Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-28022/Airspace Docket No. 07-ASO-7.” The postcard will be date/time stamped and returned to the commenter. All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be field in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara. Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to Part 71 of the Federal Aviation Regulations (14 CFR part 71) to establish Class E airspace at Centreville, AL. Class E airspace designations for airspace areas extending upward from 700 feet or more above the surface of the earth are published in Paragraph 6005 of FAA Order 7400.9P, dated September 16, 2006, and effective September 16, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document would be published subsequently in the Order.

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

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-28101/Airspace Docket No. 07-ASO-9.” The postcard will be date/time stamped and returned to the commenter. All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara. Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to Part 71 of the Federal Aviation Regulations (14 CFR Part 71) to establish Class E2 airspace at Vero Beach, FL. Class E Airspace Designations as Surface Areas are published in Paragraph 6002 of FAA Order 7400.9P, dated September 16, 2006, and effective September 16, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E2 airspace designation listed in this document would be published subsequently in the Order.

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

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-28146/Airspace Docket No. 07-AAL-07.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591 or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to the Code of Federal Regulations (14 CFR Part 71), which would revise the Class E airspace at the Ralph Wien Memorial Airport, AK. The intended effect of this proposal is to revise Class E airspace upward from the surface, from 700 ft. and 1,200 ft. above the surface, to contain Instrument Flight Rules (IFR) operations at Ralph Wien Memorial Airport, AK.

The FAA Instrument Flight Procedures Production and Maintenance Branch has amended eight SIAPs and a DP for the Ralph Wien Memorial Airport. The amended approaches are (1) the Very High Frequency Omni-directional Range (VOR)/Distance Measuring Equipment (DME) Runway (RWY) 09, Amendment (Amdt) 5, (2) the Area Navigation (Global Positioning System) (RNAV (GPS)) RWY 09, Amdt 1, (3) the Instrument Landing System (ILS) or Localizer (LOC)/DME RWY 09, Amdt 1, (4) the RNAV (GPS) RWY 27, Amdt 1, (5) the VOR RWY 09, Amdt 4, (6) the VOR RWY 27, Amdt 4, (7) the VOR/DME Y RWY 27, Amdt 1, and (8) the VOR/DME Z RWY 27, Amdt 1. DP's are unnamed and are published in the front of the U.S. Terminal Procedures for Alaska. Class E controlled airspace extending upward from the surface, from 700 ft. and 1,200 ft. above the surface, in the Ralph Wien Memorial Airport area would be revised by this action. The proposed airspace is sufficient in size to contain aircraft executing the instrument procedures at the Ralph Wien Memorial Airport, Kotzebue, AK.

The area would be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as surface areas are published in paragraph 6002 of FAA Order 7400.9P, Airspace Designations and Reporting Points, dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 in FAA Order 7400.9P, Airspace Designations and Reporting Points, dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document would be published subsequently in the Order.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle 1, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart 1, Section 40103, Sovereignty and use of airspace. Under that section, the FAA is charged with prescribing regulations to ensure the safe and efficient use of the navigable airspace. This regulation is within the scope of that authority because it proposes to create Class E airspace sufficient in size to contain aircraft executing instrument procedures at Ralph Wien Memorial Airport and represents the FAA's continuing effort to safely and efficiently use the navigable airspace.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-18145/Airspace Docket No. 07-AAL-06.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591 or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to the Code of Federal Regulations (14 CFR Part 71), which would revise the Class E airspace at Fort Yukon Airport, AK. The intended effect of this proposal is to revise Class E airspace upward from the surface, from 700 ft. and 1,200 ft. above the surface, to contain Instrument Flight Rules (IFR) operations at Fort Yukon Airport, AK.

The FAA Instrument Flight Procedures Production and Maintenance Branch has amended one SIAP and developed three new SIAPs. They have also amended a DP and a DF for the Fort Yukon Airport. The amended approach is the Very High Frequency Omni-directional Range (VOR)/Distance Measuring Equipment (DME) or Tactical Air Navigation (TACAN) Runway (RWY) 22, Amendment (Amdt) 2. The three new SIAPs are (1) the VOR/DME or TACAN A, Original, (2) the Area Navigation (Global Positioning System) (RNAV (GPS)) RWY 04, Original and (3) the RNAV (GPS) RWY 22, Original. DP's are unnamed and are published in the front of the U.S. Terminal Procedures for Alaska. DF's are for use by Flight Service Station personal to aid lost pilots. Class E controlled airspace extending upward from the surface, from 700 ft. and 1,200 ft. above the surface, in the Fort Yukon Airport area would be revised by this action. The proposed airspace is sufficient in size to contain aircraft executing the instrument procedures at the Fort Yukon Airport.

The area would be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as surface areas are published in paragraph 6002 of FAA Order 7400.9P, Airspace Designations and Reporting Points, dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 in FAA Order 7400.9P, Airspace Designations and Reporting Points, dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document would be published subsequently in the Order.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle 1, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart 1, Section 40103, Sovereignty and use of airspace. Under that section, the FAA is charged with prescribing regulations to ensure the safe and efficient use of the navigable airspace. This regulation is within the scope of that authority because it proposes to create Class E airspace sufficient in size to contain aircraft executing instrument procedures at Fort Yukon Airport and represents the FAA's continuing effort to safely and efficiently use the navigable airspace.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-28147/Airspace Docket No. 07-AAL-08.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591 or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to the Code of Federal Regulations (14 CFR Part 71), which would revise the Class E airspace at the Noatak Airport, AK. The intended effect of this proposal is to revise Class E airspace upward, from 700 ft. and 1,200 ft. above the surface, to contain Instrument Flight Rules (IFR) operations at Noatak Airport, AK.

The FAA Instrument Flight Procedures Production and Maintenance Branch has amended one SIAP and a DP for the Noatak Airport. The amended approach is the Non-directional Beacon (NDB)-Distance Measuring Equipment (DME) Runway 01, Amendment 2. DP's are unnamed and are published in the front of the U.S. Terminal Procedures for Alaska. Class E controlled airspace extending upward, from 700 ft. and 1,200 ft. above the surface, in the Noatak Airport area would be revised by this action. The proposed airspace is sufficient in size to contain aircraft executing the instrument procedures at the Noatak Airport, Noatak, AK.

The area would be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 in FAA Order 7400.9Q, Airspace Designations and Reporting Points, dated September 1, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document would be published subsequently in the Order.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle 1, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart 1, Section 40103, Sovereignty and use of airspace. Under that section, the FAA is charged with prescribing regulations to ensure the safe and efficient use of the navigable airspace. This regulation is within the scope of that authority because it proposes to create Class E airspace sufficient in size to contain aircraft executing instrument procedures at Noatak Airport and represents the FAA's continuing effort to safely and efficiently use the navigable airspace.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2007-28148/Airspace Docket No. 07-AAL-09.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov . Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara .

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591 or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to the Code of Federal Regulations (14 CFR Part 71), which would revise the Class E airspace at the Ruby Airport, AK. The intended effect of this proposal is to revise Class E airspace upward, from 700 ft. and 1,200 ft. above the surface, to contain Instrument Flight Rules (IFR) operations at Ruby Airport, AK.

The FAA Instrument Flight Procedures Production and Maintenance Branch has amended two SIAPs for the Ruby Airport. The amended approaches are (1) the Area Navigation (Global Positioning System) (RNAV (GPS)) Runway (RWY) 03, Amendment (Amdt) 1 and (2) the RNAV (GPS) RWY 21, Amdt 1. Class E controlled airspace extending upward, from 700 ft. and 1,200 ft. above the surface, in the Ruby Airport area would be revised by this action. The proposed airspace is sufficient in size to contain aircraft executing the instrument procedures at the Ruby Airport, Ruby, AK.

The area would be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 in FAA Order 7400.9P, Airspace Designations and Reporting Points , dated September 1, 2006, and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document would be published subsequently in the Order.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle 1, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart 1, Section 40103, Sovereignty and use of airspace. Under that section, the FAA is charged with prescribing regulations to ensure the safe and efficient use of the navigable airspace. This regulation is within the scope of that authority because it proposes to create Class E airspace sufficient in size to contain aircraft executing instrument procedures at Ruby Airport and represents the FAA's continuing effort to safely and efficiently use the navigable airspace.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2007-28161 and Airspace Docket No. 07-ASO-6) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://dms.dot.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2007-28161 and Airspace Docket No. 07-ASO-6.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov, or the Federal Register web page at http://www.gpoaccess.gov/fr/index.html.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the System Support Group, Eastern Service Center, Federal Aviation Administration, 1701 Columbia Ave., College Park, GA 30337.

Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing to amend Title 14 Code of Federal Regulations (14 CFR) part 71 to establish a low altitude RNAV route, designated T-209, in the vicinity of Augusta, GA. The route would extend between the Colliers, SC, very high frequency omnidirectional range/tactical air navigation (VORTAC) aid and the EHEJO, GA, navigation fix (located on Federal airway V-154). T-209 would provide a more direct route for north and southbound traffic and would also establish a published route that ensures clearance from the Bulldog A MOA to assist aircraft navigating around the MOA.

This route would enhance the safe and efficient use of the navigable airspace for north and southbound IFR aircraft in the vicinity of Augusta, GA.

Low altitude RNAV routes are published in paragraph 6011 of FAA Order 7400.9P, dated September 1, 2006 and effective September 15, 2006, which is incorporated by reference in 14 CFR 71.1. The low altitude RNAV route listed in this document would be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 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 (CGD05-07-043), 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 August 4, 2007, the East Coast Boat Racing Club of New Jersey will sponsor a power boat race, on the waters of the Chesapeake Bay, Cape Charles, Virginia. The event will consist of approximately 20 New Jersey Speed Garveys and Jersey Speed Skiffs conducting high-speed competitive races along an oval race course in close proximity to Cape Charles Beach, Cape Charles, Virginia. A fleet of spectator vessels is expected 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 Piankatank River. The temporary special local regulations will be effective from 11:30 a.m. to 4:30 p.m. on August 4, 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.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation is unnecessary. Although this regulation will prevent traffic from transiting a portion of the Chesapeake Bay 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 proposed rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in this portion of the Chesapeake Bay adjacent to Cape Charles Beach during the event.

This proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons. This proposed rule would be in effect for only a limited period. 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. 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.lD and Department of Homeland Security Management Directive 5100.1, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded 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, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. Special local regulations issued in conjunction with a regatta or marine parade permit are specifically excluded from further analysis and documentation under that section.

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 (CGD05-07-044), 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 August 10, 11 and 12, 2007, the Virginia Boat Racing Association will sponsor the “Hampton Cup Regatta”, on the waters of Mill Creek adjacent to Fort Monroe, Hampton, Virginia. The event will consist of approximately 100 inboard hydroplanes racing in heats counter-clockwise around an oval racecourse. 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 Mill Creek adjacent to Fort Monroe, Hampton, Virginia. The regulated area is comprised of the southern section of Mill Creek approximately one half mile in length and width. This rule will be enforced from 7:30 a.m. to 6:30 p.m. on August 10, 11, and 12, 2007, and will restrict general navigation in the regulated area during the power boat race. The Coast Guard, at its discretion, when practical will allow the passage of vessels when races are not taking place. 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 during the enforcement period. 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.

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

Although this proposed regulation will prevent traffic from transiting a portion of Mill Creek 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. Extensive advance notifications will be made to the maritime community via Local Notice to Mariners, marine information broadcasts, and area newspapers, so mariners can adjust their plans accordingly. 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 proposed rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit this section of Mill Creek during the event.

This proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be enforced for only a short period, from 7:30 a.m. to 6:30 p.m. on August 10, 11, and 12, 2007. The regulated area will apply to the southerly segment of Mill Creek adjacent to Fort Monroe and the Route 258 bridge. Marine 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 will be required to proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the race course. Before the enforcement period, we would 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 Coast Guard at 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 guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded 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, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. Special local regulations issued in conjunction with a regatta or marine parade permit are specifically excluded from further analysis and documentation under that section.

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:

You may submit your comments by any one of several methods:

You may mail your comments to: Director (630), Bureau of Land Management, 1620 L Street, NW., Suite 401, Washington, DC 20036, Attention: RIN 1004-AD78.

You may deliver comments to: 1620 L Street, NW., Suite 401, Washington, DC 20036. You may e-mail your comments to: comments_washington@blm.gov . (Include “Attention: AD78” in the subject line.) Please make your comments on the rule as specific as possible, confine them to issues pertinent to the proposed rule, and explain the reason for any changes you recommend. Where possible, your comments should reference the specific section or paragraph of the proposal that you are addressing.

Before including your address, phone number, e-mail address, or other personal identifying information in your comment, be advised that your entire comment, including your personal identifying information, may be made publicly available at any time. While you can ask us in your comment to withhold from public review your personal identifying information, we cannot guarantee that we will be able to do so.

The Department of the Interior may not necessarily consider or include in the Administrative Record for the final rule comments that we receive after the close of the comment period (see DATES ) or comments delivered to an address other than those listed above (see ADDRESSES ).

Part 3130 of 43 Code of Federal Regulations (CFR) contains the regulations that apply to oil and gas leasing in the NPR-A authorized under the Naval Petroleum Reserves Production Act of 1976, as amended (NPRPA), (42 U.S.C. 6501 et seq. ).

On April 11, 2002 (67 FR 17865), the BLM published a final rule that applies to operations under Federal oil and gas leases in NPR-A and added a new subpart allowing the formation of oil and gas units in the NPR-A.

On August 8, 2005, the President signed the Energy Policy Act of 2005 (EPAct of 2005) (Pub. L. 109-58). Section 347 of the EPAct of 2005 amends the NPRPA. These amendments require that the BLM revise our existing regulations on:

(A) Lease extensions and renewals;

(B) Participation in oil and gas units;

(C) Production allocation;

(D) Termination of administration of conveyed mineral estate; and

(E) Waiver, suspension, and reduction of rental, minimum royalty, or royalty.

This proposed rule would make the part 3130 regulations on these subjects consistent with the EPAct of 2005. The rule would also make other changes to NPR-A regulations affecting administration of NPR-A leases and units.

This proposed rule would amend the authority section by adding a reference to the Energy Policy Act of 2005 (Pub. L. 109-58) in a new paragraph (d).

The EPAct of 2005 uses three terms that we also use in this proposed rule. All three terms are used in the provisions having to do with the proposed methodology for allocating production among committed tracts in a unit in the NPR-A (see proposed section 3137.23(g)). If the unit included non-Federal land, the methodology must take into account reservoir heterogeneity and area variation in reservoir producibility. This section of the rule would define the terms “production allocation methodology,” “reservoir heterogeneity,” and “variation in reservoir producibility” in a manner consistent with normal usage in the field.

The EPAct of 2005 addresses the circumstances under which the BLM would consider waiving, suspending, or reducing the rental, royalty, or minimum royalty on an NPR-A lease. This section of existing regulations would be amended by this rule and under new paragraph (a)(2) the BLM could waive, suspend, or reduce the rental, royalty, or minimum royalty on an NPR-A lease if it was necessary to promote development or the BLM determined that the lease could not be successfully operated under the terms of the lease.

Also, as a result of changes made to the NPRPA by the EPAct of 2005, this proposed rule would change existing paragraph (b) by requiring the BLM to consult with the State of Alaska and the North Slope Borough within 10 days of receiving an application for waiver, suspension, or reduction of rental, royalty, or minimum royalty. Under new paragraph (b), the BLM would not approve an application for these benefits (under § 3133.4) until at least 30 days after the consultation is completed.

This proposed rule would add a new paragraph (c) to this section. Under this new paragraph, if a lease included land that was made available for acquisition by a Regional Corporation (as defined in 43 U.S.C. 1602) under Section 1431(o) of the Alaska National Interest Lands Conservation Act (16 U.S.C. 3101 et seq. ), the BLM would only approve a waiver, suspension, or reduction of rental, royalty, or minimum royalty if the Regional Corporation concurred. This change is necessary because the statute requires concurrence from the Regional Corporation prior to approval of these actions.

Under this proposed rule, existing paragraph (a)(6) would have a new requirement that an applicant who is applying for a waiver, suspension, or reduction of rental, royalty, or minimum royalty demonstrate that the waiver, suspension, reduction of the rental, royalty, or minimum royalty encourages the greatest ultimate recovery of oil or gas or it is in the interest of conservation, and all the facts demonstrate that it cannot successfully operate the lease under its terms. The new requirement is as a result of changes that the EPAct of 2005 made to NPRPA.

This rule would also make a minor editorial change to existing paragraph (a)(7) by replacing “can't” with “cannot.”

Changes to the existing paragraph (a) on additional bonding would allow the BLM to require additional bonding for all NPR-A leases, not only special areas, using the criteria of section 3104.5(b) of the existing regulations. This rule would add a cross reference to existing section 3104.5(b), which would allow the BLM to require an increase in the amount of any NPR-A lease bond if the BLM determined that the operator posed a risk due to factors, including, but not limited to:

(A) A history of previous violations;

(B) A notice from the Minerals Management Service (MMS) that there are uncollected royalties due; or

(C) The total cost of plugging existing wells and reclaiming lands exceeds the present bond amount based on the estimates determined by the BLM.

The existing regulations only allow BLM to increase the bonding amount in the Special Areas as defined in the NPRPA. This rule would allow BLM to increase the bonding amount on all NPR-A leases and would make the NPR-A oil and gas regulations consistent with the regulations that currently apply to Federal oil and gas leases outside of the NPR-A.

This proposed rule would revise paragraph (a) of this section to make the existing provisions clearer. This proposal would not change the meaning or intent of this paragraph.

This proposed rule would revise the provisions on segregation in paragraph (b) of this section by changing the standard that the BLM applies when determining if a segregated lease should continue in full force and effect. The existing standard is that a segregated lease remains in full force and effect if the BLM determines that oil and gas is being produced in paying quantities from that segregated portion of the lease area or so long as drilling or well reworking operations, either actual or constructive, are being conducted. The new standard would be that a lease would continue in full force and effect as long as the activities on the segregated lease support lease extension under the regulations in section 3135.1-5. That section would be revised by this rule as well and it is discussed further below.

Existing regulations on lease extensions require that the BLM extend the term of a lease beyond its primary term so long as:

(A) Oil or gas is produced from the lease in paying quantities; or

(B) Drilling or reworking operations, actual or constructive, as approved by the BLM, are being conducted on the lease.

This proposed rule would add a new condition to paragraph (a) of this section under which the BLM would grant a lease extension in cases where the BLM has determined in writing that oil or gas is capable of being produced in paying quantities from the lease.

The proposed rule would amend existing paragraph (a) by breaking it into subparagraphs so that it is easier to read. The last sentence of paragraph (a) would be rewritten to make it clear that the BLM approves drilling or reworking operations, actual or constructive, rather than the Secretary.

This rule would also add a new paragraph (b) to this section that explains that NPR-A leases expire on the 30th anniversary date of the original issuance date of the lease unless oil or gas is being produced in paying quantities from the lease. The new paragraph further explains that if a lease contains a well that is capable of production, but the lease does not produce the oil or gas due to circumstances beyond the lessee's control, the lessee may apply for a suspension under section 3135.2. If the BLM approved the suspension, the lease would not expire on the 30th anniversary of the original issuance date of the lease. These proposed changes are in response to changes to NPRPA made by the EPAct of 2005.

This rule would amend paragraph (c) of the existing regulation by making it clear that the directional wells discussed in that paragraph are the BLM-approved directional wells. This is a clarification of existing practice.

This proposed rule would add a new section on lease renewals to the existing NPR-A regulations that would be based on changes the EPAct of 2005 made to the NPRPA. The EPAct of 2005 addresses, and this section would address, lease renewals in two parts: those leases that have a discovery of hydrocarbons and those leases that do not have a discovery.

With a Discovery. Under this proposed section, at any time after the fifth year of the primary term of a lease, the BLM could approve a 10-year lease renewal for a lease on which there has been a well drilled and a discovery of hydrocarbons, even if the BLM had determined that the well is not capable of producing oil or gas in paying quantities. Under this section the BLM must receive the lessee's application for lease renewal no later than 60 days prior to the expiration of the primary term of the lease.

This section would require that the renewal application provide evidence, and a certification by the lessee, that the lessee has discovered oil or gas on the leased lands in such quantities that a prudent operator would hold the lease for potential future development.

Under this proposed section, the BLM would approve the application if it determined that a discovery was made and that a prudent operator would hold the lease for future development.

The lease renewal would be effective on the day following the end of the primary term of the lease. The BLM may approve the lease renewal on the condition that the lessee drills one or more additional wells or acquires and analyzes more well data, seismic data, or geochemical survey data prior to the end of the primary term of the lease.

The BLM is interested in all comments that you may have on what constitutes a “discovery” for purposes of lease renewal. If today's proposal were adopted, the BLM would use professional judgment, on a case-by-case basis, to make a determination on whether there is a discovery. However, we are especially interested in comments regarding whether any specific criteria should be used to make this determination or, if by the very nature of the determination, each case should be judged individually.

Without a Discovery. Under this proposed section, at any time after the fifth year of the primary term of a lease, the BLM could approve an application for a 10-year lease renewal for a lease on which there has not been a discovery of oil or gas. The BLM must receive the lessee's application no later than 60 days prior to the expiration of the primary term of the lease.

Under this proposed rule, the renewal application must:

(A) Provide sufficient evidence that the lessee has diligently pursued exploration that warrants continuation of the lease with the intent of continued exploration or future potential development of the leased land. The application must show the lessee has drilled one or more wells or acquired seismic or geochemical data indicating a probability of future success, and the application must include a plan for future exploration; or

(B) Show that all or part of the lease is part of a unit agreement covering a lease that qualifies for renewal without a discovery and that the lease has not been previously contracted out of the unit.

The BLM would approve the renewal application if it determined that the application satisfied the requirements of paragraph (b)(2)(A) or (B) of this section. If the BLM approved the application for lease renewal, the applicant would be required to submit to the BLM a fee of $100 per acre within 5 business days of receiving notification of the renewal approval.

The lease renewal would be effective on the day following the end of the primary term of the lease. The BLM may approve the lease renewal on the condition that the lessee drills one or more additional wells or acquires and analyzes more well data, seismic data, or geochemical survey data prior to the end of the primary term of the lease.

The renewed lease would be subject to the terms and conditions applicable to new oil and gas leases issued under the Integrated Activity Plan in effect on the date that the BLM issues the decision to renew the lease.

This proposed rule would revise the consolidation provisions in existing regulations having to do with the term of a consolidated lease. Under the existing regulations, the term of a consolidated lease is extended beyond the primary term of the lease only as long as oil or gas is produced in paying quantities or approved constructive or actual drilling or reworking operations are conducted on the lease. Under paragraph (d) of this proposed rule, the term of a consolidated lease would be extended or renewed, as appropriate, under the extension or renewal provisions of the regulations. The change would recognize that the new standards in the extension and renewal provisions of this rule apply to consolidated leases.

This rule would amend paragraph (e) of the existing regulation by making it clear that the highest of the royalty or rental rates of any original lease apply to the consolidated lease. This is consistent with existing policy and practice.

This rule would add a new section concerning the waiver of administration for conveyed lands in a lease. This new section is necessary because of changes that the EPAct of 2005 made to the NPRPA. Under this new section, the BLM would be required to terminate administration of any oil and gas lease if all of the mineral estate is conveyed to the Arctic Slope Regional Corporation (ASRC). The ASRC would then assume the lessor's obligation to administer any oil and gas lease.

This section would explain that if a conveyance of the mineral estate does not include all of the land covered by an oil and gas lease, the lease would be segregated into two leases, one of which will cover only the mineral estate conveyed. The ASRC would assume administration of the lease within the conveyed mineral estate.

Under this proposed rule, if the ASRC assumed administration of a lease under paragraphs (a) or (b) of this section, all lease terms, the BLM regulations, and the BLM orders in effect on the date of assumption would continue to apply to the lessee's obligations under the lease. All such obligations would remain enforceable by the ASRC as the lessor until the lease terminated.

In a case in which a conveyance of a mineral estate described in paragraph (b) of this section does not include all of the land covered by the oil and gas lease, a person who owns part of the mineral estate covered by the lease is entitled to the revenues associated with its mineral rights, including all royalties resulting from oil and gas produced from or allocated to that part of the mineral estate.

This rule would make one change to the definition of “participating area” by replacing the word “contain” with the phrase “are proven to be productive.” Existing regulations imply that every committed tract within a participating area must contain a well that meets the productivity criteria specified in the unit agreement. The rule would clarify that the participating area consists of tracts that have been proven productive by a well meeting the productivity criteria, but that not every committed tract in the participating area would necessarily contain a well meeting the productivity criteria.

This rule would add a new section on consultation if lands in a unit are owned by the ASRC or the State of Alaska. This section is based on changes that the EPAct of 2005 made to the NPRPA. The new section requires that if the BLM administers a unit containing tracts where the mineral estate is owned by the ASRC or the State of Alaska, or if a proposed unit contains tracts where the mineral estate is owned by the ASRC or the State of Alaska, the BLM would consult with and provide opportunities for participation with respect to the creation or expansion of the unit by:

(A) The ASRC, if the unit acreage contains the ASRC's mineral estate; or

(B) The State of Alaska, if the unit acreage contains the state's mineral estate.

The EPAct of 2005 requires that the BLM provide opportunity for participation by the State of Alaska and the ASRC in the creation and expansion of units if those units include acreage in which the State of Alaska or the ASRC has an interest in the mineral estate. If a proposed oil and gas unit included lands where one or both of these entities owned an interest in the mineral estate, the BLM would require the unit proponent to allow the State of Alaska and/or the ASRC to participate in the negotiations of the unit agreement terms and the unit agreement area. This would allow the State of Alaska and the ASRC to protect their interests in the unit agreement before they committed their tracts to the unit.

Similarly, if a unit expansion is proposed, and the existing unit or the acreage included in the expansion included lands in which the State of Alaska or the ASRC owned a mineral interest, both parties would participate in the negotiation of the terms of the expanded unit and in the determination of the expanded unit area. “Participation” in this case does not mean sharing of revenues or production. Instead, the term means participation by the ASRC or the state, as applicable, in the process of government oversight, through consultation, of the unit's creation or expansion.

The rule would make one minor change to section 3137.21(a)(3) by replacing the word “proposed” with the word “anticipated.” Existing regulations assume that in all cases the applicant would be in a position to propose the participating area size and well locations at the application stage. The wording change would recognize that at the early application stage in the process an applicant may not be able to propose the participating area size or well locations. Using the word “anticipated” instead of “proposed” better reflects on-the-ground circumstances.

This proposed rule would amend the existing paragraph (a)(5) of this section by requiring that unit agreements that contain the ASRC's mineral estate or the state's mineral estate must acknowledge that, with respect to those two entities, the BLM consulted with and provided opportunities for participation in the creation of the unit and that the BLM will consult with and provide opportunities for participation in the expansion of the unit, as appropriate. Existing regulations do not contain this consultation requirement, which is now necessary due to changes to NPRPA made by the EPAct of 2005. As in proposed section 3137.21, “participation” by the ASRC or the state means participation in the oversight process through consultation with the BLM.

This rule would also make a minor editorial change to existing paragraph (a)(5) (renumbered paragraph (a)(6)) by adding “that” between “subpart” and “you.”

This proposed rule would add to the existing regulation a provision requiring in the unit application a discussion of the proposed methodology for allocating production among the committed tracts. If the unit included non-Federal oil and gas mineral estate, new paragraph (g) would require that the application explain how the methodology would take into account reservoir heterogeneity and area variation in reservoir producibility. These changes are necessary because of changes that the EPAct of 2005 made to the NPRPA. Also, as discussed earlier, the terms “reservoir heterogeneity” and “reservoir producibility” would be defined in section 3130.0-5 of this rule.

This proposed rule would amend the section on continuing development obligations by requiring that a unit agreement provide for the submission of supplemental or additional plans of development which obligate the operator to a program of exploration and development. The existing regulations require that the unit agreement actually obligate the operator to a program of exploration and development. The change recognizes that at the early stages of a unit agreement, an operator may not be able to identify the program of exploration and development and therefore it might not be possible for an operator to commit to one at that time. The proposal would allow an operator to submit plans of development later in the process, allowing the operator to collect additional data prior to requiring the operator to obligate itself to a program of exploration and development.

This proposed rule would make two changes to this section. The first change would revise paragraph (a) of the section by replacing “that contain” with “that are proven to be productive.” The existing regulations imply that every committed tract within a participating area must contain a well that meets the productivity criteria specified in the unit agreement. The revision would make it clear that a participating area contains committed tracts in a unit area that are proven to be productive by a well meeting the productivity criteria specified in the unit agreement, but that not every committed tract in the participating area would necessarily contain a well meeting the productivity criteria.

The second change this rule would make is to paragraph (b) of this section. Under the new rule, an applicant would be required to include “a description of the anticipated participating area(s) size in the unit agreement” rather than merely stating that the unit area “contain” a well meeting the productivity criteria. This change makes it clear that the application must contain a description of the anticipated participating area size.

The rule would revise paragraph (a) of this section by changing how the BLM allocates production, for royalty purposes, to each committed tract within the participating area. Under existing regulations, the BLM allocates to each committed tract within the participating area in the same proportion as that tract's surface in the participating area to the total acreage in the participating area. Under this proposed rule, the BLM would allocate production for royalty purposes to each committed tract within the participating area using the allocation methodology agreed to in the unit agreement (see section 3137.23(g)). This change would allow for variations in the reservoir geology and producibility when calculating allocations for royalty purposes.

This proposed rule would revise paragraph (b) of this section by changing how the BLM determines the effective date of a modified participating area or modified allocation schedule. Under existing regulations, the effective date of a modified participating area or modified allocation schedule is the earlier of the first day of the month in which you: (1) Complete a new well meeting the productivity criteria; or (2) Should have known you need to revise the allocation schedule. Under this proposed rule, the effective date of a modified participating area or allocation schedule would be the earlier of the first day of the month in which you file a proposal for modification or such other date as may be provided in the unit agreement. It has been common practice with oil and gas units administered by the State of Alaska to allow for an earlier effective date when participating areas or allocation schedules are modified.

The proposed rule would allow the BLM to approve an earlier effective date of the participating area, if it is warranted, consistent with the approach that the State of Alaska takes. Under this proposed rule, rather than just determining a fair, current allocation of a revised participating area, the BLM would be able to approve an effective date back in time. This would allow corrections of past, errant allocations rather than just moving forward with a fair allocation from the time new information is acquired. This method of “backward” looking reallocation creates a greater administrative workload for the BLM and the MMS, but it is the superior approach because it would allow for corrections of allocations that were incorrect and helps to ensure that parties to the unit are treated equitably.

This proposed rule would revise this section by adding lease renewals to this section and referencing the proposed rule governing extensions (43 CFR 3135.1-5). The EPAct of 2005 addresses lease renewals and provides for a renewal fee of $100 per acre for each lease in the unit that is renewed without a discovery under 43 CFR 3135.1-6 of this proposed rule. Renewals are addressed under 43 CFR 3135.1-6 of this proposed rule. This section incorporates those changes to this section of the NPR-A unit regulations. As a result of these changes and because the EPAct of 2005 addresses extensions and lease renewals, existing section 3137.111 is superseded by the statutory provisions that this rule would implement.

These two sections address what happens to leases in a unit in the event a unit terminates. This proposed rule would revise these sections by adding the option of a lessee applying for a renewal upon unit termination and by adding a cross-reference to the proposed lease renewal provisions in these proposed regulations.

In accordance with the criteria in Executive Order 12866, this rule is not a significant regulatory action. The Office of Management and Budget makes the final determination under Executive Order 12866.

a. This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government (see below). A cost-benefit and economic analysis is not required.

b. This rule will not create inconsistencies with other agencies' actions. These rule changes are administrative in nature and will not effect other agencies' actions. There are provisions in the rule that require the BLM to consult with or request concurrence from the state, North Slope Borough, or the ASRC before approving certain actions. These provisions are to the benefit of these other agencies because they help ensure that their rights are protected. These provisions would more than likely help ensure that the actions taken under this rule would not create inconsistencies with those agencies' actions.

c. This rule will not materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients. The one fee this rule would implement (lease renewals without a discovery) is a per-acre fee mandated by Congress. As stated below, when compared to the scope and cost of operations in NPR-A, this fee is not significant.

d. This rule will not raise novel legal or policy issues. All of the NPR-A oil and gas regulations changes that this rule would implement are currently addressed similarly in other existing BLM regulations or policies.

The following discusses the potential impacts of the proposed rule changes:

The rule would add a provision that would allow the BLM to waive, suspend, or reduce the rental, royalty, or minimum royalty on an NPR-A lease if it was necessary to promote development or the BLM determined that the lease could not be successfully operated under the terms of the lease. The BLM would not allow for any of these to take place unless it were necessary to promote development or if we determined that the lease could not be successfully operated under the terms of the lease.

Operators would benefit from this provision since they would be able to continue to operate their leases. The Federal Government would benefit since producible wells would not be shut in and the Federal Government would continue to receive revenue from wells that might otherwise be shut in, which may result in waste of Federal oil and gas. Furthermore, since this provision may reduce the risk of investment to lessees, it may result in higher bonus bids for new leases. State, local and tribal governments and communities would be positively affected since wells that would under other circumstances be shut in, would continue to produce, providing jobs and revenues to local areas. Any impacts on the economy, productivity, competition or jobs would be positive, but would be too speculative to predict.

Also, as a result of changes made to the NPRPA by the EPAct of 2005, the proposed rule would change existing regulations by requiring the BLM to consult with the State of Alaska and the North Slope Borough within 10 days of receiving an application for waiver, suspension, or reduction of rental, royalty, or minimum royalty. This provision could increase costs slightly for the BLM, the State of Alaska, and the North Slope Borough because under this proposed rule these parties would be involved in consultation that is currently not required. However, consultation would help ensure that the rights of the state and the North Slope Borough are protected.

The proposed rule would add a new provision to the regulations stating that if a lease included land that was made available for acquisition by a Regional Corporation under the Alaska National Interest Lands Conservation Act, the BLM would only approve a waiver, suspension, or reduction of rental, royalty, or minimum royalty if the Regional Corporation concurred. This change is necessary because the statute requires concurrence from the Regional Corporation prior to approval of these actions. Concurrence by the Regional Corporation is not currently required. Therefore, this provision could minimally increase administrative costs for the Federal Government and for the Regional Corporation; however, requiring concurrence would help ensure that the rights of the Regional Corporation are protected.

Changes to the bonding regulations would allow the BLM to require additional bonding under certain circumstances. The existing regulations only allow BLM to increase the bonding amount in the Special Areas as defined in the NPRPA. The rule would allow the BLM to require an increase in the amount of an NPR-A lease bond for any NPR-A lease if the BLM determined that the operator posed a risk due to factors, including, but not limited to:

(A) A history of previous violations;

(B) A notice from the MMS that there are uncollected royalties due; or

(C) The total cost of plugging existing wells and reclaiming lands exceeds the present bond amount based on the estimates determined by the BLM.

The rule change would make the existing regulations on bonding of NPR-A leases consistent with the Mineral Leasing Act regulations that currently apply to Federal oil and gas leases outside of the NPR-A. The BLM has used this authority on lands leased under the Mineral Leasing Act. The increases have most often been based on the significant liabilities that an operator has under a single bond. Under these circumstances, the average bond increase has been about 200 percent. While it is not possible, at this time, to predict how much any specific bond amount might be increased were this provision to become effective, increasing an area-wide NPR-A bond ($300,000) by 200 percent would make the increased bond amount $900,000. This is more consistent with bonding of other agencies on the North Slope than is the existing area-wide bond amount under existing regulations. For example, the State of Alaska requires bonding of $700,000 for multiple oil wells and the MMS requires bonding of $3,000,000 for offshore development.

This provision would economically impact only those operators who have a history of previous violations, those that have uncollected royalties that are due, and those who have leases where the total cost of plugging existing wells and reclaiming lands exceeds the present bond amount based on the estimates determined by the BLM. The economic impact to these operators would be minimal when compared to the value of an oil and gas lease in the NPR-A, and when compared to the additional protection the Federal Government and Federal lands would receive.

A typical development in NPR-A would produce approximately 20,000 barrels per day or 7,300,000 barrels per year. With a market price of $60 per barrel  1 in the lower 48 states and approximately $8 in transportation costs per barrel to get the oil from NPR-A to the lower 48 states, the wellhead price would be approximately $52 per barrel.

A typical bond amount for a lease in the NPR-A is approximately $300,000. If we raised the bonding requirement from $300,000 to $900,000, the annual bonding fee the operator would pay would go from approximately $3,000 per year to $9,000 per year (the cost of a surety bond is approximately 1% per year), an increase of $6,000 per year.

How does that compare to other costs the operator faces? The transportation cost to get the production to the lower 48 states would be about $58,400,000 per year. Receipts at the wellhead would be approximately $379,600,000 per year. The lifting cost would be about $33,000,000. Royalties would be approximately $47,450,000 per year. A $6,000, or even $60,000, increase in costs per year would have minimal impact on the operator.

The proposed rule would change the standard that the BLM applies when determining if a segregated lease should continue in full force and effect. The existing standard is that a segregated lease remains in full force and effect if the BLM determines that oil and gas is being produced in paying quantities from that segregated portion of the lease area or so long as drilling or well reworking operations, either actual or constructive, are being conducted. The new standard would be that a lease would continue in full force and effect as long as oil or gas is produced or is capable of being produced from the lease in paying quantities or drilling or reworking operations, actual or constructive, as approved by the Secretary, are being conducted on the lease. This would have the same economic impact as discussed under the “Lease Extension” and “Lease Renewal” sections since the segregated lease would be able to be extended or renewed based on the same criteria used for all NPR-A leases.

Existing regulations on lease extensions require that the BLM extend the term of a lease beyond its primary term so long as:

(A) Oil or gas is produced from the lease in paying quantities; or

(B) Drilling or reworking operations, actual or constructive, as approved by the Secretary, are being conducted on the lease.

The proposed rule would add a new condition under which the BLM would grant a lease extension in cases where the BLM has determined that oil or gas is capable of being produced in paying quantities from the lease.

This rule would also add a new provision that explains that NPR-A leases expire on the 30th anniversary date of the original issuance date of the lease unless oil or gas is being produced from the lease. This provision is required by the EPAct of 2005.

Prior to the EPAct of 2005, NPR-A lease terms were fixed at 10 years. Longer lease terms for NPR-A leases are preferable since there are harsh climatic conditions and a short “winter only” exploration window in the NPR-A that make it difficult to operate in that region. Longer lease terms allow operators additional time to deal with these conditions. Under the existing regulations, the long lead time between exploration and production on the North Slope (6-8 years) reduces incentive for operators to explore on leases with less than 6-8 years left in their primary term. The new rule would provide incentive for operators to continue exploration in the later years of the primary term of the lease. The timeframe for bringing a gas discovery to production is even longer. Without a gas pipeline to the North Slope, operators currently have little incentive to explore in gas-prone areas or to further delineate gas discoveries. The new rule may have the effect of increasing the value of the NPR-A leases, increasing the level of exploration activity, and increasing the likelihood of eventual production from NPR-A leases. The value of these benefits, if any, is too speculative to predict. These changes would also have minor administrative savings and economic benefit to operators and to the Federal Government since lessees would not be required to file for lease extensions as frequently and since the Federal Government would not be required to process those lease extensions.

The proposed rule would add a new section on lease renewals based on changes the EPAct of 2005 made to the NPRPA. The rule would address lease renewals in two parts: Those leases that have a discovery of hydrocarbons and those leases that do not have a discovery.

With a Discovery. Under this proposed section, the BLM would approve a 10-year lease renewal for a lease on which there has been a well drilled and a discovery of hydrocarbons, even if the BLM had determined that the well is not capable of producing oil or gas in paying quantities. This section would require that the applicant provide evidence that oil or gas has been discovered on the leased lands in such quantities that a prudent operator would hold the lease for potential future development. This regulatory change is required by the EPAct of 2005.

The economic impact of this provision would be positive. Existing regulations do not provide for lease renewals but do provide for lease extensions if there is actual production or as long as drilling and reworking operations are being conducted. This provision would allow for lease renewal for a 10-year term if a discovery was made and a prudent operator would hold the lease for future development. This provision provides an incentive for an operator to explore, even if there is not enough time to meet the current conditions for lease extensions. This change would allow the lessee another 10 years to explore and develop the lease without having to compete for the lease again in a subsequent lease sale. Leases in the NPR-A typically are either 5,760 or 11,520 acres and the average high bid is approximately $70 per acre. The Federal Government may be foregoing between $400,000 and $800,000 for each of these lease renewals, since lessees who were granted a lease renewal would not be required to compete for a new lease for the same lands. In exchange for this “opportunity cost” the lease has a much greater likelihood of being developed and developed sooner.

It is also possible that without the option of renewal, the lease which has been explored without a paying well discovery would have less value and not receive bids in the next sale. In this case, the United States would lose the value of lease rental ($60,000-$150,000 per year). Lease bonuses and lease rentals are both lesser considerations in the United States realizing the value of leased lands, however. The value of potential production from an NPR-A lease far exceeds either of these revenue streams. A typical North Slope development produces about 20,000 barrels of oil per day. At a $60 per barrel oil price, the United States would collect between $45 and $60 million dollars per year in royalties. If the renewals make the likelihood of development greater, the identified “opportunity costs” are viewed as beneficial to the United States.

Furthermore, this could reduce risk of investment to the lessee, which may increase bonus bids on future leases.

Without a Discovery . Under this proposed section, the BLM could approve an application for a 10-year lease renewal for a lease on which there has not been a discovery of oil or gas.

Under this proposed rule, the renewal application must:

(A) Provide sufficient evidence that the lessee has diligently pursued exploration that warrants continuation of the lease with the intent of continued exploration or future potential development of the leased land; or

(B) Show that all or part of the lease is part of a unit agreement covering a lease that qualifies for renewal without a discovery and that the lease has not been previously contracted out of the unit.

If the BLM approved the application for lease renewal, the applicant would be required to submit to the BLM a fee of $100 per acre within 5 working days of receiving notification of the renewal approval. This fee is mandated by the EPAct of 2005.

As discussed above, existing regulations do not allow for lease renewals, only lease extensions if there is actual production or as long as drilling and reworking operations are being conducted. This new provision would allow for lease renewal without a discovery under certain circumstances and would require that lessees pay a fee of $100 per acre for the renewal. The economic impact of this provision would be minimal. As with lease renewal with a discovery, this provision provides the lessee with incentive to explore, even if there is not sufficient time to take actions to qualify for a lease extension. As discussed above, the cost to obtain the lease in a subsequent sale would likely be around $70 per acre. The new rule would allow the lessee to retain the lease without competition, or the risk of loss of the lease, for a cost above what it might cost in a competitive lease sale, but it would allow the operator to seamlessly pursue exploration. This is likely to have the effect of accelerating the eventuality of bringing the lease into production. It is also possible, as discussed above, that without the option of renewal the lease which has been explored without a discovery would have less value and not receive bids in the next sale. In this case the United States would lose the value of lease rental ($60,000—$150,000 per year). Furthermore, nothing compels a lessee to apply for a lease renewal and pay the per acre fee. If the lessee believes the lease may be valuable, but not worth $100 per acre, he can relinquish the lease and try to obtain it at a lower price in a subsequent competitive lease sale. Operators may still apply for lease extensions under the revised provisions of this rule. Operators may also apply for a renewal under other provisions of this rule and avoid paying the fee by a discovery and a showing that a prudent operator would hold the lease for future development.

The new rule has the effect of allowing the government to be compensated for the lease without having the administrative costs of conducting a new lease sale. The new rule also increases the likelihood of production and royalty payments at an earlier date. The value of potential production from an NPR-A lease far exceeds the value of lease bonuses. A typical North Slope development produces about 20,000 barrels of oil per day. At a $60 per barrel oil price, the United States would collect between $45 and $60 million dollars per year in royalties.

This provision could lower the risk of investment to the lessee and possibly result in higher bonus bids at future lease sales. Like other changes this rule would make, any benefits of this provision are too speculative to predict.

The proposed rule would revise the consolidation provisions in existing regulations having to do with the term of a consolidated lease. Under existing regulations, the term of a consolidated lease is extended beyond the primary term of the lease only as long as oil or gas is produced in paying quantities or approved constructive or actual drilling or reworking operations are conducted on the lease. Under this proposed rule, the term of a consolidated lease would be extended or renewed, as appropriate, under the extension or renewal provisions of the regulations. The change would recognize that the new standards in the extension and renewal provisions of this rule apply to consolidated leases. This would have the same economic impacts discussed under “Lease Extension” and “Lease Renewal” sections above, i.e., it could have the effect of increasing the value of the NPR-A leases, increasing the level of exploration activity, increasing the likelihood of production from NPR-A leases, and increasing future bonus bids.

This rule would add a new section concerning the waiver of administration for conveyed lands in a lease. This new section is necessary because of changes that the EPAct of 2005 made to the NPRPA. Under this new section, the BLM would be required to terminate administration of any oil and gas lease if all of the mineral estate is conveyed to the ASRC. The ASRC would then assume the lessor's obligation to administer any oil and gas lease. This provision does not provide the authority to convey the mineral estate to the Regional Corporation, only that once a conveyance is made, the BLM would no longer administer any oil and gas lease. This change would have a minor positive economic impact on the Federal Government because costs for administration of these types of leases would no longer be borne by the BLM. The Regional Corporation would be responsible for administration and likewise be responsible for administrative costs.

This section would explain that if a conveyance of the mineral estate does not include all of the land covered by an oil and gas lease, the lease would be segregated into two leases, one of which will cover only the mineral estate conveyed. The ASRC would assume administration of the lease within the conveyed mineral estate. The segregation of a lease would not impair the mineral estate owners' rights to royalties for oil and gas produced from, or allocated to, their portions of land covered by the lease. This provision is purely administrative in nature and would have a minimal economic impact. It would decrease administrative costs for the Federal Government and increase the administrative costs to the ASRC for leases that have been conveyed.

This rule would make one change to the definition of “participating area” by replacing the word “contain” with the phrase “are proven to be productive.” Existing regulations are not clear that a committed tract does not need to contain a well that meets the productivity criteria specified in the unit agreement. Instead, a unit well meeting the productivity criteria proves that the committed tract is productive. This change would have no economic impact since this change merely clarifies existing policy.

This rule would add a new section on consultation if lands in a unit are owned by the ASRC or the State of Alaska. This section is based on changes that the EPAct of 2005 made to the NPRPA. The new section requires that if the BLM administers a unit containing tracts where the mineral estate is owned by the ASRC or the State of Alaska, or if a proposed unit contains tracts where the mineral estate is owned by the ASRC or the State of Alaska, the BLM would consult with and provide opportunities for participation with respect to the creation or expansion of the unit by:

(A) The ASRC, if the unit acreage contains the ASRC's mineral estate; or

(B) The State of Alaska, if the unit acreage contains the state's mineral estate.

The rule would have minor economic impacts on the BLM, the State of Alaska, and the ASRC. All parties involved in the consultation could incur minor additional costs; however, consultation would help ensure that the rights of all parties to the unit are protected.

The proposed rule would require the unit application to explain the proposed methodology for allocating production among the committed tracts. If the unit included non-Federal mineral estate, the applicant would be required to explain how the methodology would take into account reservoir heterogeneity and area variation in reservoir producibility. These changes are necessary because of changes that the EPAct of 2005 made to the NPRPA. The economic impacts of this provision are expected to be minor, but not measurable, since the change would impact different unit agreements differently. However, the rule would help ensure fair allocation of production among unit participants and ensure that the Federal Government receives the correct royalty payment.

The proposed rule would amend the provisions on continuing development obligations in existing regulations by requiring that a unit agreement provide for the submission of supplemental or additional plans of development which obligate the operator to a program of exploration and development. The existing regulations require that the unit agreement actually obligate the operator to a program of exploration and development.

The change recognizes that at the early stages of a unit agreement, an operator may not be able to identify the program of exploration and development and therefore it might not be possible for an operator to commit to one at that time. The proposal would allow an operator to submit plans of development later in the process, allowing for the operator to collect additional data prior to requiring the operator to obligate itself to a program of exploration and development. Under the existing process, because the data may be incomplete, the operator may be required to submit information several times as the data becomes available. The new provision would have minor positive economic benefits for applicants and the BLM since it would allow commitment to a program of exploration and development at a more appropriate time when sufficient data is available.

This proposed rule would make two changes to the provisions on participating areas. The first change would make it clear that a participating area contains committed tracts in a unit area that are proven to be productive by a well meeting the productivity criteria specified in the unit agreement. The second change is that this rule would make it clear that the application must contain a description of the anticipated participating area size. Neither of these changes would have an economic impact because they merely clarify existing policy.

The rule would revise the participating area provisions of existing rules by changing how the BLM allocates production, for royalty purposes, to each committed tract within the participating area. Under existing regulations, the BLM allocates to each committed tract within the participating area in the same proportion as that tract's surface in the participating area to the total acreage in the participating area. Under this proposed rule, the BLM would allocate production for royalty purposes to each committed tract within the participating area using the allocation methodology agreed to in the unit agreement. This change would allow for variations in the reservoir geology and producibility when calculating allocations for royalty purposes. This change would implement changes mandated by Congress in the EPAct of 2005. This rule change would have little economic impact to industry or the Federal Government, but would help ensure proper production allocations on a case-by-case basis.

This proposed rule would revise how the BLM determines the effective date of a modified participating area or modified allocation schedule. Under existing regulations, the effective date of a modified participating area or modified allocation schedule is the earlier of the first day of the month in which you: (1) Complete a new well meeting the productivity criteria; or (2) Should have known you need to revise the allocation schedule. Under this rule, the effective date of a modified participating area or allocation schedule would be the earlier of the first day of the month in which you file a proposal for modification or such other date as may be provided in the unit agreement. This change allows the BLM to approve an earlier effective date, if warranted. Rather than just determining a fair current allocation of a revised participating area, the BLM would be able to approve an effective date back in time. This would allow corrections of past, erroneous, allocations rather than just moving forward with a fair allocation from the time new information is acquired. This provides greater flexibility and certainty that allocations will be equitably determined for all parties and overall would have no economic impact except that it could affect individual allocations.

This proposed rule would revise the provisions on the term of leases committed to a unit by adding lease renewals as an option. The EPAct of 2005 addresses lease renewals and provides for a renewal fee of $100 per acre for each lease in the unit that is renewed without a discovery. This section incorporates those changes to this section of the NPR-A unit regulations. As a result of these changes and because the EPAct of 2005 addresses extensions and lease renewals, existing provisions on lease extensions for leases in a unit are superseded by the statutory provisions that this rule would implement. We anticipate that the economic impacts of this rule would be the same as described under the “Lease Extension” section above.

The rule change addresses what happens to leases in a unit in the event a unit terminates. The proposed rule would allow a lessee to apply for a lease renewal upon unit termination and would conform the provisions addressing termination with Congress' mandates regarding extension in the EPAct of 2005. Existing regulations allow lease extensions upon unit termination, but do not provide for lease renewals in these circumstances. These changes would have a minor positive economic impact by allowing lessees the option of applying for lease renewal upon unit termination.

Executive Order 12866 requires each agency to write regulations that are simple and easy to understand. We invite your comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:

1. Are the requirements in the proposed regulations clearly stated?

2. Do the proposed regulations contain technical language or jargon that interferes with their clarity?

3. Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

4. Would the regulations be easier to understand if they were divided into more (but shorter) sections? (A “section” appears in bold type and is preceded by the symbol “§ ” and a numbered heading, for example: § 3135.1-4 Effect of transfer of a tract.).

5. Is the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble helpful in understanding the proposed regulations? How could this description be more helpful in making the proposed regulations easier to understand?

Please send any comments you have on the clarity of the regulations to the address specified in the ADDRESSES section.

The BLM has prepared an environmental assessment (EA) and has found that the proposed rule would not constitute a major Federal action significantly affecting the quality of the human environment under Section 102(2)(C) of the National Environmental Policy Act (NEPA), 42 U.S.C. 4332(2)(C). A detailed statement under NEPA is not required. The BLM has placed the EA and the Finding of No Significant Impact on file in the BLM Administrative Record at the address specified in the ADDRESSES section.

The action of modifying the existing regulations would have very little impact on the environment. The new regulations would create more favorable lease terms for oil and gas companies (e.g., allowing lease extensions and renewals, potential for relief from royalty, rental and minimum royalty) and this may increase the likelihood of exploration and development in the NPR-A. The revised regulations would also allow the BLM greater flexibility in granting relief from rentals and royalty which may also have the effect of encouraging development. But while the likelihood of exploration and development may be greater, the character or intensity of exploration and development remains unchanged. The potential impacts from exploration and development have been addressed in three environmental impact statements (EIS) written for the Integrated Activity Plans for the Northeast and Northwest NPR-A, seven EAs written for individual exploration proposals, and the Alpine Satellites Development EIS.

To the extent that recent Court decisions may require further NEPA analysis with respect to the environmental impacts of proposed leasing in the NPR-A, the BLM would address such analysis within the context of its consideration of land use planning and any proposed leasing. However, these proposed regulations do not invoke any significant environmental impact requiring additional NEPA analysis beyond the environmental assessment.

The revised regulations may also have the effect of allowing the oil and gas operators to pursue exploration and development at a more measured pace since terms of the lease can be extended beyond what was previously available.

The change to bonding levels would provide the BLM more certainty that environmental obligations, such as reclamation and well plugging, are honored. This would lessen the likelihood of adverse environmental impacts to the NPR-A.

Changes in the regulations that would require: (1) The BLM to allow participation from ASRC and the State of Alaska in the creation and expansion of oil and gas units; (2) Consultation with ASRC, State of Alaska, and the North Slope Borough when considering relief from royalty, rentals, or minimum royalty; (3) Allocation of production based on reservoir characteristics; and (4) The BLM to give ASRC administration of leases conveyed to the Native Corporation, are strictly administrative in nature and will have no effect on the environment.

This view as to the minimal environmental effects of the proposed changes in the regulations is consistent with the Department's previously expressed policies as indicated by provisions of the Departmental Manual (DM) which establish categorical exclusions under NEPA for actions by the BLM of the type addressed by the proposed regulations. These include “(4) approval of unitization [ sic ] agreement[s] * * * (5) approval of suspensions of operations, force majeure suspensions, and suspensions of operations and production.” See 516 DM Chapter 6, Appendix 5, 5.4B.

Congress enacted the Regulatory Flexibility Act (RFA) of 1980, as amended, 5 U.S.C. 601-612, to ensure that Government regulations do not unnecessarily or disproportionately burden small entities. The RFA requires a regulatory flexibility analysis if a rule would have a significant economic impact, either detrimental or beneficial, on a substantial number of small entities.

This rule will not have a significant economic effect on a substantial number of small entities as defined under the RFA. An initial or final Regulatory Flexibility Analysis is not required. Accordingly, a Small Entity Compliance Guide is not required.

The BLM cannot determine how many lessees may qualify as small businesses or how many would be adversely affected by this proposed rule because the BLM does not track this type of information and it is not readily available. The BLM believes that several of the types of businesses identified in the North American Industrial Classification System (NAICS) (codified in the Small Business Administration regulations at 13 CFR 121.201) may do business in the NPR-A. These businesses, NAICS codes, and size standards in millions of dollars in receipts annually or number of employees are listed in the following table:

As stated above, the businesses in the table represent ones that may operate in NPR-A. However, we do not believe that businesses with the NAICS codes 213111, 213112, or 237120 would be impacted by the changes this rule proposes to make to the current regulations. Of the businesses listed in the table, businesses with NAICS codes 211111 and 211112 may be impacted by the proposed changes this rule would make because the regulatory changes would primarily affect lessees, and lessees may fall into one or both of these two categories.

Due to the scale and cost of operations on the North Slope (see the discussion under Executive Order 12866 above), it is not likely that operators in NPR-A would be small businesses. Furthermore, the BLM is unaware of any small businesses operating on lands in NPR-A under existing regulations and because of the large scale and high cost of operations in NPR-A, we do not anticipate that small businesses will enter the market in the future. Even if a small business did begin doing business in NPR-A, when compared to the costs of operating in the NPR-A and the potential receipts involved if production were to take place (see the discussion under Executive Order 12866 above), the impact of the proposed rule changes would be minimal. Therefore, the proposed changes would not have a significant economic effect on a substantial number of small entities.

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

a. Does not have an annual effect on the economy of $100 million or more. Please see the discussion under Executive Order 12866 above.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, state, or local government agencies, or geographic regions. Please see the discussion under Executive Order 12866 above.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. These proposed changes should have no adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises because their impact, economic and otherwise, would be minimal.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501, et seq. ):

a. This proposed rule would not “significantly or uniquely” affect small governments. A Small Government Agency Plan is not required.

b. This proposed rule would not produce a Federal mandate of $100 million or greater in any year, i.e., it is not a “significant regulatory action” under the Unfunded Mandates Reform Act.

This proposed rule would not mandate additional expenditures by any state or local government, any Federal agency, or any other entity. The State of Alaska and the ASRC may incur minor additional expenses under the consultation provisions of this proposed rule, but the consultations are for the benefit of those parties.

The proposed rule does not represent a government action capable of interfering with constitutionally protected property rights. The proposed rule primarily extends benefits to leaseholders. The cost of additional bonding is too minor to constitute a taking. Therefore, the Department of the Interior has determined that the proposed rule would not cause a taking of private property or require further discussion of takings implications under this Executive Order.

The proposed rule will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

In accordance with Executive Order 13132, the proposed rule does not have significant Federalism effects. A Federalism assessment is not required.

The proposed rule would only have a minimal 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. There are certain consultation provisions in the proposed rule where the state would be invited to participate in the discussion of the creation or expansion of Federal unit agreements in NPR-A which contain state lands. The consultation burden is minimal and it would be in the interest of the state to participate to help ensure that allocations to the state were fair.

Under Executive Order 12988, the Office of the Solicitor has determined that this proposed rule would not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of the Order. The BLM has worked closely with the Office of the Solicitor to help ensure that the proposed rule is written clearly and to help eliminate drafting errors.

Executive Order 13175 (E.O. 13175) provides that Federal agencies must consult with Indian Tribal Governments before formal promulgation of regulations “that have Tribal implications.” E.O. 13175 defines “Indian Tribes” for purposes of government-to-government consultation as those “that the Secretary of the Interior acknowledges to exist as an Indian tribe pursuant to the Federally Recognized Indian Tribe List Act of 1994, 25 U.S.C. 479a” (E.O. 13175 at section 1(b)). In accordance with this mandate, the Bureau of Indian Affairs recently published a list of recognized tribes, including a large number of Native Alaskan entities including villages, communities, and tribes (see 70 FR 71194 (November 25, 2005)). If there were a duty of government-to-government consultation, prior to promulgation of these regulations, it would be owed to those listed tribal governments.

None of the recognized tribal governments have significant oil and gas interests within NPR-A or within the vicinity of NPR-A. Therefore, nothing in these final regulations has “substantial direct effects 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” (see section 1(a) of E.O. 13175). Accordingly, the final regulations do not have tribal implications and there is no government-to-government consultation obligation in this case.

Additionally, we are aware that a number of Alaska Native corporations organized under the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq. ) (ANCSA) may have oil and gas interests. The proposed rule would provide for consultation with the ASRC in accordance with the requirements of the EPAct of 2005 if lands in the unit area are owned by the ASRC. Also, the proposed rule would provide for concurrence by the ASRC before the BLM approves a waiver, suspension, or reduction of royalties under section 3133.3 if the lease includes land that was made available for acquisition by the Regional Corporation under Section 1431(o) of the Alaska National Interest Lands Conservation Act (ANILCA) (Pub. L. 96-487). Additionally, these corporations could potentially become participants in units that include Federal NPR-A leases. If so, they would be eligible to participate in those unit agreements in the same manner as any other participants. However, no special consultation beyond that required by the EPAct of 2005 or by these proposed rules, if adopted, with such corporations would be required as a matter of law. The Bureau of Indian Affairs has recently declined to include such corporations on the list of recognized tribes eligible for government-to-government consultation (see 70 FR 71194 (November 25, 2005)). The Bureau of Indian Affairs previously indicated that ANCSA corporations are formally state-chartered corporations rather than tribes in the conventional legal or “political sense” and that Alaskan Native Villages were Indian tribes. See “Indian Entities Recognized and Eligible to Receive Services From the United States Bureau of Indian Affairs,” (60 FR 9250 (February 16, 1995)).

Prior to the promulgation of these rules, the BLM will provide opportunity for the tribal governments, along with the public generally, to comment during the comment period, in accordance with the notice and comment requirements of the Administrative Procedure Act.

Therefore, in accordance with E.O. 13175, we have found that this proposed rule does not include policies that have tribal implications.

In accordance with Executive Order 13211, the BLM has determined that the proposed rule will not have substantial direct effects on the energy supply, distribution or use, including a shortfall in supply or price increase. For the most part, this proposed rule does not represent the exercise of agency discretion inasmuch as a substantial portion of this rule is mandated by the EPAct of 2005. Congress's mandate to amend the BLM's existing NPR-A oil and gas regulations may result in an increase in oil and gas production of unknown amounts.

In accordance with Executive Order 13352, the BLM has determined that this proposed rule does not impede facilitating cooperative conservation; takes appropriate account of and considers the interests of persons with ownership or other legally recognized interests in land or other natural resources; properly accommodates local participation in the Federal decision-making process; and provides that the programs, projects, and activities are consistent with protecting public health and safety. The proposed rule may positively affect the facilitation of cooperative conservation because the proposed rule seeks to add provisions to the existing NPR-A oil and gas regulations requiring that the BLM consult with the ASRC and the state in certain circumstances where consultation is not currently required.

The BLM has determined that this rulemaking does not contain any new information collection requirements that the Office of Management and Budget must approve under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

When the BLM developed this rule, it did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).

The principal authors of this proposed rule are Greg Noble, Chief, Energy Branch, Bureau of Land Management, Alaska State Office, and Erick Kaarlela, Special Assistant to the Assistant Director, Minerals, Realty and Resource Protection, assisted by the Department of the Interior Office of the Solicitor and BLM's Division of Regulatory Affairs, Washington, DC.

For the reasons stated in the preamble, the BLM proposes to amend 43 CFR part 3130 as set forth below:

We encourage you to participate in this rulemaking by reviewing the proposed rules and submitting comments and related materials. All comments received will be posted, without change, to http://dms.dot.gov/ and will include any personal information you have provided. We have an agreement with the Department of Transportation (DOT) to use the Docket Management Facility. Please see DOT's “Privacy Act” paragraph below.

A. Submitting Comments: If you submit a comment, please include your name and address, identify the docket number for this rulemaking (USCG-2004-19823), indicate the specific section of this document to which each comment applies, and give the reason or justification for each comment. You may submit your comments and material by electronic means, mail, fax, or delivery to the Docket Management Facility at the address under ADDRESSES ; but please submit each set of comments and material only once ( e.g. , mail, electronic, or fax). If you submit them by mail or delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Document Management Facility, 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.

B. Viewing Comments and Documents: To view comments or documents mentioned in this preamble as being available in the docket, go to http://dms.dot.gov/ at any time and conduct a simple search using the last five digits of the docket number. You may also visit the Docket Management Facility in room PL-401 on the Plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

C. Privacy Act: Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the Department of Transportation's Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477), or you may visit http://dms.dot.gov/.

We do not plan to hold a public meeting. You may submit a request for one to the Docket Management Facility at Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590-0001 explaining why it would be beneficial. If we determine that a public meeting would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

This rulemaking would revise and update the regulations for the Alternate Compliance Program (ACP).

The ACP was launched as a pilot program in 1995. A notice was published in the Federal Register on February 3, 1995 and can be found at 60 FR 6687. It was an element of a larger initiative to harmonize domestic and international marine safety and environmental protection standards. Other goals of the initiative were to reduce the regulatory burden on industry and improve the efficiency of the vessel plan review and inspection process.

Under the ACP, owners and operators of eligible vessels were allowed to request inspection by an authorized classification society, as defined in 46 CFR 8.100, using an equivalence to the requirements in the Code of Federal Regulations (CFR) comprising classification society rules, provisions of International Maritime Organization (IMO) treaties, and a supplementary list of requirements from the CFR that were not in IMO provisions or classification society rules. A classification society gained eligibility to participate in the ACP by meeting the standards described in the regulations and, as a result, was delegated authority to conduct plan review and inspections and issue, on the Coast Guard's behalf, certain IMO certificates documenting compliance with IMO treaty provisions. An interim final rule establishing new 46 CFR part 8, “Vessel Inspection Alternatives” was published in the Federal Register on Friday, December 27, 1996. This interim final rule can be found at 61 FR 68510. The pilot program was concluded in 1997 and the ACP was fully implemented via the final rule published on Wednesday, December 24, 1997. This final rule may be found at 62 FR 67526.

The ACP has proven to be extremely successful for both the Coast Guard and ship owners and operators. As expected, the program has evolved since 1997 and the lessons learned have typically been documented and implemented through Coast Guard policy decisions. This Notice of Proposed Rulemaking (NPRM) describes the Coast Guard's proposals to incorporate into the CFR those policy decisions as well as other revisions that expand the ACP.

When the ACP was initiated, the Coast Guard chose to retain issuing authority for the SOLAS Passenger Ship Safety Certificate (PSSC). This decision was intentionally conservative, given the newness of the ACP, and was based on our experience with the complexities of the passenger vessel plan review, inspection, and certification process. Subsequent experience has shown that retaining this issuing authority creates confusion over the roles of the Coast Guard versus the authorized classification society under the ACP. Experience with the ACP has also allowed us to gain confidence with the ACP process and its undeniably successful results. Therefore, we feel granting authorized classification societies issuing authority for the PSSC is now appropriate.

For similar reasons, we are also proposing to allow authorized classification societies to be delegated the authority to issue the High-Speed Craft (HSC) Safety Certificate. In May 2000, we determined that the HSC Code is equivalent to the 46 CFR Subchapter H requirements for large passenger vessels. As the Coast Guard and several classification societies have now gained significant experience with the HSC Code, we feel it is logical that the ACP include this document.

Our experience with the success of the ACP has also given us the flexibility to explore applying the program to other types of vessels that were originally excluded under our measured implementation approach. Positive feedback and recommendations from the U.S. maritime industry demonstrate broad support for this idea. As a result, we propose the ACP be expanded to encompass Oceanographic Research Vessels that engage on international voyages.

Soon after the current rule went into effect, we recognized that a classification society needs authorization to issue five basic IMO certificates before it can comprehensively fulfill its role in the ACP, namely:

• The Cargo Ship Safety Construction Certificate from the International Convention for Safety of Life at Sea, 1974;

• The Cargo Ship Safety Equipment Certificate from the International Convention for Safety of Life at Sea, 1974;

• The International Load Line Certificate from the International Convention on Load Lines;

• The International Tonnage Certificate from the International Convention on Tonnage Measurement; and

• The International Oil Pollution Prevention Certificate from the Protocol of 1978 relating to the International Convention for the Prevention of Pollution from Ships, 1973.

While we have implemented this concept as part of our operating policies, it has not been incorporated into 46 CFR part 8. Therefore, this proposed rule would also accomplish this change.

The initial version of the ACP only applied to the American Bureau of Shipping with whom the Coast Guard had collaborated to develop the first U.S. Supplement (the list of differences between the CFR and the combination of IMO treaty provisions and classification society rules). As the program has expanded, we have engaged in similar partnerships with other classification societies resulting in their approval to participate in the ACP. Consequently, our specific references to the American Bureau of Shipping in 46 CFR part 2 are outdated. Therefore, we proposed to replace specific references to the American Bureau of Shipping with a more general reference to authorized classification societies. The term “authorized classification society” is already defined in 46 CFR 8.100.

This NPRM proposes to amend 46 CFR 2.01-25(a) to:

• List all IMO certificates required to be maintained aboard ships; and

• Update the lists of IMO certificates issued only by the USCG and those that may be issued by an authorized classification society on the Coast Guard's behalf.

In § 2.01-25, we would change the phrase “American Bureau of Shipping” to “authorized classification society.”

In § 8.320(b), this NPRM would add the following IMO certificates to the list of those that can be issued by an authorized classification society:

• Passenger Ship Safety Certificate (PSSC)

• High-Speed Craft (HSC) Safety Certificate

This NPRM would also, in § 8.420(c), add to the list of conditions for eligibility to participate in the ACP, a requirement that a classification society must have been delegated issuing authority for the Cargo Ship Safety Construction Certificate, Cargo Ship Safety Equipment Certificate, International Load Line Certificate, International Tonnage Certificate, and International Oil Pollution Prevention Certificate.

Finally, in new § 189.15-5, we would expand the ACP to include Subchapter U “Oceanographic Research 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 will not impose any mandatory costs on the public because it enables a voluntary alternative to the traditionally prescribed method of inspection. However, we anticipate that vessel owners and operators may realize an economic benefit in the form of cost savings as a result of this proposed rule as outlined in the final rule published December 24, 1997. See 62 FR 67525 and 67530. We request comments from the public on how much they believe the proposed rule would save them.

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.

This rule does not change any requirements in the regulations. It simply updates and expands an existing voluntary program for alternate compliance with Coast Guard regulations. Therefore, 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. 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 to the Docket Management Facility at Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street SW., Washington, DC 20590-0001. In your comment, explain 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 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 consult Mr. William Peters, U.S. Coast Guard Office of Design and Engineering Standards, telephone 202-372-1731. 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 expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This proposed rule would not affect 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 lieu of government-unique standards in their regulatory activities unless the agency determines use of these standards would be inconsistent with law or are otherwise impractical. Agencies not using voluntary consensus standards in lieu of government-unique standards must provide 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 standard bodies.

This proposed rule does not use voluntary consensus standards as there are none that meet the objectives of this rulemaking, and, therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this proposed rule under Commandant Instruction M16475.lD, 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 this action is not likely to have a significant effect on the human environment. A preliminary “Environmental Analysis Check List” supporting this determination is available in the docket where indicated under the “Public Participation and Request for Comments” section of this preamble. We seek any comments or information that may lead to discovery of a significant environmental impact from this proposed rule.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 46 CFR parts 2, 8, and 189 as follows:

In June 2005, the Department of Defense (DoD) formed a Contract Closeout Systemic Issues Team to develop recommendations for improving the contract closeout process. During June/July 2005, the Team engaged with respondents to DoD's September 24, 2002, Federal Register notice (67 FR 59799) requesting public input on how to improve the contract closeout process. On September 21, 2005, DoD held a public meeting to discuss potential opportunities to streamline the closeout process for DoD contracts (70 FR 46824, August 11, 2005). At the public meeting, interested parties provided input on 23 primary issue areas. The public meeting was attended by Government and industry representatives, and the issues discussed during the public meeting are published at http://www.acq.osd.mil/dpap/general/cost-pricing.htm.

DPAP has reviewed the public comments and plans to pursue recommended revisions to the Federal Acquisition Regulation (FAR), the Defense FAR Supplement (DFARS) and its companion Procedures, Guidance, and Information (PGI), User Guides, and DoD training resources. DPAP plans to take the following actions to enhance the contract closeout process:

• Open a DFARS case on contract closeout to establish a comprehensive PGI section to address contract closeout and to assess whether regulatory clarification/revision is needed to address the following:

The following is a discussion of the public comments/recommendations received and the DPAP response and/or planned

Comment: The following recommendations were received relating to the waiver of final voucher audits:

(1) Provide the administrative contracting officer (ACO) waiver authority.

(2) Clearly identify the Government representative that has the authority to waive the audit (ACO versus procuring contracting officer (PCO)).

(3) Waive the audit for contracts less than a specified amount (e.g., $10 million).

(4) Provide specific risk assessment guidance to the ACO for use in determining whether a waiver of audit is appropriate.

(5) Include factors in addition to the dollar value in determining when final voucher audits should be waived, such as the size of the company, the number of contracts, and consideration of the contractor's corrective actions with respect to system inadequacies.

(6) Permit the Government and the contractor to agree to waive the final voucher audit when money owed is below a stipulated amount (e.g., less than $1,000).

(7) Require final voucher audits for cost-type contracts only on an exception basis for those contractors having billing systems that meet specified standards. Audits may be required when adverse circumstances exist, such as inadequate internal control systems, contracts exceeding a specified dollar threshold, recent frequency of audits, and previous audit exceptions.

(8) Allow for application of the audit waiver requirements at the delivery order level.

DPAP Response: In cases where final indirect cost rates have not been negotiated, FAR 42.708 provides for a quick closeout procedure when certain other criteria have been met. These criteria may warrant expansion based on particular facts and circumstances. Therefore, the DFARS case on contract closeout will include a review of whether it is appropriate to amend the FAR and/or DFARS to expand on the existing quick closeout FAR criteria. Depending on the results of this review, DPAP may consider revisions to the DFARS and/or may make recommendations to the FAR Council for revisions to the current FAR language on quick closeout.

In those cases where final indirect cost rates have been negotiated, DPAP does not believe a broad-based waiver of audits of final vouchers would facilitate the contract closeout process. Instead, DPAP believes that the contract closeout process is significantly reduced if contractors submit a Cumulative Allowable Cost Worksheet (CACWS) after the indirect cost rates are finalized. The CACWS allows the ACO to close out a contract without requesting an audit of the contractor's final voucher. Therefore, the DFARS case on contract closeout will include a review to determine if, and to what extent, the CACWS should be required and/or encouraged in the regulations. This review will also include an assessment of how the CACWS is or should be structured to best meet contract closeout needs without imposing significant administrative burden on the contractor or the Government.

Comment: It was recommended that contracting officers be permitted to use a bilateral modification to close out a contract, rather than requiring a final voucher, when no money is owed to the Government and specific risk criteria are met.

DPAP Response: The DFARS case on contract closeout will include a review of the quick closeout criteria in the FAR. DPAP will also review the feasibility of permitting bilateral modifications, in lieu of final vouchers, when certain criteria are met. Depending on the results of this review, DPAP may consider revisions to the DFARS and/or may make recommendations to the FAR Council for revisions to the current FAR language.

Comment: It was recommended that a demand letter be issued if monies are owed the Government and a final voucher is not submitted within the required timeframes. Under the recommendation, this demand letter would state that interest will be assessed as of a specified date, and would identify why payment is delayed and the reasons the contractor has not submitted a final voucher (e.g., extension of period of performance). Other respondents opined that issuance of a demand letter may further delay the process and may also trigger a Treasury Department offset. They also noted that it would be difficult, absent a final voucher, for the Government to determine whether or not monies are owed.

DPAP Response: FAR 42.705(b) and (c) permit the contracting officer to unilaterally close out a contract when the contractor fails to submit a final voucher. The DFARS case on contract closeout will consider if and when a demand letter should be issued for contractors that fail to submit final vouchers in accordance with FAR 42.705(b). The review also will consider how the Government could/would determine if monies are owed and will evaluate the impact of any potential delays in the contract closeout process that the use of a demand letter may create.

Comment: A recommendation was made to permit closeout of a prime contract even though a subcontract or subcontracts under that prime contract have not been closed. It was further recommended that such a process include adequate notice to the subcontractor. Conversely, a concern was expressed that such a closeout of a prime contract may result in the prime contractor's unilateral closeout of subcontracts and elimination of the Government reimbursement of any additional subcontract costs, thereby inhibiting the subcontractor's negotiation with the prime contractor.

DPAP Response: The DFARS case on contract closeout will evaluate if/when it may be appropriate to permit prime contract closeout when one or more subcontracts have not been closed.

Comment: Recommendations were made to require submittal of a final invoice within 60 days of Government acceptance, or to establish a one-year time limit for contractors to submit the final invoice, after which time the contracting officer can unilaterally close the contract without further payment to the contractor.

DPAP Response: DPAP believes that this issue is adequately addressed in FAR 4.804-1, which authorizes the contracting officer to close out fixed-price contracts within six months after the date on which the contracting officer receives evidence of physical completion. No evidence has been presented that indicates the six-month period is causing a significant delay in closing out contracts.

Comment: A recommendation was made to clarify regulations regarding the need to submit a final invoice when a DD Form 250, Material Inspection and Receiving Report, is submitted. A second recommendation was made to provide an exception to the requirement for submission of a final voucher for contracts outside the continental United States (OCONUS).

DPAP Response: While Appendix F of the DFARS currently provides guidance on the use of DD Form 250, DPAP believes it may also be helpful to include guidance in the PGI section on contract closeout to address the relationship between the DD Form 250 and the final voucher. Therefore, the DFARS case on contract closeout will include an assessment of whether additional exceptions are needed for OCONUS contracts.

Comment: A recommendation was made to waive the requirement for submission of a final invoice if the amount due to the contractor is less than $1,000 and less than 10 percent of the contract value. In such cases, the respondent recommended that the contracting officer be permitted to unilaterally deobligate any remaining funds.

DPAP Response: DPAP does not believe it is advisable to preclude payment to a contractor when monies are due. DPAP also does not believe there is a legal basis for the Government to extinguish its debt solely on the basis of the dollar amount involved. Thus, submission of a final invoice in such cases is necessary to ensure that proper payments are made under the terms of each contract.

Comment: The following recommendations were made to encourage timely submission of indirect cost rate proposals:

(1) Increase the withhold amount (a specified percentage and/or specified amount, e.g., 15 percent or $100,000). One respondent recommended analyzing major vs. non-major contractors to identify problems preventing timely submission before enacting such a withhold. Another respondent stated that increased withholdings will cause problems in obtaining additional monies due to cancelled funds.

(2) Provide incentives, rather than penalize contractors, for timely submission of indirect cost rate proposals.

(3) Include a contract provision that permits the contracting officer to extend the indirect cost rate proposal submission date.

DPAP Response: The DFARS case on contract closeout will include a review of the current provisions addressing the submission of final indirect cost rate proposals to ascertain whether any adjustments (positive and/or negative incentives) to the current regulatory coverage are warranted.

DPAP does not believe action is necessary regarding the proposal submission date, because FAR 52.216-7(d) currently authorizes the contracting officer to extend the submission due date if exceptional circumstances exist.

Comment: Recommendations were made to allow contract closeout using indirect cost rates in the forward pricing rate agreement, provisional rates, or certified year-end rates rather than final indirect cost rates, when final indirect cost rates are not established on a timely basis. One respondent further noted that the use of any such rates should be by contractor and Government mutual agreement only. Another respondent noted that the contractor's past history of costs questioned should be considered in determining whether to use such rates.

DPAP Response: The DFARS case on contract closeout will review if/when the use of forward pricing, provisional, or certified year-end rates would be acceptable when final indirect cost rates are not available. The review will also address the issue of mutual agreement in using any such rates for contract closeout.

Comment: A number of recommendations were made regarding the required content of an adequate indirect cost rate proposal. These recommendations included the following:

(1) Review the content requirements for indirect cost rate proposals to determine if/where they could be streamlined.

(2) Establish different content requirements based on dollar thresholds.

(3) Provide flexibility so that the proposal is not rejected when it is not exactly the same as the content requirements, particularly when there are only format issues/problems.

(4) Do not require submission of Cumulative Allowable Cost Worksheets at the time of submission of the indirect cost rate proposal (permit these worksheets to be submitted at a later date).

DPAP Response: The DFARS case on contract closeout will include a review of the current requirements regarding the content of an adequate indirect cost rate proposal to determine if/how they could be streamlined, and the extent to which additional flexibility should be provided. DPAP will evaluate the need for the addition of DFARS/PGI language regarding such content, as well as PGI references to relevant Defense Contract Audit Agency (DCAA), Defense Contract Management Agency (DCMA), and other agency materials on this subject. This review will also assess whether regulatory language is needed to address if/when Cumulative Allowable Cost Worksheets must be submitted to permit timely audit and negotiation of indirect cost rates and contract closeout.

Comment: One recommendation would permit the separate submission of final direct and indirect cost proposals when the ACO believes separate submissions would facilitate the contract closeout process.

DPAP Response: DPAP does not see the value in permitting separate proposals. DPAP believes that separate proposals would impose an administrative burden on both the Government and the contractor, since both proposals and multiple final vouchers would be required for the same contract (one for direct costs, one for indirect costs). When final indirect cost rates have not been negotiated, the use of quick closeout procedures is a more feasible solution than submission of separate direct and indirect cost proposals. In addition, DPAP believes it is inadvisable to permit the separate submission of direct and indirect costs, since both are required to determine indirect cost rates, and any reclassification of costs between direct and indirect would be made administratively more cumbersome by separate proposals.

Comment: One recommendation called for providing lump sum settlement guidance to the contracting officer.

DPAP Response: DPAP does not see value in providing guidance on a lump sum settlement; nor does DPAP believe it is prudent to do so, since any such guidance will ultimately tie back to the actual incurred costs. A contracting officer must have a basis for determining the final amount due. The basis for this amount is the annual allowable incurred costs of the contractor and the final negotiated indirect cost rates.

Comment: Various recommendations were made regarding the best utilization of Government resources in performing contract closeout functions. These recommendations included the following:

(1) Assign an individual or team at each agency to be responsible for reducing and eliminating the backlog of open contracts, provide training for individuals to effectively reduce the backlog, and provide promotion opportunities.

(2) Make the contract closeout function an integral part of contract administration rather than a separate function.

(3) Establish Government Centers of Excellence for contract reconciliations, establishment of final indirect cost rates, and expiring funds to assist in resolving contract closeout issues.

(4) Create a contract closeout contracting officer, similar to the termination contracting officer, who would be a specialist in closing out contracts.

(5) Outsource the contract closeout function to contractors.

DPAP Response: DPAP will review the current processes used by the military departments and defense agencies to identify best practices for utilizing resources in performing contract closeout. These best practices will be made available to the military departments and defense agencies for their consideration.

Comment: One respondent recommended establishing a separate line item in the DoD budget dedicated to contract closeout activities.

DPAP Response: DPAP does not believe it would be beneficial to establish a separate budget line item for contract closeout activities for the military departments and defense agencies. Its establishment would impose the significant administrative burden of capturing the individual activities associated with contract closeout in the DoD cost accounting systems, which are not designed to capture costs associated with discrete work activities across the Department. The intention of the separate line item would be to force the military departments and defense agencies to spend sufficient monies to support the closeout effort. However, it could be easily reduced or eliminated and, by itself, would provide no assurance that contract closeouts would be completed, since it most likely would not change the closeout process but would have the adverse effect of reducing flexibility. DPAP believes the key to successful utilization of resources is to provide a set of best practices to the departments and agencies, and to let the departments and agencies apply those practices in a manner that best meets their particular situations.

Comment: A recommendation was made to establish a timeline by which DCAA audits of indirect cost rate proposals should be completed. Under this recommendation, if the audit is not completed by the date specified, the contracting officer would have the authority to use a third party to conduct the audit, and the cost of the audit could be reimbursed to the contractor or paid directly by the Government to the third party auditor.

DPAP Response: DPAP believes that the key to timely audit of indirect cost rate proposals is the timely submission of an adequate final indirect cost rate proposal by the contractor. DoD has internal mechanisms in place to monitor and take actions when indirect cost rate proposals have been submitted but no audit action has been taken. However, in recognition of the need to ensure that the contracting officer and the auditor maintain adequate communication, the DFARS case on contract closeout will review whether PGI should include information regarding the action to be taken when a contracting officer believes an audit is not being performed on a timely basis.

Comment: Recommendations were made to—

(1) Increase training to Government and contractor personnel in the area of contract closeout; and

(2) Establish a section in the Defense Acquisition University (DAU) Community of Practice Lessons Learned for contract closeout and reference it in PGI.

DPAP Response: As part of the review of best practices, DPAP will work with DAU to determine if/what training needs to be expanded in the area of contract closeout and to establish a community of practice that can provide the best contract closeout practices for use by DoD contracting personnel.

Comment: The following recommendations were made to delineate roles and responsibilities of all parties to contract closeout:

(1) Describe in the DFARS or PGI the roles and responsibilities for all parties involved in the contract closeout process.

(2) Designate the ACO as the central control point for closeout of a contract and for use of the quick closeout process. One respondent noted that this could be problematic, since the ACO is not as knowledgeable as the PCO, and the PCO is a critical player in resolving issues related to older contracts and contract funding (e.g., cancelled funds).

(3) Specifically identify the roles and responsibilities for cost reconciliations and the final determination of contract value when there are discrepancies between the Government's and the contractor's accounting records.

DPAP Response: DPAP agrees that such delineation would help facilitate the contract closeout process. Therefore, as part of the DFARS case, the PGI will be amended to describe the contract closeout process and to delineate the roles and responsibilities of all parties involved in that process.

Regarding contracts for which there are discrepancies in cost reconciliations, DoD has legislative authority to close out contracts entered into prior to October 1, 1996, that have an unreconciled balance of $100,000 or less. Absent additional legislative authority, DPAP does not believe it can provide contracting officers with the authority to close out such contracts.

Comment: A recommendation was made to allow the ACO to close out the contract if, after notifying DFAS that a contract is administratively complete, no response is received within 60 days of the notification.

DPAP Response: Since DFAS has the accounting responsibility within DoD, it would not be appropriate to close out the contract without DFAS approval. However, the DFARS case on contract closeout will include a review of whether PGI/DFARS language is needed to address the actions to be taken when the contracting officer believes a timely response has not been received from DFAS.

Comment: One respondent recommended including contractor performance in submitting closeout data, in the contractor's past performance ratings. Another respondent noted that any data submitted for past performance must distinguish between contractor performance in submitting the closeout documents and Government-controlled actions. A third respondent recommended precluding the award of future contracts for contractors that continually fail to submit the required contract closeout items.

DPAP Response: The Office of Federal Procurement Policy Guide on Best Practices for Collecting and Using Current and Past Performance Information (May 2000) includes consideration of timely completion of all administrative requirements under “Business Relations” as a criterion for evaluating past performance. The DFARS case on contract closeout will review whether contract closeout should be a more specific past performance element. Depending on the results of this review, DPAP may consider revisions to the DFARS and/or may make recommendations to the FAR Council for revisions to the current FAR language on contract closeout.

DPAP does not believe it would be appropriate to broadly prohibit the award of future contracts to contractors with any history of failing to submit contract closeout items. To do so would be tantamount to debarment, and DPAP does not believe that failure to submit contract closeout items meets the debarment criteria at FAR 9.406-2.

Comment: The following recommendations were made to encourage contractors to complete contract closeout activities:

(1) Include specific contractual terms that provide positive and/or negative consequences for the fulfillment of contractor closeout commitments.

(2) Provide award fees or profit factors based on the submission of contract closeout documents.

(3) Include submittal of contract closeout documents a milestone for receiving a performance-based payment.

(4) Include contract closeout activities as a separately priced contract line item. A specific recommendation was made to address the allowability of contractor costs associated with required contract cost and payment reconciliations.

DPAP Response: The DFARS case on contract closeout will review whether regulatory clarification/revisions are needed to provide additional incentives (positive and/or negative) for encouraging submission of contractor closeout data. This will include a review of the criteria for determining whether to impose a withhold, the approval or denial of direct billing authority, the potential impact on contractor past performance evaluations, and the inclusion of a contract closeout milestone in determining performance-based payments.

DPAP does not believe that award fees or other profit factors are appropriate means by which to compel the contractor to complete contract closeout responsibilities, since award fee and profit criteria are intended to focus on cost, quality, and technical performance. They are not intended to be a means to further reward contractors for satisfying basic contract administration responsibilities.

DPAP also does not believe it is advisable to include contract closeout activities as a separately priced contract line item. This would most likely be perceived as increasing the cost or price of the contract, rather than simply encouraging submittal of the closeout data. Similarly, DPAP does not believe that it is necessary to promulgate specific cost allowability rules related to contractor reconciliation efforts. The contractor should consider the cost of normal contract closeout (including reconciliations) when submitting proposals for contracts and/or indirect cost rates. Furthermore, in those instances where unusual circumstances require the contractor to expend effort that is charged as a direct cost beyond the current contract period of performance, the contractor should request a contract modification to address these costs, including any necessary extension to the period of performance.

Comment: A recommendation was made to authorize the ACO to issue a final determination that a contract is administratively complete if the Government and the contractor agree that no additional services or products will be received by the Government and there are no outstanding actions.

DPAP Response: DPAP believes that the current listing of actions at FAR 4.804 for determining that a contract is administratively closed provides sufficient criteria for the contracting officer. Ensuring that the items in this listing are all complete is akin to ensuring that there are no outstanding actions. Thus, DPAP does not plan further action with regard to this recommendation.

Comment: A recommendation was made to specify in the regulations and/or PGI what constitutes an adequate contract file (e.g., modifications, DD 250's, invoices, payment vouchers) for purposes of contract closeout, and to require that contracting officers maintain such a file.

DPAP Response: The DFARS case will review whether guidance should be added to PGI to address what constitutes an adequate contract file (see response to Comment 6.a. above). Currently, FAR Subpart 4.8 delineates the applicable contract file documentation requirements depending on the product or service acquired and contract type and complexity. FAR 4.802 allows agencies to retain contract files in any medium (paper, electronic, microfilm, etc.) or any combination of media. The Electronic Data Access (EDA) system is DoD's electronic file cabinet containing electronic versions of contractual documents, including modifications, and is accessible via the Internet 24 hours a day at http://eda.ogden.disa.mil. Also, DFAS has an ongoing Voucher attachment system initiative that uploads supporting documentation for disbursing vouchers in EDA. However, it may be advisable to include these requirements, as well as any other applicable contract file documentation information, in PGI.

Comment: Three respondents recommended broadening the use of quick closeout procedures by raising the dollar threshold and/or percentage limitations currently in the regulations and by extending the existing DCMA deviation. Two respondents recommended considering mandating the use of quick closeout procedures for low-dollar value contracts and making a thorough analysis to determine the numbers of contracts that would be affected by such a mandate.

DPAP Response: The DFARS case on contract closeout will review whether it is appropriate to amend the DFARS to expand on the existing quick closeout criteria at FAR 42.708. In addition, depending on the results of this review, DPAP also may make recommendations to the FAR Council for revisions to the current FAR language on quick closeout.

Comment: A recommendation was made to provide for the quick closeout process to be one of mutual agreement between the Government and the contractor.

DPAP Response: DPAP believes that the FAR already clearly requires mutual agreement between the Government and the contractor in order to use quick closeout procedures. FAR 42.708 requires the contracting officer to “negotiate” the settlement of indirect costs for a specific contract, in advance of the determination of the final indirect cost rates. In addition, FAR 42.708 allows the use of quick closeout procedures only if “agreement” can be reached on a reasonable estimate of allocable dollars. Thus, DPAP does not believe any further action is needed regarding this recommendation.

Comment: A recommendation was made to require that an ACO perform a risk assessment to justify not using quick closeout procedures, when final indirect cost rates have not been established. In conjunction with this recommendation, one respondent recommended that the risk assessment include a cost/benefit analysis of applying quick closeout procedures.

DPAP Response: DPAP believes it is unnecessarily burdensome to require a risk assessment whenever quick closeout procedures are not used and final indirect cost rates have not been established. However, the DFARS case will review whether regulatory revisions are needed to address the criteria a contracting officer should consider for applying quick closeout procedures. Depending on the results of this review, DPAP may consider revisions to the DFARS and/or may make recommendations to the FAR Council for revisions to the current FAR language on quick closeout.

Comment: A recommendation was made to evaluate instances in which the criteria for using quick closeout applied, but the quick closeout procedure was not used by the ACO.

DPAP Response: As part of the DFARS case on contract closeout, input will be obtained from contracting personnel as to if/why contracting officers do not apply quick closeout procedures when the facts/circumstances satisfy the FAR criteria for use of such procedures. This input will be considered in determining whether any regulatory revisions are needed regarding the quick closeout procedures.

Comment: A recommendation was made to require a contract closeout plan as part of the subcontracting plan.

DPAP Response: DPAP does not believe there would be significant benefit to requiring a specific contract closeout plan as part of the subcontracting plan. However, the DFARS case on contract closeout will include a review to determine whether existing regulations should be amended to emphasize contract closeout in discussing contractor responsibilities for managing subcontracts.

Comment: A recommendation was made to require the use of quick closeout procedures for subcontracts, including interdivisional transfers, to the maximum extent possible.

DPAP Response: FAR 42.202 states that it is the prime contractor's responsibility to manage its subcontracts under existing regulations. However, the DFARS case on contract closeout will review whether regulatory revisions are needed to address subcontracts.

Comment: A recommendation was made to establish a threshold for assist audits and to permit prime contractors to waive audits for subcontracts that are below this established threshold when the lack of negotiated subcontractor indirect rates is preventing closeout of the prime contract.

DPAP Response: The DFARS case on contract closeout will review if/how subcontracts should be closed when subcontract final indirect cost rates have not been negotiated. Since DPAP believes that the contract closeout process is significantly reduced if contractors (including subcontractors when required) submit an adequate final indirect cost rate proposal and prepare a Cumulative Allowable Cost Worksheet (CACWS) when the indirect cost rates are finalized, the DFARS case will also review the extent to which a final indirect cost rate proposal and a CACWS should be required and/or encouraged for subcontractors/subcontracts.

Comment: A recommendation was made to require DCAA to provide feedback to prime contractors on the status of assist audits.

DPAP Response: The DFARS case on contract closeout will review the current process to assess whether DFARS revisions are needed to address the steps a prime contractor can take to determine the status of DCAA assist audits of subcontract costs.

Comment: A recommendation was made to use third-party auditors for subcontract audits where the Government does not already have a presence, similar to the policy on Other Transactions.

DPAP Response: DPAP does not believe that any action is needed with regard to this comment. In accordance with DoD Directive 5105.36, Defense Contract Audit Agency (DCAA), DCAA is responsible for performing all contract audits required in the negotiation, administration, and settlement of DoD contracts and subcontracts. Should the prime contractor have any issues related to audits of subcontractors, those issues should be raised with the cognizant DCAA auditor.

Comment: A recommendation was made to encourage or require that the Government and the contractor reconcile payments on an annual basis.

DPAP Response: The DFARS case on contract closeout will review if/when it would be feasible to establish an annual contract reconciliation process.

Comment: A recommendation was made to consider establishing dollar thresholds for performing contract reconciliations.

DPAP Response: DPAP does not believe it would be statutorily permitted to establish dollar thresholds below which contract reconciliations would not be required. Absent statutory authority, DPAP does not believe it can provide the contracting officer with the authority to close out unreconciled contracts.

Comment: A recommendation was made to require that replacement funds be obtained on a timely basis.

DPAP Response: The DFARS case on contract closeout will consider whether to add specific language to PGI emphasizing the need for agencies to obtain replacement funds on a timely basis.

Comment: A recommendation was made to require that DFAS notify the contractor when there is an offset to a contractor payment.

DPAP Response: DFAS currently notifies contractors by letter and/or telephone when there is an offset. The DFARS case on contract closeout will include a review of whether the DFARS/PGI should be amended to describe this process.

Comment: A recommendation was made to require the updating of the cumulative ACRN/CLIN schedule each time a modification is issued.

DPAP Response: The DFARS case on contract closeout will review whether PGI language is needed to emphasize the importance of maintaining an updated ACRN/CLIN schedule.

Comment: A recommendation was made that DoD should provide contractors with read-only access to their contract ACRN data, allow visibility to all modifications, add CLIN data to MOCAS, and consider alternatives to and simplify the ACRN/CLIN accounting.

DPAP Response: DPAP does not believe any action is needed with regard to this recommendation, because the access described is already available. A contractor can request access to the contract ACRN data by contacting the cognizant paying office identified on the DFAS Web site at http://www.defenselink.mil/dfas/about/Contacts.html. In addition, contract information, including modifications, can be accessed on the Internet via the Electronic Document Access system at http://eda.ogden.disa.mil. Furthermore, the ACRN/CLIN data is already included in MOCAS.

With regard to simplifying the ACRN/CLIN accounting, DoD is working to develop a comprehensive data structure that will support the requirements for budgeting, financial accounting, cost/performance management, and external reporting throughout the Department. This effort is intended to standardize categorization of financial information along several dimensions to support financial management and reporting functions and, when implemented, will provide a common foundation to track, process, and report DoD business transactions.

Comment: A recommendation was made to not allow agency accounting systems to drive how contracts are structured, i.e., systems automatically add SubCLINs to a CLIN.

DPAP Response: DPAP believes the DFARS adequately addresses this issue. The criteria for establishing CLINs are specified in DFARS 204.7103 and 204.7104.

Comment: A recommendation was made to clear the Government property, final patent report, security release, and other pertinent documents one time against the contract instead of on an order-by-order basis.

DPAP Response: The DFARS case on contract closeout will review if/when it may be appropriate to provide for a one-time clearance of the Government property, final patent report, security release, and other pertinent documents instead of on an order-by-order basis.

Comment: Two recommendations were made to close out all task orders as they are completed instead of waiting until the end of the contract, or to explore best practice options.

DPAP Response: The DFARS case on contract closeout will review whether DFARS/PGI language is needed to specifically address the closeout of task orders. Note that DCMA currently has a process to close out task orders as they are completed to facilitate closeout of indefinite-delivery, indefinite-quantity contracts.

Comment: A recommendation was made to clarify language on the period of performance for a task order versus that specified in the basic contract, i.e., if and when the task order period of performance may fall outside the period of performance specified in the basic contract.

DPAP Response: The DFARS case will review whether the regulations should be revised to specifically address issues regarding contract and task order periods of performance.

Comment: A recommendation was made to streamline closeout procedures for T&M contracts that are valued at less than a specified amount (e.g., $1 million).

DPAP Response: The DFARS case on contract closeout will review if and when streamlined closeout procedures would be appropriate for T&M contracts. Note that the May 17, 2005, DCAA memorandum, Audit Guidance on Low Risk Time and Material/Labor Hour Contract Closeout Initiative, provides audit procedures for expediting the closeout of T&M contracts valued at $1 million or less when contractors meet certain low risk criteria. The memorandum (05-PPD-037(R)) is available at http://www.dcaa.mil/ .

Comment: A recommendation was made for DoD guidance to provide extra focus on employee qualifications when closing out T&M contracts.

DPAP Response: The review of employee qualifications should be a part of the contracting officer representative and/or audit responsibilities during contract performance so as to ensure that employees are properly qualified before they perform contract work. DPAP is currently working to provide PGI guidance to delineate the duties of all parties in the contract administration process. The review of employee qualifications will be an integral part of this delineation of duties. Thus, while the Government is not precluded from reviewing employee qualifications at the end of the contract, DPAP believes this issue is better addressed in the guidance on administering T&M contracts, rather than any specific guidance on contract closeout.

Comment: Two recommendations were made for the use of quick closeout procedures, or certified year-end rates, for all classified contracts.

DPAP Response: DPAP does not believe it would be advisable to provide blanket quick closeout authority for all classified contracts. However, the DFARS case on contract closeout will review whether there are any particular characteristics of classified contracts that would warrant more extensive use of quick closeout procedures than is provided for non-classified contracts.

Comment: Two recommendations were made to develop a contract clause that provides clear instructions for the disposition of classified documents, and to allow the contracting officer the authority to transfer classified documents to other contracts.

DPAP Response: The DFARS case on contract closeout will review whether language on classified contracts should be added to PGI. In DoD, the security classification management program implements the requirements of the National Industrial Security Program Operating Manual (NISPOM). The security office receives, evaluates, interprets, and obtains clarification and changes to classification guidance for contracts and proposals, and issues classification guidance. Classification and distribution guidance is available at https://intranet.acq.osd.mil/intranet/admin/security/secguide/Implemnt/Altrnats/Classif.htm. In DoD contracts, the DD Form 254, Department of Defense Contract Security Classification Specification, establishes security classification levels of classified information and hardware, downgrading, and declassification instructions, public dissemination instructions for information related to the contract, and other special security requirements. If a DD Form 254 is not provided with a solicitation or contract, the security office and the contracting office are required to jointly take the actions necessary to obtain one.

Comment: The following recommendations were made relating to Government property:

(1) Distinguish between the role of the ACO and that of the Government property administrator.

(2) Provide contracting personnel with disposition authority for special tooling, special test equipment, and other property with an acquisition value of $5,000 or less, and be specific in identifying who has disposition authority (i.e., Government property administrator).

(3) Provide contracting officers with the authority to make the determination as to whether property should be reutilized or scrapped, and to scrap military unique items that have been rejected for reutilization by the buying agency. There is little value in retaining these items if they have been rejected by the buying agency.

(4) Delegate authority to the Government property administrator to transfer property to other contracts (e.g., to follow-on contracts to reduce costs).

(5) Permit the Government property administrator to grant accountability relief on the spot for recorded property that was not found at contract completion if (a) the contractor has an approved property system, (b) the lost item has an acquisition date of five years or later, and (c) the lost item has an acquisition cost of $100,000 or less. The Government property administrator would retain the right to a full Lost/Damaged/Destroyed Report.

(6) Establish a site property and/or plant-wide disposition contract for each business element location. As each contract is completed, all property would be automatically transferred to the disposition contract. Each respective buying office could fund a line item on the disposition contract for disposal of its property, or the predominant agency could fund the entire contract.

(7) Transfer accountability for property to the Government for purposes of contract closeout once property is submitted on an inventory schedule. This is an efficient method, because it removes property from the contract.

(8) Consider a system to allow the capture of data related to DoD property in the possession of contractors, since DD Form 1662 was discontinued after fiscal year 2005.

(9) Develop a contract clause that provides clear instructions for the disposition of Government property.

(10) Provide contracting officers with the authority to remove the property clauses from contracts where there is no probability of issues in these areas (e.g., service contracts with little or no property).

(11) Set a timeframe (e.g., 90 days) at the end of the contract for disposition of lost property.

(12) Clarify an apparent inconsistency between final contract closeout and the timeframe for overall closeout of Government property.

DPAP Response: DPAP anticipates that a final rule revising FAR coverage on Government property will be issued in early 2007. The FAR rule is anticipated to include a number of changes to existing Government property rules. As such, DPAP believes it would be premature to attempt to address the specific recommendations provided with regard to Government property in advance of issuance of that final rule. Upon issuance of the rule, DPAP will review whether the above comments warrant any additional regulatory or PGI coverage.

Comment: A recommendation was made to allow the contracting officer to proceed with contract closeout within a specified timeframe (e.g., 30 days), if a contractor has submitted a negative report on all interim and final patent right reports, unless the contracting officer receives notification that there are patent issues precluding such closeout.

DPAP Response: The DFARS case on contract closeout will review whether DFARS/PGI language should be added to address if/when a contract could or should be closed out if all interim reports and the final patent reports are negative. Note that current DCMA contract closeout procedures provide a structured timeframe of 60 days for proceeding with closeout when patent reports containing a negative reply are received.

Comment: Three recommendations were made to provide contracting officers with the authority to remove the patent clauses from contracts where there is no probability of issues in these areas (e.g. service contracts with no patent issues), to clarify PGI as to when the clause is needed, and to reconsider how often to issue negative reports on patents. Currently, a negative report is required every 12 months.

DPAP Response: DPAP does not believe any guidance is needed in the area of contract closeout to address this issue. However, DPAP notes that DoD has a current DFARS case regarding patents, data, and copyrights. Thus, DPAP will forward this recommendation to the cognizant DFARS committee for consideration.

Comment: A recommendation was made to review the FAR 52.301 matrix, which identifies contract clauses that are mandatory versus those that are discretionary, to ensure that clauses are not being included in contracts unnecessarily.

DPAP Response: The current matrix at FAR 52.301 indicates when a FAR clause is required, required as applicable, or optional. Thus, DPAP does not believe any further action is necessary with regard to this recommendation.

Comment: A recommendation was made to require a contract closeout plan as part of the acquisition plan. The contract closeout plan should consider the up-front effort, perceived benefit, and dollar threshold. The plan should also include a memorandum of agreement between the contractor and the Government that weighs the costs and benefits of a closeout plan.

DPAP Response: DPAP does not believe that there would be significant benefit to requiring a specific contract closeout plan as part of the acquisition plan. However, the DFARS case on contract closeout will review whether the DFARS/PGI should be revised to address how contract closeout should be considered in developing the acquisition plan.

Comment: A recommendation was made to revise MOCAS so that it is automatically updated to reflect the current performance period when the contract period is extended.

DPAP Response: DPAP will work with DCMA to ensure that MOCAS capabilities include providing current contract period of performance information.

Comment: Two recommendations were made to study Wide Area WorkFlow (WAWF) for duplication, because DD Form 1594, Contract Completion Statement, and DD Form 1597, Contract Closeout Checklist, duplicate the current electronic closeout processes being done in Procurement Defense Desktop (PD2).

DPAP Response: DPAP does not believe any action is needed with regard to this recommendation, because the use of WAWF does not duplicate PD2. DD Form 1597 is needed, because not all contracting offices use PD2. When the forms are generated electronically in PD2, the forms do not have to be completed manually. However, PD2 does permit manual closeout using DD Form 1597 and DD Form 1594 for orders under blanket purchase agreements.

Comment: Four recommendations were made to clarify the regulations to specify what is meant by the period of performance, or to provide regulations or guidance as to the allowability of costs incurred for contract closeout after the end of the performance period, such as subcontractor costs billed and paid outside the period of performance, or material transfers that occur after the period of performance.

DPAP Response: DPAP does not believe it is necessary or advisable to provide blanket guidance regarding this issue. The circumstances noted in the recommendation must be addressed on a case-by-case basis. DPAP believes the current regulations adequately address this issue. FAR 31.201-2, Determining Allowability, states that a cost is allowable only when the cost is reasonable, is allocable, complies with applicable Cost Accounting Standards or generally accepted accounting principles, complies with the terms of the contract, and complies with the specific provisions in FAR Subpart 31.2. In reading these allowability criteria, the key criteria for this particular issue are the terms of the contract. The contractor should consider the cost of normal contract closeout when submitting proposals for contracts and/or indirect cost rates. Furthermore, when unusual circumstances will require the contractor to expend effort that is charged as a direct cost beyond the current contract period of performance, the contractor should request a contract modification to extend the period of performance. With regard to subcontract costs and material transfers, when the contractor becomes aware that such costs may be incurred outside the period of performance, the contractor should notify the contracting officer and should request an appropriate contract modification to the existing period of performance.

Comment: One recommendation was made to provide guidance on “physical completion.”

DPAP Response: DPAP does not believe additional guidance on this issue is necessary. FAR 4.804-4 provides specific criteria that must exist for a contract to be physically complete.

Comment: Two recommendations were made to shorten the statute of limitations for submission of a claim (currently six years) to mitigate issues concerning expired funds, lost documentation, software changes, and Government/contractor storage costs; and to consider that reducing the period would set precedence to reduce the time requirements in other areas.

DPAP Response: The length of time allowed for the submission of a claim is directly related to the period specified in the Contract Disputes Act (41 U.S.C. 605), which was amended upon enactment of the Clinger-Cohen Act in 1996. Any revision to this period would require a change to existing statutes. DPAP believes this issue is better addressed by focusing on the systemic issues that hinder contract closeout rather than pursuing a legislative change.

Comment: A recommendation was made to revise the clause at DFARS 252.247-7023, Transportation of Supplies by Sea, to reduce the needless inclusion of this clause in contracts or to consider issuing guidance specifying when the clause needs to be used. Currently it is often included when obviously unnecessary.

DPAP Response: DPAP will refer this issue to the DFARS Transportation Committee to review whether the current clause prescription should be revised.

Comment: A recommendation was made to permit the contracting officer to negotiate the settlement of contract debts across a number of contracts. This would avoid the need to find replacement funds, which often takes years and substantially delays the closeout process.

DPAP Response: DPAP does not believe any guidance is needed in the area of contract closeout to address this issue. However, DPAP notes that there is a current FAR case that is focusing on the contract debt process. Therefore, this recommendation will be forwarded to the cognizant FAR team for consideration.

Comment: A number of recommendations were made that the DCAA Contract Audit Closeout Guide be incorporated into PGI to establish a single reference source for contracting personnel, and that the PGI be supported with training.

DPAP Response: DPAP agrees that providing a consolidated resource for contract closeout guidance will facilitate the process. Thus, the DFARS case on contract closeout will include PGI language on contract closeout. In addition to providing basic guidance addressing the contract closeout process, this PGI section will also include links to agency guidebooks, training, and any other relevant information.

10 U.S.C. 2401, as amended by Section 815 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), permits DoD to award a contract for the lease of a vessel, aircraft, or combat vehicle only if the contract will be long-term or will provide for a substantial termination liability, and if the Secretary concerned fulfills certain other requirements. Prior to the enactment of Public Law 109-163, the provisions of 10 U.S.C. 2401 applied to vessels and aircraft; Section 815 of Public Law 109-163 amended 10 U.S.C. 2401 to also include combat vehicles. This proposed rule amends DFARS 207.470 to reflect the statutory provisions.

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

DoD does not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. , because the rule relates primarily to DoD planning and budget considerations with regard to leasing of vessels, aircraft, and combat vehicles. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subpart in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2006-D013.

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

Therefore, DoD proposes to amend 48 CFR part 207 as follows:

DoD contract profit/fee policies, to include policy for developing pre-negotiation profit or fee objectives, are described in the Defense Federal Acquisition Regulation Supplement (DFARS), in sections 215.404-4 and 215.404-70 through 215.404-76. One of the key aspects of DoD's profit policy is the Weighted Guidelines. While there have been some revisions to the Weighted Guidelines over the past few years, the basis for the existing policy was established in the mid-1980s. Since then, there have been a number of changes, including (1) the evolution of DoD's acquisition programs, (2) extensive industry consolidation, and (3) a significant increase in the number of DoD contracts for services. In light of these many changes, DoD is interested in receiving public input on the existing profit/fee policies, with regard to those that are working effectively and those that should be revised or eliminated, along with supporting rationale. Potential areas for consideration include, but are not limited to, the following:

• The contractor risk factors used in DoD's structured approach for developing profit/fee objectives, particularly with regard to—

• The pertinence of the existing factors;

• Whether the ranges and normal values used for the existing factors are still valid; and

• Whether there are other risk factors that are not reflected in the existing policies.

• Any changes needed to—

• The technology incentive at DFARS 215.404-71-2(c)(2) and (d)(4);

• The contract type risk factor at DFARS 215.404-71-3;

• The facilities capital employed factor at DFARS 215.404-71-4;

• The cost efficiency factor at DFARS 215.404-71-5;

• The modified weighted guidelines at DFARS 215.404-72;

• The policies as they provide for consideration of the amount of investment a contractor has in a contract;

• The policies as they provide for consideration of the extent of contract financing payments;

• The policies as they apply to contracts for services; and

• The policies as they apply to contracts for research, development, test, and evaluation.

• Whether any of the existing structured approaches for profit analysis should play a role in establishing the base fee or pool on award-fee contracts.

DoD policies on contract financing are described in Part 32 of the Federal Acquisition Regulation (FAR) and Part 232 of the Defense FAR Supplement. These policies cover a variety of contract finance issues, including non-commercial item purchase financing; commercial item purchase financing; loan guarantees for defense production; advance payments for noncommercial items; progress payments based on costs; contract debts; contract funding; assignment of claims; prompt payment; performance-based payments; electronic funds transfer; electronic submission and processing of payment requests; and levies on contract payments.

DoD is interested in receiving public input on these contract financing policies, particularly with regard to those that are considered to be especially effective or ineffective, along with supporting rationale.

On February 25, 1998, we received a petition from the Southwest Center for Biological Diversity requesting that the Service add the Rio Grande cutthroat trout ( Onchorynchus clarki virginalis ) to the List of Endangered and Threatened Wildlife. The petition addressed the range-wide distribution of the Rio Grande cutthroat trout, including populations in Colorado and New Mexico.

Section 4(b)(3)(B) of the Act requires that we make a finding on whether a petition to list, delist, or reclassify a species presents substantial scientific or commercial information indicating that the petitioned action may be warranted. We subsequently published a notice of a 90-day finding in the Federal Register (63 FR 49062, September 14, 1998). In the 90-day finding, we concluded that the petition did not present substantial information indicating that listing of the Rio Grande cutthroat trout may be warranted.

On June 9, 1999, the Southwest Center for Biological Diversity filed a complaint challenging the September 14, 1998, 90-day petition finding as violating the Act and the Administrative Procedure Act (5 U.S.C. 551 et seq ). On November 8, 2001, a settlement agreement executed by both parties (the Service and the Southwest Center for Biological Diversity) was filed with the court. The settlement agreement stipulated that we would conduct a candidate status review for the Rio Grande cutthroat trout.

After completing the candidate status review for the Rio Grande cutthroat trout, the Service made a determination that listing of the trout was not warranted because the trout was neither endangered nor likely to become endangered within the foreseeable future throughout all or a significant portion of its range. Notice of that determination was published in the Federal Register on June 11, 2002 (67 FR 39936). Since that time, the Service has further defined how it analyzes what constitutes a “significant portion” of a species” range. For example, in the recent finding regarding the status of the Western Great Lakes distinct population segment of gray wolf (72 FR 6052, February 8, 2007), the Service outlined a framework for analyzing whether a species is in danger of extinction throughout a significant portion of its range. In addition, in the 5 years since the June 2002 deterimation, a significant amount of new information and data relevant to the Rio Grande cutthroat trout's status has been collected, such that a new candidate status review is prudent.

In light of these developments, the Service has withdrawn the June 11, 2002, candidate status review and the determination based upon that status review. The Service is initiating a new candidate status review for the Rio Grande cutthroat trout that is consistent with the new framework for analyzing “significant portion of its range” and that incorporates new information.

Our determination of candidate status for the Rio Grande cutthroat trout will be based upon the best available scientific and commercial data, as required under section 4(b)(1)(A) of the Act. We request that you submit any information on the Rio Grande cutthroat trout not previously submitted for our review. We are particularly interested in any relevant information gathered since June 2002 concerning the following:

(1) Current population status (e.g., population estimates, age-structure, trend) for any of the populations of the Rio Grande cutthroat trout, including methodology used for population estimation and confidence intervals if available;

(2) Rio Grande cutthroat trout's susceptibility to whirling disease, and distribution of Rio Grande cutthroat trout infected by whirling disease in New Mexico and Colorado;

(3) Distribution of Tubifix tubifix worms in the streams of New Mexico and Colorado and the susceptibility of these worms to infection;

(4) Genetic classification of any Rio Grande cutthroat trout population(s);

(5) Condition of occupied habitat;

(6) Restoration projects that have been completed, including translocation, new barrier construction or barrier repair, habitat improvement projects, or nonnative trout removal projects;

(7) Results of barrier surveys;

(8) Distribution of nonnative trout or their population size and structure in streams currently occupied by Rio Grande cutthroat trout;

(9) Status of any of the thirteen “core” populations identified in the 2002 status review (see 67 FR 39936);

(10) Current and future threats to Rio Grande cutthroat trout populations and remaining habitat areas; and

(11) Other regulatory mechanisms that address those threats, and the success of those mechanisms to date.

(12) Whether any portion of the range of the species is a significant portion of the range, and whether there are threats in that portion sufficient to meet the standards for listing under the Act.

Our candidate status review will take into consideration all comments and any additional information received, including all previous comments and information submitted during the previous candidate status review. As such, information provided during the previous status review does not need to be resubmitted.

If you are submitting e-mail comments, please include “ Attn: Rio Grande cutthroat trout” in your e-mail subject header. If you do not receive a confirmation from the system that we have received your e-mail, contact us directly by calling our New Mexico Ecological Services Field Office at (505) 346-2525. Please note that comments must be received by the date specified in the DATES section in order to be considered and that the e-mail address ( R2FWE_AL@fws.gov ) will be unavailable at the termination of the public comment period.

Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—;may be made publicly available at any time. While you can ask us to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

The primary author of this notice is the staff of the New Mexico Ecological Services Field Office.

The authority for this action is the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq. ).