The regulations in 7 CFR 301.50 through 301.50-10 (referred to below as the regulations) restrict the interstate movement of certain regulated articles from quarantined areas in order to prevent the spread of pine shoot beetle (PSB) into noninfested areas of the United States.

PSB is a pest of pine trees that can cause damage in weak and dying trees, where reproduction and immature stages of PSB occur. During “shoot feeding,” young beetles tunnel into the center of pine shoots (usually of the current year's growth), causing stunted and distorted growth in host trees. PSB is also a vector of several diseases of pine trees. Factors that may result in the establishment of PSB populations far from the location of the original host tree include: (1) Adults can fly at least 1 kilometer, and (2) infested trees and pine products are often transported long distances. This pest damages urban ornamental trees and can cause economic losses to the timber, Christmas tree, and nursery industries.

PSB hosts include all pine species. The beetle has been found in a variety of pine species ( Pinus spp.) in the United States. Scotch pine ( P. sylvestris ) is the preferred host of PSB. The Animal and Plant Health Inspection Service (APHIS) has determined, based on scientific data from European countries, that fir ( Abies spp.,) larch ( Larix spp.,) and spruce ( Picea spp.) are not hosts of PSB.

Surveys conducted by State and Federal inspectors have revealed that areas in Iowa and New Jersey are infested with PSB. Copies of the surveys may be obtained by writing to the individual listed under FOR FURTHER INFORMATION CONTACT .

The regulations in § 301.50-3 provide that the Administrator of APHIS will list as a quarantined area each State, or each portion of a State, in which PSB has been found by an inspector, in which the Administrator has reason to believe PSB is present, or that the Administrator considers necessary to regulate because of its inseparability for quarantine enforcement purposes from localities in which PSB has been found. The regulations further provide that less than an entire State will be designated as a quarantined area only if the Administrator determines that: (1) The State has adopted and is enforcing a quarantine and regulations that impose restrictions on the intrastate movement of regulated articles that are equivalent to those imposed on the interstate movement of those articles; and (2) the designation of less than the entire State as a regulated area will otherwise be adequate to prevent the artificial interstate spread of PSB.

In accordance with these criteria, we are designating the entire State of Iowa and two additional counties, Morris and Somerset, in New Jersey to the list of quarantined areas. Previously, two counties in Iowa (Dubuque and Scott) and five counties in New Jersey (Bergen, Hunterdon, Passaic, Sussex, and Warren) had been quarantined due to PSB. We took this action in an interim rule published in the Federal Register and effective on October 3, 2006 (71 FR 58243-58246, Docket No. APHIS-2006-0117). Since then, the Iowa Department of Agriculture has elected not to enforce an intrastate quarantine; it is, therefore, necessary to designate the entire State as a quarantined area. The New Jersey Department of Agriculture has elected to implement an intrastate quarantine; therefore, quarantined areas are listed at the county level based on reports of the presence of PSB in individual counties.

This rulemaking is necessary on an emergency basis to prevent PSB from spreading to noninfested areas of the United States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the Federal Register .

We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the Federal Register . The document will include a discussion of any comments we receive and any amendments we are making to the rule.

This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.

This rule amends the PSB regulations by adding the counties of Morris and Somerset in New Jersey and the entire State of Iowa to the list of quarantined areas.

Entities affected by this rule may include nurseries, Christmas tree farms, logging operations, moving companies and others who sell, process, or move regulated articles interstate from these areas. As a result of this rule, any regulated articles to be moved interstate from a quarantined area must first be inspected and/or treated in order to qualify for a certificate or limited permit. This action will help prevent the artificial spread of the pest to new areas, and consequently avoid economic damage to timber, nursery, and Christmas tree producers in areas that could become infested if no action were taken.

Certain pine products will not be allowed to be shipped during certain months of the year or will be required to undergo debarking before transport occurs. Enterprises such as Christmas tree farms, nurseries and greenhouses, sawmill and logging operations, and others in the newly designated PSB quarantined areas wishing to move regulated articles from these areas may be affected by compliance requirements; however, costs associated with issuance of certificates and limited permits are borne by the issuing agency.

APHIS has identified approximately 1,077 entities in Iowa and the two New Jersey counties we are designating as quarantined areas that sell, process, or move forest products and thus may be affected by this rule (table 1). Of these entities, there were approximately 747 that produced nursery and greenhouse crops, 303 Christmas tree farms, and at least 27 sawmills in 2002. In addition, an unknown number of sawmills and logging operations in the newly quarantined counties process pine tree products. According to information previously collected by APHIS, pine trees and pine tree products such as cut Christmas trees sold in these areas largely remain within the regulated areas. Nurseries and greenhouses specialize in production of deciduous landscape products rather than production of rooted pine Christmas trees and pine nursery stock. The latter products in general constitute a small part of their production, if they are produced at all. Therefore, the rule is not likely to affect most nurseries and greenhouses.

The Small Business Administration (SBA) has established size standards to determine when an entity is considered small. Nursery stock growers may be considered small when they have annual sales of $750,000 or less, and Christmas tree growers may be considered small when they have annual sales of $5 million or less.

The 2002 Agricultural Census does not report sales by entity size. However, from previously gathered information, APHIS expects that the majority of these entities are small by the SBA size standards.

Regulated articles from quarantined areas may be moved interstate if accompanied by a certificate or limited permit. A certificate for interstate movement of regulated articles from quarantined areas is issued by an inspector after it is determined that the regulated articles are not infested with PSB and do not present a risk of spreading PSB to other areas. A limited permit is issued by an inspector for the interstate movement of regulated articles from quarantined areas when they are to be moved to a specified destination for processing, handling, or utilization and the movement will not result in the spread of PSB. Regulated articles must have the name of the consignor and consignee, as well as the certificate or limited permit, attached during all segments of interstate movement.

A request for a certificate or a limited permit must be made at least 48 hours prior to transporting the regulated articles interstate. The cost for this service falls upon the issuing agency, and not the person/business entity requesting the certificate/limited permit.

In summary, this rule designates newly quarantined areas for PSB. APHIS has identified approximately 747 nursery and greenhouse farms, 303 cut Christmas tree farms, at least 27 sawmills and an unknown number of logging operations, in the newly quarantined two counties in New Jersey and the whole state of Iowa. As noted previously, the movement of cut Christmas pine trees and pine tree products by these establishments is generally within the regulated counties and States. Thus, those farms, nurseries, logging operations, and other entities are expected to be little affected by this rule.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

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

This interim rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Background

This final rule implements the Emergency Agricultural Disaster Assistance Act of 2006, Public Law 109-234, Title III (the Act). During calendar years (CY's) 2005 and 2006 the production of agricultural commodities produced in certain counties in Alabama, Arkansas, Florida, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, and Texas was hindered by widespread and significant destruction caused by hurricanes Katrina, Ophelia, Rita, Wilma. Counties in these States which the President or the Secretary of Agriculture has designated or declared disaster areas during CY 2005, or during 2006 for a request that was pending as of December 31, 2005, and all counties contiguous to these counties, are eligible for emergency disaster assistance under the Act. The Act provides that the Secretary of Agriculture (Secretary) shall use funds of the Commodity Credit Corporation (CCC) to assist producers of agricultural commodities through programs administered by the Farm Service Agency (FSA). All counties, owners, lessees, livestock, crops, losses, must meet all of the eligibility criteria provided in this rule including being the result of the listed hurricanes as provided. The programs are summarized as follows:

• Livestock Compensation Program (LCP). LCP will provide payments to livestock owners and cash lessees (not both for same livestock) for certain feed losses.

• Livestock Indemnity Program II (LIP II). LIP-II will provide benefits to livestock owners and contract growers (not both for same livestock) for certain livestock deaths. For previous LIP programs see 67 FR 7265, February 19, 2002, and 69 FR 23721, April 30, 2004.

• Citrus Disaster Program (Citrus). The 2005 Citrus Program will provide benefits to citrus producers who suffered citrus crop production losses and associated fruit-bearing tree damage, including related clean-up and rehabilitation costs.

• Fruit and Vegetable Disaster Program (Fruit and Vegetable). The Fruit and Vegetable Program will provide benefits to producers who suffered fruit and vegetable crop production losses, including related clean-up costs.

• Tropical Fruit Disaster Assistance Program (Tropical Fruit). The Tropical Fruit Program will provide benefits to producers of carambola, longan, lychee, and mangos who suffered tropical fruit production losses.

• Nursery Disaster Assistance Program (Nursery). The Nursery Program will provide benefits to commercial ornamental nursery and fernery producers who suffered inventory losses and incurred clean-up costs.

• Tree Assistance Program (TAP). The 2005 Hurricane TAP will provide benefits to producers who suffered tree, bush, or vine losses for site preparation, replacement, rehabilitation, and pruning.

• The 2005 Catfish Grant Program is authorized under the LCP provision of the Act and will provide assistance in the form of grants to states having catfish producers who suffered catfish feed losses.

Section 3034 of the Act requires that the regulations necessary to implement title III of the Act shall be made without regard to the notice and comment provisions of Section 553 of title 5, United States Code or of the Statement of Policy of the Secretary effective July 24, 1971 (36 FR 13804) relating to notices of proposed rulemaking and public participation in rulemaking, or the Paperwork Reduction Act. Thus, this rule is issued as final and is effective immediately.

This rule has been determined to be economically significant under Executive Order 12866 and has been reviewed by the Office of Management and Budget. A Cost-Benefit Analysis (CBA) was completed and is available from the contact person listed above.

This rule is not subject to the Regulatory Flexibility Act since the Farm Service Agency is not required to publish a notice of proposed rulemaking for this rule.

The environmental impacts of this rule have been considered in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq. , the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), the FSA regulations for compliance with NEPA at 7 CFR part 799, and Section 106 of the National Historic Preservation Act. The following programs were determined to have no potential impact upon the human and natural environment because they solely involve the transfer of funds to offset production- and disaster-related losses with no site-specific or ground-disturbing activities occurring as a requirement or an immediate result of program implementation: Livestock Compensation Program, Livestock Indemnity Program II, 2005 Hurricane Citrus Disaster Program, 2005 Hurricane Fruit and Vegetable Disaster Program, 2005 Hurricane Tropical Fruit Disaster Program, 2005 Hurricane Nursery Disaster Assistance and 2005 Catfish Grant Program. Therefore, no environmental assessment was needed for these programs.

FSA is currently completing a Programmatic Environmental Assessment (PEA) on the 2005 Hurricanes Tree Assistance Program to examine the potential impacts of program implementation on the human and natural environments. No benefit shall be paid under the program until FSA has completed the PEA and issued a decision document.

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

This rule does not have Federalism implications that warrant the preparation of a Federalism Assessment. This rule will not have a substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government.

This rule has been reviewed in accordance with Executive Order 12988. This interim rule is not retroactive and it does not preempt State law. Before any judicial action may be brought regarding the provisions of this rule the administrative appeal provisions of 7 CFR parts 11 and 780 must be exhausted.

This rule contains no Federal mandates under the regulatory provisions of Title II of the UMRA for State, local, and tribal government or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Section 3034(b)(3) of the Act provides that the regulations necessary to implement title III of the Act shall be promulgated without regard to the Paperwork Reduction Act, 44 U.S.C. 35.

This rule has been determined to be Major under the Small Business Regulatory Enforcement Fairness Act of 1996, (Pub. L. 104-121) (SBREFA). SBREFA normally requires that an agency delay the effective date of a major rule for 60 days from the date of publication to allow for Congressional review. Section 808 of SBREFA allows an agency to make a major regulation effective immediately if the agency finds there is good cause to do so. Accordingly, FSA finds that it would be contrary to the public interest to delay implementation of this rule because it would significantly delay assistance to the many people affected by the hurricane disasters addressed by this rule. This rule is thus effective immediately.

CCC is committed to compliance with the Government Paperwork Elimination Act (GPEA) and the Freedom to E-File Act, which require Government agencies in general and FSA in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The regulation is available at http://www.fsa.usda.gov under the heading ‘Other Partners.’

CCC is committed to complying with the E-Government Act to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-GOV compliance related to this rule, please contact the person named above under the information contact section.

Florida and Louisiana sustained the most damage from the 2005 hurricane season. According to the Florida State Department of Agriculture, losses for citrus, vegetable, tropical fruit, and nursery damage by the 2005 hurricanes was estimated at $1.7 billion and the Louisiana State University Ag Center reports damage of $35.8 million. For example, Florida Citrus Mutual reports there were nearly 352,000 acres of citrus affected for Hurricane Wilma alone. There were 152,000 acres in Tier 1, 95,000 acres in Tier 2, 79,000 acres in Tier 3 and 26,000 acres in Tier 4. Based on the tier payment system Florida citrus payments alone could be more than $350 million for producers without insurance or NAP coverage and $368 million for producers with insurance or NAP coverage. However, most producers have received some form of payment already and are not eligible to receive payment under this program due to the payment limitations provisions. As of November 14, 2006, the Federal Crop Insurance Cooperation (FCIC) has paid out $463.8 million, including nearly $60 million for citrus. Limited payment data from other payment sources prevents a definite calculation of payments paid to producers to date. Eligible producers' payments are not expected to exceed $95 million. If payments exceed $95 million, payments to eligible producers will be reduced by a uniform national percentage determined by CCC.

The estimated $50 million in expected claims for the 2006 LIP-II ($30 million) and the 2006 LCP ($20 million) are expected to significantly affect individual farmers; however these programs are not expected to have noticeable effects on aggregate social welfare. In comparison, FSA paid $16.9 billion to farmers and ranchers in fiscal 2005, with the largest payments category being $8 billion paid under the Direct and Counter Cyclical Program. However, payments to individual claimants should provide needed monetary relief from significant financial losses suffered as a result of conditions related to the 2005 Hurricanes.

Estimated TAP program payments range from $4.6 million to $8.6 million, with a most likely estimate of $5.5 million. Throughout the range of estimates, Florida comprises 63 percent of the estimated damage to fruit and nut trees, vines and bushes, and thus would receive a similar level of total TAP assistance.

CCC procures agricultural commodities for donation overseas under various food aid authorities. These authorities include Title II of the Agricultural Trade Development and Assistance Act of 1954 (Pub. L. 480), which is administered by the U.S. Agency for International Development (AID), and the Food for Progress and the McGovern-Dole International Food for Education and Child Nutrition Programs, which are administered by the Foreign Agricultural Service (FAS) within USDA.

Currently, CCC follows a two-step ocean freight bid evaluation process in connection with the procurement of commodities for foreign donations. First, CCC issues a public invitation soliciting bids for the sale of commodities and requests that ocean carriers provide indications of available freight rates to CCC. These “indications” of rates are not offers to CCC. In fact, CCC does not contract for ocean transportation for the donated commodities. Ocean transportation contracting is done by the Cooperating Sponsors (grantee organizations or foreign governments receiving the commodities) or by AID in the case of some Title II, Pub. L. 480 shipments.

At this point, CCC evaluates commodity bids together with the freight rate indications to identify the combination which would most likely result in the lowest-landed cost, i.e., the lowest combined cost of commodities and freight to destination. CCC will purchase the commodities to be donated overseas on that basis. Lowest-landed cost is calculated on the basis of U.S.-flag rates for that quantity of the commodities being purchased that is determined necessary and practical to meet cargo preference requirements, i.e., the tonnage to be shipped on U.S.-flag vessels. Although CCC does not contract for freight, the freight costs are borne by the U.S. Government from the same accounts as the commodity costs. Therefore, purchasing on the basis of lowest-landed cost will reduce outlays and maximize the use of funds.

CCC's commodity purchase determines the point at which the commodity is delivered to the carriers. However, as stated above, the freight rates used for this lowest-landed cost evaluation are not firm, fixed offers. Therefore, a second step is necessary that involves the Cooperating Sponsor or AID issuing invitations for firm freight offers. CCC will notify the Cooperating Sponsor(s) or AID of the location of the commodity as determined in its commodity bid evaluation and the Cooperating Sponsor or AID will issue ocean freight invitations that will lead to actual freight bookings by the Cooperating Sponsor or AID on firm, fixed ocean rates.

This two-step process has been in place for many years and was designed at the time that processed commodities were shipped at ocean carrier tariff rates that could be readily identified. Now, as rates are “submitted rates” and not tied to tariffs the process is exceedingly cumbersome and time-consuming, typically requiring 80 hours each month to analyze the first-step indications. Additionally, the process does not guarantee that commodities will be actually purchased and shipped on the basis of lowest-landed cost. One reason for this is that the U.S. Maritime Administration (MARAD), within the Department of Transportation, prioritizes U.S.-flag ocean service for purposes of cargo preference and assigns a higher priority to service that uses only U.S.-flag vessels to the final discharge point.

The current two-step process often results in commodities being purchased at locations based upon indications of service available from U.S.-flag carriers that have a lower priority. These port locations may not be cost-effective for the higher priority vessels, which can then displace the lower priority vessels and secure the cargo, often at a higher rate.

This rule will add clarity to the commodity bid evaluation process by eliminating the two-step process. A major constraint to revising this two-step process has been that computer resources available to CCC have been unable to analyze the large number of variables that comprise modern government commodity procurements and the complexities of cargo preference compliance. These include the many contract priorities that are mandated by law as well as the volume of possible commodity and freight cost variables that result from a national bidding system. CCC is now updating its computer bid-evaluation system to be able to accommodate a more unified one-step bid evaluation. The procurement for commodities using firm, fixed ocean rates to determine lowest-landed cost would be the most efficient method of procurement. Under such a system, the cargo preference requirements would be determined initially and not subject to a change of carriers. This should reduce the ocean freight costs considerably because the tonnage would be consolidated by the carriers' bids and by allowing lowest-landed cost and cargo preference requirements to determine the U.S. delivery points. The delivery time from call forward issuance to delivery abroad could be reduced because the current freight evaluation process would be streamlined.

The new procedures would apply to processed and bulk commodities and cover the assistance programs identified above. Under the one-step process, CCC would issue invitations for commodity bids and Cooperating Sponsors or AID would issue separate invitations for freight offers at approximately the same time. Freight invitations may call for bids to be submitted to the donee organization or AID via an Internet-based bid entry system maintained by CCC approximately 3 days prior to the time for receipt of commodity bids. Such a process would speed data input and evaluation as compared to the transmittal of written offers. Offers of commodities and freight would be invited on a “bid-point” basis, i.e., a point where the transfer of care and custody of the commodity from the vendor to the ocean carrier takes place. This point of transfer may include one or more terminals included under the specific bid point designation. CCC believes this specificity is desirable because a more general offer that designates a port area can have additional transfer costs once a specific terminal is named. CCC should be able to identify these extra costs at the time the bids are evaluated as it may impact on true lowest-landed cost calculations. The submitted freight offers will be reviewed by the donee organization, AID, and/or USDA prior to bid evaluation in order to determine the availability of service for commodities and destinations. Furthermore, the one-step bid evaluation process will be more efficient because ocean carriers are expected to offer quantity increments that are the most economical for them.

After commodity offers are received, CCC would evaluate the offers on the basis of lowest-landed cost by a comparison with offered freight rates. CCC would award the commodity bid on that basis and notify the Cooperating Sponsor of the bid accepted. The Cooperating Sponsor would be required to book freight at the rate CCC used for the lowest-landed cost determination, or a lower rate, except in circumstances where, in the opinion of the Contracting Officer and the applicable program agency's representative, extenuating circumstances (such as internal strife at the foreign destination or urgent humanitarian conditions threatening the lives of persons at the foreign destination) preclude such awards, or efficiencies and cost-savings lead to the use of different types of ocean services such as multi-trip voyage charters, indefinite delivery/indefinite quantity (IDIQ), delivery Cost and Freight (C & F), delivery Cost Insurance and Freight (CIF), and indexed ocean freight costs.

On December 16, 2005, CCC published a proposed rule, Procurement of Commodities for Foreign Donation, in the Federal Register (70 FR 74717-74721). The proposed rule proposed new procedures to be used by CCC in the evaluation of bids in connection with the procurement of commodities for foreign donation. The rule provided a 30-day public comment period ending January 17, 2006.

In response to public requests, CCC reopened and extended the comment period for 45 days to March 9, 2006, via a document published in the Federal Register January 23, 2006 (71 FR 3442). Further, CCC determined that a public meeting would be held at USDA on February 21, 2006, to provide for open discussion on the proposed rule. The notice of a public meeting was published in the Federal Register on February 8, 2006 (71 FR 6399-6400).

On April 7, 2006, a supplemental to the proposed rule was published in the Federal Register to clarify two points (71 FR 17767-17768). First, CCC specifically recognized its obligations under the cargo preference legislation of the Merchant Marine Act, 1936. Secondly, CCC clarified the “extenuating circumstances” that may preclude awards on the basis of lowest landed cost. CCC also reopened and extended the comment period to May 8, 2006, to accord interested parties to comment thereon.

CCC received a total of 46 responses on the proposed rule, including the supplemental to the proposed rule. Among the respondents were steamship lines or their legal representatives, ports, vendors of commodities, and trade and industry groups. A few of the respondents submitted more than one response, reiterating their points made from an earlier submission or addressing new points. Many of the responses received addressed multiple points; therefore, the number of comments discussed in this rule exceeds the number of actual responses received.

The public comments received in response to the proposed rule, and CCC's response, are discussed below. While we considered the comments and suggestions received and understand the concerns and opinions expressed by the respondents, CCC did not change the final rule. This rule gives CCC necessary flexibility and is consistent with statutory requirements. Therefore, the proposed rule, including the supplemental to the proposed rule, is adopted as final, without change.

Fourteen of the comments received requested an extension of the original 30-day public comment period. CCC believed that the requests for additional time to comment on the proposed rule were reasonable and therefore on January 23, 2006, reopened and extended the comment period to March 9, 2006 (71 FR 3442). Two of the comments received after January 23, 2006, supported the extended comment period. Another comment was grateful for the extension in that it permitted time for a public meeting to discuss the proposed rule. On April 7, 2006, CCC again reopened and extended the comment period to May 8, 2006 (71 FR 17767-17768).

Nine of the comments received supported the proposed rule. Many of these agreed that the one-step procurement process, using firm, fixed freight rates, would streamline CCC's procurement process making the actual purchases more cost efficient. CCC agrees.

One respondent noted that they were very pleased with the outcome of an interagency meeting on the proposed rule and that a consensus would be reached among the agencies before publication of the final rule. The agencies involved have met and have agreed that the one-step process will work efficiently for all interested parties.

Three comments stated that the proposed rule warranted a significant designation under Executive Order (EO) 12866 due to the expected economic impacts. However, the proposed rule was issued in conformance with EO 12866 and was determined to be not significant; therefore, it was not reviewed by the Office of Management and Budget (OMB). The projected economic impact from the implementation of a one-step bid evaluation process will arise, in part, from the savings that are derived from a truly “lowest landed” cost solution to commodity procurement. Under the current two-step process, as described in the background section of the rule, the indicative rates provided by the carriers are not firm—and the actual rates offered firm once the commodity is already purchased at a location, may bring into that procurement entirely different economics. This usually results in higher overall costs in the combination of freight and commodity. A one-step process should result in freight savings, derived in a more efficient manner in which ocean carriers are selected, but not, however, in avoidance of cargo preference. In addition, while the proposed rule was designated not significant under EO 12866, this final rule was designated significant and was reviewed by OMB.

Two comments stated that the Regulatory Flexibility Act was applicable to the proposed rule. The Regulatory Flexibility Act (5 U.S.C. 603) only requires regulatory flexibility analysis when an agency is required to publish a proposed rule by the public notice and comment provisions of the Administrative Procedure Act (5 U.S.C. 553). Section 553(a)(2) of the Act provides an exemption for matters relating to contracts. Therefore, by law, CCC was exempt from the Regulatory Flexibility Act provisions. Although not required by the APA to publish a proposed rule, CCC published the proposed rule because it is USDA policy under a memorandum published by the Secretary of Agriculture on July 24, 1971 (36 FR 13804) to give notice of proposed rulemaking and invite the public to participate in rulemaking even where not required by law. In addition, CCC did conduct a Regulatory Flexibility Analysis for this final rule and it is available with the cost-benefit analysis from the contact person indicated above.

One comment stated that the proposed rule would significantly alter the administration of small business and Javits-Wagner-O'Day programs in the Department. Commodity procurements under this rule will comply with Federal Acquisition Regulation (FAR) and Small Business Utilization requirements.

One comment recommended that CCC incorporate Incoterms and other industry-standard terminology in food aid programs. The contract terms for ocean freight are determined by the booking agreement with the cooperating sponsor and not within the scope of this rule.

Five comments requested that a working session and/or meeting be convened as soon as possible with member U.S. ship operating companies and other interested parties to learn more and share ideas about the proposed rule and its impact on the maritime industry. Two other comments added that the proposed rule and the Freight Bid Entry System (FBES) should be made part of a cooperative effort that involves all interested parties, including AID and MARAD. Over the past few years as the one-step procurement process was under development, USDA held numerous public meetings to share information on the one-step procurement process, including FBES. These included five meetings in 2005, starting with two in March, followed by a meeting in April, May and June. On February, 21, 2006, CCC held a public meeting to discuss the proposed rule with all interested parties. Additionally, a prototype of FBES was presented at the International Food Aid Conference (IFAC) held in Kansas City in March, 2006. During that time, all interested parties were given the opportunity to view the system and ask questions. CCC and AID have had numerous meetings with MARAD over the past several years as they have moved toward a one-step procurement process. These meetings have focused in great detail on how the software would work. Meetings are scheduled and agencies are working cohesively to achieve consensus on the new system implementation.

One comment stated that the proposed rule change had not been analyzed and/or explained in enough detail to allow stakeholders to assess the impact on their business, including changes in commodity port distribution and overall program cost benefits. Five other comments stated that not enough information was provided on the one-step procurement process, including but not limited to mechanical, programmatic and administrative changes and limitations, making it difficult to provide meaningful comments. Another comment, while supportive of a modernized system, stated that the proposed change in the procurement process deserves a full and open review by all interested parties prior to its implementation. This was shared and supported by another comment.

CCC has held numerous public meetings to share information on the one-step procurement process, including FBES, and has received extensive comments and recommendations from industry. Also, CCC intends to conduct FBES training for steamship lines and vendors in Washington, DC, and Kansas City, respectively. Training will be held to accommodate these parties during the testing period.

One comment expressed concern that implementation of the FBES system could result in programmatic errors and procedural problems. Another comment added that the FBES system will need to be highly dependable. One other comment added that they were uncertain as to when FBES testing would take place and suggested that a working group be established to develop a protocol for the testing. CCC recognizes the importance of a highly dependable system. To help identify, resolve and prevent programmatic errors and procedural problems, CCC will continue to conduct system testing prior to implementation of the one-step procurement process. FBES testing is underway and will continue through late-2006. CCC is conducting system testing on small, medium, and large invitations.

Four comments urged that a side-by-side comparison of the current two-step procurement process versus the proposed one-step procurement process be run with results made available to the industry for evaluation and input prior to implementation. During agency meetings, it was agreed that CCC would conduct extensive internal testing followed by a period of training and opportunities for the external users of the system to gain experience using the system prior to implementation.

One comment stated that it would be very helpful for the industry to view some kind of sensitivity analysis or report which addresses how the constraints placed in the transportation part of the bids impacted the solution. The constraints that will be entered by the commodity vendors in the commodity bids, by the ocean carriers in ocean freight bids, the ports for port capacity, and KCCO for small business utilization or the MSA-17 (Great Lakes) requirements are absolute. All of these constraints will likely affect the contract and ocean freight awards as the system reviews literally billions of calculations.

One comment stated that FBES did not address two major concerns raised by cooperating sponsors. The first concern was the length of time required from the time the commodity is requested until it is available for shipment. The second concern was that the procurement process is built around a broad production schedule rather than the needs of the program for a timely arrival of the commodities in-country. The implementation of the one-step procurement process will immediately reduce the commodity time-line by two weeks. Additional improvements may be realized as we are able to take advantage of the system's capabilities. The issue of production schedules is a reality the Agency acknowledges. The new system will allow requests for food aid commodities to be handled more efficiently, both for domestic operations and for transit to the destination.

One comment stated that it was not clear how a forwarding agent would be able to access FBES, generate reports, download data, or determine if all offers submitted were reviewed for responsiveness. The system will be accessible to forwarding agents and information can be downloaded. An opportunity for training on the new system will be offered to freight forwarders.

One comment stated that it would be improper for CCC to superimpose a new set of rules on the procurement process without identifying the terms and substance of the rule, its operational relationship to related regulations, and its impact on stakeholders. The preamble outlines the process and explains the efficiencies that are expected to be realized with the implementation of the rule. The desire to identify the impact on the stakeholders and to receive input on the design of the system was the impetus to hold the open meetings outlined in the preamble. The majority of suggestions and concerns expressed in these meetings were incorporated into the system, or are planned to be incorporated in future releases.

One comment addressed the software development and testing process, recommending that a MARAD originated cargo preference flow chart be incorporated; MARAD be designated as sole authority to validate cargo preference requirements and to authorize related system software changes; linear programs provide the optimal solution and a sensitivity report; and system testing be open and transparent to all interested parties. All agencies involved will reach consensus prior to implementing the system. Further, all interested parties will have the opportunity to be trained and experiment with the system prior to implementation.

Two comments noted that the proposed rule was only a piece of a much broader and complicated mosaic of statutes and regulations and must be considered in conjunction with these statutes and regulations. CCC intends to administer any new procurement system in a manner consistent with its obligations under the current laws and regulations governing the procurement of commodities for foreign donation, including meeting cargo preference requirements.

One comment stated that the proposed rule did not explain how it would add clarity to the process, the basis for new incentives to consolidation of the carriers' bids, the rationale behind the one-step process being more efficient due to ocean carriers expected to offer quantity increments most economical for them, and how elimination of one of the monthly load periods will reduce delivery times. The proposed rule adds clarity to the commodity bid evaluation process by allowing for the simultaneous review of commodity and ocean freight offers when evaluating lowest-landed cost options in connection with the procurement of commodities for foreign donation. The consolidation of cargo will inherently achieve improved efficiencies due to economies of scale. There is the potential to reduce the delivery time by two weeks due to the elimination of the need for a second round of ocean freight solicitation, offering, and bid evaluation.

Three comments concluded that the rule would not seem to accommodate the flexibility and transparency required by carriers to refine their bids. The new system, as with any procurement system that awards based on firm fixed offers, will require participants to make the offers as competitive as possible, and will maintain a firm equitable environment with all information stated in the solicitation stages.

One comment expressed concerns that the new procedures may permit the return of negative business practices such as “blocking rates.” Further, the respondent suggested that a provision be adopted whereby only competitive rates, not cost constructed rates, be evaluated. The new system will evaluate ocean carrier offers based on the priority of service. Priority 1 carriers will compete with priority 1 carriers for such cargoes as necessary in order to obtain compliance with cargo preference requirements. This procurement method will eliminate the negative business practices.

Another comment expressed concern that the new process would not permit U.S.-flag ocean carriers to link discharge ranges utilizing multiple Kansas City Commodity Office (KCCO) trade routes. Ocean carriers will be able to offer multiple discharge port ranges on one bid. Multiple bids may be entered if needed.

Two comments express concern over the one-step procurement process and its impact on the Great Lakes set-aside. The one-step procurement process will comply with the Great Lakes mandate that up to 25 percent of commodities purchased for Title II will be considered for delivery to the Great Lakes. The new system will evaluate the same as the previous system with regard to the MSA-17 provisions for the Great Lakes. The bid evaluation system will calculate the lowest-landed cost without cargo preference consideration, and up to the 25 percent maximum of the commodities purchased in the Great Lakes will be awarded to the Great Lakes.

One comment noted that references in the proposed rule to the possible use of alternative procurement procedures was confusing. On April 7, 2006, a supplemental to the proposed rule was published in the Federal Register (71 FR 17767-17768). The supplemental to the proposed rule clarified the meaning of alternative procurement procedures and when they would be utilized. The supplemental to the proposed rule provided examples for utilizing other than “lowest-landed cost” to award contracts for the procurement of commodities. The examples were internal strife at the foreign destination, or urgent humanitarian conditions threatening the lives of persons at the foreign destination.

One comment recommended that all factors be accommodated in the determination of courses of action, including a single bid process that may impose excessive bid submission windows. The new system will require ocean carriers to offer service in the future because of the transit times required to move the commodities from inland locations to the domestic delivery points.

Several comments addressed specific sections of the proposed rule.

One comment noted that CCC must require that all vessel carriers specify the maximum cargo that they can transport under a specific invitation for bid. Additionally, vessels must be required to offer freight rates for all bid points from which they can provide service and when a properly offered cargo preference freight rate is used to establish the lowest-landed cost for a particular cargo transport, the procedures must require that the cargo be shipped using the carrier that offered the applied rate. The FBES system will allow ocean carriers to enter minimum and maximum tonnage constraints to their bids.

One comment expressed concern that port designations under the proposed one-step bid evaluation process would include ports that could not handle both containerized and bulk cargoes thereby urging USDA to only designate ports that could handle and load both types of cargo. No carrier will be required to move cargo out of a port for which they do not bid. Carriers bid the port they wish to use.

One comment added that CCC should continue to require commodity suppliers to include bid-points within ocean ports. Under the proposed one-step process, offers of commodities and freight would be invited on a bid-point basis, which may include one or more ocean “port” terminals under the specific bid point designation. CCC will be using the same approved ports and terminals that we currently use.

One of the comments received noted that the proposed rule included an unexplained reference to the use of other types of ocean services. On April 7, 2006, a supplemental to the proposed rule was published in the Federal Register to clarify “extenuating circumstances” and, in which case, the Contracting Officer may determine that such circumstances preclude awards on the basis of lowest-landed cost, or efficiency and cost savings justify the use of types of ocean service that would not involve an analysis of freight bids for each of CCC's commodity purchases (71 FR 17767-17768). Other types of services may include, but are not limited to, multi-trip voyage charters, indefinite delivery/indefinite quantity (IDIQ), delivery Cost and Freight (C&F), delivery Cost Insurance and Freight (CIF), and indexed ocean freight costs.

One of the comments stated that only American ships should deliver American goods. Four other comments received found the proposed rule unclear as to CCC's adherence to existing cargo preference requirements. Another comment added that the rule should be part of an effort that looks at all pieces of cargo preference requirements as well as the procurement of commodities for foreign donation. CCC will, of course, comply with cargo preference requirements, including the use of U.S.-flag ships, and administer any new procurement system in a manner consistent with its obligations under the cargo preference legislation of the Merchant Marine Act, 1936.

Three other comments stated that CCC needed to explain how cargo preference requirements will be applied and complied with under the proposed system before a final rule is published. Another comment was not quite sure how lowest-landed cost and cargo preference mix. The proposed system is about improving efficiencies in the commodity procurement process to realize saving and not about cargo preference. All CCC is proposing is that vessels actually bid and that CCC base its lowest landed-cost calculation on that bid. The cargo preference legislation requires that CCC use a certain percentage of U.S.-flag vessels to the “extent such vessels are available at fair and reasonable rates * * *.” CCC consults with MARAD as to “fair and reasonable rates” after we have vessel and offers and a tentative vessel fixture. This will not change. The proposed rule addresses only the process of procurement up to a determination of “lowest-landed cost.”

One of the comments stated that the new CCC procedures should require that commodity prices and freight rates for each invitation be made publicly available within seven days after the bid award and freight fixtures. The party submitting the accepted commodity procurement bid will be notified of the acceptance of the bid by CCC. Also, CCC's Purchase Contract Awards (PCAs) for foreign food aid donations are published within seven days of an award on the Internet at http://www.fsa.usda.gov/daco/. AID or the grantee organization, or its shipping agent, will be notified of the vessel freight rate used in determining the commodity contract award. Both FAS and AID publish freight awards for foreign food aid donations at http://www.fas.usda.gov/food-aid.asp and http://www.AID.gov/business/ocean/solicitation.logon.html, respectively.

This final rule was issued in conformance with Executive Order 12866. This final rule was determined to be significant under Executive Order 12866 and was reviewed by OMB. A cost-benefit analysis was completed and is available from the contact person shown above.

It has been determined that the Regulatory Flexibility Act is not applicable to this rule because CCC is not required by 5 U.S.C. 553 or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule. Nonetheless, a Regulatory Flexibility Analysis was completed and is available from the contact person shown above.

The environmental impacts of this rule have been determined to be consistent with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq. , the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA, 7 CFR part 799. FSA concluded that the rule requires no further environmental review because it is categorically excluded. No extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement.

This final rule has been reviewed in accordance with Executive Order 12988. The provisions of this rule preempt State laws to the extent such laws are inconsistent with the provisions of this final rule.

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3014, subpart V, published at 48 FR 29115 (June 24, 1983).

This rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

The information collection required by this rule has been approved by OMB under the Paperwork Reduction Act of 1995 and assigned control number 0560-0258.

FSA is committed to compliance with the Government Paperwork Elimination Act, which requires Federal Government agencies to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. CCC is updating its computer bid-evaluation system that would accommodate a more unified one-step bid evaluation. Freight invitations would call for bids to be submitted through a web-based entry system.

Most of the information collections required by this rule are fully implemented for the public to conduct business with FSA electronically. However, a few may be completed and saved on a computer, but must be printed, signed and submitted to FSA in paper form.

This rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions, or on the distribution of power and responsibilities among the various levels of government.

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to CFM International CFM56-5 and -5B series turbofan engines. We published the proposed AD in the Federal Register on June 16, 2006 (71 FR 34852). That action proposed to require, for an increased population of affected EGT harnesses:

• EGT harness replacement or the establishment of an EGT baseline and trend monitoring; and

• Replacement, if necessary, of certain EGT harnesses and EGT couplings as soon as a slow and continuous EGT drift downward is noticed after the effective date of that AD.

You may examine the docket that contains the AD, any comments received, and any final disposition in person at the Docket Management Facility Docket Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the DMS receives them.

We provided the public the opportunity to participate in the development of this AD. We received no comments on the proposal or on the determination of the cost to the public.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

We are transferring the docket for this AD to the Docket Management System as part of our on-going docket management consolidation efforts. The new Docket No. is FAA-2007-27112. The old Docket No. became the Directorate Identifier, which is 2001-NE-49-AD. This AD might get logged into the DMS docket, ahead of the previously collected documents from the old docket file, as we are in the process of sending those items to the DMS.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); 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 summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary at the address listed under ADDRESSES .

The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and Federal Register requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S. certificated products.

This AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The AD contains text copied from the MCAI and for this reason might not follow our plain language principles.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in the Federal Register on December 19, 2006 (71 FR 75896). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

Freezing both engines in the back-up mode can lead to an inability to continue safe flight and forced landing.

You may obtain further information by examining the MCAI in the AD docket.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are described in a separate paragraph of the AD, and take precedence over the actions copied from the MCAI.

In paragraph (e) of the proposed AD, published December 19, 2006, we state “Unless already done, before January 31, 2007, apply the modification TU 241 by replacing the LPG board of the ECU using Turbomeca Mandatory Service Bulletin No. 298 73 0241, dated April 5, 2006.” Because that compliance date will have past before this AD becomes effective, we have changed paragraph (e) to read, “Unless already done, within 30 days after the effective date of this AD, apply the modification TU 241 by replacing the LPG board of the ECU using Turbomeca Mandatory Service Bulletin No. 298 73 0241, dated April 5, 2006.”

Based on the service information, we estimate that this AD will affect about five products of U.S. registry. We also estimate that it will take about 1.0 work-hour per product to comply with this AD. The average labor rate is $80 per work-hour. Required parts will cost about $3,500 per product. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these costs. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of the AD on U.S. operators to be $17,900, or $3,580 per product.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

You may examine the AD docket on the Internet at http://dms.dot.gov; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5227) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to RRD Dart 528, 529, 532, 535, 542, and 552 series turboprop engines. We published the proposed AD in the Federal Register on September 12, 2006 (71 FR 53610). That action proposed to require repetitive inspections of HPT blade platforms and shrouds, and reworking the engines if the inspections reveal excessive gaps between blade shrouds.

You may examine the docket that contains the AD, any comments received, and any final disposition in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5227) is located on the plaza level of the Department of Transportation Nassif Building at the street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the DMS receives them.

We provided the public the opportunity to participate in the development of this AD. We have considered the comment received.

The Modification & Replacement Parts Association requests that we incorporate the service bulletin by reference. We agree that the material should be incorporated by reference. We did so in the AD. The commenter also requests that we post service bulletins on the DMS. We are currently reviewing issues surrounding the posting of this material on the DMS as part of an AD docket. Once we have thoroughly examined all aspects of this issue and have made a final determination, we will decide whether our current practice of not posting service bulletins on the DMS should be changed. The final rule remains unchanged.

We have made two changes to the AD. In the proposed AD, we mistakenly referred to the RRD Dart 528, 529, 532, 535, 542, and 552 series turboprop engines as turbofan engines. They are turboprop engines and we corrected the final rule accordingly.

Additionally, to clarify paragraph (f)(3), we added the words “rework to DRS 611 standard.” The sentence now reads “Before exceeding 7,400 hours since last HPT blade inspection or rework to DRS 611 standard.”

We have carefully reviewed the available data, including the comment received, and determined that air safety and the public interest require adopting the AD with the changes described previously.

We estimate that this AD will affect about 30 RRD Dart 528, 529, 532, 535, 542, and 552 series turboprop engines installed on airplanes of U.S. registry. We also estimate that it will take about 22 work-hours per engine to perform the actions, and that the average labor rate is $80 per work-hour. No parts are required. Based on these figures, we estimate the total cost of the AD to U.S. operators to be $52,800.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); 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 summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary at the address listed under ADDRESSES .

On January 18, 2007, the FAA published in the Federal Register a final rule establishing 14 VOR Federal Airways (V-176, V-383, V-396, V-406, V-410, V-416, V-418, V-426, V-467, V-486, V-542, V-584, V-586, and V-609); modifying 12 VOR Federal Airways (V-14, V-26, V-40, V-72, V-75, V-90, V-96, V-103, V-116, V-297, V-435, and V-526); and revoking one VOR Federal Airway (V-42) (72 FR 2182).

Subsequent to the issuance of the final rule, an inadvertent error was identified in the legal description for V-75. Specifically, the description did not exclude that portion of the airway that is located within Canadian airspace.

VOR Federal Airways are published in paragraph 6010 of FAA Order 7400.9P dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The VOR Federal Airways listed in this document will be published subsequently in the Order.

Accordingly, pursuant to the authority delegated to me, the legal description as published in the Federal Register on January 18, 2007 (72 FR 2182), Airspace Docket No. 06-ASW-1, FAA Docket No. FAA-2006-24926, and incorporated by reference in 14 CFR 71.1, is corrected as follows:

Elanco Animal Health, A Division of Eli Lilly & Co., Lilly Corporate Center, Indianapolis, IN 46285, filed NADA 141 272 that provides for veterinary prescription use of RECONCILE (fluoxetine hydrochloride) Chewable Tablets for the treatment of canine separation anxiety in conjunction with a behavior modification plan. The NADA is approved as of January 19, 2007, and the regulations in part 520 (21 CFR part 520) are amended by adding new § 520.980 to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

Under section 512(c)(2)(F)(i) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(i)), this approval qualifies for 5 years of marketing exclusivity beginning January 19, 2007.

FDA has determined under 21 CFR 25.33(d)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Norbrook Laboratories, Ltd., Station Works, Newry BT35 6JP, Northern Ireland, filed a supplement to ANADA 200-272 for Ivermectin Pour-On for Cattle. The supplemental ANADA adds claims for persistent effectiveness against various species of external and internal parasites that were approved for the pioneer product with 3 years of marketing exclusivity (69 FR 501, January 6, 2004). The supplemental ANADA is approved as of January 19, 2007, and 21 CFR 524.1193 is amended to reflect the approval.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

FDA has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

Internet users may access this document, the notice of proposed rulemaking (NPRM), and all comments received by the U.S. DOT by using the universal resource locator (URL) http://dms.dot.gov . It is available 24 hours each day, 365 days each year. Electronic submission and retrieval help and guidelines are available under the help section of the Web site.

An electronic copy of this document may also be downloaded by accessing the Office of the Federal Register's home page at: http://www.archives.gov or the Government Printing Office's Web page at http://www.gpoaccess.gov/nara .

Section 6005 of SAFETEA-LU (Pub. L. 109-59, 119 Stat. 1144), codified at 23 U.S.C. 327, established a pilot program that allows the Secretary of Transportation (Secretary) to assign up to five States, including Alaska, California, Oklahoma, Ohio, and Texas, the responsibilities of the Secretary for implementation of the National Environmental Policy Act (NEPA)(42 U.S.C. 4321-4347) for one or more highway projects. Upon assumption of NEPA responsibilities, a State may also be assigned all or part of the Secretary's responsibilities for environmental review, consultation or other action required under any Federal environmental law pertaining to the review or approval of highway projects. Whenever a State assumes the Secretary's responsibilities under this program, the State becomes solely responsible and solely liable for carrying out, in lieu of the Secretary, the responsibilities it has assumed, including coordination and resolution of issues with Federal environmental resource and regulatory agencies and responding to litigation. The Secretary's NEPA and other environmental responsibilities pertaining to the review and approval of highway projects, as well as the administration and implementation of this pilot program, has been delegated to the FHWA pursuant to 49 CFR 1.48.

In order to participate in this pilot program, a State must submit an application. Section 327(b)(2) of title 23, United States Code, requires the Secretary to promulgate regulations that establish requirements relating to the information that States must submit as part of their applications to participate in this pilot program. This final rule establishes these requirements.

The FHWA published its NPRM on April 5, 2006, at 71 FR 17040. In response to the NPRM, the FHWA received 10 comments. The commenters include two Federal agencies, three State departments of transportation (State DOT), one public interest group, two associations, and a consolidated group of comments from each of the State DOTs designated by the statute as pilot program participants (Designated Pilot States). One State DOT, the Alaska Department of Transportation and Public Facilities (ADOT&PF), submitted two comments. The FHWA considered each of these comments in adopting this final rule.

The majority of the comments addressed several common issues. These issues are identified and addressed under the appropriate section below.

There were several comments on the definition of “Federal environmental law.” First, the Designated Pilot States and the Texas Department of Transportation (TxDOT) commented that the regulation or the preamble should acknowledge that State DOTs already perform much of the work needed to comply with many environmental laws, and that the preamble should make clear that the key change under this pilot program is the transfer of specific decisionmaking and consulting responsibilities. The FHWA acknowledges that, pursuant to 23 CFR 771.109(c)(1), the State DOTs may currently prepare the environmental impact statement (EIS) and other environmental documents with the FHWA's guidance, participation, and independent evaluation of such documents. The FHWA further acknowledges that this pilot program will involve the transfer of decisionmaking and consulting responsibilities. As provided at 23 U.S.C. 327(e), upon assuming responsibility under this pilot program, the State shall be solely responsible and solely liable for carrying out such responsibilities until the pilot program is terminated.

Second, the Designated Pilot States commented that compliance with Executive Orders should be included in the regulation itself and not just in Appendix A. The FHWA agrees with this comment and has revised the definition of “Federal environmental law” to include Executive Orders. It is important to note, however, that Executive Orders are intended only to improve the internal management and administration of the Executive Branch of the Federal Government and do not create any legally enforceable rights. Nothing in this rulemaking is intended to change the legal force and effect of any Federal statute, regulation, or Executive Order cited herein. As provided at 23 U.S.C. 327(a)(2)(C), a State DOT's assumption of any responsibility under this pilot program is subject to the same procedural and substantive requirements that apply to the Secretary.

Third, the American Road and Transportation Builders Association (ARTBA) commented that the State DOTs should be delegated the FHWA's responsibility for making transportation conformity determinations. However, 23 U.S.C. 327(a)(2)(B)(ii)(I) expressly prevents the FHWA from delegating these responsibilities. Thus, the FHWA declines to make this change.

Lastly, the Environmental Protection Agency (EPA) commented that the rule should provide clarification on how all environmental regulations will be followed if all of the FHWA's environmental responsibilities are not assumed by a State DOT. The FHWA is aware of the procedural difficulties that may be caused by only a partial assumption of the FHWA's environmental responsibilities. Should a State DOT wish to exclude some of the FHWA's environmental responsibilities under the pilot program, and if satisfactory alternate procedures cannot be developed in the formal Memorandum of Understanding (MOU), then the FHWA may either choose to not assign the responsibilities to the State DOT or withdraw the affected projects from the pilot program. Under any scenario, the FHWA believes that this issue is more appropriate for the formal Memorandum of Understanding (MOU) between the FHWA and the State DOT rather than this rule. The FHWA is committed to ensuring full compliance with all environmental regulations.

There were several comments on the definition of “highway project.” First, the Designated Pilot States, TxDOT, ADOT&PF, ARTBA, and EPA all commented on the proposed exclusion of undertakings that are planned as multi-modal. Designated Pilot States, TxDOT, ADOT&PF, and ARTBA each commented that this exclusion is overly broad. Designated Pilot States and TxDOT both commented that the exclusion would prevent the States from assuming highway projects that include common multi-modal elements such as express bus service, pedestrian and bicycle paths, and park-and-ride lots. Designated Pilot States and TxDOT both commented that excluding projects that are funded under chapter 53 of title 49, United States Code, or that require the approval of the Federal Transit Administration (FTA) is sufficient to prevent the program from applying to projects that do not fit within the common meaning of the term “highway project.” The ADOT&PF wants to ensure that the definition does not exclude projects on the Alaska Marine Highway System, which occasionally involve funds from both FHWA and FTA. The EPA was concerned that the exclusion of multi-modal projects would limit the range of reasonable alternatives that may be considered for a project.

The FHWA agrees with each of the comments made by Designated Pilot States, TxDOT, ARTBA, and EPA and has revised the definition of “highway project” to remove the exclusion of multi-modal projects. The intent behind the proposed exclusion of multi-modal projects from the definition of highway project was not to be overly restrictive in the types of projects that States may assume, but rather to ensure that only actual highway projects are assumed. Also, the FHWA included express language at the end of the definition to further clarify that a State may include and consider alternatives that are excluded from this definition in the range of reasonable alternatives for a highway project.

However, with respect to the comment from ADOT&PF, the FHWA does not believe that it is appropriate to include projects that are funded under chapter 53 of title 49, United States Code. Projects funded under chapter 53 of title 49, United States Code, are transit projects that are administered and approved by the FTA. While no changes have been made concerning the source of funding under chapter 53 of title 49, United States Code, the FHWA notes that section 1108 of SAFETEA-LU provides flexibility to the States to transfer any funds made available for highway projects under chapter 53 of title 49, United States Code, to title 23, United States Code. Once transferred, these projects would no longer be excluded. Moreover, improvements to ferry boats and terminal facilities are eligible for assistance under title 23, United States Code. Thus, the FHWA believes it is appropriate for improvements to ferry terminal facilities to be considered highway projects under the definition of this rule.

Second, the Designated Pilot States, ARTBA, California Department of Transportation (Caltrans), EPA, and Save Our Springs Alliance (SOS) all commented on the proposed exclusion of projects for which a draft environmental impact statement (DEIS) has already been issued by FHWA. The EPA and SOS were supportive of this exclusion in order to minimize changes of authority in the middle of project development. The Designated Pilot States, ARTBA, and Caltrans were opposed to this exclusion. Designated Pilot States stated that, given the short term of the pilot program, which is only six years after the date of enactment of SAFETEA-LU (August 10, 2005), it may not be possible for the State DOTs to carry-out many projects requiring an EIS all the way through the NEPA process.

After considering these comments, the FHWA has decided to remove this exclusion from the definition of “highway project.” The pilot program is only authorized for six years from the date of enactment of SAFETEA-LU. One year has already elapsed in developing these regulations and more time must still be spent in developing the application, giving public notice, considering the application, consulting with affected Federal agencies, and executing a memorandum of understanding. More time is also needed by States for obtaining legislative authority to consent to exclusive Federal court jurisdiction with respect to the responsibilities to be assumed. The FHWA's concern regarding the public frustration over changing the entity responsible for completing the EIS in the middle of a project will be minimized through the public notice requirement for the State DOTs' applications. To ensure that the public is given adequate notice of all projects for which a DEIS has already been issued, the FHWA has added a requirement at section 773.106(b)(1) to require each State DOT to specifically identify each project for which a DEIS has already been issued in its application. Additionally, the FHWA is also concerned about how to measure the State DOTs' success under the pilot program whenever a substantial amount of FHWA involvement has already occurred. Thus, in order to ensure that this pilot program allows for the greatest flexibility in the delegation of projects, the FHWA has eliminated this exclusion. While the FHWA does not believe that there is any specific threshold that is appropriate for this regulation, the decision about whether any project may be assumed is discretionary and will be made by the FHWA on a case-by-case basis.

Third, the Designated Pilot States, Caltrans, and EPA all commented on the proposed exclusion of projects listed on Executive Order (E.O.) 13274. The Designated Pilot States and Caltrans both urged the FHWA not to adopt an across-the-board rule excluding all E.O. 13274 projects, but to use discretion in determining which projects may be assumed on a case-by-case basis. The EPA asked the FHWA to clarify whether this exclusion applies only to E.O. 13274's priority list or to both the priority list and the transition list. After considering these comments, the FHWA has decided not to eliminate this exclusion. The projects designated under E.O. 13274 are high priority projects that have been designated by the Secretary as having national or regional significance. Moreover, the E.O. 13274 process itself involves high-level involvement of DOT and other Federal departments and agencies, which must collaborate and work together to expedite the environmental review of these projects. As a result, these projects require direct DOT involvement to not only ensure that special attention is given to these projects throughout the Federal Government, but also because these interactions require policy-making authority. With respect to EPA's comment concerning the scope of this exclusion, it is the FHWA's intent to exclude projects on both the priority list and the transition list. However, we do not believe that an amendment to the regulations is necessary to clarify this point.

Fourth, the Designated Pilot States and ADOT&PF commented on the proposed exclusion of Federal lands highway projects. The Designated Pilot States urge the FHWA to reassess this exclusion in light of ADOT&PF's comments on this issue and state that the exclusion, if any, should only apply to projects funded with funds under the Federal Lands Highway Program. The ADOT&PF states that this exclusion should be modified because it designs and constructs projects across Federal lands funded under the Federal Lands Highway Program. The FHWA agrees with these comments and has modified the exclusion to permit the State DOTs to assume environmental responsibilities for Federal lands projects that are funded under the Federal Lands Highway Program and both designed and constructed by the State.

Fifth, the EPA commented on the FHWA's intent to allow States to assume reevaluations. The EPA is concerned about the effects of changes of authority in the mid-course of project development. The FHWA does not believe that the issue of mid-course changes of authority in project development is significant in the context of a reevaluation. Reevaluations are separate and independent determinations concerning whether a specific NEPA determination is still valid. Unlike the issue concerning a DEIS, the State DOT will conduct a reevaluation from the beginning of this process. Additionally, due to the limited duration of this pilot program, the State DOTs' assumption of reevaluations will provide some data on the State DOTs' ability to assume the FHWA's environmental responsibilities.

Lastly, the EPA asked the FHWA to clarify whether a State can assume a Tier 2 project for which a Tier 1 determination has already been made. It is the FHWA's intent to allow States to assume Tier 2 projects for which a Tier 1 determination has already been made. However, we do not believe that an amendment to the regulations is necessary for this clarification.

The American Association of State Highway and Transportation Officials (AASHTO) commented on the importance of ensuring that all five openings in the pilot program be filled. AASHTO suggested including a provision in the regulations that requires each designated pilot State (Alaska, California, Ohio, Oklahoma, and Texas) to submit a statement of interest within 60 days of the issuance of the final rule. The statement of interest would hold the designated pilot State's place in the program while that State develops its application. If the State declines to submit a statement of interest, then other States would have an opportunity to participate in the program. The FHWA agrees with this comment and has inserted a requirement at section 773.105 to require that each designated pilot State submit a statement of interest within 60 days after the effective date of these regulations. The FHWA has also inserted a requirement that each State actively work to develop and submit its application and meet all applicable program criteria, including the enactment of necessary State legal authority after a statement of interest is submitted. The FHWA further notes that, while SAFETEA-LU requires the FHWA to give priority to Alaska, California, Ohio, Oklahoma, and Texas, any State may submit an application to the FHWA at any time to participate in this pilot program. Should any of these five designated States decide not to participate or fail to meet the eligibility criteria, the FHWA will consider another State's application.

There were several comments on the proposed application requirements. First, Designated Pilot States and TxDOT commented on the manner in which classes of projects must be identified in the application. Designated Pilot States and TxDOT felt that there was an inconsistency between the proposed regulations and the preamble of the NPRM, which implied that the State DOTs must individually identify each project in its application. In drafting the preamble to the NPRM, the FHWA did not intend to adopt this narrow approach. Rather, the FHWA intended for a flexible approach to identifying the classes of projects. State DOTs applying to this pilot program may choose to either identify individual projects or identify a class of projects by using a qualitative description of the projects. With the exception of specifically identifying each project for which a DEIS has already been issued, as discussed above, there are no limits intended to be placed on how the States identify the projects other than a requirement to identify the projects in sufficient terms so as to enable the FHWA, other agencies, and the public to reasonably know what projects the State DOT is intending to assume.

Second, TxDOT, ADOT&PF, Designated Pilot States, and SOS all commented on the requirement for the State DOT to include a philosophical/policy statement of the State DOT's goals and guiding principles in making environmental decisions. TxDOT commented that it is unclear what would constitute an appropriate philosophical/policy statement and how the statement would be evaluated by the FHWA in considering the application. ADOT&PF commented that the purpose of the philosophical/policy statement is unclear and it should be sufficient for the State DOTs to simply follow the policies and procedural requirements applicable to the FHWA. Designated Pilot States commented that the statement itself could be viewed as a regulatory requirement and that the State DOTs should simply be required to comply with the procedural and substantive requirements applicable to the FHWA. SOS commented that the philosophical/policy statement is meaningless unless it is made binding and enforceable.

Since there appears to be substantial confusion over the purpose and utility of the philosophical/policy statement, the FHWA has eliminated this requirement. The purpose of the philosophical/policy statement was not to create a binding, enforceable standard against which the State DOTs' environmental decisions would be judged. Rather, the FHWA was looking for a statement of the State DOTs' commitment to good environmental stewardship, legal compliance, public involvement, and cooperation and consultation with Federal agencies, State and local officials, and Indian tribes. Even though this requirement has been eliminated, the FHWA notes that 23 U.S.C. 327(a)(2)(C) provides that the States participating in the pilot program are subject to the same procedural and substantive requirements as the FHWA under this pilot program, which includes the policies contained in 42 U.S.C. 4331 and 23 CFR 771.105.

Third, ADOT&PF commented that the purpose behind the requirement to identify existing environmental and managerial expertise is unclear and should be revised to only require the State DOTs to identify the staff, management, and procedures that will be used to administer the responsibilities the State DOT assumes. The FHWA agrees with this comment and has eliminated this requirement. Even without this requirement, the regulations require sufficient information be submitted concerning the State DOT's personnel to be used in administering the FHWA's environmental responsibilities. However, in order to ensure that the State DOT identifies the relevant management, the FHWA amended section 773.106(b)(4)(i) to require the State DOT to describe the management positions in addition to the staff positions.

Fourth, ADOT&PF commented on the requirement for the State DOTs to describe how they will identify and address the projects that would normally require FHWA headquarters prior concurrence under 23 CFR 771.125(c). Specifically, ADOT&PF commented that the final rule should waive the applicability of 23 CFR 771.125(c) to the State DOTs participating in this pilot program. The FHWA disagrees with this comment. While this requirement is an internal FHWA processing requirement, the FHWA feels that it is important for the State DOTs to develop processes that would centralize their decisionmaking processes for the types of projects listed at 23 CFR 771.125(c).

Fifth, Designated Pilot States, TxDOT, and EPA all commented on the budget requirements that the State DOTs must submit as part of their applications. Designated Pilot States commented that it is virtually impossible to develop a meaningful litigation budget because these costs are highly unpredictable and that the State DOTs should simply be required to demonstrate that funding would be reasonably available. TxDOT commented that it was concerned about providing a budget for things that may or may not happen, such as litigation costs, and that the State DOT should be required only to demonstrate that funding is reasonably available. TxDOT further commented that it considered it to be sufficient to simply state in its application that TxDOT has a $2.6 billion construction letting budget and a total agency disbursements of $7.5 billion. EPA commented that it would be very difficult for a State DOT to show that it has all the financing for a project in place before the project is undertaken. EPA stated that the State DOTs should be given the flexibility to provide satisfactory evidence that financing will be made available.

The FHWA agrees with these comments and has revised section 773.106(b)(5) to require the State DOTs to submit a summary of financial resources, as opposed to a budget, showing the anticipated financial resources that will be available to carry out the responsibilities and projects assumed under this pilot program. The FHWA recognizes that some costs may be difficult to ascertain and that the State DOTs' funding is contingent on its appropriations processes. Thus, a summary of financial resources that identifies anticipated financial resources and the expected allocation of those resources, as opposed to a budget, will be sufficient. However, while the FHWA does not intend to require a budget of future financial resource, the FHWA notes that the State DOTs must be able to show that they expect to be able to meet the extra needs identified in sections 773.106(b)(3) and (4). The FHWA does not believe that the broad, general assertion by TxDOT stating that the State DOT has a $2.6 billion construction letting budget and a total agency disbursements of $7.5 billion will be sufficient verification of financial resources. Instead, the State DOT must reasonably show how much financial resources are expected to be allocated to carrying out the environmental responsibilities it has assumed.

Sixth, SOS commented on the certification required to be made by the State Attorney General or other State official legally empowered by State law. SOS commented that the certification should be only from the Attorney General and not some other State official because it is unclear who might actually be legally empowered to make these certifications. The FHWA shares this concern. Only a State official that has authority to consent to Federal court jurisdiction and has the ability to make legal conclusions should make this certification. However, since each State has its own unique laws and departmental structures, the FHWA believes that it is appropriate to leave some flexibility in the regulation as to which official would actually make this certification. In most cases, the State's Attorney General would most likely be the appropriate State official. In other cases, the most appropriate State official could be the chief legal official of the State DOT. Whenever an official other than the State's Attorney General makes these required certifications, the State DOT must show the FHWA that the official is legally empowered under State law to make the certification.

Seventh, Designated Pilot States and TxDOT commented on the public review and comment requirements. Designated Pilot States and TxDOT were concerned that section 773.106(b)(8) could be construed to require a State DOT to publish the entire application in every newspaper in the State. Designated Pilot States and TxDOT state that the size of the application will make this requirement impracticable and wasteful. In developing the NPRM, the FHWA did not intend to prescribe the manner in which the State DOTs publish their applications for public comment. Rather, the FHWA intended for the publication requirement to be determined in accordance with State law, as provided at 23 U.S.C. 327(b)(3). Moreover, the FHWA believes that the intent of the publication requirement of 23 U.S.C. 327(b)(3) is simply to notify the public that the complete application is reasonably available for public review and inspection. Additionally, the access to the complete application provided to the public must enable them to timely review and comment on the application. Thus, the requirements of 23 U.S.C. 327(b)(3) are met if it is sufficient under State law to provide notice and solicit public comment on a document by publishing a notice of the document's availability. The FHWA has added clarifying language in section 773.106(b)(8) to this effect.

Lastly, ACHP and SOS both commented on the public review and comment requirements. ACHP commented that the State DOTs should be required to provide evidence that they have notified and provided an opportunity to comment to Indian tribes and State Historic Preservation Officers (SHPO). The FHWA agrees that the State DOTs should ensure that Indian tribes, SHPOs, and other stakeholders are provided notice and an opportunity to comment on their applications. Moreover, the State DOTs should be mindful that their applications will not only be reviewed by the FHWA, but also other affected Federal agencies, including the ACHP, before their applications are approved. Evidence of adequate public notice and a meaningful opportunity to submit comments will be considered in approving any application. However, the FHWA does not believe that an amendment to the regulations is necessary to ensure that any specific group or stakeholder receives notice and is provided an opportunity to comment.

Also, SOS commented that they have little confidence in the requirement to seek public comment solely in accordance with the public notice law of the State, and that the regulations should be amended to require public outreach and education. However, 23 U.S.C. 327(b)(3) provides that the public notice requirement be determined under the appropriate public notice law of the State. Thus, the method of public notice and solicitation of comments is to be determined by the State DOTs following State law.

The ACHP, similar to its comments on the public notice and comment process, commented that the State DOT should be required to notify affected Indian tribes and SHPOs of its intent to amend its application. As stated above in response to the ACHP's comments on the public notice and comment process, the FHWA agrees that the State DOTs should ensure that Indian tribes, SHPOs, and other stakeholders are provided notice and an opportunity to comment on amendments to their applications involving requests for additional projects or responsibilities. However, the FHWA does not believe that an amendment to the regulations is necessary to ensure that any specific group or stakeholder receives notice and is provided an opportunity to comment.

Also, the FHWA amended section 773.108 to clarify that the State DOT does not need to provide notice and solicit public comments for amendment not involving requests to assume additional highway projects, classes of highway projects, or more environmental responsibilities.

There were several comments on Appendix A. First, ADOT&PF, ACHP, Designated Pilot States, and TxDOT commented on the government-to-government tribal consultation responsibilities. ADOT&PF commented that the FHWA should reevaluate its proposal in the NPRM to exclude government-to-government consultations with the Indian tribes. The ACHP commented that it agreed that government-to-government tribal consultation responsibilities should only be administered by the State DOT if the Tribe consents through a formally signed consultation agreement. The Designated Pilot States commented that they were concerned that each State DOT would be required to negotiate agreements with dozens or hundreds of separate Indian tribes simply to permit a State DOT to continue its current practice of handling consultation with tribes except in cases where a tribe requests direct FHWA involvement. TxDOT commented that it is appropriate for FHWA to be involved when a tribe requests FHWA involvement.

While the statute does not specifically prohibit the FHWA from assigning its government-to-government consultation responsibilities, the FHWA does not believe that the agency can, or should try to, require a sovereign Indian tribe to consult with the State DOT without a clear Congressional mandate to do so. Additionally, the FHWA is aware that requiring the State DOT to negotiate individual agreements with every Indian tribe could be time consuming and very burdensome administratively. Since the FHWA is not assigning any government-to-government consultation activities, there should be no change in the existing relationships between the State DOTs and the Indian tribes. Thus, the FHWA is deleting this requirement from Appendix A. However, the FHWA notes that some State DOTs currently have executed agreements with the Indian tribes within their borders to coordinate and resolve issues relating to highway projects as part of the FHWA's tribal consultation process. These agreements have generally worked well and the State DOTs are encouraged to follow this practice under this pilot program.

Second, Designated Pilot States and TxDOT commented that the regulation should clarify that, with regard to the laws listed in Appendix A, the FHWA would be assigning only those responsibilities that are carried out as part of the NEPA analysis. TxDOT specifically commented that E.O. 13287 and E.O. 11514 should be deleted from Appendix A because they do not require any consideration in the NEPA process. The FHWA has decided to remove E.O.'s 11514, 11593, 13007, 13175, and 13287, and 23 U.S.C. 319 to indicate that the FHWA would retain responsibility for implementation of these laws either because they apply only to properties owned and managed by the Federal Government, involve policy decisions, or do not otherwise appear to require the FHWA to undertake any environmental review, consultation, or other action pertaining to the review or approval of highway projects. Also, the FHWA has modified the reference to the Rivers and Harbors Act of 1899 in Appendix A to include only section 10 because the other sections of the Act do not appear to be inherently environmental.

The FHWA notes that the mere inclusion of a law on the list in Appendix A does not mean that the law will be automatically assigned. The laws that are assigned will only be those laws approved by the FHWA and specifically reflected in the MOU between the FHWA and the State DOT. Moreover, the list in Appendix A is not meant to be an exhaustive list, but rather a list of laws the FHWA has predetermined to be inherently environmental. The FHWA further notes that the State DOTs participating in the pilot program must comply with the substantive requirements of all applicable laws regardless of these laws' inclusion or exclusion in an application or MOU.

The EPA commented that the rulemaking should clarify that the review and coordination responsibilities assumed by the State DOTs will not affect or diminish their obligations to other Federal agencies. The EPA also commented that the States should be required to acknowledge their commitment to cooperate with other Federal agencies. While we do not agree that it is necessary to add a regulation to this effect, we agree with the EPA's comment that the State DOTs must cooperate with other Federal agencies in administering the FHWA's responsibilities under this program. These obligations will be made part of the formal MOUs between the FHWA and the State DOTs. In developing their applications, the State DOTs should be mindful that the FHWA is required to consult with other Federal agencies before approving their applications. Demonstrating their commitment to cooperate with other Federal agencies in their applications may help expedite the approval of their applications.

Finally, Designated Pilot States and TxDOT commented that the FHWA should use an acronym other than “STD” whenever referring to a State transportation department. The FHWA used the acronym “STD” since 23 U.S.C. 101(a)(34) uses the words “State transportation department” in referring to the State department charged with the responsibility for highway construction. However, the FHWA agrees that the term “State DOT” in an acceptable replacement for the previously used acronym and accordingly, the FHWA has accepted this comment.

The FHWA has determined that this action would be a significant rulemaking action within the meaning of Executive Order 12866 and would be significant within the meaning of the U.S. Department of Transportation's regulatory policies and procedures. This rulemaking proposes application requirements for the Surface Transportation Project Delivery Program as mandated in section 6005 of the Safe, Accountable, Flexible, Efficient Transportation Act: A Legacy for Users (SAFETEA-LU) (Pub. L. 109-59; 119 Stat. 1144; 23 U.S.C. 327).

This action is considered significant because of the substantial public interest in environmental concerns associated with highway projects. The program to which this proposed application corresponds allows States to assume the Secretary of Transportation's responsibilities under the National Environmental Policy Act of 1969, and for environmental reviews, consultations, and compliance with other Federal environmental laws. This action involves important DOT policy in that it allows participating States to assume limited DOT responsibilities.

These changes are not anticipated to adversely affect, in a material way, any sector of the economy. This rulemaking sets forth application requirements for the Surface Transportation Project Delivery Pilot Program, which will result in only minimal costs to program applicants. In addition, these changes do not create a serious inconsistency with any other agency's action or materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs. Consequently, a full regulatory evaluation is not required.

In compliance with the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601-612) we have evaluated the effects of this proposed action on small entities and have determined that this action would not have a significant economic impact on a substantial number of small entities.

This rule addresses application requirements for States wishing to participate in the Surface Transportation Project Delivery Program. As such, it affects only States and States are not included in the definition of small entity set forth in 5 U.S.C. 601. Therefore, the Regulatory Flexibility Act does not apply, and the FHWA certifies that this action would not have a significant economic impact on a substantial number of small entities.

This rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48). This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $128.1 million or more in any one year (2 U.S.C. 1532). Further, in compliance with the Unfunded Mandates Reform Act of 1995, the FHWA will evaluate any regulatory action that might be proposed in subsequent stages of the proceeding to assess the effects on State, local, and tribal governments and the private sector. Additionally, the definition of “Federal Mandate” in the Unfunded Mandates Reform Act excludes financial assistance of the type in which State, local, or tribal governments have authority to adjust their participation in the program in accordance with changes made in the program by the Federal Government. The Federal-aid highway program permits this type of flexibility.

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, and the FHWA has determined that this action would not have sufficient federalism implications to warrant the preparation of a federalism assessment. The FHWA has also determined that this action would not preempt any State law or State regulation or affect the States' ability to discharge traditional State governmental functions.

Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct, sponsor, or require through regulations. The FHWA has determined that this action does not contain collection of information requirements for the purposes of the PRA. The FHWA does not anticipate receiving applications from ten or more States because participation in the Surface Transportation Project Delivery Pilot Program has been limited to five, expressly named States in 23 U.S.C. 327.

The agency has analyzed this action for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) and has determined that the establishment of the application requirements for participation in the Surface Transportation Project Delivery Pilot Program, as required by Congress in 23 U.S.C. 327(b)(2) and the subsequent delegation of responsibilities, would not have any effect on the quality of the environment. Section 327 expressly provides that a State's assumption of the Secretary's responsibilities under this program shall be “subject to the same procedural and substantive requirements as would apply if that responsibility were carried out by the Secretary.” 23 U.S.C. 327(a)(2)(C). In addition, this State assumption of responsibility does not preempt or interfere “with any power, jurisdiction, responsibility, or authority of an agency, other than the Department of Transportation, under applicable law (including regulations) with respect to a project.” 23 U.S.C. 327(a)(2)(E). Finally, the Secretary is authorized to terminate the participation of any State in this program if the Secretary determines “that the State is not adequately carrying out the responsibilities assigned to the State.” 23 U.S.C. 327(i)(2)(A).

The FHWA has analyzed this rule under Executive Order 12630, Governmental Actions and Interface with Constitutionally Protected Property Rights. The FHWA does not believe that this action would affect a taking of private property or otherwise have taking implications under Executive Order 12630.

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

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. The FHWA certifies that this action would not cause any environmental risk to health or safety that might disproportionately affect children.

The FHWA has analyzed this action under Executive Order 13175, dated November 6, 2000, and believes that this action would not have substantial direct effects on one or more Indian tribes; would not impose substantial direct compliance costs on Indian tribal governments; and would not preempt tribal laws. The proposed rulemaking addresses application requirements for the Surface Transportation Project Delivery Program and would not impose any direct compliance requirements on Indian tribal governments. Therefore, a tribal summary impact statement is not required.

We have analyzed this action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use dated May 18, 2001. We have determined that it is not a significant energy action under that order since it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required.

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

Section 611(g)(1) of the Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780, 972 (PPA), which was enacted on August 17, 2006, amended ERISA by adding a new section 408(b)(19), which exempts from the prohibitions of sections 406(a)(1)(A) and 406(b)(2) of the Act those transactions involving the purchase and sale of a security between a plan and any other account managed by the same investment manager, provided that certain conditions are satisfied. 1 Among other requirements, an investment manager must adopt, and cross-trades must be effected in accordance with, written cross-trading policies and procedures that are fair and equitable to all accounts participating in the cross-trading program. The policies and procedures must include descriptions of (i) the investment manager's policies and procedures relating to pricing, and (ii) the investment manager's policies and procedures for allocating cross-trades in an objective manner among accounts participating in the cross-trading program.

The investment manager also must designate an individual (a compliance officer) who is responsible for periodically reviewing purchases and sales of securities made pursuant to the exemption to ensure compliance with the foregoing policies and procedures. Following such review, the compliance officer must provide, on an annual basis, a written report describing the steps performed during the course of the review, the level of compliance with the foregoing policies and procedures, and any specific instances of noncompliance. The report must be provided to the plan fiduciary who authorized the cross-trading no later than 90 days following the period to which it relates. Additionally, the written report must notify the plan fiduciary of the plan's right to terminate participation in the investment manager's cross-trading program at any time and must be signed by the compliance officer under penalty of perjury.

Section 611(g)(3) of the PPA provides that the Secretary of Labor, after consultation with the Securities and Exchange Commission (SEC), shall, no later than 180 days after the date of the enactment of the PPA, issue regulations regarding the content of the written policies and procedures required to be adopted by an investment manager in order for such manager to qualify for relief under section 408(b)(19) of the Act. Section 611(h) of the PPA provides that the amendments made by section 611 of the PPA shall apply to transactions occurring after the date of enactment of the PPA.

The rule contained in this document is being issued on an interim final basis to provide immediate guidance regarding the contents of the written cross-trading policies and procedures that must be adopted by investment managers in order to comply with the requirements of the statutory exemption. ERISA section 408(b)(19) is effective for transactions occurring after August 17, 2006, and Congress directed the Secretary of Labor to issue regulations by February 13, 2007. Given the current need for regulations and the short period in which the regulations are to be issued, the Department finds for good cause that notice and public procedure before issuance of this regulation is impracticable. Nevertheless, the Department will carefully review the comments received on this regulation and will thereafter issue a final regulation that takes them into consideration.

The interim final rule amends 29 CFR part 2550 by adding a new section, 2550.408b-19. Paragraph (a) of the interim final rule states that the standards set forth in this interim final rule apply solely for purposes of determining whether an investment manager's written policies and procedures satisfy the content requirements of section 408(b)(19)(H) of the Act. Accordingly, such standards shall not apply in determining whether, or to what extent, the investment manager satisfies the other requirements for relief under section 408(b)(19) of the Act.

Paragraph (b)(2) requires the content of the written cross-trading policies and procedures to be clear, concise, and written in a manner calculated to be understood by the plan fiduciary authorizing a plan's participation in the manager's cross-trading program. Although no specific format is required for the investment manager's written cross-trading policies and procedures, the information contained in the policies and procedures must be sufficiently detailed to facilitate a periodic review by the compliance officer of the cross-trades.

As discussed below, paragraph (b)(3) of the interim final rule describes the content requirements of the written cross-trading policies and procedures that must be adopted by the investment manager, and provided to the plan fiduciary, prior to the investment manager engaging in any cross-trades under section 408(b)(19) of the Act. The Department of Labor (Department) expects that, following disclosure of the written policies and procedures adopted by the investment manager and any other disclosures required by the exemption, 2 the plan fiduciary will be able to determine whether it is appropriate to authorize the plan's participation in the investment manager's cross-trading program. The definitions of certain terms used in the interim final rule are contained in paragraph (c).

Section 408(b)(19)(H) of the Act requires the investment manager to adopt, and effect cross-trades in accordance with, written cross-trading policies and procedures that are fair and equitable to all accounts participating in the cross-trading program, and that include a description of the manager's pricing policies and procedures, and the manager's policies and procedures for allocating cross-trades in an objective manner among accounts participating in the cross-trading program.

Paragraph (b)(3) of the interim final rule sets forth the content requirements for the written cross-trading policies and procedures to be adopted by the investment manager. The Department believes that the policies and procedures must provide sufficient information to enable a plan fiduciary to assess the investment manager's cross-trading program. In this regard, the relief provided by section 408(b)(19) of the Act is subject to satisfaction of a number of conditions by the investment manager, including the designation of a compliance officer to periodically review purchases and sales and prepare an annual report. A number of the content requirements mandated by the interim final rule require the investment manager to describe the method or process that will be employed by the manager to satisfy section 408(b)(19)(H) of the exemption. This information will enable the compliance officer to review securities purchases and sales to ensure compliance with the written policies and procedures. Since the compliance officer's annual report must be issued to plan fiduciaries responsible for authorizing a plan's participation in the investment manager's cross-trading program, it will assist the plan fiduciary in making an informed decision regarding the plan's continued participation in the cross-trading program.

The interim final rule requires the compliance officer to determine whether an investment manager's cross-trading program meets the requirements of section 408(b)(19) (H) of the Act. The Department specifically requests comments from interested persons regarding whether the scope of the compliance officer's responsibilities under the regulation should be expanded to encompass compliance with all of the requirements of the statutory exemption. In this regard, the Department is interested in any information regarding the current practices of compliance officers in determining compliance with applicable statutory or administrative exemptions under ERISA.

In order to assure that plan fiduciaries recognize the scope of compliance reviews conducted under these rules, paragraph (b)(3)(vii) requires the policies and procedures to contain a statement describing whether such review is limited to compliance with the policies and procedures required pursuant to 408(b)(19)(H).

Section 408(b)(19)(H) of the Act specifies that the written cross-trading policies and procedures adopted by the investment manager must include a description of the manager's policies and procedures for determining the price at which securities are cross-traded. The Department expects that the pricing policies and procedures will be described in sufficient detail to enable the compliance officer to independently determine that the cross-trade transaction was effected at the “independent current market price” of the security (within the meaning of § 270.17a-7(b) of Title 17, Code of Federal Regulations) as required by section 408(b)(19)(B) of the Act. 3

Section 408(b)(19)(H) further specifies that such policies and procedures must include the policies and procedures for allocating cross-trades in an objective manner among accounts participating in the cross-trading program. In this regard, the Department notes that frequently the demand for a particular security among the accounts of an investment manager may exceed the supply available to cross-trade. Section 408(b)(19)(D) of the Act requires that the basis for any objective allocation to be used must be disclosed to each plan fiduciary prior to obtaining the required authorization. It is the Department's understanding that managers have relied on different systems, e.g., a pro rata or queue system, to allocate cross-trade opportunities on an objective basis. The Department recognizes that there may be a number of objective systems that are appropriate for the allocation of securities.

Paragraph (b)(3) of the interim final rule specifies that the investment manager's written cross-trading policies and procedures must include:

• A statement of policy which describes the criteria that will be applied by the investment manager in determining that execution of a securities transaction as a cross-trade will be beneficial to both parties to the transaction;  4

This final rule reflects the administrative action of correcting the address of the Nevada State Office of the BLM. The post office box number was incorrectly stated in the final rule published in the Federal Register on April 16, 2003 (68 FR 18554). The street address for the personal filing of documents relating to public lands in Nevada remains the same, and this correcting amendment makes no other changes in filing requirements.

As published, the final regulations contain an error which may prove to be misleading and needs to be clarified.

DoD published an interim rule at 71 FR 29084 on May 19, 2006, to implement the second year of DoD's three-year roll-out plan for supplier implementation of RFID. The rule added requirements for contractors supplying materiel to DoD to affix passive RFID tags at the case and palletized unit load levels when shipping packaged petroleum, lubricants, oils, preservatives, chemicals, additives, construction and barrier materials, and medical materials to specified locations. Ten respondents submitted comments on the interim rule. A discussion of the comments is provided below.

1. Comment: The DoD Suppliers' Passive RFID Information Guide states that the Air Mobility Command Terminals at Charleston, Dover, and Travis Air Force Bases will be added to the locations that require passive RFID tags in 2006. Instead of Dover Air Force Base, the rule adds the Naval Air Station in Norfolk.

DoD Response: The locations identified in the DFARS rule are correct. DoD is updating the Suppliers' Passive RFID Information Guide to incorporate these changes.

2. Comment: The Air Mobility Commands should be excluded until 2007, when all ship-to locations will require RFID tags. For contracts with transshipment points, such as the Air Mobility Commands, vendors do not know whether or not the ship-to location requires RFID tags when they respond to the solicitation. Vendors are required to contact the Transportation Office for shipping instructions at time of shipment.

DoD Response: DoD has amended the rule to require RFID tags for all high- priority shipments (Transportation Priority 1). Therefore, vendors do not need to know the aerial shipping port. DoD also has amended the rule to exempt shipments to locations other than Defense Distribution Depots when the contract includes the clause at FAR 52.213-1, Fast Payment Procedure, because of limitations in the Wide Area WorkFlow-Receipt and Acceptance electronic system.

3. Comment: DoD should extend the ending date for use of Generation 1 tags, from October 1, 2006, to January or May 2007, or should consider an attrition-based alternative to phase out the Generation 1 tags. In the first year of DoD's supplier implementations of RFID, DoD encouraged vendors to buy large quantities of Generation 1 tags to help keep costs down. If the Generation 1 tags are not accepted after October 1, 2006, vendors who followed DoD's advice will have large inventories of the Generation 1 tags that are no longer acceptable.

DoD Response: DoD has amended the rule to make the Generation 1 tags acceptable under all new contracts until March 1, 2007. DoD's July 30, 2004, policy statement on RFID (available at http://www.acq.osd.mil/log/rfid/rfid_policy.htm ) provided that the Generation 1 technology would no longer be accepted 2 years after the ratification of the UHF Generation 2 Standard. The UHF Generation 2 Standard was ratified in December 2004. DoD has extended the date an additional 5 months to ensure that vendors are not left with large, obsolete inventories of the Generation 1 tags. In addition, DoD will continue to accept Class 0 and Class 1 Generation 1 and Class 1 Generation 2 tags for all shipments under contracts awarded prior to the effective date of the interim rule, May 19, 2006.

4. Comment: The contract clause should reference the specific version or effective date of the applicable EPC Tag Data Standard instead of “the most recent EPC Tag Data Standards document,” because an open-ended requirement is inappropriate. Also, the clause should reference the specific versions or effective dates for the tag identity type instructions and receiving reports procedures, instead of the instructions and procedures at the cited Web sites.

DoD Response: DoD has amended the clause to specify that the contractor must use the tag data standards in effect at the time of contract award. Incorporating the version number or effective date of the standard, instructions, and procedures in the DFARS clause would not be practicable, since these requirements may change.

5. Comment: The rule should clarify whether RFID tags are required if a shipment contains both medical materials that require RFID tags and other products that do not require RFID tags.

DoD Response: If an individual case contains an exempted item, or if an individual pallet contains an exempted case, RFID tags are not required. The rule has been amended to clarify that suppliers should limit mixing of exempted and non-exempted materials.

6. Comment: DoD should retain the provision of the original clause that required the passive tag to be “readable at the time of shipment in accordance with MIL-STD-129 (Section 4.9.1.1) readability performance requirements,” instead of the current clause provision that only requires the tag to be “readable,” to ensure the requirement is appropriately bounded.

DoD Response: Suppliers must apply a readable tag before shipping products to DoD. The clause has been amended to allow suppliers more flexibility in meeting this requirement.

7. Comment: Contractors are required to ensure that each passive tag is “readable,” but the rule does not define “readable.” We understand “readable” to mean that the contents of the RFID tag can be read by an EPCglobal-compliant passive RFID reader.

DoD Response: The respondent's understanding is correct. Suppliers must apply a readable tag before shipping products to DoD.

8. Comment: DoD should establish a mechanism to address tags that are readable prior to shipment but non-readable at the point of receipt. A number of factors may affect tag readability during the shipping and receiving process (e.g., damage in transit, reader failure).

DoD Response: Suppliers are required to affix a readable tag before shipment. DoD maintains a collaborative approach to working with its suppliers. If a trend of non-readable tags is noted for a specific supplier, DoD will work with that supplier to develop a mutually agreeable resolution.

9. Comment: DoD should allow use of all ISO-approved RFID tag formats, instead of limiting the tag formats to either EPCglobal or the DoD tagging format utilizing the CAGE codes. Current product cases for medical materials utilize industry standard product bar codes. Medical material suppliers utilize two different consensus standards for bar code identification of their product cases, based on either Health Industry Business Council or GS1 (formerly the Uniform Code Council) formats. One format is predominately used to identify drug products (using the National Drug Code) and the other is used for medical devices or supplies. Each format has unique labeler codes assigned to each company. The data contained in the bar codes is currently used to identify the packages and their contents throughout the supply chain. DoD should allow the use of ISO-approved Issuing Agency Codes (IAC) instead of limiting supplier identification to the EPCglobal or CAGE code. The use of ISO-approved IACs is currently supported by DoD in its unique identification (UID) requirements. Allowing for this in the RFID would be consistent with other standards supported by DoD.

DoD Response: The acceptable tag encoding schemes are those identified in the version of the EPCglobal Tag Data Standard in effect at the time of contract award. These tag data standards include the DoD tag identity which utilizes the CAGE code.

10. Comment: DoD should allow RFID tag capacity of 128 Bit and higher. High capacity tags are now common, and are more likely to be used by suppliers. Many RFID tags have capacity of several kilobits.

DoD Response: Under the DFARS rule, DoD will only accept tags encoded according to the tag data standards defined in the EPCglobal Tag Data Standards documents available at http://www.epcglobalinc.org/standards/ . DoD will review the potential for accepting higher capacity tag data types as the standards for those tags are ratified.

11. Comment: The RFID frequency specified in the DoD documents is 915 MHz. Electromagnetic interference can cause medical device failures and malfunctions. 915 MHz is within the frequency band that medical devices are tested and have been shown to function during and after exposure. Medical devices are immune to 915 MHz signals at FCC regulated levels.

DoD Response: DoD requires passive tags on the packaging of items, not on the item itself. The tags themselves do not emit any electromagnetic signal unless interrogated by an RF reader.

12. Comment: DoD should work with the U.S. Food and Drug Administration (FDA) and compare its Medical Federal Supply Classes to the FDA combination product codes. DoD's RFID program calls for tagging of medical devices but not pharmaceuticals, biological, or in vitro diagnostics. Drug, biologics, and devices can be used in combination to potentially enhance the safety and/or effectiveness of either product used alone. The appropriate classification of these combination products is sometimes unclear. FDA's Office of Combination Products addresses concerns with drug-device, drug-biologic, and device-biologic combination products. FDA is investigating the use of unique device identification to improve patient safety, by reducing medical errors, facilitating device recalls, and improving medical device adverse event reporting. No standard has been developed as of yet.

DoD Response: DoD is working with the FDA to ensure that the RFID requirements are clearly defined and appropriate. In addition, DoD is sharing lessons learned from its work with uniquely identifying items with the FDA.

13. Comment: Adding repairable and consumable items to the supplies that require passive RFID tags will add time and costs to low-dollar items. Small businesses are already burdened with the unique item identification (UID) requirements for certain items under $5,000. The RFID threshold is even lower. Is there any value added and cost trade-off to keep track of low-dollar DoD inventory on a resistor or relay, etc?

DoD Response: The benefits of applying RFID outweigh the costs. The dollar value of an item is not an accurate measure of its mission criticality (e.g., an inexpensive part that could keep a plane from flying its mission would be considered mission critical). Repair parts and components, including repairables and consumables, must be tagged for shipments to one of the specified locations. RFID technology is simply a faster, better way to acquire data for logistics and financial systems and will be a benefit for all items DoD manages.

14. Comment: The rule should exempt limited volume suppliers from RFID requirements, because implementation and operation of an RFID system can be costly. Also, many suppliers do not currently have RFID capability and do not have requirements for RFID tagging for other customers. The cost to implement an initial system in one shipping location is approximately $100,000. The cost for additional shipping locations is approximately $65,000. Additional implementation costs would be incurred for automatically generated advance shipment notices, or significant operational costs would be incurred for manually inputted advance shipment notices. Measurable benefits of RFID do not exceed the costs for small businesses. With only one contract that requires RFID tags, we are using a contract labeler to make the tags instead of investing significant amounts of money ($12,000 or more) in cutting edge technology. We are hesitant to invest in the technology, because we have no idea of the volume of future requirements. We have to price each tag to recoup our costs.

DoD Response: Outfitting an entire shipping location with RFID capability could be expensive. However, compliance with DoD's requirement is significantly less complex. The basic requirement is that materiel shipped to DoD must be tagged. A variety of low-cost solutions that enable suppliers to comply with DoD's requirement are available in the marketplace. A supplier can buy an RFID reader that reads and writes the tags for approximately $2,000 and can purchase pre-printed tags for as little as $0.70 per tag.

15. Comment: DoD should streamline the contract clause by referencing the locations that require RFID tags in an attachment to the contract instead of listing the locations in the clause, to be consistent with DoD's DFARS transformation initiative and to eliminate the need for additional changes to the clause to add additional ship-to locations.

DoD Response: In 2007, DoD plans to add the remaining locations that will require RFID tags and will consider a more generic clause that allows the contracting officer to specify the locations that require RFID tags. This change will be vetted through the rulemaking process.

16. Comment: DoD should add language to encourage the use of a Single Process Initiative (SPI) where practicable.

DoD Response: Suppliers can use an SPI, provided the single process meets contract requirements.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows:

DoD has developed a three-year roll-out plan for supplier implementation of RFID. This rule finalizes the interim rule published in the Federal Register at 71 FR 29084 on May 19, 2006, to address the second year of the plan. The rule amends the clause at DFARS 252.211-7006, Radio Frequency Identification. The rule contains requirements for DoD contractors supplying materiel to DoD to affix passive RFID tags at the case and palletized unit load levels when shipping packaged petroleum, lubricants, oils, preservatives, chemicals, additives, construction and barrier materials, and medical materials to specified DoD locations. Prior to this rule, DoD contractors were already required to print and affix military shipping labels to every package delivered to DoD. For packaged operational rations, clothing, individual equipment, tools, personal demand items, and weapon system repair parts shipped to the Defense Distribution Depot in Susquehanna, PA, or the Defense Distribution Depot in San Joaquin, CA, DoD contractors also were already required to affix passive RFID tags at the case and palletized unit load levels.

To create an automated and sophisticated end-to-end supply chain, DoD is dependent upon initiating the technology at the point of origin, the DoD commercial suppliers. Without the assistance of the DoD supplier base to begin populating the DoD supply chain with passive RFID tags, a fully integrated, highly visible, automated end-to-end supply chain is untenable.

As a result of comments received on the interim rule, the final rule extends the date for the acceptability of the EPC Class 0 and Class 1 Generation 1 tags until March 1, 2007, clarifies the shipments that require RFID tags, and exempts shipments to locations other than Defense Distribution Depots when the contract includes the clause at FAR 52.213-1, Fast Payment Procedures.

The rule may affect businesses interested in receiving contracts for packaged petroleum, lubricants, oils, preservatives, chemical, additives, construction and barrier materials, and medical materials that will be shipped to specified DoD locations. Options to comply with the requirements of the rule can be as simple as replacing existing military shipping label printers with RFID-enabled printers. This will allow DoD contractors to print military shipping labels with embedded RFID tags. The regulatory flexibility analysis DoD prepared for the three-year roll-out plan for supplier implementation of RFID at http://www.acq.osd.mil/log/rfid/regflex.htm details other options and approximate costs to comply.

The rule increases the information collection requirements approved under Office of Management and Budget (OMB) Control Number 0704-0434. The rule requires contractors to provide an electronic advance shipment notice in accordance with the procedures at http://www.acq.osd.mil/log/rfid/advance_shipment_ntc.htm, to associate RFID tag data with the corresponding shipment. OMB has approved the increased information collection requirements for use through December 31, 2009.

DoD uses the Aviation Into-plane Reimbursement (AIR) card for purchases of aviation fuel and oil at commercial airport facilities. The AIR card is a centrally-billed, Government commercial purchase card that is an alternative to use of the Standard Form 44, Purchase Order-Invoice-Voucher. This final rule amends DFARS 213.306 to address use of the AIR card. In addition, the rule amends DFARS 213.301 to clarify that DoD has multiple fuel card programs.

DoD published a proposed rule at 71 FR 34867 on June 16, 2006. DoD received no comments on the proposed rule and has adopted the proposed rule as a final rule without change.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the Aviation Into-plane Reimbursement card is an alternative to use of the Standard Form 44, Purchase Order-Invoice-Voucher, designed primarily for on-the-spot, over-the-counter purchases while away from the purchasing office or at isolated activities.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

DoD published an interim rule at 71 FR 34832 on June 16, 2006, to implement Section 831 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163) and Section 8118 of the Defense Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287). Section 831 of Public Law 109-163 amended 10 U.S.C. 2533a(d)(3) to expand the exception that permits the acquisition of non-domestic perishable foods by activities located outside the United States, to also permit the acquisition of such foods by activities that are making purchases on behalf of activities located outside the United States. Section 8118 of Public Law 108-287 established a permanent requirement for the acquisition of domestic fish, shellfish, and seafood, including fish, shellfish, and seafood contained in foods manufactured or processed in the United States. This requirement previously had been included in Defense Appropriations Acts on an annual basis.

DoD received no comments on the interim rule. Therefore, DoD has adopted the interim rule as a final rule without change.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the rule applies only to: (1) The acquisition of perishable foods for DoD activities located outside the United States, and (2) continuation of the existing requirement for the acquisition of domestic fish, shellfish, and seafood.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

This final rule—

• Removes text at DFARS 233.204 regarding research of a contractor's history of filing claims during a contracting officer's review of a current claim. Text on this subject has been relocated to the DFARS companion resource, Procedures, Guidance, and Information (PGI) at http://www.acq.osd.mil/dpap/dars/pgi; and

• Revises DFARS 233.210 to remove an obsolete cross-reference and to add a reference to the guidance added to PGI regarding review of a contractor's claim.

DoD published a proposed rule at 71 FR 34867 on June 16, 2006. The proposed rule had provided for total elimination of the text at DFARS 233.204 and 233.210. One source submitted comments on the proposed rule, recommending that, instead of total elimination, the text at DFARS 233.204 should be relocated to PGI. DoD has adopted this recommendation and has included the corresponding changes in the final rule.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the rule makes no significant change to DoD policy regarding consideration of claims submitted by contractors.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

DoD published an interim rule at 71 FR 34833 on June 16, 2006, to implement Section 344 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163). Section 344 extends, through September 30, 2007, the period during which contractor performance of security-guard functions at military installations or facilities is authorized to fulfill additional requirements resulting from the terrorist attacks on the United States on September 11, 2001.

DoD received no comments on the interim rule. Therefore, DoD has adopted the interim rule as a final rule without change.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Although the rule may provide opportunities for small business concerns to receive contracts for the performance of security-guard functions at military installations or facilities, the economic impact is not expected to be substantial.

The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

DoD published an interim rule at 71 FR 34834 on June 16, 2006, to implement the Dominican Republic-Central America-United States Free Trade Agreement with respect to El Salvador, Honduras, and Nicaragua. The rule amended the appropriate DFARS provisions and clauses to reflect the addition of El Salvador, Honduras, and Nicaragua as Free Trade Agreement countries.

DoD received no comments on the interim rule. Therefore, DoD has adopted the interim rule as a final rule without change.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Although the rule opens up DoD procurement to the products of El Salvador, Honduras, and Nicaragua, DoD does not believe there will be a significant economic impact on U.S. small businesses. DoD applies the trade agreements to only those non-defense items listed at DFARS 225.401-70, and procurements that are set aside for small businesses are exempt from application of the trade agreements.

This rule affects the certification and information collection requirements in the provisions at DFARS 252.225-7020 and 252.225-7035, currently approved under Office of Management and Budget Control Number 0704-0229. The impact, however, is negligible.

On September 27, 2006, we published in the Federal Register (71 FR 56443) a proposed rule to amend the regulations governing the annual Migratory Bird Hunting and Conservation Stamp Contest [also known as the Federal Duck Stamp Contest (contest)]. In brief, this rule adopts those proposed changes in full, as described below.

We are making all the changes detailed in our proposed rule (September 27, 2006, 71 FR 56443). The changes affect the regulations governing the contest in the Code of Federal Regulations (CFR) at 50 CFR 91.

Section 91.12 contains a 3-year prohibition against winning artists participating in the three successive contests. We put this rule into place as a way to ensure that a variety of artists can compete fairly and to avoid allowing a single individual to repeatedly win the contest. However, we are exempting the 2007 contest from this rule, because the 2007 contest marks an important milestone, since it will choose the 75th Federal Duck Stamp. This significant event is very important for all wildlife artists, and we therefore allow everyone an equal chance to compete. We lift this prohibition for the 2007 contest only. We further clarify that this exemption will not be counted towards the remainder of the waiting period for 2004-06 winning artists. These recent winning artists must complete their 3-year waiting periods in full and will have to serve the remainder of their terms after the 2007 contest. Two examples follow:

(1) Ann wins the 2006 contest. She may enter the special 2007 contest. Regardless of whether she wins 2007 or not, she is ineligible to enter in 2008, 2009, or 2010. She may enter in 2011.

(2) Bob wins the 2005 contest. He was ineligible to enter the 2006 contest. He may enter the special 2007 contest. Regardless of whether he wins 2007 or not, he is ineligible to enter in 2008 or 2009, but he may enter in 2010.

Section 91.24 paragraphs (g) and (h) have typographical errors. We correct the errors in our presentation of the possible numerical scores that can be awarded by judges.

Section 91.31 specifies the return of artwork after the contest has concluded. We clarify the portion of the regulations that mentions the possibility of the artwork being sent on a tour to appear at one or more wildlife art exhibitions. Recently artists believed that the 120-day limit was all that had to be honored. We clarify this requirement.

The art tour is a chance for the public to see the finalists in the Federal Duck Stamp Contest. These are the entries that made it to the third and final round of judging. The tour travels to various locations across the country and allows the public to see some of the best examples of wildlife art. With the tour, we engage new artists to enter the contest and encourage the general public to purchase more stamps. Unfortunately, some artists have chosen to sell their pieces before or during the art tour and have requested to remove them from the tour. This lessens the quality of the paintings available for the public to view and is against the spirit of the tour. We clarify that the tour lasts for 1 year after the date on which the winner is judged, and entries will be returned after that year. We also codify that artists who remove their artwork before the tour is complete will be ineligible to participate in the next three contests.

For the history of the Federal Duck Stamp Program and the contest, please see our proposed rule for a previous unrelated change to the duck stamp regulations (April 12, 2006, 71 FR 18697).

We received comments on the proposed rule regarding the section addressing the number of times a Judge may serve. The Federal Duck Stamp Office will reconsider that section and if warranted, include changes in future rules.

This document is not a significant rule and is not subject to review by the Office of Management and Budget under Executive Order (E.O.) 12866.

1. This rule will not have an annual effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

2. This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. The rule deals solely with the contest. No other Federal agency has any role in regulating this endeavor.

3. This rule does not alter budgetary effects or entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. There are no entitlements, grants, user fees, or loan programs associated with the regulation of the contest.

4. This rule does not raise novel legal or policy issues. This rule is primarily a reorganization and clarification of existing regulations. New provisions proposed in the rule are in compliance with other laws, policies, and regulations.

The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ). The changes are intended primarily to clarify the requirements for the contest. In addition, these changes do not affect the information collected. These changes will affect individuals, not businesses or other small entities as defined in the RFA.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

1. Does not have an annual effect on the economy of $100 million or more.

2. Does not cause a major increase in costs or prices for consumers; individual industries; Federal, State, or local government agencies; or geographic regions.

3. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq. ) is not required.

In accordance with E.O. 12630, this rule does not have significant takings implications. A takings implication assessment is not required.

In accordance with E.O. 13132, this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. A Federalism Assessment is not required.

In accordance with E.O. 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of the Order.

This rule does not contain new or revised information collections for which Office of Management and Budget approval is required under the Paperwork Reduction Act. An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 (42 U.S.C. 4371 et seq. ) is therefore not required.

Under the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), and 512 DM 2, we have evaluated possible effects on federally recognized Indian Tribes and have determined that there are no effects.

On May 18, 2001, the President issued E.O. 13211 on regulations that significantly affect energy supply, distribution, and use. E.O. 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This rule revises the current regulations in 50 CFR part 91 that govern the contest. This rule is not expected to significantly affect energy supplies, distribution, and use. Therefore, this action is a not a significant energy action and no Statement of Energy Effects is required.