avoid sham licensing agreements for the purpose of improperly claiming micro entity status (as improper micro entity claims would result in higher fees for other applicants). Thus, the narrow requirements imposed by the Office under 35 U.S.C. 123(e) are necessary to avoid abuses of micro entity status, and simply eliminating them in the name of reducing burden would not impose the least burden on society overall and would not obtain the regulatory objectives.

D. Executive Order 13132 (Federalism): This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

E. Executive Order 13175 (Tribal Consultation): This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes; (2) impose substantial direct compliance costs on Indian tribal governments; or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000).

F. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

G. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

H. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997).

I. Executive Order 12630 (Taking of Private Property): This rulemaking will not effect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988).

J. Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ), the United States Patent and Trademark Office will submit a report containing this final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. In addition, the United States Patent and Trademark Office will inform the Committee on the Judiciary of the House of Representatives and the Committee on the Judiciary of the Senate of any proposed limits under 35 U.S.C. 123(e) at least three months before any limits proposed to be implemented pursuant to 35 U.S.C. 123(e) take effect.

The changes in this final rule are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this final rule is not a “major rule” as defined in 5 U.S.C. 804(2).

K. Unfunded Mandates Reform Act of 1995: The changes set forth in this rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

L. National Environmental Policy Act: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

M. National Technology Transfer and Advancement Act: The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions which involve the use of technical standards.

N. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) requires that the USPTO consider the impact of paperwork and other information collection burdens imposed on the public. This final rule makes changes to the rules of practice that would impose new information collection requirements involving fee deficiency statements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3549). Accordingly, the Office submitted a proposed information collection to OMB for its review and approval when the notice of proposed rulemaking was published. The Office also published the title, description, and respondent description of the information collection, with an estimate of the annual reporting burdens, in the notice of proposed rulemaking ( See Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR 31812-13).

The Office received one comment on the proposed information collection indicating that the estimate of 3,000 respondents per year was a significant underestimate as every inventor employed outside of large entities will likely be confronted with the various certifications, and that there may be tens of thousands of university professors or university students on work-study who qualify under 35 U.S.C. 123(d).

The information collection requirements discussed in the notice of proposed rulemaking, however, narrowly pertain to the information required for fee deficiency payments based upon the previous erroneous payment of patent fees in the micro entity amount ( See Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR 31812). Based upon the number of applicants and patentees who make fee deficiency payments under existing 37 CFR 1.28(c) (about 2,250 per year), the Office believes that 3,000 respondents per year is a reasonable and conservative estimate of the number of applicants and patentees who make fee deficiency payments under 37 CFR 1.28(c) or 1.29(k).

As discussed in the notice of proposed rulemaking, OMB has determined under 5 CFR 1320.3(h) that the certification of micro entity status ( e.g., Form PTO/SB/15A (gross income basis) or Form PTO/SB/15B (institution of higher education basis) does not collect “information” within the meaning of the Paperwork Reduction Act of 1995 ( See Changes to Implement Micro Entity Status for Paying Patent Fees, 77 FR 31812). The changes adopted in this final rule do not require any further change to the proposed information collection.

Accordingly, the Office has resubmitted the proposed information collection to OMB. The proposed information collection is available at the OMB's Information Collection Review Web site ( www.reginfo.gov/public/do/PRAMain ).

Notwithstanding any other provision of law, no person is required to respond to, nor shall a person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB control number.

For the reasons set forth in the preamble, 37 CFR part 1 is amended as follows:

This action corrects inadvertent omissions in the August 1, 2012, final rulemaking and its associated regulatory text section. Specifically, EPA is correcting the final rule to expressly indicate that the South Carolina Code Annotated Sections described in the June 6, 2012, proposed rule are being incorporated into the South Carolina SIP. 1 See 77 FR 33386. The August 1, 2012, final rule also failed to list these code sections in the regulatory text. Accordingly, this rulemaking corrects that inadvertent omission by adding S.C. Code Ann. Sections 8-13-100(31), 8-13-700(A) and (B), and 8-13-730 to the regulatory text of the August 1, 2012, final rule.

In addition, EPA is correcting the footnote on page 45492 of the final rule which inadvertently listed “April 13, 2012,” as the date of South Carolina's SIP revision. The correct date for South Carolina's SIP revision is April 3, 2012. Through today's notice, EPA is hereby correcting the footnote on page 45492 of the August 1, 2012, final rule to reflect the correct date.

Finally, EPA is correcting the statement on page 45493 of the August 1, 2012, final rule that stated “[t]oday's action is not approving any specific rule, but rather making a determination that South Carolina's already approved SIP meets certain CAA requirements.” Today's rule removes this sentence from the August 1, 2012, final rule and replaces it with a sentence that reads: “EPA is making a determination that South Carolina's SIP meets certain CAA requirements.” See 77 FR 45492.

EPA has determined that today's action falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedure Act (APA) which, upon finding “good cause,” authorizes agencies to dispense with public participation where public notice and comment procedures are impracticable, unnecessary, or contrary to the public interest. Public notice and comment for this action is unnecessary because today's action to correct an inadvertent regulatory text omission included with EPA's August 1, 2012, final rule is consistent with the substantive revisions to the South Carolina SIP described in the proposal to approve certain state statues into the South Carolina SIP as addressing the section 110(a)(2)(E)(ii) state board requirements for the 1997 annual and 2006 24-hour PM 2.5 NAAQS. In addition, EPA can identify no particular reason why the public would be interested in being notified of the correction, or in having the opportunity to comment on the correction prior to this action being finalized, since this correction action does not change the meaning of EPA's analysis or action to approve certain state statues as addressing the state board requirements for the 1997 annual and 2006 24-hour PM 2.5 NAAQS into the South Carolina SIP. EPA also finds that there is good cause under APA section 553(d)(3) for this correction to become effective on the date of publication of this action. Section 553(d)(3) of the APA allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” 5 U.S.C. 553(d)(3). The purpose of the 30-day waiting period prescribed in APA section 553(d)(3) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's action merely corrects an inadvertent omission for the regulatory text of a prior rulemaking by listing these state statues in the regulatory text for the South Carolina SIP. For these reasons, EPA finds good cause under APA section 553(d)(3) for this correction to become effective on the date of publication of this action.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely corrects an inadvertent omission for the regulatory text of EPA's August 1, 2012, final rule to approve certain state statues as addressing the state board requirements for the 1997 annual and 2006 24-hour PM 2.5 NAAQS into the South Carolina SIP, and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule merely corrects an inadvertent omission for the regulatory text of EPA's August 1, 2012, final rule to approve certain state statues as addressing the state board requirements for the 1997 annual and 2006 24-hour PM 2.5 NAAQS into the South Carolina SIP, and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This rule also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This rule merely corrects an inadvertent omission for the regulatory text of EPA's August 1, 2012, final rule to approve certain state statues as addressing the state board requirements for the 1997 annual and 2006 24-hour PM 2.5 NAAQS into the South Carolina SIP, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. In addition, this rule does not involve technical standards, thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule also does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 19, 2013.

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

40 CFR part 52 is amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

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

In this document EPA is issuing an order requiring the submission of various data to support the continuation of the difenzoquat tolerances at 40 CFR 180.369, under section 408 of FFDCA, 21 U.S.C. 346a. Difenzoquat is not currently registered under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136 et seq. The last FIFRA registration for difenzoquat was canceled in 2010. However, 25 FFDCA tolerances remain for residues of difenzoquat on the following commodities: Barley, cattle, goat, hog, horse, poultry, sheep, and wheat (40 CFR 180.369). Because there are currently no domestic registrations for difenzoquat, these tolerances are referred to as “import tolerances.” It is these tolerances that are addressed by the Data Call-In order.

Under section 408(f) of the FFDCA, EPA is authorized to require, by order, submission of data “reasonably required to support the continuation of a tolerance” when such data cannot be obtained under the Data Call-In authority of FIFRA section 3(c)(2)(B), or section 4 of the Toxic Substances Control Act (“TSCA”), 15 U.S.C. 2603. A FFDCA section 408 Data Call-In order may only be issued following publication of notice of the order and a 60-day public comment provision.

A section 408(f) Data Call-In order must contain the following elements:

1. A requirement that one or more persons submit to EPA a notice identifying the person(s) who commit to submit the data required in the order.

2. A description of the required data and the required reports connected to such data;

3. An explanation of why the required data could not be obtained under section 3(c)(2)(B) of FIFRA or section 4 of TSCA.

4. The required submission date for the notice identifying one or more interested persons who commit to submit the required data and the required submission dates for all the data and reports required in the order (21 U.S.C. 346a(f)(1)(C)).

EPA may by order modify or revoke the affected tolerances if any one of the following submissions is not made in a timely manner:

1. A notice identifying the one or more interested persons who commit to submit the data.

2. The data itself.

3. The reports required under a section 408(f) order are not submitted by the date specified in the order (21 U.S.C. 346a(f)(2)).

On July 6, 2012 (77 FR 44181) (FRL-9352-9), EPA issued a proposed Data Call-In order for the pesticide difenzoquat in connection with tolerances for that pesticide under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a. The proposed Data Call-In order included the following studies:

• Neurotoxicity Screening Battery (870.6200).

• Immunotoxicity Study (870.7800).

• Crop Field Trials (860.1500)—(wheat hay, wheat forage, and barley hay).

EPA received no comments in response to the July 6, 2012, Federal Register notice announcing the Agency's proposed Data Call-In order for difenzoquat. In addition, the Agency has not received any of the data identified in the proposed order as needed to support the difenzoquat tolerances.

Because no comments were submitted on the proposal and the data deficiencies identified in the proposed order remain, EPA is issuing this final Data Call-In order under FFDCA section 408(f)(1)(C) for difenzoquat in the same form as the proposed order and for the reasons set forth in that proposed order. Specifically, this order:

1. Requires notice of intent to submit data. A notice identifying the person or persons who commit to submit the data and reports in accordance with Unit IV.2. must be submitted to EPA if any person wishes to support the difenzoquat tolerances. The notice must be submitted on a section 408(f) Order Response Form which is available in the electronic docket, http://www.regulations.gov, under docket ID number EPA-HQ-OPP-2012-0441.

2. Establishes a deadline for submission of notice identifying data submitters. The notice described in Unit IV.1., identifying data submitters, must be submitted to and received by EPA on or before March 19, 2013. Instructions on methods for responding to this order (referred to in this order as a “section 408(f) Order Response Form”) are set out under the ADDRESSES section above.

3. Describes data and reports required to support continuation of the difenzoquat tolerances, requires submission of those data and reports, and establishes deadlines for submission. The table in this Unit describes the data and reports required to be submitted on difenzoquat under this order and the deadlines for the submission of each study and report. The required submission date is calculated from March 19, 2013. Thus, for example, if EPA generally allows 12 months to complete a study, the required submission date for such a study under this order would be 15 months from the date of publication of the order in the Federal Register . Studies, study protocols, and reports should be submitted to the person listed under FOR FURTHER INFORMATION CONTACT .

EPA provided a description of why the required data could not be obtained under section 3(c)(2)(B) of FIFRA or section 4 of TSCA in the proposed order and relies on that description in this final order.

If, by March 19, 2013 the Agency does not receive a section 408(f) Order Response Form identifying a person who agrees to submit the required data, EPA will revoke the difenzoquat tolerances at 40 CFR 180.369. Such revocation is subject to the objection and hearing procedure in FFDCA section 408(g)(2) but the only material issue in such a procedure is whether a submission required by the order was made in a timely fashion.

Additional events that may be the basis for modification or revocation of difenzoquat tolerances include, but are not limited to the following:

1. No person submits on the required schedule an acceptable protocol report when such report is required to be submitted to the Agency for review.

2. No person submits on the required schedule acceptable data as required by the final order.

This action, which requires the submission of data in support of tolerances in accordance with FFDCA section 408, is in the form of an order and not a rule (21 U.S.C. 346a(f)(1)(C)). Under the Administrative Procedures Act (APA), orders are expressly excluded from the definition of a rule (5 U.S.C. 551(4)). Accordingly, the regulatory assessment requirements imposed on a rulemaking do not apply to this action, as explained further in the following discussion.

Because this order is not a “regulatory action” as that term is defined in Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not subject to review by the Office of Management and Budget (OMB) under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011).

This action does not impose additional burdens that require approval by OMB under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ). The information collection activities associated with the order requesting data from any party interested in supporting certain tolerances are already approved by OMB under OMB Control No. 2070-0174, and are identified by EPA ICR No. 2288.01. Burden is defined at 5 CFR 1320.3(b). Under the PRA, an Agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument, or form, if applicable.

Since this order is not a rule under the APA (5 U.S.C. 551(4)), and does 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 order requests data from any party interested in supporting certain tolerances and does not impose obligations on any person or entity including States or tribes; nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. 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 (64 FR 43255, August 10, 1999) and Executive Order 13175 (65 FR 67249, November 9, 2000) do not apply to this order. In addition, this order does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531-1538).

As indicated previously, this action is not a “regulatory action” as defined by Executive Order 12866. As a result, this action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) and Executive Order 13211 (66 FR 28355, May 22, 2001). In addition, this order also does not require any special considerations under Executive Order 12898 (59 FR 7629, February 16, 1994).

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 (NTTAA), (15 U.S.C. 272 note).

The Congressional Review Act, 5 U.S.C. 801 et seq. does not apply because this action is not a rule as that term is defined in 5 U.S.C. 804(3).

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 EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2011-0772 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 February 19, 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 CBI) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2011-0772, by one of the following methods:

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

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

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

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

In the Federal Register of November 9, 2011 (Volume 76, FR 69690) (FRL-9325-1), EPA issued a notice pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 1F7892) by Syngenta Crop Protection, LLC, P.O. Box 18300 Greensboro, NC 27419-8300. The petition requested that 40 CFR 180.434 be amended by establishing tolerances for residues of the fungicide propiconazole, 1H-1,2,4-Triazole, 1-{[2-(2,4-dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]methyl}-, and its metabolites determined as 2,4-dichlorobenzoic acid and expressed as parent compound in or on sugarcane, cane at 1.0 parts per million (ppm). That notice referenced a summary of the petition prepared by Syngenta Crop Protection, LLC, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has proposed a different tolerance level for the reasons explained in Unit IV.D.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue * * *.”

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

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

The toxicology database for propiconazole is adequate for evaluating and characterizing toxicity and selecting endpoints for purposes of this risk assessment. The primary target organ for propiconazole toxicity in animals is the liver. Increased liver weights were seen in mice after subchronic or chronic oral exposures to propiconazole. Liver lesions such as vacuolation of hepatocytes, ballooned liver cells, foci of enlarged hepatocytes, hypertrophy and necrosis are characteristic of propiconazole toxicity in rats and mice. Decreased body weight gain was also seen in subchronic, chronic, developmental and reproductive studies in animal studies. Dogs appeared to be more sensitive to the localized toxicity of propiconazole as manifested by stomach irritations at 6 mg/kg/day and above.

In rabbits, developmental toxicity occurred at a higher dose than the maternally toxic dose, while in rats, developmental toxicity occurred at lower doses than maternal toxic doses. Increased incidences of rudimentary ribs occurred in rat and rabbit fetuses. Increased cleft palate malformations were noted in two studies in rats. In one published study in rats, developmental effects (malformations of the lung and kidneys, incomplete ossification of the skull, caudal vertebrae and digits, extra rib (14th rib) and missing sternbrae) were reported at doses that were not maternally toxic.

In the two generation reproduction study in rats, offspring toxicity occurred at a higher dose than the parental toxic dose suggesting lower susceptibility of the offspring to the toxic doses of propiconazole.

Propiconazole was negative for mutagenicity in the in vitro BALB/3T3 cell transformation assay, bacterial reverse mutation assay, Chinese hamster bone marrow chromosomal aberration assay, unscheduled DNA synthesis studies in human fibroblasts and primary rat hepatocytes, mitotic gene conversion assay and the dominant lethal assay in mice. It caused proliferative changes in the rat liver with or without pretreatment with an initiator, like phenobarbital, a known liver tumor promoter. Liver enzyme induction studies with propiconazole in mice demonstrated that propiconazole is a strong phenobarbital type inducer of xenobiotic metabolizing enzymes. Hepatocellular proliferation studies in mice suggest that propiconazole induces cell proliferation followed by treatment-related hypertrophy in a manner similar to the known hypertrophic agent phenobarbital. Propiconazole was carcinogenic to male mice. Propiconazole was not carcinogenic to rats or to female mice. The Agency has classified propiconazole as possible human carcinogen used the reference dose (RfD) approach for quantification of human risk. Propiconazole is not genotoxic and this fact, together with special mechanistic studies, indicates that propiconazole is a threshold carcinogen. Propiconazole produced liver tumors in male mice only at a high dose that was toxic to the liver. At doses below the RfD, liver toxicity is not expected; therefore, tumors are also not expected.

Propiconazole has low to moderate toxicity in experimental animals by the oral (Category III), dermal (Category III) and inhalation routes (Category IV), is moderately irritating to the eyes (Category III), minimally irritating to the skin (Category IV) and is a dermal sensitizer.

Specific information on the studies received and the nature of the adverse effects caused by propiconazole as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled “Propiconazole Human Health Risk Assessment for an Amended Section 3 Registration on Sugarcane” on pages 12-18 in docket ID number EPA-HQ-OPP-2011-0772.

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

A summary of the toxicological endpoints for propiconazole used for human risk assessment is discussed in Unit B of the final rule published in the Federal Register of Wednesday, May 11, 2011 (76 FR 27261) (FRL-8873-2).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to propiconazole, EPA considered exposure under the petitioned-for tolerances as well as all existing propiconazole tolerances in 40 CFR 180.434. EPA assessed dietary exposures from propiconazole in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. Such effects were identified for propiconazole. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). This dietary survey was conducted from 2003 to 2008. As to residue levels in food, EPA conducted an acute dietary analysis for propiconazole residues of concern using tolerance levels and 100% crop treated for all existing and proposed uses.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA's National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). This dietary survey was conducted from 2003 to 2008. As to residue levels in food, EPA conducted a chronic dietary analysis for propiconazole residues of concern using tolerance levels for some commodities, average field trial residues for the remaining commodities, and 100% crop treated for all existing and proposed uses.

iii. Cancer. EPA determines whether quantitative cancer exposure and risk assessments are appropriate for a food-use pesticide based on the weight of the evidence from cancer studies and other relevant data. Cancer risk is quantified using a linear or nonlinear approach. If sufficient information on the carcinogenic mode of action is available, a threshold or nonlinear approach is used and a cancer RfD is calculated based on an earlier noncancer key event. If carcinogenic mode of action data is not available, or if the mode of action data determines a mutagenic mode of action, a default linear cancer slope factor approach is utilized. Based on the data summarized in Unit III.A., EPA has concluded that a nonlinear RfD approach is appropriate for assessing cancer risk to propiconazole. Cancer risk was assessed using the same exposure estimates as discussed in Unit III.C.1.ii., Chronic exposure.

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

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

Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Screening Concentration in Ground Water (SCI-GROW) model, the estimated drinking water concentrations (EDWCs) of propiconazole for acute exposures are estimated to be 55.78 parts per billion (ppb) for surface water and 0.64 ppb for ground water. For chronic exposures for non-cancer assessments EDWCs are 21.61 ppb for surface water and 0.64 ppb for ground water. For chronic exposures for cancer assessment EDWCs are 13.24 ppb for surface water and 0.64 ppb for groundwater.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Propiconazole is currently registered for the following uses that could result in residential exposures: Turf, ornamentals and in paint.

EPA assessed residential exposure using the following assumptions: Short-term risk to toddlers was assessed for incidental oral and dermal exposure. The highest incidental oral and dermal exposure scenarios are expected from residential use on turf. Short-term risk to adults was assessed for dermal and inhalation residential handler exposure as well as from post-application dermal exposure. Adult handlers have some inhalation exposure; however, based on the low vapor pressure of propiconazole, negligible post application inhalation exposure is anticipated to occur. The highest post application exposure from residential use on turf was used to assess risk to short-term aggregate exposures.

The only residential use scenario that will result in potential intermediate-term exposure to propiconazole is dermal and incidental oral post application exposure to children from wood treatment (antimicrobial use).

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

Propiconazole is a member of the triazole-containing class of pesticides. Although conazoles act similarly in plants (fungi) by inhibiting ergosterol biosynthesis, there is not necessarily a relationship between their pesticidal activity and their mechanism of toxicity in mammals. Structural similarities do not constitute a common mechanism of toxicity. Evidence is needed to establish that the chemicals operate by the same, or essentially the same, sequence of major biochemical events (EPA, 2002). In conazoles, however, a variable pattern of toxicological responses is found; some are hepatotoxic and hepatocarcinogenic in mice. Some induce thyroid tumors in rats. Some induce developmental, reproductive, and neurological effects in rodents. Furthermore, the conazoles produce a diverse range of biochemical events including altered cholesterol levels, stress responses, and altered DNA methylation. It is not clearly understood whether these biochemical events are directly connected to their toxicological outcomes. Thus, there is currently no evidence to indicate that conazoles share common mechanisms of toxicity and EPA is not following a cumulative risk approach based on a common mechanism of toxicity for the conazoles. For information regarding EPA's procedures for cumulating effects from substances found to have a common mechanism of toxicity, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

Propiconazole is a triazole-derived pesticide. This class of compounds can form the common metabolite 1,2,4-triazole and two triazole conjugates (triazolylalanine and triazolylacetic acid). To support existing tolerances and to establish new tolerances for triazole-derivative pesticides, including propiconazole, U.S. EPA conducted a human health risk assessment for exposure to 1,2,4-triazole, triazolylalanine, and triazolylacetic acid resulting from the use of all current and pending uses of any triazole-derived fungicide. The risk assessment is a highly conservative, screening-level evaluation in terms of hazards associated with common metabolites (e.g., use of a maximum combination of uncertainty factors) and potential dietary and non-dietary exposures (i.e., high end estimates of both dietary and non-dietary exposures). In addition, the Agency retained the additional 10X FQPA safety factor for the protection of infants and children. The assessment includes evaluations of risks for various subgroups, including those comprised of infants and children. The Agency's complete risk assessment is found in the propiconazole reregistration docket at http://www.regulations.gov, Docket Identification (ID) Number EPA-HQ-OPP-2005-0497 and an update to assess the addition of the commodities included in this action may be found in docket ID number EPA-HQ-OPP-2011-0072, in the document titled “Common Triazole Metabolites: Updated Dietary (Food + Water) Exposure and Risk Assessment to Address the Amended Propiconazole Section 3 Registration to Add Foliar Use on Sugarcane.”

1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. In the developmental toxicity study in rats, fetal effects observed in this study at a dose lower than that evoking maternal toxicity are considered to be quantitative evidence of increased susceptibility of fetuses to in utero exposure to propiconazole. In the developmental toxicity study in rabbits, neither quantitative nor qualitative evidence of increased susceptibility of fetuses to in utero exposure to propiconazole was observed in this study. In the 2-generation reproduction study in rats, neither quantitative nor qualitative evidence of increased susceptibility of neonates (as compared to adults) to prenatal and/or postnatal exposure to propiconazole was observed. There is no evidence of neuropathology or abnormalities in the development of the fetal nervous system from the available toxicity studies conducted with propiconazole. In the rat acute neurotoxicity study, there was evidence of mild neurobehavioral effects at 300 mg/kg/day, but no evidence of neuropathology from propiconazole administration. Although there was quantitative evidence of increased susceptibility of the young following exposure to propiconazole in the developmental rat study, the Agency determined there is a low degree of concern for this finding and no residual uncertainties because the increased susceptibility was based on minimal toxicity at high doses of administration, clear NOAELs and LOAELs have been identified for all effects of concern, and a clear dose-response has been well defined.

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

i. The toxicity database for propiconazole is complete except for the lack of immunotoxicity and subchronic neurotoxicity studies. In the absence of specific immunotoxicity studies, EPA has evaluated the available propiconazole toxicity data to determine whether an additional database uncertainty factor is needed to account for potential immunotoxicity. There was no evidence of adverse effects on the organs of the immune system in any propiconazole study. In addition, propiconazole does not belong to a class of chemicals (e.g., the organotins, heavy metals, or halogenated aromatic hydrocarbons) that would be expected to be immunotoxicity. Based on the considerations in this Unit, EPA does not believe that conducting a special Harmonized Guideline 870.7800 immunotoxicity study will result in a POD less than the NOAEL of 10.0 mg/kg/day used in calculating the cPAD for propiconazole, and therefore, an additional database uncertainty factor is not needed to account for potential immunotoxicity.

ii. In the absence of the subchronic neurotoxicity study, EPA has evaluated the available propiconazole toxicity data to determine whether an additional database uncertainty factor is needed to account for potential neurotoxicity after repeated exposures. With the exception of the developmental studies in the rat, there were no indications in any of the repeated dose studies that propiconazole is neurotoxic. In the developmental studies in the rat, there were some clinical signs of neurotoxicity at 300 mg/kg/day but not at lower doses. Further, there is no evidence of neuropathology or abnormalities in the development of the fetal nervous system from the available toxicity studies conducted with propiconazole. In the rat acute neurotoxicity study, there was evidence of mild neurobehavioral effects at 300 mg/kg, but no evidence of neuropathology from propiconazole administration. Based on the considerations in this Unit, EPA does not believe that conducting a Harmonized Guideline 870.6200b subchronic neurotoxicity study will result in a POD less than the NOAEL of 10 mg/kg/day used in calculating the cPAD for propiconazole, and therefore, an additional database uncertainty factor is not needed to account for potential neurotoxicity from repeated exposures.

iii. Although an apparent increased quantitative susceptibility was observed in fetuses and offspring, for the reasons noted in this Unit residual uncertainties or concerns for prenatal and/or postnatal toxicity are minimal.

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

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

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to propiconazole will occupy 79% of the aPAD for children 1-2 years old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to propiconazole from food and water will utilize 21% of the cPAD for children 1-2 years old the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of propiconazole is not expected.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Propiconazole is currently registered for uses that could result in short-term residential exposure and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water and with short-term residential exposures to propiconazole. Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposure result in aggregate MOEs of 200 for children and adults.

4. Intermediate-term risk. The only residential use scenario that will result in potential intermediate term exposure to propiconazole is post application exposure to children from wood treatment (antimicrobial use). The aggregate MOE is 120, which is greater than the target MOE of 100. Therefore, this scenario is not of concern.

5. Aggregate cancer risk for U.S. population. Propiconazole is classified as a possible human carcinogen with risk quantitated using a reference dose (RfD) approach, this determination is further explained in section III.C.1.iii. As noted in Unit III.E.2., chronic exposure is below the cPAD.

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

Adequate enforcement methodology, a high performance liquid chromatography with ultraviolet detection method (HPLC/UV Method AG-671A) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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

The Codex has established MRLs for propiconazole per se in or on sugarcane, cane at 0.02 ppm. These MRLs are different than the tolerances established for propiconazole in the United States. Codex MRLs apply only to applications by seed piece treatment for sugarcane. The Agency considers seed piece treatment to be a non-food use and did not set a tolerance for that use. In the U.S., application to sugarcane is by foliar spray. This results in higher residues in sugarcane, and thus EPA has established a higher tolerance level for propiconazole on sugarcane than the Codex MRL.

No comments received.

The petitioned for tolerance level of 1.0 ppm has been revised to 0.40 ppm. The Organization for Economic Cooperation and Development tolerance calculation procedures were utilized in determining the appropriate tolerance level for the requested amended use. Changes in recommended tolerance are based on the use of these calculation procedures. Additionally, the registrant made a calculation error in choosing the tolerance value.

Therefore, tolerances are established for residues of propiconazole, 1-[[2-(2,4-dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]methyl]-1H-1,2,4-triazole), in or on sugarcane, cane at 0.40 ppm.

This final rule establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

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

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq. ).

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

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

Therefore, 40 CFR chapter I is amended as follows:

On February 22, 2006, FRA presented, and the Railroad Safety Advisory Committee (RSAC) accepted, the task of reviewing existing locomotive safety needs and recommending consideration of specific actions useful to advance the safety of rail operations. The RSAC established the Locomotive Safety Standards Working Group (Working Group) to handle this task. The Working Group met twelve times between October 30, 2006, and April 16, 2009. The Working Group successfully reached consensus on the following locomotive safety issues: locomotive brake maintenance, pilot height, headlight operation, danger markings placement, load meter settings, reorganization of steam generator requirements, and the establishment locomotive electronics requirements based on industry best practices. The full RSAC voted to recommend the consensus issues to FRA on September 10, 2009, which were incorporated into the notice of proposed rulemaking (NPRM) issued in this proceeding on January 12, 2011. See 76 FR 2199. The specific regulatory language recommended by the RSAC was amended slightly for clarity and consistency. FRA independently developed proposals related to remote control locomotives, alerters, and locomotive cab temperature, issues that the Working Group discussed, but ultimately did not reach consensus. Id. Many comments were submitted to the public docket in response to the NPRM. The comment period closed on March 14, 2011, and after considering the public comments FRA issued a final rule on April 9, 2012. See 77 FR 21312.

In accordance with the provisions of Executive Order (E.O.) 13563, the final rule also modified the existing Locomotive Safety Standards based on what was been learned from FRA's retrospective review of the regulation. E.O. 13563 requires agencies to review existing regulations to identify rules that are overly burdensome, and when possible, modify them to reduce the burden. As a result its retrospective review, FRA determined that reductions in the burdens imposed on the industry could be achieved by modifying the regulations related to periodic locomotive inspection and locomotive headlights. FRA continues to believe that the modifications related to periodic locomotive inspection and locomotive headlights that are contained in the final rule do not reduce railroad safety.

Following publication of the final rule, parties filed petitions seeking FRA's reconsideration of some of the final rule's requirements. Petitioners included: The American Association for Justice (AAJ), the Association of American Railroads (AAR), the Central Railway MFG (CRM), D. P. Honold (Honold), David Lombardi (Lombardi), Paul, Reich & Myers, P.C. (PRM), Wabtec Corporation (Wabtec), and the ZTR Equipment Management (ZTR). The petitions filed by these parties principally relate to the following subject areas: locomotive electronics; locomotive alerters; remote control locomotives; periodic inspection of locomotives; preemption of State law; and, locomotive diesel exhaust. In addition to the issues raised in the petitions, FRA has determined that clarification or modification of the final rule is needed with respect to placement of the air flow method (AFM) indicator calibration date on the Form 6180-49A; the duration of the remote control locomotive (RCL) audio indication; and the date by which railroads and vendors must notify FRA regarding electronic locomotive control products that are under development. This document responds to all the issues raised in the petitions for reconsideration and clarifies and amends certain sections of the final rule in response to some of the issues raised in the petitions and clarifies certain other final rule requirements.

In response to the petitions for reconsideration, FRA is modifying the Locomotive Safety Standards final rule related to: § 229.303, Applicability of the Locomotive Electronics; § 229.305, Definition of New or Next-Generation Locomotive; § 229.140(d), Locomotive Alerters; § 229.15(b)(4), RCL Conditioning Run; § 229.15(a)(12)(xii), RCL Audio Indication; and, § 229.23(b)(2) Mechanical Inspection. FRA respectfully refers interested parties to the agency's section-by-section analysis of the final rule and the NPRM for a full discussion of those aspects of the rulemaking that remain unchanged. See 76 FR 2199 and 77 FR 21312. The following is a discussion of each of the issues raised in various petitions for reconsideration. These discussions should be read in conjunction with the specific section-by-section analysis that identifies the specific modifications or clarifications being made to the text of the final rule.

Several of the petitions request clarification or revision of certain requirements related to locomotive electronics. FRA's responses to each of the requests that were made in the petitions are provided in this discussion and the specific regulatory changes or modifications are discussed in the section-by-section analysis. For discussion purposes, the responses have been grouped into seven general categories: (1) Responsibility and Applicability, (2) Definitions, (3) Safety Analysis, (4) Appendix F, (5) Confidentiality and Other Product Development Issues, (6) Small Businesses, and (7) Training.

AAR's petition recommends that FRA “place responsibility for compliance [with the locomotive electronics requirements that are contained in part 229, subpart E (Locomotive Electronics Requirements)] on the suppliers instead of the entities merely purchasing products.” According to the AAR, it “is illogical to hold railroads responsible for compliance [with the Locomotive Electronics Requirements] for products they do not produce;” and, it is ineffective to “hold railroads responsible for products developed by other companies since individual railroads will not have the complete picture of problems or developments associated with the products.”

FRA declines to adopt the AAR's recommendation to place responsibility for compliance with the Locomotive Electronics Requirements with only the suppliers and denies this portion of AAR's petition. The purpose of the Locomotive Electronics Requirements is to ensure that safety critical electronic locomotive control systems, subsystems, and components are designed, operated, and maintained to promote the safe functioning of these systems. FRA believes that both the railroads and suppliers play an important role in ensuring the safety of these systems and that both need to be responsible for properly fulfilling their respective roles.

The final rule provides that a railroad shall develop a Safety Analysis (SA) of each product created in conjunction with safety-critical electronic control systems, subsystems, and components, See § 229.301(a)-(b). Section 229.7(b) of the existing regulation provides that, “any person (including but not limited to a railroad; any manager, supervisor, official, or other employee or agent of a railroad; any owner, manufacturer, lessor, or lessee of railroad equipment, track, or facilities; any independent contractor providing goods or services to a railroad; and any employee of such owner, manufacture, lessor, lessee, or independent contractor)” who violates any requirement of part 229 or of the Locomotive Inspection Act or causes the violation of any such requirement can be subject to civil penalties to the same extent as the railroad. Thus, the onus of responsibility for ensuring safety compliance does not lie solely on the railroads. Compliance is a responsibility shared between the railroads, suppliers, manufacturers, and contractors to ensure the safe handling and functioning of locomotives for industry employees and the public.

For enforcement purposes, FRA retains the authority to determine which entity is more culpable for non-compliance related to a specific product and focus enforcement efforts on that entity or a group of entities. The determination would be based on a fact specific analysis that weighs each entity's role in the non-compliance. However, FRA retains the authority and discretion to hold each and every entity responsible for non-compliance, as provided for in § 229.7(b).

While FRA does acknowledge that the supplier will most likely prepare the initial SA for the product, it is the railroad that makes the final determination of where, when, and how a supplier's product is used. The supplier may, or may not, be fully aware of the manner in which the product is used, nor can it ensure that a product is being used within the design limitations laid out for the product. If, for a given product, the railroad always utilizes the supplier's product within the design limitations as laid out in the SA, implements all of the suppliers design changes as they occur, and does not implement third-party changes that are outside the scope of the SA, then no action would be required by the railroad. The SA would either remain unchanged as in the first case, or would have been updated by the supplier or third-party in the later cases when the supplier or third-party implemented the product change.

Only the railroad would know if they choose not to implement all product design changes specified by a manufacturer, choose to implement additional third party changes to the supplier's product, or choose to use the product in a manner not foreseen in the supplier's SA. If such choices are made by a railroad, the railroad would responsible for ensuring the safety of the product. To comply with these requirements, the railroad may choose to make the changes to the SA to address the changes themselves, it may have the supplier revise the SA to account for the railroad's actions, or it may have a third-party revise the SA to address the differences between the railroad's actual use and the suppliers design use.

Section 229.307(a) of the final rule requires that the railroad develop the SA for a product prior to its use. The railroad is not prohibited from delegating authority for creating or modifying the SA. While a supplier may have contractual obligations to a railroad for providing and maintaining a product that meets a minimum level of safety designated by the railroad, it is ultimately the railroad that makes the determination to: accept or reject the product; place the product in use; and, maintain the product in such a manner to ensure the safety and integrity of the product. FRA recognizes the possibility exists that a supplier may discontinue support for its product for any number of reasons. For example, the supplier may leave the market place. Such an action by a supplier does not preclude the railroad from continuing to operate and maintain the product despite the lack of a responsible supplier. In such a situation, while the railroad remains responsible for the SA, there is no requirement that it modify the SA as provided for in the regulation, electing to have the changes made by a third-party. It is only in the situation where there is no vendor or third-party available that the railroad alone must execute necessary changes to the SA.

Similarly, § 229.309(a) of the final rule places responsibility on the railroad for product changes that are accepted by a railroad. As with § 229.307(a), § 229.309(a) does not prohibit the railroad from delegating responsibility for the SA changes to the supplier or a third party designated by the railroad. FRA recognizes that the supplier is in the best position to aggregate reported product failures and safety hazards. However, the individual railroads that are using the product are in the best position to note the occurrence of a product failure. During operation, when a safety hazard exists, it is also the railroad that is utilizing the product that is best able to determine what immediate actions are necessary to ensure the safety of the crews and public pending final resolution of the problem by the supplier.

Suppliers and other parties are required to aggregate and report problems associated with a product to the railroads, so the railroads may determine what the appropriate course of action is to take in their specific circumstances. See § 229.309(b) and (c). Suppliers that fail to make these reports to the potentially affected railroads are potentially subject to enforcement action by FRA. FRA believes that actions by suppliers and other parties that amount to hidden recalls are unacceptable. Such actions place individual railroads in an untenable position.

FRA also discourages duplicate submissions of SAs for the same product. There is no requirement to submit a SA to FRA unless one is specifically requested by FRA. Indeed, § 229.311(a) was clearly intended to not require action by FRA. The SA is assumed to have been reviewed and approved by the railroad. FRA does not believe the requirement that the railroad review and approve the SA to be especially onerous, and believes that it reflects what would be appropriate risk mitigation actions by the railroad. FRA finds it extremely unlikely that a railroad would knowingly use a supplier product without understanding the potential hazards and limitations of a product—information that would be specifically detailed in the SA. FRA also believes that the railroad will maintain the SA for the life of the product's use on the railroad. The information in the SA will provide a written record of a products design and safety limitations and hazards to all personnel not intimately involved with the initial acquisition.

In its petition, Wabtec requests that the final rule be changed to eliminate § 229.303(c). According to Wabtec, the railroad and the supplier should not be responsible for evaluating whether products or product changes will result in degradation of safety, or a material increase in safety-critical functionality. FRA believes that it is the responsibility of the railroad and the supplier to evaluate all products with regards to their safety functionality irrespective of the presence or lack of a prior formal SA as required by this regulation. Product changes must be evaluated to determine if they change the level of safety provided, and if the change is such that it results in degradations in safety, or an increase in safety functionality, the product should be formally evaluated and documented in a SA. FRA declines to make any change based on the Wabtec request and denies this portion of Wabtec's petition.

Wabtec also requests that the final rule be changed to exempt products that undergo minor changes from the SA requirements contained in subpart E. As stated in the preamble to the final rule, “products with slightly different specifications that are used to allow the gradual enhancement of a product's capability do not require a full safety analysis.” See 77 FR 21331. FRA's intent in the final rule is not to require a full SA for minor product changes or enhancements. However, FRA remains concerned that a series of minor changes over time may result in a major change in functionality from that initially defined and justified in the original SA. As a consequence, FRA does not agree with providing a general exemption as requested by Wabtec and denies Wabtec's petition on this issue. At some point, cumulative changes over time may require a new SA to be developed.

In its petition, Wabtec requests that FRA clarify the language contained in § 229.303(a)(1) of the final rule, which states that “products that are in service prior to June 8, 2012” are exempt from the locomotive electronics requirements contained in subpart E. According to Wabtec, the exemption should apply to products that have been fully developed prior to June 8, 2012. FRA agrees that it intended the final rule to cover products that are fully developed by June 8, 2012, although the products may not yet be in service and agrees to change the language contained in § 229.303(a)(1) to clarify the intent of the final rule. Thus, FRA grants Wabtec's petition in this regard and this document changes the language contained in § 229.303(a)(1) of the final rule to state that “products that are fully developed prior to June 8, 2012” are exempt from the locomotive electronics requirements contained in subpart E.

Wabtec's petition also requests that FRA clarify the language contained in § 229.303(a)(2) of the final rule, which states that “products that are under development as of October 9, 2012, and are placed in service prior to October 9, 2017” are exempt from the locomotive electronics requirements contained in subpart E. According to Wabtec, the exemption should apply to products that have been fully developed prior to October 9, 2017. FRA agrees that it intended for the final rule to cover products that are fully developed by October 9, 2017, even though they may not be in service as of that date and agrees to change the language contained in § 229.303(a)(2) to clarify the intent of the final rule. Thus, FRA grants Wabtec's request and this document modifies the language contained in § 229.303(a)(2) to state that “products that are fully developed prior to October 9, 2017” are exempt from the locomotive electronics requirements contained in subpart E.

The AAR requests that FRA clarify the definition for the term “new or next-generation locomotive” that is provided in § 229.305 of the final rule. According to the AAR, a definition is provided for the term, but the term is not used in subpart E and that there is no need to define a term, if it is not used in the subpart. FRA agrees, grants AAR's petition in this regard and removes the term “new or next-generation locomotive” from § 229.305 in this document.

ZTR requests that FRA clarify the definition of the term “safety-critical” as it is used in the final rule. FRA believes that the definition that is provided in § 229.305 of the final rule is clear and believes that ZTR's petition fails to explain the definition's lack of clarity. In its petition, ZTR simply states that the definition of “safety-critical” is not clear to ZTR, when it considers its entire product line, including systems and subsystems. FRA's understanding is that generally, locomotive manufacturers consider their product to be the entire locomotive. This includes systems and subsystems. In this situation, the manufacturers' extensive knowledge of the product allows them to conduct a safety analysis on the safety critical elements, including locomotive control systems. Similarly, major suppliers to locomotive manufacturers are also familiar with their own products. They too can clearly identify the safety critical elements and conduct the safety analysis accordingly. Safety-critical electronic systems include, but would not be limited to: Directional control; graduated throttle or speed control; graduated locomotive independent brake application and release; train brake application and release; emergency air brake application and release; fuel shut-off and fire suppression; alerters; wheel slip/slide applications; audible and visual warnings; remote control locomotive systems; remote control transmitters; pacing systems; and speed control systems.

While these provide general examples, any specific item must be considered in the context of its use. For example, fuel injectors might possibly be considered as providing “fuel shut off.” However, in the context of the entire locomotive, they do not act as the primary means of “fuel shut off,” but rather are an element of the engine, the fuel to which is controlled by a separate independent control system. In this situation the injector's would clearly not be safety-critical, while other elements of the fuel control system may. FRA believes that manufacturers are capable of determining which elements of their product line contain safety critical elements, and which ones do not. As such, FRA denies this portion of ZTR's petition and declines to change the definition of “safety critical.”

Wabtec requests that FRA revise the definition of the term “product” that is contained in § 229.305 of the final rule to clarify what is meant by the phrase “directly related to” that is used in the definition. In the final rule, the term “product” means “any safety critical electronic locomotive control system, subsystem, or component, not including safety critical processor based signal and train control systems, whose functions are directly related to safe movement and stopping of the train as well as the associated man-machine interfaces irrespective of the location of the control system, subsystem, or component.” (Emphasis added). FRA believes that the definition of the term “product” is clear and is denying this portion of Wabtec's petition and declines to revise the definition.

The locomotive electronics requirements contained in subpart E are performance based. They are intended to address the application of products, processes, and technologies that have already been identified as well as new and emergent products, processes, and technologies not yet identified. They are also intended to address the application of products, processes, and technologies in manner different than they are currently being used. FRA believes that it is not possible to envision all possible applications of a technology and enumerate all possible products arising from that technology. FRA believes that any enumeration as requested in Wabtec's petition would be inappropriate.

According to ZTR's petition, due to the complexity and vastness of the certifications required by Appendix F to part 229 of the final rule, each railroad could have their own SA, and in some cases, they could conflict across the same product line. ZTR requests that FRA revise the final rule to resolve this potential conflict.

FRA agrees that there may be differences not only in a product line, but also for the same product. FRA also believes that different railroads may require different levels of detail from their suppliers. However, FRA does not see where this should be an issue for a supplier as it reflects the reality of the market place. Currently, when different railroads purchase the same products from the same vendor, each railroad may require unique customizations to suit that railroads business and operational needs. Different railroads may have different standards for “due diligence,” and therefore, may require different degrees of granularity of the information provided by the vendor. FRA does agree that different elements of a product line may have a different SA based on the complexity of the product and its intended use by the railroad. However, FRA believes that requiring a SA which addresses the complexity and intended use of the product by a railroad is critical to ensuring that the product's safety functionality not only operates correctly, but does so in the environment which the railroad intends it to be used. This type of customized analysis becomes especially critical if different railroads desired to use the product in different manners to support the railroads operations.

Without this type of customization, the risk exposure of the railroad, the railroads employees, and the public, cannot be determined by either the railroad or FRA. Generally, only a single inclusive SA that addresses the different use cases for the products used by the different railroads is required. FRA would recognize as acceptable any appropriately inclusive SA done under the auspices of one railroad, or a consortium of railroads.

ZTR's petition also states that because FRA's approval of the SA is “open-ended,” it is subject to interpretation by each individual reviewer and may be inconsistent. Section 229.311(b) of the final rule is intended to limit FRA's review of SAs. FRA reemphasizes that it conducts reviews of SAs on a case-by-case basis, and does not formally approve or disapprove SAs. FRA anticipates that the railroad will exercise due diligence in the design and review process prior to placing the product in use for purposes that are outside of the scope of subpart E. A vendor's railroad customer therefore would determine the level of detail necessary in a SA to prove that they have demonstrated due diligence prior to a product change, or placing a new or next generation product in use. Because individual railroads may have different expectations as to what is required to them to demonstrate due diligences, any SA, by necessity will be subject to differing interpretations and differing degrees of granularity. This, of course, does not restrict FRA review where it appears that due diligence has not been exercised, there are indications of fraud or malfeasance, or the underlying technology or architecture represent significant departures from existing practice.

Also, as previously indicated, the locomotive electronics requirements that are contained in subpart E of the final rule are performance based, and therefore, are by their very nature somewhat open-ended. As its name implies, performance based regulation and oversight is an approach that focuses on performance, as well as the desired results and outcomes. This approach differs from the traditional, prescriptive regulatory and oversight approach in that it emphasizes what must be achieved, rather than how the desired results and outcomes must be obtained. As is the case with any such regulatory and oversight approach, a variety of different issues and concerns can exist that reflect the specific concerns of the overseeing organization. Issues that concern the frequency and nature of reviews and inspections, the style of interaction of inspectors and inspected entities, the way in which sanctions are used, and the willingness of organizations responsible for to accept alternative approaches to accomplishing the same end will differ.

In the specific context of FRA regulatory oversight, any regulatory approach must confront a fundamental issue of how tight controls should be in promoting consistency and accountability versus how much discretion should be granted in promoting flexibility and innovation. As discussed in detail below, the performance based approach to regulation moves this balance from promoting consistency and accountability under current prescriptive approaches toward a greater emphasis on flexibility and innovation. At issue for any particular regulatory situation is how that balance is being struck.

FRA fully recognizes the reality that this regulation rests on what FRA inspectors do in the field when enforcing the regulation and monitoring performance, and that this is where the potential for inequities and inconsistencies exist. FRA also recognizes that regulated entities will react negatively to the lack of predictability if performance based regulations are inconsistently interpreted. However, FRA also believes that regulated entities will see little improvement over the prior more prescriptive regulations, if performance based regulations are interpreted too narrowly in allowing for a limited range of solutions. While there is the risk that there may be some inconsistencies, FRA believes the potential benefits of greater effectiveness in reaching specific regulatory objectives, flexibility in the means of adhering to the regulation, increased incentives for innovation, and reduced costs of compliance for regulated entities far outweigh the risks of inconsistencies in the application of regulations.

ZTR's petition also requests that FRA clarify when a “grandfathered” system may have to undergo a SA due to design change. FRA clarifies as follows; FRA believes that the evaluation of a product must be done on a case-by-case basis within the context of the proposed use of the product. Products that result in degradation of safety or a material increase in safety critical functionality are not exempt. Products with slightly different specifications that are used to allow the gradual enhancement of the product's capabilities do not require a full SA but do require a formal verification and validation to the extent that the changes involve safety-critical functions. The grandfathering provision does not apply to new or next-generation locomotive control system, which refers to locomotive control products using technologies or combinations of technologies not in use on the effective date of this regulation, products that are under development as of October 9, 2012, and are fully developed by October 9, 2017, or products without established histories of safe practice. Traditional, non-microprocessor systems, as well as microprocessor and software based locomotive control systems that are currently in use have used existing technologies, existing architectures, or combinations of these to implement their functionality are grandfathered.

Wabtec's petition notes that FRA is silent on the estimated costs of preparing and maintaining a SA that is required by the final rule. FRA believes that the requirements that are contained in subpart E related to the SA represent good engineering practice for safety-critical systems, and that the costs of such an effort are a normal part of the system design lifecycle. Meeting these requirements represents an exercise of the due diligence required on the part of the railroad and/or supplier to minimize product liability. FRA believes that by allowing for broad flexibility in the specific standards, processes, and procedures used by the railroad and vendor, the railroad and vendors can accomplish this in a manner which both satisfies good engineering practice and is consistent with the railroads and vendors business philosophy. As such, FRA disagrees with Wabtec's petition, which alleges that the SA requirements are so inflexible that they will result in significant product cost increases or decreases in vendor profitability. FRA believes that virtually all companies developing safety critical systems currently conduct a comprehensive SA as an integral part of its products lifecycles. FRA does not specify any particular format for the SA, so there should be no additional costs for preparing documents that the suppliers are presently preparing in the normal course of their business.

In its petition, ZTR contends that there is too much room for interpretation in regards to the number and level of certifications suggested in Appendix F for any and all products. ZTR asserts that it's not clear whether 5% or 95% of these certifications will be requested, or whether they will be requested for simpler or more complex products. Contrary to ZTR's assertion, there is no requirement in the final rule for certification by the FRA, or the railroad purchasing a product for electronic systems covered by part 229. There is a requirement that the railroads “* * * shall develop a Safety Analysis (SA) for each product subject to this subpart prior to the initial use of such product on their railroad.” The requirements contained in the final rule hold individual railroads accountable for ensuring that an appropriate SA for products that they buy has been done and the analysis is

FRA involvement in the review process of a railroad's SA is on a case-by-case basis. See § 229.311(b) of the final rule. ZTR is correct in noting that that the regulation does not specify the scope of the SA. Such specificity would be inconsistent with the performance based nature of the regulation. The scope of a SA will vary greatly depending upon the function of the product in question, the safety criticality of its elements, its implementation, and good engineering practice.

FRA notes that the use of Appendix F is not mandatory. Appendix F offers one approach to developing a SA. There are a number of equally effective or better approaches. FRA encourages railroads and manufacturers to select an approach best suited to their business model. FRA would consider as acceptable any approach that would be equal to, or more effective than, the one outlined in Appendix F. As such, FRA is denying those portions of the petitions requesting modification of the appendix and declines to revise Appendix F of the final rule.

Wabtec requests that FRA revise the final rule to standardize an approach to developing a SA and the appropriate level of human factors analysis. As FRA states in both the preamble and the rule text to the final rule, Appendix F represents only one possible set of minimum recommended practices for design and safety analysis. FRA recognizes that there may be any number of practices in use both within and outside the railroad industry that can be used to demonstrate the same or better levels of safety. FRA also recognizes that the practices and standards that should be implemented may vary depending on the safety criticality and sensitivity of the product in question. Rather than mandate that all railroads and suppliers adopt the same standards and practices for all products, regardless of the product in question and the railroads and vendors already defined standards and processes, FRA believes it is more appropriate to outline representative general standards and requirements and address specific standards on a case-by-case basis. Therefore, FRA denies Wabtec's petition in this regard and declines to revise the final rule. That said, FRA would not be adverse to the industry's use of a specific railroad industry standard that provides the same or equivalent level of functionality, if such a standard were developed and approved by the industry.

Wabtec's petition also requests that FRA revise the final rule to specify a single applicable standard for verification and validation of products. FRA believes that the latitude granted in the final rule enables railroads and vendors to accomplish the requirements in a manner that not only satisfies the technical requirements, but also is consistent with the railroads and vendors existing business practices. FRA continues to believe that mandating a single standard without due regard to existing business practices and engineering philosophies would actually result in increased costs as well as decreased innovation. Thus, FRA denies Wabtec's petition on this issue and FRA declines to make any change to the final rule. FRA notes that it would not be adverse to the industry's use of a specific railroad industry standard that provided the same or equivalent level functionality, if such a standard were developed and approved by industry.

The petitions of both ZTR and Wabtec express concerns regarding the intellectual property protection and public disclosure of design documentation, as well as development plans without any guarantee of confidentiality. The SA and associated documentation is primarily shared between the supplier and its railroad customer and covered by mutually agreed non-disclosure agreements. To ensure confidential treatment by FRA of business sensitive information that is provided to FRA, a request for confidential treatment should be made as instructed by 49 CFR 209.11. Thus, FRA believes that no change to the final rule is necessary. It is the responsibility of the railroad and their suppliers to clearly designate what elements of a submission to FRA should be exempted from a public request and the basis of such an exemption.

ZTR also expresses concern that the final rule will negatively impact the nimbleness of product development for suppliers and most certainly will reduce the amount of Research and Development (R&D) invested in rail. According to the ZTR, there is already a substantial risk on the part of the supplier during the R&D stages of product development. The outcome of this ruling will require that at the beginning of the R&D cycle, the effort and cost required to understand and satisfy the SA must be clearly understood. FRA disagrees. The regulation places no restrictions on the type and nature of research and development that may be undertaken. The regulation does require that products resulting from R&D and development efforts are proactively designed and built to demonstrate they can meet an acceptable level of safety over the life of the product. Proven safety methods and techniques are used to prevent, eliminate and control hazards. Such safety considerations begin at the initial design stages of a project. Although design cannot eliminate unsafe acts by irresponsible employees, it can incorporate measures to reduce the individual's ability to take a risk.

One of the biggest challenges to life cycle safety is cost. The influences to overall project/system safety considerations have more of an impact and cost less when factored into the mix early on. Using this cost influence concept allows designers to minimize cost impact while positively influencing the safety considerations and implementations to systems and projects. However, cutting too many costs at the design level can compromise workers' safety and result in long-term economic losses associated with system downtime, on-site design repairs, and injury to workers that may result in legal action. Obviously, cutting too many corners can be more costly and unsafe than if the original budget had provided sufficient funding for life cycle safety.

According the ZTR's petition, safety originates from certainty and therefore railroad safety requirements need to be clearly spelled out and not subject to interpretation. This knowledge would enable more intelligent decision making when evaluating and moving forward with R&D investments. It also would keep product costs to a minimum, while ensuring safety is at the forefront. Again, FRA disagrees. System safety begins the structured assessment of potential hazards and risks with the aim to design out problems at source rather than incorporate measures at a later time to deal with a problem. The approach uses systems theory and systems engineering to prevent foreseeable accidents and to minimize the result of unforeseeable accidents. Losses in general, not just human death or injury are considered. Such losses may include destruction of property, loss of mission, and environmental harm.

The design goal is the management of hazards: Their identification, evaluation, elimination, and control through analysis, design and management procedures. Safety considerations must be part of the initial stage of concept development and requirements definition. The degree to which it is economically feasible to eliminate a hazard rather than to control it depends upon the stage in system development at which the hazard is identified and considered. Early integration of safety considerations into the system development process allows maximum safety with minimal negative impact. The alternative is to design the product, identify the hazards, and then add on protective equipment to control the hazards when they occur, which is usually more expensive and less effective.

According to the CRM's petition, the requirements contained in the final rule related to locomotive electronics do not take into account the limited resources of small railroad suppliers and favor conglomerate suppliers that are currently in the market place. FRA has exempted currently existing products from the requirement to create a SA and provided a grace period for products already under development and will be fully developed by October of 2017. For changes to existing products, the need for a SA has been limited to changes that result in degradations in safety or an increase in safety functionality. FRA recognizes that there may be any number of practices in use both within and outside the railroad industry that can be used to create a SA and demonstrate the same or better levels of safety. FRA also recognizes that the practices and standards that should be implemented may vary depending on the safety-criticality and sensitivity of the product in question. Rather than mandate all railroads and suppliers adopt the same standards and practices for all products, regardless of the product in question and the railroads and vendors already defined standards and processes, FRA believes it is more appropriate to outline representative general standards and requirements and address specific standards on a case-by-case basis. To that end, FRA has indicated in both the preamble and the rule text of the final rule that Appendix F represents only one possible set of minimum recommended practices for design and safety analysis. FRA believes that the latitude granted in the final rule enables railroads and vendors to accomplish the requirements in a manner that not only satisfies the technical requirements, but also is consistent with the railroads and vendors existing business practices. FRA believes that mandating a single standard without due regard to existing business practices and engineering philosophies would actually result in increased costs as well as decreased innovation.

FRA believes that the requirements of subpart E related to the SA represent good engineering practice for safety critical systems, and that the costs of such an effort are a normal part of the system design lifecycle. Meeting these requirements represents an exercise of the due diligence required on the part of the railroad and/or supplier to minimize product liability. FRA believes that by allowing for broad flexibility in the specific standards, processes, and procedures used by the railroad and vendor, the railroad and vendors can accomplish this in a manner which both satisfies good engineering practice and is consistent with the railroads and vendors business philosophy. Thus, FRA disagrees with the assertions of CRM and continues to believe that the approaches taken in the final rule are consistent with existing good business practice and provide necessary flexibilities to allow small business to comply with the requirements without undue hardship.

AAR's petition requests that FRA eliminate the requirement related to training that is contained in § 229.317 of the final rule. FRA declines to eliminate the requirement for developing training based on task analysis (TA). FRA believes that the TA based training addresses a need for training that will address human factors related to the implementation of subpart E. The TA analysis provides the background, setting, and context for training. AAR appears to express concern regarding the cost of training, but fails to provide any human factors based rationale for elimination of the requirement.

TA is a fundamental methodology in the assessment and reduction of human error. The term TA can be applied very broadly to encompass a wide variety of human factors techniques. Nearly all TA techniques provide, as a minimum, a description of the observable aspects of operator behavior at various levels of detail, together with some indications of the structure of the task. These are action-oriented approaches. Other techniques focus on the mental processes, which underlie observable behavior, e.g. decision making and problem solving. These are known as cognitive approaches.

TA methods can be used to eliminate the preconditions that give rise to errors before they occur. They can be used as an aid in the design stage of a new system, or the modification of an existing system. They can also be used as part of an audit of an existing system. TA can also be used in a retrospective mode during the detailed investigation of major incidents. The starting point of such an investigation must be the systematic description of the way in which the task was actually carried out when the incident occurred. This may, of course, differ from the prescribed way of performing the operation, and TA provides a means of explicitly identifying such differences. Such comparisons are valuable in identifying the immediate causes of an accident.

A TA is an important component of the instructional systems design (ISD) approach to training. As the ultimate purpose of a systematic approach to training design is to produce a properly trained person, the training designer must understand a job and its contents in considerable detail to design, develop and carry out effective training. If this step is not done, and done well, there will be no factual basis for development of effective, efficient instruction.

The analysis process provides information for the design and development of education/training that, in turn, is used to produce organizations that can accomplish their missions, and individuals capable of performing their tasks and duties. TA: (1) Identifies valid training and non-training solutions to organization and individual performance deficiencies; (2) determines what is trained in the form of critical, collective, and individual tasks, and supporting skills and knowledge; (3) provides an accurate description of identified critical tasks; and, (4) provides a definitive performance standard that describes what constitutes successful organization and individual performance of the task. Based on the discussion above, FRA denies that portion of AAR's petition related to this issue and declines to make any changes to this portion of the final rule.

AAR's petition requests that FRA amend the alerter requirement that is contained in § 229.140(d) of the final rule to eliminate the lower bound for the alerter warning indication interval. The final rule requires that an alerter provide a warning indication at a frequency that is within 10 seconds of the amount of time that is calculated by the following formula: Timing cycle specified in seconds = 2400 ÷ track speed. According to AAR, its standard differs from the final rule because it establishes a maximum interval of approximately 120 seconds. The final rule requires a warning indication interval that could be much greater than 120 seconds when operating at speeds of less than 20 mph.

AAR states that alerter warning indications at intervals that exceed 120 seconds (nominal) at or below 20 miles per hour are incompatible with the existing AAR standard for alerters and that more frequent alerts will enhance safety. While limiting their discussion to speeds under 20 miles per hour, AAR then petitions for a rule change which would allow the alerter to be activated more frequently than the formula given in the regulation at all speeds. FRA denies the petition for speeds of 20 mph and above, and will retain the formula given in the final rule. Arguments made by AAR for a maximum interval of 120 seconds (nominal) at speeds below 20 mph have merit, particularly in light of the findings of the National Transportation Safety Board's (NTSB) investigation of the rear end collision at Red Oak, Iowa, on April 17, 2011. See NTSB Accident ID DCA11FR002, Operations Group Factual Report at page 6. In that accident, two lives were lost at a speed only three mph faster than the proposed dividing speed, and approximately seven seconds away from activation of the alerter. Although neither the formula in the final rule, nor the AAR proposed maximum interval of approximately 120 seconds, would have prevented the fatalities at Red Oak, the accident is an example of a variance of a few seconds of the timing of the alerter warning indication can make a difference, even at relatively low speeds. For speeds below 20 mph, FRA is partially granting AAR's Petition and revising the alerter timing to 120 seconds, with the same 10 second tolerance that is provided for in this section for all other speeds. The specific changes are discussed in the section-by-section analysis below.

AAR's petition requests that FRA clarify the RCL requirement related to conducting conditioning runs that are contained in § 229.15(b)(4) of the final rule. Section 229.15(b)(4) provides that: “[e]ach time an RCL is placed in service and at the start of each shift locomotives that utilize a positive train stop system shall perform a conditioning run over tracks that the positive train stop system is being utilized on to ensure that the system functions as intended.” According to the AAR, its understanding is that FRA intended that: (1) An RCL must pass over only one transponder to ensure that the system is working; and (2) that the conditioning run is required to be performed at the beginning of each shift, but not necessarily the first task that is performed by the RCL operator. However, AAR is concerned that the requirement could be misinterpreted to mean that a conditioning run is required: (1) Over each and every track that utilizes a positive train stop system that could be utilized by an RCL during a shift; or (2) at the beginning of every shift before any work is done.

FRA agrees that the existing final rule language could potentially be misinterpreted as stated by AAR. Such misinterpretations could lead to impractical results from an operational perspective. For example, at a hump yard where positive train stop is used, the requirement could be misinterpreted to mean that switching over the hump would have to cease while the conditioning run was being performed. As another example, in the same hump yard, the requirement could be misinterpreted to mean that when an RCL that is coupled to cars being moved over the hump when the previous shift ends with the job only partially complete ( e.g. some cars are halfway up the hump), then the new RCL operator would have to perform a conditioning run prior to completing the hump move. To avoid these misinterpretations, FRA is clarifying the RCL requirement related to the conditioning run that is contained in § 229.15(b)(4) of the final rule as discussed in the section-by-section analysis below.

AAR's petition also requests clarification of the requirement related to the audio indication of RCL movement that is contained in § 229.15(a)(12)(xii) of the final rule. This section requires that the operator control unit (OCU) shall be capable of providing an audio indication of movement of the RCL. According to AAR, all RCL's currently provide an audio indication of movement when they are moving via the locomotive bell. The AAR assertion that this audio indication complies with the requirement that is contained in § 229.15(a)(12)(xii), because the OCU controls the movement of the RCL and the OCU provides an audio indication of the movement of the RCL via the locomotive bell. In addition, the AAR expresses concern that this requirement could be misinterpreted to mean that the OCU is required to produce an audio indication that emanates directly from the OCU, rather than from the RCL. FRA intended for the final rule to require the audio indication to emanate from the RCL as it is being operated by the OCU. A properly sounding locomotive bell is an acceptable example of an audio indication that emanates from the locomotive. The audio indication functions as a warning to people who are nearby the moving locomotive and not necessarily nearby the OCU. FRA also recognizes that the existing language could lead to misinterpretation, as stated in the AAR petition. Therefore, FRA grants AAR's petition related to this issue and agrees to clarify the language that is contained in § 229.15(a)(12)(xii) to identify the RCL as the source of the audio indication.

In its petition, AAR requests that FRA revise the periodic inspection requirement that is contained in § 229.23 of the final rule to make the 184-day interval optional. FRA believes that the 184-day interval is optional and does not believe anything in the final rule states otherwise. However, FRA's expectation is that the railroad will note on the FRA Form 6180-49A whether a locomotive is on a 92-day or 184-day inspection interval. The railroad must choose one inspection interval and stick with it until the inspection cycle is completed.

AAR's petition also requests that FRA modify the frequency of the daily inspection that is performed by a qualified mechanical inspector (QMI daily inspection) that is contained in § 229.23 of the final rule. The final rule requires a QMI daily inspection to be performed every 31 days. According to the AAR, the final rule could require a QMI daily inspection within a few days before the next periodic inspection, which AAR states would include a QMI daily inspection, by standard industry practice. The AAR asserts that two QMI daily inspections within days of each other cannot be justified and recommends that the final rule be modified so that a QMI daily inspection is not required to be performed when a periodic inspection is due within 41 days of the previous QMI daily inspection, effectively permitting 10 days of flexibility. While recognizing that overly frequent QMI daily inspections could be required under the provisions of the final rule, FRA does not agree with the AAR's proposed solution of a variable interval for the QMI daily inspection. FRA believes it would be awkward and possibly confusing to implement a requirement containing variable intervals. Generally, the inspection requirements that are contained in the Locomotive Safety Standards do not have provisions for variable interval inspections, except in the case of out-of-service credit that provided for in § 229.33.

FRA's intent in the final rule is to require that a minimum of five QMI daily inspections be performed between 184 day periodic inspections. FRA recognizes that a 31-day interval provides little, if any, flexibility in scheduling the QMI daily inspections. For example, if the average interval for the first five QMI daily inspections is 30 days, only one day shorter than the maximum amount of time that is permitted by the requirement, then a sixth QMI daily inspection would be due on day 181, three days before the periodic inspection. To keep the inspection interval constant, and provide the flexibility that the industry seeks, FRA is partially granting the AAR's petition on this issue and changing the QMI daily inspection interval to 33 days in this response. This will provide 12 days of potential flexibility in each periodic inspection cycle.

The petitions of Honold and Lombardi request that the requirements contained in the final rule related to cab temperature be revised to require that air conditioning units be installed and operative in all lead locomotives. FRA declines to adopt this request for revision for several reasons. First and foremost is that there are several safety-critical systems or components that must take precedence over air conditioning on lead units. These include but are not limited to: An ability to control certain subsystems throughout the consist ( See § 229.13); an air brake control system which functions as intended ( See § 229.46); and, headlights and auxiliary lights which provide night vision for the crew and enhanced grade crossing safety for the public ( See § 229.125). Adding air conditioning in locomotive cabs to the list of items which disqualify a locomotive from lead service could create power shortages, including preventing a trailing unit which is otherwise lead-qualified from being switched to the lead position when an en route failure of the lead locomotive could otherwise be remedied by that move.

Another major consideration was the difficulty of adequately measuring cab conditions under which air conditioning would be required. Disqualifying a locomotive from lead service on a day where ambient (un-conditioned) temperature in the cab is moderate would have no safety benefit. As pointed out in comments received in response to the NPRM from U.S. Army Joint Munitions Command, Transportation Division, (Docket Number FRA-2009-0094-0018), available scientific research on human performance in hot environments has shown that it is not simply temperature (scientifically called dry-bulb temperature) but Wet-bulb Globe Temperature (WBGT) which must be measured. A rule based on WBGT would be exceedingly difficult to enforce, because the expense of the equipment required to make the measurement would mean that few people would be able to make reliable measurements.

Overall, the goal of this change in the Locomotive Safety Standards is to take a first step toward improving the temperature conditions in locomotive cabs. Maintenance of the air conditioners is currently required at periodic inspections. In the preamble to the final rule, FRA stated that it will monitor air conditioning maintenance performed by railroads to ensure that maintenance is being adequately performed. If FRA determines that the prescribed level of maintenance is insufficient to ensure the proper functioning of the air conditioning units, FRA will consider taking further regulatory action to address the issue. The issue of cab temperature is also being referred to the Railroad Safety Advisory Committee's Fatigue Management Working Group (which includes participants representing rail labor) for further study.

PRM's petition requests that FRA provide its current position on the pre-emptive effect of the Locomotive Inspection Act (LIA). The pre-emptive effect of the LIA, to the extent that it was addressed by the Supreme Court in Kurns v. Railroad Friction Products Corp., 132 S. Ct. 1261 (2012), has been determined by the Supreme Court. FRA is in the process of fully considering the implications of the Supreme Court's decision in Kurns, and FRA's application of the LIA in light of the decision. Moreover, FRA believes that this issue is outside the scope of the petitions for reconsideration of the Locomotive Safety Standards final rule. The final rule did not establish or modify any Federal requirements related to the pre-emptive effect of the LIA. As such, FRA denies PRM's petition on this issue and declines to further discuss the pre-emptive effect of the LIA in this rulemaking proceeding.

The petition of AAJ requests that FRA clarify its preamble discussion of the locomotive diesel exhaust requirement that is contained in § 229.43. FRA believes that the preamble discussion related to locomotive diesel exhaust is clear and accurately reflects FRA's existing understanding and implementation of the requirement. The final rule does not establish or modify any requirements related to the locomotive diesel exhaust requirement. As such, FRA believes that the AAJ's request is outside the scope of this rulemaking proceeding. Thus, FRA denies AAJ's petition related to this issue.

Following the publication of the final rule, FRA is undertaking the task of updating the FRA Form F 6180-49A (blue card) to accurately reflect the requirements contained in part 229 as they stand after the Locomotive Safety Standards final rule has become effective. During this process, FRA determined that the blue card that is under development may be unclear regarding where the AFM calibration date should properly be recorded. The blue card, currently under development, contains a box labeled “AFM calibration,” while § 229.29 requires that the AFM calibration date be recorded in the remarks section of the blue card. FRA intended for the calibration date to be recorded in the remarks section of the blue card only in the absence of a specific box labeled “AFM calibration.” When such a box exists, the AFM calibration date should be recorded in the specifically labeled box. When such a box does not exist, the AFM calibration date should be recorded in the remarks section. FRA is revising the language contained in § 229.29 to clarify this point to allow for entry of AFM calibration information in either place.

FRA is amending the language contained in § 229.23(h) of the final rule to clarify the requirement. The final rule states that “[t]he railroad shall maintain, and provide employees performing inspections under this section with, a list of the defects and repairs made on each locomotive over the last ninety-two days.” This requirement is intended to ensure that an employee who performs an inspection that is required by this section is given the locomotive's history of defects that were found during inspections, and repairs that were made to the locomotive, since the date that the last inspection that is required by this section occurred. The locomotive's history will provide the employee with important information that will assist in the performance of a proper inspection. Prior to the final rule, periodic inspections required by this section were required to be performed at intervals not to exceed 92 days. As such, the record of the defects and repairs for the locomotive was required to be maintained and provided to appropriate employees for up to 92 days. Section 229.23(b) of the final rule modified the requirement to permit certain locomotives to operate for up to 184 days between periodic inspections. For a locomotive that is permitted to receive a periodic inspection at intervals not to exceed 184 days, the record of the defects and repairs for the locomotive is required to be maintained and provided to appropriate employees for up to 184 days. Based on the rule contained in the final rule, FRA believes that the requirement could be understood to mean that all locomotives, including those that are permitted to operate for 184 days between periodic inspections, require only 92 days of records to be maintained and provided to appropriate employees. To clarify the requirement, FRA is amending the language to read as follows: “The railroad shall maintain, and provide employees performing inspections under this section with, a list of the defects and repairs made on each locomotive since the date that the last inspection required by this section was performed.”

Section 229.15(a)(12)(xii) of the final rule requires that the RCL shall be capable of providing an audio indication of movement of the RCL. FRA believes that in order to function as intended as a warning to people that are nearby that the RCL that the equipment is moving, the audio indication must be a minimum of 3 seconds in duration. FRA believes that at this time all RCL units comply with this requirement as they are currently manufactured and that this timeframe is standard practice within the industry. Thus, FRA is clarifying the final rule in this document by specifically including that the audio indication last at least 3 seconds.

FRA is clarifying the requirement that is contained in § 229.15(b)(4) of the final rule by modifying the language. The final rule states that “[e]ach time an RCL is placed in service and at the start of each shift locomotives that utilize a positive train stop system shall perform a conditioning run over tracks that the positive train stop system is being utilized on to ensure that the system functions as intended.” Section 229.5 of the final rule provides a definition for the term “Remote Control Pullback Protection,” (RCPP), which is a type of positive train stop system (PTSS). FRA included the definition in the final rule because it intended to provide RCPP as an example of a PTSS that is acceptable for the purposes of § 229.15. To clarify this point, the language is being amended to read as follows: “[e]ach time an RCL is placed in service and at the start of each shift locomotives that utilize a positive train stop system, such as remote control pullback protection, shall perform a conditioning run over tracks that the positive train stop system is being utilized on to ensure that the system functions as intended.”

This section is also being amended in response to petitions for reconsideration of the final rule. For a discussion of those changes, please see section (c)(1) of the Issues Raised by Petitions for Reconsideration.

Section 229.20(d)(2) of the final rule contains an erroneous link to Westlaw. The Internet address has no significance related to the electronic recordkeeping requirements and was not intended to be included in the rule text. As such, to prevent any confusion, the Internet address is being removed.

FRA is modifying the language contained in § 229.15(a)(12)(xii) of the final rule to clarify that an RCL is required to produce audio indication of movement for at least 3 seconds and that the OCU must be capable of activating the audio indication of movement. FRA believes that in order to function as intended as a warning to people that are nearby that the RCL that the equipment is moving, the audio indication must be a minimum of 3 seconds in duration. This was not expressly stated in the final rule, but to provide additional clarity on the issue, FRA is expressly adding the 3 second duration to § 229.15(a)(12)(xii) in this response to petitions for reconsideration. In addition, the language contained in the final rule could incorrectly be read as providing that the OCU itself is required to produce an audio indication of movement. To avoid such a misinterpretation, the word “activate” is being added to § 229.15(a)(12)(xii) to read as follows “[a]ctivate the audio indication of movement that is located on the RCL for a duration of at least 3 seconds * * *” FRA believes that these changes clarify the final rule.

FRA is also modifying the RCL requirement related to the conditioning run that is contained in § 229.15(b)(4) of the final rule to clarify that: (1) an RCL must pass over only one transponder to ensure that the system is working; and, (2) that the conditioning run is required to be performed at the beginning of each shift, but not necessarily the first task that is performed by the RCL operator. The language contained in the final rule states that“[e]ach time an RCL is placed in service and at the start of each shift locomotives that utilize a positive train stop system shall perform a conditioning run over tracks that the positive train stop system is being utilized on to ensure that the system functions as intended.” The modified language that is established by this response to petitions for reconsideration is as follows “[e]ach time an RCL is placed in service and at the first practical time after the start of each shift, but not more than 2 hours after the start of that shift, locomotives that utilize a positive train stop system shall perform a conditioning run over a track that the positive train stop system is being utilized on to ensure that the system functions as intended.” Adding the phrase “at the first practical time after * * * but not more than 2 hours after the start of that shift * * *” and changing the word “tracks” to “track,” add clarity to this requirement.

FRA is further modifying the language that is contained in § 229.15(b)(4) of the final rule to clarify FRA included the definition of RCPP in the final rule because it intended to provide RCPP as an example of a PTSS that is acceptable for the purposes of § 229.15. For a more detailed discussion of the change to this section please see section D of the Clarifying Amendments.

Section 229.20(d)(2) of the final rule contains an erroneous link to Westlaw. The Internet address has no significance related to the electronic recordkeeping requirements and was not intended to be included in the rule text. As such, to prevent any confusion, the Internet address is being removed and the section will read as follows: [p]aper copies of electronic records and amendments to those records that may be necessary to document compliance with this part, shall be provided to FRA for inspection and copying upon request. Paper copies shall be provided to FRA no later than 15 days from the date the request is made; and, * * *.”

FRA is amending the language contained in § 229.23(b)(2) of the final rule to change the frequency of the QMI daily inspection from every 31 days to every 33 days. As noted in the discussion of AAR's petition contained in section D of the Issues Raised by Petitions for Reconsideration above, FRA believes that the intent of the final rule is to require that a minimum of five QMI daily inspections be performed between 184 day periodic inspections. FRA recognizes that a 31-day interval provides little, if any, flexibility in scheduling the QMI daily inspections. For example, if the average interval for the first five QMI daily inspections is 30 days, only 1 day shorter than the maximum amount of time that is permitted by the requirement, then a sixth QMI daily inspection would be due on day 181, three days before the periodic inspection. To keep the inspection interval constant, and provide the flexibility that the industry seeks, FRA is partially granting the AAR's petition on this issue and changing the QMI daily inspection interval to 33 days. This will provide 12 days of potential flexibility in each periodic inspection cycle.

FRA is also amending the language contained in § 229.23(h) of the final rule to clarify the requirement. The final rule states that “[t]he railroad shall maintain, and provide employees performing inspections under this section with, a list of the defects and repairs made on each locomotive over the last ninety-two days.” To clarify the requirement, FRA is amending the language to read as follows: “The railroad shall maintain, and provide employees performing inspections under this section with, a list of the defects and repairs made on each locomotive since the date that the last inspection required by this section was performed.” For a more detailed discussion of the change to this section please see section B of the Clarifying Amendments.

To clarify the final rule, FRA is amending the language contained in § 229.29(g)(1) to indicate that the date of AFM indicator calibration shall be recorded and certified on the Form F6180-49A. Please see the preceding discussion in section A of the Clarifying Amendments for background information related to this modification.

FRA is amending the language that is contained in § 229.140(d) of the final rule to establish a fixed interval for the alerter warning indication when operating at speeds below 20 mph. To make this change, FRA is revising the requirement for locomotives operating at speeds under 20 mph to 120 seconds, with the same 10 second tolerance that is provided for in this section for all other speeds. Please see the preceding discussion in section B of the Issues Raised by Petitions for Reconsideration for background information related to this modification.

The language contained in § 229.303 is being modified to clarify that certain products are excluded from the locomotive electronics requirements. The language is being modified by replacing the phrase “placed in service” that is contained in §§ 229.303(a)(1) and (a)(2) with the phrase “fully developed.” Please see the preceding discussion in section (A)(1) of the Issues Raised by Petitions for Reconsideration for background information related to this modification. In addition, FRA is extending the date for railroads and vendors to identify all products that are under development as identified in paragraph (a)(2) of this section to FRA from October 9, 2012 to February 9, 2013. The substantive requirement is not being changed, as the requirements that govern which products can be properly identified under paragraph (a)(2) of this section remain unchanged. Only the date by which the products must be identified and submitted to FRA is being changed.

Section 229.305 of the final rule is being amended by removing the definition for the term “new or next-generation locomotive.” Please see the preceding discussion in section (A)(2) of the Issues Raised by Petitions for Reconsideration for background information related to this modification.

This action has been evaluated in accordance with existing policies and procedures and determined to be non-significant under both Executive Order 12866 and DOT policies and procedures. See 44 FR 11034; February 26, 1979. The original final rule was determined to be non-significant. Furthermore, the amendments contained in this action are not considered significant because they generally clarify requirements currently contained in the final rule or allow for greater flexibility in complying with the rule.

These amendments and clarifications are in response to commenters petitions for reconsideration and will provide greater flexibility in the implementation and enforcement of this final rule. The amendments modify the remote control locomotive provisions and also Subpart E. Both of these are not mandatory requirements to operate locomotives, and therefore will not cause a change in FRA's estimated costs in the final rule's regulatory impact analysis (RIA). In addition, there is an amendment that modifies section 229.140 for locomotive alerters. This amendment is in response to a commenter's petition and should improve compliance with the alerter requirement in the final rule. This change to the alerter timing interval below 20 mph would result in a modest cost saving to the industry, particularly in regard to the January 1, 2017, full implementation requirement because it makes more currently installed alerters compliant, thus reducing the number to be modified. FRA does not believe that the amount of potential savings warrants modification of the RIA. There are amendments to the periodic inspection requirements in section 229.23 which are also in response to a commenter's petition. The amendment will have minimal economic impact on the railroads that are able to use the final rule's 184 day periodic inspection provision. Any impact it will have, will serve to decrease the estimated costs in the final rule's RIA. The amendment to section 229.29 is not a change in the air brake system calibration, maintenance, and testing requirements but rather a change in where and how the calibration is recorded on the locomotive's blue card.

In summary, FRA has concluded that these amendments will have a minimal net effect on FRA's original analysis of the costs and benefits associated with the final rule. Hence, FRA has not revised the final rule's RIA.

To ensure potential impacts of rules on small entities are properly considered, FRA developed this action and the original final rule in accordance with Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA certifies that this action would not have a significant economic impact on a substantial number of small entities.

The amendments contained in this action that modify provisions for the use of remote control locomotives and will not impact any small entities. Most small railroads do not use remote control locomotives and the use of remote control locomotives is permissive and not mandatory. The amendments to the periodic inspection requirements in § 229.23 would not negatively impact any small entities. This is due to that fact that the amendments to this section should reduce cost for a railroad that has locomotives that can utilize a longer, i.e., 184 day, period inspection. In addition, most, if not all, small railroads currently do not have locomotives that would qualify to utilize the longer periodic inspection period. The amendment to § 229.29 is not a change in the air brake system calibration, maintenance, and testing requirements but rather a change in where and how the calibration is recorded on the locomotive's blue card. There is one amendment on § 229.140 which adds a requirement to establish a “fixed interval” for the audible warning indication for locomotive alerters for speeds under 20 mph. This amendment will not impact any small railroad since many small railroads operate at speeds that do not require an alerter, and the amendment is granting a commenter's request. Finally the amendments to subpart E relate to clarification on the requirements for new advanced electronic locomotive control systems, which would be found on new locomotives. No small railroads purchase new locomotives that would have these systems on them. Accordingly, because the amendments contained in this action generally clarify requirements currently contained in the final rule, FRA has concluded that there are no substantial economic impacts on small entities resulting from this action.

FRA has carefully reviewed agency amendments to certain sections of this final rule in response to petitions for reconsideration. There are no changes to any of the final rule's information collection requirements and estimated burden published in the FR on April 9, 2012. See 77 FR 21312. These information collection requirements and associated burden were approved by the Office of Management and Budget on November 21, 2012, under OMB No. 2130-0004, for the maximum time period.

FRA has analyzed this rule in accordance with the principles and criteria contained in Executive Order 13132, issued on August 4, 1999, which directs Federal agencies to exercise great care in establishing policies that have federalism implications. See 64 FR 43255. This final rule will not have a substantial effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among various levels of government. This final rule will not have federalism implications that impose any direct compliance costs on State and local governments.

This final rule could have preemptive effect by operation of law under certain provisions of the Federal railroad safety statutes, specifically, the former Federal Railroad Safety Act of 1970 (former FRSA), repealed and recodified at 49 U.S.C. 20106, and the former Locomotive Boiler Inspection Act at 45 U.S.C. 22-34, repealed and recodified at 49 U.S.C. 20701-20703. See Kurns v. Railroad Friction Products Corp., 132 S. Ct. 1261 (2012); and Napier v. Atlantic Coast Line R.R., 272 U.S. 605 (1926).

The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and where appropriate, that they be the basis for U.S. standards.

This action is purely domestic in nature and is not expected to affect trade opportunities for U.S. firms doing business overseas or for foreign firms doing business in the United States.

FRA has evaluated this action in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321 et seq. ), other environmental statutes, Executive Orders, and related regulatory requirements. FRA has determined that this action is not a major FRA action (requiring the preparation of an environmental impact statement or environmental assessment) because it is categorically excluded from detailed environmental review pursuant to section 4(c)(20) of FRA's Procedures. See 64 FR 28547 (May 26, 1999).

In accordance with section 4(c) and (e) of FRA's Procedures, the agency has further concluded that no extraordinary circumstances exist with respect to this action that might trigger the need for a more detailed environmental review. As a result, FRA finds that this action is not a major Federal action significantly affecting the quality of the human environment.

Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $140,800,000 or more in any one year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. The action will not result in the expenditure, in the aggregate, of $140,800,000 or more in any one year, and thus preparation of such a statement is not required.

Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355 (May 22, 2001). Under the Executive Order, a “significant energy action” is defined as any action by an agency (normally published in the Federal Register ) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) That is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. FRA has evaluated this action in accordance with Executive Order 13211. FRA has determined that this action is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Consequently, FRA has determined that this action is not a “significant energy action” within the meaning of Executive Order 13211.

Anyone is able to search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). See http://www.regulations.gov/#!privacy. Notice for the privacy notice of regulations.gov or interested parties may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477).

For the reasons discussed in the preamble, FRA amends part 229 of title 49 of the Code of Federal Regulations as follows:

The Georges Bank (GB) Closed Area, located in the Exclusive Economic Zone east of 69°00′ W. long. and south of 42°20′ N. lat., has been closed to the harvest of surfclams and ocean quahogs since 1990 due to red tide blooms that cause paralytic shellfish poisoning (PSP). The closure was implemented based on advice from the U.S. Food and Drug Administration (FDA) after samples tested positive for toxins (saxitoxins) that cause PSP. These toxins are produced by the alga Alexandrium fundyense, which can form blooms commonly referred to as red tides, or harmful algal blooms, and can accumulate in water column filter-feeding shellfish. Shellfish contaminated with the toxin, if eaten in large enough quantity, can cause illness or death in humans.

Due to inadequate testing or monitoring of the water and shellfish within the area for the presence of PSP-causing toxins, the closure was made permanent in 1999, under Amendment 12 to the Atlantic Surfclam and Ocean Quahog Fishery Management Plan (FMP). Since the implementation of the closure, NOAA's National Ocean Service has provided grants to the FDA, the states of Maine, New Hampshire, and Massachusetts, and a clam industry representative to collect water and shellfish samples from Federal waters off southern New England. NMFS has also issued exempted fishing permits (EFPs) since 2008 to surfclam and ocean quahog vessels to conduct research in the closure area. Testing of clams on GB by the FDA in cooperation with NMFS and the fishing industry under the EFPs demonstrate that PSP toxin levels have been well below the regulatory limit established for public health safety (FDA 2010). The FDA and NMFS also developed a Protocol for Onboard Screening and Dockside Testing in Molluscan Shellfish (the protocol) that is designed to test and verify that clams harvested from GB are safe. The protocol was formally adopted into the National Shellfish Sanitation Program at the October 2011 Interstate Shellfish Sanitation Conference.

On June 30, 2010, NMFS published a similar proposal in the Federal Register (75 FR 37745) to re-open a portion of the GB Closed Area. This proposed rule was later withdrawn due to public comments that opposed reopening the GB Closed Area without having a testing protocol in place. Now that the protocol has been formally adopted, NMFS is reopening a portion of the GB Closed Area with the requirement that the protocol be used on all fishing trips into the area.

This action also implements specific reporting requirements for the reopened area. To access the reopened area, a vessel must obtain a letter of authorization (LOA) from NMFS. The LOA outlines the harvesting requirements for the reopened area; by obtaining the LOA, a vessel acknowledges and agrees to the terms and conditions of the protocol and the LOA. Signing up for an LOA also allows NMFS to know which vessels are eligible to fish in the reopened area. NMFS has the authority to invalidate the LOA, should a vessel not comply with the requirements for harvesting in the reopened area. NMFS has also developed new vessel monitoring system (VMS) codes for the area. These codes will allow NMFS and enforcement agencies to readily identify a vessel's intent to fish in the area. The new VMS codes and the LOA will provide NMFS with additional oversight tools to assist enforcement and monitoring efforts in order to ensure public health and safety.

Since research began in the area in 2008, no PSP toxin measurements have been recorded above regulatory limits, and PSP toxin monitoring will be conducted under the terms of the protocol for all trips into the area. NMFS retains the authority to close any area to harvesting of surfclams and ocean quahogs to prevent contaminated shellfish from entering the market. Any future closures or openings within the GB Closed Area will be based upon PSP toxin testing results conducted under the terms of the protocol, the advice of the FDA, and the most current information available.

NMFS reopens the identified portion of the GB Closed Area to the harvest of surfclams and ocean quahogs, under its authority at § 648.76(c). However, we will continue to defer to the FDA in matters of public health and, should we receive new data or advice from the FDA, we may have to reconsider the status of any reopened areas or the need for additional closures.

NMFS published a proposed rule for this action in the Federal Register on August 31, 2012 (77 FR 53164), with a 30-day comment period that ended on October 1, 2012. In the proposed rule, three alternatives were identified: Alternative A was the largest of the three, and encompassed the entire area between Closed Area I and Closed Area II; Alternative B was smaller than Alternative A area and encompassed the area defined under the 2012 EFP; Alternative C was the smallest of the three areas, and is known as the Cultivator Shoals area. Due to comments received on the proposed rule, the area being reopened with this interim final rule represents a slight modification to the Alternative A area. The New England Fishery Management Council (NEFMC) submitted a comment informing NMFS that its Habitat Oversight Committee is currently developing Essential Fish Habitat (EFH) Omnibus Amendment 2, which may include potential habitat management areas (HMAs) that, if implemented, would spatially overlap with the areas initially proposed for reopening. Because of this, NMFS has modified the area that will be reopened with this interim final rule to ensure that there is no overlap with any portion of the potential HMAs. This will allow the NEFMC to continue development of the habitat amendment without additional risk to the potential new HMAs, while also allowing the Atlantic surfclam/ocean quahog fleet to access most of the proposed area. This will prevent any additional Atlantic surfclam/ocean quahog effort from being introduced into the potential HMAs while they are still being developed. After the habitat amendment has been completed, and after NMFS reviews any additional comments on the measures in this interim final rule, NMFS may reconsider the reopened area and will publish a final rule in the Federal Register implementing the final area. In the meantime, the surfclam and ocean quahog fishery can access the majority of the area originally proposed, and the areas of concern to the NEFMC will remain closed pending further comments and/or actions by the NEFMC.

The area being reopened is defined in the table below and illustrated in the map and the remaining portion of the GB Closed Area will remain closed.

This interim final rule also includes a clarifying prohibition that was not included in the proposed rule. The additional regulation prohibits the harvest of Atlantic surfclams or ocean quahogs from the reopened portion of the GB Closed Area without being in compliance with the protocol, LOA, and VMS requirements.

NMFS received 19 comments on the proposed rule. One comment opposed reopening any portion of the GB Closed Area, but provided no factual basis for the opposition. Eleven comments were in support of reopening the Alternative A area; three were in support of the Alternative C area; and no comments were received specifically supporting the Alternative B area. Generally, all comments received were in support of reopening a portion of the GB Closed Area and were also in support of requiring the testing protocol and corresponding reporting requirements on all trips into the reopened area.

Comment 1: One of the comments voiced support for reopening the Alternative C area, but provided no rationale for this support, and also wanted to ensure a mechanism exists to prohibit access to the reopened area should a vessel not follow the protocol.

Response: With this action, NMFS is also implementing measures that allow for additional oversight of vessels harvesting in the reopened area including mechanisms to control and monitor access. A vessel that wishes to harvest from the reopened areas must obtain an LOA from NMFS. The LOA explicitly outlines the harvesting requirements for the reopened area and by obtaining the LOA the vessel is acknowledging and agreeing to the terms and conditions of the protocol and the LOA, including NMFS's ability to invalidate the LOA, should the vessel not comply with the requirements. Further, NMFS has also developed new VMS codes that are specific to the area. With these codes, NMFS will able to readily identify a vessel's intent to fish in the area, requiring the vessel to follow the terms and conditions of the protocol. The new VMS codes will help facilitate enforcement and perform monitoring of the area. Thus, with the protocol, the LOA, and the new VMS codes, NMFS has the necessary mechanisms available to appropriately monitor and enforce the provisions in this rule, including prohibiting a vessel's access to the area, should it become necessary.

Comment 2: Cote Fisheries, Inc., and the Atlantic Offshore Lobstermen's Association provided comments on behalf of the lobster industry in support of the Alternative C area due to concerns regarding potential gear conflicts within the larger Alternative A area. The commenters also raised concerns that hydraulic dredge fishing gear could bycatch soft shell and egg-bearing lobsters. The commenters state that lobster fishing takes place in the southern portion of the area during the summer and autumn months and request that the reopened area should only be reopened seasonally to prevent gear conflicts. Additionally, the commenter expressed concerns about the reopened area frequently closing and reopening, and state that this will encourage derby style fishing and create an unpredictable fishery that make it difficult for fixed gear fisherman to operate with little advanced notice of future closures or reopening.

Response: NMFS acknowledges that gear conflicts between fixed and mobile gear fisherman are ongoing and sharing access to an area can be difficult to coordinate. However, this area is already open to all other types of bottom-tending mobile fishing gear and NMFS does not anticipate that the additional effort will result in substantial additional gear conflicts. Further, surfclam and ocean quahog vessels have been operating in this area under an EFP since 2008, and NMFS is not aware of any ongoing gear conflicts in the area. Reopening the area on a seasonal basis, based on lobster fishing activity, would be inequitable for the surfclam and ocean quahog fleet and could create safety-at-sea concerns. If NMFS were to implement the reopening on a seasonal basis as requested, the surfclam and ocean quahog fleet would be limited to harvesting in the area in the winter and spring, at a time when the weather offshore is subject to frequent change and is often unsafe for commercial fishing. Further, NMFS does not anticipate that this reopening will create a derby style fishery. The surfclam and ocean quahog fishery is largely market driven and it is unlikely that the market would allow for the flood of product produced by a derby-type fishery. Additionally, there is significant coordination between processors and harvesters in the surfclam and ocean quahog fishery and this would also likely prevent a derby-style fishery. Because the majority of the product in the surfclam and ocean quahog fishery is processed, this fishery typically operates and benefits by supplying the processers with steady and consistent quantities of surfclams and/or ocean quahogs. Although NMFS has the authority to implement future openings or closing, it is not anticipated that the area will be frequently closed and reopened. The protocol was designed to prevent this, but NMFS must retain the authority to close and reopen areas based on environmental conditions, should problems arise beyond what can be handled by the protocol. Therefore, we do not anticipate frequent closures and reopening that would create a derby-style fishery leading to excessive gear conflicts.

As for the lobster bycatch concern, while clam dredge gear may interact to some extent with lobsters, documented incidences of bycatch are very low. Clam dredge gear is towed at very low speeds, allowing most species to avoid the gear, and the unique way clam dredge gear operates typically yields little bycatch. The 1997 NMFS Northeast Fisheries Science Center survey results support that the surfclam and ocean quahog fishery is considered a clean fishery with regard to incidental catch because the target species comprises well over 80 percent of the catch. No fish were caught during the survey, and only sea scallops, representing other commercially desirable invertebrates, were caught at around 0.5 percent of the total catch. The remaining non-target species caught included a variety of benthic invertebrates, including a variety of crabs, other bivalves, snails, and starfish, among them rock crab, Jonah crab, several species of whelks, and horseshoe crabs. Thus, it is unlikely that reopening the area will produce substantial bycatch of lobster resulting in a negative impact to the fishery.

Comment 3: Two of the comments in support of reopening the Alternative A area were also concerned that NMFS should not have the authority to close or reopen areas based on PSP testing results. The commenters explain that the protocol was designed to prevent frequent and routine closures and reopenings that would result in excessive administrative burden, unnecessarily extending the time between closures and reopenings, which would restrict harvesting.

Response: NMFS understands how the protocol operates and also recognizes the burden involved with the administrative process of closures and reopening, but these processes are necessary precautions to safeguard public health. This authority existed prior to this rulemaking and is part of the Atlantic Surfclam and Ocean Quahog FMP. This is not a new authority being implemented as part of this action. The Regional Administrator's authority to close or reopen an area due to the presence of PSP is not specific to this area, and this authority is necessary should PSP blooms occur in this or other areas. We do not anticipate that routine and frequent closures and openings will occur as a result of this action; rather, this authority is intended for more large-scale and long-term closures. NMFS will continue to defer to the FDA in matters of the public health and, should we receive advice from the FDA, it may be necessary for NMFS to close or reopen any area to the harvesting of surfclams and ocean quahogs to prevent contaminated shellfish from entering the market. It is not NMFS' intention to disregard the effectiveness of the protocol and frequently implement routine closures and reopening; however, NMFS must maintain this authority to protect public health.

Comment 4: The Massachusetts Department of Public Health, Bureau of Environmental Health, and the Massachusetts Department of Fish and Game, Division of Marine Fisheries, jointly serve as the State Shellfish Control Authority (SSCA) in Massachusetts and submitted a comment in support of Alternative A, provided the SSCA continues to have the flexibility to develop individual agreements with harvesters that may be more stringent than the minimum requirements of the testing protocol.

Response: The protocol that this action is based on will continue to include this flexibility, and thus the Massachusetts SSCA can continue to require additional testing that aligns with its individual agreements.

Comment 5: The NEFMC submitted a comment informing us that its Habitat Oversight Committee is currently developing an Essential Fish Habitat Omnibus Amendment, which may include potential HMAs that, if implemented, would spatially overlap with the areas proposed for reopening. The NEFMC also requested that we extend the comment period on the proposed rule for an additional 60 days to allow them time compose a more formal comment. Oceana also submitted a similar comment requesting that the NEFMC be consulted in this matter.

Response: Due to this comment and the similar comment received from Oceana, NMFS has modified the area that will be reopened through this interim final rule to ensure that there is no overlap with any portion of the potential HMAs. This will also prevent any additional Atlantic surfclam/ocean quahog effort from being introduced into the potential HMAs while they are still being developed. However, NMFS chose not to extend the proposed rule comment period for an additional 60 days. The MAFMC and the surfclam and ocean quahog industry has requested that this area be reopened by the start of the fishing year on January 1, 2013, and extending the comment period for an additional 60 days would not allow sufficient time to implement this action by January 1. To allow the habitat amendment to be completed, while also allowing the Atlantic surfclam/ocean quahog fleet to access the reopened area, NMFS is publishing this action as an interim final rule, which allows for an additional comment period after the modified area is reopened. After the habitat amendment has been completed, and after NMFS reviews any additional comments on the measures in this interim final rule, NMFS may reconsider the reopened area and will publish a final rule in the Federal Register implementing the final area.

Comment 6: Oceana provided a comment that does not directly oppose any of the area alternatives, but raised a number of concerns. They stated that NMFS does not have the authority to implement this action, and that the action should have been initiated by the MAFMC and should include the entire Council process. The commenter also alleged that NMFS intentionally placed the 30-day comment period between two Council meetings, which prevented the Councils or their committees from commenting.

Oceana also requested that the National Environmental Policy Act (NEPA) analysis accompanying this action be an environmental impact statement (EIS) rather than an EA, stating that NEPA requires that all significant actions go through the public comment, scrutiny, and analysis of an EIS. Their rationale for this is that hydraulic clam dredge fishing gear is among the most destructive gear types and will impact EFH as well as the existing fisheries on GB. The commenter also stated that, because Atlantic surfclams and ocean quahog resources are abundant on GB, the resulting high catch rates will impact the administration of the fishery, including how the fishery is prosecuted, the quota specifications, and overfishing definitions.

Response: In regards to the authority that NMFS is using to take this action, Oceana's comment broadly cites the regulations at § 648.76(c), but their comment quotes the regulations at § 648.76(c)(2), which pertain only to NMFS's authority in implementing short-term emergency closures to prevent adverse effects to public health. However, the authority for this action is found at § 648.76(c)(1). This section pertains to the process for reopening areas and also provides the Regional Administrator with the authority to close or reopen an area provided NMFS publish a Federal Register notice with a 30-day comment period. NMFS published a proposed rule for this action in the Federal Register on August 31, 2012 (77 FR 53164), with a 30-day comment period that ended on October 1, 2012. Therefore, NMFS is authorized to take this action separate from the MAFMC under the Regional Administrator's authority at § 648.76(c)(1). In fact, this action was initiated at the specific request of the MAFMC. Further, the comment period for this action was not deliberately placed between Council meetings. To meet the January 1, 2013, deadline for this action, as requested by the industry and the MAFMC, the comment period needed to be initiated as soon as the proposed rule was fully developed. The 30-day comment period for this proposed rule is the typical length of a comment period for FMP frameworks and amendments. The NEFMC did in fact provide comment on the proposed rule, and the area being reopened is based on the NEFMC's comment.

In response to Oceana's request to complete an EIS rather than an EA, NMFS does not agree that an EIS is necessary for this action. The EA completed for this action is fully compliant with the applicable NEPA requirements and the analysis resulted in a finding of no significant impact, consistent with all applicable guidance and the regulations implementing NEPA; therefore, an EIS is not required and none has been prepared. The commenter's concerns are all addressed in the EA and are also discussed below.

Alternative A has been revised in response to comments received. It excludes the potential Georges Shoal Habitat Areas, which were previously included in the draft EA, as well as Closed Area I and Closed Area II. In regards to Oceana's concern about impacts to other fisheries that occur on GB, the Atlantic surfclam and ocean quahog fishery is considered a clean fishery because the target species comprise well over 80 percent of the catches. Based upon scientific surveys, bycatch typically consists of scallops and other benthic invertebrates. The EA found that reopening the area will result in a net reduction of bycatch, temporarily, for the entire fishery due to the fewer dredges and shorter dredge time anticipated in an area of high biomass such as GB. This fishery is managed under an IFQ, so total fishing effort is capped by the IFQ allocated to the fishery. Because there would be no increase in harvesting permitted, reopening the area would have negligible impacts to the non-target and bycatch species. It is, in addition, highly unlikely that this action will cause any additional gear conflicts with other types of mobile gear, but NMFS acknowledges that gear conflicts between fixed and mobile gear fishermen can be challenging to resolve. However, this area is open already to all other types of bottom-tending mobile gear, including scallop dredges and otter trawls, and NMFS does not anticipate that the additional effort will result in substantial additional gear conflicts with fixed gear fishermen. Further, several surfclam/ocean quahog vessels have been operating in this area under an EFP since 2008, and NMFS is not aware of any ongoing gear conflicts in the area.

Concerning impacts to EFH from hydraulic clam dredge gear, the EA contains a thorough description of hydraulic dredge gear, including a detailed analysis of the impacts to EFH. Other types of bottom-tending gear are currently also used in the subject area, including scallop dredges, trawls, sink gill nets, longlines, pots, and traps. Most of the area for clam dredging where the fishing activity is expected to be concentrated is located in a relatively shallow (30-60 m) part of GB that is routinely highly disturbed by strong tidal currents and wave action from storms. Published studies of the effects of hydraulic clam dredges in high-energy, sandy, habitats, such as those where clam fishing occurs, indicate that, in this type of environment, the affected physical and biological features of the seafloor can be expected to recover from the impacts of this gear in less than a year, and can actually recover within a matter of a few days or months. For this reason, it was determined that the use of this gear would not have significant impacts on EFH in the affected area, because the impacts are minimal or temporary (i.e., ones that are limited in duration and that allow the particular environment to recover without measurable impact). For these same reasons (i.e., because this habitat is highly energetic and recovers relatively quickly), the cumulative impacts from the existing use of bottom trawling and scallop dredging gear together with the expected addition of hydraulic clam dredge gear is also not expected to be significant.

In deeper water, in the southern part of the Alternative A area, habitat recovery times may be longer and the habitat impacts may be more substantial. In addition, because the deeper, southern portion of this area is currently subjected to some bottom trawling and scallop dredging, there could be some cumulative impacts resulting from the three gears being used together in this area. However, because the biomass of surfclams and ocean quahogs is much higher on GB than on the traditional clam fishing grounds in the Mid-Atlantic, hydraulic dredge vessels that move from these grounds to GB to take advantage of the higher concentrations of clams would require less fishing time to achieve their catch quotas and, as a result, the cumulative area of seafloor swept throughout the range of the fishery would very likely be substantially reduced. The positive effect of the net reduction in clam dredging effort would, in all likelihood, mitigate any cumulative impacts of using all three mobile, bottom-tending gears in the fairly small southern portion of the area. Thus, because quotas are not changing as a result of this action and because catch rates on GB exceed those in the Mid-Atlantic, any shift of clam dredging effort on to GB is expected overall to minimize any adverse direct, indirect, or cumulative impacts of this action on EFH. This conclusion supports a FONSI and, therefore, an EIS is not required. Further analysis of the impacts to the physical environment and habitat including EFH, are discussed at length in sections 5.0 and 6.0 of the EA prepared for this action.

NMFS acknowledges that reopening a portion of the revised GB Closed Area may cause some fundamental shifts in the administration and operations of the fishery; however, the EA prepared for this action includes these considerations in the economic analysis. The area being reopened with this rule is not expected to have an adverse impact on the economy. The reopened area provides a larger area open to the harvest of surfclams and ocean quahogs. In addition, the fishery is managed under an individual transferable quota, and this action does not change the quota. Furthermore, the amount of surfclams and ocean quahogs harvested in the fishery is largely driven by market demand; therefore, it is unlikely that there will be a substantial increase in landings and revenue. The entire allocated quota available for surfclams has not been harvested since 2001. In fishing year 2011, the quota harvested for surfclams and ocean quahog was the lowest to date, 71 percent and 52 percent, respectively. This is another indicator that the fishery is market-limited. Overall, the reopened area is expected to provide a positive economic impact due to the increased area and target species biomass available to harvest surfclam and ocean quahogs, but, because overall catch is not increasing, it is not expected that the positive economic impact will be substantial.

The majority of surfclams harvested in Federal waters are landed in New Jersey and trucked to Delaware for processing. New Jersey, however, has already authorized landings of clams harvested from the GB area through an EFP that NMFS issued. The EFP authorizes vessels to participate in shellfish harvesting to continue to test the recently approved sampling protocol that was developed by state and Federal regulatory agencies to test for presence of saxitoxins in shellfish. Since New Jersey, Delaware, Massachusetts, and Maine have already authorized landings and processing of clams harvested from the revised GB Closed Area, this action is not expected to have a significant impact on major landing ports and processing plants.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the Assistant Administrator for Fisheries, NOAA, has determined that this final rule is consistent with the Atlantic Surfclam and Ocean Quahog FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

Pursuant to the Administrative Procedures Act (APA), 5 U.S.C. 553(d)(1), NMFS waives the 30-day delay in effectiveness of this rule because it is a substantive rule that relieves a restriction. This final rule will reopen an area that has been closed to the harvest of surfclams and ocean quahogs since 1990 due to red tide blooms that cause PSP. Because recent testing in the GB Closed Area has demonstrated that PSP toxin levels were well below the regulatory limit established for public health and safety, continued closure of the area is not necessary and could unnecessarily restrict Atlantic surfclam and ocean quahog fishing. Furthermore, NMFS finds good cause to waive the 30-day delay in effectiveness under 5 U.S.C. 553(d)(3). The GB Closed Area has caused harvesting to be limited to the Mid-Atlantic, where Atlantic surfclam and ocean quahog stocks have recently become less abundant. A 30-day delay in effectiveness would continue to prohibit harvest from the GB Closed Area and would continue to put pressure on Mid-Atlantic stocks. Waiving the 30-day delay would allow the GB Closed Area to be reopened sooner, which could relieve fishing pressure on southern stocks and would allow for greater distribution of Atlantic surfclam and ocean quahog harvest effort in the region. We also received public comment on the proposed rule for this action that fishing is only being continued in the Mid-Atlantic region to maintain the market, and vessels may no longer be profiting. Thus, a delay in effectiveness would continue to limit vessels to harvesting in the Mid-Atlantic region and could result in continued loss of revenue for the Atlantic surfclam and ocean quahog fishing fleet.

Moreover, the industry and the MAFMC have requested that the reopening become effective by the start of the 2013 Atlantic surfclam and ocean quahog fishing year on January 1, 2013. A 30-day delay in effectiveness would result in this action not being implemented by January 1, as requested. Because the industry and MAFMC have requested that the area be reopened by January 1, regulated entities are aware of this action and have likely already begun preparing for the area to be reopened on January 1. Therefore, a 30-day delay in effectiveness would not serve any beneficial purpose.

The Office of Management and Budget has determined that this rule is not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration at the proposed rule stage that this final rule will not have a significant economic impact on a substantial number of small entities. The factual basis for this certification was provided in the proposed rule that was published on August 31, 2012 (77 FR 53163) and is not repeated here. No comments were received on this certification and no new information has been obtained that would change this determination. As a result, a final regulatory flexibility analysis is not required and none has been prepared.

NMFS prepared an EA for this action that analyzes the impacts of this rule. A copy of the EA is available from the Federal e-Rulemaking portal http://www.regulations.gov. Type “NOAA-NMFS-2012-0121” in the Enter Keyword or ID field and click search. A copy of the EA is also available upon request from the NMFS Northeast Regional Administrator, John K. Bullard (see ADDRESSES ).

This final rule contains reporting and recordkeeping requirements and associated information collections subject to the Paperwork Reduction Act (PRA) that have been previously approved by OMB under control numbers 0648-0202 and 0648-0240. Measures implemented by this final rule include provisions that require either new or revised collection-of-information requirements. The protocol includes a detailed procedure outlining how shellfish are to be harvested, tested, and handled. The PSP testing protocol includes the following requirements that require analysis under the Paperwork Reduction Act: Submission of concurrence from the state of landing; maintain and submit harvest records; compile and submit laboratory results; create and maintain a written onboard lot segregation plan; and provide notification prior to unloading.

Additionally, to monitor and control the harvest of surfclams and ocean quahogs from the area, and to ensure vessels adhere to the protocol, vessels fishing in the area are required to apply for and obtain a LOA from NMFS. The LOA will help to ensure that vessels are adhering to the regulations for harvesting within the area and provides a mechanism for NMFS to restrict harvesting in the area should a vessel not comply with the terms and conditions of the LOA and/or the PSP testing protocol. The full protocol is available for viewing at www.nero.noaa.gov/sfd/clams/ApprovedProtocol.pdf.

In regards to the requirement to obtain an LOA, in 2011, there were 47 Federal open-access surfclam and/or ocean quahog permitted vessels that landed surfclams and/or ocean quahogs that may wish to fish in the area proposed to be reopened. Each vessel may apply up to once a year, for a maximum of 47 applications. It is expected that each application will take 5 min to complete, for a fleet maximum of 4 hr. There is no additional public cost associated with this change as the application will be submitted with the previously existing annual permit renewal package.

In regards to the information collection required under the protocol, if all of the permitted vessels in 2011 fished in the area, there would be a total of 47 entities, as well as 11 states, that would be required to adhere to the terms and conditions of the PSP testing protocol. While the PSP testing protocol outlines what is required, there will likely be differences in the complexity of the documents as well as varying methods of submission. For this PRA analysis, it is assumed that the traditional method of submission will be used, physical mail at 45 cents per submission; however, it is likely that many submissions will be completed electronically and, therefore, the overall cost would be reduced.

The testing protocol requires numerous elements that contain collection of information requirements, including elements that are submitted to NMFS, as well as to state and private entities. The submission of concurrence from state of landing element is required only of the state, which total 11 entities. This submission will be in the form of an annual written letter, with a total time burden estimate of 11 hr (11 submissions × 1 hr) and would cost $5 (11 submissions × $0.45).

The remainder of the requirements in the protocol apply to individual vessels, and is based on the maximum number of trips that occurred in the area in 2011 (46 trips). Three of these elements require document submission—one of which is an annual submission, and the other two that are required on each trip. The result is 4,370 submissions (((47 × 46) × 2) + 46), with a total public cost burden of $1,967 (4,370 × $0.45). The offload notification requirement does not impose any additional costs, as the notification will be completed through a pre-existing email or cellular phone account and is not required to be submitted in writing.

It is estimated that both the requirement to submit and maintain harvest records and compile and submit laboratory test results would take 30 min each to complete. Based on the number of anticipated trips into the area, there would be 4,324 submissions and a public burden of 2,162 hr (4,324 submissions × 30 min). The element to create and maintain a written onboard lot segregation plan is required annually and will take approximately 60 min to complete for a public burden of 47 hr (47 submissions × 1 hr). The notification element is required on each trip and is estimated to take 5 min per notification, resulting in 180 hr of burden (2,162 notifications × 5 min). The total resulting time burden to the public from all of the requirements to fish in the reopened portion of the GB Closed Area is 2,404 hr (4 + 11 + 2,162 + 47 + 180).

These estimates include the time required for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows: