Comments Invited

The FAA invites interested persons to participate in rulemaking by submitting written data, views, or arguments on this proposed rule. We also invite comments relating to the environmental, energy, federalism, or economic impact that might result from adopting the proposals in this notice. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also review the docket using the Internet at the web address in the ADDRESSES section.

Privacy Act: Using the search function of our docket Web site, anyone can find and read the comments received into any of our dockets, including the name of the individual sending the comment (or signing the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78) or you may visit http://dms.dot.gov.

Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

If you want the FAA to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

You can get an electronic copy using the Internet by:

1. Searching the Department of Transportation's electronic Docket Management System (DMS) Web page ( http://dms.dot.gov/search );

2. Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/ ; or

3. Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html.

You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make sure to identify the docket number, notice number, or amendment number of this rulemaking.

Advances in technology have meant that many propeller certification programs over the past decade have required repeated application of special conditions or special tests. In addition, the need to demonstrate compliance with both FAA and EASA requirements has placed additional burdens on propeller manufacturers who require foreign certification. Therefore, we concluded that part 35 should be substantially revised.

In 1994, the FAA began an initiative to harmonize FAA propeller certification requirements with Europe's Joint Aviation Authorities (JAA) regulations (now the EASA certification specifications). As part of this effort, the FAA tasked the Aviation Rulemaking Advisory Committee through its Engine Harmonization Working Group (EHWG) to compare part 35 with JAA requirements, and identify differences. The EHWG was also to update existing requirements to reflect advancements in propeller design, including design and construction of composite material propellers, propeller control systems (such as dual acting control systems), and electronic controls for propellers.

To complete this task, the EHWG established the Propeller Harmonization Working Group, with members from industry and government from Canada, France, Germany, United Kingdom, and the United States. The Propeller Harmonization Working Group focused on requirement differences between part 35 and Joint Aviation Requirements—Propellers (JAR-P) in six areas:

1. Those in part 35, but not in JAR-P;

2. Those in both part 35 and JAR-P, but not accepted as equivalent for both;

3. Those accepted as equivalent for both part 35 and JAR-P;

4. Those in which intent is not clear;

5. Those that may be simplified or deleted; and

6. Those that are new requirements not in either part 35 or JAR-P.

This NPRM proposes to harmonize FAA part 35 propeller certification requirements with most of the requirements of EASA's Certification Specifications for Propellers (CS-P).

We relied on the following material as a basis for this proposed rule:

1. Special Conditions No. 35-ANE-01, Hamilton Standard Model 247F Propeller, Docket No. 94-ANE-50.

2. Special Conditions No. 35-ANE-02, Hamilton Standard Model 568F Propeller, Docket No. 94-ANE-60.

3. Special Conditions No. 35-ANE-03, Hamilton Standard Model 568F Propeller, Docket No. 94-ANE-61.

4. Special Conditions SC-92-03-NE, Hartzell Propeller, Inc. Model HD-E6C-3( )/E13482K Dual Acting Propeller, Docket No. 92-ANE-47.

5. Joint Airworthiness Requirements—Propellers, JAR-P, Change 7, October 22, 1987.

6. Certification Specifications for Propellers (CS-P), Decision No. 2003/7/RM, October 24, 2003.

7. 14 CFR Part 21, Certification Procedures for Products and Parts.

8. 14 CFR Part 23, Airworthiness Standards: Normal, Utility, Acrobatic, and Commuter Category Airplanes.

9. 14 CFR Part 25, Airworthiness Standards: Transport Category Airplanes.

10. 14 CFR Part 33, Airworthiness Standards: Engines.

11. 14 CFR Part 35, Airworthiness Standards: Propellers.

We propose requiring that propeller controls that are certified as part of the airplane or engine type design meet the same requirements as propeller controls that are certified as part of the propeller type design.

We propose revising §§ 23.907 and 25.907 to make them identical, and changing the titles of both sections from “Propeller vibration” to “Propeller vibration and fatigue,” to reflect the revised requirements.

These sections require that a propeller demonstrate safe vibration compatibility with the airplane; they harmonize with CS-P 530, Vibration and Aeroelastic Effects and CS-P 550, Fatigue Evaluation. The vibration evaluation of a propeller on an airplane involves both vibration and fatigue requirements. The vibration evaluation of the propeller depends on the airplane and engine installation; the proposed requirements would show this dependency.

The current requirements differ for part 23 and 25 airplanes and fail to address important areas. They do not address fatigue evaluation or require comparison to the fatigue limits and other structural data established in part 35. They do not require a revision of the propeller operating and airworthiness limitations, and they fail to address the flutter requirements of EASA's Certification Specifications for Propellers (CS-P). In the case of § 23.907, they permit the use of service experience to show compliance, which is an unsatisfactory method to show the safety of the installation.

Our proposed new paragraph (a) for §§ 23.907 and 25.907 would require that applicants determine the stresses throughout the declared operational envelope of the airplane. It would permit applicants to determine stresses by analysis based on direct testing or by interpolation and measured data extrapolation if testing the entire airplane operational envelope is not feasible. The paragraph would also permit the determination of stress by comparison with a similar airplane for which these measurements were made. Our proposed paragraph, however, would not permit the use of service experience to determine stresses.

Proposed paragraph (a) harmonizes with CS-P 530(b) by requiring that applicants investigate stress peaks or resonant conditions.

Proposed paragraph (b) harmonizes with CS-P 530(a) by requiring that applicants address flutter.

Proposed paragraph (c) would harmonize with CS-P 550 by requiring that applicants conduct a fatigue evaluation on the propeller. It would also harmonize with CS-P 550 by requiring that applicants revise the airplane and propeller operating and airworthiness limitations sections as needed to show compliance with the fatigue requirements.

Prior to the propeller vibration and fatigue evaluation for the airplane installation, the propeller undergoes a substantial amount of structural evaluation during its certification to show compliance with part 35. Proposed paragraph (c) would require that the data obtained from the part 35 evaluation be used in the propeller fatigue evaluation.

We propose to add a reference in this section to the propeller installation instructions in § 35.3 to ensure that part 25 airplane comply with the installation instructions for the propeller.

We propose to renumber certain part 35 regulations to harmonize part 35 with EASA's CS-P. Part 35 designation will differ from the CS-P designation by a zero added to the CS-P designation. For example, our proposed § 35.35 Centrifugal load tests will be equivalent to the CS-P 350 Centrifugal Load Tests.

This subpart addresses the requirements for issuing propeller type certificates and changes to those type certificates. Our proposed revisions clarify the propeller configuration to be certificated; list the requirements for installing and operating the propeller; and specify ratings and operating limitations.

We propose adding a new paragraph (c) to establish the relationship between propeller and airplane certification.

We propose adding a paragraph (d) to refine the propeller definition for this part. Paragraph (d) would define a propeller and propeller system consistent with how those terms are used in part 35.

We propose a new § 35.2(a) that would require the applicant to provide a list of all the components and parts, including references to the relevant drawings and software design data, that defines the type design of the propeller the applicant wants approved. This requirement would improve the documentation regarding the propeller components that is included within the propeller type design.

We propose a new § 35.2(b) that would reinforce the link between parts 35 and 45 and harmonize with the CS-P.

We propose to revise § 35.3 to require specific content in propeller installation and operation instructions. The revision would require applicants to prepare installation instructions containing the data required by the airplane manufacturer to install and operate the propeller within the limitations of the propeller type design.

The proposed revision would rename § 35.3 to “Instructions for propeller installation and operation” to reflect the revised requirements.

We propose revising § 35.5 by modifying the requirements about establishing ratings and operating limitations. In our proposed paragraph (a), the applicant would establish the ratings and operating limitations, which would be subject to approval by the Administrator. This change reflects the process used now to establish the propeller limitations and ratings.

We propose adding paragraph (b), which lists specific ratings and limits applicants must address. The list would include ratings for takeoff power and rotational speed, maximum continuous power and rotational speed. The proposed paragraph would also document transient overspeed and overtorque limits that would not require maintenance. The overspeed and overtorque limits are intended for inadvertent or maintenance use.

Our proposed list in paragraph (b) does not represent all the ratings and operating limits that may be required for safe propeller operation. Paragraph (a) would state that the ratings and operating limitations must include limitations based on the operating conditions demonstrated during the tests required by this part and any other information necessary for safe propeller operation.

We propose changing the title of § 35.5 to “Propeller ratings and operating limitations” to reflect the revised requirements and to harmonize with CS-P 50, Propeller Ratings and Operating Limitations.

We propose a new § 35.7 that will incorporate requirements formerly in § 35.15, Design features.

The proposed § 35.7(a) requires that a propeller not have any features or characteristics that make it unsafe for the purposes for which it is being certified.

The proposed § 35.7(b) indicates the applicant's responsibilities if a failure occurs during a certification test.

Part 35 subpart B addresses design and construction requirements for propellers. This proposed revision would maintain the intent of the current subpart. We propose, however, to remove sections that are redundant or no longer applicable and to revise or add sections that address existing and future design and construction technology not adequately covered by the current requirements.

Section 35.11 is a descriptive statement about subpart B compliance that is fully addressed within § 35.1. Therefore, we propose to remove § 35.11 and mark the section “reserved.”

Section 35.13 is a descriptive statement about subpart B compliance that is fully addressed within § 35.1. Therefore, we propose to remove § 35.13 and mark the section “reserved.”

We propose to revise § 35.15, Design features, and rename it “Safety analysis” to reflect its revised requirements.

Our proposed revision would require that applicants conduct a safety analysis of the propeller. Safety analysis has been used to show compliance with the current requirement for the majority of new propeller certification programs during the past decade. The ultimate objective of the safety analysis is to ensure that the collective risk from all propeller failure conditions is acceptably low. The basis of safety analysis is the concept that an acceptable total propeller design risk is achievable by managing individual risks to acceptable levels. This concept emphasizes reducing the risk of an event proportionally with the severity of the hazard it represents.

Our proposed revision would add definitions for hazardous and major propeller effects, based on CS-P, historical JAR-P requirements, and the propeller special conditions listed under “Reference Material.” These definitions would be used throughout part 35 and would only apply to this part.

Showing compliance with the requirements of this section would not mean that a propeller is suitable for use on all or any airplane. For example, a part 25 airplane may require different failure effects and probabilities of failure than a part 23 airplane would.

We propose to revise and rename this section from “Materials” to “Materials and manufacturing methods” to reflect the revised requirements. Our proposed revision would require that the materials specifications and manufacturing methods used by applicants be acceptable to the FAA. The revision would remove the list of examples of approved specifications and change the word “approved” to “acceptable.” This change would reflect the level of review of the specifications by the FAA.

Our proposed revision would also require that applicants consider the effects of environmental conditions expected in service when assessing material suitability and durability. We are including consideration for environmental effects in this proposed section because many materials used in the propeller design depend on the environment in which the propeller operates. This is especially relevant for composite materials that have age-dependent properties, as well as properties affected by humidity and temperature.

Our proposed revision would also harmonize with CS-P requirements by requiring that applicants use the most adverse properties stated in the accepted specifications of their design values. This clarification would prevent misinterpretations regarding the application of material properties to the propeller design.

We propose to revise and rename this section to from “Reversible propellers” to “Variable and reversible pitch propellers” to reflect the revised requirements. The revision would incorporate the current pitch control and indication requirements of § 35.23(c). It would also expand the current § 35.23(c) requirement to include all airplane installations with reversible propellers, including reciprocating engine aircraft, because the flight safety aspect of this rule applies regardless of engine type. Proposed § 35.21 harmonizes with CS-P 210, Variable and Reversible Pitch Propellers.

We propose a new § 35.22 that will incorporate requirements for feathering propellers currently located in § 35.23(b) and in CS-P 220, “Feathering Propellers.” We would incorporate the requirements of CS-P 220(a) into paragraph (a), which would require feathering propellers be designed to feather from all conditions in flight, taking into account expected wear and leakage. It would also require that applicants document the feathering characteristics and limitations in the appropriate manuals.

We would move the feathering requirements of the current § 35.23(b) to the new § 35.22(b).

We propose that the requirements of CS-P 220(c) be incorporated into paragraph (c). This paragraph would require the applicant to design the propeller to be capable of unfeathering at the minimum declared outside air temperature after stabilization to a steady-state temperature.

We propose to revise and rename § 35.23 from “Pitch control and indication” to “Propeller control system” to reflect the revised requirements and to harmonize with CS-P 230. We would retain and revise current paragraph (a), redesignate and revise current paragraph (c) as § 35.21(b), redesignate and revise current paragraph (b) as § 35.22(b), and add several new paragraphs.

Our proposed § 35.23 would address propeller control design requirements concerning loss of normal control that may cause hazardous overspeeding and an alternative means to override or bypass the engine oil system for propellers that use engine oil to feather. It would also add requirements that address control system description, design, construction, validation, and software design, for all types of propeller mechanical, hydraulic, and electronic control systems.

Our proposed § 35.23(a)(1) would ensure that the control system, operating in normal and alternative modes and transitions between operating modes, performs the intended functions throughout the declared operating conditions and flight envelope. This requirement does not mandate flight test on an airplane. Substantiation by propeller tests, rig tests, airplane tests, analysis or a combination of these would be acceptable.

Our proposed § 35.23(a)(2) would ensure that the control system functionality is not adversely affected by declared environmental conditions.

Our proposed § 35.23(a)(3) would ensure that applicants provide methods to indicate to the flight crew, if crew action is required, that a mode change has occurred.

Our proposed § 35.23(b) would add system safety requirements in addition to those in § 35.15. Paragraph (b)(1) would require that no single failure or malfunction of electronic or electrical components result in a hazardous propeller effect. Paragraph (b)(2) would address the relationship between failures of the linkages from the airplane to the propeller control, and the effects that airplane fires and overheating have on the propeller control. Paragraph (b)(3) would adopt the requirements of the current § 35.23(a). Paragraph (b)(4) would address the effect of isolation between propellers on an airplane.

Our proposed § 35.23(c) would add a requirement that all software be designed and implemented by a method approved by the FAA. It would require that the software design be consistent with the criticality of the performed functions to minimize the existence of software errors.

Our proposed § 35.23(d) would add requirements for airplane-supplied data so that no single failure or malfunction of airplane-supplied data would result in a hazardous propeller effect.

Our proposed § 35.23(e) would add requirements for airplane-supplied electrical power so that abnormalities of the power supply would not result in hazardous effects and would not require a declaration of the validated power supply characteristics.

We propose adding a new § 35.24 to establish strength requirements for propellers consistent with those required by CS-P 240.

We propose to remove those regulations in this subpart that are redundant or no longer apply and to modify and add sections to reflect existing industry practices. We also propose to change the subpart heading from “Tests and Inspections” to “Type Substantiation,” since subpart C applies to both testing and analysis.

We propose to remove the content of § 35.31 and to mark the section “reserved” since § 35.31 is a descriptive statement about subpart C and not a requirement.

Section 35.33(a) does not adequately address part 21 certification requirements. We propose, therefore, to revise § 35.33(a) to identify that the testing conducted in this subpart is also governed by the test requirements established in part 21.

We propose a new § 35.33(b) and (c) to harmonize with CS-P 330(b), which requires that automatic controls operate during tests. Our proposed § 35.33(b) would adopt this requirement and add that it also applies to propeller safety systems. Also, our proposed § 35.33(b) clarifies the conditions under which some tests may be conducted without the automatic controls or safety systems. For example, the applicant may have to disable a primary system to test a backup system.

CS-P 440 requires that applicants address potential safety issues that may occur if required testing does not adequately test a component during propeller certification. Our proposed § 35.33(c) would adopt this requirement.

We propose a new § 35.34 which would revise and incorporate inspection requirements from § 35.45 and the adjustment and repairs requirements from § 35.47.

We propose a new § 35.34(a) to harmonize with CS-P340 requirements for pre-test inspections. Our proposal moves the post-test inspection requirements of the existing § 35.45, Teardown inspection, and consolidates them here. Pre-test inspection establishes the condition of the test article prior to testing. This is particularly important for composite structures in which damage may be internal and not visible. If internal damage is present prior to the start of the test, then the post-test inspection may not be valid without knowledge of the pre-test condition of the test article.

Our proposal also would relocate the existing requirements of § 35.47 to a new § 35.34(b), since the requirements in § 35.47 are related to testing.

We propose revising § 35.35 and renaming it as “Centrifugal load tests” to reflect the revised requirements.

Our proposal would define requirements for the entire propeller and include consideration of material degradation expected in service. Material degradation considerations apply to all types of construction, but would be specifically added to address composite materials, which may absorb moisture or show some evidence of delamination prior to retirement from service.

We propose a § 35.35(a) that would require the hub, blade retention, and counterweights be tested to twice the centrifugal load for one hour. This test is designed to assure a suitable static strength margin above the maximum rated rotational speed.

Our proposed § 35.35(b) would require the transition in a composite blade from the composite material to the metallic retention be tested to twice the centrifugal load for one hour. This requirement would also apply to other types of construction in which a blade to retention transition occurs.

Our proposed § 35.35(c) would harmonize with CS-P 350 by requiring that lower energy debris for the entire propeller be evaluated at 159 percent of the maximum centrifugal load. The low energy debris would include spinners, de-icing equipment, blade erosion shields, and other assemblies used with or attached to the propeller.

We propose adding a new § 35.36 to part 35 to address bird impact with the propeller. Our proposed § 35.36 incorporates the use of special conditions for propellers with composite blades and would extend the bird impact certification requirement to all propeller designs, except fixed-pitch wood propellers of conventional design. Section 35.36 would exclude conventional fixed-pitch wood propellers because of their satisfactory experience. The new requirement would apply to metallic blades but would allow compliance by experience from similar designs.

Industry recognized the need for bird impact requirements when composite blades were introduced in the 1970s. The safety issues have been addressed by special tests and special conditions for composite blade certifications. These special conditions were unique for each propeller and effectively stated that the propeller must withstand a 4-pound bird impact without contributing to a major or hazardous propeller effect. The special tests and special conditions have been effective for over 50 million flight hours, and no accidents have been attributed to bird impact against composite propellers. The selection of a 4-pound bird is based on the extensive service history of blades that have been designed using the 4-pound bird criteria.

We propose to rename § 35.37 from “Fatigue limit tests” to “Fatigue limits and evaluation” and revise it to harmonize with CS-P 370, Fatigue Characteristics. The current requirement does not adequately address composite materials and is limited to hubs, blades, and primary load-carrying metal components of nonmetallic blades. Our proposed § 35.37 would expand the requirement to all materials and components (including controls system components, if applicable) whose failure would cause a hazardous propeller effect and also include environmental effects. It would retain the fatigue evaluation requirement in paragraph (b), but would require that the fatigue evaluation be conducted on the intended airplane in accordance with §§ 23.907 or 25.907 or on a typical airplane. Applicants may configure a typical airplane to develop design criteria for the propeller in those instances when the intended airplane installation is either unavailable or unknown at propeller type certification.

We propose a new § 35.38, Lightning strike, to harmonize with CS-P 380, Lightning Strike. Part 35 currently has no lightning strike requirements. Our proposed § 35.38 requires that composite propellers withstand a lightning strike without contributing to a major or hazardous propeller effect. It also reflects current practices in the industry and the special tests and special conditions we issued for lightning strikes when composite blades were first introduced.

Our new § 35.38 would exclude conventional fixed-pitch wood propellers because of their satisfactory experience. This new requirement would apply to metallic blades but allow compliance by experience from similar designs.

We propose to revise § 35.39 to harmonize with CS-P 390. We would remove the existing 10-hour endurance block test from this section because testing one propeller at the greatest pitch and diameter for 10 hours is not adequate for a family of propellers. All current fixed-pitch propellers are being tested in accordance with the current 50-hour test requirement, which provides an adequate test.

The proposed revision would delete the requirement to test a propeller of the greatest diameter for which certification is requested. We are introducing this change because testing of the greatest diameter is restrictive and does not necessarily result in an increase in airworthiness.

We propose to redesignate the current § 35.41 as § 35.40 to harmonize with CS-P 400, Functional Test.

We propose a new overspeed and overtorque requirement to harmonize with CS-P 410(a). We will rename § 35.41 “Overspeed and overtorque” to reflect the revised requirements. Our proposal would require that applicants verify the declared transient overspeed and overtorque limits of the propeller.

We propose to combine the current § 35.42(a) and (b) into a single paragraph and rename § 35.42 as “Components of the propeller control system” to reflect the revised requirements. We would expand the 1000-hour operation requirement to the initially declared inspection interval or to a minimum of 1000 hours.

We propose to revise the current § 35.43, Special tests, and rename it as “Propeller hydraulic components” to reflect the revised requirements. Our revision would delete the duplication common between § 35.43 and § 21.16 and would harmonize with CS-P 430.

The Propeller Harmonization Working Group determined that it is in the best interest of the public to require special conditions be issued and made available to the public when testing is required for unconventional features of design, material, or construction. We are, therefore, proposing to remove the special tests requirement of § 35.43.

Our proposed § 35.43 would add requirements for testing propeller components that contain hydraulic pressure. These tests have been previously required by special condition or special tests under the current § 35.43. This proposal adopts the test procedures that are being conducted on applicable components.

We propose to revise § 35.45 by moving the teardown inspection requirements to § 35.34, as noted above, and to mark § 35.45 “reserved.”

We propose to revise § 35.47 by moving the propeller adjustment and repair requirements to § 35.34, as noted above, and to mark § 35.47 “Reserved.”

Title 49 of the U.S. 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, including minimum safety standards for aircraft engines. This proposed rule is within the scope of that authority because it updates the existing regulations for airplane propellers.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there are no current new information collection requirements associated with this proposed rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to comply with International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these proposed regulations.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act also requires agencies to consider international standards and, where appropriate, to be the basis of U.S. standards. Fourth, the Unfunded Mandate Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule.

The Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposal does not warrant a full evaluation, this order permits a statement to that effect. The basis for the minimal impact must be included in the preamble, if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this rule. The reasoning for that determination follows.

To a great extent this proposed rule would require propeller manufacturers to certificate future production propellers for sale in the United States to the same European standards that these firms already meet. The European Aviation Safety Agency, the European equivalent to the FAA, became responsible for certification of aircraft, engines, parts and appliances on September 28, 2003 by Commission Regulation (EC) 1702/2003. Because the U.S. and European effort to have common certification propeller regulations was almost completed when EASA became operational, the proposed part 35 and the European propeller requirements CS-P are almost identical. CS-P is now an official rule of a foreign regulatory agency while this is a proposed rule. To export propellers to Europe, U.S. manufacturers now must meet the European requirements. Before Europe made these requirements, industry provided us with a cost estimate of $31 million over a 25-year analysis period for them to be in compliance with the FAA proposed propeller requirements which would have codified existing special tests and conditions. But as manufacturers are already in compliance with these now harmonized proposed requirements, there are no additional compliance costs.

This proposed rule has only one regulation stricter than EASA's CS-P. The FAA proposes to extend the current special condition 4-pound bird strike test for composite propeller blades. CS-P requires newly certificated propellers to withstand a 4-pound bird strike for equivalent part 25 airplanes. However, CS-P requires newly certificated propellers to withstand a 2.8-pound bird strike for equivalent part 23 commuter airplanes and does not require a bird strike test for other equivalent part 23 airplanes. U. S. propeller manufacturers provided us with their estimated costs to meet the proposed 4-pound requirement. Over a 25-year analysis period (based on the operational life of a propeller) we estimate the total cost for 635 future propellers to be $458,000 or $213,000 in present value (7 percent discount rate). The FAA considers this cost to be minimal.

The benefits from this higher bird-strike requirement are an expected continuity of over fifty million flight hours with no accidents attributed to bird impacts against composite propellers despite many bird strikes. Between 1990 and 2004, there have been over 150 bird strikes to part 23 propellers (see the FAA National Wildlife Strike Database, Version 6.0, February 26, 2005; available online at http://wildlife.pr.erau.edu/public/index1.html ).

We, therefore, have determined that this rulemaking action is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures. In addition, the FAA has determined that this rulemaking action: (1) Would not have a significant economic impact on a substantial number of small entities; (2) would be in compliance with the Trade Agreements Act; and (3) would not impose an unfunded mandate on state, local, or tribal governments, or on the private sector.

The Regulatory Flexibility Act of 1980 (RFA) establishes “* * * as a principle of regulatory issuance that agencies shall endeavor, consistent with the objective of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the business, organizations, and governmental jurisdictions subject to regulation.” To achieve that principle, the RFA requires agencies to solicit and consider flexible regulatory proposals and to explain the rationale for their actions. The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations and small governmental jurisdictions.

Agencies must perform a review to determine whether a proposed or final rule would have a “significant economic impact on a substantial number of small entities.” If the determination is that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a proposed or final rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the 1980 RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

The purpose of this Initial Regulatory Flexibility Analysis (IRFA) is to ensure that the agency has considered all reasonable regulatory alternatives that would minimize the proposal's economic burdens for affected small entities, while achieving its safety objectives.

Under Section 603 of the RFA, the analysis must address:

• Description of reasons the agency is considering the action.

• Statement of the legal basis and objectives for the proposal.

• Description of the recordkeeping and other compliance requirements of the proposal.

• All federal rules that may duplicate, overlap, or conflict with the proposal.

• Description and an estimated number of small entities to which the proposal would apply.

• Analysis of small firms' ability to afford the proposal.

• Conduct a competitive analysis.

• Estimation of the potential for business closures.

• Describe the alternatives considered.

• Conduct a disproportionality analysis.

The FAA proposes to revise the airworthiness standards for the issuance of original and amended type certificates for airplane propellers. The existing propeller requirements do not adequately address the technological advances of the past 20 years. The proposed standards would address the current advances in technology and would harmonize the FAA requirements with the existing requirements of Certification Specifications for Propellers of the EASA. This proposal would establish nearly uniform standards for aircraft propellers certified by the United States under FAA standards and by European countries under EASA standards, thereby simplifying airworthiness approvals for import and export products.

Under Title 49 of the U. S. Code, the FAA Administrator is required to consider the following matters, among others, as being in the public interest: Assigning, maintaining, and enhancing safety and security as the highest priorities in air commerce. (See 49 U.S.C. 40101(d)(1).). Additionally, it is the FAA Administrator's statutory duty to carry out his or her responsibilities “in a way that best tends to reduce or eliminate the possibility or recurrence of accidents in air transportation.” (See 49 U.S.C. 44701(c).)

Accordingly, this proposal would amend Title 14 of the Code of Federal Regulations to update the propeller certification requirements to reflect technological changes in the last 10 to 20 years, reduce the need for and use of special tests and conditions for propeller certification, and to harmonize U.S. propeller certification requirements with European propeller certification requirements.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there are no current new information collection requirements associated with this proposed rule.

The FAA is unaware that the proposal would overlap, duplicate, or conflict with existing Federal Rules.

Under the RFA, the FAA must determine whether or not a proposal significantly affects a substantial number of small entities. This determination is typically based on small entity size and cost thresholds that vary depending on the affected industry. The Small Business Administration (SBA) uses the NAICS (North American Industry Classification System) 2002 to determine size standards for small businesses. There is no entry in the NAICS 2002 for propeller manufacturers. However, the NAICS 2002 does list under Sectors 31-33, Manufacturing, Subsector 336, Transportation Equipment Manufacturing, which in turn lists the following numbers and number of employees as shown in the following table:

Propeller manufacturing could be included in #336412, Aircraft Engine and Aircraft Parts Manufacturing; or #336413, Other Aircraft Parts and Auxiliary Equipment Manufacturing. Both these categories use 1,000 employees to define a small business. Therefore, the FAA defines a small business in the variable pitch propeller manufacturing industry as a business with 1,000 or less employees. In accordance with SBA usage, this number applies to the ultimate ownership of the company.

In 2004, the American airplane variable pitch propeller industry consisted of three firms. These firms were Hamilton Sundstrand, Hartzell, and McCauley. Hamilton Sundstrand is a subsidiary of United Technologies that employed approximately 210,000 people and had annual revenues of approximately $37 billion in 2004. 1 McCauley Propeller Systems is owned by Cessna, which, in turn, is owned by Textron, Inc. Textron employed some 44,000 people and had annual revenues of some $10 billion in 2004. 2 Hartzell Propeller, Inc. employed 295 employees in 2003 and had annual revenues between $20 and $50 million in 2002. 3

Using the above criteria, Hartzell is a small business and Hamilton Sundstrand and McCauley are not small businesses. Because only one company is a small business, this proposal would not affect a substantial number of small entities.

The 25 year present value estimate of the costs of the proposal is $213,000 or $18,000 annually. Assuming that this cost is distributed evenly across the three firms in the American propeller industry, this results in a cost of $6,000 per company per year.

Hartzell Propeller does not release its annual financial statements. The reference source “Reference, USA, 2003,” uses a model to estimate the annual revenues of privately held firms that do not release their financial statements. Therefore, this source provides a range estimate of firms such as Hartzell. The annual revenue of Hartzell Propellers was estimated to be between $20 and $50 million annually, or an average of $37.5 million, by “Reference USA, 2003.”

A comparison of the annual costs of the proposal per firm to the annual revenues of a firm provides a rough estimate of the burden the rule causes for a firm. Applying the above technique to the small propeller entity yields the following results:

Given the estimated cost and revenue, the FAA believes that the cost would have only a minor impact on the small firm.

As the cost information is at the company level and the propeller firms do not all produce the same kind of propeller, the FAA does not have sufficient information to analyze the competitive impact of this proposal.

Relative to larger propeller manufacturers, smaller propeller manufacturers are more likely to be disproportionately impacted by this rulemaking because the larger manufacturers have relatively higher fixed costs than the smaller manufacturers. These fixed costs are not impacted by the costs that would be imposed by this proposal. The larger propeller manufacturers are expected to incur costs which are a relatively smaller percentage of their annual revenues than those of smaller propeller manufacturers.

The one small business entity has a relatively low compliance cost per annual revenue ratio. We believe that this minor compliance cost would not cause firms to face a business closure. The FAA does not have sufficient information to provide a more refined estimate of a potential business closure.

The agency considered three alternatives to the proposal. These were:

1. Exclude small entities.

2. Extend compliance deadline for small entities.

3. Establish lesser technical requirements for small entities.

The FAA concludes that the option to exclude small entities from all the requirements of the proposal is not justified. If small entities were excluded the intended safety improvements would be forfeited.

The FAA also considered options that would lengthen the compliance period for small operators. The FAA believes that the requirement, as proposed, would place a modest burden on small entities with respect to time constraints. Small entities would have sufficient time from the effective date of the rule to complete implementation work. Further time extensions would only provide modest cost savings and leave the system safety at risk.

The FAA considered establishing lesser technical requirements for small entities. However, the FAA believes that this would result in a lower level of safety than would the implementation of the proposal. The FAA believes that the greatest safety benefits would come from a common certification rule for all manufacturers.

The FAA concludes that the current proposal is the preferred alternative because the current proposal provides for a common certification system for all propeller manufacturers.

In conclusion, as only one small entity would be affected there are not a substantial number of small entities. Therefore, the FAA certifies that this rule will not have a significant economic impact on a substantial number of small entities. The FAA solicits comments regarding this determination.

The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it will accept European standards as the basis for U.S. regulations.

Title II of the Unfunded Mandate Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector. The FAA currently uses an inflation-adjusted value of $128.1 million in lieu of $100 million.

This proposed rule does not contain such a mandate. The requirements of Title II do not apply.

The FAA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action would 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. Therefore, we determined that this proposed rulemaking would not have federalism implications.

FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined that this proposed rule qualifies for the categorical exclusion identified in Chapter 3, paragraph 312d and involves no extraordinary circumstances.

The FAA has analyzed this NPRM under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). We have determined that it is not a “significant energy action” under the executive order because it is not a “significant regulatory action” under Executive Order 12866, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend parts 23, 25, 33, and 35 of Title 14 Code of Federal Regulations as follows:

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also review the docket using the Internet at the Web address in the ADDRESSES section.

Privacy Act: Using the search function of our docket Web site, anyone can find and read the comments received into any of our dockets, including the name of the individual sending the comment (or signing the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78) or you may visit http://dms.dot.gov.

Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

If you want the FAA to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

You can get an electronic copy using the Internet by:

(1) Searching the Department of Transportation's electronic Docket Management System (DMS) Web page ( http://dms.dot.gov/search );

(2) Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/ ; or

(3) Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html.

You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make sure to identify the docket number, notice number, or amendment number of this rulemaking.

U.S. and European aircraft engine regulations differ in several areas including engine controls. Harmonization of these differences benefits industry and regulators because of the lower costs associated with one set of engine control regulations.

The FAA, in cooperation with the Joint Aviation Authorities (JAA), the European rulemaking authority before EASA, established an international engine certification study group to compare part 33 with the Joint Aviation Requirements—Engines (JAR-E), the European requirements for engines. As a follow-on, the Aviation Rulemaking Advisory Committee, through its Engine Harmonization Working Group (EHWG), looked at harmonizing the engine control requirements of part 33 and the JAR-E.

In response to EHWG recommendations, the JAA published a Notice of Proposed Amendment (NPA), NPA-E-33 Rev 0, on April 20, 2001. JAA's proposed amendment contained rules and advisory material almost identical to FAA's proposed part 33 changes. Some commenters to this NPA objected that the reliability of aircraft-supplied electrical power should be considered when determining the required degree of protection against failure. Because of these comments, the JAA updated its rulemaking in NPA-E-33 Rev 1. The FAA and the JAA subsequently agreed that the reliability and quality of aircraft-supplied power should be a factor in considering the approval of the engine design. This NPRM reflects this agreement between FAA and the JAA. EASA has adopted this agreement as CS-E (Certification Specifications for Engines) 50(h).

We propose adding new paragraphs (a)(4), (a)(5), (a)(6) and (b)(4) to § 33.5 to require applicants to include additional installation information in their instructions for installation. The requirements in proposed paragraphs (a)(4), (a)(5) and (b)(4) are currently prescribed under § 33.28(a) as part of the control system description. This proposal places these requirements in sections consistent with their intended purpose.

Our proposed § 33.5(a)(6) would require that installation instructions list the instruments necessary for satisfactory control of the engine. It would also require that the limits of accuracy and transient response required for satisfactory engine operation be identified so that the suitability of the instruments as installed can be assessed. Part 33 does not require similar installation information. We would harmonize §§ 33.5(a)(4), (a)(5) and (b)(4) with CS-E 20(d), CS-E 30(b), and CS-E 20(d), respectively. Adding § 33.5(a)(6) would harmonize with CS-E 60(b).

We propose adding a new paragraph (d) to this section. This paragraph would require that the overall limits of accuracy of the engine control system and the necessary instruments, as defined in § 33.5(a)(6), be considered when determining engine performance and operating limitations. Paragraph (d) would harmonize with CS-E 40(g).

We propose a new § 33.27(b) that prescribes requirements for methods, other than engine control methods, for protecting rotor structural integrity during overspeed conditions. These methods would include protection methods, such as blade shedding, currently regulated under the CS-E but not identified under part 33.

We propose changing the title of § 33.28 and the content of its paragraphs. The title would be changed from “Electrical and electronic engine control systems” to “Engine control systems.” Currently, § 33.28 applies only to electrical and electronic engine control systems, while CS-E 50 and associated requirements apply to all types of engine control systems, including hydromechanical and reciprocating engine controls. The new title reflects the proposed revisions to the section which, to harmonize with EASA specifications, would change the scope of the proposed rule to include all types of engine control systems and devices under § 33.28.

Our proposed § 33.28(a) would be titled “Applicability” and would clarify the systems or devices that are subject to § 33.28 requirements.

We propose replacing existing § 33.28(b) with new § 33.28(b), “Validation,” which prescribes requirements for engine control system validation. The new § 33.28(b) consists of new paragraphs (b)(1) and (b)(2).

Our proposed § 33.28(b)(1) requires that applicants demonstrate that their engine control system performs its intended function in the declared operating conditions, including environmental conditions and flight envelope. Part 33 generally requires this showing, but does so nonspecifically. This new specific requirement will clarify the regulation.

The proposed § 33.28(b)(1) requires that the engine control system comply with §§ 33.51, 33.65, and 33.73, as appropriate, under all likely system inputs and allowable engine power or thrust demands. It also requires that the engine control system allow engine power and thrust modulation with adequate sensitivity over the declared range of engine operating conditions. The engine control system also must not create unacceptable power or thrust oscillations.

Proposed § 33.28(b)(1) would harmonize the sections in part 33 that address engine performance and operability requirements with similar requirements in CS-E 50.

Our proposed § 33.28(b)(2) revises requirements located in the existing § 33.28(d). Proposed § 33.28(b)(2) would clarify environmental testing requirements, including those for High Intensity Radiated Fields (HIRF), lightning, and electromagnetic interference (EMI) for the engine control system.

The environmental testing requirements that are part of the proposed § 33.28(b) set the installation limitations. Those limitations are incorporated into the instructions in accordance with § 33.5(b)(4).

We propose to revise § 33.28(c) to clarify the requirements for control transitions when fault accommodation is implemented through alternate modes, channel changes, or changes from primary to back-up systems. Proposed § 33.28(c), titled “Control transitions,” will clarify the need for crew notification if crew action is required as part of fault accommodation.

Our proposed § 33.28(d) would consist of revised control system failure requirements formerly located in § 33.28(c). Proposed § 33.28(d), titled “Engine control system failures,” would consist of four paragraphs: § 33.28(d)(1) would address integrity requirements, such as Loss of Thrust Control (LOTC) requirements consistent with the intended application; § 33.28(d)(2) would require accommodation of single failures with respect to LOTC/LOPC (Loss of Power Control) events; § 33.28(d)(3) would clarify requirements for single failures of electrical or electronic components; and § 33.28(d)(4) would add requirements for foreseeable failures or malfunctions in the intended aircraft installation such as fire and overheat ( i.e. , local events).

We considered using the phrase “essentially single fault tolerant” in proposed paragraph (d)(2) as the standard for measuring the compliance of an applicant's engine control system. We have had extensive discussions with industry about the meaning of “essentially single fault tolerant.” However, in reviewing the meaning of “essentially,” we decided that this term introduces sufficient ambiguity so that the phrase could not serve as the basis for an enforceable standard. We chose, therefore, to remove “essentially” and to reserve to the Administrator the right to define what is meant by “single fault tolerant.” We are preparing an advisory circular to offer guidance regarding what we mean by “single fault tolerant” as used in the regulation.

Our proposed § 33.28(e), titled “System safety assessment,” would require a System Safety Assessment (SSA) for the engine control system. The SSA would identify faults or failures that would have harmful effects on the engine. Proposed § 33.28(e) harmonizes with CS-E 50(d).

Our proposed § 33.28(f), titled “Protection systems,” requires protective functions that preserve rotor integrity. Proposed § 33.28(f)(1) would include the protection requirements of the existing § 33.27(b). Proposed § 33.28(f)(2) adds requirements for testing the protection function for availability. Proposed § 33.28(f)(3) establishes requirements for overspeed protection systems implemented through hydromechanical or mechanical means. Proposed § 33.28(f) harmonizes with CS-E 50(e).

Our proposed § 32.28(g), titled “Software,” would consist of the software requirements for the engine control system currently prescribed under § 33.28(e). We are proposing to revise § 33.28(g) to require that software be consistent with the criticality of performed functions. Proposed § 33.28(g) harmonizes with CS-E 50(f).

Our proposed § 33.28(h), titled “Aircraft-supplied data,” clarifies requirements related to failure of aircraft-supplied data. The revision consists of two new paragraphs that prescribe requirements for single failures leading to loss, interruption, or corruption of aircraft-supplied data or data shared between engines. We propose to modify the current FAA requirement for fault accommodation for loss of all aircraft-supplied data to require detection and accommodation for single failures leading to loss, interruption, or corruption of aircraft-supplied data. This accommodation must not result in an unacceptable change in thrust or power or an unacceptable change in engine operating and starting characteristics. Proposed § 33.28(h) harmonizes with CS-E 50(g).

Our proposed § 33.28(i), titled “Aircraft-supplied electrical power,” clarifies requirements for the response of the engine control system to loss or interruption of electrical power supplied from the aircraft. Proposed § 33.28(i) would apply to all electrical power supplied to the engine control system, including that supplied from the aircraft power system and from the dedicated power source, if required.

We propose to add requirements to § 33.28(i) that represent current industry standard practices but are not in part 33. These include a requirement that the applicant define in the instructions for installation:

1. The power characteristics of any power supplied from the aircraft to the engine control system; and

2. The engine control and engine responses to low voltage transients outside the declared power supply voltage limitations.

This action proposes an additional requirement for a dedicated power source for the control system to provide sufficient capacity to power the functions provided by the control system below idle, such as for the auto-relight function.

With the change in scope of this proposal from electronic engine controls to engine controls, it is not our intent that all electrically powered engine functions be under the § 33.28(i) requirement for a dedicated power source. The loss of some control functions traditionally dependent on aircraft-supplied power continues to be acceptable. The use of conventional aircraft-supplied power for these traditional functions has been acceptable as they, in general, do not affect the safe operation of the engine. Examples include:

• Functions without safety significance that are primarily performance enhancement functions

• Engine start and ignition

• Thrust reverser deployment

• Anti-icing (engine probe heat)

• Fuel shut-off

Our proposed § 33.28(i) harmonizes with CS-E 50(h).

We propose adding a new § 33.28(j), titled “Air pressure signal,” that would add safety requirements for air pressure signals in the engine control system. It will require that applicants take design precautions to minimize system malfunction from ingress of foreign matter or blockage of the signal lines by foreign matter or ice. Our proposed § 33.28(j) harmonizes with CS-E 50(i).

Our proposed § 33.28(k), “Automatic availability and control of engine power for 30-second OEI rating,” prescribes requirements for engines with One-Engine-Inoperative (OEI) capability. This proposal, formerly located in § 33.67(d), prescribes a control function that more properly is located in the “Engine control systems” section. We propose moving the contents of § 33.67(d) to 33.28(k). Our proposed § 33.28(k) harmonizes with CS-E 50(j).

Our proposed § 33.28(l), titled “Engine shutdown means,” requires that the engine control system provide a rapid means of shutting down the engine. Proposed § 33.28(l) harmonizes with CS-E 50(k).

Our proposed § 33.28(m), titled “Programmable logic devices,” adds safety requirements for programmable logic devices (PLD) that include Application-Specific Integrated Circuits and programmable gate arrays. We decided to propose new PLD requirements separate from software requirements, although the requirements are similar, because PLD's combine software and complex hardware. The proposed rule would require that development of the devices and associated encoded logic used in their design and implementation be at a level equal to the hazard level of the functions performed via the devices. Proposed § 33.28(m) harmonizes with CS-E 50(f).

We propose revising § 33.29 by adding new paragraphs (e) through (h) to harmonize with CS-E 60, Provision for Instruments.

The new § 33.29(e) would require that applicants provide instrumentation necessary to ensure engine operation in compliance with the engine operating limitations. When instrumentation is necessary for compliance with the engine requirements, applicants must specify the instrumentation in the instructions for installation and include the instrumentation as part of the engine type design. The proposed § 33.29(e) harmonizes with CS-E 60(a).

The existing § 33.29(a) requirement addresses the prevention of incorrect connections of instruments only. Proposed § 33.29(f) would require that applicants provide a means to minimize the possibility of incorrect fitting of instruments, sensors and connectors. Proposed § 33.29(f) harmonizes with CS-E 110(e).

Currently, part 33 does not address requirements for sensors and associated wiring and signal conditioning segregation. Proposed § 33.29(g) would reduce the probability of faults propagating from the instrumentation and monitoring functions to the control functions, or vice versa, by prescribing that the probability of propagation of faults be consistent with the criticality of the function performed. Proposed § 33.29(g) harmonizes with CS-E 60(c).

Our proposed § 33.29(h) would add new requirements for instrumentation that enables the flight crew to monitor the functioning of the turbine case cooling system. Proposed § 33.29(h) harmonizes with CS-E 60(e).

We propose revising the title of § 33.53 from “Engine component tests,” to “Engine system and component tests.” The revised title would better identify reciprocating engine control system tests that may be conducted under this paragraph. Proposed § 33.53(a) provides for systems tests if required.

We propose changing the title of § 33.91 from “Engine component tests” to “Engine system and component tests.” The revised title would better identify engine control system tests, for example, system validation testing, that may be required under this paragraph. Our proposed § 33.91(a) would provide for systems tests if required.

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, including minimum safety standards for aircraft engines. This proposed rule is within the scope of that authority because it updates existing regulations for aircraft engine control systems.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We determined that this proposed rule does not impose any new information collection requirements.

In keeping with U.S. obligations under the Convention on International Civil Aviation, we comply with International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. We determined that ICAO has no Standards or Recommended Practices that correspond to these proposed regulations.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 directs that each Federal agency propose or adopt a regulation only upon a determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act also requires agencies to consider international standards and, where appropriate, use them as the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule.

Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect, and the basis for it, be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this proposed rule. The reasoning for this determination follows.

The proposed rule reflects current practices and harmonizes FAA airworthiness standards for aircraft engine control systems with similar requirements recently adopted by EASA. These proposed changes to engine control system requirements would establish uniform standards for all engine control systems for aircraft engines certificated by both U.S. and European countries and would simplify airworthiness approvals for import and export. Similar international requirements would reduce duplicative testing which would reduce certification costs.

An engine control system is any system or device that controls, limits, or monitors engine operation and is necessary for the continued airworthiness of the engine. This implies consideration of all control system components including the electronic control unit(s), fuel metering unit(s), variable-geometry actuators, cables, wires, and sensors.

An engine control system may be composed of several subsystems which can include: (1) Fuel control, (2) spark control, (3) turbocharger wastegate control, (4) throttle control, and (5) propeller governor. A turbine FADEC (Full Authority Digital Engine Control) system typically controls the fuel, the variable pitch vanes, the engine operability bleeds, the temperature management system and, most recently, the ignition and other starting elements. A reciprocating engine could be considered to have a FADEC system if any of the subsystems are controlled electronically over their full range of operation.

The proposed regulation covers the main engine control system as well as the protection systems, for example, overspeed, over-torque, or over-temperature. Engine monitoring systems are covered by this proposed regulation when they are physically or functionally integrated with the control system and they perform functions that affect engine safety or are used to effect continued-operation or return-to-service decisions.

The purpose of § 33.28 is to set objectives for the general design and functioning of the engine control system. These requirements are not intended to replace or supersede other requirements, such as § 33.67 for the fuel system. Therefore, individual components of the control system, such as alternators, sensors, actuators, should be covered, in addition, under other part 33 paragraphs such as § 33.53 and § 33.91 as appropriate.

Although the proposed rule would cover all types of engine control systems (including hydromechanical and reciprocating engine controls), it would not cover one particular simple electro-mechanical device—the conventional magneto—because that device is not a true control component. On the other hand, the proposed rule would cover subsystems controlled by a FADEC because this is considered part of the engine control system. FADECs are standard on virtually all new turbine engines, and are now being put on some new reciprocating engines also.

This proposal would lower costs by establishing uniform certification standards for all engine control systems certified in the United States under part 33 and in European countries under EASA regulations, simplifying airworthiness approvals for import and export. In addition, a potential for increased safety lies in having more clear and explicit regulations, but the FAA was unable to quantify this benefit. The FAA concludes that the benefits of this rule justify the costs. The FAA requests comments with supporting justification about the FAA determination of minimal impact.

The FAA has, therefore, determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

The FAA believes that this proposed rule would not have a significant economic impact on a substantial number of small entities because only one U.S. engine manufacturer meets the definition of small business contained in the Small Business Administration's small business size standard regulations. Therefore, the FAA certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities. The FAA solicits comments regarding this determination.

The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this rulemaking and determined that it uses European standards as the basis for U.S. regulations.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $128.1 million in lieu of $100 million.

This proposed rule does not contain such a mandate. The requirements of Title II do not apply.

The FAA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. We determined that this action would 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, and therefore would not have federalism implications.

FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. We determined that this proposed rulemaking action qualifies for the categorical exclusion identified in Chapter 3, paragraph 312d and involves no extraordinary circumstances.

The FAA has analyzed this NPRM under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). We determined that it is not a “significant energy action” under the executive order because it is not a “significant regulatory action” under Executive Order 12866, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend chapter I of Title 14, Code of Federal Regulations, as follows:

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

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-27532; Directorate Identifier 2007-CE-021-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued AD No. 2007-0031, dated February 9, 2007 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products.

The MCAI requires:

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

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

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 proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a Note within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 60 products of U.S. registry. We also estimate that it would take about 5 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour.

Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $24,000, or $400 per product.

In addition, we estimate that any necessary follow-on actions would take about 13 work-hours and require parts costing $125 for a cost of $1,165 per product. We have no way of determining the number of products that may need these actions.

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

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

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would 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 proposed regulation:

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

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

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

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

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

Today's joint force combat operations require highly trained, experienced and motivated troops. We are fortunate that the All Volunteer Force of today is comprised of individuals who fit the stringent requirements needed for success on the battlefield. The military has seen a lot of changes since it became an All Volunteer Force in 1973. The technological advances over the ensuing 34 years have made remarkable transformations to the capabilities of the Armed Forces.

These advances would not have been as easily attained if it were not for the All Volunteer Force. The members of this force have higher levels of aptitude, stay in the military longer, and as a consequence, perform better than their conscript predecessors. During the Vietnam era draft, 90 percent of conscripts quit after their initial two-year hitch, whereas retention of volunteers is five-times better today—about half remain after their initial (four-year) military service obligation. Said another way, two thirds of the military was serving in its first two years of service prior to 1973, where as today, the number is about one-fourth.

Today's Service members are still younger than the population as a whole, with 46 percent 25 years old or less. Thirty eight percent of these young Service members 25 years old or less are married and 21 percent of them have children. This is compared with approximately 13 percent of their contemporaries in the U.S. population 18 through 24 who are married (2000 Census). The majority of recruits come to the military from High School, with little financial literacy education.

The initial indoctrination provided to Service members is critical, providing basic requirements for their professional responsibilities and to successfully adjust to military life. Part of this training is in personal finance which is seen as an integral part of their responsibilities. The Department continues to provide them messages to save, invest and manage their money wisely throughout their career.

Service members and their families are experiencing the sixth year of the Global War on Terror. The Department views the support provided to military families as essential to sustaining force readiness and military capability. From this perspective, it is not sufficient for the Department to train Service members on how best to use their financial resources—financial protections are an important part of fulfilling the Department's compact with Service members and their families.

The Department of Defense (DoD) believes that assisting Service members with their family needs is essential to maintaining a stable, motivated All Volunteer Force. As part of the President's February 2001 call to improve the quality of life for Service members and their families, the Department of Defense developed a social compact reflecting the Department's commitment to caring for their needs as a result of their commitment to serving the Nation. The social compact involved a bottom-up review of the quality-of-life support provided by the Department, which articulated the linkage between quality-of-life programs as a human capital management tool and the strategic goal of the Department—military readiness.

The social compact is manifested in the programs the Department of Defense provides to support the quality of life of Service members and their families. This social compact includes personal finances as an integral part of their quality of life. The Department equates financial readiness with mission readiness. When asked in 2005 on a blind survey to rate the stressors in their lives, Service members (as a group) rated finances as a more significant stressor than deployments, health concerns, life events, and personal relationships. They only rated work and career concerns as a higher stressor in their lives. As part of the social compact for financial readiness, the Department established a strategic plan to:

• Reduce the stressors related to financial problems—the stress associated with out of control debt can impact the performance of Service members and have major negative impact on family quality of life.

• Increase savings—establishes personal and family goals, motivates Service members to control their finances and live within their means.

• Decrease dependence on unsecured debt—reduces the stressors and vulnerabilities associated with living from paycheck to paycheck.

• Decrease the prevalence of predatory practices—provide protection from financial practices that seek to deceive Service members or take advantage of them at a time of vulnerability.

The Department has taken action on obtaining these outcomes by providing financial awareness, education and counseling programs; by advocating the marketplace deliver beneficial products and services; and by advocating for the protection for Service members and their families from harmful products and practices.

The Military Services are expected to provide instruction and information to fulfill the needs of Service members and their families. To this end, the Department established policy in November 2004: DoD Instruction 1342.27, Personal Financial Management Programs for Service Member.

As outlined in the Government Accountability Office (GAO) Report 05-348, the Military Services have their own programs for training first-term Service members on the basics of personal finance. These programs vary in terms of venue and duration; however, all Military Service programs must cover the same core topics to the level of competency necessary for first term Service members to apply basic financial principles to everyday life situations.

The Department has tracked the ability of Service members to pay their bills on time as a reflection of their competency and ability to apply basic financial principles. Since 2002, self reported assessments through survey data have shown Service members are paying better attention to keeping up with their monthly payments.

To assist the Military Services in delivering financial messages, the Department established the Financial Readiness Campaign in May 2003, which has gathered the support of 26 nonprofit organizations and Federal agencies. In the past three years, Service members have benefited from the materials and assistance from over 20 active partnerships. These partnerships are on-going and have been developed to allow the Military Services to choose which partner programs can best supplement the education, awareness and counseling services they provide. The materials and services are not mandatory and do not take the place of the programs offered by the Military Services.

Aspects of predatory lending practices are covered as topics in initial financial education training and in refresher courses offered at the military installations. The Military Services provide over 10,000 classes and train approximately 24 percent of the force, as well as nearly 20,000 family members on an annual basis. These classes are primarily conducted on military installations located in the United States.

In addition to these classes, Financial Readiness Campaign partner organizations conduct over a thousand classes for informing over 60,000 Service members and family members per year. These classes are primarily provided by the staff of banks and credit unions located on military installations (military banks and defense credit unions). These institutions provide these classes as part of their responsibilities outlined in the DoD Financial Management Regulation. Other organizations involved include local Credit Counseling Agencies, State financial regulatory agencies, the InCharge Institute and the NASD Foundation.

The Military Service financial educators, along with partner organizations, also distributed over 200,000 brochures and pamphlets, with the Military Services and Federal Trade Commission the primary provider of these products. In addition, Military Money Magazine has run several articles, to include two cover article editions on predatory lending. The free distribution of the magazine is through military commissaries, family support centers, other service agencies on the installation, residents on the military installations and home addresses off the installation upon request. The distribution is approximately 250,000 per quarter.

As identified in GAO Report 05-349, DOD's Tools for Curbing the Use and Effects of Predatory Lending Not Fully Utilized, April 2005, the review of practices that are considered predatory has not benefited from a consistent definition that has been universally applied. However, sources studying the issue of predatory lending have focused on similar characteristics. GAO Report 04-280, Federal and State Agencies Face Challenges in Combating Predatory Lending, January 2004, said the following:

This definition has been reiterated in the FDIC Office of the Inspector General Audit Report 06-0111, June 2006, which stated:

These same characteristics were also identified in the DoD Report to Congress on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents, August 9, 2006:

While the Report to Congress provides a more expansive definition, there are several commonalities between the definitions listed above:

The Department started collecting information on high cost lending in 2004 as part of the Defense Manpower and Data Center annual surveys of active duty Service members. The survey requested input on payday loans, rent-to-own, refund anticipation loans and vehicle title loans. GAO Report 05-359 focused on these four practices and obtained feedback from “command leaders, [Personal Financial Management] PFM program managers, command financial counselors, legal assistance attorneys, senior noncommissioned officers (pay grades E8 to E9), chaplains, and staff from the military relief/aid societies,” concerning these practices. Input from these individuals, among others was that “The extent to which active duty Service members use consumer loans considered to be predatory in nature and the effects of such borrowing are unknown, but many sources suggest that providers of such loans may be targeting Service members.”

The Report to Congress reviewed five products (payday loans, vehicle-title loans, rent-to-own, refund anticipation loans and military installment loans) identified by installation-level financial counselors (employed as PFM program managers and employed by the Military Aid Societies) and legal assistance attorneys who regularly counsel service members on indebtedness issues. When compared against the common characteristics listed above, the five products reviewed in the Report to Congress measure up somewhat differently:

A major concern of the Department has been the debt trap some forms of credit can present for Service members and their families already burdened with debt and recurring bills. The combination of little to no regard for the borrower's ability to repay the loan, unrealistic payment schedule, high fees and interest and the opportunity to rollover the loan instead of repaying it, can create a cycle of debt for financially overburdened Service members and their families.

Consumer groups, news media, and academics have chronicled concerns about payday loans and the propensity for this lending practice to create a cycle of debt. For example, M. Flannery and K. Smolyk state the following in their June 2005 FDIC Financial Research Working Paper No. 2005-09:

Likewise, vehicle title loans are similarly structured, with potentially similar results. According to a November 2005 report by the Consumer Federation of America, vehicle title loans are generally made for 30 days with high interest/fee structures (average of 295 APR). Limits on title loans vary by State concerning interest rates, duration, rollover allowances and rules on repossessing the vehicle. Only four states cap interest rates at less than 100% APR. In many states these loans can be rolled over by the borrower several times if the borrower is unable to pay the principal and interest when due. If not paid or rolled over, many states allow the creditor to repossess the vehicle and in some states the borrower is not entitled to any portion of the proceeds of the vehicle sale. Loan amounts average 55 percent of the value of the vehicle.

Rent-to-own, refund anticipation loans and some military installment loans present products with high fees and interest. Rent-to-own, which is not covered as credit under the Truth-in-Lending Act (TILA), can represent an expensive alternative to credit when used as a means of purchasing an item. Military installment loans (an installment loan marketed primarily or exclusively to the military) can represent a high cost over the duration of the loan, particularly when other non TILA fees and charges are added to the interest rate. Tax refund anticipation loans also cost Service members and their families high fees when they can easily obtain rapid returns through electronic filing with the assistance of their installation legal assistance office.

Refund anticipation loans (RALs) provide a limited time advantage (approximately 10 day reduction in the time required to receive a tax return) in comparison to the cost involved ($39-$100). As a consequence, the annual percentage rate for this credit can be triple digit. A study by Gregory Elliehausen of the Credit Research Center (CRC) (Monograph #37, April 2005) showed that more individuals below 35 years old use RALs (61 percent) as compared to the percentage under 35 years old who head households (28.6 percent). Seventy nine percent of Service members are age 35 or below.

The rationale for a borrower wanting to obtain a RAL vary; however, the CRC study showed that 41 percent of borrowers obtaining RALs did so to pay bills, 21 percent due to unexpected expenditures, 15 percent to make purchases, 15 percent because of impatience and 7 percent for other reasons. Less than one percent said they obtained a RAL to pay for tax preparation. Through the Armed Forces Tax Council, in collaboration with the IRS, Volunteer Income Tax Assistance (VITA) sites are located on all active duty military installations to assist Service members and their families with preparation and electronic filing of their tax returns.

As with other forms of short term high cost credit, the Department would prefer Service members and their families to consider low cost alternatives to resolve their financial crisis with the perspective that they should establish a more solid footing for their personal finances. The CRC study showed similar patterns of use of credit and debt burden between users of RALs and payday loans. Additionally, through education the Department attempts to persuade Service members that planning is an important part of managing finances, and a high cost 10 day loan does not reinforce this lesson.

The five products reviewed in the Report to Congress represent two kinds of financial problems for Service members and their families: Those products that contribute to a cycle of debt (payday and vehicle title loans) and those products that can cost the military consumer high fees and interest costs (rent-to-own, installment loans and refund anticipation loans). Cycle of debt represents a more significant concern to the Department than the high cost of credit.

The Department would prefer Service members and their families who experience financial duress seek out the alternatives available through Military Aid Societies, military banks and defense credit unions rather than credit products that would more likely mire them in a cycle of debt. These institutions have established programs and products designed to help Service members and their families resolve their financial crises, rebuild their credit and establish savings.

The Military Aid Societies are strong advocates for limiting the cost associated with credit and for creditors to develop alternative products for Service members who cannot otherwise qualify for loans. Within their own resources they provided $87.3 million in no cost loans and grants to Service members and their families in 2005. These funds were provided for emergencies and essentials, such as rent, food, and utilities.

Banks and credit unions located on military installations also understand the need to provide products and services that can help those who mishandle their finances and who may need remedial assistance. A review of on-base financial institutions surfaced 24 programs on 51 military installations in the U.S. providing alternative small loan products designed to help Service members and their families to recover from their financial problems. These financial institutions supplement the emergency funding made available by the nonprofit Military Aid Societies that provide grants and no-interest loans to needy Service members and families.

These banks and credit unions provide low denomination loans at reasonable annual percentage rates designed to assist their members who need to get out of high cost credit and into more traditional lending products. Financial counseling and education are often prerequisites for the short term loan and some institutions have attached a requirement to develop savings as part of the loan.

Many of these military banks and credit unions use their products and services to maintain a watchful eye over their members to ensure they do not abuse services designed to assist them, such as overdraft protection, which if used on a chronic basis, can become very expensive and propel someone already overextended into a deeper spiral of debt. Representatives of the Association of Military Banks of America had an opportunity to showcase their alternative small loan products at a FDIC Conference held in December of 2006. FDIC hosted this conference to spotlight the need to develop more of these types of products for Service members and their families and several banks and credit unions described above that currently provide such favorable credit to Service members participated in the conference.

The Department has found that it has a small window of opportunity to inform and convince young Service families of what may constitute a beneficial product that can fit their circumstances, particularly when they receive many messages to the contrary. Nonetheless, the Department has attempted to use the processes and resources available within the Department to curb the prevalence of high cost short term lenders, particularly those that can contribute to a spiral of debt.

Predatory lenders have seldom been placed off-limits, primarily because the process associated with placing commercial entities off-limits, through the review and recommendations of the Armed Forces Disciplinary Control Board (AFDCB), is not well suited to this purpose. The AFDCB, covered by Joint Army Regulation 190-24, is designed to make businesses outside of military installations aware that their practices cause morale and discipline concerns and to offer these businesses an opportunity to modify their practices to preclude being placed off-limits. When the commercial entity refuses to comply, the AFDCB recommends to the regional command authority to place the business off-limits for all Service members within the region (regardless of Service).

Normally concerns are raised when a business has demonstrated practices that violate state or federal statute, and remediation involves the business curtailing these illegal practices. In the case of the loan products listed above, businesses usually offer their services within the legal limits. Since the AFDCB takes on businesses one at a time, bringing a lender under scrutiny has been difficult if the lender is complying with the same rules as its competitors. Additionally, the magnitude of mediating with the number of outlets surrounding military installations has exacerbated the process. As illustrated in research by Professor Steven M. Graves and Professor Christopher L. Peterson published in the Ohio State Law Journal, Volume 66, Number 4, 2005, “Predatory Lending and the Military: The Law and Geography of ‘Payday’ Loans in Military Towns,” there are large numbers of payday lenders which can be found in communities around military installations.

Also, without appropriate authority, commanders and AFDCBs have difficulty citing lenders offering payday, auto title and refund anticipation loans as needing to take remedial action. In States that authorize these types of loans, AFDCBs must establish their own local guidelines in addition to the provisions of Federal and State law, ensure all affected businesses are aware of these new rules, and then require these businesses to comply.

The Department has considered establishing guidelines that would ameliorate the concerns posed by lenders characterized above, but establishing these policies within DoD poses legal problems and raises the potential for litigation against the Department. Prior to the Talent-Nelson Amendment of the John Warner National Defense Authorization Act of 2007 (10 U.S.C. 987), there has not been any established authority for DoD to make rules governing credit offered by off-base private businesses. Commercial businesses offering these loans could view DoD rules as restrictions outside of the existing statutes and policies governing these entities and burdens provided without sufficient statutory authority to establish rules governing their businesses. Without sufficient authority, the Department would have difficulty making “off limits” declarations enforceable and could lead to legal action.

As State governments have considered restricting or controlling payday lending, the Department has provided information concerning this issue and has extended its support for these measures to the extent that these provisions protect Service members and their families. Internet lenders claim jurisdiction in States with lax protections and unlimited rates and often attempt to bypass the State credit, usury or payday loan laws of the State where the borrower receives the loan. State regulators have successfully enforced home-State law against Internet payday lenders making loans to consumers in their States in Colorado, New York, Massachusetts, Kansas, Pennsylvania, and the District of Columbia.

As stated above, the Department will continue to provide education, awareness and counseling programs to influence skills and attitudes towards managing personal resources wisely. There still remains a gap between the opportunity to influence a young Service member or family concerning the best way to manage their finances, and the level of experience and capability necessary to be successful. The Department has a limited opportunity to impress upon these young people the importance of managing their resources, and does not have sufficient control over the behavior of Service members and their families to preclude them taking on financial risks that can impact not only their quality of life, but also the mission performance of Service members.

The Department will continue to send Service members messages that they and their families need to manage their resources wisely for their own benefit and to maintain personal readiness. The Department's call for responsibility competes with market messages from the sub-prime financial industry to get cash now for purchases, vacations, and paying bills. Their marketing stresses the ease and convenience of obtaining these loans, with virtual guarantee of approval. These messages can be particularly alluring to Service members and families already over burdened with bills and debts. A 2006 survey accomplished by the Consumer Credit Research Foundation stated that the primary reason Service members choose payday loans is because they are convenient. Certainly, obtaining “fast cash” from a payday lender is far more convenient than considering uncontrolled debt or addressing inherent overspending that creates situations where sub-prime loans are needed.

Service members have inherently understood that limits on interest rates are appropriate, even if these limits would decrease the availability of credit. When asked in a 2006 survey conducted by the Consumer Credit Research Foundation if Service members strongly/somewhat agree or disagree with the statement: “The government should limit the interest rates that lenders can charge even if it means fewer people will be able to get credit,” over 74 percent of the Service members surveyed agreed with the statement (with over 40 percent strongly agreeing). Similarly when asked their position on the statement “There is too much credit available today,” 75 percent of Service members not using payday loans and 63 percent of Service members using payday loans agreed (with 51 percent of non users strongly agreeing).

After both the Congressional Banking and Armed Service Committees reviewed the issue of predatory lending directed at members of the Armed Forces and their dependents, the Armed Service Committees included § 670 in the John Warner National Defense Authorization Act for Fiscal Year 2007. The resulting statute, 10 U.S.C. 987, directs the Secretary of Defense to establish policy to implement the provisions of the statute. The Secretary is to accomplish the regulation prior to October 1, 2007, when the statute goes into effect, and to draft the regulation in consultation with the Department of Treasury, Office of the Comptroller of the Currency, Office of Thrift Supervision, Board of Governors of the Federal Reserve System, Federal Trade Commission, Federal Deposit Insurance Corporation, and the National Credit Union Administration. Specifically, section (h)(2) requires the Secretary of Defense to define key terms as part of developing the regulation:

“(A) Disclosures required of any creditor that extends consumer credit to a covered member or dependent of such a member.

(B) The method for calculating the applicable annual percentage rate of interest on such obligations, in accordance with the limit established under this section.

(C) A maximum allowable amount of all fees, and the types of fees, associated with any such extension of credit, to be expressed and disclosed to the borrower as a total amount and as a percentage of the principal amount of the obligation, at the time at which the transaction is entered into.

(D) Definitions of ‘creditor’ under paragraph (5) and ‘consumer credit’ under paragraph (6) of subsection (i), consistent with the provisions of this section.

(E) Such other criteria or limitations as the Secretary of Defense determines appropriate, consistent with the provisions of this section.”

This broad latitude allows the Department of Defense to determine the scope and impact of the regulation, consistent with the provisions of the statute. These provisions have been established to protect Service members and their families from potentially abusive lending practices and products. The provisions, or terms, of the statute provide several limitations on credit transactions, and the statute allows the Department to focus these limitations on areas that create the most concern.

Through correspondence received from numerous creditors and trade associations representing creditors, the Department has learned of the potential unintended consequences of these limitations that could potentially preclude Service members and their families from receiving a multitude of credit products not determined as harmful. These commenters suggested, as a simple way to limit the potential unintended consequences of the rule and adverse impact on the availability of credit for Service members by regulated depository institutions and their subsidiaries, that the regulations include a complete or limited carve-out from the “creditor” definition of insured depository institutions and their subsidiaries. As described in the section-by-section description that follows, the Department did not specifically propose to exclude any types of lenders from the regulatory definition of “creditor.” The intent of the statute is clearly to apply these limitations so that their impact is upon credit practices evaluated as negative without impeding the availability of credit that is benign or beneficial to Service members and their families. The Department is proposing a regulation it believes is fully consistent with this intent.

QUESTION 1: However, we seek comment on whether the final regulation should exclude regulated banks, credit unions and savings associations and their subsidiaries from coverage by the regulation generally, or in limited circumstances such as in the following circumstances: (1) the depository institutions are subject to supervision and regulation by a federal regulatory agency; (2) the institution extends covered “consumer credit”; (3) the extension of consumer credit by the institution is subject to supervisory guidance by the federal bank regulatory agency that addresses consumer protection, disclosure, and safety and soundness criteria applicable to such lending; and (4) the federal bank regulatory agency agrees to act on matters referred to it by the Department concerning complaints that such lending to a covered member may be inconsistent with the supervisory guidance, applicable law, or is having an adverse effect on military readiness. Would depository institutions find an exclusion that is limited in this manner useful? The Department notes that if the final regulatory definition includes additional limitations on the definition of covered “creditor,” it would not be precluded from expanding that definition in the future as appropriate to address new concerns or changed circumstances.

232.1 and 232.2, Authority, purpose and coverage, and Applicability: No further descriptions provided other than that contained in the regulation.

232.3, Definitions:

In drafting a regulation to implement the statute, the Department has chosen to use the opportunity to define the terms “creditor” and “consumer credit” judiciously, having heard from numerous groups through comments received in response to Federal Register notice DoD-2006-OS-0216, solicited and unsolicited comments and through meetings requested of the Department that applying the provision broadly would create numerous unintended consequences. These unintended consequences would have a “chilling effect” on the availability of consumer credit covered as part of the statute.

In defining the term creditor, the statute provides the following:

“(5) CREDITOR .—The term ‘creditor’ means a person—

(A) who—

(i) is engaged in the business of extending consumer credit; and

(ii) meets such additional criteria as are specified for such purpose in regulations prescribed under this section; or

(B) who is an assignee of a person described in subparagraph (A) with respect to any consumer credit extended.”

Consistent with the statute, the proposed regulation defines “creditor” as any person who extends consumer credit covered by part 232. For this purpose a “person” includes both natural persons as well as business entities, but would exclude governmental entities. Pursuant to the Department's authority to specify additional criteria, a person would be a creditor only if the person is also a “creditor” for purposes of the Truth in Lending Act. For clarity, the Department has implemented the provision covering assignees by including a specific reference to assignees in each section of the regulation that would apply to an assignee, in lieu of including assignees in the definition of “creditor.” See sections 232.4, 232.8 and 232.9.

The definition of consumer credit provided in the statute is as follows:

“(6) CONSUMER CREDIT .—The term ‘consumer credit’ has the meaning provided for such term in regulations prescribed under this section, except that such term does not include (A) a residential mortgage, or (B) a loan procured in the course of purchasing a car or other personal property, when that loan is offered for the express purpose of financing the purchase and is secured by the car or personal property procured.”

This proposed regulation seeks to address the concerns addressed by many institutions and associations that corresponded with the Department by limiting the scope of the products upon which the provisions of the statute would apply. It is clearly the intent of the statute that consumer credit be defined by the Department, as long as it does not include the two listed exemptions. The definition in this proposed regulation clearly excludes these two types of loans and focuses on three problematic credit products that the Department identified in its August 2006 Report to Congress on the Impact of Predatory Lending Practices on Members of the Armed Forces and Their Dependents: payday loans, vehicle title loans, and refund anticipation loans.

With respect to exclusion of “residential mortgages” the proposed regulation clarifies that the exclusion applies to any credit transaction secured by an interest in the borrower's dwelling. Thus, home-purchase transactions, refinancings, home-equity loans, and reverse mortgages would be excluded. Home equity lines of credit are also excluded. In addition, the property need not be the consumer's primary dwelling to qualify for the exclusion. A “dwelling” includes any residential structure containing one to four units, whether or not the structure is attached to real property, and would also include an individual condominium unit, cooperative unit, mobile home, and manufactured home.

The Department's proposed definition of the term “consumer credit” is intended to narrow the regulation's impact to consumer credit products and services that are potentially detrimental and for which there are DoD-recommended, alternative products or services available to Service members and their families. DoD believes that a narrow definition can prevent unintended consequences while affording the protections granted by the statute.

In addition to the above criteria, the Department intends to use the definition of consumer credit to encourage the financial services industry to offer affordable small loans for Service members and their families.

Payday loans have common characteristics that make them detrimental to a Service member's financial well being and inferior to alternative sources of emergency support. These characteristics can exacerbate a cycle of debt, particularly if the borrower is already over-extended through the use of other forms of credit. The proposed regulation defines “Payday loans” based on certain characteristics, in order to distinguish them from other financial products. A payday loan is defined as a closed-end credit transactions having a term of 91 days or less, where the amount financed does not exceed $2,000. The “amount financed” is not defined in this regulation, but must be determined based on the definition of that term in the Federal Reserve Board's Regulation Z, which implements the Truth in Lending Act. In addition, the definition of “payday loan” is limited to transactions where the borrower contemporaneously provides a check or other payment instrument that the creditor agrees to hold, or where the borrower contemporaneously authorizes the creditor to initiate a debit or debits to the covered borrower's deposit account.

Payday loans, otherwise known as deferred presentment loans, are allowed in 39 States as a separate credit product from other forms of credit regulated by Federal or State statute. States authorizing these types of loans require payday lenders to obtain a license to operate within the State. States have defined these products and services, primarily through the basic process used to secure a payday loan, either through holding a check or by obtaining access to a bank account through electronic means. These basic processes have been included as part of the definition of payday loans in the regulation (Section 232.3(c)). Many States have also established limits to the amount that can be borrowed and the duration of the loan as part of the authorized activities of lenders licensed to offer these products and services. A review of State limits for payday loans establishes a foundation for the definition used in this regulation.

The majority of States have a maximum dollar amount, maximum time limits and maximum fees that regulate the product. Six States (New Mexico, Oregon, Texas, Utah, Wisconsin and Wyoming) have no dollar limit on the amount that can be loaned, and nine States (Alaska, Arizona, Idaho, New Mexico, Rhode Island, South Dakota, Virginia, Wisconsin and Wyoming) have no maximum limit established for the duration of a payday loan. Of the States with dollar and duration limits, the maximum amount loaned is $1,000 (Idaho and Illinois) and the maximum duration of a loan is 180 days (Ohio). The average dollar limit is $519 and the average duration limit is 46 days.

Payday loans offered over the internet often originate in States with no limits on fees or maximum loan amounts. A survey of Web sites offering payday loans indicates $1,500 as generally the maximum amount loaned. A review of sites marketing “Military Payday Loans” refer to loans of up to 40 percent of a Service member's take home pay. This amount can vary considerably based on rank, other entitlements, tax withheld and military allotments. For married enlisted Service members in the grade of E-6 and below (no deductions for taxes or other allotments), the proposed limit would cover a loan made for 40 percent of take home pay. The limits established in the definition for payday loans reflect the maximum duration and amount anticipated for loans based on current State practices, to include internet payday loans originating from locations without limits. QUESTION 2: The Department seeks comments concerning whether the duration limit and monetary limit on the amount of the loan included in the definition of payday lending creates any unintended consequences for other credit products .

The definition provided in 232.3(b)(1)(A)(ii) includes the following statement: “This provision does not apply to any right of a depository institution under statute or common law to offset indebtedness against funds on deposit in the event of the covered borrower's delinquency or default.” This exemption only applies if the depository institution has a right of offset under State or other applicable law.

As previously stated, the Department's intention is that the definition of payday loans does not impede creditors providing alternatives to payday loans with high fees. The Department's August 2006 report to the Congress describes a variety of affordable credit products that banks and credit unions located on military installations offer to members of the armed services. Such loans generally had annual percentage rates (APRs) for Truth in Lending Act purposes of 18% or less. Because the loans may be for a small dollar amount, any flat fee charged by the lender in connection with originating the loan could cause the Military Annual Percentage Rate (MAPR), defined by the proposed regulation, to exceed 36% even though the interest rate may be much lower.

The Department believes that vehicle title loans meet the proposed definition of consumer credit, and that subjecting them to the proposed rule is consistent with the Department's intent in developing the regulation. The definition for “vehicle title loans” limits the rule's coverage to loans of 180 days or less. Many States have not established statutes overseeing these loans. A 2005 survey of States conducted by the Consumer Federation of America (CFA) found that, of the 16 States authorizing vehicle-title lending, 10 require 30 day or one month term limits (with authorized renewals or extensions), one State allows up to 60 days (with 6 renewals), one State requires installments and four States do not establish term limits. QUESTION 3: The Department seeks comments as to whether the limits established for vehicle title loans for duration of the loan included as part of the definition cause any unintended consequences for other credit products .

The Department believes that covering RALs is consistent with the intent of the Department's proposed regulation. RALs can also be defined to limit unintended consequences and refunds can be provided expeditiously. There have been only a few States that have developed statutes concerning RALs. Connecticut is the only state that has established a rate cap, and prohibit transactions where the APR exceeds 60 percent. Other states, such as California, Washington, Oregon and Nevada have established statutes specifying disclosure requirements for RALs.

The Department is interested in ensuring that lenders continue to offer responsible, small-dollar loan products that meet the credit needs of service members and their families. QUESTION 4: Accordingly, the Department solicits comments on regulatory approaches that would encourage creditors to offer affordable, small-dollar, short-term loans to Service members and their dependents. For example, should transactions that would otherwise be covered as payday loans be exempt from coverage under these rules if the MAPR is less than 24% MAPR or some other rate specified in the rules? Would a similar rule be appropriate for vehicle-title loans or tax refund anticipation loans? Are there other approaches that DoD should consider?

The definition of MAPR creates a distinctive percentage rate that reflects the provisions of the statute. The MAPR does not include fees imposed for unanticipated late payments, default, delinquency or a similar occurrence, because such fees are imposed as a result of contingent events that may occur after the loan is consummated. Thus, such fees are not included in the computation of the maximum 36% MAPR cap imposed by these rules. QUESTION 5: The Department solicits comment on whether there are other fees that should be expressly excluded for the same reason .

232.4, Terms of consumer credit extended to covered borrowers: This section implements the statutory prohibition limiting the amount that creditors may charge for extensions of consumer credit to covered borrowers. The proposed rule mirrors the statutory language. This section also applies to “assignees” consistent with the statutory definition of “creditor.”

232.5, Identification of covered borrower:

The Department has received several comments expressing concern over the potential difficulty in identifying a covered borrower, particularly in light of the penalties for failing to provide the statutory protections to a covered borrower. While DoD recognizes this concern, the Department would emphasize that identifying the covered borrower is only relevant in the context of transactions defined by the regulation as consumer credit (for payday loans, vehicle title loans and refund anticipation loans).

The Department's intent is to balance protections for covered borrowers (according to the statute) and protections for creditors. The Department understands creditors may otherwise decline offering beneficial credit products to covered borrowers as a result of concerns over penalties. To achieve an appropriate balance, the Department has proposed a safe harbor, under which the creditor may require the applicant to sign a statement declaring whether or not he or she is a covered borrower (using the definition from the statute). If required by the creditor, this declaration provides a “safe harbor” for the creditor to prevent inadvertently violating the statute by failing to recognize a covered borrower.

There is one caveat to this “safe harbor” provision. If the loan applicant signs a declaration that denies being a covered borrower, but the creditor obtains documentation as part of the credit transaction reflecting that the applicant is a covered borrower (such as, a current military leave and earning statement as proof of employment, or a tax filing that takes advantage of a specific tax provision designed to benefit the military), the applicant's declaration would not create a safe harbor for the creditor. In such cases creditors should seek to resolve the inconsistency, but if they are unable to do so, they may avoid any risk of noncompliance by treating the applicant as a covered borrower based on the documentation or by declining to extend credit due to the inability to verify information provided in the borrower's signed declaration.

This caveat is being included to prevent creditors from using the declaration to allow covered borrowers to waive their right to the protections provided by the regulation. This may occur when the creditor recognizes the applicant is a covered borrower, as a result of the documents presented as part of the credit transaction. The intent of this caveat is not to hold the creditor accountable for false statements made by an applicant when there is no indication through the credit transaction that the applicant is a covered borrower.

The opposite situation, where an applicant claims to be a covered borrower without presenting proof of his or her status does not require further validation by the creditor. However, creditors have the option of verifying the applicant's status as a covered borrower using several sources of information, but they are not required to do so. Thus, creditors may request applicants to provide proof of their current employment and income, for example by requesting from service members a copy of the most recent month's military leave and earning statement. Creditors may also request service members or dependents to provide a copy of their military identification card.

These sources, however, might not always be determinative. For example, in some a cases a leave and earnings statement might not reflect a recent change in the applicant's active duty status. Military identification cards, that are the same as identification cards carried by members of the active component, are issued to members of the National Guard and the Reserve regardless of their duty status. Hence, the proposed regulation states “[u]pon such request, activated members of the National Guard or Reserves shall also provide a copy of the military orders calling the covered member to military service and any orders further extending military service.” This would also be the case for their dependents. The proposed rule does not provide a safe harbor to creditors in the situation described in this paragraph.

It is the Department's understanding that providing proof of employment is a prerequisite to receiving a payday loan or a vehicle title loan. The military leave and earning statement is the document that provides validation of employment. There are several tax provisions which are directed toward assisting the military. If the tax preparer includes these provisions as part of the tax return, the creditor should be made aware of this disclosure in order to validate the status of the applicant prior to processing the application for a refund anticipation loan. QUESTION 6: The Department would like feedback on the creditor's involvement in tax filing aspects of a refund anticipation loan .

The Department intends to provide access to a database to creditors to validate the status of an applicant. This arrangement is currently available to creditors to validate the active duty status of Service members as part of implementation of benefits authorized by the Service Members Civil Relief Act ( https://www.dmdc.osd.mil/scra/owa/home ). The proposed database will include the status of covered borrowers and can be used to resolve questions creditors may have about the status of an applicant who denies being a covered member and yet presents information during the credit transaction that is contrary to this declaration. In these situations, the database would provide the most accurate verification of the status of the applicant, to include activated members of the National Guard and Reserve and their dependents.

QUESTION 7: Since this issue is critical to the success of the regulation, and also protecting the reputation of the creditor, the Department solicits further comment on the proposed “safe harbor” concept and the methodology proposed to implement the intended balance in approach to identification .

232.6, Mandatory disclosures:

Section 232.6 describes the disclosures that must be provided to covered borrowers before they become obligated on a consumer credit transaction, which includes the new disclosures established under 10 U.S.C. 987 but also includes disclosures that creditors are already required to provide pursuant to the Federal Reserve Board's Regulation Z, which implements the Truth in Lending Act (TILA). Regulation Z contains certain requirements pertaining to the format of the TILA disclosures for closed-end credit transactions, including a requirement that they “shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related” to the disclosures required under Regulation Z. The Department intends that the disclosures required under this proposal be provided consistent with the format requirements of Regulation Z. Accordingly, the covered borrower identification statement described in § 232.5 and the disclosures provided pursuant to § 232.6(a)(1), (3), and (4) should not be interspersed with the TILA disclosures.

The general rule is that disclosures required by § 232.6(a)(1), (3), and (4) must be provided orally as well as in writing. However, in credit transactions entered into by mail or on the internet, a creditor complies with this requirement if the creditor provides covered borrowers with a toll-free telephone number on or with the written disclosures and the creditor provides oral disclosures when the covered borrower contacts the creditor for this purpose.

As with identification of the covered borrower, the Department has received several comments about potential disparities in disclosures required by this regulation as opposed to TILA, as well as the difficulty of potentially presenting disclosures orally under part 232 when an offer is made through the mail or over the internet. QUESTION 8: The Department requests comment on whether the proposed rule for providing certain disclosures orally adequately addresses the compliance difficulties associated with the statutory requirements for oral disclosures, or whether another approach is more appropriate .

As with other aspects of the statute, the Department's intention has been to develop a regulation that is true to the intent of the statute without creating a system that is so burdensome that the creditor cannot comply. The Department also recognizes the potential confusion inherent in mandating the disclosure of two annual percentage rates (the MAPR required by this regulation and the APR required by TILA). QUESTION 9: DoD therefore seeks comments on this proposed requirement and invites suggestions on alternative approaches .

232.7, Preemption: The proposed regulation would implement the statutory provision. Although revisions have been made to the statutory language for clarity, no substantive change is intended.

232.8, Limitations:

Section 232.8(a) implements the statutory provision in 10 U.S.C. 987(e)(1), which prohibits a creditor from extending consumer credit to a covered borrower in order to roll over, renew, or refinance consumer credit that was previously extended by the same creditor to the same covered borrower. The proposed regulation includes a limited exception to this prohibition, however, to permit workout loans and other refinancings that may benefit the borrower. QUESTION 10: The Department solicits comment on whether it can or should adopt this approach.

QUESTION 11: Assuming the final rule permits a creditor to roll over, renew or refinance credit that it previously extended to the same covered borrower in limited circumstances, the Department solicits comment on whether it can and should also adopt a rule clarifying that refinancings or renewals of a covered loan require new disclosures under § 232.6 only when the transaction would also be considered a new transaction that requires Truth in Lending Act disclosures. Whether or not new disclosures are required, the Department believes that when a creditor refinances or renews credit that it extended to a covered borrower the limitations on rates and terms apply in the same manner as they would for the original consumer credit transaction.

In some cases, a consumer might become a covered borrower after obtaining consumer credit. When consumers request to refinance or renew a short-term loan, creditors are likely to rely on their original determination that the consumer is not a covered borrower. The Department believes that it would be unnecessarily burdensome to impose a duty on creditors to make a new determination in each transaction given that a change in the borrower's status will infrequently occur with short-term transactions. Accordingly, the proposed rule would not apply when the same creditor extends consumer credit to a covered borrower to refinance or renew an extension of credit that was not covered by Part 232 because the consumer was not a covered borrower at the time of the original transaction.

QUESTION 12: The Department solicits comment on this approach. If such transactions were to be covered, however, should the disclosures in § 232.6 only be required for transactions also deemed to be transactions requiring new disclosures under the Truth in Lending Act?

Subparagraph (a)(3) makes it unlawful for any creditor to extend consumer credit to a covered borrower if the “creditor requires the covered borrower to submit to arbitration or imposes other onerous legal notice provisions.” The requirement is in accordance with 10 U.S.C. 987(e)(3). QUESTION 13: The Department does not have the specific notice provisions or examples to include with this regulation and requests feedback on particular legal notice provisions that should be considered onerous.

Similarly, subparagraph (a)(4) makes it unlawful for any creditor to extend consumer credit to a covered borrower if the “creditor demands unreasonable notice from the covered borrower as a condition for legal action.” This requirement is in accordance with 10 U.S.C. 987(e)(4), and as with onerous legal notice provisions, the Department does not have specific unreasonable notices or examples to include in the regulation. QUESTION 14: Feedback is also requested on this provision and particular notice requirements that should be considered unreasonable.

Section 232.8(a)(5) provides an exemptions to creditors, with respect to consumer credit, to use electronic fund transfer to repay a consumer credit, require direct deposit of the consumer's salary as a condition of eligibility for consumer credit, or take a security interest in funds deposited after the extension of credit in an account established in connection with the consumer credit transactions that are below 36% MAPR. This exemption is made with the recognition that this exemption must be provided in compliance with other applicable statutes governing the use of electronic fund transfers, savings and direct deposit of consumer's salary. The Department believes the flexibility provided by the 10 U.S.C. 987(h)(2)(E) may allow the Department the authority to provide this exemption to facilitate creditors to make alternative loans designed to assist covered borrowers with financial recovery. The Department believes providing this opportunity is important in fulfilling the Department's intended purpose of encouraging creditors to provide alternative loan products. QUESTION 15: The Department solicits comments on whether it can or should adopt this proposed exemption.

Section 8(a)(7) prohibits creditors from charging a prepayment penalty to covered borrowers. The proposed rule does not define what constitutes a prepayment penalty, and the Department expects creditors to rely on existing state and federal laws, as applicable. QUESTION 16: Comment is specifically solicited on this approach.

232.9, Penalties and remedies:

This provision incorporates the penalties and enforcement provisions contained in the statute. Section 9 provides, among other things, that any credit agreement subject to the regulation which fails to comply with this regulation is void from inception. It further provides that a creditor or assignee who knowingly violates the regulation shall be subject to certain criminal penalties.

The statute, however, does not provide explicitly for enforcement of these rules beyond the provisions described above. The Department understands that the federal bank, thrift and credit union regulatory agencies have authority—derived from federal law unique to federally-regulated depository institutions—to enforce these rules with respect to the institutions that they supervise. However, the Department notes that this authority extends to a narrow category of depository institutions that it proposes to cover as “creditors” (See Question 1 above), but it does not extend to other creditors, such as nonbank lenders, that would also be covered creditors and that may be most likely to provide the types of consumer credit restricted by these rules. The Department is concerned that reliance solely on private litigation or criminal prosecution with respect to these other creditors may be insufficient to ensure uniform compliance with these rules with respect to all creditors. QUESTION 17: Comment is requested on all aspects of these issues, and on how to ensure uniform implementation of, and compliance with, the statute by creditors not subject to oversight by the federal bank, thrift, and credit union regulatory agencies.

232.10, Effective date and transition:

The comment period for this proposal is 60 days. The Department intends to review the comments in a timely manner in order to propose and publish final rules on or before September 1, 2007, which is 30 days before the rules would become effective on October 1, 2007. QUESTION 18: Comment is solicited on the proposed timing for the publication of final rules. In particular, the Department requests comment on the ability of covered creditors to comply with the proposed rules by October 1 in light of the specific credit products that would be covered by the rules.

It has been determined that 32 CFR part 232 is not an economically significant regulatory action. The rule does not:

(1) Have an annual effect to the economy of $100 million or more or adversely affect in a material way the economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.

Nevertheless, the proposed regulation was submitted to the Office of Management and Budget for review under other provisions of Executive Order 12866 as a significant regulatory action.

It has been certified that this rule does not contain a Federal mandate that may result in the expenditure by State, local and tribal governments, in aggregate, or by the private sector, of $100 million or more in any one year.

It has been certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities. The North American Industrial Classification (NAIC) for the impacted businesses is 522390—“other financial activities related to credit intermediation.” According to the 2002 Economic Census, there are approximately 5,205 small businesses related to this classification, with 3,000 of these small businesses having less than 5 employees. These 5,205 businesses represent a portion of the 51,725 potential respondents cited in the Paperwork Reduction Act evaluation.

The limitations and disclosures posed by this part impact a small percentage of the market served by the industries covered by this part. For example according to the payday lending trade association, Service members and their dependents represent approximately 1-2 percent of the payday lending market. Thus there is not a significant economic impact on a substantial number of small entities.

Section 232.6 of this proposed rule contains information collection requirements. DoD has submitted the following proposal to OMB under the provisions of the Paperwork Reduction Act (44 U.S.C. Chapter 35). Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of DoD, including whether the information will have practical utility; (b) the accuracy of the estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including the use of automated collection techniques or other forms of information technology.

Title: Mandatory Loan Disclosures as Part of Limitations on Terms of Consumer Credit Extended to Service Members and Their Dependents.

Type of Request: New requirement.

Number of Respondents: 51,725.

Responses per Respondent: 1 per respondent.

Annual Responses: 1,219,035.

Average Burden per Response: 2-2.5 minutes, plus one business day to revise processes and two business days to revise applicable Web sites.

Annual Burden Hours: 182,105.

Needs and Uses: With respect to any extension of consumer credit (including any consumer credit originated or extended through the Internet) to a covered borrower, a creditor shall provide to the member or dependent the following information clearly and conspicuously before consummation of the consumer credit transaction:

(1) The Military Annual Percentage Rate (MAPR) applicable to the extension of consumer credit, and the total dollar amount of all charges included in the MAPR.

(3) A clear description of the payment obligation of the covered member or dependent, as applicable. A payment schedule provided pursuant to subsection (2) satisfies this requirement.

(4) A statement that “Federal law provides important protections to active duty members of the Armed Forces and their dependents. Members of the Armed Forces and their dependents may be able to obtain financial assistance from Army Emergency Relief, Navy and Marine Corps Relief Society, the Air Force Aid Society, or Coast Guard Mutual Aid. Members of the Armed Forces and their family members may request free legal advice regarding an application for credit from a service legal assistance office or financial counseling from a consumer credit counselor.”

The creditor shall provide the disclosures in writing in a form the covered borrower can keep. The creditor also shall provide the required disclosures orally. In mail and internet transactions, the creditor satisfies this requirement by providing a toll-free telephone number on or with the written disclosures that consumers may use to obtain oral disclosures.

Affected Public: Creditors making payday loans, vehicle title loans and refund anticipation loans.

Frequency: One for each loan transaction, which is equal to an occasional frequency .

Respondent's Obligation: Mandatory.

Written comments and recommendations on the proposed information collection should be sent to the Office of Management and Budget, Desk Officer for the Department of Defense, Room 10235, New Executive Office Building, Washington, DC 20503, fax number: (202) 395-6974 with a copy to the Office of the Under Secretary of Defense for Personnel and Readiness (MC&FP), DoD State Liaison Office, Attn: Mr. George Schaefer, 4000 Defense Pentagon, Washington, DC 20301-4000, telephone (703) 588-0876. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice.

You may also submit comments, identified by docket number and title, by the following method:

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

Instructions: All submissions received must include the agency name, docket number and title for this Federal Register document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at http://www.regulations.gov as they are received without change, including any personal identifiers or contact information.

To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Office of the Office of the Under Secretary of Defense for Personnel and Readiness (MC&FP), DoD State Liaison Office, Attn: Mr. George Schaefer, 4000 Defense Pentagon, Washington, DC 20301-4000, or telephone Mr. Schaefer at (703) 588-0876.

Executive Order 13132 requires that Executive departments and agencies identify regulatory actions that have significant federalism implications. A regulation has federalism implications if it has substantial direct effects on the States, on the relationship or distribution of power between the Federal Government and the States, or on the distribution of power and responsibilities among various levels of government.

The provisions of this part, as required by 10 U.S.C. 987, overrides State statutes inconsistent with this part to the extent that these provisions provide different protections for covered borrowers than those provided to residents of that State. As discussed in the section-by-section description of the proposed part, the provisions are more stringent for creditors providing consumer credit to covered borrowers (as defined in the part). In such circumstances, State laws would not be preempted by operation of this part.

In this respect, this proposed part, if adopted, would not affect in any manner the powers and authorities that any State may have or affect the distribution of power and responsibilities between Federal and State levels of government. Therefore, the Department has determined that the proposed part has no federalism implications that warrant the preparation of a Federalism Assessment in accordance with Executive Order 13132.

For the reasons set forth in the preamble, chapter I of title 32, Code of Federal Regulations is proposed to amended by adding part 232 to read as follows:

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD05-07-017), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not plan to hold a public meeting. But you may submit a request for a meeting by writing to the Coast Guard at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

On June 30, 2007, the Rappahannock River Boaters Association (RRBA) will sponsor the “2006 RRBA Spring Radar Shootout”, on the waters of the Rappahannock River near Layton, Virginia. The event will consist of approximately 35 powerboats participating in high-speed competitive races, traveling along a 3-mile strait line race course. Participating boats will race individually within the designated course. A fleet of spectator vessels is anticipated to gather nearby to view the competition. Due to the need for vessel control during the event, vessel traffic will be temporarily restricted to provide for the safety of participants, spectators and transiting vessels.

The Coast Guard proposes to establish temporary special local regulations on specified waters of the Rappahannock River. The temporary special local regulations will be enforced from 11:30 a.m. to 4:30 p.m. on June 30 2007, and will restrict general navigation in the regulated area during the event. Except for participants and vessels authorized by the Coast Guard Patrol Commander, no person or vessel will be allowed to enter or remain in the regulated area. These regulations are needed to control vessel traffic during the event to enhance the safety of participants, spectators and transiting vessels.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary.

Although this regulation will prevent traffic from transiting a portion of the Rappahannock River during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners, marine information broadcasts, and area newspapers, so mariners can adjust their plans accordingly. Additionally, the regulated area has been narrowly tailored to impose the least impact on general navigation yet provide the level of safety deemed necessary. Vessel traffic will be able to transit the regulated area between heats, when the Coast Guard Patrol Commander deems it is safe to do so.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit this section of the Rappahannock River during the event.

This rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for only a short period, from 11:30 a.m. to 4:30 p.m. on June 30, 2007. Although the regulated area will apply to a 3 mile segment of the Rappahannock River immediately east of Layton, Virginia, traffic may be allowed to pass through the regulated area with the permission of the Coast Guard patrol commander. In the case where the patrol commander authorizes passage through the regulated area during the event, vessels shall proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the race course. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this proposed rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation.

Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule. Comments on this section will be considered before we make the final decision on whether to categorically exclude this rule from further environmental review.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD05-07-033), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the address listed under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

On June 30, 2007, the Borough of Westville and Westville Power Boat will sponsor the “Parade of Lights”. There will be a boat parade from the Route 130 Bridge to the Delaware River entrance in Big Timber Creek along with a fireworks display launched from land with a fallout area extending over the navigable waters of Big Timber Creek in the vicinity of Westville, New Jersey. Due to the need for vessel control during the event, vessel traffic will be temporarily restricted to provide for the safety of spectators and transiting vessels.

The Coast Guard proposes to establish a safety zone on Big Timber Creek in Westville, NJ, encompassing all waters from the Route 130 Bridge to the entrance of the Delaware River, shoreline to shoreline. The safety zone will be in effect from 8 p.m. to 11 p.m. on June 30, 2007. The effect will be to restrict general navigation in the regulated area during the boat parade and fireworks display. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the regulated area during the enforcement period. The Patrol Commander will notify the public of specific enforcement times by Marine Radio Safety Broadcast. These regulations are needed to control vessel traffic during the event to enhance the safety of spectators and transiting vessels.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation is unnecessary.

Although this regulation restricts vessel traffic from transiting a portion of Big Timber Creek near Westville, New Jersey, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via marine information broadcasts and area newspapers so mariners can adjust their plans accordingly.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit a portion of Big Timber Creek in the vicinity of Westville, New Jersey during the event.

This proposed rule will not have a significant economic impact on a substantial number of small entities for the following reasons. The rule will be in effect for only a short period, from 8 p.m. to 11 p.m. on June 30, 2007. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this proposed rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation.

A preliminary “Environmental Analysis Check List” is available in the docket where indicated under ADDRESSES . Comments on this section will be considered before we make the final decision on whether to categorically exclude this rule from further environmental review.

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

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD05-07-030), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the address listed under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

On July 6, 2007, the Borough of Avalon will sponsor the “Avalon Family Fun Festival Fireworks Display”. The fireworks display will be launched from a barge offshore and the hazardous fallout area will extend over coastal waters immediately adjacent to the shoreline in the vicinity of Avalon, New Jersey. A fleet of spectator vessels is expected to gather near the event site to view the fireworks display. Due to the need for vessel control during the event, vessel traffic will be temporarily restricted to provide for the safety of spectators and transiting vessels.

The Coast Guard proposes to establish a safety zone on specified coastal waters of the North Atlantic Ocean, immediately adjacent to the shoreline at Avalon, New Jersey. The regulated area includes all waters within a 500 yard radius from latitude 39°05′31″ N, 074°43′00″ W. The safety zone will be in effect from 5 p.m. to 10:30 p.m. on July 6, 2007. The effect will be to restrict general navigation in the regulated area during the fireworks display. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the regulated area during the enforcement period. The Patrol Commander will notify the public of specific enforcement times by Marine Radio Safety Broadcast. These regulations are needed to control vessel traffic during the event to enhance the safety of spectators and transiting vessels.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary.

Although this regulation restricts vessel traffic from transiting a small segment of coastal waters near Avalon, New Jersey, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via marine information broadcasts and area newspapers so mariners can adjust their plans accordingly.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit coastal waters in the vicinity of Avalon, New Jersey during the event.

This proposed rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for only a short period, from 5 p.m. to 10:30 p.m. on July 6, 2007. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this proposed rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation.

A preliminary “Environmental Analysis Check List” is available in the docket where indicated under ADDRESSES . Comments on this section will be considered before we make the final decision on whether to categorically exclude this rule from further environmental review.

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

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD05-07-037), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Coast Guard Sector Baltimore, Waterways Management Division, at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

Each year, thousands of spectators attend outdoor fireworks displays discharged from vessels or floating platforms on or near the navigable waters of the United States. Accidental discharge of fireworks and falling hot embers are a safety concern during such events. The Coast Guard has the authority to impose appropriate controls on marine events that may pose a threat to persons, vessels and facilities under its jurisdiction. The Coast Guard proposes to establish a safety zone that will be enforced during a fireworks display held over the Patuxent River, near Solomons, in Calvert County, Maryland. The proposed rule is needed to control movement through a portion of the waterway that is expected to be populated by vessels seeking to view the fireworks display.

On July 4, 2007, the Solomons Island Business Association, will sponsor an Independence Day celebration fireworks display launched from two adjoining barges located on the Patuxent River near Solomons, in Calvert County, Maryland. The planned event includes an aerial fireworks display beginning at 9 p.m. Due to the need for vessel control during the fireworks display, vessel traffic will be restricted to provide for the safety of spectators and transiting vessels.

The purpose of this rule is to promote maritime safety, and to protect the environment and mariners transiting the area from the potential hazards due to falling embers or other debris associated with a fireworks display from a barge. This rule proposes to establish a safety zone on the waters of the Patuxent River, within a radius of 400 yards around a fireworks barge, which will be located at position latitude 38°19′03.0″ N, longitude 076°26′07.6″ W. The Coast Guard anticipates a large recreational boating spectator fleet during this event. The rule will impact the movement of all vessels operating in a specified area of the Patuxent River. Interference with normal port operations is unlikely; however, if required, will be kept to the minimum considered necessary to ensure the safety of life on the navigable waters immediately before, during, and after the scheduled event.

This proposed rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation is unnecessary. The safety zone will be in effect for only two and one-half hours on one day of the year, commercial traffic in the area is limited, and vessels not constrained by their draft may proceed safely around the safety zone.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities: The owners or operators of vessels intending to operate, remain or anchor within certain waters of the Patuxent River, within a radius of 400 yards around a fireworks barge located at position latitude 38°19′03.0″ N, longitude 076°26′07.6″ W, from 7:30 p.m. to 10 p.m. on July 4, 2007, and if necessary due to inclement weather, from 7:30 p.m. to 10 p.m. on July 5, 2007. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for two and one-half hours, commercial vessel traffic in this area is limited, vessels not constrained by their draft may proceed safely around the safety zone, and the Coast Guard will issue maritime advisories widely available to users of the river before the effective period.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Coast Guard Sector Baltimore, Waterways Management Division, at telephone number (410) 576-2674. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

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

We have analyzed this proposed rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, we believe that this rule should be categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. This rule establishes a safety zone.

A preliminary “Environmental Analysis Check List” will be available in the docket where indicated under ADDRESSES . Comments on this section will be considered before we make the final decision on whether this rule should be categorically excluded from further environmental review.

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

In 1991, the Architectural and Transportation Barriers Compliance Board (Access Board) issued the Americans with Disabilities Act (ADA) Accessibility Guidelines for Transportation Vehicles, which is codified at 36 CFR part 1192. The guidelines have not been updated since they were issued, except for modifications for over-the-road buses in 1994. The Access Board is beginning the process of updating the guidelines by publishing draft revisions to subparts A and B of 36 CFR part 1192, which contain general provisions and cover buses, vans and similar vehicles. Draft revisions to other subparts, which cover other modes, will be available later. Changes are proposed to accommodate new technology and vehicles, and new system designs, particularly Bus Rapid Transit.

Subsequent to issuance of the guidelines in 1991, the National Highway Traffic Safety Administration (NHTSA) issued regulations for vehicle lifts. The Access Board will coordinate its rulemaking with NHTSA to ensure consistency.

The Access Board is making the draft revisions to the guidelines and supplemental information available for public review and comment prior to issuing a notice of proposed rulemaking to update the guidelines. Comments on the draft revisions to the guidelines will be considered by the Access Board in developing the notice of proposed rulemaking to update the guidelines, which will also be open for public comment. The draft revisions to the guidelines and supplementary information are available on the Access Board's Internet site ( http://www.access-board.gov/vguidedraft.htm ). You may also obtain a copy of the draft guidelines and supplementary information by contacting the Access Board at (202) 272-0080. Persons using a TTY should call (202) 272-0082. The documents are available in alternate formats upon request. Persons who want a copy in an alternate format should specify the type of format (cassette tape, Braille, large print, or ASCII disk.)

On May 14, 2007, the Postal Service will adopt new prices and mailing standards to support the majority of the Docket No. R2006-1 pricing change recommended by the Postal Regulatory Commission and accepted by the Governors of the United States Postal Service. The Postal Service Board of Governors is delaying the implementation of new Periodicals prices and mailing standards until July 15, 2007, to give postal employees and mailers more time to prepare for the new pricing structure recommended by the Commission. This proposal provides the revisions to Mailing Standards of the United States Postal Service , Domestic Mail Manual (DMM) that we propose to adopt in support of the Periodicals portion of the Docket No. R2006-1 pricing change.

You can find this Periodicals proposal, as well as the rate case final rule for all other classes of mail, at www.usps.com/ratecase. We also provide rate charts and other helpful information for mailers, including frequently asked questions, press releases, and MailPro articles related to the pricing change.

In our request for a recommended decision filed with the Commission on May 3, 2006, we proposed Periodicals rates based on pieces, pounds, and a single container charge. The Commission recommended rates based on pieces and pounds but also on bundles, sacks, and pallets. Piece rates vary based on machinability, barcoding, and presort level. Bundle, sack, and pallet rates vary based on presort level and point of entry. The recommended rate structure is much more complex than the one we originally proposed. Ideally, by explicitly recognizing the cost differences between various bundles, containers, and entry points, many mailers will respond to these price signals, bring down costs, and improve the cost-coverage for all Periodicals mailers.

For In-County Periodicals, the rate design is still based on pieces and pounds, as it is today. Since many publications use both Outside-County and In-County rates, the Board set the same July 15 implementation date for both subclasses, and for all Periodicals fees.

In general, mailers who sort their mail to the 5-digit and carrier route levels on destination-entered pallets will pay the lowest rates. Mailers should note that the piece, pound, bundle, and container rates are designed to work together to more accurately reflect handling and delivery costs. We suggest that mailers test different preparation scenarios to see the interplay between variables and how their own mail will be affected.

The new rate structure adds container rates for Periodicals mail. We define a “container” as a tray, sack, pallet, or other equivalent USPS-approved container. Most of our standards for mail preparation are not changing as a result of the new rate structure. Mailers will still follow the mail preparation requirements in DMM 705, 707, and 708, which specify when to prepare mail in bundles and when to place it in trays, sacks, and pallets. We note that mailers must follow the preparation and entry requirements in the DMM. Mailers cannot choose to use certain containers (or to not use containers) to circumvent the rates.

New Outside-County container rates are based on the type of container (tray, sack, or pallet), the level of sortation of the container, and where the container is entered. We will apply the container rates to pallets, sacks, and trays containing Outside-County Periodicals mail (except for mixed containers of In-County and Outside-County pieces in carrier route, 5-digit carrier routes, and 5-digit/scheme containers). When trays and sacks are placed on pallets, we propose to charge for each tray and sack, but not for the pallets. This should encourage mailers to use pallets.

Container rates decrease with deeper entry because there are fewer handlings needed. Our best rates are for mail that is finely sorted on pallets and entered close to its destination. For example, the price for a 5-digit pallet entered at the DDU is $1.20, compared to $15.50 if entered at the DADC.

On the other hand, when entered at the same facility level, prices are higher for more-finely presorted containers than for those that are less-finely presorted. The difference reflects the additional handlings that the more-finely presorted container will get before it is opened. For instance, for origin entry, the price for a 5-digit pallet is $26.95, or $8.34 higher than the $18.61 price for an ADC pallet.

Working in the opposite direction, a bundle in a less-finely presorted container requires more handlings prior to piece sortation than the same level bundle in a more-finely presorted container, and bundle prices reflect this. The price for a 5-digit bundle is $0.095 on an ADC pallet, but only $0.008 on a 5-digit pallet, a difference of $0.087.

Therefore, as the container presort-level becomes finer, container prices increase but prices for bundles within the container decrease. The lower bundle postage will offset some, all, or more than all of the higher container postage.

Taken as a whole, the inter-relationships among the per-container, per-bundle and per-piece prices in this rate structure provide further incentives for mailers to comail and copalletize.

The rate structure also provides new rates for pallets and for sacks on pallets entered at the destination bulk mail center (DBMC) to ensure efficient handling and consistent service. These rates reflect the cost of cross-docking pallets and do not represent a new pallet or sack sortation level. Mailers can enter Periodicals mail at the DBMCs listed in DMM Exhibit 346.3.1, or at a USPS-designated facility. For DBMC entry, pieces must be prepared in bundles or in sacks on ADC, 3-digit, or 5-digit pallets, and addressed for delivery to one of the 3-digit ZIP Codes served by that BMC.

We are adopting new rates for bundles of Periodicals mail, but we are not changing the definition of a bundle or the bundling requirements. A “bundle” is a group of addressed pieces secured together as a unit. Pieces are first sorted to destinations and then assembled into groups for bundling based on quantity and other factors. The term bundle does not apply to unsecured groups of pieces (for example, pieces prepared in letter or flat trays and identified by separator cards or tic marks). “Firm bundles” are also groups of pieces that are secured together, but in a firm bundle all pieces are for delivery to the address shown on the top piece.

New Outside-County bundle rates are based on the level of sorting of both the bundle and the container (but not on the type of container). More finely presorted bundles within the same container level have higher rates to reflect more bundle handlings before they are opened. For example, for pieces sorted into a carrier route bundle, and then placed on an ADC pallet or sack, a mailer pays 10.4 cents per bundle. For pieces sorted into an ADC bundle and placed on an ADC pallet or sack, a mailer pays 3.8 cents per bundle. A lower piece rate for pieces in more finely presorted bundles offsets the higher bundle charge.

We propose to apply the bundle rates to all bundles containing Outside-County mail, except for mixed bundles of In-County and Outside-County pieces in carrier route and 5-digit/scheme bundles. This will avoid imposing the Outside-County pricing structure on bundles that will likely contain mostly In-County Periodicals.

Firm bundles are subject to both a piece charge (16.9 cents) and a bundle charge (2.7 cents to 7.9 cents, depending on the container level). Because of this new rate structure, mailers may no longer use firm bundles to satisfy a six-piece bundle requirement to a presort level.

We will charge bundle rates based on the actual number of bundles entered, so mailers must precisely document the number of bundles they produce. Unlike today, where there is no rate impact for a difference between the number of bundles implied by the presort requirements and the actual number of bundles created during production, under the new rates mailers must conscientiously modify software parameters and monitor adherence to physical breaks between bundles to ensure the number of bundles produced matches their documentation.

Periodicals Outside-County prices include new piece rates based on shape, machinability, barcoding, and presort level. The presort level of the piece is based primarily on the bundle level of the piece, with one exception: The presort level of pieces loose in trays is based on the container level.

While the new structure eliminates the per-piece discounts for pieces on pallets, including the experimental copalletization discounts, the container and bundle charges are designed to encourage copalletization. The new structure also eliminates the per-piece discounts for destination area distribution center (DADC), destination sectional center facility (DSCF), and destination delivery unit (DDU) entry, but recognizes instead the associated cost savings in the new DADC, DSCF, and DDU rates for editorial pounds, as well as in the container rates.

We divide the piece rates into “letter” rates, “machinable flats” rates, and “nonmachinable flats and parcel” rates, with the exception of carrier route rates, which we divide only according to saturation, high density, and basic rates.

We provide letter rates for “barcoded” and “nonbarcoded” pieces. Periodicals letters must meet the standards for all letters in DMM 201. Letters mailed at the barcoded rates must include a barcode and must meet the additional standards for automation pieces in DMM 201.3.0. Automation Periodicals letters meet these dimensions:

• For height, no more than 6 1/8 or less than 3 1/2 inches high.

• For length, no more than 11 1/2 or less than 5 inches long.

• For thickness, no more than 0.25 or less than:

○ 0.007 inch thick if no more than 4 1/4 inches high and 6 inches long; or

○ 0.009 inch thick if more than 4 1/4 inches high or 6 inches long, or both.

• The maximum weight for each piece is 3.5 ounces.

Periodicals letters mailed at the nonbarcoded rates meet the letter standards in DMM 201 but do not include a barcode. We assigned the machinable—nonbarcoded flats rates to these pieces. Nonbarcoded Periodicals letters meet these dimensions:

• For height, no more than 6 1/8 or less than 3 1/2 inches high.

• For length, no more than 11 1/2 or less than 5 inches long.

• For thickness, no more than 0.25 or less than 0.007-inch thick.

• The maximum weight for each piece is 3.5 ounces.

We divide flats rates into categories for machinable and nonmachinable pieces, and then provide rates for barcoded and nonbarcoded pieces.

For flats prepared in 3-digit, ADC, and mixed ADC bundles and containers, we define “machinable—barcoded” flats as barcoded pieces that we can process on our primary flats-sorting equipment, the automated flat sorting machine (AFSM 100). These pieces must meet our standards for minimum flexibility, maximum deflection, and uniform thickness, and use automation-compatible polywrap (if polywrapped). Machinable—barcoded Periodicals flats meet these dimensions:

• Minimum height is 5 inches. Maximum height is 12 inches.

• Minimum length is 6 inches. Maximum length is 15 inches.

• For bound or folded pieces, the edge perpendicular to the bound or folded edge may not exceed 12 inches.

• Minimum thickness is 0.009 inch. Maximum thickness is 0.75 inch.

• The maximum weight for each piece is 20 ounces.

These pieces are defined in DMM 301.3.0 and match our standards for Standard Mail flat-size pieces mailed at automation rates, with a different weight limit.

“Machinable—nonbarcoded” flats prepared in 3-digit, ADC, and mixed ADC bundles and containers meet the same dimensions noted above, but they do not include a barcode.

For flats prepared in 3-digit, ADC, and mixed ADC bundles and containers, we define “nonmachinable—barcoded” flats as barcoded pieces that we can process on the upgraded flat sorting machine (UFSM 1000) and potentially in the future flats sequencing environment; therefore, the requirements are slightly more restrictive than current UFSM 1000 requirements. These pieces must meet our standards for uniform thickness and use automation-compatible polywrap (if polywrapped), but they are not currently subject to our standards for minimum flexibility and maximum deflection. Nonmachinable—barcoded Periodicals flats meet these dimensions:

• Minimum height is 5 inches. Maximum height is 12 inches.

• Minimum length is 6 inches. Maximum length is 15 inches.

• Minimum thickness is 0.009 inch. Maximum thickness is 1.25 inches.

• The maximum weight for each piece is 4.4 pounds.

These pieces are defined in proposed DMM 707.26.0, and they are unique to Periodicals mail.

For pieces prepared in 5-digit bundles and containers, we define “machinable—barcoded” flats as those pieces prepared under 301.3.0 that we can process on the AFSM 100, and those pieces prepared under 707.26 that we can process on the UFSM 1000 and potentially on the future flats sequencing system. This definition will help us align Periodicals mail with the flats sequencing system, which will likely process a wider variety of flat-shaped mail than the AFSM 100 can process, and also recognizes that only some flats prepared in 5-digit bundles are sorted to carrier routes by the AFSM 100, while the rest are sorted manually. We are not proposing to change the standards for combining AFSM 100—compatible (defined in 301.3.0) and UFSM 1000—compatible (defined in 707.26.0) pieces in the same bundle.

“Machinable—nonbarcoded” flats prepared in 5-digit bundles and containers meet the same dimensions noted above, but they do not include a barcode. The rate design includes a price for “nonmachinable “ barcoded—flats prepared in 5-digit bundles, but mailers will not use this rate because we allow these UFSM 1000-compatible barcoded pieces to pay the lower, machinable—barcoded rates at the 5-digit level.

For all sort levels, we define “nonmachinable—nonbarcoded” flats as barcoded or nonbarcoded pieces that do not meet the standards in DMM 301.3.0 or in proposed 707.26.0.

Periodicals parcels are pieces that cannot be processed on our primary flat-sorting equipment. This rate category includes rigid and parcel-like pieces, pieces in boxes, and tubes and rolls. Parcels exceed the weight or dimensions for machinable flats in DMM 707.26, but cannot weigh more than 70 pounds or measure more than 108 inches in length and girth combined (for parcels, length is the longest dimension and girth is the distance around the thickest part).

Parcel rates are the “nonmachinable flats and parcels—nonbarcoded” rates, whether or not the parcel includes a barcode.

For advertising pounds, the new price structure retains zoned rates and per-pound incentives for DADC, DSCF, and DDU entry. For editorial pounds, postage from any entry point upstream from the DADC will continue to be unzoned, but there are new per-pound incentives for DADC, DSCF, and DDU entry. There are no pound-rate incentives for DBMC entry.

We propose new documentation requirements in DMM 708.1.0, including a new bundle report, a new container report, and a new column on the USPS qualification report indicating which bundles and containers are subject to the Outside-County bundle and container rates. As we stated above, we will charge bundle rates based on the actual number of bundles entered, and the new documentation will help us verify that mailers have correctly prepared and paid for their mailings. We are not changing the documentation requirements for In-County mail.

Although we are exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C 410(a)), we invite your comments on the following proposed revisions to Mailing Standards of the United States Postal Service , Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR part 111.

Accordingly, 39 CFR part 111 is proposed to be amended as follows:

This action is directed to the public in general. This action may, however, be of interest to you if you manufacture, import, process, or use PIPs. In order to identify potentially impacted industries the analysis relies on North American Industrial Classification System (NAICS) codes. Potentially affected entities may include, but are not limited to:

•  Pesticide and Other Agricultural Chemical Manufacturing (NAICS code 325320). This industry comprises establishments that are producing PIPs intended for distribution and sale as pesticides.

•  Crop Production (NAICS code 111). These are establishments such as farms, orchards, groves, greenhouses, and nurseries, primarily engaged in growing crops, plants, vines, or trees and their seeds.

•  Colleges, Universities, and Professional Schools (NAICS code 611310). This industry comprises establishments primarily engaged in furnishing academic courses and granting degrees at baccalaureate or graduate levels. Furthermore, they may comprise establishments where research on PIPs occurs and where PIPs may be grown.

•  Research and Development in the Physical, Engineering, and Life Sciences (NAICS code 54171). This industry comprises establishments primarily engaged in conducting research and experimental development in the physical, engineering, or life sciences, such as agriculture, environmental, biology, botany, biotechnology, forests, and other allied subjects.

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

1. Docket. EPA has established a docket for the ANPRM under docket identification (ID) number EPA-HQ-OPP-2006-1003. Publicly available docket materials are available either in the electronic docket at http://www.regulations.gov , or, if only available in hard copy, at the Office of Pesticide Programs (OPP) Regulatory Public Docket in Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. The hours of operation of this Docket Facility are from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The Docket Facility telephone number is (703) 305-5805.

2. Electronic access . You may access this Federal Register document or the ANPRM electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr .

The ANPRM, entitled Plant-Incorporated Protectants; Potential Revisions to Current Production Regulations published in the Federal Register of April 4, 2007 (72 FR 16312) (FRL-8118-2) provides the basis for the public meetings described in this document and contains the background information describing the nature of the issue and the areas where EPA is considering amending regulations. That document is available in the docket established for this action as described in Unit I.B.

Submit public comments on the ANPRM published in the Federal Register of April 4, 2007 (72 FR 16312) (FRL-8118-2) to regulations.gov using the methods listed under ADDRESSES in that document. If the oral comments are different from previously submitted comments on the ANPRM, please also submit a copy of the comments that will be presented at the meeting to the docket using the submission methods under ADDRESSES in the ANPRM.

The purpose of the consultation meetings is to provide Native American organizations, museums and the scientific community, and the Native American Graves Protection and Repatriation Review Committee with an opportunity to consult on forthcoming regulations regarding the disposition of unclaimed Native American human remains, funerary objects, sacred objects, or objects of cultural patrimony excavated or discovered on Federal or tribal lands after November 16, 1990.

The April 18, 2007, 8:30 a.m to noon consultation meeting supports the Secretary of the Interior's administrative policy on tribal consultation by encouraging maximum direct participation of representatives of tribal governments on important Departmental issues and processes.

The April 18, 2007, 1 p.m. to 4:30 p.m. consultation meeting supports the Secretary of the Interior's responsibility to consult with museums and the scientific community in the development of these regulations.

The April 19-20, 2007 consultation meeting supports the Secretary of the Interior's responsibility to consult with the Review Committee regarding the development of regulations.

The Native American Graves Protection and Repatriation Act provides criteria for determining the ownership of Native American cultural items that are excavated or discovered on Federal or tribal lands after November 16, 1990 [25 U.S.C. 3002 (a)]. Ownership or control of such items is, with priority given in the order listed:

(1) In the case of human remains and associated funerary objects, in the lineal descendant of the deceased individual;

(2) In cases where the lineal descendant cannot be ascertained or no claim is made, and with respect to unassociated funerary objects, sacred objects, and objects of cultural patrimony:

(i) In the Indian tribe on whose tribal land the human remains, funerary objects, sacred objects, or objects of cultural patrimony were discovered inadvertently;

(ii) In the Indian tribe or Native Hawaiian organization that has the closest cultural affiliation with the human remains, funerary objects, sacred objects, or objects of cultural patrimony;

(iii) In circumstances in which the cultural affiliation of the human remains, funerary objects, sacred objects, or objects of cultural patrimony cannot be ascertained and the objects were discovered inadvertently on Federal land that is recognized by a final judgment of the Indian Claims Commission or the United States Court of Claims as the aboriginal land of an Indian tribe:

(A) In the Indian tribe aboriginally occupying the Federal land on which the human remains, funerary objects, sacred objects, or objects of cultural patrimony were discovered, or

(B) If it can be shown that a different Indian tribe or Native Hawaiian organization has a stronger cultural relationship with the human remains, funerary objects, sacred objects, or objects of cultural patrimony, in the Indian tribe or Native Hawaiian organization that has the strongest demonstrated relationship with the objects [43 CFR 10.6 (a)].

The Act directs that Native American cultural items not claimed under subsection (a) shall be disposed of in accordance with regulations promulgated by the Secretary of the Interior in consultation with the Review Committee, Native American groups, representatives of museums, and the scientific community [25 U.S.C. 3002 (b)]. One section of the regulations was reserved for procedures to effect the disposition of Native American cultural items that are not claimed [43 CFR 10.7].

Participants in the consultation meetings are requested to comment on the following issues:

(1) How should the regulations address distinctions between:

(a) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which ownership or control is with a lineal descendant or an Indian tribe or Native Hawaiian organization on whose lands the cultural items were discovered?

(b) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which an Indian tribe or Native Hawaiian organization has stated a claim based on cultural affiliation, aboriginal land, or cultural relationship?

(c) human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care for which a non-federally recognized Indian group has stated a claim based on a relationship of shared group identity?

(d) human remains and associated funerary objects remaining in Federal care for which no claim has been made?

(2)Do current regulations regarding the curation of Federally-owned and administered archaeological collections [36 CFR 79] adequately address the management, preservation, and use of human remains, funerary objects, sacred objects, or objects of cultural patrimony remaining in Federal care?

The Magnuson-Stevens Act requires that each Regional Fishery Management Council submit any FMP amendment it prepares to NMFS for review and approval, disapproval, or partial approval. The Magnuson-Stevens Act also requires that NMFS, upon receiving an FMP amendment, immediately publish a notice in the Federal Register that the amendment is available for public review and comment. If approved by NMFS, this amendment would implement a rebuilding program to increase the scup stock to the level associated with maximum sustainable yield (B msy ). The amendment would also effect an administrative change to the regulations on framework adjustments.

In August 2005, NMFS notified the Council that the scup stock had officially been designated as overfished as defined by the Magnuson-Stevens Act. Specifically, the 3-year Northeast Fishery Science Center (NEFSC) spawning stock biomass (SSB) value for scup had declined below the minimum biomass threshold. In response, the Council began development of Amendment 14 to the FMP in February 2006 to rebuild the scup stock to the biomass target.

This action proposes scup rebuilding program alternatives which would, within at least 10 years, increase the scup stock to the target biomass level (i.e., achieve stock rebuilding) as required by the Magnuson-Stevens Act. In addition, this action proposes a single administrative change to the procedures for modifying the GRAs. Currently, GRAs are modified though the annual specification process. This action proposes to change the procedures so that GRAs may be modified through framework adjustments to the FMP.

Public comments are being solicited on Amendment 14 and its incorporated documents through the end of the comment period stated in this notice of availability. A proposed rule that would implement Amendment 14 will be published in the Federal Register for public comment, following NMFS's evaluation of the proposed rule under the procedures of the Magnuson-Stevens Act. Public comments on the proposed rule must be received by the end of the comment period provided in this notice of availability of Amendment 14 to be considered in the approval/disapproval decision on the amendment. All comments received by June 11, 2007, whether specifically directed to Amendment 14 or the proposed rule will be considered in the approval/disapproval decision on Amendment 14. Comments received after that date will not be considered in the decision to approve or disapprove Amendment 14. To be considered, comments must be received by close of business on the last day of the comment period; that does not mean postmarked or otherwise transmitted by that date.