This rule is issued under Marketing Order No. 983 (7 CFR part 983), regulating the handling of pistachios grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule continues in effect the establishment of procedures for use by the committee in exempting handlers from minimum quality (maximum limits for quality defects and minimum size) testing requirements prescribed under the order. The committee, or its duly authorized agents, will also use these procedures when considering the revocation of exemptions for good cause, and when considering appeals of handlers who have had exemptions denied or revoked.

Section 983.46 of the pistachio order authorizes the committee to recommend that the Secretary modify or suspend the order provisions contained in §§ 983.38 through 983.45. These sections were implemented on August 1, 2005.

Section 983.41 of the pistachio order authorizes exemptions from minimum quality testing requirements for handlers handling less than 1 million pounds of assessed weight pistachios per production year (September 1-August 31) and specifies that the committee may grant handler exemptions. For the purposes, of this document, the term “production year” is synonymous with “marketing year”.

Section 983.70 of the pistachio order exempts handlers who handle 1,000 pounds or less of dried weight (assessed weight) pistachios (dried to 5 percent moisture) during any marketing year from all assessment, aflatoxin, and minimum quality requirements.

Section 983.147 of the pistachio order establishes handler reporting requirements (ACP Forms 2-7) and exempts handlers who handle 1,000 pounds or less of dried weight pistachios from all reporting requirements with the exception of ACP Form-4. Handlers who have handled or intend to handle 1,000 pounds or less of dried weight pistachios during the production year (September 1-August 31) must submit ACP Form-4 by November 15 each year to the committee.

The recommended decision, published on August 4, 2003, (68 FR 45990), indicated that implementing regulations would effectuate the declared policy of the Act by establishing the specific procedures for exempting handlers who handle more than 1,000 pounds and less than 1 million pounds of assessed weight pistachios per production year (September 1-August 31) from minimum quality testing requirements.

Under these authorities, the committee at its April 12, 2005, meeting, unanimously recommended establishing a new section entitled, “§ 983.141—Procedures for Exempting Handlers from Minimum Quality Testing” to specify appropriate exemption, revocation, and appeal procedures. The committee believes that standardized procedures would ensure equitable treatment of applicants for exemptions and those handlers subject to the revocation of such exemptions.

The committee also recommended that handler exemptions under § 983.41(b) not be granted if a handler failed to file required reports, shipped substandard pistachios, or failed to comply with the requirements specified in § 983.41 on exemptions for minimum quality testing. Revocation of approved exemptions could be implemented by the committee, or its duly authorized agents, for the same reasons.

Additionally, the committee recommended that any handler who believes that he/she has been improperly denied an exemption or improperly had an exemption revoked by the committee should be allowed to appeal the committee's action to USDA. The committee recommended that the USDA review any appeals and determine their merit. All appeals must be submitted in writing, and the committee will provide USDA the complete file on each appeal.

The recommended exemption procedures require the committee, or its duly authorized agents, to timely notify all handlers of the opportunity to apply to be exempted from minimum quality testing so that all interested handlers can submit applications on forms provided by the committee by the August 1 deadline; promptly review all requests for exemption; verify that the quantity of assessed weight pistachios handled by any applicants during the prior production year was less than 1 million pounds of assessed weight and that applicants are in compliance with the order's inspection, quality, and reporting requirements; approve or disapprove requests for exemptions by August 20 of each year; maintain complete files concerning the approval or disapproval of each handler's application; and notify handlers by August 30 of approval or disapproval.

A handler's exemption would be revoked by the committee, or its duly authorized agents, if the handler fails to provide reports required under this part, or has not complied with the provisions on minimal quantity testing in § 983.41. Additionally, the committee, or its duly authorized agents, would revoke an approved exemption when a handler audit reveals that a handler has handled a million pounds or more of assessed weight pistachios during the applicable production year. The revocation of a handler's exemption would be made in writing to the handler and specify the reason(s) for and the effective date of the revocation.

Any handler who believes that he/she has been improperly denied an exemption or improperly had an exemption revoked may appeal to USDA for reconsideration within 20 days after notification of the committee's findings. All appeals must be in writing.

The committee, or its duly authorized agents, shall forward all pertinent information related to the handler's appeal to USDA. USDA shall inform the handler and all interested persons of the Secretary's decision.

As previously mentioned, under § 983.70 of the order, this rule continues in effect the application to handlers handling more than 1,000 pounds and less than 1 million pounds because handlers who handle 1,000 pounds or less of dried weight pistachios are exempt from assessment, aflatoxin, and minimum quality requirements and from all reporting requirements under § 983.147 of the order's administrative rules and regulations, with the exception of filing ACP Form-4.

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

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

There are approximately 24 handlers of California pistachios who are subject to regulation under the order and about 741 producers of pistachios in the production area. The Small Business Administration (SBA) (13 CFR 121.20) defines small agricultural service firms as those having annual receipts of less than $6,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Seventeen of the 24 handlers subject to regulation have annual pistachio receipts of less than $6,000,000. In addition, 722 of the 741 producers have annual receipts less than $750,000. Therefore, a majority of handlers and producers may be classified as small entities under the SBA standards.

This rule continues in effect the establishment of procedures for exempting handlers from minimum quality (maximum limits for quality defects and minimum size) testing requirements prescribed under the order. These procedures will be used by the committee when considering handler requests for exemptions from minimum quality testing requirements and when considering revocations of such exemptions. Additionally, this rule continues in effect the establishment of an appeals process for handlers who have been denied an exemption or had an exemption revoked.

Section 983.41(a) of the pistachio order permits handlers who handle less than 1 million pounds of assessed weight pistachios each production year (September 1-August 31) to use optional aflatoxin testing methods. The optional methods permit the sampling and testing of a handler's entire inventory before further processing, and allow handlers to segregate their receipts into various lots for sampling and testing.

Section 983.41(b) of the pistachio order authorizes handler exemptions from minimum quality testing for handlers who handle less than 1 million pounds of assessed weight pistachios per production year, and specifies that the committee may grant such handler exemptions.

Section 983.70 of the pistachio order exempts handlers who handle 1,000 pounds or less of dried weight (assessed weight) pistachios (dried to 5 percent moisture) during any marketing year from all assessment, aflatoxin, and minimum quality requirements. For the purposes of this document, the term “marketing year” is synonymous with “production year” and represents the period September 1 through August 31.

The recommended decision, published on August 4, 2003, (68 FR 45990), indicated that implementing regulations would effectuate the declared policy of the Act by establishing the specific procedures for exempting handlers who handle more than 1,000 pounds and less than 1 million pounds of assessed weight pistachios per production year (September 1-August 31) from minimum quality testing requirements.

Under these authorities, the committee at its April 12, 2005, meeting, unanimously recommended establishing standardized procedures for granting and revoking handler exemption requests, and considering handler appeals on exemption decisions. This action will have a positive impact on small and large handlers by assuring that all exemption applications and reviews are handled equitably following approved standardized procedures.

The committee discussed alternatives to this change, including not making any changes, but determined that specific procedures were needed to facilitate: (1) Exempting handlers from minimum quality testing; (2) revoking exemptions when handlers violate requirements under the marketing order; and (3) processing appeals to the committee's actions. These procedures are expected to ensure that all such requests are treated equitably. The committee's vote was unanimous.

The information collection requirements for the ACP Form-5, which handlers will complete and forward to the committee to request exemption from minimum quality requirements under the order, was previously submitted to the Office of Management and Budget (OMB) and approved under OMB No. 0581-0230. Thus, this action will not impose any additional reporting or recordkeeping requirements on either small or large pistachio handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

The AMS is committed to compliance with the Government Paperwork Elimination Act, which requires government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

Further, the committee's meetings are widely publicized throughout the pistachio industry and all interested persons are encouraged to attend the meetings and participate in the committee's deliberations. Like all committee meetings, the April 12, 2005, meeting was a public meeting and all entities, both large and small, were encouraged to express their views on these issues.

An interim final rule concerning this action was published in the Federal Register on July 22, 2005 (70 FR 42256). Copies of the rule were provided to the committee and handlers by the committee staff. In addition, the rule was made available through the Internet by USDA and the Office of the Federal Register. That rule provided for a 60-day comment period, which ended September 20, 2005. No comments were received.

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

After consideration of all relevant material presented, including the committee's recommendation and other information, it is found that this finalizing the interim final rule, without change, as published in the Federal Register (70 FR 42256, July 22, 2005), will tend to effectuate the declared policy of the Act.

Section 529 of the Internal Revenue Code provides tax benefits for “qualified tuition programs.” See 26 U.S.C. 529(a). Such programs include prepaid tuition programs (which may be created by states or educational institutions) as well as tuition savings programs (which must be sponsored by states or public instrumentalities). See 26 U.S.C. 529(b)(1). A tuition savings program is defined by section 529 as a program under which a person “may make contributions to an account which is established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of the account” (and which meets certain requirements). 26 U.S.C. 529(b)(1)(A)(ii).

Under laws administered by the Securities and Exchange Commission (SEC), interests in a qualified tuition savings program must be sold by a public instrumentality (such as a state investment trust) so that the interests in the program will be exempt from registration under section 2(b) of the Investment Company Act. See 15 U.S.C. 80a-2(b). This means that a participant in a state qualified tuition savings program cannot acquire an asset through the program or public instrumentality. Rather, the participant must acquire an interest or account in the public instrumentality.

Some state 529 programs have provided participants with the option of investing their funds directly in bank deposits. Other state programs have expressed an interest in creating such an option. As stated above, participants in a 529 program must acquire an interest in the public instrumentality. They cannot acquire a particular asset. This means that the public instrumentality, not the participant, will be the legal owner of any bank deposit purchased by or through the public instrumentality.

The fact that any bank deposit will belong to the public instrumentality raises issues under the FDIC's insurance regulations. These issues are discussed below.

Under the applicable section of the FDIC's insurance regulations, the deposits of a corporation are insured up to $100,000 in the aggregate. See 12 CFR 330.11(a)(1). This rule applies to ordinary corporations as well as to business or investment trusts that must file registration statements with the SEC. Generally, this rule also applies to investment trusts that would be required to file registration statements with the SEC “but for” certain sections of the Investment Company Act, including section 2(b).

An exception exists for the deposits of a qualified tuition savings program sponsored by a state or public instrumentality. Although such programs are covered by section 2(b) of the Investment Company Act, the FDIC does not treat the public instrumentality as a corporation with insurance coverage limited to $100,000 in the aggregate. Rather, the FDIC provides insurance coverage up to $100,000 for the interest of each investor or plan participant. The FDIC provides this “pass-through” coverage through an interim final rule published in June of 2005. See 70 FR 33689 (June 9, 2005).

In adopting the interim final rule, the FDIC relied upon the fact that qualified tuition savings programs—in placing participants' funds at banks in a manner that satisfies the FDIC's requirements for “pass-through” insurance coverage—do not function in the manner of ordinary business trusts or investment companies. In a qualified tuition savings program, the deposits are equivalent to brokered deposits. Assuming the satisfaction of certain disclosure requirements, brokered deposits are insured on a “pass-through” basis to the broker's customers. See 70 FR at 33691. Also, in adopting the interim final rule, the FDIC relied upon the Congressional purpose behind section 529. That purpose is to encourage persons to save money for post-secondary educational expenses. Without “pass-through” coverage of deposits, some persons may choose not to participate in 529 programs. See id.

In response to the publication of the interim final rule, the FDIC received seven public comments. These comments were submitted by three bankers' associations, one state regulator, one holding company, one bank, and one banking information company.

One of the comments did not address the substance of the rule but noted a grammatical error (involving noun/verb agreement). The other comments supported the interim final rule, though two changes were suggested. Each of the suggested changes is discussed in turn below.

First, a recommendation was made to create a separate insurance category for the deposits of qualified tuition savings programs so that a participant's funds in a 529 deposit would not be aggregated with the participant's funds in other deposit accounts (if any) at the same insured depository institution. This suggested treatment would be similar to the FDIC's treatment of the deposits of employee benefit plans. See 12 CFR 330.14.

Although the FDIC recognizes the deposits of employee benefit plans as a separate ownership category for purposes of applying the $100,000 insurance limit, this special treatment is based upon a specific statutory provision. See 12 U.S.C. 1821(a)(1)(D). No such statutory provision exists for the deposits of qualified tuition savings programs. In the absence of any such statutory provision, the FDIC is reluctant to recognize a new deposit insurance ownership category.

Moreover, no apparent reason exists to treat the deposits of qualified tuition savings programs differently than deposits held by agents or custodians. In the case of such deposits, the FDIC provides “pass-through” insurance coverage (assuming the satisfaction of certain disclosure requirements) but the FDIC does not insure such deposits separately from all other deposits. Rather, the FDIC aggregates the funds of each owner with the owner's other accounts (if any) at the same insured depository institution. Under these circumstances, the FDIC has decided not to create a new deposit ownership category for the deposits of qualified tuition savings programs under section 529 of the Internal Revenue Code.

Second, a recommendation was made to include specific language about treating each participant's funds “as a deposit account of the participant.” Although this language would not change the substance of the rule, the suggested language could clarify the effect ( i.e. , to provide separate insurance coverage for the funds of each participant). For this reason, the FDIC has adopted the suggested language. 1

Under the final rule, the deposits of a qualified tuition savings program under section 529 of the Internal Revenue Code will not be treated as the deposits of a corporation with coverage limited to $100,000 in the aggregate. Rather, the deposits will be insured up to $100,000 for the interest of each participant or investor (in aggregation with any other deposits of the participant or investor at the same insured depository institution). Such “pass-through” coverage will not be available, however, unless two requirements are satisfied. First, the funds in the account must be traceable to one or more particular investors. Second, the existence of any trust or custodial relationships must be disclosed in accordance with the FDIC's requirements at 12 CFR 330.5.

In providing insurance coverage up to $100,000 for each “participant,” the FDIC means to provide coverage up to $100,000 for each owner of the securities issued by the public instrumentality. In the 529 programs reviewed by the FDIC, these “participants” are the persons who contribute the funds. These persons may be referred to as “account owners.” A distinction exists between these contributors or “account owners” and the “designated beneficiaries” ( i.e. , the persons who will go to college someday).

In the programs reviewed by the FDIC, the contributors retain some rights with respect to the funds ( e.g. , the right to withdraw money under certain circumstances or the right to change the beneficiary). Assuming that the qualified tuition savings program is structured in this manner so that the securities are owned by the contributors, then the FDIC will treat the contributors as the “participants.” If the program is structured so that the securities are owned by the “designated beneficiaries,” however, then the FDIC will treat the beneficiaries as the “participants.” For example, the beneficiary would be the “participant” if no one but the beneficiary possesses the right to withdraw funds or to name a different beneficiary.

Again, the FDIC simply means to provide “pass-through” insurance coverage to the actual owners of the securities. The FDIC does not mean to dictate the terms of a qualified tuition savings program. Such programs must adhere to the requirements of section 529 and the applicable state law.

This rule contains no new collections of information as defined by the Paperwork Reduction Act. See 44 U.S.C. 3501 et seq. Consequently, no information has been submitted to the Office of Management and Budget for review.

A regulatory flexibility analysis is required only when the agency must publish a notice of proposed rulemaking. See 5 U.S.C. 603, 604. Because the amendment to part 330 is being published in final form without a notice of proposed rulemaking, no regulatory flexibility analysis is required.

In accordance with the Small Business Regulatory Enforcement Fairness Act, the FDIC will report this rule to Congress so that the rule may be reviewed. See 5 U.S.C. 801 et seq.

Discussion

The Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified us that an unsafe condition may exist on all Aerospatiale Model ATR42 and ATR72 airplanes. The DGAC advises that a Model ATR72 airplane ditched off the coast of Italy. An investigation revealed that a fuel quality indicator (FQI) having an incorrect part number (P/N) was installed on the airplane. An FQI for the Model ATR72 airplanes may also be inadvertently installed on a Model ATR42 airplane if operators do not adhere to the manufacturer's service information. This condition, if not corrected, could result in fuel starvation to the engine and consequent engine shutdown during flight.

Aerospatiale has issued ATR All Operators Message (AOM) 42-72/2005/08, issue 5, dated September 7, 2005. The AOM describes procedures to determine if the part number of the FQI is consistent with the one provided within the applicable illustrated parts catalog section 28-42-80-01. The DGAC mandated the AOM and issued French emergency airworthiness directive UF-2005-160, dated September 8, 2005, to ensure the continued airworthiness of these airplanes in France.

These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DGAC has kept the FAA informed of the situation described above. We have examined the DGAC's findings, evaluated all pertinent information, and determined that we need to issue an AD for products of this type design that are certificated for operation in the United States.

Therefore, we are issuing this AD to ensure that a correct FQI is installed. This AD requires accomplishing the actions specified in the service information described previously, except as discussed under “Differences Among the AD, the AOM, and the French Emergency Airworthiness Directive.”

Although the French emergency airworthiness directive recommends accomplishing the inspection “before next flight,” we have determined that a compliance time of 7 days for completing the required actions is warranted because most U.S. operators have already completed the inspection. In developing an appropriate compliance time for this AD, we considered the degree of urgency associated with addressing the subject unsafe condition, the average utilization of the affected fleet, and the time necessary to perform the inspections. In light of all of these factors, we find a compliance time of 7 days represents an appropriate interval of time for affected airplanes to continue to operate without compromising safety. This difference has been coordinated with the DGAC.

The French emergency airworthiness directive and the AOM specify to determine the correct P/N of the FQI. However, in addition to the inspection to determine the correct P/N, this AD allows operators to inspect the FQI for applicable markings to determine if the correct FQI is installed. The markings are illustrated in the AOM. This difference has been coordinated with the DGAC.

Although the French emergency airworthiness directive specifies reporting results to the manufacturer, this AD does not require those actions. We do not need this information from operators.

This AD is considered interim action. If final action is later identified, we may consider further rulemaking then.

An unsafe condition exists that requires the immediate adoption of this AD; therefore, providing notice and opportunity for public comment before the AD is issued is impracticable, and good cause exists to make this AD effective in less than 30 days.

This AD is a final rule that involves requirements that affect flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any relevant written data, views, or arguments regarding this AD. Send your comments to an address listed in the ADDRESSES section. Include “Docket No. FAA-2005-22795; Directorate Identifier 2005-NM-193-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the AD that might suggest a need to modify it.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of that web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you may visit http://dms.dot.gov.

You may examine the AD docket on the Internet at http://dms.dot.gov , or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them.

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

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

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

For the reasons discussed above, I certify that the regulation:

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

On March 20, 1998, the Department published regulations addressing the procedures for participation in, and conduct of, sunset reviews. See 63 FR 13516. On December 17, 2004, the Dispute Settlement Body (“DSB”) of the World Trade Organization adopted the reports of the Appellate Body and the dispute settlement panel in United States—Sunset Reviews of Anti-dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R (November 29, 2004) and WT/DS268/R (July 16, 2004), respectively. The AB and the dispute settlement panel found that the waiver provisions of section 751(c)(4)(B) of the Tariff Act of 1930 and section 351.218(d)(2)(iii) of Commerce's sunset regulations are inconsistent with Articles 6.1, 6.2, and 11.3 of the Antidumping Agreement.

Section 123 of the URAA governs the process for changes to the Department's regulations where a dispute settlement panel and/or the Appellate Body finds a regulatory provision to be inconsistent with any of the WTO agreements. Consistent with section 123(g)(1)(C), on August 15, 2005, the Department published proposed amendments to its regulations related to sunset reviews to conform the existing regulations to the United States' obligations under Articles 6.1, 6.2, and 11.3 of the Antidumping Agreement. The Department received four sets of written public comments on the proposed amendments. The Department has carefully considered each of the comments it received, and has adopted a drafting suggestion from one commenter related to the issue of the basis for parties' participating in a hearing in an expedited sunset review. This final rule is published pursuant to section 123(g)(1)(F) of the URAA. The final rule amends the “waiver” provisions which govern treatment of interested parties who do not provide a complete substantive response to the Department's Notice of Initiation of a sunset review and clarifies the basis for parties' participation in a public hearing in an expedited sunset review.

In finalizing the amendments to the Department's regulations addressing the procedures for participation in, and conduct of, sunset reviews, the Department carefully considered each of the comments it received. The following is an explanation of the amendments, as well as a summary of the comments received and the Department's responses to those comments.

Section 751(c)(4)(B) of the Tariff Act provides that where an interested party “waives” its participation in a sunset review, the Department “shall conclude that revocation of the order * * * would be likely to lead to continuation or recurrence of dumping or a countervailable subsidy (as the case may be) with respect to that interested party.” Paragraph (d)(2) of 19 CFR 351.218 deals with the procedure for waiving participation in a sunset review before the Department. Specifically, paragraph (d)(2)(i) provides for filing a “statement of waiver” for parties electing not to participate in the Department's sunset review (so-called “affirmative waiver”), and paragraph (d)(2)(iii) provides that failure to file a complete substantive response to a notice of initiation also will be treated as a waiver of participation (so-called “deemed waiver”). The panel and Appellate Body found that the operation of the statutory and regulatory waiver provisions was inconsistent with the obligation under Article 11.3 to arrive at a “reasoned conclusion” because the Department's order-wide likelihood determination would be based, at least in part, on statutorily-mandated “assumptions” about a company's likelihood of dumping. The AB and panel also found that the operation of paragraph (d)(2)(iii) was inconsistent with “due process rights” of Articles 6.1 and 6.2, because the Department could assume likelihood with respect to a particular company even though that party had filed a substantive response to the notice of initiation, albeit an “incomplete” response.

To implement the AB and panel findings with respect to the operation of the waiver provisions, the Department has modified its regulations to eliminate the possibility that the Department's order-wide likelihood determinations would be based on assumptions about likelihood of continuation or recurrence of dumping or a countervailable subsidy due to interested parties' waiver of participation in sunset reviews. Specifically, the Department has made the following three modifications to paragraph (d)(2) of 19 CFR 351.218. First, with respect to so-called “affirmative waivers” set forth in paragraph (d)(2)(i)—which provides that a party may elect not to participate in the Department's sunset review by filing a “statement of waiver” within 30 days of initiation of the sunset review—the Department has amended the contents of a “statement of waiver” which are set forth in paragraph (d)(2)(ii). Paragraph (d)(2)(ii) now requires that a party filing a Statement of Waiver include a statement that it is likely to dump or benefit from a countervailable subsidy (as the case may be) or, in the case of a foreign government in a CVD sunset review, provide a countervailable subsidy, if the order is revoked or the investigation is terminated. Second, we have eliminated paragraph (d)(2)(iii)—which provided that an interested party is “deemed” to have waived participation in the sunset review by failing to file a complete substantive response to a notice of initiation. Thus, the Department will no longer make company-specific likelihood findings for companies that fail to file a statement of waiver and fail to file a substantive response to the notice of initiation. Finally, we modified paragraphs (d)(2)(iv)(C) and (e)(1)(ii)(B)( 3 )—which address waiver of participation by a foreign government in a CVD sunset review—to eliminate cross-references to paragraph (d)(2)(iii) and to eliminate certain language that might suggest the possibility that the Department's order-wide likelihood determination in a CVD sunset review would be based on assumptions about likelihood of continuation or recurrence of a countervailable subsidy. In sum, these three modifications to the waiver provisions of the Department's sunset regulations ensure that there is no longer the possibility that the Department's order-wide likelihood determinations might be based on assumptions about likelihood of continuation or recurrence of dumping or a countervailable subsidy. The Department will make its order-wide likelihood determinations on the basis of the facts and information available on the record of the sunset review.

Two commenters argue that amendment or withdrawal of the statutory provision (section 751(c)(4)(B) of the Act) found to be WTO-inconsistent was required in order to implement the AB/panel findings. We disagree. By modifying its regulatory waiver provisions, the Department has eliminated the possibility that its order-wide likelihood determinations would be based on assumptions about likelihood of continuation or recurrence of dumping or a countervailable subsidy due to interested parties' waiver of participation in sunset reviews. Section 751(c)(4)(B) of the Act only mandates an affirmative company-specific likelihood finding as a consequence of a party electing to waive its participation in the sunset review. Thus, the modified regulatory waiver requirements result in elimination of any assumptions about likelihood because a party waiving participation would have already indicated to the Department that it was likely to dump or benefit from a countervailable subsidy if the order were revoked.

Two commenters also noted that the regulations would not longer specify how the Department will address the situation where a producer/exporter does not participate in a sunset review. The commenters are correct in part. While it is the statute that provides for determinations on the basis of facts available where, inter alia , a party does not provide requested information (section 776 of the Act), there are specific provisions in the Department's regulations concerning use of facts available in a sunset review (19 CFR 351.308(f)). As a general matter, the Department will make its order-wide likelihood determination on the basis of the facts and information available on the record of the sunset review which may include, where appropriate, use of facts available as provided for in the statute and regulations.

The Appellate Body upheld the panel's finding that the operation of paragraph (d)(2)(iii) of 19 CFR 351.218 was inconsistent with Article 6.2 in that it allegedly denies an interested party that is deemed to have waived its right to participate in a sunset review by submitting an incomplete substantive response the right to participate in a hearing. Paragraph (d)(2)(iii) does not explicitly address the issue of hearings; nor do the regulations preclude hearings in expedited sunset reviews resulting from the application of the waiver provisions. Nevertheless, in the interest of alleviating any perceived confusion with respect to participation in a hearing in an expedited sunset review, the Department is modifying paragraph (c)(1)(iii) of 19 CFR 351.309 to clarify that the Secretary will specify a due date for case briefs in an expedited sunset review. Case briefs provide the basis for parties' affirmative presentations at a hearing. In addition, as discussed above, for other reasons we have eliminated paragraph (d)(2)(iii) in its entirety.

One commenter argued that providing for filing of case briefs in expedited reviews could eliminate the distinction between expedited and full sunset reviews. The commenter proposed, instead, that the regulations provide respondents with an opportunity to supplement their substantive responses to correct identified deficiencies. We have not adopted this suggestion. The central distinction between an expedited and full sunset review remains. In a full sunset review, the regulations provide that the Department will issue a preliminary determination and allow comments on that determination; there is no provision for issuance of a preliminary determination in an expedited sunset review. Clarifying the basis for parties' participation in a public hearing in an expedited sunset review does not change this distinction. The commenter also suggested that if the Department permits the filing of case briefs in an expedited review, it should make a corresponding amendment to paragraph (e)(1)(ii)(C)( 2 ) of 19 CFR 351.218. We agree and have eliminated certain language in paragraph (e)(1)(ii)(C)( 2 ) that could be construed as inconsistent with permitting parties to file case briefs in expedited sunset reviews.

This final rule has been determined to be not significant under E.O. 12866.

The Department finds good cause to waive the 30-day delay in effectiveness pursuant to 5 U.S.C. 553(d)(3) in order to complete requirements mandated by the World Trade Organization (“WTO”) Appellate Body by December 17, 2005. On December 17, 2004, the WTO Appellate Body (“AB”) issued its findings regarding the sunset review of the antidumping duty order on Oil Country Tubular Goods (“OCTG”) from Argentina. The WTO-appointed arbitrator determined, with reference to the Appellate Body report, that the United States must bring its laws into compliance with the Antidumping Agreement and complete another sunset review of the antidumping duty order on OCTG from Argentina not later than December 17, 2005. The Department was informed of this deadline date on June 7, 2005. On August 15, 2005 (70 FR 47738), the Department published a proposed rule to solicit comments on proposed revisions to its regulations related to sunset reviews. In addition, the Department initiated consultations for 60 days with the relevant congressional committees in accordance with section 123 of the Uruguay Round Agreements Act. After the publication of this final rule, the Department still must initiate the sunset review, provide interested parties with 30 days to submit their responses to the Department's sunset questionnaire, analyze the responses, and make a final likelihood determination in the sunset review before December 17, 2005. Thus, in order to meet the WTO-mandated implementation date and to ensure that interested parties have an opportunity to participate fully in the sunset review, the Department finds good cause to waive the 30-day delay in effectiveness of the final rule and makes these regulations effective on October 31, 2005, upon conclusion of the 60-day congressional consultation period required by the Uruguay Round Agreements Act.

Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for a 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 Office of Management and Budget (OMB) control number. This final rule involves collection-of-information requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. The requirements have been approved by OMB under control numbers 0625-0105 and 0625-0148.

This final rule does not contain federalism implications warranting the preparation of a Federalism Assessment.

The Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this final rule will not have a significant impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding the economic impact of this action. As a result, a regulatory flexibility analysis was not prepared.

The Route 71 Bridge, at mile 0.8 across Shark River (South Channel), a bascule-type drawbridge, has a vertical clearance in the closed position to vessels of 13 feet, at mean high water.

The New Jersey Department of Transportation, the bridge owner, requested a temporary deviation from the operating regulations for the Route 71 Bridge, set out in 33 CFR 117.751, to effect emergency repair and replacement of the span lock motor and gear box of the draw span.

To facilitate the work, the Route 71 Bridge will provide vessel openings of the draw span upon two hours advance notice each day from 8 a.m. to 3 p.m. and from 6 p.m. to 10 p.m. beginning on Monday, October 31, 2005 until and including Thursday, November 3, 2005. At all other times, the bridge will operate in accordance with 33 CFR 117.751.

The Coast Guard has informed the known users of the waterway of the closure periods for the bridge so that these vessels can arrange their transits to minimize any impact caused by the temporary deviation.

In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Medicare and Medicaid-participating nursing homes are regulated by sections 1819 and 1919 of the Social Security Act (the Act), added by Title IV, subtitle C of the Omnibus Budget Reconciliation Act of 1987 (OBRA '87) (Pub. L. 100-203, December 22, 1987).

On February 27, 2004 we published a proposed rule in the Federal Register entitled “Medicare and Medicaid Programs; Requirements for Long Term Care Facilities; Nursing Services; Posting of Nurse Staffing Information” (69 FR 9282). In the proposed rule, we presented our proposal to implement section 941 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) by establishing a new data collection and recordkeeping requirement for SNFs and NFs. Section 941 of BIPA, which was effective January 1, 2003, requires SNFs and NFs to post daily, for each shift, the number of licensed and unlicensed nursing staff directly responsible for resident care in the facility, and it requires the information to be displayed clearly in a visible place. Additionally, section 941 of BIPA requires the Secretary of Health and Human Services (the Secretary) to specify a “uniform manner” for display of this information.

In the February 27, 2004 proposed rule, we proposed that SNFs and NFs be required to: (1) On a daily basis, use a CMS-specified form at the end of each shift to indicate the number of full-time equivalents (FTEs) of registered nurses, licensed practical nurses, licensed vocational nurses, and certified nurse aides (CNAs) directly responsible for resident care; (2) verify or determine the resident census on a daily basis, (3) post the completed form in a prominent place readily accessible to residents and visitors; (4) make the form available to the public upon request; and (5) maintain the forms for a minimum of 3 years or as required by State law, whichever is greater. The requirements in this final rule were revised based on the comments we received on the proposed rule.

To date, we have also taken the following actions to educate providers and clarify the requirements to implement section 941 of BIPA:

• An October 10, 2002 letter to State Agency Directors, which can be found at http://www.cms.hhs.gov/medicaid/survey-cert/SC0303.pdf .

• Presentation of information at a national nursing home conference.

• Publication of a notice on an electronic bulletin board used by nursing homes.

• A December 24, 2002 letter to nursing homes, which can be found at http://www.cms.hhs.gov/medicaid/bipa/bipanh.asp .

In November 2001, the Secretary announced an initiative to focus on efforts to address quality of care improvement for nursing homes. The Nursing Home Quality Initiative, implemented nationwide in November 2002, represents a broad-based program that includes our continuing regulatory and enforcement systems, new and improved consumer information, community-based nursing home quality improvement programs and partnerships, and collaborative efforts to promote quality awareness and improvement.

Working with quality measurement experts, the National Quality Forum and a diverse group of nursing home industry stakeholders, we adopted a set of nursing home quality measures. The Nursing Home Quality Initiative combines new information for consumers about the quality of care provided in individual nursing homes with current resources available to nursing homes to improve the quality of care in their facilities data for comparison, deficiency survey results and staffing information about the nation's Medicare and Medicaid-certified nursing homes through the Nursing Home Compare Web site, which is updated quarterly.

The main components of the initiative are nursing home quality measures derived from resident assessment data. This information is routinely collected by nursing homes at specified intervals during a resident's stay (using the Minimum Data Set or MDS). These measures provide additional information to help consumers make informed decisions about nursing home care options. Publication of the measures is intended to motivate nursing homes to improve care delivery and encourage discussions about quality between consumers and clinicians.

Additional CMS-sponsored quality improvement information may be found in the “Nursing Home Compare” section of our Web site at http://www.medicare.gov . The primary purpose of Nursing Home Compare is to provide detailed information about the past performance of every Medicare- and Medicaid-certified nursing home in the country. Nursing Home Compare contains the following sections of detailed information:

• About the Nursing Home: including the number of beds and type of ownership.

• Quality Measures: including the percentage of residents with pressure (bed) sores, percentage of residents with physical restraints, and more.

• Inspection Result Information: including health and safety deficiencies found during the most recent State nursing home survey and from recent complaint investigations.

• Nursing Home Staff Information: including the average number of hours worked by registered nurses, licensed practical or vocational nurses, and certified nurse aides per resident per day.

Each nursing home is required to report nursing staff totals to its State survey agency during the annual survey. We receive this information from the State survey agencies and convert the nursing staff hours reported into the number of staff hours per resident per day. We report the total nursing staff hours per resident per day, as well as the total nursing staff hours per resident per day for registered nurses, licensed practical nurses, and licensed vocational nurses. (Facility staffing measures reflected in Nursing Home Compare may be updated or revised in the future.)

NFs are required to have adequate staff to give appropriate care to all residents. SNFs and NFs must have at least one registered nurse for at least 8 consecutive hours per day, 7 days per week, and either a registered nurse, licensed practical nurse or licensed vocational nurse, and other nursing personnel on duty 24 hours per day, unless a waiver has been granted in accordance with § 483.30(c) or § 483.30(d). Certain States may have more stringent nurse staffing specifications than the Federal requirements.

Section 4801(e)(17)(B) of the Omnibus Budget Reconciliation Act of 1990 (OBRA '90) (Pub. L. 101-508, November 5, 1990) required the Secretary to report the results of a study to the Congress on the appropriateness of establishing minimum caregiver-to-resident and supervisor-to-nurse ratios for Medicare- and Medicaid-certified nursing homes. The purpose of the study was to examine the analytic justification for establishing minimum nurse staffing ratios for nursing homes. The study, entitled “Appropriateness of Minimum Nurse Staffing Ratios in Nursing Homes,” (Report to Congress, July 2000) was conducted in two phases. Phase I of the study http://www.cms.hhs.gov/Medicaid/reports/rp700hmp.asp ) examined whether an association exists between staffing levels in nursing homes and quality of care. Phase II of the study ( http://www.cms.hhs.gov/medicaid/reports/rp1201home.asp ) examined the cost and benefits associated with establishing staffing minimums and expanding the data used in the multivariate analysis from three States to a more representative national sample. It included an exploration of more refined case mix classification methods and case studies to validate Phase I findings, while examining related issues affecting certified nurse aide recruitment and retention. In both Phase I and Phase II studies, the phrase “nurse staffing” referenced all three categories of nurses and nurse aides: registered nurses, licensed practical nurses, and nurse aides. Based upon these studies, we do not believe sufficient evidence exists to warrant minimum nurse staffing ratio requirements. Abt Associates and CMS staff have completed a draft report with options for: (1) Collecting more accurate staffing data; (2) auditing the data collected; (3) transmitting the data; and (4) configuring the data so that they can be informative to the public when placed on our website.

Consistent with our November 2002 initiative to disseminate reliable information on nursing home quality for Medicare and Medicaid beneficiaries, our objective in finalizing the February 27, 2004, proposed rule is to make staffing information available to the public to assist them in making informed decisions when choosing health care providers. This regulation provides consumers with staffing information on a day-to-day basis.

On February 27, 2004, we published a proposed rule in the Federal Register entitled “Medicare and Medicaid Programs; Requirements for Long Term Care Facilities; Nursing Services; Posting of Nurse Staffing Information” (69 FR 9282). Below we summarize and discuss the proposed changes to the general conditions and requirements in § 483.30, Nursing services.

We proposed to revise § 483.30 by adding a new paragraph (e) that would require nursing homes to post nurse-staffing information in accordance with section 941 of BIPA, specified as sections 1819(b)(8) and 1919(b)(8) of the Act. We proposed daily collection requirements for staffing information, identified categories of staff for which the provision would apply, and established record keeping specifications, that is, a specific form SNFs and NFs would use to display staffing information by shift. We also proposed requiring SNFs and NFs to make this information available to the public upon request and maintain the forms for 3 years or as required by State law, whichever is greater.

In the February 27, 2004 proposed rule, we also noted that neither section 1819(b)(8) nor section 1919(b)(8) of the Act specifies what constitutes “licensed and unlicensed nursing staff.” In the proposed rule, we interpreted “licensed and unlicensed nursing staff” to mean registered nurses, licensed practical nurses or licensed vocational nurses (as the term(s) are defined under State law), and certified nurse aides.

We also proposed to revise § 483.30 by adding a requirement that SNFs and NFs collect and display the resident census for each day. While collection of resident census information is not specifically required under section 941 of BIPA, we believe that collection of this information is authorized under our general statutory authority as defined in sections 1819(f)(1) and 1919(f)(1) of the Act. These sections require the Secretary to “assure that requirements which govern the provision of care [in both SNFs and NFs] * * * and the enforcement of those requirements, are adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of public moneys.” We believe the addition of census information makes the nurse staffing data more meaningful and useful to the public and is in line with our rulemaking authority. Providing resident census data along with nurse staffing data gives consumers a context and information they can use to interpret the data and reach conclusions regarding the nurse staffing levels in relation to the resident population.

We proposed to add a new § 483.30(e)(1) that would specify the contents and format of the information in accordance with the statutory authority provided by BIPA, which mandates that the information must be “displayed in a uniform manner.” Proposed § 483.30(e)(1) through § 483.30(e)(3) would require that the nurse staffing and census information:

• Include current nurse staffing numbers calculated as full time equivalents (FTEs) for each shift;

• Include the daily resident census;

• Be posted on the CMS Daily Nurse Staffing Form; and

• Be displayed in a prominent place readily accessible to residents and visitors.

We received a total of 82 timely items of correspondence from individuals, providers, national and regional health care professional associations and advocacy groups, State and local health organizations, labor unions, health care law firms, and others. Summaries of the public comments received and our responses to those comments are set forth below under the appropriate subject headings. The first section, “Information Requirements,” includes comments and responses that primarily relate to the proposed requirements in § 483.30(e)(1), that is, the proposed requirement to calculate full time equivalents (FTEs) for nursing staff and the proposed requirement to determine or verify resident census. The second section, “Form Use and Posting Requirements,” contains comments and responses regarding the requirements in § 483.30(e)(2), that is, the proposed CMS-specified form and the proposed requirements for displaying the form. The third section, “Public Access and Data Retention Requirements,” includes comments and responses regarding the proposed requirements in § 483.30(e)(3) for maintaining data and making them publicly available. The fourth section, “General Comments” includes comments about the preamble discussion and other issues that fall outside the specified requirements of the February 27, 2004, proposed rule.

In § 483.30(e)(1), we proposed requiring that SNFs and NFs on a daily basis, at the end of each shift, calculate the number of full time equivalents (FTEs) for the following licensed and unlicensed nursing staff directly responsible for resident care: (A) Registered nurses (RN); (B) Licensed practical nurses (LPN) or licensed vocational nurses(LVN) (as defined under State law); and (C) Certified nurse aides. In addition we proposed requiring SNFs and NFs to determine or verify the resident census on a daily basis.

Comment: A number of commenters voiced their disagreement with the proposal to require facilities to post staffing data according to FTEs. Commenters stated that the requirement “goes beyond the law” and pointed out that section 941 of BIPA requires only that nursing facilities post the number of licensed and unlicensed staff for each shift every day. In addition, commenters pointed out that in our December 24, 2002 memorandum sent to nursing facilities, we gave facilities discretion with respect to how the nurse staffing and census data are to be displayed, provided that the required information is displayed in a uniform manner in a clearly visible place.

Commenters further indicated that the use of FTEs may make it difficult for families and the public to understand, and staff time will be wasted explaining FTEs to visitors.

Response: We agree with the commenters that displaying nurse staffing totals using FTEs could be confusing and may not accurately represent the number of staff providing care during a given time period. For example, 1 LPN FTE during an 8-hour (3 p.m. to 11 p.m.) shift could mean that 1 LPN worked the entire 8-hour shift. However, it could also mean that 2 LPNs worked 4 hours each from 3 p.m. to 7 p.m. and that no LPNs worked in the unit from 7 p.m. to 11 p.m. Clearly, displaying FTEs does not provide sufficient information to determine the number of staff present at a given point in time, which is important for families and visitors to know.

Therefore, instead of requiring facilities to post FTEs, in this final rule we are requiring facilities to post the number of nursing staff by category (RN, LPN or LVN, and CNA) providing direct care to residents during each shift and the actual hours worked by the staff during each shift (for example 7 p.m. to 11 p.m.). More specific information about the required data and the method for displaying the data are presented later in this preamble.

Comment: A few commenters stated that staffing level data would not be helpful to the public unless information about resident acuity was included. One commenter indicated that without consideration of the acuity of the residents the posting of staffing will be meaningless.

Response: We agree that it would be valuable to have the acuity information posted along with the staffing data. However, there are wide variations in the types of populations served in SNFs and NFs. In addition, there are no accepted standardized measures of resident acuity that can be applied across all facilities. Therefore, in this final rule, we are not requiring facilities to post resident acuity level data.

Comment: One commenter stated that instead of posting the number of staff, the facility should post the number of hours of training and the type of training the staff receives.

Response: We appreciate the comment, but requiring the posting of information about staff training is not within the scope of this regulation, which is to develop requirements for implementation and codification of the requirements of section 941 of BIPA, which requires the posting of specific nurse staffing information. We would point out that requiring facilities to identify the number of each category of nursing staff (that is RN, LPN, LVN and CNA) provides the public with some degree of knowledge about their education and training.

Comment: Many commenters stated that nurse staffing data are not sufficient to inform families and the public about the quality of care in a facility.

Response: While we are in agreement with commenters who noted that the provision of nurse staffing data alone is insufficient to evaluate quality of care within a facility, we are currently conducting a wide range of regulatory and research activities focused on nursing home quality assessment and improvement. For example, at our Nursing Home Compare website, we present quality measures, deficiency information, and other basic information about facility performance. We also encourage consumers to visit facilities.

Nurse staffing information is critical data to help consumers make informed decisions when selecting a facility. Census information provides a basis for consumers to understand the relative number of nursing staff providing direct care to all of the residents during each shift. We believe that implementing the nurse staffing requirements in section 941 of BIPA, as well as establishing a requirement for collecting and posting census data offers the public access to updated data and other information that can assist them in making healthcare decisions.

Comment: Some commenters stated they would like the nurse staffing form to include all the staff working on a particular shift, including medical records reviewers, MDS coordinators, directors of nursing, persons conducting interdisciplinary team meetings, and others who work with residents at some level.

Response: Activities such as data collecting, conducting and coordinating meetings, and reviewing records are outside the scope of BIPA requirements. However, facilities may choose to provide that information separately as part of the same documentation that is used to display nurse-staffing data. Therefore, in this final rule, facilities have been given discretion with respect to the manner in which the nurse staffing and census data are displayed, provided that the required information is displayed in a uniform manner in a clearly visible place.

Comment: One commenter suggested that we require staff-to-resident ratios on the form.

Response: As we stated in the preamble of the February 27, 2004 proposed rule, we do not believe sufficient evidence exists to warrant minimum nurse staffing ratio requirements. In addition, the level of care needed and the resident acuity level varies from facility to facility, which limits the utility of those data. However, a facility is not prevented from posting that information should they choose to do so. Therefore, in this final rule facilities have been given discretion with respect to the manner in which the nurse staffing and census data are displayed, provided that the required information is displayed in a uniform manner in a clearly visible place.

Comment: Some commenters stated the forms should include the names of each staff member at work during the shift.

Response: We appreciate the comment but do not believe that facilities should be required to post names of staff. Such a requirement would increase the paperwork and recordkeeeping burden on SNFs and NFs without serving the purpose of making staff level information available. We believe collecting and updating staff data would be more time consuming. In this final rule, facilities have been given discretion to create their own document that may include more information than the mandated data.

Comment: Some commenters stated that the nurse staffing form should include the name and signature of the person who completes it, so that the public knows to whom questions should be directed.

Response: Facilities may wish to include contact information for someone who can answer questions. (This is likely to be the nursing supervisor on each shift, not necessarily the person who completed the information that is posted.) Facilities certainly may post information that is not required under this final rule. However, in this final rule, to minimize the burden of these requirements, we are not specifically requiring that facilities include that information.

Comment: Many commenters expressed their concern that the process of collecting and posting of data will take nursing staff away from resident care.

Response: We appreciate the commenters' concerns. However, this final rule does not require that nursing staff complete and update this information, and we do not expect that preparing and posting the information will take much time. Clerical staff should be able to prepare and post the data quickly. Therefore, we are not requiring specific personnel to collect, verify, or post the data that have to be displayed daily.

Comment: Some commenters were not sure how to determine which nursing staff should be included under section 941 of BIPA. They asked for clarification of the meaning of “directly responsible for resident care.”

Response: In this final rule, we clarify the term “directly responsible for resident care” to mean that an individual is providing direct care to residents or is directly responsible for care provided to residents. Providing direct care means that an individual has responsibility for the residents' total care or some aspect of the residents' care. Resident contact is an intrinsic part of direct care. “Directly responsible for resident care” includes, but is not limited to, such activities as assisting with activities of daily living (ADLs), performing gastro-intestinal feeds, giving medications, supervising the care given by CNAs, and performing nursing assessments to admit residents or notify physicians about a change in condition.

For example, when an RN is assigned to submit MDS data to a State agency for the day, that RN would not be regarded as providing direct care. However, if the same RN is assigned to the unit for providing resident care, then the hours worked by the RN in the unit would be included in the posted data. Therefore, in this final rule, we require only the data related to the number of direct care staff on each shift be posted.

Comment: Many commenters stated that this data collection is a redundant process as the facilities already collect and report those data to surveyors.

Response: We are aware that facilities are required to provide information, including the actual number of direct care staff and direct care hours worked to us. Therefore, this final rule codifies section 941 of BIPA, which specifically requires the posting of nurse staffing information. The purpose of this final regulation is to make the data available to the public on a daily basis. Facilities should be able to reduce the burden by providing surveyors with the staffing level data they collect and post every day for families and the public. This would eliminate the need to collect the data twice.

Comment: Many commenters stated that CMS needs an enforcement mechanism to ensure accuracy of the data. Some commenters suggested that the data be transmitted to CMS for validation and others stated that surveyors must validate it. Other commenters stated that the validation is much more reliable when family members or others who are in the facility visiting at a particular time check the validity of the posted data, as they can verify the number of staff working at a given time.

Response: As we discussed in the preamble of the February 27, 2004 proposed rule, we would expect facilities to retain this information in order to be able to produce it if requested by a State Agency, the public, or CMS. While surveyors are aware of the nurse staff posting requirements and can check for compliance at any time and report their findings to us, we do not currently require them to do so. (We are currently working to update nursing home survey requirements and revise the State Operations Manual (SOM) to provide additional guidance for surveyors and facilities.) Sending the information to us would not serve the purpose of validating the accuracy of the displayed information. Family members, ombudsmen, and others visiting the facilities will be able to verify the accuracy of the data posted, as they can check the number of nursing staff in realtime.

We proposed at § 483.30(e)(1)(ii) that SNFs and NFs determine or verify the resident census on a daily basis. Forty percent of the comments we received included a comment about posting of census data.

Comment: Many commenters supported the presentation of the census data on the staffing form.

Response: We appreciate your comments and agree that providing resident census data gives families and residents a frame of reference by which they can view the nurse-staffing level data. The number of nursing staff alone, without the census data, may not be meaningful. Census information provides a basis for inferring the number of nursing hours available to residents. In this final rule, we require that census data be posted daily.

Comment: Some commenters did not support the posting of census data and stated that it is of little value if staffing ratio or acuity of the resident population is not captured.

Response: Although we do not require that resident acuity level be posted, we believe it is important for consumers to have information about the number of residents in the facility to provide a context for understanding of the nurse-staffing data. Facilities that have been posting nurse staffing information since BIPA was implemented report that posting staff data has helped them, as it has addressed families' questions regarding the number of staff working at a given time. Acuity levels across facilities vary tremendously, and currently there are no generally accepted standard measures. Additionally, requiring the posting of this information is beyond this scope of the statute. Therefore, in this final rule, we require census data to be posted daily.

We proposed at § 483.30(e)(2)(i) to require SNFs and NFs to use a CMS-specified form (Daily Nurse Staffing Form) to enter the information specified in paragraph (e)(1) of this section, and we proposed at § 483.30(e)(2)(ii) to require that the completed Daily Nurse Staffing Form be posted in a prominent place readily accessible to residents and visitors.

Approximately 90 percent of commenters had comments concerning the proposed requirement for use of the CMS-specified form; about 30 percent of commenters had comments about where the form should be posted.

Comment: Many commenters expressed concerns that the CMS-specified form does not meet their facility's staffing patterns, and that the calculations would be very burdensome if a facility does not use standard 8-hour shifts or has overlapping shifts. Commenters stated that the nursing shortage has caused them to use 2-hour shifts and 4-hour shifts to help meet the needs of their residents. Others stated that nurses may work 12 hours just on a weekend to cover the shortage in a facility. Commenters stated that alternate staffing patterns cannot be captured on the proposed CMS-specified form. Some commenters also stated that requiring the use of a CMS-specified form does not conform to the information in the December 24, 2003 CMS State agency directors' letter.

Response: After reviewing the comments on the proposed mandatory form, we reviewed the issues raised by the commenters and found that many facilities have non-standard or overlapping shifts. For example 1 unit within a facility may have 1 RN working 7 a.m. to 7 p.m., 1 LPN working 7 a.m. to 3 p.m., 1 LPN working 8 a.m. to 4 p.m., 2 CNAs working 6 a.m. to 2 p.m., 4 CNAs working 7 a.m. to 3 p.m., and 2 CNAs working 7 a.m. through 7 p.m. Overlapping shifts ensure that a unit has sufficient staffing available during the busiest times of the day, for example, giving medications, preparing end stage renal disease (ESRD) patients to be transported for dialysis, or assisting residents at mealtimes. To address these varied staffing patterns, many facilities have developed their own forms to display nurse staffing data and have found their own forms to be useful and informative.

Therefore, we have concluded that facilities should have the flexibility to develop their own documents for displaying the required information. Note that in the context of this final rule, we are using the term “document” to refer to the medium a facility may use to display nurse staffing information. The “document” may be a form or a spreadsheet, as long as all the required information is displayed in a clearly visible place. Further, the information on the document should be displayed in a uniform manner and presented in a clear and readable format. If requested, hard copies of the document must be made available to families and the public, as specified in § 483.30(e)(3)(i) of the proposed rule and § 483.30(e)(3) of this final rule.

The following is an example of one method for displaying nurse staffing information, using the information for one shift in a 24-hour period.

Name of the Facility:

Sample Nursing Home

Date: January 24, 2005

Comment: Several commenters strongly opposed the proposal to delay calculating and posting nurse staffing data until the end of the shift. Commenters stated that data posted at the end of a shift are not of any use to resident families since it is after the fact. Some commenters pointed out that CMS agreed to the form being posted closer to the beginning of the shift in the December 24, 2003 State Agency Directors' letter.

Response: We agree that it is preferable for families and visitors to have the opportunity to view nurse-staffing data that reflects the staffing level at the time they are visiting the facility. Therefore, in this final rule, we are requiring facilities to post the information at the beginning of the shift. If any changes to the information posted are needed, they must be made as soon as possible.

Comment: Some commenters stated that the staffing sheet should show the staffing levels for the entire day, not just for one shift at a time.

Response: We agree families may be interested in knowing the staffing levels for the entire 24-period, rather than staffing levels for a single shift. However, it is also important to have accurate and updated information posted each shift. If families are interested in staffing levels for other shifts, they can ask to see data from those shifts.

Comment: One commenter expressed concern regarding identifying the first shift of the day. The commenter pointed out that a day starts after midnight; therefore, the night shift would be the first shift.

Response: Standard practice in most facilities is to consider the start of the day as the morning shift. However, there are variations in shifts among facilities. Some have night shifts starting at 10 p.m.; some at 11 p.m.; and some at 12 midnight. Additionally, the length of shifts vary among facilities. Some have 12-hour shifts and others 8-hour or even 4-hour shifts. While we are requiring uniformity in the displaying of the nurse-staffing level data for each shift, we are providing facilities with the flexibility to identify the shift breakdowns so the 24-hour staffing coverage can be determined in an accurate manner.

Comment: Many commenters stated that we should require that the staffing form be posted within 1 hour of the start of the shift; others suggested 2 hours.

Response: Although we are requiring that facilities post nurse staffing data at the beginning of the facility-specified shift, we do not believe it is necessary to dictate a particular time frame. Staffing levels may change unexpectedly, and we believe facilities should have the flexibility to ensure the accuracy of the information before posting it.

Comment: Some commenters asked, “which census should be recorded, the census at midnight or the average census for the day?”

Response: The facility must post the census at the beginning of each shift. For example, the 7am to 3pm shift would post the census at 7am and so forth. In most facilities, the census data can be obtained from the shift report that nursing supervisors give to the next shift.

Comment: Some commenters stated that the term “uniform manner” needs to be clarified, referring to the requirement that the information must be displayed in a uniform manner.

Response: “Uniform manner” means that certain required information must be displayed on or in a document of the facility's choosing in a format that assures the information can be read and clearly understood by the reader. The required information includes: (1) The name of the facility; (2) the date, (3) the resident census; (4) each facility shift for a 24 hour period; and (5) the specific hours worked, per shift, aggregated by category (registered nurses, licensed practical nurses or licensed vocational nurses (as the term(s) are defined under State law), and certified nurse aides).

For example: Three RNs worked for 4 hours each during an 8-hour shift, which started at 7 a.m. and ended at 3 p.m. Two of the RNs worked from 7 a.m. to 11 p.m., and one RN worked from 11 a.m. to 3 p.m. The facility's posting would show the shift (7 a.m. to 3 p.m.), the specific work hours (2 RNs from 7 a.m. through 11 p.m., and 1 RN from 11 a.m. through 3 p.m.), and the total number of RNs on duty during the shift (1.5). Note that although 3 RNs worked for some part of the shift, the total number displayed would be 1.5 because each RN worked for only half the 8-hour shift. The total number of RNs would be 3 only if all 3 RNs worked for the entire 8-hour shift.

The data should be updated at the beginning of every shift to reflect actual hours worked by registered nurses, licensed practical nurses, and nurse aides during the facility-identified shift in question and the total hours worked. The document on which the information is displayed should be clear and readable to residents and visitors.

The facilities have discretion with respect to displaying the nurse staffing and census data provided the information is in a clearly visible place and contains the required data elements.

Comment: Some commenters stated that the daily nurse staffing form should be posted on each unit.

Response: The facilities can choose to post information on each unit. We require that the nurse staffing information be posted in a visible and easily accessible area that is common to visitors and residents. If a facility posts the information on each unit, for just that unit, we would still expect all nurse staffing information to be posted in a visible and easily accessible common area.

Comment: Many commenters voiced their support for the requirement that the information is to be posted in a prominent place readily accessible to residents and visitors.

Response: We appreciate the support and agree that it is important for visitors and residents to be able to locate the information. Therefore, in this final rule, we require that the data be displayed in a clear and readable manner and be posted in a prominent place that is readily accessible to residents and visitors.

Comment: Some commenters stated that CMS needs to mandate the size of the paper or the size of the font to ensure that the form is readable.

Response: We are requiring facilities to display the information in a clear and readable manner. Facilities are free to use the paper and font they choose, as long as the information is displayed in a manner that meets these requirements. We believe facilities should have the flexibility to determine how best to display the information so that it is clear and readable. Therefore, in this final rule, we require that the data be displayed in a clear and readable manner.

Comment: Some commenters wanted more precise instructions for completing the required nurse staffing data.

Response: As discussed earlier, after reviewing the comments on the feasibility of using a standardized form regarding variations in shifts and staffing patterns, we have concluded that facilities must have the flexibility to capture daily nurse staffing data. This final rule does not prevent facilities from providing additional data.

We proposed public access and data retention requirements at § 483.30(e)(3). Forty percent of the commenters had a comment about the proposed access requirements at § 483.30(e)(3)(i) that would require SNFs and NFs to make the Daily Nurse Staffing Form(s) available to the public upon request. Sixty percent of the comments received included a comment about the proposed data retention requirements.

Comment: A few commenters agreed with the proposed requirement and suggested that facilities keep the forms in a notebook at the front desk so the public would have easy access to them. The commenters further stated that both oral and written requests to see the forms should be honored; records should be provided within 24 hours of the request; and records should be copied at costs not to exceed community photocopying standards and the actual cost of clerical time to copy the documents.

Response: Facilities have the flexibility to decide how to make the documents accessible to the public. In this final rule, we require that upon oral or written request, facilities must make the nurse staffing data available to the public for review. Furthermore, we require that facilities must provide, as requested, photocopies of the documents at a cost not to exceed the community standard.

This requirement is similar to the current requirements at 42 CFR 483.10(b)(2) that the resident or his or her legal representative has the right—(i) Upon an oral or written request, to access all records pertaining to himself or herself including current clinical records within 24 hours (excluding weekends and holidays); and (ii) After receipt of his or her records for inspection, to purchase at a cost not to exceed the community standards, photocopies of their records or any portion of them upon request after a 2 working days advance notice to the facility.

We proposed that the Daily Nurse Staffing Form(s) be maintained for a minimum of 3 years, or as required by State law, whichever is greater. It is our expectation that a SNF or NF will retain this information in keeping with standard business practices and be able to produce it if requested by the State Agency or the public.

Comment: A few commenters agreed with the proposed requirement that the forms should be retained for 3 years or as required by State law, whichever is greater. However, many other commenters stated that a requirement to maintain records for 3 years would be burdensome, unnecessary, and costly in terms of wasted time, paper, storage space, and personnel. One commenter suggested reducing the requirement to 1 year or deleting it altogether. Another commenter suggested retaining the records only until the next certification survey.

Response: We understand the commenters' concerns and have concluded that it is not beneficial for facilities to retain the nurse staffing records for 3 years. Therefore in this final rule, we are requiring facilities to retain nurse staffing data for only 18 months. Since nursing home surveys generally are conducted every 9 to 15 months, retaining the data for 18 months ensures their availability to surveyors. It also ensures that records are available for a reasonable period of time if residents or the public want to see them.

Comment: Some commenters stated that maintaining the nurse staffing data are redundant, since staffing schedules, pay roll, and other data typically maintained by facilities would provide the same information.

Response: We understand that facilities keep certain records that would contain the same information. However, this information is not maintained in a format that would enable families and the public to determine staffing levels across the facility on a given day or days. The data, as displayed, are different from the data acquired from payroll records, as payroll records contain only the hours each staff person worked in a given pay period, not whether the staff person provided direct care to residents or performed some other duty, such as coordinating MDS data. Furthermore, section 941 of BIPA mandates that facilities post nurse staffing information daily and make the posted information available to the public. Therefore, in this final rule, we require the facilities to post daily nurse staffing data for specified direct care nursing staff.

Comment: A commenter stated that the retention of records is not necessary since the information will not be submitted to an agency.

Response: The commenter is correct that we are not requiring data to be submitted to an agency; however, the statute requires the information be available to the public. Therefore, in this final rule, we require that nurse staffing data to be maintained for a minimum of 18 months which will also cover the annual survey period.

A number of commenters included discussions on topics related to nurse staffing, but not specifically proposed in the February 27, 2004 rule. The comments that follow were considered out of scope and as such were not part of our consideration in this final rule.

Comment: Several commenters stated that the BIPA requirements are helpful, although some commenters expressed concerns related to specific implementation requirements. One commenter reported that posting of the nurse staffing form in their facility for the past year has posed no problem at all. The commenter stated that it has even helped the facility resolve certain issues with family members.

Response: We appreciate the support; it is encouraging to know that facilities have been able to comply with our requirements and have found the display of the information to be helpful.

Comment: A few commenters wanted to know if these requirements apply to swing beds and hospitals.

Response: The requirements in this proposed rule apply only to nursing facilities, that is, SNFs and NFs.

Comment: One commenter stated that “a better way would be to require a resident's family member or guardian to visit the resident a minimum of once per week to observe the care of the resident and report any concerns to the facility management or, if unresolved, to a liaison to the government.”

Response: Family members of residents are free to visit and observe the care given to the resident and report concerns to the facility, the State survey agency or the ombudsman. Requiring a resident's family member or guardian to visit the resident a minimum of once per week is beyond the scope of this final rule.

Comment: One commenter interpreted the preamble language that discusses the Nursing Home Quality Initiative as being a part of the proposed requirement. The commenter stated that the background information contradicts itself. The referenced section states, “Although staffing is not an explicit part of this initiative * * *” and “Based upon these studies, at this time, we do not believe sufficient evidence exists to warrant minimum nurse staffing ratio requirements.”

Response: We would like to clarify that the “initiative” that is being discussed is the Nursing Home Quality Initiative and is not part of this final regulation. The preamble to the February 27, 2004 proposed rule states that we do not believe sufficient evidence exists to warrant minimum nurse staffing ratio requirements based on the study discussed. In our discussion of the value of the data required by this regulation, for example we noted, “Consistent with our November 2002 initiative to disseminate and publish reliable information on nursing home quality for Medicare and Medicaid beneficiaries, our objective is to make staffing information available to the public to assist them in making informed decisions when choosing health care providers.”

Comment: One commenter stated that requiring a nursing home to post the FTE and census data does not ensure nurse staffing levels will increase due to the market demand created by an informed public.

Response: We agree with the comment. Clearly, providing information to consumers about nurse staffing levels will not be sufficient to increase staffing levels. However, the intent of the requirements in this rule is to make staffing information available to residents and visitors at any given time.

Comment: A few commenters stated that they were not in agreement with the contention that the Minimum Staffing Ratios in Nursing Home Phase I and Phase II fail to provide sufficient evidence to warrant minimum staffing ratio requirements.

Response: We appreciate the comments. However, we do not believe sufficient evidence exists to warrant minimum nurse staffing ratio requirements. There exists a great variation in the population served in nursing facilities, not just in the acuity level but also in the experience and credentials of staff. Additionally, requiring a specific nurse-to-resident ratio is beyond the scope of this final rule.

Comment: Some commenters urged CMS to release Abt Associates' recommendations to the public as soon as they are made so that the facilities can implement them in a timely manner.

Response: We appreciate the comments and will share them with our staff overseeing the Abt Associate study. The study is mentioned in the preamble of this final rule as it is related to staffing, but it is not directly related to these requirements as this rule codifies the BIPA 941 requirements.

Comment: Some commenters suggested that it would be a good idea to use the data in the Online Survey Certification and Reporting (OSCAR), which is derived from the 671 Form that the State survey agency uses when conducting facility surveys.

Response: We agree that the data can be used on the 671 Form. The facilities have the flexibility to use the data to reduce the burden of collection when the same data are to be used in other documents or reports. However, this rule is focused on codifying the BIPA 941 requirements.

This final rule requires SNFs and NFs to post, for each shift, on a daily basis the actual hours of and total number of hours worked by, licensed and unlicensed nursing staff who are directly responsible for resident care on each shift in the facility. In the February 27, 2004 proposed rule, we noted that neither section 1819(b)(8) of the Act nor section 1919(b)(8) of the Act specifies what constitutes licensed and unlicensed nursing staff. In this final rule, we interpret the term “licensed nursing staff” to mean registered nurses (RNs); licensed practical nurses (LPNs) or licensed vocational nurses (LVNs), and “unlicensed nursing staff” to mean certified nurse aides (CNAs), as defined under State law.

As discussed in section IV of the preamble of this final rule, we use the term “directly responsible for resident care” to mean that an individual is providing direct care to residents or is supervising those who provide direct care to residents and has the responsibility for residents' total care or some aspect of residents' care. Resident contact is the intrinsic part of direct care. “Directly responsible for resident care” includes, but is not limited to, those activities as assisting with activities of daily living (ADLs), performing gastro-intestinal feeds, giving medications, supervising the care given by CNAs, and performing nursing assessments to admit residents or notifying physicians about a change in condition.

Therefore, in this final rule, we require only nursing staff assigned and responsible for direct resident care under the categories of RN, LPN/LVN and CNA to be captured in the daily nurse staffing data. This final rule does not require data collection on other staff, volunteers, or feeding assistants. This final rule provides the flexibility to facilities to post more data if they choose to do so to fit the individual facility needs.

In addition, SNFs and NFs must post the resident facility census and update the data as needed.

On a daily basis, at the beginning of the shift, NFs and SNFs must post the following data:

1. Facility Name

2. Current Date

3. Resident Census

4. Facility-specific shifts for the 24-hour period, (for example 7 a.m. through 3 p.m., 3 p.m. through 11 p.m., and 11 p.m. to 7 a.m.).

5. Categories of nursing staff employed or contracted by the facility, per shift.

6. Actual time worked for the specified categories of nursing staff, including split shifts.

7. Number of nursing staff working per shift

In the February 27, 2004 proposed rule, we proposed that SNFs and NFs post, on a CMS-specified form, information on a daily basis that includes the date, the name of the facility, the total number of licensed and unlicensed nursing staff who are directly responsible for resident care and the specific hours they work. However, in this final rule, we deleted the required use of a CMS-specific form. Nurse staffing data must be displayed in a clear and readable format and be posted in a prominent place readily accessible to residents and visitors. However, we are not mandating a specific form be used, and we are providing facilities the flexibility to use the form or format which best meets their needs.

We proposed requiring facilities to post a CMS-specified form at the end of the shift. However, this final rule requires facilities to post nurse staffing information at the beginning of the shift. In addition, we do not require facilities to post the number of FTEs on the form because we determined, based on public comments received on the February 27, 2004 proposed rule, that the process of calculating FTEs would be burdensome for facilities and the data collected might not be comprehensible to residents and visitors.

SNFs and NFs must make their daily nurse staffing records available to the public for review at a cost not to exceed the community standard.

SNFs and NFs must maintain nurse staffing records for 18 months or as required by State law, whichever is greater. This covers the annual survey period and gives the surveyors the opportunity to verify the records if they choose to do so.

Under the Paperwork Reduction Act of 1995, we are required to provide 30-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

Below is a summary of the information collection requirements in this regulation:

In summary, section 483.30(e)(2) requires that long-term care facilities use the CMS-specified form (Daily Nurse Staffing Form) to enter the information specified in paragraph (e)(1) of this section; and to post the completed Daily Nurse Staffing Form in a prominent place readily accessible to residents and visitors.

The burden associated with this requirement is the time and effort it will take for the facility to complete the form and post it. Currently, there are 16,473 participating nursing homes. We estimate a total of 5 minutes to fill in the information per day. We further estimate that it will require facilities 30.42 hours each on an annual basis to meet these collection requirements.

Section 483.30(e)(3) requires the facility to make the information required in § 483.30(e)(1)-(2) available to the public and to maintain documentation.

The burden associated with this requirement will be the time it will take for the facility to retrieve the documented information being requested. We believe this requirement to be usual and customary business practice; therefore, the burden for this collection requirement is exempt under 5 CFR 1320.3(b)(2) and 5 CFR 1320.3(b)(3).

We have examined the impact of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. Executive Order 12866 directs 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). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). This rule does not reach the economic threshold and thus is not considered a major rule.

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. According to the Small Business Administration (SBA) approximately 53 percent of all SNFs and NFs generate revenues of $11.5 million or less in a one year period, and are considered small entities. Individuals and States are not included in the definition of small entities. The only burden associated with this rule is the information collection burden associated with collecting and posting nurse staffing data. We are not preparing an analysis for the RFA because we have determined that this rule will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this final rule will not have a significant impact on the operations of a substantial number of small rural hospitals because it applies only to SNFs and NFs.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. The only burden associated with this rule is the information collection burden associated with collecting and posting nurse staffing data. This final rule will have no consequential effect on the governments mentioned or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this regulation will not impose any costs on State or local governments, the requirements of Executive Order 13132 are not applicable.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

The fisheries for spiny lobster, queen conch, reef fish, and corals and reef-associated invertebrates in the exclusive economic zone (EEZ) off Puerto Rico and off the U.S. Virgin Islands are managed under the respective fishery management plans prepared by the Council. These fishery management plans are implemented under the authority of the Magnuson-Stevens Act by regulations at 50 CFR part 622. This final rule implements Amendment 2 to the FMP for the Spiny Lobster Fishery, Amendment 1 to the FMP for Queen Conch Resources, Amendment 3 to the FMP for the Reef Fish Fishery, and Amendment 2 to the FMP for the Corals and Reef Associated Plants and Invertebrates of Puerto Rico and the U.S. Virgin Islands, known collectively as the Comprehensive Amendment to the FMPs of the Caribbean.

NMFS published a notice of availability for the comprehensive amendment in the Federal Register on June 16, 2005, and requested public comment on the amendment (70 FR 35053). On September 13, 2005, NMFS published the proposed rule to implement the comprehensive amendment and requested public comment on the proposed rule (70 FR 53979). NMFS approved the comprehensive amendment on September 14, 2005. The rationale for the measures in the comprehensive amendment is provided in the amendment and in the preamble to the proposed rule and is not repeated here. This final rule is implemented with no changes from the proposed rule.

NMFS received 17 comments on the comprehensive amendment and proposed rule. Following is a summary of the comments and NMFS' responses.

Comment 1: The data underlying the calculations for maximum sustainable yield (MSY) do not comply with the Magnuson-Stevens Act requirement to use the best scientific information available. In data-poor situations, it is appropriate to base estimates of MSY on catch levels, such as is done in the amendment. However, catch estimates derived from the Marine Recreational Fishery Statistics Survey (MRFSS) are widely regarded as flawed and inconclusive. The Council needs to develop a more suitable tool for determining recreational catch levels. Estimates of MSY should be set more conservatively.

Response: NMFS and the Council acknowledge there are data limitations regarding all Caribbean fisheries, but NMFS disagrees that the MRFSS data are flawed and inconclusive. The primary purpose of the MRFSS survey techniques is to produce regional (and possibly by state), annual estimates of recreational saltwater fishing effort, catch and participation. These methods have been peer-reviewed and found to be adequate or better for their intended purpose and scope. The MRFSS program began in Puerto Rico in 2000 and routinely collects information on both catch and discards. Over 2,700 field intercept angler observations were made in the year 2000, and sampling continues at a similar level. Under other actions in the amendment, more robust standardized reporting requirements are being established, and as additional data become available in the future, these catch estimates can be revised. Until such data become available, the amendment includes several processes intended to ensure quality control in the establishment of MSY for the various stocks. MSY is not simply defined as the long-term average catch. Equating MSY to just the average catch over time assumes that both biomass (B) and fishing mortality (F) are consistent and able to produce MSY. Additionally, the time period over which catches are averaged would need to be sufficient to observe trends in the fishery. Recognizing the data for the U.S. Caribbean do not meet these assumptions, the Council selected a proxy for MSY derived from recent catch (C), modified by estimates of the current biomass (B) and fishing mortality (F) ratios. This allows the Council to ensure that MSY reflects situations when B or F are above or below the level needed to produce MSY.

The Council's choice of targets and limit reference points is based on the recommendations of NMFS' Technical Guidance on the Use of Precautionary Approaches to Implementing National Standard 1 of the Magnuson-Stevens Fishery Conservation and Management Act (Technical Guidance). The Technical Guidance states “in cases of severe data limitations, qualitative approaches may be necessary, including expert opinion and consensus-building methods,” which was the approach used by the Council. The Council depended heavily on the recommendations of its Sustainable Fisheries Act (SFA) Working Group, which consisted of Council staff, NMFS scientists, representatives from various U.S. Virgin Islands and Puerto Rico fishery management agencies, and representatives from several environmental organizations. This expert group offered its best professional judgment to the Council regarding appropriate values, based on the available scientific and anecdotal information.

MSY values chosen for spiny lobster and reef fishes are the lowest values considered other than closing the fisheries and setting MSY at zero. MSY for queen conch is an intermediate value of the range of alternatives considered and provides a moderate level of fishing mortality on the stock. The Council chose to prohibit all take of queen conch in the exclusive economic zone (EEZ) except for a small area of Lang Bank, which will aid this species' recovery from an overfished condition.

Comment 2: Most Caribbean snapper and grouper species and many grunt species are overfished or at risk of being overfished. Establishing a proxy B ratio of 0.75 is less conservative than an option assuming the stocks are more depressed by providing a B ratio of 0.50.

Response: Only Snapper Unit 1 (4 species), Grouper Unit 4 (4 species), and the parrotfishes (10 species) are considered to be at risk. Four species are identified as being overfished. The selections of B and F ratios for these species or species units follow the recommendations developed in the Technical Guidance for a default target control rule. Information is insufficient to determine a precise status for each species or species unit; establishing a more conservatively based B ratio could be unnecessarily restrictive. The Council is proposing several harvesting restrictions intended to reduce fishing mortality and improve the condition of these stocks.

Comment 3: One commenter suggested that establishing optimum yield (OY) as the average yield associated with fishing at F OY , where F OY = 0.75 F MSY , was unduly punishing to resource users, and assumes the relationship between fishing effort and catch is linear. Conversely, one commenter suggested this selection was not conservative as it allows yields at 94 percent of MSY.

Response: As noted for Comment 1, the Council's choice of targets and limit reference points is based on the recommendations of the Technical Guidance. The recommended default for a constant-F target strategy should restrain F to a level 20 to 30 percent below the maximum fishing mortality threshold. Establishing a target F at 75 percent of F MSY results in yields of 94 percent of MSY or higher and creates a biomass level of at least 125 percent of B MSY once the stock reaches equilibrium. This does not mean yields allowed on a depressed stock are 94 percent of MSY. A constant-F approach is more conservative because it restricts F on the stock at any size, whereas a constant catch approach could allow excessive harvest under low MSY values and be too restrictive under a larger MSY.

Comment 4: Establishing minimum stock size threshold (MSST) as B MSY (1-c) where “c” is natural mortality (M) or 0.50, whichever is smaller, is restrictive.

Response: The Council's choice for MSST follows the guidance for a default MSY control rule. Setting “c” equal to 1-M or 0.50 is expected to allow a stock fished at F MSY to fluctuate its biomass around B MSY , allowing for variation in natural mortality.

Comment 5: National Standard 8 of the Magnuson-Stevens Act allows managers to consider the potential socio-economic impacts as long as they are consistent with the primary goals of ending overfishing and rebuilding depleted populations. Nevertheless, the Council chose the most liberal alternative for maximum fishing mortality threshold (MFMT), citing the need to minimize short-term socio-economic impacts as its justification. The priority in setting MFMT is conservation of resource.

Response: The Council's preferred alternatives to reduce F and end overfishing are consistent with the choices for stock status determination criteria. The Council's proposed harvesting restrictions are intended to reduce F by as much as 30 percent, leading to improved conditions of these stocks.

Comment 6: The Council should have selected the alternative requiring the establishment of a Memorandum of Understanding (MOU) between NMFS and the state governments to develop compatible regulations for all its managed species.

Response: The Council did select alternatives to develop MOUs for Nassau grouper and queen conch. The Council continually recognized the importance of compatible state regulations, given the vast majority of harvest occurs in state-controlled waters. The U.S. Virgin Islands state representatives on the Council have agreed to pursue implementing state regulations to prohibit harvest of Nassau grouper, and the Council's suite of preferred alternatives are based in large part on measures already in place in Puerto Rico.

Comment 7: The Council's choice of actions to reduce F through gear restrictions is not adequate. Gillnets would be prohibited in the EEZ, but continued limited use for non-managed baitfish would be allowed, thus contributing to bycatch. The Council rejected the alternative to prohibit fish traps--the dominant fishing gear used in the Caribbean.

Response: The Council estimates the prohibition on the use of gillnets and trammel nets may provide an overall F reduction of about 10 percent, with F on species such as parrotfish reduced as much as 30 percent. Bycatch issues will additionally be addressed through the proposed action. Many gillnets in the EEZ are set on the bottom, and a secondary benefit to their prohibition is a reduction in physical damage to the habitat. The restricted use of surface gillnets for baitfish, such as ballyhoo, is species-specific. The requirement to constantly tend the nets will reduce bycatch and the potential for lost gear that could continue to “ghost” fish. Additionally, most of this effort occurs in shallow state waters. The allowable use of gillnets to catch surface fishes such as ballyhoo should not have impacts to habitat.

The Council considered but rejected an alternative to ban fish traps in the EEZ. Such a ban could theoretically reduce F by 20 to 67 percent; however, the majority of fish trap effort occurs in state waters, and the actual reductions in F in the EEZ were likely to be much lower. Because there is limited fishable area for fish traps in the EEZ, the Council concluded a prohibition of this gear in the EEZ would likely transfer the limited effort in the EEZ to state waters, where more juveniles would be taken, thus negating any benefits of the Federal prohibition.

Comment 8: Species-specific seasonal closures will not be as effective as area closures to protect spawning aggregations of Grouper Unit 4, parrotfish, and Snapper Unit 1. These species will continue to be caught while fishing for other species occurs.

Response: The Council recognized there would be a regulatory discard issue when these species are taken during a closed season. However, closing specific areas would still allow the species to be taken in areas not closed to fishing. Allowing continued harvest would not reduce F as needed. A seasonal closure of the entire U.S. Caribbean during the peak spawning periods for each species group is necessary to achieve these reductions.

Comment 9: It is unnecessary to close the EEZ to queen conch fishing. Catches in St. Thomas have never approached 1 percent of MSY levels, whereas the fishery in St. Croix has landed queen conch in excess of MSY occasionally and in excess of OY consistently.

Response: The status of the queen conch resource was determined for the U.S. Caribbean as a whole. The stock is considered overfished, and reductions in fishing mortality are necessary. NMFS estimates the EEZ comprises only 14 percent of the fishable habitat of the U.S. Caribbean. Fishing for queen conch off Puerto Rico occurs almost entirely in state waters. Off the U.S. Virgin Islands, including state waters, landings are approximately 39,000 lb (17,690 kg). Because queen conch are generally harvested by hand, depth is another limiting factor, thus, most harvest occurs in inshore waters. Approximately 14,000 lb (6,350 kg) are harvested in the Lang Bank area off St. Croix, and only 22 percent of these landings are estimated to come from Federal waters. Given the importance of this area to the social and economic stability of St. Croix fishermen, the Council chose to allow fishing to continue in the small area known as Lang Bank.

Comment 10: The Council chose the shortest rebuilding period for Nassau and goliath grouper, and prohibited filleting fish at sea to help reduce illegal catches of these species. However, efforts should be made to protect sites in Federal waters where Nassau and goliath grouper aggregate to spawn.

Response: NMFS agrees a prohibition of filleting fish at sea will reduce illegal harvest of prohibited or undersized species. Identifying areas in the EEZ where Nassau and goliath grouper aggregate to spawn would not further reduce F on these species. The harvest and possession of Nassau and goliath grouper in or from the entire Caribbean EEZ is already prohibited.

Comment 11: The life history information used to develop the rebuilding schedules and recovery strategies is in error. The proposed rebuilding periods are longer than what is consistent with accepted life history information.

Response: The Council considered three alternatives to each rebuilding strategy. For Nassau grouper, goliath grouper, and queen conch, the Council chose the rebuilding time frame recognizing the lower generation time for these species. For Grouper Unit 4, the Council chose the longest time frame (10 years) to reduce the social and economic impacts that would have occurred under shorter (2 and 6 years) schedules. Each of the rebuilding strategies was developed using the best available scientific information on each species. These data were reviewed by NMFS and the Council's SFA Working Group comprised of representatives of NMFS, the Council, state agencies, and interested stakeholders. This Working Group provided technical guidance and recommendations to the Council during its deliberations, choosing the most appropriate time frame for each rebuilding strategy.

Comment 12: In the case of overfished species, the Magnuson-Stevens Act requires managers to specify a rebuilding period that is “as short as possible.” Although the Council chose the shortest rebuilding period for Nassau and goliath grouper, of the alternatives considered, they chose the longest period (10 years) for Grouper Unit 4.

Response: National Standard 8 of the Magnuson-Stevens Act requires managers to minimize socio-economic impacts as long as the actions are consistent with the primary goals of ending overfishing and rebuilding depleted populations. To that end, the National Standard Guidelines allow rebuilding strategies to be as long as 10 years as long as pertinent factors, such as the status of the stock and the needs of fishing communities, are appropriately considered. Under the proposed stock status criteria, Grouper Unit 4 is slightly overfished, with a stock size at 91 percent of MSST. The seasonal closure on this Unit is anticipated to achieve a 24-percent reduction in F, recovering the stock from an overfished condition under any of the alternative schedules considered (2, 6, or 10 years). To reduce the economic impacts of the shorter rebuilding schedules, the Council chose 10 years.

Comment 13: During its deliberations on the actions to be selected in this amendment, the Council changed its preferred alternative from the largest closed area of Grammanik Bank (23.57 square kilometers or 6.88 square nautical miles) to the smallest (1.50 square kilometers or 0.44 square nautical miles). A more moderate choice would provide better protection for yellowfin grouper spawning aggregations.

Response: The amendment also proposes to close the entire U.S. Caribbean EEZ to the harvest and possession of yellowfin grouper and other groupers in Grouper Unit 4 during February through April. However, such action does not preclude fishing in the EEZ for other species, whereby there will be incidental harvest and some mortality on yellowfin grouper and other grouper in Grouper Unit 4. Thus, the prohibition of all fishing on the Grammanik Bank is intended specifically to protect vulnerable aggregations of yellowfin grouper known to inhabit this distinct area during spawning season (February through April).

Comment 14: The amendment fails to establish a standardized bycatch reporting methodology. The proposed actions depend, in part, on MRFSS data, which is widely known to be flawed and inconclusive. Other alternatives could include observers, dockside interviews, or at-sea intercepts. One of the preferred alternatives only states that the Council will consult with Puerto Rico and the U.S. Virgin Islands to modify trip tickets into a standardized reporting mechanism. NMFS should require the Council to modify and update the trip ticket system to provide credible data.

Response: NMFS and the Council acknowledge there are data limitations regarding all Caribbean fisheries, but NMFS disagrees the MRFSS data are flawed and inconclusive. The MRFSS program only began in Puerto Rico in 2000, but it does routinely collect information on both catch and discards. Over 2,700 field intercept angler observations were made in the initial year, 2000, and sampling continues at a similar level. The proposed actions are intended to improve the existing databases in regard to both catch and bycatch in the Caribbean. Trip ticket programs are currently managed by the respective state agencies: the Department of Natural and Environmental Resources for Puerto Rico, and the Division of Fish and Wildlife for the U.S. Virgin Islands. Currently, Puerto Rico has no bycatch data collection program, and the U.S. Virgin Islands instituted their program in 2004. NMFS currently contributes $78,900 and $73,000 to commercial fisheries data gathering efforts in Puerto Rico and the U.S. Virgin Islands, respectively. The amendment establishes a standardized bycatch reporting methodology in partnership with both states. Both states have agreed to include standardized bycatch data collection within their trip ticket systems.

Comment 15: To reduce bycatch, the Council considered only one option: to amend regulations regarding trap construction to require one escape panel instead of maintaining the existing two-panel requirement.

Response: The Magnuson-Stevens Act defines bycatch as those fish which are harvested, but which are not sold or kept for personal use, and includes economic as well as regulatory discards. Data available for the Caribbean fisheries indicate that the vast majority of the catch is retained. Coupled to the preponderance of effort occurring in state waters, the Council concluded bycatch is a minor cause of fishing mortality in its fisheries. The Council did consider other options, such as increasing mesh size in fish traps and nets, but existing information indicates that even with increased mesh size, the quantity of discards remains the same. The Council is reverting to previous requirements to have only one escape panel based on public testimony. With two panels, there is a greater possibility of a panel breaking open during retrieval, losing the catch; thus, some fishermen are disabling the escape panels, negating any benefit of requiring two. The action to amend the escape panel requirement was agreed on by the fishermen, the state fishery management agencies, and the Council, and the states are interested in developing compatible regulations to reduce enforcement confusion. Therefore, the Council anticipates increased compliance with escape panel requirements, which will reduce bycatch mortality. In addition, many of the other actions in the amendment, such as seasonal closures, closed areas, and gear restrictions have an ancillary benefit of reducing bycatch and bycatch mortality.

Comment 16: The designations of EFH are vague and overly broad. There is no consideration of designating EFH habitat areas of particular concern (EFH-HAPCs) for the Spiny Lobster and Queen Conch FMPs.

Response: The EFH regulations (50 CFR 600.815) contain guidance regarding the types and levels of information that should be used for describing and identifying EFH. These range from distribution; habitat-related densities; habitat-related growth, reproduction, or survival rates; and production rates by habitat. Where higher level information is sparse, such as with many fish species in the U.S. Caribbean, information is to be used in a risk-averse fashion to err on the side of conservation. Therefore, NMFS acknowledges designations of EFH are broad, but it is also important to realize that the area designated as EFH in U.S. waters comprises the aggregate of separate EFH designations for each life stage of each managed species. Unlike EFH, EFH-HAPCs are not a mandated component of an FMP. Councils are encouraged to designate EFH-HAPCs in order to focus conservation priorities on specific habitat areas that play a particularly important role in the life cycles of federally managed fish species. An HAPC is expected to be a localized area of EFH that is especially ecologically important, sensitive, stressed, or rare when compared to EFH. Seven alternative methods were considered for designating EFH-HAPCs; the preferred alternative relied upon expert opinion regarding factors related to EFH-HAPC selection. A panel of experts recommended HAPC sites. To designate HAPC sites in an efficient manner, it was necessary to determine which FMP the sites would be designated under. Sites with predominantly coral habitat were aligned with the Coral FMP, while sites with predominantly mangrove habitat were aligned with the Reef Fish FMP.

Comment 17: The amendment only generally states that anchors, pots/traps, gill/trammel nets, and bottom longlines have a potential adverse impact on EFH. This cursory evaluation does not cover all fishing activities undertaken in waters identified as EFH by the Council, nor does it adequately evaluate the impacts of fishing on EFH. We support the gear prohibitions and anchoring restrictions year round on Grammanik Bank, but do not believe these measures are sufficient to minimize adverse impacts on EFH. In addition, the amendment violates the National Environmental Policy Act (NEPA) by failing to analyze a broad range of management alternatives to minimize the adverse impacts of fishing on EFH.

Response: The impacts of fishing on EFH were analyzed in Sections 2.1.5, 3.5.1, 4.3, and 4.5 of the Final Environmental Impact Statement for the Generic EFH Amendment to the FMPs of the U.S. Caribbean (EFH FEIS). The EFH FEIS was prepared, in part, as a supporting document to the comprehensive amendment and was incorporated by reference. The EFH FEIS was prepared separately from the comprehensive amendment pursuant to a process outlined in the Joint Stipulation and Order filed in American Oceans Campaign v. Evans , Civil No. 99-982 (GK) (D.D.C. December 17, 2001). The EFH FEIS analyzed, within each fishery, a range of potential alternatives to: (1) describe and identify EFH for the fishery; (2) identify other actions to encourage the conservation and enhancement of such EFH; and (3) identify measures to minimize to the extent practicable the adverse effects of fishing on such EFH. In addition to pots/traps, gill/trammel nets, and bottom longlines, the other allowable gears in Caribbean fisheries include hook-and-line, handline, dip net, slurp gun, spear, and hand harvest. The EFH FEIS identified and evaluated the effects of all fishing gears, including prohibited gear, on EFH (See Section 3.5.1 and Tables 3.15, 4.1 and 4.2). Alternatives were not developed for gears whose effects on habitat were considered below a minimal and temporary threshold as determined by habitat/gear sensitivity and fishing effort. Six alternatives for preventing, mitigating, or minimizing adverse effects of fishing on EFH were presented in the EFH FEIS. The alternatives consisted of specific management actions that progressively increased the amount of restriction affecting the use of fishing gears allowed under the Reef Fish FMP and the Spiny Lobster FMP. Gear used under the Queen Conch FMP (hand harvest only) is not considered to have adverse impacts, and no harvest of coral is allowed under the Coral FMP. The gear prohibitions and anchoring restrictions proposed in the comprehensive SFA amendment are applicable to a large number of EFH sites throughout the Caribbean, not just Grammanik Bank. The two alternatives, a no-action alternative and a total year-round prohibition on the use of the predominant bottom-tending gears, represent the minimum and maximum action that could be taken. Other alternatives would have been less restrictive. Therefore, NMFS believes the Council did adequately consider a broad range of alternatives.

The Administrator, Southeast Region, NMFS, determined that the comprehensive amendment is necessary for the conservation and management of the reef fish, spiny lobster, queen conch, and coral fisheries of the Caribbean and that it is consistent with the Magnuson-Stevens Act and other applicable laws.

This final rule has been determined to be significant for purposes of Executive Order 12866.

NMFS prepared a final supplemental environmental impact statement (FSEIS) for this amendment. The FSEIS was filed with the Environmental Protection Agency on June 17, 2005. A notice of availability was published on June 24, 2005 (70 FR 36582). In approving the comprehensive amendment on September 14, 2005, NMFS issued a ROD identifying the selected alternatives. A copy of the ROD is available from NMFS (see ADDRESSES ).

NMFS prepared a FRFA that incorporates the initial regulatory flexibility analysis (IRFA), a summary of the significant issues raised by the public comments in response to the IRFA, NMFS' responses to those comments, and a summary of the analyses completed to support the action. A summary of the FRFA follows. Copies of the FRFA are available from NMFS (see ADDRESSES ).

The final rule will implement an integrated FMP amendment that will bring the Caribbean Council's FMPs for spiny lobster, queen conch, reef fish, corals, and reef associated plants and invertebrates into full compliance with requirements added to the Magnuson-Stevens Act through the 1996 Sustainable Fisheries Act. The objectives of the rule are to: (1) define fishery management units (FMUs) and FMU sub-units; (2) specify biological reference points and stock status determination criteria; (3) regulate fishing mortality; (4) rebuild overfished fisheries; (5) conserve and protect yellowfin grouper; (6) achieve bycatch mandates; and (7) achieve the essential fish habitat mandates.

There were two comments that specifically addressed the economic impacts of the proposed rule. One comment implied that a regulatory flexibility analysis had not been conducted for the proposed rule. However, a regulatory flexibility analysis was conducted, and a summary of the IRFA was included in the published proposed rule. The second comment from a trade association stated that NMFS had not considered the adverse economic impact of the proposed seasonal closure of an area of Grammanik Bank to all fishing, except highly migratory species, on small commercial fishers from St. Thomas. The association noted that the recent temporary rule, which prohibited fishing for or possession of any species, except highly migratory species, within an area of Grammanik Bank from February 1, 2005, through April 30, 2005, had an adverse economic impact on the four St. Thomas fishers that operate in the area, and for one of these fishers, the impact was heavy. In the IRFA, NMFS evaluated the economic impact of the seasonal Grammanik Bank closure on all small commercial U.S. Virgin Island fishers and concluded that the seasonal Grammanik Bank closure could have a significant adverse economic impact on some of the small commercial fishers that operate in the EEZ. The impacts were not, however, separated by which island the fishers operated from. In response to this comment, the FRFA includes a statement that the seasonal closure will have an adverse economic impact on four commercial fishers from St. Thomas, and the impact will be large for one of the fishers. No changes, however, were made to the rule as a result of these comments.

The final rule will affect commercial and recreational fishers and charter fishing services in Puerto Rico and the U.S. Virgin Islands. There are approximately 1,758 commercial fishers in Puerto Rico and 349 commercial fishers in the U.S. Virgin Islands. Approximately 50 entities offer year-round for-hire charter services in the U.S. Caribbean, with the majority located in the U.S. Virgin Islands. NMFS expects that 88 Puerto Rican commercial fishers (5 percent), 35 U.S. Virgin Island commercial fishers (10 percent), and 3 for-hire charter services (5 percent) operate in the EEZ and may be affected by this final rule. The Small Business Administration (SBA) size standards for the finfish, shellfish, and other marine fishing industries are $3.5 million in annual sales. The SBA size standard for the charter fishing industry is $6.0 million in annual sales. NMFS assumes all of the entities that may be affected by this final rule are small businesses. Thus, NMFS expects a total of 123 small businesses in commercial fishing and 3 small businesses in charter fishing services will be affected by this final rule. The final rule will: (1) prohibit fishing for or possession of queen conch in the EEZ, with the exception of Lang Bank east of St. Croix; (2a) move aquarium trade species of Caribbean coral and reef fish from a management to a data collection only category; (2b) move all species of Caribbean conch, with the exception of queen conch, to a data collection only category, thereby removing fishery management restrictions on these species; (3) close the EEZ to the possession of red, black, tiger, yellowfin, and yellowedge grouper from February 1 through April 30 of each year; (4) close the EEZ off the west coast of Puerto Rico to the possession of red hind from December 1 through the last day of February each year; (5) close the EEZ to the possession of black, blackfin, vermilion, and silk snapper from October 1 through December 31 of each year; (6) close the EEZ to the possession of mutton snapper and lane snapper from April 1 through June 30 of each year; (7a) implement an immediate prohibition against the use of gill and trammel nets to fish for Caribbean reef fish or Caribbean spiny lobster in the EEZ; (7b) require gill nets used to fish for bait fish in the EEZ to be tended at all times; (8) prohibit the filleting of fish in the EEZ and require that fish captured or possessed in the EEZ be landed with heads and fins intact, with minor exceptions; (9) close an area of the Grammanik Bank to fishing for or possession of any species of fish, except highly migratory species, from February 1 through April 30 of each year; (10) amend current requirements for trap construction such that only one escape panel is required, which could be the door; (11a) require at least one buoy that floats on the surface for all traps/pots fished individually for all fishing vessels that fish for or possess Caribbean spiny lobster or Caribbean reef fish species in or from the EEZ; (11b) require at least one buoy at each end of trap lines linking traps/pots for all fishing vessels that fish for or possess Caribbean spiny lobster or Caribbean reef fish species in or from the EEZ; (11c) prohibit use of pots/traps, gill/trammel nets, and bottom longlines on coral or hard bottom year-round in the existing seasonally closed areas and Grammanik Bank in the EEZ; and (11d) require an anchor retrieval system for all vessels that fish for or possess Caribbean reef fish species in or from the EEZ. In addition, consistent with the provisions of the comprehensive amendment, a standardized bycatch reporting methodology is being established in partnership with both states. Both states have agreed to include standardized bycatch data collection within their trip ticket systems.

The queen conch fishery occurs primarily in state waters. Approximately 92 percent of queen conch harvested in Puerto Rico is reported to be obtained from state waters, while 60 percent of queen conch harvested in the U.S. Virgin Islands is reported to be taken from state waters. Only 18 fishers were reported to have harvested queen conch in the EEZ in 1999 (2 from the U.S. Virgin Islands and 16 from Puerto Rico). Together, the 18 queen conch fishers represent 7 percent of the 260 U.S. Caribbean queen conch fishers, or less than 1 percent of all commercial fishing businesses in the U.S. Caribbean. The 16 queen conch fishers from Puerto Rico represent 8 percent of the 209 queen conch fishers from that state, and the 2 from the U.S. Virgin Islands represent 4 percent of the 51 queen conch fishers from that territory. NMFS expects that the prohibition against fishing for or possession of queen conch in the Caribbean EEZ, with the exception of Lang Bank east of St. Croix, will not have a significant economic impact on queen conch fishers from Puerto Rico but will likely have a greater adverse economic impact on the U.S. Virgin Island queen conch fishers that harvest the species in the Caribbean EEZ. Any small business that harvests species of Caribbean conch, other than queen conch, or aquarium trade species of Caribbean coral or reef fish in the EEZ will benefit from the movement of these species to a data-collection-only category because this movement will eliminate existing Federal fishing restrictions on these species. However, as stated in the IRFA, because harvest of these species occurs primarily in state waters, NMFS expects that any economic benefit obtained will be negligible.

The U.S. Caribbean reef fish fishery is essentially a multi-species fishery in that fishers catch multiple species of reef fish on any given trip. Consequently, the harvest of any particular species likely represents a small proportion of total revenue and profit for any given trip. Up to 5.8 percent of commercial fishers and 5.0 percent of for-hire charter services will be affected by the ban on the possession of red, black, tiger, yellowfin, and yellowedge grouper in the EEZ from February 1 through April 30 of each year; the ban on the possession of red hind in the EEZ from December 1 through the last day of February of each year; the ban on the possession of black, blackfin, vermilion, and silk snapper in the EEZ from October 1 through December 31 of each year; and the ban on the possession of mutton snapper and lane snapper in the EEZ from April 1 through June 30 of each year. To mitigate any revenue and profit losses that may result from the seasonal closures, commercial fishers and charter fishing operations that fish for reef fish in the EEZ may intensify fishing before and after the seasonal closures and/or relocate to state waters. The mitigating effects of these behavioral changes cannot be forecast. Nonetheless, the combined seasonal closures may have a significant adverse impact on a substantial number of small businesses.

The immediate prohibition against the use of gillnets and trammel nets to fish for Caribbean reef fish or Caribbean spiny lobster will require the adoption of other gear, most likely traps/pots, to harvest these species. NMFS expects the prohibition will affect a small number of the 5 percent of Puerto Rican commercial fishers that operate in the EEZ because waters depths in the EEZ off Puerto Rico do not favor the use of gillnets or trammel nets. The prohibition will likely affect more U.S. Virgin Island commercial fishers because there is more fishable habitat that can be targeted by gillnets and trammel nets in the EEZ off the U.S. Virgin Islands, and the use of gillnets and trammel nets has increased among St. Croix fishers. Consequently, NMFS expects the immediate prohibition against the use of gillnets and trammel nets will have a greater adverse economic impact on the 10 percent of U.S. Virgin Island commercial fishers that operate in the EEZ.

The immediate prohibition against the use of gillnets and trammel nets in the EEZ will not apply to the harvest of ballyhoo, houndfish, and flying fish, which are commonly found near the surface. When used to harvest these species in the EEZ, the nets must be tended at all times. Ballyhoo and houndfish are used as bait. At present, there is insufficient information to determine the economic impact on any small business that may currently harvest ballyhoo, houndfish, or flying fish in the EEZ by using untended gillnets and/or trammel nets.

Since 1990 and 1993, there have been prohibitions against the harvest and possession of Nassau grouper and goliath grouper in the EEZ, respectively; however, anecdotal evidence suggests that illegal harvest and possession occur. Prohibiting the filleting of all species of fish in the U.S. Caribbean EEZ, except highly migratory species or species caught and used for bait or the crew's own consumption, and requiring that all fish captured or possessed in the EEZ be landed with heads and fins intact will improve enforcement of existing prohibitions and result in reduced illegal revenues. At the same time, the prohibition may reduce legal revenues for those who fish in the EEZ and fillet their fish due to limited storage capacity. Because whole fish take up more space in a vessel than fillets, harvest per trip may be reduced. However, because the typical fishing vessel in the Caribbean EEZ does not have fish holds and, in many cases, does not use coolers, it is expected that a substantial number of the small businesses do not fillet their catches from the EEZ and will not experience a significant adverse economic impact.

The final rule will prohibit fishing for or possession of any species of fish, except highly migratory species, within a 0.44 nm 2 (1.5 km 2 ) area of Grammanik Bank from February 1 through April 30 of each year. NMFS expects the greatest adverse economic impact of the 3-month Grammanik Bank closure will be on fishers who harvest yellowfin grouper because the reported spawning aggregation of yellowfin grouper is centered within the closed area during this time. As previously discussed, the final rule will prohibit the possession of red, black, tiger, yellowfin, and yellowedge grouper in the U.S. EEZ from February 1 through April 30. The combined impact of the 3-month Grammanik Bank closure and the 3-month ban against the possession of the above species of grouper in the EEZ on yellowfin grouper fishers will be no revenues from yellowfin grouper fished for or possessed anywhere in the EEZ, which includes the closed area, for 3 months. To mitigate losses due to the prohibitions, yellowfin grouper fishers and other commercial fishers may intensify fishing before and after the seasonal bans and/or move their fishing activities to state waters. Nonetheless, the adverse economic impact will be significant for some of the small commercial fishers that operate in the EEZ. According to one U.S. Virgin Island trade association, the seasonal closure will have an adverse economic impact on the four St. Thomas commercial fishers who operate in the area, and for one of them, the impact will be large. The one fisher represents 25 percent of St. Thomas commercial fishers that operate in the area and 3 percent of U.S. Virgin Island commercial fishers that operate in the EEZ.

The final rule will require only one escape panel for traps and pots. This action relaxes the current requirement of two escape panels and therefore does not impose any adverse economic impact on small businesses.

The use of traps and pots in the EEZ is expected to be infrequent because of water depth. Nevertheless, for those fishers who use traps and pots in the EEZ, the requirement to have at least one buoy that floats on the surface for all traps or pots fished individually and to have at least one buoy at each end of trap lines linking traps/pots is not expected to impose a significant adverse impact because the additional gear expenses should be minor.

The year-round ban on the use of traps, pots, gillnets, trammel nets, and bottom longlines on coral or hard bottom habitat in currently existing, seasonally closed areas and the 0.44 nm 2 (1.5 km 2 ) area of Grammanik Bank represents a prohibition against the use of traditional gear types in these areas. This prohibition could be especially burdensome to U.S. Virgin Islands commercial fishers from St. Croix because they have already lost fishing areas in state waters due to U.S. Virgin Island closures. The majority of fishable habitat off St. Croix is primarily restricted to Lang Bank and, currently, the eastern half of Lang Bank is closed to all fishing from December 1 through the last day of February of each year. The final rule will ban the use of traditional gear in an area that encompasses approximately the easternmost half of Lang Bank. Consequently, NMFS expects the ban will have a significant adverse economic impact on those St. Croix commercial fishers that currently use traps, pots, gillnets, trammel nets, and/or bottom longlines in the eastern half of Lang Bank.

The final rule will require that the owner or operator of any fishing vessel, recreational or commercial, that fishes for or possesses Caribbean reef fish in or from the EEZ ensure that the vessel uses only an anchor retrieval system that recovers the anchor by its crown, thereby preventing the anchor from dragging along the bottom during recovery and damaging habitat. NMFS assumes that most commercial and charter fishing vessels that operate in the EEZ do not currently have an anchor retrieval system that meets the requirement. For those fishers that have a grapnel hook, this will require incorporating an anchor rode reversal bar that runs parallel along the shank. For those fishers that have a fluke or plow-type anchor, a trip line consisting of a line from the crown of the anchor to a surface buoy would be required. There is currently insufficient information to quantify the number of fishing vessels that use the different types of anchors and the costs of making necessary modifications. However, NMFS expects the cost will not represent a significant adverse economic impact on small businesses.

Although the current data collection system in the U.S. Caribbean, partially funded through Federal grants, does not require commercial fishers or charter fishing operations to report bycatch data, Puerto Rico has agreed to require that this information be reported, and the U.S. Virgin Islands has incorporated some bycatch data into its reporting requirements and will be improving the data collection. Consistent with the provisions of the comprehensive amendment, NMFS will consult with Puerto Rico in an effort to add data fields to Puerto Rico's existing mandatory landings reports in order to include consistent and standardized bycatch data. Consequently, the final rule does not directly impose any new reporting or recordkeeping requirements. However, the indirect economic impact of requiring additional reporting information will accrue to commercial fishing and charter fishing businesses in Puerto Rico through additional time to report bycatch information in the future. At present, there is insufficient information to quantify the amount of time necessary to report such information and how this might affect business operation; however, it is not expected to represent a significant adverse economic impact on a substantial number of small businesses.

Alternatives considered but rejected by the Council would have increased the adverse economic impact on small businesses. One alternative would have prohibited fishing for or possession of queen conch in the entire EEZ. Because the rejected alternative would have extended the prohibition to include Lang Bank east of St. Croix, it could have had a greater adverse economic impact on U.S. Virgin Island queen conch fishers. Alternatives to the seasonal bans on the possession of mutton snapper and lane snapper, red hind, and the respective snapper and grouper species would have banned the possession of all species managed by the Caribbean Council for 3 months, 6 months, or a year. Such bans would have had greater adverse economic impacts than the final rule because each rejected alternative would have banned the possession of more species for an equal or a longer period of time. The Council considered, but rejected, alternatives to the immediate prohibition against the use of gillnets and trammel nets to fish for Caribbean reef fish or Caribbean spiny lobster because the adverse economic impacts of the alternatives on small businesses could have been much greater than the final rule. Specifically, the rejected alternatives included the immediate prohibition against the use of fish traps in the Caribbean EEZ, the immediate prohibition against the use of gillnets or trammel nets in the Caribbean EEZ to fish for any species, and closing various areas of the EEZ to fishing for or possession of all species. Alternatives to the 3-month prohibition against fishing for or possession of any species of fish, except highly migratory species, within a 0.44 nm 2 (1.5 km 2 ) area of Grammanik Bank would have closed larger areas of the Bank or added a year-round ban against fishing for or possession of yellowfin grouper in the EEZ and, therefore, would have had greater adverse economic impacts on small commercial fishers than the final rule. Finally, the Council considered implementing a Federal permit system for commercial and charter fishing businesses that operate in the EEZ as an alternative to the recommendation that NMFS consult with Puerto Rico as the state modifies its mandatory landings reports; however, that alternative was rejected because it would have had a greater adverse economic impact than the alternative in the final rule.

Administrative practice and procedure, Confidential business information, Fisheries, Fishing, Fishing vessels, Foreign relations, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Statistics.

Fisheries, Fishing, Puerto Rico, Reporting and recordkeeping requirements, Virgin Islands.