The Department of Energy published a document in the Federal Register of February 9, 2006, (71 FR 6857) establishing (1) the framework for a worker protection program that will reduce or prevent occupational injuries, illnesses, and accidental losses by requiring DOE contractors to provide their employees' with safe and healthful workplaces; and (2) procedures for investigating whether a requirement has been violated, for determining the nature of such violations, and for imposing appropriate remedy.

In FR Doc. 06-964, published in the Federal Register of February 9, 2006, (71 FR 6857), make the following corrections to the preamble:

(1) On page 6898, in the third column, at the beginning of the first full paragraph, remove the words “Section 851.26(a)” and add in its place “Section 851.26(a)(1)”.

(2) On page 6898, in the third column, at the beginning of the second paragraph, remove the words “Section 851.26(a)(1)” and add in its place “Section 851.26(a)(2)”.

(3) On page 6898, in the third column, at the beginning of the third paragraph, remove the words “Section 851(a)(2)” and add in its place “Section 851(a)(3)”.

(4) On page 6898, in the third column, at the beginning of the fourth paragraph, remove the words “Section 851.26(b)” and add in its place “Sections 851.26(b)(1) and (2)”.

(5) On page 6898, in the third column, at the beginning of the fifth paragraph, remove the words “Section 851.26(c)” and add in its place “Section 851.26(a)(4)”.

In December 2005, the Board issued for public comment a proposed rule establishing concentration limits for indirect automobile loans and loan participations serviced by third-party servicers. 70 FR 75753 (Dec. 21, 2005). As stated in the preamble to the proposed rule, the Board recognizes indirect lending has certain advantages for credit unions, such as growth in membership and loans, but is concerned some credit unions may involve themselves in indirect, outsourced programs—meaning programs in which a third party manages a credit union's relationship with automobile dealers and, because the third party handles loan servicing, with the credit union's members as well—without undertaking adequate due diligence, implementing appropriate controls, and having sufficient experience with a third party servicer.

The Board proposed to limit the aggregate amount of outsourced loans and participations in outsourced loans a credit union may purchase from any one servicer to 50 percent of the credit union's net worth. After 30 months of experience with a particular servicer, the limit increases to 100 percent of net worth. The proposal exempted federally-insured depositories and wholly-owned subsidiaries of those depositories from the definition of servicer. The proposal also included a process and requirements for a credit union to request a waiver from the concentration limits from its regional director.

Briefly summarized, this final rule retains the concentration limits, the servicer exemptions, and the waiver provision as proposed but, in response to public comments, the Board has made certain changes in the final rule. The final rule includes an additional exemption for certain credit union service organization (CUSO) servicers and excludes loans in which the servicer and its affiliates were not involved in the origination process from the concentration limits. These changes, while not affecting the rule's substantive and procedural rationales, are beneficial to credit unions by narrowing the rule's scope and impact. The final rule also includes a 45-day time period for a regional director to act on waiver requests and provides for an appeal to the NCUA Board. These changes are discussed in more detail in the following section on public comments.

NCUA received 27 comment letters from a variety of sources, including a state supervisory authority (SSA), credit unions, credit union trade organizations, and vendors involved in third-party servicing. The following summary categorizes the comments into general comments about the rule and comments about specific provisions with the Board's response to comments, as appropriate.

Several commenters believe this rulemaking is a good idea. One commenter stated “NCUA's concerns are valid, and its proposal basically sound.” Several commenters stated the specific concentration limits were reasonable and the waiver provisions appropriate. The SSA stated it shares NCUA's concern about indirect lending in general and specifically the risks related to third-party servicing arrangements for indirect vehicle lending. This SSA stated it had reviewed a number of these programs and found structural weaknesses and that reported returns failed to reflect credit losses and collection costs.

Several commenters were generally opposed to the rulemaking. A few of these commenters contended NCUA's existing guidance was sufficient to deal with the risks of indirect automobile loans serviced by third-party servicers. One of these commenters stated that each credit union's board should have flexibility to set policy limits in indirect lending just as they do with other types of lending. One commenter stated the proposal manages credit unions to the lowest common denominator and unnecessarily encumbers a credit union's ability to use indirect lending to manage the asset liability management (ALM) process.

The Board appreciates these concerns and does not wish to unnecessarily limit the flexibility of credit union management or encumber a credit union's ability to manage its ALM process. As stated in the preamble to the proposed rule, indirect lending programs with third-party servicing carry risk for credit unions. When these programs involve a significant percentage of the credit union's net worth, these programs also create risks for the National Credit Union Share Insurance Fund (NCUSIF). Accordingly, the Board believes concentration limits are appropriate but credit unions demonstrating sufficient due diligence should be permitted to apply for and receive waivers to the concentration limits. 1

As proposed, the rule permits a credit union to buy indirect vehicle loans serviced by a third-party servicer in an amount up to 50 percent of net worth for the first 30 months of the servicing relationship and, thereafter, up to 100 percent of net worth.

Some commenters contended the rule should permit a credit union to invest up to 100 percent of its net worth after only 18 or 24 months in a program instead of having to wait 30 months. A few commenters also thought the initial concentration limit should be 75 percent of net worth instead of 50 percent. Some of these latter commenters thought that a 75 percent limit would be appropriate but only for credit unions with a composite CAMEL 1 rating. 2 A few commenters contended credit unions qualifying for the NCUA Regulatory Flexibility Program should be entirely exempt from the proposed limits. 12 CFR part 742.

The Board believes a credit union should have sufficient experience with a third-party servicer before entrusting it with indirect vehicles loans in an amount equaling the credit union's entire net worth. Given the expected lives of various types of vehicle loans, the Board continues to believe 30 months is a reasonable time for a credit union to obtain the experience. Accordingly, the final rule retains the 30-month time period.

The Board also believes half of a credit union's net worth is a reasonable exposure during its initial involvement with a third-party servicer, regardless of a credit union's CAMEL rating. As stated in the preamble to the proposed rule, risks associated with these programs are similar to risks associated with asset backed securities (ABS). While natural person credit unions generally may not invest in ABS, national banks may, and the Office of the Comptroller of the Currency (OCC) limits a bank's aggregate investments in ABS issued by any one issuer to 25 percent of capital and surplus. 12 CFR 1.3(f). Since the capital and surplus of a national bank is roughly equivalent to the net worth of a natural person credit union, the 50 percent and 100 percent limits in the proposed rule are significantly less restrictive than the 25 percent that the OCC permits for national bank investment in ABS. In addition, the OCC's 25 percent concentration limit on ABS applies to all banks, regardless of the bank's asset size or net worth ratio or the general performance ratings that OCC examiners assign to a particular bank. NCUA's proposal is less restrictive than the OCC's ABS limits because NCUA wants to encourage lending, but some safety and soundness limits are necessary. Accordingly, the final rule retains 50 percent as the initial limit for credit unions and 100 percent as the general limit, subject to a credit union receiving a waiver.

One commenter analogized the risks the proposal addressed to the risks of participation lending and suggested concentration limits should be related to loans to a single borrower, not to a particular servicer. The Board believes risks associated with third-party servicing of indirect vehicle loans apply equally to whole loans and participation interests in loans and these risks are best constrained by limits expressed in terms of exposure to particular servicers. Another commenter stated concentration limits should be set as a percentage of paid-in and unimpaired capital and surplus rather than as a percentage of net worth. This commenter believes using net worth in the calculation encourages credit unions to maintain unnecessarily high levels of net worth.

The Board believes third-party servicer concentration limits, which protect the viability of the credit union and also limit risk to the NCUSIF, are best expressed in terms of a credit union's net worth and not in terms of paid-in and unimpaired capital and surplus. Paid-in and unimpaired capital and surplus includes both shares and undivided earnings. 12 CFR 700.2(f). Including shares in this definition means a credit union with relatively low levels of net worth could have significant paid-in and unimpaired capital. Accordingly, concentration limits calculated as a percentage of the paid-in and unimpaired capital and surplus may not adequately protect a credit union or the NCUSIF.

The Board confirms, as some commenters requested, that the concentration limits are calculated based on the outstanding loan balance. Further, the Board clarifies, as requested by one commenter, that a credit union may calculate the initial 30-month servicing relationship period from a date preceding this rulemaking. The 30-month servicing relationship period starts from the date a credit union first acquires an interest in loans from a particular third-party servicer.

The proposal exempted servicers that are federally-insured depository institutions or wholly-owned subsidiaries of federally-insured depository institutions from the concentration limits. The rationale for this exemption is federal regulators have access to and oversight of these entities. Many comment letters addressed this exemption.

Several commenters contended the “wholly-owned subsidiary” exemption should be broadened to include servicers that are only partially owned by credit unions. These commenters suggested various alternatives to the “wholly-owned subsidiary” language, including: exempting any servicer that is also a CUSO; any CUSO that has a majority of voting interests owned by federally-insured depository institutions; or any CUSO that has a majority of voting interests owned by federally-insured depository institutions and to which SSAs have access. One commenter also stated additional language could be added to require access by a Federal regulatory authority.

NCUA understands the concerns of these commenters. As suggested by some of the commenters, the final rule exempts any servicing entity that has a majority of its voting interests owned by federally-insured credit unions and that includes in its servicing agreements with credit unions a provision providing NCUA with access to the servicer's books and records and the ability to review its internal controls. This written access provision is similar to the CUSO rule requirement that federal credit unions and their CUSOs must agree in writing to permit NCUA access to the CUSO. 12 CFR 712.3(d)(3). Credit unions relying on this exemption must provide the regional director a copy of the servicing agreement. This will keep regional directors informed of the number of these arrangements, particularly regarding state-chartered credit unions that NCUA does not examine on a regular basis.

A few commenters suggested NCUA should exempt any servicer that agrees to allow NCUA access, whether or not the servicer is affiliated with a federally-insured credit union. Absent at least majority ownership of the servicer by federally insured credit unions, the Board does not believe an agreement will assure unfettered and cooperative access. Similarly, while a few commenters stated access by an SSA should be sufficient to exempt a servicer from the rule, the Board concludes the circumstances this rule addresses present particular safety and soundness concerns requiring NCUA or another Federal insurer to have access to the servicing entity.

One commenter suggested the rule should be changed to apply only to those servicers involved in the loan origination process. This commenter contended that, where a credit union controls the underwriting process, uses its own dealer relationships for originations, and contracts directly with an independent, financially sound servicer with appropriate asset class experience, the credit union's risks are not significantly different from risks in its internal programs and, therefore, should not have different concentration limits.

As stated in the preamble to the proposed rule, NCUA is primarily concerned with indirect vehicle lending programs where both control over the loan origination process and servicing are outsourced to a third-party. While NCUA drafted the proposed concentration limits so as to apply to any indirect loan serviced by a third-party servicer, regardless of the servicer's involvement in the loan origination process, after considering the comments, the Board agrees separating servicing from other aspects of the loan, such as underwriting, originating, or insuring, mitigates the overall risk. Accordingly, the Board has determined to exclude loans in which the servicer and its affiliates have no involvement with the loan other than servicing from the concentration limit. Specifically, the final rule excludes from the definition of covered vehicle loans any loan where neither the third-party servicer nor any of its affiliates are involved in underwriting, originating, or insuring the loan or the process by which the credit union acquires its interest in the loan.

Aside from this modification, the final rule retains the basic definition of vehicle loan, that is, “any installment vehicle sales contract or its equivalent that is reported as an asset under generally accepted accounting principles [GAAP].” The Board notes that, under GAAP, an interest in a vehicle loan transferred with recourse may not be a true sale. See Financial Accounting Standards Board Standard No. 140. If the transfer does not warrant true sale accounting, the transferred loan interest would remain as an asset on the transferring credit union's books and, if serviced by a third-party servicer, count toward the concentration limits.

The proposal defined net worth as:

Proposed § 701.21(h)(3)(iv). A few commenters believe this definition of “net worth” should be modified to permit calculation of the appropriate limits from the line items on NCUA's Call Report, NCUA Form 5300.

NCUA's current Call Report has an automated “PCA Net Worth Calculation Worksheet.” If a credit union makes accurate Call Report entries, line 7 of this Worksheet, entitled “Total Net Worth,” will provide the credit union with its retained earnings balance as determined under generally accepted accounting principles. This information can help credit unions determine their net worth for purposes of these concentration limits. The final rule text, however, does not refer to the Call Report directly since NCUA modifies the Call Report and the specific line items change on occasion.

The concentration limits will apply to all indirect vehicle loans serviced by a particular third-party servicer and its affiliates. The proposal defined affiliate as follows:

Proposed § 701.21(h)(3)(ii). One commenter asked why the proposed definition includes entities under contract as well as entities under common control. If a credit union is using two or more servicers to service indirect automobile loans, the Board believes the loans of both servicers should be aggregated for purposes of the concentration limits if there is any contractual connection between the two servicers. 3 If the contractual relationship does not increase the risk to a credit union in a particular case, it may seek a waiver from the regional director under the rule's waiver provisions and provide the regional director with details about the contractual relationship.

One commenter thought that, in the definition of “servicer,” the phrase “pursuant to the terms of a loan” should be clarified to ensure that lockbox relationships are not inadvertently covered by the regulation. 4 The Board understands lockbox accounts are typically established at banks, and the rule's definition of servicer specifically excludes banks and other federally-insured depository institutions and their wholly-owned subsidiaries. While a bank is excluded from the rule, any other entity falling within the definition of servicer is subject to the rule whether or not it employs a lockbox account arrangement as part of its servicing activities.

The proposal provided that a regional director, upon request, could grant a credit union a waiver from the concentration limits. The proposal provided criteria a regional director will consider when evaluating a waiver request, including: a credit union's understanding of the third-party servicer's organization, business model, financial health, and the related program risks; the credit union's due diligence in monitoring and protecting against program risks; the contracts between the credit union and the third-party servicer; and other factors relevant to safety and soundness. Many commenters thought this waiver provision was a good idea and the provision for a waiver and proposed criteria are retained in the final rule.

Several commenters suggested the waiver provision should set a time period for a regional director's decision. A few commenters thought the rule should permit appeal of a waiver decision to the NCUA Board. The Board agrees with these commenters. The final rule provides that a regional director will make a written determination on a waiver request within 45 calendar days after receipt of the request. The 45-day period will not begin until a credit union has submitted all necessary information to the regional director. A credit union may appeal any part of the determination to the NCUA Board. Appeals must be submitted through the regional director within 30 days of the date of the determination. The Board believes these time periods are reasonable and notes they are similar to other waiver processes the Board has adopted. See, e.g., 12 CFR 701.36(a)(2)(iii).

Two commenters thought the rule should permit state chartered credit unions to obtain waivers from their SSAs rather than from a regional director. The proposed rule required the SSA of a state chartered credit union to concur before the regional director grants a waiver, and the final rule retains this requirement. Because third-party servicing of indirect vehicle loans creates risk for the NCUSIF, however, NCUA should have a role in the decision to grant or deny all waivers.

One commenter thought the waiver procedure was overly burdensome. The Board understands the commenter's concern, but believes it has balanced safety and soundness concerns appropriately with the burden associated with requesting a waiver. Another commenter questioned why an approved waiver should have an expiration date. Circumstances change with the passage of time, including the structure of the servicer, the content of its program, and the composition of the credit union's internal staff and due diligence. Given the significance of the risks, a credit union with an existing waiver should demonstrate periodically that it understands and controls the risks associated with a servicer's program.

Two commenters sought clarification that credit unions could request a waiver from the initial concentration limit of 50 percent as well as the 100 percent concentration limit. The Board confirms that, as proposed and as provided in the final rule, credit unions may request waivers of either limit.

One commenter noted one of the criteria a regional director will consider when reviewing a waiver is the ability of a credit union to replace an inadequate servicer. This commenter expressed concern that credit unions purchasing participation interests generally have little or no ability under standard servicing contracts to replace the servicer. The Board agrees an owner of a loan participation interest is unlikely to have much say in replacing a poor servicer but notes this criterion is only one factor among several a regional director considers in determining whether to grant a waiver request.

Several commenters stated they would like additional information about the requirements for a waiver. Two commenters thought waiver criteria should include information about the rating of any associated insurance company. The Board believes the rule sufficiently describes the criteria a regional director will consider but provides the following additional discussion of the criteria and documentation for waiver requests. Much of this discussion is repeated from the preamble of the proposed rule. 70 FR 75753, 75756 (Dec. 21, 2005).

Credit unions seeking higher concentration limits should have high levels of due diligence and tight controls. Due diligence, in turn, begins with a demonstrated understanding of the third-party servicer's organization, business model, financial health, and program risks. Accordingly, a waiver request should provide information about the following:

• The vendor's organization, including identification of subsidiaries and affiliates involved in the program and the purpose of each;

• The various sources of income to the vendor and the credit union in the program and any potential vendor conflicts with the interests of the credit union;

• The experience, character, and fitness of the vendor's owners and key employees;

• The vendor's ability to fulfill commitments, as evidenced by aggregate financial commitments, capital strength, liquidity, reputation, and operating results;  5

• How loan-related cash flows, including borrower payments, borrower payoffs, and insurance payments, are tracked and identified in the program;

• An analysis of whether, in the event of the servicer's insolvency, the various borrower, insurance, and resale payments in the possession of the servicer and the vehicle collateral are protected from the bankruptcy trustee;

• The vendor's internal controls to protect against fraud and abuse, as documented by, for example, a current SAS 70 type II report prepared by an independent and well-qualified accounting firm;

• Insurance offered by the vendor, including interrelated insurance products, premiums, conditions for coverage beyond the control of the credit union ( e.g. , a prohibition on extension of the insured loans past maturity), the rating of the insurer, and limitations such as aggregate loss limits;

• The underwriting criteria provided by the vendor, including an analysis of the expected yield based on historical loan data, and a sensitivity analysis considering the potential effects of a deteriorating economic environment, failure of associated insurance, the possibility of fraud at the servicer, a decline in average portfolio credit quality, and, if applicable, movement in the program back toward industry-wide performance statistics;  6

• Vendor involvement in the underwriting and processing of loan applications, including use of proprietary scoring or screening models not included in the credit union approved underwriting criteria; and

• The program risks, including (1) Credit risk, (2) liquidity risk, (3) transaction risk, (4) compliance risk, (5) strategic risk, (6) interest rate risk, and (7) reputation risk.

To qualify for a waiver of concentration limits, the servicing agreement should also include more than minimal protections for the credit union. Servicer performance standards should be objective and clear, and a waiver request should clearly articulate how the performance standards protect the interests of the credit union. The exit clause, including any cure period, should be exercisable in a reasonable period of time. The more intensive the requisite servicing, such as for nonprime or subprime loans, the shorter that period of time should be. A credit union's right to exit the servicing agreement should be exercisable at a reasonable cost to the credit union. If a credit union must pay a punitive fee to replace a poor servicer, give up valuable insurance protection, or forfeit legal rights without adequate compensation, the servicing agreement will not satisfy this waiver criterion.

Some indirect, outsourced programs have complex business models that include vendor management of the dealer relationship and also insurance provided by the vendor. These business models can produce situations where the vendor's financial interests are not aligned with the credit union's interests. The credit union needs to be aware of these situations and, if appropriate, take protective action.

For example, a dealer's interest in an indirect lending situation is to obtain financing so the dealer can sell a vehicle. A credit union's interest is to ensure loan applications are properly underwritten and only members meeting the underwriting standards receive loans. With an indirect, outsourced program, a third-party vendor controls information on the quality of a particular dealer's originations. A vendor could present loans to a credit union from a changing list of dealers, making it difficult for a credit union to identify and screen substandard dealers. This creates a potential for the vendor to permit dealers with substandard underwriting performance to remain active in the program.

Unlike typical indirect lending where a dealer receives an origination fee, in some vendor programs, a vendor processes loan applications for the credit union and also receives significant income from dealer fees. A credit union needs to fully understand the relationship between the vendor and the dealers. Credit unions seeking a concentration limit waiver should review agreements between the vendor and associated dealers.

Some vendors provide third-party default insurance or reinsurance and this presents a potential conflict between the vendor as servicer and the vendor as insurer. Accordingly, a credit union needs to understand the relationship between the vendor and the insurance company and the associated risks to the credit union. To understand this relationship fully, a credit union desiring a concentration limit waiver should review all agreements between the vendor, affiliates of the vendor, and the associated insurance companies.

Another potential conflict exists where the vendor controls the dealer relationship and can route a potential loan to multiple funding sources. For example, some vendors track statistics on loan performance by dealership. A credit union should be aware if a vendor then routes loan applications from the preferred dealerships to the preferred funding sources. A credit union desiring a waiver should understand the various funding sources available to the vendor and document how the vendor tracks vendor performance and makes funding decisions.

With each identified risk, a credit union should explain to the regional director how it plans to eliminate or mitigate the risk. Some, but not all, risks may be dealt with through contractual arrangements. For example, the credit union must ensure that its contracts with the servicer grant the credit union sufficient control over the servicer's actions and provide for replacing an inadequate servicer. As NCUA stated in Letter to Credit Unions No. 04-CU-13, and, again, in NCUA Risk Alert No. 05-01, safety and soundness requires a credit union to limit the power of a third-party servicer to alter loan terms. Also, the servicing contract must contain a mechanism, or exit clause, to replace an unsatisfactory servicer.

A regional director may also consider any legal reviews obtained by the credit union on these contracts and should consider the scope and depth of the review and the reviewer's qualifications.

Regional directors may consider other relevant factors when determining whether to grant a waiver of concentration limits as well as the size of any substitute limit. Other factors include the demonstrated strength of the credit union's management and the credit union's previous history in exercising due diligence over similar programs. In addition, higher concentration levels entail more risk to the net worth of a credit union, and so the requisite due diligence also depends on the substitute concentration limit the credit union requests.

The effective date of this final rule is 30 days from the date of publication in the Federal Register .

As discussed in the preamble to the proposed rule, 70 FR 75753, 75757 (Dec. 21, 2005), several credit unions that currently participate in indirect, outsourced programs have concentration levels that exceed the proposed concentration limits. For those credit unions that exceed the concentration limits on the effective date, the rule will not require any divestiture. The rule will prohibit these credit unions from purchasing any additional loans, or interests in loans, from the affected vendor program until such time as the credit union either reduces its holdings below the appropriate concentration limit or the credit union obtains a waiver to permit a greater concentration limit.

The Board is concerned that some credit unions may consider making large purchases of loans that would be subject to the rule before the effective date of the final rule. NCUA will review any large purchases closely and credit unions should be advised that NCUA may consider appropriate supervisory action, including divestiture, to ensure that the credit union's actions were safe and sound.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small credit unions (those under $10 million in assets). This final rule establishes for federally-insured credit unions a concentration limit on indirect vehicle loans serviced by certain third parties. In the preamble of the proposed rule NCUA published its estimate that no more than five small credit unions were involved in purchasing vehicle loans, or interests in loans, from an indirect, outsourced vendor program. NCUA received no comments on this estimate. Accordingly, NCUA has determined that the rule will not have a significant economic impact on a substantial number of small credit unions and that a regulatory flexibility analysis is not required.

The waiver provision in § 701.21(h)(2) contains information collection requirements. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), NCUA submitted a copy of the proposed rule as part of an information collection package to the Office of Management and Budget (OMB) for its review and approval of a new Collection of Information, Third-Party Servicing of Indirect Vehicle Loans. On March 1, 2006, OMB approved this new Collection of Information. The OBM Collection Number is 3133-0171.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. This rule will not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this rule does not constitute a policy that has federalism implications for purposes of the Executive Order.

NCUA has determined that this rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by section 551 of the Administrative Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

NCUA's chartering and field of membership policy is set out in NCUA's Chartering and Field of Membership Manual (Chartering Manual), Interpretive Ruling and Policy Statement 03-1. 68 FR 18333, Apr. 15, 2003. The policy is incorporated by reference in NCUA's regulations at 12 CFR 701.1. On December 29, 2005, the NCUA Board issued a moratorium suspending that portion of its chartering policy allowing non-multiple-common-bond credit unions to add new underserved areas. After establishing a moratorium, the NCUA conducted a comprehensive review of its underserved area policy.

On January 19, 2006, the NCUA Board approved a proposed rule regarding service to underserved areas. 71 FR 4530, Jan. 27, 2006. The NCUA proposed two amendments that would apply only prospectively. The first proposed change was to limit the addition of new underserved areas to only multiple common-bond credit unions. The second proposed change was to the definition and location of the service facility. When adding underserved areas, NCUA proposed requiring a physical presence in the underserved areas to assure better service to members in these locations and deleting the choice of a credit union owned electronic facility with certain functions as a service facility.

NCUA welcomed general comments on the proposed rule and also on all aspects of NCUA's rules on credit unions serving underserved areas. In addition to seeking general comments on the proposed rule, the Board specifically sought comments on a series of questions related to the impact of the proposed changes on consumers and credit unions. The comments were intended to assist the Board in understanding what, if any, impact the proposed changes would have on credit unions that have expended resources investing in underserved areas. The Board is concerned that there is both financial and reputation risk if credit unions, previously authorized to operate in underserved areas, are prohibited from continuing to do so. The Board is also concerned that the proposed changes could limit the ability of credit unions to grow and expand services into underserved areas and provide needed financial assistance to consumers of modest means who do not currently have access to low cost financial services and undermine the viability of the federal credit union charter.

NCUA received 49 comment letters in response to the proposed rule: 31 from federal credit unions, one from a state-chartered credit union, 12 from credit union trade organizations, three from bank trade organizations, one from an individual, and one from an institute. Most credit union commenters opposed the proposal and support the status quo. One commenter believes the proposal contradicts congressional intent by only allowing multiple common-bond credit unions to add underserved areas. In contrast, some credit union commenters appreciated NCUA's concerns and supported the proposal. Whether opposed to or in favor of the proposal, most credit union commenters support a legislative solution amending the Federal Credit Union Act to expressly state that all federal credit unions may add underserved areas. Bank trade group commenters generally supported the proposal and, in some cases, recommended further requirements for credit unions serving underserved areas.

The NCUA Board asked for specific comments on the following five questions.

(1) NCUA's authority to permit expansions into underserved areas for all three federal charter types.

With the exception of the bank trade groups, almost all commenters expressed the opinion that NCUA has the authority to allow all three charter types to add underserved areas. Six commenters support the continuation of the moratorium and understand the basis for NCUA's proposal in this area given the current litigation. Almost all credit union commenters suggest that NCUA seek a statutory change to the Federal Credit Union Act in order to insert express language authorizing this activity.

Credit unions are leaders among financial institutions in providing affordable financial services to persons within their specific field of membership, including people of modest means. The Board is committed to assuring that credit unions have the regulatory tools necessary to perform this important role. One of the primary purposes of the Credit Union Membership Access Act (CUMAA) was to codify the legality of multiple common-bond credit unions. CUMAA also reflects Congress' intent to clarify that this new charter type was authorized to add underserved areas. Unfortunately, the statutory language does not expressly provide that authority to the other two charter types although there is legislative history that indicates Congress intended that all types of federal credit unions should be able to add underserved areas. This absence of specific statutory language, when considered together with the specific authorization for multiple common-bond credit unions, creates uncertainty about the continued authority of non-multiple common-bond credit unions to serve underserved areas. Though most commenters argued that the Board has the authority to authorize the other charter types to serve underserved areas, they provided no persuasive argument to address the issue created by the absence of any specific statutory language. In addition, recently the American Bankers Association and others have filed litigation challenging the authority of a non-multiple common-bond credit union to serve underserved areas in Utah.

In light of this uncertainty, the Board is amending its chartering policies to allow only multiple common-bond credit unions to serve underserved areas pending clarification of the language contained in the Federal Credit Union Act that authorizes the addition of underserved areas. The amendments to the chartering policy will apply only prospectively. The NCUA Board agrees a statutory change is necessary.

(2) The impact of limiting expansions into underserved areas to only multiple common-bond credit unions.

Several credit union commenters described the negative impact on both credit unions and consumers of limiting underserved expansions to multiple common bond credit unions. Commenters wrote that low-income individuals and those who most need credit union service will receive less service. A couple of commenters wrote that there will be less competition. One commenter said there will be a negative impact on the dual chartering system and that some federal credit unions will convert to state charters.

The Board agrees that restricting further expansions has the potential to limit the availability of credit union services to some consumers. Nevertheless, the Board has concluded that there are many opportunities for continued growth and expanded service to consumers within existing fields of membership, even with a change to chartering policies limiting prospective addition of underserved areas to multiple common-bond credit unions. The Board concludes that the ambiguity arising from the statute as well as the current litigation outweighs the potential harm to credit unions and potential members.

(3) Whether, if only multiple common bond credit unions are permitted to add underserved areas, they should be permitted to retain these areas in the event they change charter type.

Almost all credit union commenters who commented on this issue support permitting multiple common-bond credit unions to retain their underserved areas if they change charter types. The banking trade group commenters oppose credit unions retaining the areas.

Given that the final rule will not permit non-multiple common-bond credit unions to serve underserved areas, the Board concludes that, upon conversion to another charter type, the restrictions applicable to the new charter type must apply. Therefore, a multiple common-bond credit union converting to either a single common-bond or community charter would be required to give up its underserved areas. The credit union could continue to serve its existing members. This approach is faithful to the requirements of this final rule which prospectively permits only multiple common-bond credit unions to serve underserved areas. It is also consistent with the approach taken when a multiple common-bond credit union converts to a community credit union. In those circumstances, a credit union must comply with the requirements of the new charter type and relinquish its select employee groups.

The Board is aware that certain unpredictable factors, such as economic downturns and plant closings, could cause a multiple common-bond credit union to convert its charter type. While the loss of underserved areas in these circumstances may seem harsh, the Board concludes that the credit union must balance the potential impact of the loss with other factors relevant to a decision on its charter type. Part of the consideration regarding whether a charter change makes good business sense should necessarily include the fact that, once a multiple common-bond credit union changes its charter, it will lose its underserved areas.

(4) The type and extent of existing investment by non-multiple common bond credit unions in underserved areas including for example, capital investment, loans, share deposits, and other programs targeting low income people.

The Credit Union National Association, a credit union trade group, provided a comprehensive list of investments by non-multiple common-bond credit unions in underserved areas. Credit unions described investments in branch offices and ATMs, their involvement through loans, deposit products, services, and community involvement and charitable services in underserved areas. This information is discussed further in connection with question 5 below.

(5) The impact to members of underserved areas, and non-multiple common-bond credit unions, of restrictions on the addition of new members in underserved areas they are currently serving.

Almost all credit union commenters on this question believe the restrictions would have a negative impact. A few credit unions wrote they might have to close branches and would suffer economic loss. Several credit unions requested they be “grandfathered” so that they can continue to add new members from the underserved areas they currently serve.

The information provided establishes that many credit unions have invested significant funds, totaling in excess of 400 million dollars, and other resources into serving more than 800 underserved areas. This investment includes the establishment of hundreds of branches in and near underserved areas. Activity by credit unions in these areas indicates the significance of their services to their financial well being and the needs of their membership. It includes billions of dollars in loans and share deposits.

Generally, regulations are prospective in nature. Bowen v. Georgetown Hospital, 488 U.S. 204, 216 (1988) (Scalia, J., concurring). In considering the equities of applying a rule retroactively courts will consider such factors as the degree of hardship parties would experience, whether reliance on past regulation was justifiable and any statutory interest in retroactive application of the new rule. See, e.g., Consolidated Freightways v. N.L.R.B., 892 F.2d 1052, 1058 (D.C. Cir. 1989) citing Tennesee Gas Pipeline Co. v. FERC, 606 F.2d 1094, 1115, 1116 n.77 (D.C. Cir. 1979), cert. denied, 445 U.S. 920 (1980).

Application of these principles to this rule demonstrate that the equities favor prospective application.

The comments received demonstrate that there has been significant financial investment by credit unions in reliance on NCUA's existing rule. These investments were made with the expectation that service would be available to all potential members in the underserved areas. Prohibiting the addition of new members would limit growth in these areas, expose the institutions to significant hardship through increased financial and reputation risk, and could cause safety and soundness concerns. Existing members would also suffer as a result of the diminished services that would result if further membership growth was prohibited.

It is also clear that reliance by credit unions on NCUA's regulation permitting these expansions was justified. NCUA has authorized all federal credit unions, regardless of charter type, to add underserved areas since 1994. Prior to the passage of the CUMAA in 1998 these areas were referred to as underserved communities.

With the passage of CUMAA, NCUA made significant changes to its chartering policies but again reiterated that all charter types were permitted to add underserved areas. In the preamble to the regulatory changes implementing CUMAA, the Board noted that the new legislation specifically authorized flexible policies regarding multiple common-bond credit unions providing service to underserved areas. At that time we also encouraged all credit unions to continue service to poor and disadvantaged areas and indicated that previous policy permitting all charter types to serve underserved areas would continue. IRPS 99-1, 63 FR 71998, 72016 (Dec. 30, 1998). Credit unions reasonably relied on these policy statements by this Board.

In short, investment by credit unions in underserved areas has occurred in reliance on long-standing NCUA policies that authorized and indeed encouraged such activity. Members in underserved areas have benefited from low cost financial services made available as a result of these efforts. They have become members in reliance upon NCUA policy that authorized credit union expansion into these areas. Credit unions that have invested in these areas have done so based on economic assumptions that included continued growth in membership. If continued growth is no longer possible, credit unions will be unable to sustain the current level of services provided in these areas. This could result in diminished or lost services to existing members.

On balance therefore, the Board concludes that the equities support only prospective application of this rule. Credit unions, regardless of charter type, that were serving underserved areas at the time the proposed rule was issued should be permitted to continue to serve those areas to include adding new members. To require them to do otherwise, given their reasonable reliance on NCUA's policy as well as their substantial investments, would cause substantial harm to the credit unions, their members, and potential members in the underserved area.

Regarding the service facility location, many commenters opposed NCUA's proposal to require a physical presence in the underserved area and recommend keeping the status quo. Some opposing commenters believe NCUA has the authority to require a credit union to locate a service facility in or near an underserved area. Some commenters believe the location of a branch is a business decision for the credit union to decide. Some commenters believe NCUA should focus on the level of service to the underserved area, not whether the branch is within the area, and one commenter noted that the Community Reinvestment Act does not require branches in an area and allows banks to provide service via ATMs and computers. Another commenter supported a specified distance from the underserved area to the service facility's location rather than requiring it to be in the underserved area.

A commenter wrote that the service facility should not have to be in an underserved area within two years if there is public transportation to the service facility or is an acceptable distance from the underserved area. The same commenter suggested the proposed definition of local community should be revised to be 50 miles for heavily populated urban areas and 200 miles for lightly populated rural areas. The commenter believes common interests and interaction should be removed as they are no longer valid or necessary due to credit reports.

Several commenters supported the service facility requirement as proposed, requiring a service facility be within the underserved area. A couple of commenters specifically mentioned that a physical presence ensures a credit union is serving the area.

A banking trade group commenter wrote that NCUA should require credit unions serving underserved areas to establish a service facility in that area within one year. Another banking trade group wrote that NCUA should require a credit union to establish the service facility in the area upon approval of the expansion.

The NCUA Board finds that a service facility physically located in the underserved area assures better service to members in these locations. A credit union can build a better relationship and understanding of the needs of the community by having a physical presence in the area. By doing so the credit union will be better able to assess the needs of the underserved area and provide needed services to its members. NCUA believes requiring establishment of a service facility within two years of the credit union's addition of the area is reasonable and is retaining it. In addition, the Board has decided to retain as an option for an acceptable type of service facility within the underserved area, a credit union owned facility where shares are accepted for member accounts, loan applications are accepted, and loans are disbursed.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small credit unions (primarily those under $10 million in assets). The final amendments will not have a significant economic impact on a substantial number of small credit unions and therefore, a regulatory flexibility analysis is not required.

The Office of Management and Budget control numbers assigned to Section 701.1 are 3133-0015 and 3133-0116. NCUA has determined that the amendments will not increase paperwork requirements and a paperwork reduction analysis is not required.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The final rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this rule does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act of 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act. 5 U.S.C. 551. NCUA is recommending the Office of Management and Budget determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

PATS Aircraft (holder of Supplemental Type Certificate (STC) SA979NE) notified us that it has determined that Model 757-200 series airplanes equipped with auxiliary fuel tank systems installed by STC SA979NE have insufficient structural strength in the auxiliary fuel tank support structure. The STC holder has also determined that the cargo barriers have insufficient structural strength if subjected to emergency landing loads with more than 2,000 pounds of cargo in the cargo compartment. These determinations were based on a new structural analysis resulting from a re-evaluation of the floor structure and cargo barriers conducted by the STC holder. Structural overload of the auxiliary fuel tank support structure could cause the floor beams to fail, damaging the primary flight controls and the auxiliary power unit fuel lines that pass through the floor beams; this condition, if not corrected, could result in loss of control of the airplane. Structural overload of the cargo barriers could cause the barriers to fail, allowing the cargo to shift; this condition, if not corrected, could result in damage to the auxiliary fuel tanks, residual fuel leakage, and consequent increased risk of a fire.

We have reviewed PATS Aircraft Service Bulletin SA979NE-28-SB-28_IR, dated April 3, 2006. The service bulletin describes procedures for deactivating the auxiliary fuel system, and installing new cargo loading weight limits and “INOP” placards, depending on the airplane configuration. The service bulletin also describes procedures for venting any residual air pressure from the auxiliary fuel tanks following each flight and draining the auxiliary fuel tank sumps to regularly remove any residual fuel that may accumulate over time due to leakage around the auxiliary fuel tank valves. Paragraph I.D. (“Description”) of the service bulletin describes limiting the maximum cargo weight to 2,000 pounds (as specified on the new cargo weight placards) in the forward and aft cargo compartments, as applicable, depending on the STC configuration of the airplane.

We have also reviewed the PATS Aircraft supplements to the Limitations section of the Boeing 757-200 Airplane Flight Manual (AFM), which are identified in the following table. These AFM supplements provide revised maximum cargo weight limits.

The unsafe conditions described previously are likely to exist or develop on other airplanes of the same type design. We are issuing this AD to prevent structural overload of the auxiliary fuel tank support structure, which could cause the floor beams to fail, damaging the primary flight controls and the auxiliary power unit fuel lines that pass through the floor beams, resulting in loss of control of the airplane. We are also issuing this AD to prevent structural overload of the cargo barriers, which could cause the barriers to fail, allowing the cargo to shift, resulting in damage to the auxiliary fuel tanks, residual fuel leakage, and consequent increased risk of a fire. This AD requires accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the AD and the Service Bulletin.”

PATS Aircraft Service Bulletin SA979NE-28-SB-28_IR, dated April 3, 2006, does not specify a compliance time for deactivating the auxiliary fuel system or implementing the new cargo weight limits. In developing an appropriate compliance time for those actions in this AD, we considered the degree of urgency associated with the subject unsafe condition, the average utilization of the affected fleet, and the time necessary to perform the deactivation (3 hours) and AFM revision. In light of all of these factors, we find that a 30-day compliance time represents an appropriate interval of time for affected airplanes to continue to operate without compromising safety.

We consider this AD interim action. The STC holder is currently developing a modification that will address the unsafe conditions identified in this AD. Once this modification is developed, approved, and available, we may consider additional rulemaking.

Since unsafe conditions exists that require the immediate adoption of this AD, we have found that notice and opportunity for public comment before issuing this AD are impracticable, and that 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-2006-25175; Directorate Identifier 2006-NM-099-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 unsafe conditions that are 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 May 31, 2006, the FAA issued AD 2006-12-08, amendment 39-14633 (71 FR 33606, June 12, 2006), for Goodrich evacuation systems approved under TSO-C69b and installed on certain Airbus Model A330-200 and -300 series airplanes, Model A340-200 and -300 series airplanes, and Model A340-541 and -642 airplanes. The AD requires inspecting to determine the part number of the pressure relief valves on the affected Goodrich evacuation systems, and corrective action if necessary.

As published, the final rule identifies an incorrect reference to the airplane manufacturer (Airbus) in the regulatory text of the AD. The correct reference is Goodrich (formerly BF Goodrich).

No other part of the regulatory information has been changed; therefore, the final rule is not republished in the Federal Register .

The effective date of this AD remains July 17, 2006.

This amendment to Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), establishes, amends, suspends, or revokes SIAPs and/or Weather Takeoff Minimums. The complete regulatory description of each SIAP and/or Weather Takeoff Minimums is contained in official FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms are identified as FAA Forms 8260-3, 8260-4, 8260-5 and 8260-15A. Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs and/or Weather Takeoff Minimums, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs and/or Weather Takeoff Minimums but refer to their depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP and/or Weather Takeoff Minimums contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR sections, with the types and effective dates of the SIAPs and/or Weather Takeoff Minimums. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and/or Weather Takeoff Minimums as contained in the transmittal. Some SIAP and/or Weather Takeoff Minimums amendments may have been previously issued by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP, and/or Weather Takeoff Minimums amendments may require making them effective in less than 30 days. For the remaining SIAPs and/or Weather Takeoff Minimums, an effective date at least 30 days after publication is provided.

Further, the SIAPs and/or Weather Takeoff Minimums contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and/or Weather Takeoff Minimums, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs and/or Weather Takeoff Minimums and safety in air commerce, I find that notice and public procedure before adopting these SIAPs and/or Weather Takeoff Minimums are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs and/or Weather Takeoff Minimums effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This document contains amendments to 26 CFR part 1. On June 27, 2003, temporary regulations (TD 9063; 68 FR 38177) regarding whether a loss corporation has an owner shift where a qualified trust described in section 401(a) distributes an ownership interest in an entity were published in the Federal Register . A notice of proposed rule making (REG-108676-03) cross-referencing the temporary regulations was published in the Federal Register for the same day (68 FR 38247). The temporary regulations provided that—(1) if a qualified trust distributes an ownership interest in an entity, then for testing dates on or after the date of the distribution, the distributed ownership interest will be treated as having been acquired by the distributee on the date and in the manner acquired by the trust, and (2) the distribution itself does not give rise to a testing date. They further provided that, in determining which ownership interests have been distributed, the loss corporation must account for all dispositions of ownership interests by the qualified trust either by specifically identifying the ownership interest disposed of, or by using a first-in, first-out (FIFO) method.

The preamble of TD 9063 included background information and an explanation of provisions regarding the regulations. Also in the preamble, the IRS and Treasury Department requested comments regarding whether there are other events that, under current rules, are taken into account in determining whether an ownership change occurs, but do not cause the ultimate beneficial ownership of the loss corporation to change. In this regard, the IRS and Treasury Department indicated that they had been studying the constructive ownership rules as they apply to members of a family and the effect of those rules on the determination of whether a loss corporation has an ownership change. The IRS and Treasury Department expressed concern that, under the current rules, a change in the composition of a family might be interpreted in certain circumstances as shifting ownership even though there has been no change in the ultimate beneficial ownership of the loss corporation, as, for example, might occur when two individuals owning loss corporation stock get married.

The IRS and Treasury Department further indicated that they were considering the promulgation of regulations to address such changes in family composition in a manner similar to that employed in the proposed regulations concerning qualified trusts. The IRS and Treasury Department will continue to study whether to issue regulations under section 382 concerning shifts in ownership resulting from certain changes in family composition.

No comments were received responding to the notice of proposed rulemaking, and no public hearing was requested or held. The proposed regulations are adopted with no substantive change by this Treasury decision, and the corresponding temporary regulations are removed.

It has been determined that this regulation is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. Pursuant to 5 U.S.C. 553(d)(3), it has been determined that good cause exists to dispense with a delayed effective date on grounds that this regulation, which is substantively identical to currently effective temporary regulations and relieves a restriction on affected qualified trusts, merely continues to provide necessary guidance to taxpayers with respect to whether a loss corporation has an ownership change where a qualified trust described in section 401(a) distributes an ownership interest in an entity. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the regulations provide relief to qualifying loss corporations that might be affected by an unintended consequence of the operation of the statute. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Keith E. Stanley of the Office of Associate Chief Counsel (Corporate). Other personnel from the IRS and Treasury Department participated in their development.

Throughout this document, “we,” “us” and “our” refer to EPA.

Section 112(l) of the Clean Air Act, as amended in 1990 (CAA), authorizes EPA to delegate to state or local air pollution control agencies the authority to implement and enforce the standards set out in the Code of Federal Regulations, Title 40 (40 CFR), Part 63, National Emission Standards for Hazardous Air Pollutants for Source Categories. On November 26, 1993, EPA promulgated regulations, codified at 40 CFR Part 63, Subpart E (hereinafter referred to as “Subpart E”), establishing procedures for EPA's approval of state rules or programs under section 112(l) (see 58 FR 62262). Subpart E was later amended on September 14, 2000 (see 65 FR 55810).

Any request for approval under CAA section 112(l) must meet the approval criteria in 112(l)(5) and Subpart E. To streamline the approval process for future applications, a state or local agency may submit a one-time demonstration that it has adequate authorities and resources to implement and enforce any CAA section 112 standards. If such demonstration is approved, then the state or local agency would no longer need to resubmit a demonstration of these same authorities and resources for every subsequent request for delegation of CAA section 112 standards. However, EPA maintains the authority to withdraw its approval if the State does not adequately implement or enforce an approved rule or program.

On October 30, 1996, EPA approved the Maricopa County Air Quality Department's program for accepting delegation of CAA section 112 standards that are unchanged from Federal standards as promulgated (see 61 FR 55910). On March 2, 2000, EPA published a direct final action delegating to Maricopa County several NESHAPs (see 65 FR 11231). That action explained the procedure for EPA to grant future delegations to Maricopa by letter, with periodic Federal Register listings of standards that have been delegated. On April 21, 2006, Maricopa requested delegation of the following NESHAPs contained in 40 CFR Part 63:

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

• Crop production (NAICS 111)

• Animal production (NAICS 112)

• Food manufacturing (NAICS 311)

• Pesticide manufacturing (NAICS 32532)

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

In addition to accessing an electronic copy of this Federal Register document through the electronic docket at http://www.regulations.gov , you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr . You may also access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's pilot e-CFR site at http://www.gpoaccess.gov/ecfr .

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2006-0395 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before August 28, 2006.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit your copies, identified by docket ID number EPA-HQ-OPP-2006-0395, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov . Follow the on-line instructions for submitting comments.

• Mail : Office of Pesticide Programs (OPP) Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

• Delivery : OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Building), 2777 S. Crystal Drive, Arlington, VA. Deliveries are only accepted during the Docket's normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The telephone number for the Docket Facility is (703) 305-5805.

EPA, on its own initiative, in accordance with sections 408(e) and 408(l)(6) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, is establishing tolerances for combined residues of the fungicide myclobutanil, alpha-butyl-alpha-(4-chlorophenyl)-1H-1,2,4-triazole-1-propanenitrile and its alcohol metabolite (alpha-(3-hydroxybutyl)-alpha-(4-chlorophenyl)-1H-1,2,4-triazole-1-propanenitrile (free and bound), in or on vegetable, legume (except soybean), Crop Group 6 and vegetable, foliage of legume (except soybean), Crop Group 7 at 1.0 parts per million (ppm). These tolerances will expire and are revoked on June 30, 2009. EPA will publish a document in the Federal Register to remove the revoked tolerances from the Code of Federal Regulations.

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

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

Section 18 of the FIFRA authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” This provision was not amended by the Food Quality Protection Act of 1996 (FQPA). EPA has established regulations governing such emergency exemptions in 40 CFR part 166.

The States of Florida and Tennessee, as lead state agencies in what is essentially a “national” emergency exemption request for vegetable legume growing states, have petitioned the Agency requesting an Emergency Exemption for myclobutanil to control soybean rust under section 18 of FIFRA. On November 10, 2004, U.S. Department of Agriculture's Animal and Plant Health Inspection Service (USDA/APHIS) confirmed the presence of Phakopsora pachyrhizi , the pathogen that causes soybean rust, on soybean leaf samples taken from two plots associated with a Louisiana State University research farm. Soybean rust has been designated as a biosecurity threat and therefore it is important that control measures be available for this disease. Legume crops, in general are considered a suitable host for the pathogen that causes soybean rust. So, for this reason, legume crops are vulnerable to this plant disease. EPA has authorized under FIFRA section 18 the use of myclobutanil on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) for control of soybean rust in Florida and Tennessee, and all other states that have requested an exemption for this use. After having reviewed the submission, EPA concurs that emergency conditions exist for these States.

As part of its assessment of this emergency exemption, EPA assessed the potential risks presented by residues of myclobutanil in or on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans). In doing so, EPA considered the safety standard in section 408(b)(2) of the FFDCA, and EPA decided that the necessary tolerance under section 408(l)(6) of the FFDCA would be consistent with the safety standard and with FIFRA section 18. Consistent with the need to move quickly on the emergency exemption in order to address an urgent non-routine situation and to ensure that the resulting food is safe and lawful, EPA is issuing these tolerances without notice and opportunity for public comment as provided in section 408(l)(6) of the FFDCA. Although these tolerances will expire and are revoked on June 30, 2009, under section 408(l)(5) of the FFDCA, residues of the pesticide not in excess of the amounts specified in the tolerances remaining in or on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) after that date will not be unlawful, provided the pesticide is applied in a manner that was lawful under FIFRA, and the residues do not exceed a level that was authorized by this tolerance at the time of that application. EPA will take action to revoke these tolerances earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

Because these tolerances are being approved under emergency conditions, EPA has not made any decisions about whether myclobutanil meets EPA's registration requirements for use on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) or whether permanent tolerances for this use would be appropriate. Under these circumstances, EPA does not believe that these tolerances serve as a basis for registration of myclobutanil by a State for special local needs under FIFRA section 24(c). Nor do these tolerances serve as the basis for any State other than those which have been granted exemptions as part of the vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) section 18 to use this pesticide on this crop under section 18 of FIFRA without following all provisions of EPA's regulations implementing FIFRA section 18 as identified in 40 CFR part 166. For additional information regarding the emergency exemption for myclobutanil, contact the Agency's Registration Division at the address provided under FOR FURTHER INFORMATION CONTACT .

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of myclobutanil and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for time-limited tolerances for residues of myclobutanil in or on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) at 1.0 ppm. EPA recently assessed the potential risks presented by residues of myclobutanil in or on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) as part of the dietary exposure estimates in the human health risk assessment for another proposed section 18 use of myclobutanil. EPA was still evaluating the emergency application on the specialty legume crops at that time and did not include a regulatory expression for these time-limited tolerances in the earlier notice. However, the human health risk assessment of the dietary exposures and risks associated with establishing these tolerances is discussed fully in the final rule published in the Federal Register of August 24, 2005 (70 FR 49499) (FRL-7731-2).

Adequate enforcement methodology (example—gas chromatography) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov .

There are no CODEX, Canadian, or Mexican Maximum Residue Limits (MRLs) for myclobutanil on legumes (excluding soybeans). Therefore, there are no international harmonization issues associated with this action.

Therefore, the tolerances are established for combined residues of myclobutanil, alpha-butyl-alpha-(4-chlorophenyl)-1H-1,2,4-triazole-1-propanenitrile and its alcohol metabolite (alpha-(3-hydroxybutyl)-alpha-(4-chlorophenyl)-1H-1,2,4-triazole-1-propanenitrile (free and bound), in or on vegetable, legume (except soybeans) and vegetable, foliage of legume (except soybeans) at 1.0 ppm.

This final rule establishes time-limited tolerances under section 408 of the FFDCA. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a FIFRA section 18 exemption under section 408 of the FFDCA, such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers, and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

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

This document does not contain new or modified information collection requirements subject to the PRA of 1995, Public Law 104-13. In addition, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506 (c)(4). This is a summary of the Commission's document FCC 06-81, Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities , Order, CG Docket No. 03-123, adopted June 12, 2006, released June 16, 2006, addressing issues raised in Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities , Report and Order, Order on Reconsideration, CC Docket Nos. 90-571 and 98-67, CG Docket No. 03-123, published at 69 FR 53346, September 1, 2004.

The full text of document FCC 06-81 and copies of any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. Document FCC 06-81 and copies of subsequently filed documents in this matter may also be purchased from the Commission's duplicating contractor at Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact the Commission's duplicating contractor at its Web site http://www.bcpiweb.com or by calling 1-800-378-3160.

To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). Document FCC 06-81 can also be downloaded in Word or Portable Document Format (PDF) at: http://www.fcc.gov/cgb/dro .

The TRS rules, see 47 CFR 64.604 of the Commission's rules (the TRS “mandatory minimum standards”), require that CAs stay with a call at least 10 minutes before transferring the call to another CA. 47 CFR 64.604(a)(1)(v) of the Commission's rules. This rule was adopted in the March 2000 Improved TRS Order . See Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities , FCC 00-56, CC Docket 98-67, 15 FCC Rcd 5140, at 5168-5169, paragraphs 67-69 (March 6, 2000) ( Improved TRS Order ); published at 65 FR 38432, June 21, 2000 and 65 FR 38490, June 21, 2000. The 10-minute period begins when the calling party reaches the CA and they begin communicating. This rule is intended to reduce disruptions caused by in-call transfers and make the call more functionally equivalent to voice telephone calls. Improved TRS Order , 15 FCC Rcd at 5169, paragraph 68; see also Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities , FCC 98-90, CC Docket No. 98-67, Notice of Proposed Rulemaking, 13 FCC Rcd 14187, 14211, at paragraph 61 (May 20, 1998); published at 63 FR 32798, June 16, 1998 (raising the 10-minute in-call replacement rule in NPRM). Its application to VRS, however, has raised concerns. Specifically, in the 2004 TRS Report and Order and FNPRM the Commission noted that in some VRS calls “the caller using ASL and the VRS CA may not be able to understand each other because, e.g. , each uses a different style of sign language,” and therefore the call might be more effectively handled by a different CA. 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 248. The Commission therefore sought comment on whether an exception to the 10-minute rule should apply in this context. 2004 TRS Report and Order and FNPRM, 19 FCC Rcd at 12569, paragraph 248. Previously, the Commission adopted a different standard for Speech-to-Speech (STS) because of concerns unique to that service; in that case, it adopted a longer period of time. See Improved TRS Order , 15 FCC Rcd at 5170, paragraph 70.

The Commission also sought comment on whether VRS CAs should be permitted to ask questions to the VRS user during call set-up so that the VRS CA can gain an understanding of the nature of the call before the CA begins relaying the call. 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 249. The Commission noted that because the role of the CA “is to relay the call back and forth between the parties as a transparent entity, CAs generally may not ask questions to the initiating party about the call.” 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 249. The Commission further noted, however, that “VRS [* * *] presents different challenges for CAs who have to deal with the complexities of sign language, including the fact that one sign can mean different things depending on the context.” 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 249. The Commission also sought comment on how, assuming VRS CAs are allowed to ask questions, the Commission could ensure that the VRS CA does not interfere with the independence of the VRS user should the caller choose not to answer the questions. 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 249.

In response to these two issues, five comments, six reply comments, and one ex parte letter were filed. Comments were filed by the State of California and the California Public Utilities Commission (CA PUC) (October 18, 2004); Communication Services for the Deaf, Inc, (CSD) (October 18, 2004); Hands On Video Relay Services, Inc. (Hands On) (October 15, 2004); Sorenson Media, Inc. (Sorenson) (October 18, 2004); and Sprint Corporation (Sprint) (October 18, 2004). Reply comments were filed by CSD (November 15, 2004); and five individuals, Nancy Bender (October 20, 2004); Kathryn Bennett (October 20, 2004); Diana O'Toole (October 20, 2004); J. Powell (October 20, 2004); and Jennifer Sweeney (October 20, 2004). CSD also filed an ex parte letter addressed to Jay Keithley and Thomas Chandler of Consumer and Governmental Affairs (September 14, 2005). All commenters generally support allowing the replacement of the VRS CA if necessary to ensure effective communication. See , e.g. , CA PUC Comments at 17; CSD Comments at 32; Hands On Comments at 26; Sorenson Comments at 18; Sprint Comments at 12; CSD Reply Comments at 7; Nancy Bender; Kathryn Bennett; Diana O'Toole; J. Powell; and Jennifer Sweeney.

Commenters also generally support permitting the VRS CAs to ask questions to the VRS user during call set-up in order to ensure that the CA can effectively relay the conversation. CA PUC Comments at 17; CSD Comments at 33; Sorenson Comments at 18; Sprint Comments at 12; Kathryn Bennett; Diana O'Toole; J. Powell; and Jennifer Sweeney.

The Commission clarifies that if the party using sign language or the VRS CA find that they are not communicating effectively given the nature of the call, the VRS provider may have another CA handle the call without violating the 10-minute in-call replacement rule. The purpose of the rule is to prevent disruptions to a call and make the call more functionally equivalent to a voice telephone call. In this regard, the rule is principally intended for the benefit of the TRS user. At the same time, there may be VRS calls during which the party using sign language, the CA, or both, find that they are unable to communicate effectively because of regional dialect differences, lack of knowledge about a particular subject matter ( e.g. , a technical or complex subject matter), or other reason. In these circumstances, when effective communication is not occurring, the Commission concludes that the 10-minute in-call replacement rule is not violated if the VRS provider has another CA take over the call. The Commission emphasizes that this exception to the 10-minute rule does not permit VRS providers and CAs to switch CAs within the 10-minute time period for other reasons unrelated to the ability to effectively communicate in sign language. For example, the VRS provider may not switch CAs within the 10-minute time period simply because the CA might prefer not to handle a call with a particular subject matter or a call made by a particular consumer.

The Commission clarifies that, consistent with the TRS rules, the VRS CA may ask a VRS caller questions during call set-up when necessary to ensure that the CA can effectively handle the call. The Commission recognizes that in some circumstances the complexity of sign language may make it difficult for the CA to effectively relay the call if the CA does not understand the subject matter or context of the call. For example, the sign for “Congress,” Commission,” “committee,” and “council” is the same, and therefore the context of the conversation dictates which of these words would be voiced by the CA. In addition, the Commission understands that it is universal practice in the interpreting profession to ask customers questions prior to an assignment in order to better facilitate effective communication. See http://www.deaflinx.com/useterp.html , “Working with an ASL-English Interpreter.” See also http://www.rid.org/125.pdf , “RID Standard Practice Paper on Interpreting in legal settings.” As the Commission has noted, one sign can have different meanings depending on the context. 2004 TRS Report and Order and FNPRM , 19 FCC Rcd at 12569, paragraph 249; see also note 31. Further, no commenters oppose allowing the VRS CA to ask questions during the call set-up. For these reasons, the Commission finds that VRS CAs may ask questions to the calling party during call set-up when necessary to ensure effective communication between the VRS CA and the VRS user. At the same time, the Commission adds that if the VRS user declines to answer the questions, the CA must proceed with the call. See 47 CFR 64.604(a)(3)(i) of the Commission's rules (prohibiting a TRS provider from refusing any calls).

The Regulatory Flexibility Act of 1980, as amended (RFA) requires that a regulatory flexibility analysis be prepared for rulemaking proceedings, unless the agency certifies that “the rule will not have a significant economic impact on a substantial number of small entities.” The RFA, see 5 U.S.C. 601-612, has been amended by the Contract with America Advancement Act of 1996, Public Law Number 104-121, 110 Statute 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Act of 1996 (SBREFA). The RFA generally defines “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 605(b). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 5 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register .” A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 15 U.S.C. 632.

This Order addresses two issues raised in the FNPRM in the 2004 TRS Report and Order and FNPRM : (1) Whether an exception should be made to the 10-minute in-call replacement rule for VRS if the calling party using ASL and the VRS CA find that they are not communicating effectively given the nature of the call, permitting the VRS provider to have a new CA handle the call; and (2) whether a VRS CA should be permitted to ask the VRS user questions during call set-up when necessary to assist the CA in properly handling the call. Given the complexity of sign language, the Commission concludes that the public interest is best served by permitting a VRS provider to have another CA handle the call if a CA cannot effectively communicate with the calling party, and by permitting a VRS CA to ask questions to the calling party during call set-up when necessary to gain an understanding of the nature of the call to ensure effective communication. Because this Order addresses only how VRS CAs may handle VRS calls in particular circumstances, the Commission certifies that the requirements of the Order will not have a significant economic impact on a substantial number of small entities.

The Commission also notes that, arguably, there are not a substantial number of small entities that will be affected by our action. The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such firms having 1,500 or fewer employees. 13 CFR 121.201, NAICS code 517110. According to Census Bureau data for 1997, there were 2,225 firms in this category which operated for the entire year. U.S. Census Bureau, 1997 Economic Census, Subject Series: Information, “Establishment and Firm Size (Including Legal Form of Organization),” Table 5, NAICS code 513310 (issued Oct. 2000). Of this total, 2,201 firms had employment of 999 or fewer employees, and an additional 24 firms had employment of 1,000 employees or more. Thus, under this size standard, the majority of firms can be considered small. (The census data do not provide a more precise estimate of the number of firms that have employment of 1,500 or fewer employees; the largest category provided is “Firms with 1,000 employees or more”). Currently, only eight providers are providing VRS and being compensated from the Interstate TRS Fund: AT&T Corp.; Communication Access Center for the Deaf and Hard of Hearing, Inc.; Hamilton Relay, Inc.; Hands On; MCI; Nordia Inc.; Sorenson; and Sprint. The Commission notes that two of the providers noted above are small entities under the SBA's small business size standard. In addition, the Interstate TRS Fund Administrator is the only entity that compensates eligible providers of VRS. Under these circumstances, the Commission concludes that the number of small entities affected by its decision in this Order is not substantial. The Commission will send a copy of this Order , including a copy of this Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the SBA. 5 U.S.C. 605(b).

The Commission will not send a copy of the Order pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the adopted rules are rules of particular applicability.

Pursuant to the authority contained in Sections 1, 2, and 225 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, and 225, the Order is hereby adopted .

The Order shall be effective July 28, 2006.

The Commission will send a copy of the Order , including a copy of this Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the SBA.

This is a summary of the Commission's Report and Order, MB Docket No. 04-361, adopted June 7, 2006, and released June 9, 2006. The Notice of Proposed Rule Making, 69 FR 57897, September 28, 2004, was issued at the request of Dana J. Puopolo. The full text of this Commission decision is available for inspection and copying during normal business hours in the Commission's Reference Information Center, 445 Twelfth Street, SW., Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC, 20054, telephone 800-378-3160 or http://www.BCPIWEB.com.

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

This is a synopsis of the Commission's Report and Order, MB Docket No. 05-304, adopted June 7, 2006, and released June 9, 2006. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The complete text of this decision also may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, (800) 378-3160, or via the company's Web site, http://www.bcpiweb.com. The Commission will send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see U.S.C. 801(a)(1)(A).

The groundfish, crab, scallop, and salmon fisheries in the exclusive economic zone (EEZ) off Alaska are managed under their respective FMPs. The North Pacific Fishery Management Council (Council) prepared the FMPs under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801, et seq. Regulations implementing the FMPs appear at 50 CFR parts 679 and 680. General regulations governing U.S. fisheries also appear at 50 CFR part 600.

The Secretary of Commerce approved the FMP amendments for EFH and HAPC identification and conservation on May 3, 2006.

Detailed information on the history of EFH requirements in the Magnuson-Stevens Act, litigation regarding EFH, gear effects on bottom habitat, Council actions, and summary of the EFH and HAPC amendments to Alaska fisheries FMPs implemented by this final rule are in the preamble to the proposed rule (71 FR 14470, March 22, 2006).

A description of the regulatory amendments to implement provisions for EFH and HAPC management follows.

The final rule revises the definition of “authorized fishing gear” to add dredge gear. This definition is necessary to establish restrictions on this gear type in habitat protection areas (HPAs) and habitat conservation zones (HCZs). To ensure consistency between the Federal and State of Alaska (State) regulations for the management of the scallop fishery, the final rule adds a definition for dredge that is the same as the State's definition at 5 Alaska Administrative Code 39.105(16).

To identify groups of gear for the purposes of EFH and HAPC management measures, the categories of bottom contact gear and mobile bottom contact gear are added to the authorized fishing gear definition. The definition for bottom contact gear lists dredge, hook-and-line, nonpelagic trawl, dinglebar, and pot gears. The definition for mobile bottom contact gear lists dredge, nonpelagic trawl, and dinglebar gears.

The final rule defines each management area established to protect EFH and HAPC. The definitions for the habitat conservation areas (HCAs), HPAs, and HCZs provide the names of the management areas and refer to tables in 50 CFR part 679 for the coordinates of each area to ensure accurate descriptions.

The final rule adds a definition for “federally permitted vessel” for purposes of the fishing restrictions in the HCAs, HPAs, and HCZs and for vessel monitoring systems (VMS). Federally permitted vessels are those vessels named on either a groundfish Federal fishing permit (FFP) or a Federal crab vessel permit (FCVP). These types of permits were identified for this purpose because they are required for anyone fishing for groundfish or crab species in the EEZ, are easily obtained compared to other types of Federal fishing permits that require catch history, and can be easily relinquished and reissued. The ability to easily relinquish and reissue the groundfish FFPs and FCVPs provides the fisher the flexibility to choose whether to participate in activities that require compliance with the EFH and HAPC restrictions and VMS requirements. This new definition ensures the EFH and HAPC provisions do not apply to vessels named only on other types of federal fishing permits.

The final rule adds a definition of “operate a vessel” for the purpose of describing when a VMS is required to be transmitting. A vessel is operating any time it is offloading or processing fish; is in transit to, from, or between the fishing areas; or is fishing or conducting operations in support of fishing.

Currently, license limitation permits (LLPs) are issued for fishing groundfish in the GOA with a trawl, non-trawl, or both trawl and non-trawl gear endorsements. The Council recommended that vessels named on an LLP with a trawl endorsement be allowed to use non-trawl gear to fish for slope rockfish within the Gulf of Alaska Slope Habitat Conservation Areas (GOASHCAs). The final rule revises paragraph (k)(3)(iv)(A) to allow vessels named on an LLP with a trawl endorsement to use non-trawl gear to fish for slope rockfish within the GOASHCAs. This revision provides some accommodation to vessels named on an LLP endorsed only for trawl gear, if the operator is willing to use non-trawl gear to fish for slope rockfish within the GOASHCA.

The current pelagic trawl performance standard does not apply to the Community Development Quota (CDQ) pollock fishery. To ensure all directed fishing for pollock follows the performance standard at § 679.7(a)(14), the final rule revises the prohibition to make it applicable to all pollock directed fisheries. Background on the CDQ pollock fishery and the trawl performance standard is detailed in the proposed rule (71 FR 14470, March 22, 2006).

To ensure all directed fishing for pollock is conducted using pelagic trawl gear that meets the performance standard at § 679.7(a)(14), the final rule revises this prohibition to delete the word “non-CDQ,” thereby making the prohibition applicable to all pollock directed fisheries. This revision ensures that all directed fishing for pollock in the BSAI is conducted with pelagic trawl gear in a manner that has less potential impact on bottom habitat.

A new paragraph (a)(20) is added to prohibit the anchoring of any federally permitted fishing vessel in an HPA. This prohibition applies to any vessel named on an FFP or FCVP. Anchoring may disturb bottom habitat during deployment and retrieval of the anchor and is included in those activities that are prohibited in these fragile and sensitive bottom habitat areas.

The final rule also adds two new paragraphs (a)(21) and (22) to address the VMS requirements for EFH and HAPC management. Paragraph (a)(21) prohibits all vessels named on an FFP or FCVP from operating in the Aleutian Islands subarea without an operable VMS and without complying with the requirements at § 679.28. Paragraph (a)(22) prohibits all vessels named on an FFP or FCVP from operating in the GOA with mobile bottom contact gear on board without an operable VMS and without complying with the requirements at § 679.28.

The final rule adds fishing closures in the BSAI and GOA. Paragraph (a)(12) is revised, and paragraphs (a)(13), (a)(14), and (a)(15) are added to the closures listed for the BSAI to include the Aleutian Islands Coral Habitat Protection Areas (AICHPAs), Aleutian Islands Habitat Conservation Area (AIHCA), Bowers Ridge Habitat Conservation Zone (BRHCZ), and Alaska Seamount Habitat Protection Areas (ASHPAs), respectively. The final rule adds new paragraphs (b)(8), (b)(9), and (b)(10) to the closures listed for the GOA to include the Gulf of Alaska Coral Habitat Protection Areas (GOACHPAs), GOASHCAs, and ASHPAs, respectively. Portions of the ASHPAs occur in both the BSAI and GOA. Therefore, the closures for these HPAs are addressed under both management areas. Each new paragraph refers to the respective new table in 50 CFR part 679 that contains the coordinates for that management area. The final rule prohibits fishing with bottom contact gear by federally permitted vessels in the HPAs. It also prohibits fishing with nonpelagic trawl gear in the HCAs and fishing in the HCZ with mobile bottom contact gear.

Existing gear limitations prohibit the use of nonpelagic trawl gear for the directed fishing of non-CDQ pollock in the BSAI. Directed fishing for CDQ pollock was not included in this prohibition for the same reasons stated in the proposed rule (71 FR 14470, March 22, 2006) for the trawl performance standard pursuant to § 679.7(a)(14)(i). To ensure all directed fishing for pollock is conducted with pelagic trawl gear that meets the trawl performance standard, the final rule revises paragraph (b)(4) to remove the term “non-CDQ.” This revision prevents potential opportunistic use of nonpelagic trawl gear for pollock harvest in any CDQ trawl fishery, ensuring that all directed fishing for pollock is conducted with pelagic trawl gear that must meet the trawl performance standard and that is less likely to impact bottom habitat.

The final rule revises paragraph (f)(3)(iv) to clarify when a vessel operator must stop fishing because of VMS transmission problems. The paragraph currently specifies that fishing must stop if the vessel operator is informed by NMFS that the VMS is not transmitting properly. The final rule further requires that fishing must stop if the vessel operator determines that the VMS is not transmitting properly. This revision ensures that fishing is stopped as soon as possible after either NMFS or the vessel operator determines that the VMS is not functioning properly.

The final rule also revises paragraph (f)(6) to clarify when a VMS must be transmitting for all vessels that are required to have a VMS. For purposes of EFH and HAPC management, the final rule requires VMS transmission while a vessel is operating in the Aleutian Islands subarea or while a vessel is operating in the GOA with mobile bottom contact gear on board.

The final rule adds six new tables to 50 CFR part 679 to identify and describe the EFH and HAPC management areas that are defined in § 679.2 and closed to certain gear types in § 679.22 or anchoring under § 679.7. Each table lists the individual sites by name and number within each management area and provides the coordinates needed to locate the boundaries of each site. These tables are necessary to ensure that the fishery participants and State and Federal enforcement staff are able to identify those areas that are restricted to fishing activities.

NMFS received 11 comment letters on the proposed rule that contained 19 separate comments. The following summarizes and responds to these comments.

Comment 1: The Federal Register notice of the FMP amendments is hard to understand and should be rewritten and published. The agency is attempting to mislead the public.

Response: The FMP amendments are large and complex changes to five FMPs. NMFS provided a concise summary of each of the changes to the FMPs in the Federal Register notice (71 FR 6031, February 6, 2006). In that notice, the public was provided the name, phone number and e-mail address of a contact person and a Web site where additional information is available if a proposed action is not explained to a reader's satisfaction. The Federal Register notice of availability of the FMP amendments provided sufficient information to the public and additional sources of information for more details. The notice will not be republished.

Comment 2: NMFS has conflicts of interest by financing fishing vessels and receiving profits from fishing activities. The public loses when NMFS lets the commercial fishing industry run rampant over the nation's resources.

Response: The Magnuson-Stevens Act does provide for a Fisheries Finance Program that makes long-term fisheries loans for vessels and shoreside facilities. NMFS receives no financial support from fishing activities, except to recover the costs of administration for certain programs such as the individual fishing quota program for halibut, sablefish, and crab. NMFS disagrees that these programs create a conflict of interest. The FMP amendments for EFH and HAPC will result in restrictions on fishing activities to preserve our nation's marine resources.

Comment 3: In general, we support the Council's recommendations and the Secretary of Commerce's approval of the FMP amendments and their implementing regulations.

Response: Support is noted.

Comment 4: The EFH EIS supports status quo for the GOA and the Bering Sea. The Aleutian Islands subarea has high coral density, highly repetitive fishing patterns, and extensive areas that have not been trawled, unlike the GOA and Bering Sea. We agree with the Council's recommended protection measures for the Aleutian Islands subarea.

Response: Support is noted. Even though the EFH EIS determined that the impacts of fishing on EFH in these management areas are no more than minimal, the Council and NMFS have the authority to implement measures necessary for the conservation and management of fishery resources, including precautionary measures to protect EFH. The Council recommended new conservation measures for EFH in the Aleutian Islands and GOA, but deferred any new conservation measures for the Bering Sea pending additional analysis.

Comment 5: The State of Alaska recently took emergency action to protect the AICHPAs. We encourage the Council and NMFS to continue to work with the State of Alaska to implement other EFH and HAPC protection measures in the proposed rule.

Response: Once the EFH and HAPC regulations are finalized, NMFS and the Council will work with the State of Alaska to develop parallel closures in State waters and fisheries. This issue is scheduled for review by the State of Alaska Board of Fisheries in October 2006.

Comment 6: In the preamble to the proposed rule, the comparison of the effect of pelagic and nonpelagic trawl gears on the bottom is not accurate. All components of a nonpelagic trawl are designed to contact the bottom, whereas only the bosom of the footrope of a pelagic trawl is likely to contact the bottom. The comparison should not use the words “as aggressively” to describe the type of impact of these two gear types on bottom habitat.

Response: NMFS appreciates the commenter's more descriptive comparison of the bottom contact of pelagic and nonpelagic trawl gear. The comparison in the proposed rule was intended to be general and indicate that pelagic trawl gear has less contact and potentially fewer impacts than nonpelagic trawl gear.

Comment 7: The use of the term off-bottom mode in describing fishing with pelagic trawl gear is misleading. The trawl performance standards (§ 679.7(a)(14)) and the gear limitations in the GOA (§ 679.24(b)(4)) are established to ensure pelagic trawl gear is operated in a manner that is less likely to impact the bottom. The performance standard and gear limitation do not preclude the pelagic trawl from contacting the bottom. The public may have assumed that the proposed rule included an off-bottom mode standard for pelagic trawl. Any statement in the final rule regarding fishing for pollock with pelagic gear should not include the phrase off-bottom mode and only should use the pelagic trawl gear performance standard and gear limitation, as specified in the regulations.

Response: NMFS agrees with the comments and has incorporated the requested language.

Comment 8: The performance standards for pelagic trawl gear are inadequate to prevent seafloor habitat impacts in the AICHPAs, the BRHCZ and the ASHPAs. Although trawling within the performance standard is characterized as off-bottom mode, the standard could allow for significant seafloor impacts. A stronger performance standard is needed to prevent pelagic trawl gear from impacting these sensitive habitats through bottom contact. In the BSAI, the pelagic trawl performance standard based on crabs is not indicative of the lack of habitat impacts and does not provide adequate controls on pelagic trawling in EFH and HAPC management areas. The footrope may be contacting the floor even though crabs may not be observed by being retained in the net. The GOA gear limitation allowing pelagic trawl gear contact of the bottom for no more than 10 percent of the tow could result in large areas being impacted as some tows may extend for several miles. A footrope contacting the bottom may be particularly damaging to animals anchored on or residing in the upper sediments of the seafloor. The Council recommended prohibiting the use of pelagic trawl gear that contacts the bottom in areas where bottom contact gear is prohibited. They also recommended the use of pelagic trawl gear in an off-bottom mode in the AIHCA. A more stringent and enforceable performance standard is needed to ensure pelagic trawl gear is operated in a manner that does not contact the bottom in areas where bottom contact gear is prohibited and to ensure operation without bottom contact in areas where pelagic trawl gear in an off-bottom mode is allowed.

Response: See comment 7. NMFS agrees that the current performance standard in the BSAI and gear limitation in the GOA for pelagic trawl gear do not eliminate the possibility that pelagic trawl gear may contact the bottom. However, the EFH EIS determined that given the location and use of pelagic trawl gear in the Aleutian Islands subarea and GOA, no impact on habitat was likely to occur (see ADDRESSES ). The Aleutian Islands subarea and GOA areas protected by this final rule are comprised of either very deep waters or rocky substrate that fishers using pelagic trawl gear avoid. Thus, this final rule provides adequate assurance that pelagic trawl gear fisheries would not adversely impact protected habitat areas in the Aleutian Islands subarea and GOA.

The EFH EIS determined that pelagic trawl gear is likely to contact soft bottom substrate that is prevalent in the Bering Sea. The Council is reevaluating the potential effects of fishing on Bering Sea habitat. If fishing activities are determined to affect Bering Sea habitat, the Council may recommend protection measures. The development of any protection measures likely would include evaluation of the current pelagic trawl gear performance standard and whether the current standard would meet Council objectives for protection of habitat in the Bering Sea.

Comment 9: NMFS’ conclusion that the effects of fishing on EFH are no more than minimal and temporary is fundamentally incorrect and based on an unlawful analysis and standard. The conclusion of adverse impact should not be dependent on identifying the decline in productivity of a managed species. The Council's Scientific and Statistical Committee and the Center for Independent Experts told the Council and NMFS that this was too high a standard for which scientific information is missing. The adverse effects of fishing on EFH must be minimized to the extent practical.

Response: NMFS responded to the commenter's concerns about the analysis of the effects of fishing on EFH in Appendix L to the final EFH EIS. In summary, NMFS appropriately considered the productivity of managed species to assess whether habitat disturbance caused by fishing reduces the capacity of EFH to support those species. In the final EIS, NMFS reevaluated the effects of fishing on EFH and examined whether stock status and trends indicate any potential influence of habitat disturbance due to fishing. The analysis considered whether credible evidence exists to support a conclusion that disturbance to EFH caused by fishing reduces the capacity of EFH to support managed species. The analysis indicated that there are long- term effects of fishing on benthic habitat features, yet the effects on EFH are minimal because NMFS found no indication that continued fishing activities at the current rate and intensity alter the capacity of EFH to support healthy populations of managed species over the long term.

Comment 10: We have two concerns regarding the closures in Southeast Alaska to all bottom contact gear: (1) Little information exists documenting negative fixed gear impacts in this area and (2) the proposed regulations contradict the statutory language which recommends closure areas to be in pristine or undisturbed state. Data indicate that extensive and historic fixed gear effort has occurred in Southeast Alaska. Southeast Alaska should be designated for research purposes only because bottom trawling is prohibited in Southeast Alaska and fixed gear has been used in this area for nearly a century without damaging coral or sponge habitat. We appreciate NMFS’ efforts to establish closure areas that include only identified sensitive habitat without surrounding productive fishing grounds.

Response: The GOACHPAs located in Southeast Alaska were developed based on in situ submersible observations by NOAA scientists who documented the presence of unusually dense thickets of red tree corals. These corals are large, branching, fragile, and very slow growing structures that enhance the complexity of bottom habitats. They are susceptible to physical disturbance from fishing gear that comes in contact with them, including fixed gear. As discussed in the EA/RIR/IRFA (see ADDRESSES ), longline gear can lie slack and meander along the bottom. During retrieval, the gear can snag on rocks and corals, resulting in corals that are broken, tipped over, or dragged along the sea floor. The areas identified for closure are relatively undisturbed, and the purpose of the closures is to prevent potential future disturbance to those habitat features. The closure areas were identified with active participation from the fishing industry, and the size of the closures was reduced in response to that input. The applicable statutory language for addressing the effects of fishing on habitat is in section 303(a)(7) of the Magnuson-Stevens Act, which requires that fishery management plans “minimize to the extent practicable the adverse effects of fishing on [EFH].” Such areas do not have to be in a pristine or undisturbed state, as suggested by the commenter.

Comment 11: VMS is a necessary tool for enforcement, fisheries management, and to increase fishing opportunities. VMS is useful for large vessels fishing over vast areas but is not appropriate for small vessels operating in densely fished areas like Southeast Alaska. NMFS should investigate ways to ease the cost of VMS, especially for small vessels. Difficulties in implementing VMS should not delay the implementation of the EFH and HAPC regulations.

Response: In the GOA, VMS requirements in this rule apply only to vessels with an FFP or FCVP and mobile bottom contact gear on board. NMFS agrees that implementation of the EFH and HAPC regulations should not be delayed by difficulties in implementing VMS and that VMS is a necessary tool for fisheries management and enforcement. VMS is useful for tracking vessel locations for small and large vessels. VMS is important for enforcing EFH protection areas, which are impacted more by the gear type than the vessel size. The FRFA analysis shows that in most instances, the cost of VMS is reasonable for small vessels. Some vessels may have a very small portion of their income derived from fishing activities that require VMS, making the cost of VMS higher relative to the revenue from those fishing activities. It is up to the vessel owner and operator to determine if the income from a fishing activity requiring VMS justifies the expense for the VMS. In the past, NMFS has purchased VMS units for some participants in the groundfish fisheries. For fiscal year 2006, NMFS has a national VMS reimbursement program for vessel owners who are required by regulations promulgated in 2006 to install and operate a VMS unit for the first time. The details of this program will be available in late summer 2006 through the Alaska Region Web site at http://www.fakr.noaa.gov.

Comment 12: The legal, enforcement, and conservation concerns regarding VMS on small vessels need to be resolved before implementing the requirement. What happens if the technology fails? For example, what happens if the VMS fails while the vessel is fishing? Would the vessel be required to stop fishing and leave gear on the grounds while returning to port for repair work? Gear left on the grounds could result in lost gear or significant dead loss and the fishers would experience loss of fishing time while waiting for repairs. Jarring of the VMS unit on small vessels in poor weather may make the unit more likely to break down. In Southeast Alaska, repair locations are limited.

Response: This final rule revises § 679.28(f)(3)(iv) to require the vessel operator to stop fishing if either the operator or NMFS personnel determine that the VMS is not working properly. Further actions required of a vessel with a failed VMS unit depend on the situation, and the operator is encouraged to contact the NOAA Office of Law Enforcement immediately to determine the appropriate action. NMFS does not expect the jarring of VMS units on small vessels to result in a rate of equipment malfunction any higher than the failure rate of any other device with an antenna and wires onboard.

Comment 13: Approximately 80 percent of the vessels holding halibut IFQ complete their quota fishing in one or two trips and many would never go more than 3 nautical miles from shore. A large majority of these vessels are less than 60 feet (18.3 m) length overall (LOA) and most commonly are 40 foot (12.3 m) LOA longline-troll gear vessels. Requiring VMS for these vessels would be an unsupported and unjustified expense. This requirement would likely result in significant legal and conservation problems. We oppose the VMS requirement on small vessels, especially in Southeast Alaska where enforcement opportunities are high.

Response: See response to comment 11. The VMS requirement in the GOA does not include longline-troll gear vessels. Small vessels using mobile bottom contact gear (nonpelagic trawl, dredge, or dinglebar gears) could possibly adversely affect the GOACHPAs. VMS is the most effective method to ensure any fishing by these vessels in EFH and HAPC protection areas is detected.

Comment 14: We oppose further imposition of VMS in fisheries management plans. No one has demonstrated the need for VMS to meet enforcement goals. If VMS is required, NMFS must bear the cost of acquisition, installation, maintenance, and broadcast or user fees.

Response: See responses to Comments 11 and 12.

Comment 15: We oppose the use of VMS as an enforcement tool for EFH and HAPC areas. During the rule development for the GOACHPAs, we were under the impression that longline fisheries would be exempt from VMS requirements. Also, we thought that dinglebar gear should have been exempted because the effects on bottom habitat are no more than minimal, the fishery is small and of a short duration, the FFP can be surrendered so the vessel is exempt from VMS requirements, and these vessels do not fish in GOACHPAs. A year round VMS requirement for dinglebar vessels (usually less than 60 feet (18.3 m) LOA) that participate in a short duration fishery is burdensome. Dinglebar gear vessels should be exempt from VMS requirements because the impact on the GOA EFH of approximate four dinglebar gear vessels is likely less than the longline fleet which is exempt from VMS. VMS is not needed for dinglebar gear vessels because the closure areas are mostly too deep to be fished by this gear type. Fishers have avoided the proposed protection areas in the past and are unlikely to fish these areas in the future. Enforcement tools for the GOACHPAs should be developed by working with the potentially affected vessels owners and operators.

Response: The EFH EIS notes that mobile bottom tending fishing gears have the greatest potential adverse effects on sensitive seafloor habitat features. Dinglebar gear has fewer potential adverse effects than certain other bottom tending mobile gears, such as bottom trawls. As described in the EA/RIR/IRFA ( see ADDRESSES ), dinglebar gear has a heavy weight deployed near the bottom in fisheries that target groundfish, such as lingcod throughout Southeast Alaska. This gear type has the potential to disturb sensitive bottom habitats. In the final EIS, NMFS proposed requiring the use of VMS on all fishing vessels with bottom contact gear in the GOA to ensure adequate enforcement. Following publication of the final EIS, the Council requested that NMFS exempt fixed gear vessels (including pot, jig, and hook-and-line gear) from the VMS requirement. The Council also requested that NMFS develop a separate comprehensive analysis of alternatives for applying VMS for all fishing vessels in the BSAI and GOA to address enforcement, management, and safety objectives. Because the VMS requirements recommended by the Council would promote very effective enforcement for the gears with the greatest potential to impact sensitive habitat features, NMFS followed the Council's recommendation and retained the VMS requirement only for vessels with mobile gear, including dinglebar gear.

Comment 16: The Bering Sea provides ecosystem and habitat function critical to ecologically sustainable fisheries. The EFH EIS contained enough information to support EFH conservation measures for the Bering Sea. Until NMFS implements regulations to minimize to the extent practical the adverse effect of fishing on EFH in the Bering Sea, NMFS is in violation of the EFH provisions of the Magnuson-Stevens Act. The Council needs to make progress on developing a reasonable range of alternatives, including a conservation management alternative.

Response: The EFH EIS concluded that the effects of fishing on EFH in Alaska (including the Bering Sea) are minimal; and therefore, NMFS is not required by the Magnuson-Stevens Act to adopt new conservation measures to reduce the effects of fishing on EFH. NMFS concluded that the BSAI Groundfish FMP complies with the Magnuson-Stevens Act requirement to minimize to the extent practicable the adverse effects of fishing on EFH. Available information indicates that the eastern Bering Sea does not support the kind of hard bottom habitats that sustain extensive corals and other particularly sensitive benthic invertebrates. However, the Council is reevaluating fishing impacts on the Bering Sea bottom habitat and may consider new habitat conservation measures for this area. NMFS agrees that any National Environmental Policy Act analysis for Bering Sea habitat conservation must include a reasonable range of alternatives.

Comment 17: Scallop vessels fishing in waters outside of Cook Inlet are restricted to no more than two dredges, 15 feet (4.5 m) or less in width. Scallops occur in specific, well-documented locations that are not identified as EFH protection areas. Scallop fishing is limited to these sites. In addition, many areas along the Alaska coast are closed to scallop dredging for various reasons. All scallop vessels are required to carry observers. For these reasons, scallop vessels should be exempt from the EFH protection measures for the GOA.

Response: Scallop dredges are heavy steel framed devices that are dragged along the seabed. They are designed to create a downward force on the dredge and cutting bar. The effects of the gear on bottom habitats depend on gear configuration and the environments in which they are fished. Despite the limited extent of the scallop fishery in Alaska, the Council determined that the measures designed to protect EFH should apply to all bottom tending mobile fishing gear (and in some cases, to all fishing gear that contacts the bottom). As noted in the EFH EIS, the new fishery closures in the GOA are not expected to have substantial effects on the scallop fishery.

Comment 18: In the Aleutian Islands subarea, the protection areas were based on fishing locations provided by vessel owners and operators in the Aleutian Islands groundfish fisheries. The coordinates in the proposed rule for the Semichi block do not accurately reflect fishing patterns. The coordinates should be adjusted a couple miles south and west to accommodate the difference between haulback and tow locations. In addition, the open areas near Buldir Island should be adjusted to reflect historical fishing areas and areas where no fishing has occurred.

Response: The coordinates for the open areas of the AIHCA have been approved and finalized in the amendments to the BSAI groundfish, salmon, crab, and scallop FMPs on May 3, 2006. FMP amendments would be necessary to change the coordinates of any of the open areas in the AIHCA. NMFS encourages the public to work with the Council to identify any needed adjustments to the open areas in the AIHCA. Until the FMPs are amended, NMFS is unable to change the regulatory description of the AIHCA.

Comment 19: We support the concept of establishing open areas in the Aleutian Islands subarea where bottom trawl gear may be used. Because fish patterns in the Aleutian Islands subarea follow patterns of water flows through the passes, trawling occurs in the same areas since the 1940s and 1950s. Establishing open areas is a practicable means of protecting fragile coral habitats in the Aleutian Islands subarea because of this historical concentration of fishing effort in discrete locations. This method is less likely to work for the areas of broad fishing effort like the Bering Sea.

Response: NMFS agrees that establishing open areas in the AIHCA is the best approach for protection of fragile habitat from the effects of fishing. The Council is evaluating potential fishing impacts and protection measures for the Bering Sea bottom habitat. NMFS will work with the Council and industry to ensure any proposed measures are practical and effective.

Six minor revisions were made to the final rule from the proposed rule to ensure the format of the regulations remained consistent. In § 679.2, the term “federally permitted” was changed to “federally permitted vessel” and the definition was clarified to be consistent with how the term is used in regulatory text implementing this rule. The term “Alaska Seamount Habitat Conservation Areas” also was corrected to “Alaska Seamount Habitat Protection Areas” to ensure consistent identification of the areas in the regulations. In § 679.7, paragraph headings were added to paragraphs (a)(20) through (a)(22) in the same manner as other paragraphs in this section. In addition, the term “fishing” was removed from paragraph (a)(20) to be consistent with the term “federally permitted vessel” as defined by this rule. The title to each table in the final rule was revised to include the text “to Part 679,” in the manner as other table titles in part 679. In Table 26, the name “Fariweather” is corrected to “Fairweather” for area numbers 2 and 3.

In the preamble to the proposed rule, page 14476, column 3, first sentence under the AICHPAs section, the parenthetical clause contains a typographical error. The text “onpelagic” should have been “nonpelagic.” This parenthetical statement was intended to remind the reader of those gear types included in the bottom contact fishing gear definition. This error appeared only once in the entire document, and the definition of bottom contact fishing gear includes only nonpelagic trawl. Because the regulatory text correctly states the gears included in the bottom contact fishing gear definition, the closures for the AICHPAs are specific to bottom contact fishing gear, and the text “onpelagic” appears only once in the document, no additional clarification will be published for this typographical error.

The Acting Administrator, Alaska Region, NMFS, determined that the FMP amendments implemented by this final rule are necessary for the conservation and management of the groundfish, salmon, scallop, and crab fisheries and that they are consistent with the Magnuson-Stevens Act and other applicable laws.

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

NMFS prepared a final EIS for the EFH portion of this action ( see ADDRESSES ). A notice of availability was published on May 6, 2005 (70 FR 24037), and the Record of Decision was completed on August 8, 2005. The analysis indicates that fishing has long-term effects on benthic habitat features off Alaska and acknowledges that considerable scientific uncertainty remains regarding the consequences of such habitat changes for the sustained productivity of managed species. Nevertheless, based on the best available scientific information, the EIS concludes that the effects on EFH are minimal because the analysis finds no indication that continued fishing activities at the current rate and intensity would alter the capacity of EFH to support healthy populations of managed species over the long term. Despite this conclusion, the Council elected to take precautionary measures to provide additional habitat protection.

NMFS also prepared an EA for the HAPC portion of this action. The EA evaluated various alternatives (see below) for HAPC in the GOA and BSAI. A finding of no significant impact was issued for this EA.

NMFS prepared a final regulatory flexibility analysis (FRFA) for this action. The FRFA incorporates the IRFAs, a summary of the significant issues raised by any public comment on the IRFAs with NMFS responses to those comments, and a summary of the analyses completed to support the action. The need for and objectives of this action are contained in the preamble to the proposed rule published in the Federal Register on March 22, 2006 (71 FR 14470), and are not repeated here. The legal basis for this action is contained in this preamble. A summary of the FRFA and how it addresses each of the requirements in 5 U.S.C. 604(a)(1)-(5) follows. A copy of this analysis is available from NMFS ( see ADDRESSES ).

NMFS received 11 comment letters containing 7 comments related to economic impacts of the proposed action. No changes were made to the final rule from the proposed rule based on the comments. No comments directly addressed the IRFAs, however, several comments, (comments 11 through 15) addressed economic impacts from the VMS requirement for various types of small vessels. Comment 10 questioned the need for fixed gear closures in the eastern GOA, and Comment 17 questioned the need for scallop vessels to be required to comply with EFH and HAPC requirements. Comments 10 through 15, and 17 and NMFS’ responses are in the preamble under Comments and Responses and are not repeated here.

The EFH protection measures for the Aleutian Islands subarea and the GOA would have an adverse impact on small entities using bottom trawl, and other bottom contact gear, by restricting the areas within which they may operate. An estimated 13 directly regulated small entities might be affected in the Aleutian Islands subarea. About 2.2 percent of the revenues from all affected entities (large and small) in the Aleutian Islands subarea could be placed at risk. Fifty-eight small entities in the GOA might be affected. Affected entities (large and small) in the GOA could see 4.2 percent of their revenues placed at risk. Entities in the Aleutian Islands subarea and the GOA do have opportunities to make up some of these revenues by substituting fishing in other areas.

Prohibiting the use of all bottom contact gear in the AICHPA could directly regulate as many as 124 small entities. Revenues potentially at risk were less than 0.5 percent of Aleutian Islands subarea groundfish revenue, about 4.4 percent of Aleutian Islands subarea halibut revenue, and less than 0.1 percent of crab revenue. Much of the revenue placed at risk could potentially be recovered by changes in fishing location.

Designation of the BRHCZ as HAPC, and prohibition of mobile bottom contact gear, could potentially affect 23 small head-and-gut catcher/processors. About 0.02 percent of their groundfish gross revenues might be placed at risk. A no action alternative was considered for protection of Bowers Ridge. However, the action alternative provided more potential protection at no significant additional cost to fishing operations.

This rule would prohibit CDQ vessels from directly fishing for pollock in such a way that the vessel would have more than 20 crabs of any species, with a carapace width greater than 1.5 inches, on board at any time (§ 697.7(a)(14)(i)). CDQ vessels directly fishing for pollock also would be prohibited from using nonpelagic trawl gear by regulations in § 697.24. This action could potentially affect the six CDQ groups and the pollock vessels that fish for them. Because CDQ vessels currently use pelagic trawl gear for directed fishing for pollock, this action is not likely to affect the revenue from this activity. While a no action alternative was considered, the action alternative provided more potential protection and no significant additional cost to fishing operations.

A requirement that federally permitted vessels operating in the Aleutian Islands subarea carry and operate VMS could potentially directly regulate 124 vessels with average gross revenues of $950,000. Average installation costs are $1,550 for vessels that do not already have VMS. Annual transmission costs are $451 for vessels acquiring VMS, and $994 for vessels that already have it. Average repair costs were estimated to be $28. An alternative to exempt vessels under 32 feet LOA was considered. This would have exempted only three vessels. NMFS determined that the potential for small vessels to employ bottom contact gear in protected EFH and HAPC waters in the Aleutian Islands subarea makes it necessary for all vessels to carry VMS to efficiently enforce closure areas.

The Council recommended designating the ASHPAs as HAPC and prohibiting federally managed bottom contact gear in these areas. This action could directly regulate as many as seven small entities. The impact is believed to be very small; about 0.01 percent of their total groundfish revenues might be placed at risk. A no action alternative, and an alternative only designating five seamounts were both considered. The latter alternative was not taken, since the 15 seamount alternative provided greater protection, and appeared to impose a very small additional burden on small entities.

The Council recommended five GOACHPAs off of Southeast Alaska, and prohibited federally permitted vessels from fishing in them with bottom contact gear. Almost 300 small entities may have operated in proximity to these areas from 1995-2003. Revenues at risk appear to be about 0.03 percent of total groundfish revenue for the affected vessels.

The Council recommended federally permitted vessels operating with mobile bottom contact gear on board in the GOA to carry transmitting VMS units. This action was expected to directly regulate 73 small entities. Average gross revenues for these vessels were $453,000. Although installation costs are estimated to be $1,550, many of these vessels already have VMS. Therefore, average installation costs were estimated to be about $400. Average transmission costs were $500, and average annual repair costs were $16.

The Council considered a suite of alternatives for the eastern Bering Sea subarea (EBS) in the draft EFH EIS/RIR/IRFA. Based on that preliminary analysis, the Council decided not to adopt new management measures for EFH protection in the EBS at this time, but to initiate an expanded analysis to further evaluate the potential impacts of fishing activities on EFH and any potential mitigation measures for the EBS. The Council determined that existing information was insufficient to justify immediate action to add new habitat protection measures in the EBS.

The following describes the alternatives considered for the EFH protection measures for the Aleutian Islands subarea and GOA.

Alternative 1 was the No Action (status quo) alternative. No additional measures would have been taken to minimize the effects of fishing on EFH. This alternative was not chosen, since it would fail to accomplish the Council's objectives.

Alternative 2 would have amended the GOA Groundfish FMP to prohibit the use of bottom trawls for targeting slope rockfish in 11 designated areas of the GOA upper slope (200 to 1,000 m), but allow vessels endorsed for trawl gear to fish for rockfish in these areas with fixed gear or pelagic trawl gear. This alternative involves more extensive GOA closures for this fishery than the preferred alternative, Alternative 5C. Therefore, on this issue, a less burdensome alternative was chosen.

Alternative 3 would have amended the GOA Groundfish FMP to prohibit the use of bottom trawl gear for targeting GOA slope rockfish species anywhere on the upper slope area (200 to 1,000 m), but allow vessels endorsed for trawl gear to fish for slope rockfish with fixed gear or pelagic trawl gear. This alternative involves more extensive closures for this fishery than the preferred alternative, Alternative 5C. Therefore, on this issue, a less burdensome alternative was chosen.

Alternative 4 would have amended the GOA and the BSAI Groundfish FMPs to prohibit the use of bottom trawl gear in designated areas of the EBS, AI, and GOA. In the EBS only, bottom trawl gear used in the remaining open areas would be required to have disks/bobbins on trawl sweeps and footropes to reduce the impact on the bottom. The EBS was to be subject to 10-year rotational closures. Alternative 4 would prohibit nonpelagic trawl (NPT) gear use in designated areas of the Aleutian Islands subarea (near Semisopochnoi Island, Stalemate Bank, Bowers Ridge, and Seguam Foraging Area). In the GOA, Alternative 4 would have prohibited fishing for rockfish with bottom trawls in designated sites on the upper to intermediate slope. An important reason for not choosing Alternative 4 was that it would impose restrictions in the EBS. The Council chose not to implement EFH fishing restrictions in the EBS. The Council determined that current EFH knowledge and management experience in the EBS were insufficient to justify immediate action.

Alternative 5A would have amended the GOA and BSAI Groundfish FMPs to prohibit the use of bottom trawl gear in expanded designated areas of the EBS, AI, and GOA. In the EBS only, bottom trawl gear used in the remaining open areas would be required to have disks/bobbins on trawl sweeps and footropes. The EBS was to be subject to 5-year rotational closures. In the GOA, Alternative 4 would have prohibited fishing for all groundfish with bottom trawls in designated sites on the upper to intermediate slope, and prohibited targeting GOA slope rockfish with bottom trawls on the upper to intermediate slope. Alternative 5A would have prohibited NPT gear use in five designated areas of the Aleutian Islands subarea (Semisopochnoi Island, Seguam Foraging Area, Yunaska Island, Stalemate Bank, and Bowers Ridge). An important reason for not choosing Alternative 5A was that it would impose restrictions in the EBS. The Council chose not to implement EFH fishing restrictions in the EBS. The Council determined that current EFH knowledge and management experience in the EBS were insufficient to justify immediate action.

Alternative 5B would have amended the GOA and BSAI Groundfish FMPs to prohibit the use of bottom trawl gear in designated areas of the BSAI and GOA. In the EBS, bottom trawling would be closed in areas subject to a 5-year rotating closures. Bottom trawls would be required to have sweeps and footropes equipped with disks/bobbins to reduce seafloor contact. In the Aleutian Islands subarea, various combinations of areas would have been closed to bottom trawling gear under each of three different Alternative 5B options (Options 1, 2, and 3). In addition, Options 1 and 2 would have required reductions in total allowable catch amounts (TACs) for Pacific cod, Atka mackerel, and rockfish equivalent to the expected catch of each species that would have come from the closed areas. Options 1 and 2 also would have closed specific fisheries and areas once coral/bryozoan and sponge bycatch limits were reached. In the GOA, Alternative 5B would have prohibited fishing for all groundfish with bottom trawls in designated sites on the upper to intermediate slope, and prohibited targeting GOA slope rockfish with bottom trawls on the upper to intermediate slope at depths between 200 m and 1,000 m. An important reason for not choosing Alternative 5B was that it would have imposed restrictions in the EBS. The Council chose not to implement EFH fishing restrictions in the EBS. The Council determined that current EFH knowledge and management experience in the EBS were insufficient to justify immediate action.

The preferred alternative, Alternative 5C, will amend the FMPs to prohibit the use of bottom trawl gear in designated areas of the Aleutian Islands subarea and GOA to reduce the effects of fishing on corals, sponges, and rocky (“hard bottom”) habitats. In the Aleutian Islands subarea, a combination of measures will reduce the effects of all bottom contact gear on corals and sponges. The management measures established by this alternative will be in addition to existing habitat protection measures (e.g., area closures, gear restrictions, and limitations on fishing effort). Additionally, all bottom contact fishing will be prohibited in six coral garden sites, located off Semisopochnoi Island, Bobrof Island, Cape Moffet, Great Siskin Island, Ulak Island, and Adak Canyon, in the Aleutian Islands subarea, the AICHPA. To ensure adequate enforcement, VMS will be required on all commercial fishing vessels in the Aleutian Islands subarea, as well as on all commercial fishing vessels operating in the GOA with bottom contact gear on board. Alternative 5C will not include new management measures for the EBS because available information indicates that the EBS does not support the kind of hard bottom habitats that sustain extensive corals and other particularly sensitive benthic invertebrates. However, under this alternative, the Council will initiate a subsequent analysis, specifically designed to consider potential future habitat conservation measures for the EBS (including the management options identified in the EFH EIS and others). The VMS requirement for the Aleutian Islands subarea was adopted under Alternative 5C, but additional alternatives for the GOA VMS requirement were considered and are described below.

Alternative 6 would have amended the GOA and BSAI Groundfish FMPs, the Pacific Salmon FMP, the Alaska Scallop FMP, the BSAI Crab FMP, and Pacific Halibut Act regulations to prohibit the use of all bottom tending gear (dredges, bottom trawls, pelagic trawls that contact the bottom, longlines, dinglebars, and pots) within approximately 20 percent of the fishable waters (i.e., 20 percent of the waters shallower than 1,000 m) in the BSAI and GOA. This alternative would have implemented EFH restrictions in the EBS. The Council chose not to implement EFH fishing restrictions in the EBS. The Council determined that current EFH knowledge and management experience in the EBS were insufficient to justify immediate action. This alternative would have imposed relatively heavy burdens on entities operating in the BSAI and the GOA.

Alternatives considered for the AICHPAs are as follows:

Alternative 1 was the no action alternative. This alternative would not have met the Council's HAPC protection objectives. Therefore, Alternative 1 was not chosen.

Both Alternatives 2 and 3 were chosen as part of the preferred alternative. Alternative 2 is the AICHPA and would adopt six coral garden sites within the Aleutian Islands subarea as HAPC and implement fishing restrictions in these areas. This alternative was adopted as part of Alternative 5C explained above. Alternative 3 would adopt an area including Bowers Ridge and Ulm Plateau as HAPC and establish the BRHCZ where fishing with mobile bottom contact gear is prohibited.

Alternative 4 would have designated four sites within the Aleutian Islands subarea as HAPC (South Amlia/Atka, Kanaga Volcano, Kanaga Island, and Tanaga Islands), with two options for gear restrictions. Alternative 4 was not adopted because of the limited information on the extent to which significant corals would be protected for the proposed closures that was available to the Council.

Alternative 5 would have adopted all the areas designated under Alternatives 2, 3, and 4. Alternative 5 included Alternatives 2 and 3, which were chosen, but also Alternative 4, which was not chosen. Therefore, Alternative 5 was not chosen.

Alternatives considered for the GOACHPA are as follows:

Alternative 1 was the no action alternative. This alternative did not advance the Council's objectives. Therefore, Alternative 1 was not chosen.

Alternative 2 would have designated three sites along the continental slope at Sanak, Albatross, and Middleton Islands as HAPC and close sites to either mobile bottom-contact gear or bottom trawling for five years. Alternative 2 was more burdensome than the preferred Alternative 3. Alternative 2 revenues at risk for trawler catcher vessels had risen to 2 to 3 percent of their gross revenues in some historical years.

The preferred alternative, Alternative 3, designates four areas near Cape Omaney, Fairweather Grounds NW., and Fairweather Grounds SW., as HAPC. It would establish the GOACHPAs and prohibit bottom-contact gear within these five smaller areas inside these HAPC. As noted above, this alternative had very small impacts on the fleet.

Alternative 4 would adopt all HAPC specified in Alternatives 2 and 3 with the same boundaries and management measures. Alternative 4 was ruled out when the Council chose not to adopt Alternative 2.

Alternatives considered for VMS requirements for the GOA included longline vessels as well as mobile bottom contact gear vessels. The Council considered alternatives that would have exempted vessels under 25 feet LOA, under 30 feet LOA, under 32 feet LOA, using dredge gear, and using dinglebar gear. The Council chose to exclude longline vessels to reduce the burden on small entities. Because mobile bottom contact gear was believed to create a greater potential for damage to EFH and HAPC, these vessels required more careful monitoring and enforcement. Therefore, the alternative chosen by the Council requires VMS for these vessels.

The Council recommended not requiring VMS for longline vessels operating in the GOA, thereby eliminating any potential VMS costs to these vessels from this action. The selection of sites for closures was developed through industry participation and based on the best information available to ensure closures did not impose any more economic burden than was necessary to meet the Council's objectives to protect EFH and HAPC. A number of alternatives were rejected based on lack of information to support the need for protection measures or due to economic impact beyond what was needed to meet the Council's objectives.

The IRFAs did not reveal any Federal rules that duplicate, overlap, or conflict with this action. The VMS portion of this action would add new reporting requirements for vessels that carry an FFP or FCVP and fish in any fishery in the Aleutian Islands subarea, or those that carry an FFP or FCVP and have mobile bottom contact fishing gear onboard while operating in the GOA. These fishing operations would be required to carry VMS units and to report their locations every half hour while they are participating in fisheries subject to the requirement. Moreover, they would be required to notify NOAA Office of Law Enforcement (OLE) that their VMS units are active, once installed, and before vessel operation. They also would be required to notify NOAA OLE in the event of a breakdown in the unit.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule, or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, NMFS Alaska Region has developed a Web site that provides easy access to details of this final rule, including links to the final rule, maps of closure areas, and frequently asked questions regarding EFH. The relevant information available on the Web site is the Small Entity Compliance Guide. The Web site address is http://www.fakr.noaa.gov/habitat/efh.htm. Copies of this final rule are available upon request from the NMFS, Alaska Regional Office ( see ADDRESSES ).

This final rule contains a collection-of-information requirement subject to the Paperwork Reduction Act (PRA) and that has been approved by the Office of Management and Budget (OMB) under control number OMB 0648-0445. Public reporting burden per response are estimated to average: 6 seconds for each VMS transmission, 12 minutes for VMS check-in form, 6 hours for VMS installation, and 4 hours for VMS annual maintenance. The response times include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection-of-information. Send comments regarding these burden estimates or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS ( see ADDRESSES ) and by e-mail to David_Rostker@omb.eop.gov , or fax to 202-395-7285.

Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection-of-information subject to the requirements of the PRA, unless that collection-of-information displays a currently valid OMB control number.