Classification Executive Order 12866

This rule has been determined to be not significant for purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

This rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. It has been determined that this final rule meets the applicable standards provided in section 3 of the Executive Order. In addition, all State and local laws and regulations that are in conflict with this rule will be preempted; no retroactive effect will be given to the rule; and in accordance with sec. 212(e) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e)), appeal procedures must be exhausted before an action against the Department or its agencies may be initiated.

It has been determined that the Regulatory Flexibility Act is not applicable to this rule since Rural Development is not required by 5 U.S.C. 551 et seq. or any other provision of law to publish a notice of final rulemaking with respect to the subject matter of this rule.

The information collection and recordkeeping requirements contained in this rule are currently approved under OMB control number 0575-0066 in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). The Agency has submitted an information collection package to OMB to establish a new OMB control number, 0572-0137, for the information collection covered by this rule and will transfer the applicable burden from 0575-0066 to 0572-0137, when OMB approval is granted.

The Administrator has determined that this rule will not significantly affect the quality of the human environment as defined by the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ). Therefore, this action does not require an environmental impact statement or assessment.

The program described by this rule is listed in the Catalog of Federal Domestic Assistance Programs under numbers (1) 10.760—Water and Waste Disposal System for Rural Communities, (2) 10.761—Technical Assistance and Training Grants, (3) 10.762—Solid Waste Management Grants (4) 10.763—Emergency Community Assistance Grants, and (5) 10.770—section 306C Water and Waste Loans and Grants. This catalog is available on a subscription basis from the Superintendent of Documents, the United States Government Printing Office, Washington, DC 20402-9325, telephone number (202) 512-1800.

This program is listed in the Catalog of Federal Domestic Assistance under numbers (1) 10.760—Water and Waste Disposal (WWD) System for Rural Communities, (2) 10.763—Emergency Community Assistance Grants, and (3) 10.770—Water and Waste Loans and Grants (section 306C) and is subject to the provisions of Executive Order 12372 which requires intergovernmental consultation with State and local officials.

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

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with States is not required.

The Rural Development water and waste program is administered by Water and Environmental Programs (WEP). The water and waste loan and grant programs are authorized by various sections of the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq. ), as amended. The regulations for these programs have not been completely reviewed for many years. The 1994 streamlining and reorganization of the Department of Agriculture provided an opportunity to review and rewrite the water and waste loan and grant servicing regulations. A task force was formed for that purpose. The aim of the task force was to make the regulations easier to understand, eliminate unnecessary requirements, and continue to protect the interest of the U.S. taxpayer. The program provides loan servicing options for communities facing financial problems. Servicing options should result in reasonable user costs for rural residents, rural businesses, and other rural users. Additionally, in order to provide uniformity, servicing provisions for grants are addressed in the Departmental Grant Regulations cited in 1782.7.

Major changes are as follows:

1. Servicing regulations found in 7 CFR parts 1951, 1955, and 1956 are combined into one regulation.

2. The field staff is provided with more authority to service water and waste loans and grants.

3. The application process for servicing actions has been streamlined to reduce unnecessary paperwork and improve service to the rural communities. There will be fewer regulations, and the number of pages in the Code of Federal Regulations will be greatly reduced.

4. The functions of the former Farmers Home Administration (FmHA) and the Rural Development Administration (RDA) relating to the water and waste loan and grant programs authorized by various sections of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)), have been transferred to the Rural Development Utilities programs based on the Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354). Therefore, in order to enhance the delivery of borrower services and better assist the public, Rural Development is simplifying and rewriting regulations originally published by FmHA and RDA. All parts pertaining to the water and waste loan program will be moved into 7 CFR part 1782. This action will have no effect on the RHS community facilities loan program, as this action makes no policy changes in the regulation with the exception of implementing Section 6018 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 1936a). The following programs are affected by these amendments: (1) Water and Waste Disposal Loans and Grants, (2) Watershed Loans and Advances, (3) Resource Conservation and Development Loans, (4) Technical Assistance and Training Grants, (5) Emergency Community Assistance Grants, (6) Solid Waste Management Grants, and (7) Section 306C Water and Waste Facility Loans and Grants to Alleviate Health Risks.

5. Implement Sec. 6018 of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171). This change will allow the borrower or grant recipient to use property (real and personal) purchased or improved with the loan or grant funds or proceeds from the sale of property (real and personal) purchased with such funds, for another project or activity. Rural Development has included language to implement this provision in 7 CFR 1782.23. These provisions will also be applicable to Rural Development's Business and Housing programs by adding § 1951.218 to 7 CFR 1951, subpart E.

Rural Development published a proposed rulemaking in the Federal Register on November 15, 2004, 69 FR 65546. One public comment was received; however, Rural Development did not receive any comments from outside Federal agencies. The one public comment received was in the form of a Web site entry. The comment pertained to the legislation authorizing the program, as follows: “Why should only rural areas get this taxpayer money? Certainly urban districts have just as many financial issues. I find this kind of legislation extremely discriminatory. A survey is unnecessary and wasteful of taxpayer dollars. There are 50 years of history of data facts—there is no reason to survey. I would appreciate having sent to me a copy of the accomplishments of this little known agency for 2003.”

Response: Water and Waste Disposal Loans and Grants are authorized by the Consolidated Farm and Rural Development Act (TITLE III OF THE AGRICULTURAL ACT OF 1961) (Pub. L. 87-128; 75 Stat. 294). Rural Development makes water and wastewater loans and grants in accordance with 7 CFR 1780. The Agency has posted the most recent Annual Report for Fiscal Year (FY) 2006 at the following Web site address: http://www.usda.gov/rus/water/ . Please view this report for an overview of the Water and Environmental Program and its accomplishments. Rural Development did not receive enough information in the comment to respond to the issue of a particular survey. No changes were made to the final regulation based on the comment received. However, changes were made to the regulation in § 1782.17. Review by the Agency of Circular No. A-129, issued by the Office of Management and Budget (OMB), led to the conclusion that subordination cannot be listed as a general option in its regulations. The Circular states that the Government's claim should generally not be subordinated to the claims of other creditors since subordination increases the risk of loss to the Government. In a special circumstance, the Agency might seek a waiver of this requirement from OMB, but this would be on a case-by-case basis as dictated by the individual facts of the case. Therefore, subordination was removed as an option from § 1782.17. Also, the Agency determined that § 1782.17 lacked the criteria needed to make the determination that granting a parity lien is in the Government's interest. The Agency has added such criteria to § 1782.17.

Rural Development has completed a consolidation of regulations affecting WEP loans and grants. Prior to this rule becoming effective, WEP borrowers were affected, in part, by the following regulations:

All of the above-mentioned regulations include regulatory provisions of other programs of the former FmHA such as farm loans, business and industrial loans, single family housing, and multi-family housing. Rural Development is consolidating all regulatory actions in the above-mentioned regulations which affect WEP loan and grant servicing into one new regulation—7 CFR part 1782. This consolidated regulation will clarify for our borrowers and grantees the available servicing tools and the requirements to utilize these tools.

Additionally, Rural Development is removing all administrative processes from the regulations, leaving only regulatory actions that impact the public. This streamlining will make the regulation more concise and much easier to read and understand. A Staff Instruction will be issued that will include the administrative portion, which outlines agency internal processing procedures. The Staff Instruction will be available to the public upon request at no cost.

Rural Development believes the consolidation and streamlining of the regulations for this program will maximize the ability of the borrowers to use and understand the available servicing tools under this program. This consolidation is consistent with the Administration's efforts to streamline Government functions, improve the efficiency and effectiveness of Government activities, and strive to be more borrower-friendly. This effort will enable Rural Development to reduce regulations, streamline operations, and provide servicing assistance with fewer staff resources.

On August 10, 2007, (72 FR 44951), the NRC published a direct final rule amending its regulations in 10 CFR parts 2 and 171 to revise the size standards it uses to qualify an NRC licensee as a small entity under the Regulatory Flexibility Act. This amendment increases the receipts-based small business size standard from $5 million to $6.5 million. In the direct final rule, NRC stated that if no significant adverse comments were received, the direct final rule would become final on October 24, 2007. The NRC did not receive any comments that warranted withdrawal of the direct final rule. Therefore, this rule will become effective as scheduled.

The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691-1691f, makes it unlawful for a creditor to discriminate against an applicant in any aspect of a credit transaction on the basis of the applicant's national origin, marital status, religion, sex, color, race, age (provided the applicant has the capacity to contract), receipt of public assistance benefits, or the good faith exercise of a right under the Consumer Credit Protection Act, 15 U.S.C. 1601 et seq. The ECOA is implemented by the Board's Regulation B.

In addition to the general prohibition against discrimination, Regulation B contains specific rules concerning the taking and evaluation of credit applications, including procedures and notices for credit denials and other adverse action. Under section 202.9 of Regulation B, notification given to an applicant when adverse action is taken must contain the name and address of the federal agency that administers compliance with respect to the creditor. Appendix A of Regulation B contains the names and addresses of the enforcement agencies where questions concerning a particular creditor shall be directed. The Board is establishing a centralized address and telephone number for receiving inquiries about creditors for which the Board enforces Regulation B. This amendment updates the address in Appendix A to reflect this change. Creditors have until October 1, 2008, the mandatory compliance date, to include the new address and telephone number on their adverse action notices.

The Federal Trade Commission Act requires the Board to establish a separate division of consumer affairs to receive and take appropriate action upon complaints about unfair or deceptive acts or practices for banks under its jurisdiction. See 15 U.S.C. 57a(f). The procedures for submitting consumer complaints are contained in the Board's Regulation AA (12 CFR part 227). The regulation currently directs consumers having complaints regarding a state member bank to submit the complaint to the Board or the Federal Reserve Bank of the district in which the bank is located. 12 CFR 227.2(a). The Board is establishing a centralized location for the administrative processing of consumer complaints. Accordingly, the Board is amending Regulation AA to reflect the new address where such complaints should be sent and to provide a telephone number consumers can use to submit complaints.

On April 12, 2007 the FAA published a direct final rule (72 FR 18556) amending § 187.15(a) to allow the use of a credit card to pay fees to the FAA for certification services performed outside the United States. Until now, fees could only be paid by check, money order, wire transfer, or draft, payable in U.S. currency and drawn on a U.S. bank. Section 187.15(d) already allows the use of a credit card to remit amounts less than $1,000 for certain aircraft flights transiting U.S. controlled airspace. The direct final rule revised sections (a) and (d) to bring consistency to the methods of payment.

In 1995 the FAA published a final rule (60 FR 19631) amending 14 CFR part 187. During this time the FAA offices were not set up to receive credit card payments and therefore credit card payments were specifically omitted from the 1995 rulemaking. As technology advanced over the years credit card payments became an accepted practice within the FAA accounting systems and offices. Therefore the FAA began collecting user fees by credit card allowing more timely receipt and providing customers with a convenient method to pay for services.

This direct final rule also revised §§ 61.13(a)(2), 63.11 and 65.11. In the 1995 final rule that amended fees under part 187, appendix A, the issue that was specifically addressed was that user fees extended to all applicants located outside the United States, regardless of citizenship. The 1995 final rule brought these regulations in line with the nondiscrimination principles of multilateral trade agreements to which the U.S. is a signatory. Those included the principles of the General Agreement on Tariffs and Trade (GATT), including the GATT Aircraft Code and the General Agreement on Trade in Services. When part 187 was initially amended in 1995, §§ 61.13(a)(2), 63.11 and 65.11 were not revised for consistency, the direct final rule corrects this inconsistency.

Before the direct final rule became effective § 61.13(a)(2) required an “applicant who is neither a citizen of the United States nor a resident alien of the United States” to show evidence of paying the correct fee prescribed in appendix A to part 187. This evidence was to be presented when the person applied for a student pilot certificate issued outside the United States or a knowledge test or practical test administered outside the United States. The direct final rule revised the wording to make it clear that an applicant's citizenship is not at issue. The revised wording now states the fees are for “airmen certification services.” There is no need to enumerate those services because they are addressed in part 187, appendix A.

Before the direct final rule became effective §§ 63.11 and 65.11 stated: “Each person who is neither a United States citizen nor a resident alien and applies for written or practical test to be administered outside the United States for any certificate or rating issued under this part must show evidence the fee prescribed in appendix A of part 187 of this chapter has been paid.” The direct final rule revised the wording as follows: “Each person who applies for airmen certification services to be administered outside the United States for any certificate or rating issued under this part must show evidence that the fee prescribed in appendix A of part 187 of this chapter has been paid.”

The FAA did not receive any adverse or negative comments or a written notice of intent to file an adverse or negative comment and therefore the rulemaking became effective on June 11, 2007.

The Securities and Exchange Commission (“Commission”) is adopting temporary rule 206(3)-3T [17 CFR 275.206(3)-3T] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] as an interim final rule.

We are soliciting comments on all aspects of the rule. We will carefully consider the comments that we receive and respond to them in a subsequent release.

On March 30, 2007, the Court of Appeals for the District of Columbia Circuit (the “Court”), in Financial Planning Association v. SEC (“ FPA decision”), vacated rule 202(a)(11)-1 under the Investment Advisers Act of 1940 (“Advisers Act” or “Act”). 1 Rule 202(a)(11)-1 provided, among other things, that fee-based brokerage accounts were not advisory accounts and were thus not subject to the Advisers Act. 2 As a consequence of the FPA decision, broker-dealers offering fee-based brokerage accounts became subject to the Advisers Act with respect to those accounts, and the client relationship became fully subject to the Advisers Act. Broker-dealers would need to register as investment advisers, if they had not done so already, act as fiduciaries with respect to those clients, disclose all potential material conflicts of interest, and otherwise fully comply with the Advisers Act, including the Act's restrictions on principal trading.

We filed a motion with the Court on May 17, 2007 requesting that the Court temporarily withhold the issuance of its mandate and thereby stay the effectiveness of the FPA decision. 3 We estimated at the time that customers of broker-dealers held $300 billion in one million fee-based brokerage accounts. 4 We sought the stay to protect the interests of those customers and to provide sufficient time for them and their brokers to discuss, make, and implement informed decisions about the assets in the affected accounts. We also informed the Court that we would use the period of the stay to consider whether further rulemaking or interpretations were necessary regarding the application of the Act to fee-based brokerage accounts and other issues arising from the Court's decision. On June 27, 2007, the Court granted our motion and stayed the issuance of its mandate until October 1, 2007. 5

We and our staff received several letters regarding the FPA decision and about particular consequences to customers who hold fee-based brokerage accounts. 6 Our staff followed up with, and has been engaged in an ongoing dialogue with, representatives of investors, financial planners, and broker-dealers regarding the implications of the FPA decision. During that process, firms that offered fee-based brokerage accounts informed us that, unless the Commission acts before October 1, 2007, one group of fee-based brokerage customers is particularly likely to be harmed by the consequences of the FPA decision: Customers who depend both on access to principal transactions with their brokerage firms and on the protections associated with a fee-based (rather than transaction-based) compensation structure. Firms explained that section 206(3) of the Advisers Act, the principal trading provision, poses a significant practical impediment to continuing to meet the needs of those customers.

Section 206(3) of the Advisers Act makes it unlawful for any investment adviser, directly or indirectly “acting as principal for his own account, knowingly to sell any security to or purchase any security from a client * * *, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction.”  7 Section 206(3) requires an adviser entering into a principal transaction with a client to satisfy these disclosure and consent requirements on a transaction-by-transaction basis. 8 An adviser may provide the written disclosure to a client and obtain the client's consent at or prior to the completion of the transaction. 9

During our discussions, firms informed our staff that the written disclosure and the client consent requirements of section 206(3) act as an operational barrier to their ability to engage in principal trades with their clients. Firms that are registered both as broker-dealers and investment advisers generally do not offer principal trading to current advisory clients (or do so on a very limited basis), and the rule vacated in the FPA decision had allowed broker-dealers to offer fee-based accounts without complying with the Advisers Act, including the requirements of section 206(3). Most informed us that they plan to discontinue fee-based brokerage accounts as a result of the FPA decision because of the application of the Advisers Act. They also informed us of their view that, unless they are provided an exemption from, or an alternative means of complying with, section 206(3) of the Advisers Act, they would be unable to provide the same range of services to those fee-based brokerage customers who elect to become advisory clients and would expect few to elect to do so. 10

Several broker-dealers and the Securities Industry and Financial Markets Association (“SIFMA”) contended that providing written disclosure before completion of each securities transaction, as required by section 206(3) of the Advisers Act, makes it not feasible for an adviser to offer customers principal transactions for several reasons. Firms explained that there are timing and mechanical impediments to complying with section 206(3)'s written disclosure requirement. SIFMA explained that, for example, the combination of rapid electronic trading systems and the limited availability of many of the securities traded in principal markets means that an adviser may be unable to provide written disclosure and obtain consent in sufficient time to obtain such securities at the best price or, in some cases, at all. 11 Similarly, SIFMA contended that trade-by-trade written disclosure prior to execution is not practicable because “discussions between investment advisers and non-discretionary clients about a trade or strategy may occur before a particular transaction is effected, but at the time that discussion occurs the representative may not know whether the transaction will be effected on an agency or a principal basis.” 12

Firms also explained that they engage in thousands—in many cases, tens of thousands—of principal trades a day and that, due to the sheer volume of transactions, providing a written notice to all the clients with whom they conduct trades in a principal capacity may only be done using automated systems. 13 One such automated system is the system broker-dealers use to provide customers with transaction-specific written notifications, or trade confirmations, that include the information required by rule 10b-10 under the Exchange Act. 14 Under rule 10b-10, a broker-dealer must disclose on its confirmation if it acts as principal for its own account with respect to a transaction. 15 However, confirmations are provided to customers too late to satisfy the requirements of section 206(3). This is because trade confirmations are sent, rather than delivered, at completion of a transaction and much of the information required to be disclosed by rule 10b-10 may only be available at completion of a transaction, not before. Thus, even if firms were to rely on the Commission's 1998 interpretation of section 206(3), under which disclosure and consent may be obtained after execution but before settlement of a transaction, 16 no automated system currently exists that could ensure compliance. 17

Additionally, even if an automated system existed to enable the disclosure and consent after execution of a trade but before its completion in satisfaction of section 206(3), firms indicated that they would be unlikely to trade on such a basis. The firms explained that they do not seek post-execution consent because allowing a client until settlement to consent to a trade that has already been executed creates too great a risk that intervening market changes or other factors could lead a client to withhold consent to the disadvantage of the firm.

Access to securities held in a firm's principal accounts is important to many investors. We believe, based on our discussions with industry representatives and others throughout the transition process, that many customers may wish to access the securities inventory of a diversified broker-dealer through their non-discretionary advisory accounts. 18 For example, the Financial Planning Association (“FPA”) noted that principal trades in a fiduciary relationship could be beneficial to investors, stating:

As a result of the FPA decision, customers must elect on or before October 1, 2007, to convert their fee-based brokerage accounts to advisory accounts or to traditional commission-based brokerage accounts. Several firms emphasized to our staff that the inability of a client to access certain securities held in the firm's principal accounts—particularly municipal securities and other fixed income securities that they contend have limited availability and are dealt through a firm's account using electronic communications networks—may be a determinative factor in whether the client selects (or the firm makes available) a non-discretionary advisory account to replace the client's fee-based brokerage account. As discussed in this Release, many firms informed us that, because of the practical difficulties with complying with the trade-by-trade written disclosure requirements of section 206(3) discussed above, they simply refrain from engaging in principal trading with their advisory clients. Accordingly, customers who wish to access firms' principal inventories may, as a practical matter, have no choice but to open a traditional brokerage account in which they will pay transaction-based compensation, rather than convert their fee-based brokerage account to an advisory account.

While we do not agree with SIFMA that an exemption from section 206(3) of the Act in its entirety is appropriate, we do believe that there may be substantial benefits to many of the investors holding an estimated $300 billion in approximately one million fee-based brokerage accounts if their accounts are converted to advisory accounts instead of traditional brokerage accounts. 20 Those investors will continue to be able to avoid transaction-based compensation and the incentives such a compensation arrangement creates for a broker-dealer, a reason they may have initially opened fee-based brokerage accounts. 21 They also will enjoy, as the Court pointed out in the FPA decision, the protections of the “federal fiduciary standard [that] govern[s] the conduct of investment advisers.”  22

To address the concerns described above and to protect the interests of customers who previously held fee-based brokerage accounts, we are adopting a temporary rule, on an interim final basis, that provides an alternative method for advisers who also are registered as broker-dealers to comply with section 206(3) of the Act. We believe this rule both protects investors' choice—fee-based brokerage customers would be able to choose an account that offers a similar set of services (including access to the same securities) that were available to them in fee-based brokerage accounts—and avoids disruption to, and confusion among, investors who may wish to access and sell securities only available through a firm acting in a principal capacity and who, as a result, may no longer be offered any fee-based account. We believe the temporary rule will allow fee-based brokerage customers to maintain their existing relationships with, and receive roughly the same services from, their broker-dealers. We believe further that making the rule temporary allows us an opportunity to observe how those firms use the alternative means of compliance provided by the rule, and whether those firms serve their clients' best interests.

Congress intended section 206(3) of the Advisers Act to address concerns that an adviser might engage in principal transactions to benefit itself or its affiliates, rather than the client. 23 In particular, Congress appears to have been concerned that advisers might use advisory accounts to “dump” unmarketable securities or those the advisers fear may decline in value. 24 Congress chose not to prohibit advisers from engaging in principal and agency transactions, but rather to prescribe a means by which an adviser must disclose and obtain the consent of its client to the conflicts of interest involved. Congress's concerns were and continue to be significant. Self-dealing by investment advisers involves serious conflicts of interest and a substantial risk that the proprietary interests of the adviser will prevail over those of its clients. 25

In light of these concerns and the important protections provided by section 206(3) of the Advisers Act, rule 206(3)-3T provides advisers an alternative means to comply with the requirements of that section that is consistent with the purposes, and our prior interpretations, of the section. The temporary rule continues to provide the protection of transaction-by-transaction disclosure and consent, subject to several conditions. 26 Specifically, temporary rule 206(3)-3T permits an adviser, with respect to a non-discretionary advisory account, to comply with section 206(3) of the Advisers Act by, among other things: (i) Providing written prospective disclosure regarding the conflicts arising from principal trades; (ii) obtaining written, revocable consent from the client prospectively authorizing the adviser to enter into principal transactions; (iii) making certain disclosures, either orally or in writing, and obtaining the client's consent before each principal transaction; (iv) sending to the client confirmation statements disclosing the capacity in which the adviser has acted and disclosing that the adviser informed the client that it may act in a principal capacity and that the client authorized the transaction; and (v) delivering to the client an annual report itemizing the principal transactions. The rule also requires that the investment adviser be registered as a broker-dealer under section 15 of the Exchange Act and that each account for which the adviser relies on this rule be a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member. 27

These conditions, discussed below, are designed to prevent overreaching by advisers by requiring an adviser to disclose to the client the conflicts of interest involved in these transactions, inform the client of the circumstances in which the adviser may effect a trade on a principal basis, and provide the client with meaningful opportunities to refuse to consent to a particular transaction or revoke the prospective general consent to these transactions. We note that we have previously stated that “Section 206(3) should be read together with Sections 206(1) and (2) to require the adviser to disclose facts necessary to alert the client to the adviser's potential conflicts of interest in a principal or agency transaction.”  28 We request comment generally on the need for the rule and its potential impact on clients of the advisers. Will the advantages described above that we believe accompany rule 206(3)-3T be beneficial to investors? Have we struck an appropriate balance between investor choice and investor protection? Does the alternative means of compliance contained in rule 206(3)-3T provide all the necessary investor protections?  29

Rule 206(3)-3T deems an investment adviser to be in compliance with the provisions of section 206(3) of the Advisers Act when the adviser, or a person controlling, controlled by, or under common control with the investment adviser, acting as principal for its own account, sells to or purchases from an advisory client any security, provided that certain conditions discussed below are met. The scope and structure of the rule are similar to our rule 206(3)-2 under the Advisers Act, which, as noted above, provides an alternative means of complying with the limitations on “agency cross transactions,” also contained in section 206(3).

We have applied section 206(3) not only to principal transactions engaged in or effected by an adviser, but also to certain situations in which an adviser causes a client to enter into a principal transaction that is effected by a broker-dealer that controls, is controlled by, or is under common control with the adviser. 30 Accordingly, rule 206(3)-3T would be available if the adviser acts as principal by causing the client to engage in a transaction with a broker-dealer that is an affiliate of the adviser—that is, a broker-dealer that controls, is controlled by, or is under common control with the investment adviser.

Rule 206(3)-3T applies to principal trades with respect to accounts over which the client has not granted “investment discretion, except investment discretion granted by the advisory client on a temporary or limited basis.”  31 Availability of the rule to discretionary accounts would be inconsistent with the requirement of the rule, discussed below, that the adviser obtains consent (which may be oral consent) from the client for each principal transaction. 32 In addition, we are of the view that the risk of relaxing the procedural requirements of section 206(3) of the Advisers Act when a client has ceded substantial, if not complete, control over the account raises significant risks that the client will not be, or is not in a position to be, sufficiently involved in the management of the account to protect himself or herself from overreaching by the adviser.

The rule would apply to all non-discretionary advisory accounts, not only those that were originally established as fee-based brokerage accounts. 33 As noted above, some portion of the customers converting fee-based brokerage accounts into advisory accounts will be converting those accounts into non-discretionary accounts offered by the same firm. We understand from our discussions with broker-dealers that maintaining principal trading distinctions between advisory accounts that were once fee-based brokerage accounts and those that were not would be very difficult. Trade execution routing for investment advisory programs often is derived through unified programs or electronic codes allowing or prohibiting certain kinds of trades uniformly for all accounts that are of the same type. As such, limiting relief to accounts that were formerly in fee-based brokerage programs would make the requested relief impractical for firms and would neither serve the best interests of clients (because the effect would be to limit their ability to continue to access the inventory of securities held by their brokerage firm) nor be administratively feasible to firms affected by the Court's ruling with respect to the transition and ongoing servicing of these and other accounts subject to the Advisers Act. We accordingly determined not to limit the availability of the temporary rule only to those non-discretionary advisory accounts that were fee-based brokerage accounts.

We welcome comment on this aspect of our interim final rule. Are we correct that the potential for abuse through self-dealing is less in non-discretionary accounts, where clients may be better able to protect themselves and monitor trading activity, than in accounts where clients have granted discretion and may not be in a position to protect themselves sufficiently? Should we further limit the availability of the rule so that it is only available for transactions with wealthy or sophisticated clients who, for other purposes under the Act, we have presumed are capable of protecting themselves? For example, should it apply only with respect to transactions with a “qualified client” as defined in Advisers Act rule 205-3?

Should we limit the relief provided by the rule to accounts that originally were fee-based brokerage accounts? Do the operational burdens and complexities identified by the broker-dealers support application of the rule to all non-discretionary advisory accounts?

Rule 206(3)-3T is not available for principal trades of securities if the investment adviser or a person who controls, is controlled by, or is under common control with the adviser (“control person”) is the issuer or is an underwriter of the security. 34 The rule includes one exception—an adviser may rely on the rule for trades in which the adviser or a control person is an underwriter of non-convertible investment-grade debt securities.

One benefit an investor may gain by establishing a brokerage account with a large broker-dealer is the ability to obtain access to potentially profitable public offerings of securities. These securities are typically purchased by the broker-dealer participating in the underwriting as part of its allotment of the offering and then sold to customers in principal transactions. As noted above, many broker-dealers have not made such offerings available to advisory clients because of the requirements of section 206(3).

A broker-dealer participating in an underwriting typically has a substantial economic interest in the success of the underwriting, which might be different from the interests of investors. When a broker-dealer acts as an underwriter with respect to a security, it is compensated precisely for the service of distributing that security. 35 A successful distribution not only offers the possibility of a concession on the securities (the spread between the underwriter's purchase price from the issuer and the public offering price), but also often an over-allotment option, and potentially future business (whether as an underwriter, lender, adviser or otherwise) with the issuer. The incentives may bias the advice being provided or lead the adviser to exert undue influence on its client's decision to invest in the offering or the terms of that investment. As such, the broker-dealer's incentives to “dump” securities it is underwriting are greater for sales by a broker-dealer acting as an underwriter than for sales by a broker-dealer not acting as an underwriter of other securities from its inventory.

A broker-dealer acting as an issuer has similar, if not greater, proprietary interests that are likely to adversely affect the objectivity of its advice. We therefore are of the view that an investment adviser who (or whose affiliate) is the issuer or underwriter of a security has such a significant conflict of interest as to make such a transaction, with one exception, an inappropriate subject of the relief we are providing today.

We have, however, provided an exception for principal transactions in non-convertible investment grade debt securities underwritten by the adviser or a person who controls, is controlled by, or is under common control with the adviser. 36 Non-convertible investment grade debt securities may be less risky and therefore less likely to be “dumped” on clients. Also, it may be easier for clients to identify whether the price they are being quoted for a non-convertible investment grade debt security is fair given the relative comparability, and the significant size, of the non-convertible investment grade debt markets.

Moreover, as the staff has discussed the effects of the FPA decision with broker-dealers, those broker-dealers have asserted that it is in the interest of investors to permit them to conduct principal trades with their advisory clients involving these securities, even where they or their affiliates are underwriters. Those firms argue that clients may face difficulties and higher costs in obtaining these debt instruments, particularly municipal bonds, through an advisory account if the adviser is not permitted to rely on the interim final rule's alternative means of complying with section 206(3).

The limitation on issuer transactions makes the rule unavailable for principal transactions in traditional equity or debt offerings of the investment adviser or a control person of the adviser. It also makes the rule unavailable in connection with—and thus requires compliance with section 206(3)'s trade-by-trade written disclosure requirements before—non-discretionary placement by an adviser of a proprietary structured product, such as a structured note, with an advisory client. 37 We request comment on whether we should consider expanding the availability of the rule to apply to structured products, and if so, on what terms.

We also request comment on our exclusion for securities issued or underwritten by the adviser or its control persons. Do commenters agree with our assessment of the risks to clients and our interpretation of the purposes of section 206(3)? Should we consider making the rule available for principal transactions in all securities (including those issued or subject to an underwriting by the adviser or a control person) in light of the clients' interest in obtaining access to public offerings? Alternatively, is there an approach we might take that could distinguish types of underwriting arrangements that do not present unacceptable risks of conflicts for the adviser? In this regard, we request comment on the one exception we have provided for non-convertible investment grade debt securities. Is the exception appropriate under the circumstances? Are there other circumstances in which an adviser should be able to rely on the rule when it (or a control person) is an issuer or underwriter of securities in certain circumstances?

An adviser may rely on rule 206(3)-3T only after having secured its client's written, revocable consent prospectively authorizing the adviser directly or indirectly acting as principal for its own account, to sell any security to or purchase any security from such client. 38 The consent must be obtained only after the adviser provides the client with written disclosure about: (i) The circumstances under which the investment adviser may engage in principal transactions with the client; (ii) the nature and significance of the conflicts the investment adviser has with its clients' interests as a result of those transactions; and (iii) how the investment adviser addresses those conflicts. 39 We anticipate that this consent normally would be obtained by the adviser when the client establishes the advisory account. 40

Rule 206(3)-3T is not exclusive. An adviser would still be able to effect principal trades with a client who either never grants the prospective consent required under paragraph (a)(3) of the rule 206(3)-3T, or subsequently revokes that consent after having granted it, so long as the adviser complies with the terms of section 206(3) of the Act.

Will the disclosure required by paragraph (a)(3) be meaningful for clients in understanding the conflicts and risks inherent in principal trading by a fiduciary counterparty? Are there alternative approaches that we could adopt to make the prospective disclosures more meaningful to clients? Should we require disclosure to be prominent or, alternatively, require disclosure in a separately executed document to assure that the client has separately given attention to the request for consent?

With each written disclosure, confirmation, and request for written prospective consent, the investment adviser must include a conspicuous, plain English statement clarifying that the prospective general consent may be revoked at any time. 41 Thus, the client must be able to revoke his or her prospective consent at any time, thereby preventing an adviser from relying on rule 206(3)-3T with respect to that account going forward. 42 Do these provisions adequately ensure that client consent is voluntary? Will advisers make a client's consent a condition to participation in non-discretionary advisory accounts they offer? If so, should we add a provision to the rule to address this issue, such as prohibiting advisers from doing so?

The written prospective consent need only be executed once. Should we require that the client's consent be renewed periodically? What benefit would be gained by such a provision in light of the client's right to revoke his or her consent at any time?

The temporary rule requires an investment adviser, before the execution of each principal transaction, to: (i) Inform the client of the capacity in which the adviser may act with respect to the transaction; and (ii) obtain consent from the client for the investment adviser to act as principal for its own account with respect to each such transaction. 43 The trade-by-trade disclosure and consent may be written or oral. Although representatives of the brokerage industry have requested that we eliminate the requirement for transaction-by-transaction disclosure and consent, 44 we have determined that such disclosure and consent continues to be important to alert clients to the potential for conflicted advice they may be receiving on individual transactions. In light of the conflicts inherent in these transactions, generally notifying the client that a transaction may be effected on a principal basis close in time to the carrying out of such a trade is appropriate.

Given the frequency and speed of trading in some advisory accounts as well as the increasing complexity of securities products available in the marketplace, trade-by-trade disclosure and consent, even if oral, might be a more effective protection against misunderstanding by advisory clients of the nature of a transaction and the conflicts inherent in it as well as a meaningful safeguard for investment advisers seeking to comply with their fiduciary obligations. We understand, however, that in many instances the adviser may not know whether a particular transaction will be effected on a principal basis. Accordingly, the rule permits advisers to disclose to clients that they “may” act in a principal capacity with respect to the transaction.

We do not believe the obligation to make oral disclosure will impose a significant burden on investment advisers of non-discretionary accounts who must, in most cases, obtain consent for each transaction regardless of whether the transaction will be done on a principal basis. 45 We are interested in learning from investors whether this consent requirement is informative and helpful. We also are interested in learning from advisers whether they intend to document receipt of the oral consent and, if so, whether they will be able to do so efficiently.

We request comment regarding whether investment advisers find useful the flexibility to provide oral instead of written disclosure on a trade-by-trade basis. Or, will advisers instead view the relief as unworkable?

The investment adviser must send to each client with which it effects a principal trade pursuant to rule 206(3)-3T a written confirmation, at or before the completion of the transaction. 46 In addition to the other information required to be in a confirmation by Exchange Act rule 10b-10, 47 the confirmation must include a conspicuous, plain English statement informing the advisory client that the adviser disclosed to the client prior to the execution of the transaction that the adviser may act in a principal capacity in connection with the transaction, that the client authorized the transaction, and that the adviser sold the security to or bought the security from the client for its own account. 48 An investment adviser need not send a duplicate confirmation. An adviser may satisfy its obligations under paragraph (a)(5) by including, or causing an affiliated broker-dealer to include, the additional required disclosure on a confirmation otherwise sent to the client with respect to a particular principal transaction.

The requirement to provide a trade-by-trade confirmation is designed to ensure that clients are given a written notice and reminder of each transaction that the investment adviser effects on a principal basis and that conflicts of interest are inherent in such transactions. 49 We request comment on our written confirmation condition. Is there additional information that should be included in the confirmation? Are there circumstances in which commenters believe it is appropriate for us to permit investment advisers to rely on rule 206(3)-3T and also deliver confirmations to clients pursuant to the alternative periodic reporting provisions of rule 10b-10(b)?

The investment adviser must deliver to each client, no less frequently than once a year, written disclosure containing a list of all transactions that were executed in the account in reliance on rule 206(3)-3T, including the date and price of such transactions. 50 The annual summary statement is designed to ensure that clients receive a periodic record of the principal trading activity in their accounts and are afforded an opportunity to assess the frequency with which their adviser engages in such trades. As with each other disclosure required pursuant to rule 206(3)-3T, to be able to rely on the rule the investment adviser must include a conspicuous, plain English statement that its client's written prospective consent may be revoked at any time. 51

We request comment generally on this aspect of the interim final rule. Should a summary statement be provided more or less frequently than annually? Is there additional information that we should require to be included in each summary statement? For example, we are not requiring advisers to disclose in an annual statement the total amount of all commissions or other remuneration they receive in connection with transactions with respect to which they are relying on this rule. Although that disclosure is required with respect to agency cross transactions pursuant to rule 206(3)-2(a)(3), we are concerned that disclosure of such amounts for principal trades may not accurately reflect the actual economic benefit to the adviser with respect to those trades or the consequence to the client for consenting to those trades. Are our concerns justified? Commenters are invited to submit suggestions for possible enhancements to the disclosures in annual statements that could enhance the disclosure to clients of the significance of their consenting to principal trades.

Rule 206(3)-3T is only available to an investment adviser that also is registered with us as a broker-dealer. Each account for which the investment adviser relies on this section must be a brokerage account subject to the Exchange Act, the rules thereunder, and the rules of applicable self-regulatory organizations ( e.g. , FINRA). 52 The rule therefore requires that the protections of both the Advisers Act and the Exchange Act apply when advisers enter into principal transactions with clients in reliance on the rule.

The temporary rule permits, subject to compliance with the rule's conditions, an adviser that also is registered as a broker-dealer to execute a principal trade directly (out of its own account) or indirectly (out of an account of another person who is a control person of the adviser). Because we have decided to apply the rule only to advisers who also are registered as broker-dealers, an adviser who is not also a registered broker-dealer would be unable to rely on rule 206(3)-3T if it causes a client to enter into a principal trade with a control person, even if that control person is a registered broker-dealer.

Our decision not to extend the rule to advisory accounts that are held only at investment advisers, as opposed to entities that are both investment advisers and broker dealers, is based on several considerations. First, firms that are both broker-dealers and investment advisers and their employees must comply with the comprehensive set of Commission and self-regulatory organization sales practice and best execution rules that apply to the relationship between a broker-dealer and its customer in addition to the fiduciary duties an adviser owes a client. We believe that it is important to maintain the application of the laws and rules regarding broker-dealers to these accounts. 53 Second, as a practical matter, advisory clients most frequently need and desire principal trading services from firms that are dually registered as an adviser and a broker-dealer because they generally carry large inventories of securities. Providing a variation in the method of complying with section 206(3) of the Advisers Act for advisers that also are registered as broker-dealers thus addresses a large category of the situations in which clients are likely to benefit from access to the inventory of the adviser/broker-dealer without sacrificing pricing or other sales practice protections.

We request comment on this aspect of the interim final rule. What will be the benefit to customers of maintaining the sales practice rules of self-regulatory organizations? What will be the impact of the rule on advisers that are not themselves registered as broker-dealers? Would they choose to register as a broker-dealer in order to take advantage of the new rule? Are there particular requirements of broker-dealer regulation that are clearly duplicative or clearly inapplicable to the regulation of investment advisers and so are unnecessary in this context?

Rule 206(3)-3T(b) clarifies that the temporary rule does not relieve in any way an investment adviser from its obligation to act in the best interests of each of its advisory clients, including fulfilling the duty with respect to the best price and execution for a particular transaction. 54 Compliance with rule 206(3)-3T also does not relieve an investment adviser from its fiduciary obligation imposed by sections 206(1) or (2) of the Advisers Act or by other applicable provisions of federal law. 55

We note specifically that an adviser engaging in principal transactions is subject to rule 206(4)-7, which, among other things, requires an investment adviser registered with us to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act (and the rules thereunder) by the adviser or any of its supervised persons. 56 Thus, an adviser relying on rule 206(3)-3T as an alternative means of complying with section 206(3) must have adopted and implemented written policies and procedures reasonably designed to comply with the requirements of the rule. In addition, rule 204-2, 57 as well as Exchange Act rules 17a-3  58 and 17a-4, 59 requires the adviser to make, keep, and retain records relating to the principal trades the adviser effects.

Rule 206(3)-3T(d) contains a sunset provision. Absent further action by the Commission, the temporary rule will expire on December 31, 2009, which is about 27 months from its effective date. 60 Setting a termination date for the rule will necessitate further Commission action no later than the end of that period if the Commission intends to continue the same or similar relief.

We believe limiting the duration of the rule will give us an opportunity to observe how firms comply with their disclosure obligations under the rule, and whether, when they conduct principal trades with their clients, they put their clients' interests first. A significantly shorter period than the one we have established, however, may have disadvantaged former fee-based brokerage customers because of the uncertainty about the continuation of access through their advisory accounts to the securities in the inventory of their brokerage firm. Those customers also could have faced renewed disruption and confusion if the rule on principal trades were abolished or substantially modified in the short term. Similarly, broker-dealers would have faced the same uncertainty about the continuation of the rule, which could have caused some broker-dealers to decide not to make the necessary expenditures and investments to offer advisory accounts with access to principal trades.

We request comment on whether the 27-month time frame is appropriate. We also welcome comment on any other aspects of the rule that commenters believe should be modified.

This rulemaking action must be: (i) Necessary or appropriate in the public interest; (ii) consistent with the protection of investors; and (iii) consistent with the purposes fairly intended by the policy and provisions of the Advisers Act. 61 We also need to consider the effect of the rule on competition, efficiency, and capital formation, which we address below in Section VII of this Release. For the reasons described in this Release, we believe that the rule is necessary or appropriate in the public interest and consistent with the protection of investors. We also believe that the temporary rule is consistent with the purposes fairly intended by the policy and provisions of the Advisers Act.

In the FPA decision, the Court described the purposes of the Act, emphasizing that the “overall statutory scheme of the [Advisers Act] addresses the problems identified to Congress in two principal ways: First, by establishing a federal fiduciary standard to govern the conduct of investment advisers, broadly defined, * * * and second, by requiring full disclosure of all conflicts of interest.”  62 The Congressional intent was to eliminate or expose all conflicts of interest that might incline an investment adviser, consciously or unconsciously, to render advice that was not disinterested. 63 The Court further noted that Congress's purpose in enacting the Advisers Act was to establish fiduciary standards and require full disclosure of all conflicts of interests of investment advisers. 64

The temporary rule adopted today meets those purposes and adheres closely to the text of section 206(3), which reflects the basic conflict disclosure purposes of the Act. That section provides that an adviser, before engaging in a principal trade with an advisory client, must disclose to the client in writing before completion of the transaction the capacity in which the adviser is acting and must obtain the consent of the client to the transaction. As we have stated before, “[i]n adopting Section 206(3), Congress recognized the potential for [abuses such as price manipulation or the placing of unwanted securities into client accounts], but did not prohibit advisers entirely from engaging in all principal and agency transactions with clients. Rather, Congress chose to address these particular conflicts of interest by imposing a disclosure and client consent requirement in Section 206(3) of the Advisers Act.”  65

The temporary rule complies with Congressional intent. It provides an alternative procedural means of complying with section 206(3) that retains transaction-by-transaction disclosure and consent (as required by section 206(3) of the Act), but adds additional investor protections measures by requiring an adviser:

• At the outset of the relationship with the client, to disclose in writing the circumstances under which the investment adviser directly or indirectly may engage in principal transactions, the nature and significance of conflicts with its client's interests as a result of the transactions, and how the investment adviser addresses those conflicts;

• To obtain prospective written consent of the client in response to that initial disclosure;

• Before each transaction, to inform the advisory client, orally or in writing, that the adviser may act in a principal capacity with respect to the transaction and to obtain the consent from the advisory client, orally or in writing, for the transaction;

• To send to the client, at or before completion of the transaction, a written trade confirmation that, in addition to the information required by rule 10b-10 under the Exchange Act, discloses that the adviser informed the client prior to the execution of the transaction that the adviser may be acting in a principal capacity in connection with the transaction, that the client authorized the transaction, and that the adviser sold the security to, or bought the security from, the client for its own account;

• To send to the advisory client an annual statement listing each principal transaction during the preceding year and the date and price of each such transaction; and

• To acknowledge explicitly in each required disclosure the right of the client to revoke his or her prospective consent at any time.

Another significant protection is that, as we discuss in Section II.B.7 above, to benefit from the rule, the investment adviser must also be a broker-dealer registered with us. Therefore, the firm must comply with the comprehensive set of Commission and self-regulatory organization sales practice and best execution rules that apply to the relationship between a broker-dealer and customer in addition to the fiduciary duties an adviser owes a client.

We further believe that the temporary nature of the rule will give us an opportunity to observe how firms comply with their obligations, and whether, when they conduct principal trades with their clients, they put their clients' interests first. The rule therefore employs a range of features to achieve the transaction-by-transaction conflict disclosure and consent purposes and policies of the Advisers Act. The rule additionally enables the adviser to discharge its fiduciary duties by bolstering them with broker-dealer responsibilities.

This temporary rule takes effect on September 30, 2007. For several reasons, including those discussed above, we have acted on an interim final basis.

In the time since the FPA decision, the Commission staff has had numerous communications with affected customers, broker-dealers, and investment advisers about areas in which Commission action or relief might be required to protect the interests of investors as a result of the Court's decision. One area of significance identified as our deliberative process continued was the area of principal trades. Under the rule vacated in the FPA decision, principal trades in fee-based brokerage accounts were not subject to section 206(3) of the Act. Through the process of discussions with interested parties, it was brought to our attention that a large number of fee-based brokerage customers favor having the choice of advisory accounts with access to the inventory of a diversified broker-dealer and that for certain customers the access to such securities—many of which would otherwise be unavailable—was a critical component of their investment strategy. We also learned that, as discussed above, the traditional method for complying with the principal trading restrictions on an adviser in section 206(3)—written disclosure and consent before completion of each securities transaction—made it not feasible for an adviser to engage in principal trading with its clients. The Commission received requests for principal trading relief from firms and the staff engaged in discussions with representatives of investors, financial planners, and broker-dealers about the terms of relief, considered their specific comments, and took those comments into account in developing the temporary rule we are adopting today.

Because of the FPA decision and the October 1, 2007 expiration of the stay of the issuance of the Court's mandate to vacate the former rule, investors with fee-based brokerage accounts must now consider whether they should convert their accounts to advisory accounts or to traditional commission-based brokerage accounts. It is not possible for those customers to make a meaningful, well-informed decision if they do not know what services will be offered in advisory accounts. For example, it would be critical to a customer who invests primarily in fixed income securities (which generally are traded by firms on a principal basis) to know whether he or she could continue to access a firm's inventory of those securities (or sell those securities to the firm) in an advisory account. But firms informed us that they would not permit that kind of trading without a rule that is effective and that provides an alternative means of complying with section 206(3) of the Act. Until we could publish a rule for comment, receive and analyze those comments, and adopt a final rule, that customer would be left with the choice between a traditional brokerage account without the ability to pay a fee based on assets—presumably the customer's preferred manner of payment—or a fee-based advisory account without the ability to invest in fixed income products.

Changing accounts and methods of payments can be highly disruptive and confusing to many investors, requiring a series of communications between the investor and one or more firms about the options available to give the investor the information he or she needs to make informed decisions about the services available in each type of account. We believe that it serves such investors' interests best to adopt the rule on an interim final basis, which permits them to continue the same kind of account, with similar services, that they had when they were fee-based brokerage customers.

We are aware that, as a result of the FPA decision, the process for converting as many as one million fee-based brokerage accounts to non-discretionary advisory or other accounts requires a great deal of time and imposes significant conversion costs on firms. For example, in order to comply with the October 1 deadline, those firms needed to draft or revise agreements, policies, and other documents, hire and train employees, and make changes to data and recordkeeping, order entry, billing, and other systems. The firms offering fee-based brokerage accounts urged us to reduce the burdens that apply to them by adopting a rule that is effective on or before October 1 and that permits an alternative method of complying with section 206(3) of the Act (or, alternatively, to exempt them from section 206(3) altogether). They informed us that this would simplify the process of communicating with their customers and reduce investor confusion. This is mostly because the services and manner of payments would be substantially similar in non-discretionary advisory accounts as they were in fee-based brokerage accounts—the firms would not have to explain why the services a customer has become accustomed to are changing, or why the manner of payment is changing.

The firms also were concerned that, without a rule that is effective by the date the FPA decision takes effect, fee-based brokerage customers may elect (or the firm may recommend) a commission-based brokerage account in order to have access to their firm's inventory of securities, then elect an advisory account only after a rule subject to notice and comment is finalized. This type of serial account change is costly to firms for the same reasons it is costly for them to convert accounts pursuant to the FPA decision. Moreover, such switching of account types can be confusing to customers if it is the firm that is recommending the changes.

Those factors led to this rule and similarly explain why the rule needs to be available at the same time the broker-dealers complete the transition from fee-based brokerage to advisory or other accounts. Otherwise, the risk of disrupting services to the investors, depriving them of the choice of an advisory account with a broker-dealer, and confusing them with a series of changes to the services available to them would have been substantial. Obtaining a further postponement of the stay of the mandate to allow advance notice and comment rulemaking did not appear feasible. For these reasons, issuance of an immediately effective rule is necessary to ameliorate the likely harm to investors.

Furthermore, we emphasize that we are requesting comments on the rule and will carefully consider and respond to them in a subsequent release. Moreover, this is a temporary rule. Setting a 27-month termination date for the rule will necessitate further Commission action no later than the end of that period if the Commission intends to continue the same or similar relief. The sunset provision will result in the Commission assessing the operation of the rule and intervening developments, as well as public comment letters, and considering whether to continue the rule with or without modification or not at all.

A significantly shorter period than the 27-month period we have established could have disadvantaged investors. They would have faced uncertainty about the continuation of having access through their advisory accounts to the securities in the inventory of their brokerage firm and could have faced renewed disruption and confusion if the rule on principal trades were abolished or substantially modified in the short term. Similarly, broker-dealers would have faced the same uncertainty about the continuation of the rule, which could have caused some broker-dealers to decide not to make the necessary expenditures and investments to offer advisory accounts with access to principal trades.

As a result, the Commission finds that it has good cause to have the rule take effect on September 30, 2007, and that notice and public procedure in advance of the effectiveness of the rule are impracticable, unnecessary, and contrary to the public interest. In addition, the rule in part has interpretive aspects and is a rule that recognizes an exemption and relieves a restriction.

The Commission is requesting comments from all members of the public during the next 60 days. We will carefully consider the comments that we receive and respond to them in a subsequent release.

In addition, we are awaiting a report being prepared by RAND Corporation comparing how the different regulatory systems that apply to broker-dealers and advisers affect investors (the “RAND Study”). As we have previously announced, the Commission commissioned a study comparing the levels of protection afforded customers of broker-dealers and investment advisers under the federal securities laws. 66 The Commission will have another opportunity to assess the operation and terms of the rule when it receives the results of the RAND Study comparing how the different regulatory systems that apply to broker-dealers and advisers affect investors. The RAND Study is expected to be delivered to the Commission no later than December 2007, several months ahead of schedule. The results of the RAND Study are expected to provide an important empirical foundation for the Commission to consider what action to take to improve the way investment advisers and broker-dealers provide financial services to customers. One option then available to the Commission will be making the RAND Study results available to the public and seeking comments on them and their bearing on the terms of this rule.

We are today providing guidance to assist broker-dealers who have offered fee-based brokerage accounts and are seeking the consent of their clients to convert those accounts to advisory accounts and meet the requirements of this rule by October 1, 2007.

Broker-dealers have asked whether they must, before October 1, 2007, obtain written consent from each of their fee-based brokerage customers to enter into an advisory agreement that meets the requirements of the Advisers Act, in particular section 205 of the Act. Broker-dealers have informed us that, as a practical matter, it is not feasible for them to do so and, if written consent is required, many fee-based brokerage customers will experience interrupted service or will be placed in traditional commission-based brokerage accounts, which may not be best for them.

Interim final rule 206(3)-3T(a)(3) requires an adviser wishing to rely on the rule's alternative means for complying with section 206(3) of the Act to obtain a written prospective consent from each client authorizing the investment adviser to engage in principal transactions with the client. We understand that it likely will be impossible for advisers to obtain these written consents from fee-based brokerage customers who convert their accounts to non-discretionary advisory accounts prior to October 1, 2007. To make the alternative means provided in the interim final rule useful immediately upon its effective date to those customers, we will not object if an adviser obtains the required written consent no later than January 1, 2008 from each fee-based customer who converts his or her account to a non-discretionary advisory account. During this transitional period, investment advisers must comply with the other conditions of rule 206(3)-3T, including the condition in paragraph (a)(4) of the rule, which requires that the adviser make certain disclosures and obtain client consent before effecting a principal trade with the client. They also must provide a client with the written disclosure required by paragraph (a)(3) of the temporary rule prior to effecting the first trade with that client in reliance on this rule.

Advisers Act rule 204-3 requires an investment adviser to furnish its advisory clients with a disclosure statement, or brochure, containing at least the information required to be in Part II of Form ADV at the time of, or prior to, entering into an advisory contract. 67 In light of the time constraints firms face in complying with the October 1st deadline, we will not object if, with respect to the fee-based brokerage customers that convert to non-discretionary advisory accounts, advisers deliver this statement no later than January 1, 2008.

Rule 206(3)-3T contains “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995. 68 The collection of information is new. We submitted these requirements to the Office of Management and Budget (“OMB”) for review in accordance with 44 U.S.C. 3507(j) and 5 CFR 1320.13. Separately, we have submitted the collection of information to OMB for review and approval in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The OMB has approved the collection of information on an emergency basis with an expiration date of March 31, 2008. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The title for the collection of information is: “Temporary rule for principal trades with certain advisory clients, rule 206(3)-3T” and the OMB control number for the collection of information is 3235-0630.

Rule 206(3)-3T provides an alternative method for investment advisers that are registered with us as broker-dealers to meet the requirements of section 206(3) when they act in a principal capacity with respect to transactions with certain of their advisory clients. In the absence of this rule, an adviser must provide a written disclosure and obtain consent for each transaction in which the adviser acts in a principal capacity. Rule 206(3)-3T permits an adviser, with respect to a non-discretionary advisory account, to comply with section 206(3) by: (i) Making certain written disclosures; (ii) obtaining written, revocable consent from the client prospectively authorizing the adviser to enter into principal trades; (iii) making oral or written disclosure that the adviser may act in a principal capacity and obtaining the client's consent orally or in writing prior to the execution of each principal transaction; (iv) sending to the client confirmation statements disclosing the capacity in which the adviser has acted and indicating that the adviser disclosed to the client that it may act in a principal capacity and that the client authorized the transaction; and (v) delivering to the client an annual report itemizing the principal transactions.

Under rule 206(3)-3T, there are four distinct collection burdens. Our estimate of the burden of each of the collections reflects the fact that the alternative means of compliance provided by the rule is substantially similar to the approach advisers currently employ to comply with the disclosure and consent obligations of section 206(3) of the Advisers Act and the approach that broker-dealers employ to comply with the confirmation requirements of rule 10b-10 under the Exchange Act. Thus, as discussed below, we estimate that rule 206(3)-3T will impose only small additional burdens.

Providing the information required by rule 206(3)-3T is necessary to obtain the benefit of the alternative means of complying with section 206(3) of the Advisers Act. The rule contains two types of collections of information: Information provided by an adviser to its advisory clients and information collected from advisory clients by an adviser. With respect to each type of collection, the information would be maintained by the adviser. Under Advisers Act rule 204-2(e), an adviser must preserve for five years the records required by the collection of information pursuant to rule 206(3)-3T. Although the rule does not call for any of the information collected to be provided to us, to the extent advisers include any of the information required by the rule in a filing, such as Form ADV, the information will not be kept confidential. The collection of information delivered by investment advisers pursuant to rule 206(3)-3T would be provided to clients and also would be maintained by investment advisers. The collection of information delivered by clients to advisers would be subject to the confidentiality strictures that govern those relationships, and we would expect them to be confidential communications.

Prospective Disclosure and Consent: Pursuant to paragraph (a)(3) of the rule, an investment adviser must provide written, prospective disclosure to the client explaining: (i) The circumstances under which the investment adviser directly or indirectly may engage in principal transactions; (ii) the nature and significance of conflicts with its client's interests as a result of the transactions; and (iii) how the investment adviser addresses those conflicts. Pursuant to paragraph (a)(8) of the rule, the written, prospective disclosure must include a conspicuous, plain English statement that a client's written, prospective consent may be revoked without penalty at any time by written notice to the investment adviser from the client. And, for the adviser to be able to rely on rule 206(3)-3T with respect to an account, the client must have executed a written, revocable consent after receiving such written, prospective disclosure.

The first part of this collection of information involves the preparation and distribution of a written disclosure statement, which we anticipate will be largely uniform for clients in non-discretionary advisory accounts with a particular firm. This collection of information is necessary to explain to investors how their interests might be different from the interests of their investment adviser when the adviser engages in principal trades with them. It is designed to provide investors with sufficient information to be able to decide whether to consent to such trades.

We anticipate that the cost of this collection will mostly be borne upfront as advisers develop and deliver the required disclosure. This will require drafting and distributing the required disclosure to clients with respect to the accounts for which the investment adviser seeks to rely on the rule. 69 Once the disclosure has been developed and is integrated into materials provided upon opening a non-discretionary advisory account, the ongoing burden will be minimal.

We estimate that the average burden for drafting the required prospective disclosure for each eligible adviser, taking into account both those advisers that previously engaged in principal trades with their non-discretionary advisory clients, will be approximately 5 hours on average. We expect that some advisers, particularly the large financial services firms, may take significantly longer to draft the required disclosure because they may have more principal trading practices, and potentially more conflicts, to describe. 70 Other advisers may take significantly less time and some eligible advisers may choose not to rely on rule 206(3)-3T. Further, we expect the drafting burden will be uniform with respect to each eligible adviser regardless of how many individual non-discretionary advisory accounts that adviser administers or seeks to engage with in principal trading. As of August 1, 2007, there were 634 advisers that were eligible to rely on the temporary rule ( i.e. , also registered as broker-dealers), 395 of which indicate that they have non-discretionary advisory accounts. 71 We estimate that 90 percent of those 395 advisers, or a total of 356 of those advisers, will rely on this rule. 72 Of the 239 eligible advisers that do not currently provide non-discretionary advisory services, we estimate that 10 percent of these advisers, or 24 advisers, will create non-discretionary advisory programs and rely on the alternative means of compliance provided by this rule. 73 Thus, the total number of advisers we anticipate will rely on the rule is 380. 74 Accordingly, we estimate that the total drafting burden for the prospective disclosure statement for the estimated 380 advisers that will rely on the rule will be 1,900 hours. 75

The prospective disclosure will need to be distributed to all clients who have non-discretionary advisory accounts for which an adviser seeks to rely on rule 206(3)-3T. Registration data indicates that there are approximately 3,270,000 existing non-discretionary advisory accounts held with eligible advisers. 76 Discussions with eligible advisers indicate that approximately: (i) 90 percent of these non-discretionary advisory accounts administered by them, or 2,943,000 accounts, are in programs to which the rule will not apply, such as mutual fund asset allocation programs; and (ii) 40 percent of the remaining 327,000 non-discretionary advisory accounts administered by them, or 130,800 accounts, are retirement accounts, and thus unlikely to participate in principal trading, 77 leaving 196,200 existing non-retirement non-discretionary advisory accounts administered by eligible advisers. 78

On May 22, 2006, The Department of Homeland Security (DHS) through the United States Coast Guard (Coast Guard) and the Transportation Security Administration (TSA) published a joint notice of proposed rulemaking entitled “Transportation Worker Identification Credential (TWIC) Implementation in the Maritime Sector; Hazardous Materials Endorsement for a Commercial Driver's License” in the Federal Register . 71 FR 29396. This was followed by a 45-day comment period and four public meetings. The Coast Guard and TSA issued a joint final rule, under the same title, on January 25, 2007 (hereinafter referred to as the original TWIC final rule). 72 FR 3492. The preamble to the original TWIC final rule contains a discussion of all the comments received on the NPRM, as well as a discussion of the provisions found in that final rule, which became effective on March 26, 2007.

On July 13, 2007, the Coast Guard issued another final rule, extending the deadline for facilities wishing to redefine their secure areas, under 33 CFR 105.115. 72 FR 38486. This delay allowed facility owners and operators to take guidance, issued by the Coast Guard in Navigation and Vessel Inspection Circular 03-07 on July 6, 2007, into consideration before being required to submit new security plans.

A complete discussion of the background and purpose of the original TWIC final rule may be found beginning at 72 FR 3494. This final rule is being issued in order to make amendments to the original TWIC final rule that have become necessary due to delays in the implementation of the original TWIC final rule, or that are necessary in order to allow for a more effective implementation of the original TWIC final rule.

With this final rule, the Coast Guard amends its regulations on vessel and facility security, requiring the use of the TWIC as an access control measure. Specifically, the Coast Guard is amending its definition of secure area to take into account facilities in the Commonwealth of Northern Mariana Islands (CNMI) where non-resident alien workers are not required to obtain work visas from the United States before being allowed to work. Under the existing rule, these workers are ineligible to obtain TWICs. There are currently 12 facilities regulated by part 105 located in the CNMI. Non-resident alien workers at these facilities are not required to obtain visas from the U.S. Department of State (State Department) before being allowed to work at facilities in CNMI. Without this amendment, these workers would be unable to obtain TWICs, and the facilities in CNMI would lose approximately 50 percent of their present workforce. Note that these facilities must continue to implement their previously approved facility security plans, which include provisions for maintaining access control. Vessels coming from the CNMI to any other port in the United States will still need to go through the same port state control screening required of a vessel coming from a foreign country. Additionally, workers provided unescorted access to facilities in the CNMI would not be eligible for unescorted access to any other part 105 facility, nor would they be eligible for unescorted access to any part 104 vessel, unless the were issued a TWIC. This amendment may be found at 33 CFR 101.105.

The Coast Guard is also adding a provision into parts 105 and 106 to mirror a provision added into part 104 in the original TWIC final rule. These provisions allow mariners serving aboard vessels to have access to those spaces immediately adjacent to their vessel when they are working in those spaces in the conduct of vessel activity, even if they do not have a TWIC. This provision was discussed in the preamble to the original TWIC final rule on 72 FR 3521, but the corresponding amendments were not made in parts 105 and 106. This final rule corrects that oversight. These amendments can be found in 105.105 and 106.105.

In the original TWIC final rule, TSA listed the categories of non-resident aliens who work in the maritime sector and would be eligible to apply for TWICs. TSA's intention was to allow lawful non-immigrants with legitimate employment authorization and lawful presence to obtain TWICs. Shortly after publication of the original TWIC final rule, Coast Guard received comments from industry questioning why B1/OCS (Outer Continental Shelf) and H2B visas were not included in the list of acceptable visas under 49 CFR 1572.105. This led TSA to re-examine the list of categories of individuals who should be able to apply for a TWIC and to make the changes described below to allow additional non-resident aliens to apply for a TWIC.

After further research, we determined that B1/OCS visas are currently in use in the maritime industry to allow specialized workers to fill open positions where U.S. employees are not available. Approximately 4,000 B1/OCS visas are issued annually to seamen who work at OCS operations. If these workers are not eligible to apply for a TWIC, they will likely not be employable in OCS operations. Further, owners/operators who currently rely on holders of B1/OCS visas will be adversely impacted if they cannot hire workers in sufficient numbers to keep the OCS facilities operating. For these reasons and in keeping with the criteria we established in the original TWIC final rule to determine which lawful non-immigrants should be eligible to apply for a TWIC, we are adding the B1/OCS visa to the list of permissible visa categories in 49 CFR 1572.105. ( See 72 FR 3492, 3502-3505 for a full discussion of the immigration eligibility criteria.) Holders of the B1/OCS visa have restricted authorization to work and the restriction is intrinsically related to the maritime industry. Individuals who hold the visa typically will require a TWIC in order to complete their employment duties and the employers will be required to obtain the TWIC once the employment for which the visa was issued is completed.

At this time we are not adding the H2B visa to the list of permissible visas in section 1572.105. We believe approximately 78,000 H2B visas are issued annually, an indeterminate number of which are issued to maritime workers. The H2B visa is issued to temporary unskilled or skilled workers for up to one year, without regard to whether they work in the maritime industry. Workers who hold this visa are not restricted to work in the maritime industry and therefore, a maritime employer typically would have little control over when the employment for which the visa was issued is completed and the visa expires. This fact would make it difficult for the employer to retrieve the TWIC if the employee ceased working at that location.

Even though TSA is not adding the H2B visas explicitly to the list of permissible visa categories at this time, we may consider permitting H2B visa holders to apply for a TWIC under a new provision of the rule. We are adding new subparagraph 1572.105(a)(7)(x) to the immigration standards to permit TSA to determine whether additional categories of lawful non-immigrants not explicitly listed in 49 CFR 1572.105(a)(7) may apply for a TWIC. We believe this provision is necessary to avoid the chance that we will inadvertently exclude aliens who possess lawful U.S. presence and are prevalent in or important to the maritime industry. Also, given the national interest in immigration reform legislation, there may be new visa categories created in the future that should be eligible for TWIC. Under this new provision, TSA may permit individuals to apply for TWIC if they possess an authorization that confers legal status, and the legal status is comparable to those listed in paragraphs (a)(7)(i)-(ix) of this section.

TSA will evaluate whether to add new categories of lawful non-immigrants using the same criteria by which we created the list of permissible categories in the original TWIC final rule. (See 72 FR 3492, 3502-3505 for a full discussion of the immigration eligibility criteria.) The critical issues we examined and on which we rely to determine whether an alien should be permitted to apply for a TWIC or hazardous materials endorsement (HME) are: (1) The statutory language regarding immigration status; (2) the degree to which TSA can complete a thorough threat assessment both initially and perpetually on the applicant; (3) the duration of the applicant's legal status as of the date he or she enrolls and the degree to which we can control possession of a TWIC once legal status ends; (4) the restrictions, if any, that apply to the applicant's immigration status; (5) particular maritime professions that commenters stated often involve aliens; and (6) the checks done by the State Department or other federal agency relevant to granting alien status.

TSA would make such determinations after careful evaluation and in consultation with the Coast Guard, the State Department, and other pertinent agencies within DHS. TSA would notify affected populations and provide the appropriate training to TWIC enrollment personnel to ensure that only the appropriate applicants are permitted to enroll.

With respect to H2B visas, commenters have informed Coast Guard and TSA that there may be particular operations or locations, such as large construction projects at port facilities, that rely heavily on H2B visa holders for completion. Although we are not amending the immigration standards to permit all H2B visa holders to apply for TWIC, we may consider permitting workers at these locations to apply for a TWIC to prevent adverse economic or security impacts on maritime operations. Employers in these kinds of operations should notify their respective Captain of the Port to discuss potential solutions to immigration eligibility problems. There may be methods to have the H2B visas holders complete the work without requiring a TWIC. See, for example, Navigation and Inspection Circular 03-07, issued by the Coast Guard on July 2, 2007, enclosure (3) at 3.3 c.(6). If that is not possible, TSA may consider permitting the workers to apply for a TWIC, ensuring that the employer is in a position to retrieve all credentials TSA issues when the project is complete.

In addition to amending 49 CFR 1572.105(a)(7), TSA amends the scope provision to include other individuals that TSA may consider eligible to apply for a TWIC, such as holders of a visa not specifically listed in 49 CFR 1572.105(a)(7) that TSA has determined should be permitted to hold a TWIC. As discussed in the paragraph above, there may be other or new visas or similar authorizations that we have not anticipated that serve as legitimate grounds for lawful presence in the United States and justification for holding a TWIC. By adding this language to the scope provision of the rule, we remove unnecessary restrictions on broadening the applicant pool, if the need arises in the future due to the discovery of other visa holders or with the passage of new legislation. Also, in the future TSA may wish to expand the TWIC program to non-maritime modes of transportation and this new scope provision facilitates extending coverage to other populations. For instance, there may be situations in which a transportation worker who seeks access to a secure or otherwise prohibited area would wish to voluntarily undergo the threat assessment described in part 1572 to gain the benefit of access. The expanded scope provision would facilitate this. TSA also may wish to make the threat assessment mandatory, not voluntary, for a new population. If so, we would provide notice to the public and an opportunity to comment before implementing an expansion of the requirement to a new population.

TSA also amends the scope provision of part 1572 to include commercial drivers licensed in Canada or Mexico who apply for a TWIC so that they may transport hazardous materials in the United States in accordance with 49 CFR 1572.201. This population is permitted to apply for a TWIC under the original final rule, but was inadvertently omitted from the scope provision.

TSA is also amending its regulations to clarify which credentialed merchant mariners who may receive a TWIC at a reduced fee. The original TWIC final rule contained a separate implementation schedule for mariners, which allowed a mariner who had already undergone a security threat assessment by the Coast Guard to apply for their TWIC but forego an additional security threat assessment by TSA. This would allow mariners to obtain their TWIC at a reduced fee, but would also mean that their TWIC would be given the same expiration date as the credential for which the Coast Guard conducted their security assessment. This provision, found at 49 CFR 1572.19(b), incorrectly limited those mariners who may take advantage of this provision by including an end date of March 26, 2007 ( i.e. , the effective date of the original TWIC final rule). That date should have been the September 25, 2008 date, calculated to mark the compliance date for mariners, to allow all mariners who receive their Coast Guard security assessment before they are required to obtain a TWIC the opportunity to receive a reduced fee and not have to undergo an additional security threat assessment. We are amending 49 CFR 1572.19(b) to reflect the September 25, 2008 compliance date.

TSA is amending the TWIC Card Replacement Fee, codifying the exact fee amounts for the Standard and Reduced TWIC Fees, and codifying a change the FBI is making to its fees for electronic submission of fingerprint-based criminal history record checks (CHRC).

TSA is increasing the Card Replacement Fee for lost, damaged, or stolen TWICs to $60.00 and is amending § 1572.501(d) to include the revised amount. In the original TWIC final rule, TSA established the Card Replacement Fee at $36.00 as was proposed in the TWIC NPRM. However, TSA stated that a re-evaluation of the costs associated with card replacement revealed that the actual cost should be $60.00. For a detailed discussion of the increased Card Replacement Fee, see the preamble of the original TWIC final rule at 72 FR 3505-3508.

In summary, the per-person cost for the Card Replacement Fee is derived from four of the cost components that make up the total TWIC fee: Enrollment/Issuance, 1 the TWIC information data management system (IDMS), Card Production, and Program Support. The Enrollment/Issuance cost component increased by approximately one percent to account for the contractor fee of $5 associated with replacing a credential. The IDMS cost component increased by $19 per credential produced due to: (1) The need to increase the hardware and software required to obtain a Security Certification & Accreditation, and to support the full volume of TWIC applicants; (2) system changes required to address security vulnerabilities; and (3) increases in contractor support necessary for systems operations and maintenance.

The Card Production cost increased by approximately 39 percent based on the need to add a third work shift at the production facility to produce cards more rapidly during the initial enrollment phase. This increase was necessary to address concerns from stakeholders that cards must be produced very quickly to minimize adverse impacts on commerce. Also, this increase was necessary to cover technology and product improvements for the TWIC system, credentials, and readers in the future. Including the cost of technology and system improvements is a common practice for programs that rely heavily on software and hardware to collect and transmit large amounts of information.

Finally, the Program Support cost decreased by approximately 17 percent based on reduced program staff levels and the cost of interagency communications. This resulted in a $2 per card decrease.

We invited comment on raising the Card Replacement fee from $36 to $60 and received comments from four entities. One entity stated that replacement cards should cost no more than the actual card stock and personalization, which it asserts is $14, shipping and handling at $10, and a reasonable contractor issuance fee of $5—a total of $29.

We developed the fees by spreading all of the program costs (enrollment/issuance, IDMS, threat assessment, card production, and program support) over 5 years and according to whether a particular cost component is related to the corresponding fee. If we failed to calculate the fees in this way, there would be an unfair distribution of the costs among the population and over the time period, and the regular applicant fee during initial enrollment would be significantly higher. Thus, the card replacement fee includes a portion of the program costs that relates to issuing a replacement card, including the IDMS and program support costs. Therefore, we are not accepting the recommended change—we must take into account the cost of the IDMS, enrollment/issuance, card production, and program support because producing a replacement card involves all of these program components. As stated in the original final TWIC rule, the IDMS cost increased by 135 percent from the NPRM due to the need for more hardware and software, and additional security features. In addition, card production costs increased by 39 percent due to the need to add a third worker shift to cover card production during initial enrollment. These increased the Card Replacement Fee.

Another entity stated that increasing the Card Replacement Fee based on the need for three shifts rather than two at the card production facility during the initial enrollment phase should not apply to replacement cards at all, because most replacement cards will be issued after the initial enrollment phase. This argument is similar to the one immediately above. We disagree. We calculated the fees by spreading the costs of the program over 5 years to prevent the unfair result of having people who enroll in TWIC in the first year pay a much higher fee than those who apply in the third year.

An entity stated that using three shifts rather than two in the card production process should decrease, not increase, TSA's card production costs because the fixed costs would remain and the cost per card would be lower. We disagree. Even assuming the fixed costs remain constant with the addition of a third shift, which would not necessarily be the case, there are increased labor costs associated with adding a third shift that increase TSA's costs.

An entity suggested that TSA should conduct a cost-comparison between the federally-managed card production facility and an established commercial card production facility, such as a credit card facility, where high-volume services around the clock are typical. We agree. Under the terms of the enrollment provider contract, we permit our contractor to seek out and use other card production facilities that offer high quality products that meet the TWIC specifications at lower cost.

An entity commented that if a TWIC card malfunctions as a result of normal wear, TSA should replace it free of charge. TSA is purchasing card stock that is designed to remain operable under normal conditions for 5 years. If TSA determines that the card stock does not perform satisfactorily under normal handling conditions or fails to meet the design warranty, TSA will replace the cards at no charge to applicants.

Finally, an entity claimed that technology improvements should decrease, not increase, costs associated with the TWIC system, credentials and card production. We agree that technology improvements that occur in the future will improve efficiency and are likely to reduce some costs. However, equipment and software changes will be necessary to take advantage of the improved technology, and therefore, those costs must be accounted for in the TWIC fee. If TSA's overall costs decrease, TSA will reduce the TWIC fees accordingly.

The Criminal Justice Information Services (CJIS) Division of the FBI recently notified government agencies and other entities of revised interim fees for fingerprint-based CHRCs, effective October 1, 2007. The revised interim fees will remain in effect until the FBI announces final fees through a Notice in the Federal Register . However, the FBI does not anticipate significant changes to the interim fee structure.

The FBI is reducing its fee for electronically submitted CHRCs from $22.00 to $17.25. The existing rule text in § 1572.501(b)(3) states that if the FBI changes its fee for CHRCs, TSA will collect the amended FBI fee. Therefore, it is not necessary to change the rule text to authorize TSA to collect $17.25 from applicants rather than $22.00. Nonetheless, to avoid confusion, TSA is amending the rule text by removing the old fee amount—“$22”— from § 1572.501(b)(3). We are retaining the language stating that if the FBI amends its fees in the future, TSA will collect the amended FBI fee.

In this final rule, TSA also codifies the exact Standard TWIC and Reduced TWIC Fee amounts. When the original TWIC final rule was published, we provided ranges for these fees in the preamble as follows: the Standard TWIC Fee would be $139-$159, and the Reduced TWIC Fee would be $107-$127. TSA could not provide exact figures at that time because the contract for enrollment services was not yet finalized and thus some of the costs could not be determined with specificity. We noted that we would publish a notice in the Federal Register announcing the exact fee amounts as soon as possible.

On March 20, 2007, TSA announced the exact fee amounts. 72 FR 13026. For the Standard TWIC Fee, the Enrollment Segment Fee would be $43.25, the Full Card Production/Security Threat Assessment Segment Fee would be $72, and the FBI Fee would be $22. We announced the Standard TWIC Fee total as $137.25 ($43.25 + $72 + $22) to obtain a TWIC. In this final rule, we are codifying the Enrollment Segment Fee ($43.25) and the Full Card Production/Security Threat Assessment Segment Fee ($72). However, since the FBI is changing its fee as of October 1, 2007, as discussed in detail above, the new Standard TWIC Fee total for a TWIC is $132.50. We are codifying these fees in § 1572.501(b).

In March, TSA also announced that the Reduced TWIC Fee for applicants who have completed a comparable threat assessment and can forego a new FBI criminal check would total $105.25. This includes the Enrollment Segment Fee of $43.25 and the Reduced Card Production/Security Threat Assessment Segment Fee of $62. We are codifying these fee amounts in § 1572.501(c).

TSA and the Coast Guard provided the public an opportunity to comment on the bases for the TWIC fee calculations. However, we did not publish a notice of proposed rulemaking (NPRM) regarding other amendments in this final rule. Under 5 U.S.C. 553(b)(B), the Coast Guard and TSA find that good cause exists for not publishing an NPRM with respect to these amendments, because providing opportunity for public comment is unnecessary and would be contrary to the public interest. Each of the provisions being amended by this final rule without prior notice and comment ease a restriction on the public, in some cases by removing regulatory requirements completely, or by expanding the pool of persons allowed to apply for a TWIC in a manner that meets the rule's original intent. These immediate revisions are in the public interest because they expand the pool of workers who are lawfully present in the United States and will perform needed services. For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard and TSA also find that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

We note that the fee provisions of this final rule were subject to notice and comment, and therefore we need not claim good cause for the amendments to 49 CFR 1572.501.

This final rule is not a significant regulatory action under section 3(f) of Executive Order 12866. The Office of Management and Budget has not reviewed it under that Order. We expect the economic impact of this rule to be minimal and a full Regulatory Evaluation is unnecessary.

This rule provides technical clarifications and additional flexibility for some mariners and vessel and facility owners and operators to comply with TWIC requirements. The rule better clarifies the definition of secure areas and corrects for omissions from the original TWIC final rule. The rule extends the end date for mariners who may receive a TWIC at a reduced fee. To the extent that deadlines have changed, affected parties may incur some TWIC-related costs later rather than sooner.

With this final rule, TSA is amending provisions to allow TSA to evaluate and decide if individuals holding other visa types are eligible for a TWIC on a case-by-case basis. TSA is also formally publishing final fee changes after considering public comments and assessing final impacts in the original TWIC final rule.

We anticipate that these changes will not substantially increase TWIC-related compliance costs to the affected entities and in most cases will provide them advantages through deadline extensions, technical clarifications, and flexibility.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this 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.

We do not expect this rule to substantially increase TWIC-related compliance costs. This rule provides technical clarification and adds flexibility for some mariners and vessel and facility owners and operators affected by the TWIC requirements. The Coast Guard and TSA certify under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities.

Under sec. 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard and TSA will not retaliate against small entities that question or complain about the rule or any policy of the Coast Guard or TSA.

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

A rule has implications for federalism under E.O. 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 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 rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

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

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

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

We have analyzed this rule under E.O. 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 E.O. 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 E.O. 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 rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

The provisions of this rule have been analyzed under the Department of Homeland Security (DHS) Management Directive (MD) 5100.1, Environmental Planning Program, which is the DHS policy and procedures for implementing the National Environmental Policy Act (NEPA), and related E.O.s and requirements. The changes being made by this final rule have no effect on the environmental analysis that accompanied the promulgation of the original TWIC final rule. That analysis can be found at 72 FR 3576-3577.

Accordingly, there are no extraordinary circumstances presented by this rule that would limit the use of a categorical exclusion (CATEX) under MD 5100.1, Appendix A, paragraph 3.2. The implementation of this rule, like the implementation of the original TWIC final rule, is categorically excluded under the following CATEX listed in MD 5100.1, Appendix A, Table 1: CATEX A1 (personnel, fiscal, management and administrative activities); CATEX A3 (promulgation of rules, issuance of rulings or interpretations); and CATEX A4 (information gathering, data analysis and processing, information dissemination, review, interpretation and development of documents). CATEX B3 (proposed activities and operations to be conducted in an existing structure that would be compatible with and similar in scope to ongoing functional uses) and CATEX B 11 (routine monitoring and surveillance activities that support law enforcement or homeland security and defense operations) would also be applicable.

On December 28, 2006, the Secretary published in the Federal Register (71 FR 78075) interim final regulations for the Federal Perkins Loan, FFEL, and Direct Loan programs. The interim final regulations were effective on January 29, 2007.

The December 28, 2006, interim final regulations included a request for public comment. This document contains a discussion of the comments we received and revisions to the interim final regulations that we made as a result of these comments.

These final regulations contain several significant changes from the interim final regulations. We fully explain the changes in the Analysis of Comments and Changes section elsewhere in this preamble.

In response to the Secretary's invitation in the interim final regulations, 8 parties submitted comments on the interim final regulations.

An analysis of the comments and of the changes in the regulations since publication of the interim final regulations follows. We group major issues according to subject, with appropriate sections of the regulations referenced in parentheses. Generally, we do not address technical and other minor changes and suggested changes the law does not authorize the Secretary to make. We also do not respond to comments that address issues that were outside the scope of the interim final regulations.

Comments: One commenter noted that, while there is no formal appeals process for a borrower whose application for a discharge is denied under the interim final regulations, if a borrower disputes the lender's decision, the borrower may contact the Secretary to ask her to look into the situation. The commenter urged the Secretary to work proactively to ensure that each potential applicant for the discharge of student loans for survivors of victims of the attacks of September 11, 2001 is presented with all necessary information regarding how to apply, the application process, and the applicant's rights in the event the discharge application is denied.

Discussion: The discharge application form will describe the eligibility requirements for the discharge and explain what information needs to be included with the application. The process to apply for the discharge—where to send the application, contact information if the borrower has questions, and so on—is different for each loan holder. The Secretary expects loan holders to provide information about the process and eligibility requirements to borrowers who apply for a discharge. If a borrower is not satisfied with the information provided by a lender in response to a discharge application, the borrower may contact the Department of Education's (Department's) Office of the Ombudsman.

Changes: None.

Comments: One commenter asked whether a defaulted Perkins Loan would qualify for a discharge under the interim final regulations.

Discussion: If a borrower meets the eligibility criteria for a discharge, the borrower qualifies for the discharge regardless of the repayment status of the loan.

Changes: We have modified § 674.52(c)(3) to specify that a borrower may qualify for a discharge of a defaulted Perkins Loan.

Comments: Several commenters questioned why the interim final regulations use the term “permanently and totally disabled”, while § 682.402 of the FFEL Program regulations uses the term “totally and permanently disabled”. The commenters requested using “totally and permanently disabled” in § 682.407, to be consistent with § 682.402.

Discussion: The interim regulations mirror the language used in the THEAA, which uses the term “permanently and totally disabled.” We believe that using the term “permanently and totally disabled” helps to distinguish the September 11-related discharges from the total and permanent disability discharge addressed in § 682.402. Although the criteria for the two discharges are similar, they are not identical. An individual who is “totally and permanently disabled” must meet additional eligibility criteria to be considered “permanently and totally disabled due to injuries suffered in the terrorist attacks on September 11, 2001.” Therefore, we believe that it is useful to maintain different terminology for the two discharges. Accordingly, for purposes of the September 11-related discharges and these regulations, and in accordance with the THEEA, we are using the term “permanently and totally disabled”.

Changes: None.

Comments: Several commenters recommended that we extend the timeframe by which an eligible victim or an eligible public servant must have received medical treatment in order to qualify as “permanently and totally disabled due to injuries suffered in the terrorist attacks on September 11, 2001.” The interim final regulations specified that medical treatment must have been received within 24 hours of the time the injury was sustained, or within 24 hours of the rescue. The commenters point out that the September 11th Victim Compensation Fund regulations, on which many of the definitions in the interim final regulations are based, provide a timeframe of 72 hours for receipt of medical treatment in certain circumstances.

These commenters also recommended that we allow individuals who did not receive medical treatment within 72 hours to qualify as eligible victims or eligible public servants on a case-by-case basis.

Discussion: We agree with the recommendation to extend the timeframe for receipt of medical treatment from 24 hours to 72 hours. However, we do not agree that the final regulations should provide for exceptions to the 72-hour timeframe on a case-by-case basis. The discharge established by the THEEA applies to the survivors of individuals who died or became permanently and totally disabled “due to injuries suffered in” the terrorist attacks on September 11, 2001. We believe that evidence that the individual sought medical treatment within the 72-hour timeframe is necessary to determine whether an individual died or became permanently and totally disabled due to injuries suffered in the September 11, 2001 terrorist attacks and that exceptions to the timeframe would not be appropriate.

The Department considered whether exceptions made to this rule by the September 11th Victim Compensation Fund would also merit exceptions here. We found that most of the recipients of a case-by-case exception by the September 11th Victim Compensation Fund were rescue workers, whose injuries occurred not from the crashes, but in their efforts afterward. Since they would not therefore be eligible for this discharge under statute, we do not believe the case-by-case exceptions provided for in the September 11th Victim Compensation Fund regulations are relevant to this program.

Furthermore, we believe that allowing case-by-case exceptions could lead to inequities. The September 11th Victim Compensation Fund permitted case-by-case exceptions because the Special Master decided all the cases and could ensure fair treatment for all applicants. In the student loan programs, however, it would be difficult to ensure equal treatment of all borrowers, because the case-by-case exceptions would by made by lenders and guaranty agencies in the FFEL program, Perkins institutions in the Perkins Loan program, and the Department in the Direct Loan program. We believe that the interim final regulations treat borrowers fairly and in accordance with Congressional intent and that an exception process would undercut achieving these goals.

Changes: We have revised §§ 674.52(a)(3)(i)(A), 682.407(a)(5)(i)(A), and 685.218(a)(5)(i)(A) to extend the timeframe for receipt of medical treatment from 24 hours to 72 hours.

Comments: Under the interim final regulations, an eligible victim's or eligible public servant's disability must be “the result of a physical injury to the individual.” Several commenters recommended expanding the definition of “permanently and totally disabled due to injuries suffered in the attacks on September 11” to include non-physical injuries.

One commenter recommended extending the timeframe for receipt of medical treatment for an unspecified period beyond the 24 hours established in the interim final regulations for individuals with psychological or emotional disabilities.

Discussion: The THEEA provides for discharges to the survivors of individuals whose death or permanent and total disability is attributable to “injuries suffered” in the September 11 terrorist attacks. The Secretary has interpreted this provision of the statute to limit the definitions of “eligible victim” and “eligible public servant” to individuals who were physically injured or died in the September 11 attacks. This approach is also consistent with the September 11th Victim Compensation Fund regulations, which limited compensation to individuals who experienced physical harm.

Changes: None.

Comments: Several commenters noted that the interim final regulations did not specify who should sign the certification that an eligible victim was present at one of the September 11, 2001 crash sites at the time of the attacks, but that the draft discharge application specified that the certification should be signed by the borrower. The commenters recommended revising the FFEL regulations to reflect the requirement on the draft application form.

Discussion: We agree. In addition we realized that the certification that an individual was “present at the World Trade Center in New York City, New York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site”, as that term is defined in the interim final regulations, would not include individuals who were on board American Airlines flights 11 or 77 or United Airlines flights 93 or 175 on September 11, 2001. To simplify the discharge application process, we believe that the certification should cover all individuals present at the crash sites, whether they were in the buildings, in areas contiguous to the crash sites, or on board the airplanes.

Changes: We have revised § 682.407(e)(2)(ii) to specify that the certification must be signed by the borrower. We have also modified the definition of “Present at the World Trade Center in New York City, New York, at the Pentagon in Virginia, or at the Shanksville, Pennsylvania site” in §§ 674.64(a)(5), 682.407(a)(7), and 685.218(a)(7) to include individuals who were on board American Airlines flights 11 or 77 or United Airlines flights 93 or 175 on September 11, 2001. This change makes the references to individuals who died on board the flights in the definition of “Died due to injuries suffered in the terrorist attacks on September 11, 2001” redundant. Therefore, we've removed the references to American Airlines flights 11 and 77, and United Airlines flights 93 and 175 from §§ 674.64(a)(2)(ii), 682.407(a)(1)(ii), and 685.218(a)(4)(ii).

Comments: Some commenters noted that the September 11-related discharge identifies several new categories of borrowers, with different eligibility requirements and different discharge benefits. Several commenters requested clarification on which benefits apply to which category of borrowers.

Discussion: We agree that the interim final regulations could be clearer as to which discharge benefits apply to each of the different categories of borrowers.

Changes: We have revised § 682.407(c)(1) of the FFEL regulations to clarify that under these regulations: The spouse of an eligible public servant may receive a discharge of a FFEL loan; a parent of an eligible victim may receive a discharge of a PLUS Loan incurred on behalf of the eligible victim; a parent of an eligible victim may receive a discharge of the portion of a FFEL Consolidation Loan that repaid a PLUS Loan incurred on behalf of an eligible victim; and a spouse of an eligible victim may receive a discharge of the portion of a joint FFEL Consolidation Loan obtained on behalf of the eligible victim.

In addition, we have added a new § 682.407(b)(4), specifying that the parent of an eligible public servant may receive the same benefits with regard to the discharge of PLUS Loans and Consolidation Loans that the parent of an eligible victim receives. The parent of the eligible public servant must apply for the discharge under the procedures, eligibility criteria, and documentation requirements of a parent of an eligible victim.

We have also made comparable changes in §§ 685.218(c)(1) and 685.218(b)(4) of the Direct Loan Program regulations. We have not made similar changes to the Perkins Loan Program regulations since this issue relates only to PLUS Loans and Consolidation Loans.

Comments: Several commenters asked whether the spouse of an eligible victim is entitled to any additional discharges under the interim final regulations. They pointed out that the portion of a Consolidation Loan incurred on behalf of a borrower who has become totally and permanently disabled or has died is already dischargeable under the procedures specified in § 682.402.

In addition, these commenters pointed out that there is no requirement under § 682.402 that a borrower of a joint Consolidation Loan must still be married to the co-borrower, or must have been married to the co-borrower at the time of his or her death. To qualify for a partial discharge of a joint Consolidation Loan under § 682.407, the co-borrowers must still be married, or must have been married at the time of the death of one of the co-borrowers. These commenters recommended eliminating this requirement from § 682.407.

Discussion: The spouse of an eligible victim may apply for a discharge of the portion of a joint Consolidation Loan attributable to an eligible victim under the procedures in § 682.402 or under the procedures in § 682.407. If the borrower obtains a partial discharge of a joint Consolidation Loan under § 682.402, the borrower may also qualify for a refund of payments, as provided for in §§ 682.402(b)(5) or 682.402(c)(1)(i). Under § 682.407, the September 11-related discharge does not provide for a refund of payments to a borrower who has made payments. However, unlike a discharge under § 682.402, a borrower who applies for a partial discharge of a Consolidation Loan due to permanent and total disability under § 682.407 is not subject to a three-year conditional discharge period prior to the discharge.

A borrower may apply for a partial discharge of a joint Consolidation Loan under either § 682.402 or § 682.407. If the borrower of a joint Consolidation Loan has made payments on the loan that would be refunded if the discharge were granted, it would be more advantageous for the borrower to apply for a partial discharge of the joint Consolidation Loan under § 682.402. If the borrower has not made payments that would be refunded, it would be more advantageous for the borrower to apply for a discharge of the joint Consolidation Loan under § 682.407.

A similar situation exists for a parent borrower of a PLUS Loan. A PLUS Loan may be discharged due to the death of the student for whom the PLUS Loan was obtained. If the student for whom a parent borrowed a PLUS Loan died in the September 11 attack, the parent could either apply for a death discharge on the PLUS Loan under § 682.402(b) or apply for a September 11-related discharge under § 682.407.

With regard to the marital status of co-borrowers of joint Consolidation Loans, under the THEEA, the September 11-related survivor's discharge applies to eligible parents, and to the spouses of eligible victims or eligible public servants. The THEEA does not provide for a discharge to former spouses of eligible victims or eligible public servants.

Changes: We have added provisions to § 682.407(g) of the FFEL regulations clarifying that a borrower with a joint Consolidation Loan may apply for a partial discharge under either § 682.407 or § 682.402 and that a parent PLUS Loan borrower may apply for a discharge due to the death of the student under either § 682.407 or § 682.402. We have also added similar provisions to § 685.218(g) of the Direct Loan regulations. No change is required in the Perkins Loan regulations because there are no Consolidation Loans or PLUS Loans in the Perkins Loan program.

Comments: The parent of an eligible victim who borrowed a PLUS Loan on behalf of an eligible victim may qualify for a discharge of the PLUS Loan under these regulations. Several commenters asked whether a parent who has obtained a PLUS Loan on behalf of an eligible public servant would also qualify for a discharge.

Discussion: The parent of an eligible public servant may qualify for a discharge of a PLUS Loan under these regulations. However, the parent need not provide the additional documentation required to demonstrate that the individual qualifies as an eligible public servant. The eligibility criteria for the parent of an eligible victim also apply to the parent of an eligible public servant.

Changes: In the FFEL Program regulations, we have added a new § 682.407(b)(4) to clarify that a parent who has borrowed a PLUS Loan on behalf of an eligible public servant may qualify for a discharge under the same procedures, eligibility criteria, and documentation requirements that apply to an eligible parent applying for a discharge of a loan incurred on behalf of an eligible victim. We have also added a comparable provision to § 685.618(b)(4) of the Direct Loan Program regulations.

Comments: Several commenters stated that the regulations should specify how a guaranty agency should treat unpaid interest on a loan that accrues during the claim filing and claim approval process when the agency pays an approved discharge claim.

Discussion: We agree.

Changes: We have added a new § 682.407(c)(10) to the FFEL Program regulations, providing rules for payment of interest that accrues during the period after the lender determines that the borrower qualifies for a discharge and before the claim is filed; during the period following the lender's receipt of a claim returned by the guaranty agency for additional documentation; and during the period required by the guaranty agency to approve or return the claim. These changes will address the interest accrued in these circumstances in a manner consistent with § 682.402(h)(3)(i) through (iii) of the FFEL Program regulations.

In addition, we have replaced the cross-reference in § 682.407(c)(8) with text to improve the clarity of the regulations. The cross-reference to § 682.402(h)(1)(i)(B) established a timeframe of 90 days for a guaranty agency to pay a lender a September 11-related discharge claim. The new regulatory language maintains the 90-day timeframe, but eliminates the need to refer to a different section of the regulations.

Comments: Several commenters recommended that we remove the requirement that a lender provide an original or true and exact copy of the promissory note to the guaranty agency when filing a September 11-related discharge claim. The commenters stated that the guaranty agency doesn't need the promissory note to process the claim, and the information provided on the promissory note is not needed to determine a borrower's eligibility for a discharge.

Discussion: We agree.

Changes: We have removed the requirement that a lender provide an original or true and exact copy of the promissory note to the guaranty agency from § 682.407(c)(4).

Comments: Several commenters noted that if a borrower's discharge application is denied, the suspension of collection activity is converted to a forbearance. The interim final regulations state that the forbearance ends on the “first payment due date”. The commenters noted that the forbearance should end on the “next payment due date”.

Discussion: We agree.

Changes: We have revised § 682.407(c)(7) by replacing “first payment due date” with “next payment due date”.

Comments: In the course of our review of the public comments, we discovered an error in the provisions of the regulations that establish documentation requirements for the death of an eligible victim. In both the FFEL and Direct Loan versions of the current regulations, §§ 682.407(d)(5)(i) and 685.218(d)(5)(i) require the borrower to provide the documentation described in paragraphs (d)(2)(ii), (d)(2)(iii), and (d)(3) of those sections. Paragraph (d)(2)(ii) refers to requiring an original or certified copy of a death certificate. Paragraph (d)(3) refers to an alternative to an original or certified copy of a death certificate. There is no need to require both an original or certified copy of a death certificate, and an alternative to an original or certified copy of a death certificate.

Changes: We have revised §§ 682.407(d)(5)(i) and 685.218(d)(5)(i) to require either a certified or original copy of a death certificate, or, as an alternative, documentation that the individual received a death discharge on a Title IV loan.

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and therefore subject to the requirements of the Executive Order and subject to review by the OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may (1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities in a material way (also referred to as an “economically significant” rule); (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order.

Pursuant to the terms of the Executive order, it has been determined this regulatory action will not have an annual effect on the economy of more than $100 million. We believe that approximately 1,000 borrowers are eligible for discharge of their loans under these provisions and that the costs incurred by the Department, lenders, and guaranty agencies to make the necessary systems changes to implement the discharge will approximate $1,350,000. Therefore, this action is not “economically significant” and is not subject to OMB review under section 3(f)(1) of Executive Order 12866. However, this action is subject to OMB review under section 3(f)(4) of the Executive order.

These final regulations are needed to implement recent amendments to the HEA that affect students, borrowers and program participants in the Federal student aid programs authorized under Title IV of the HEA.

The Secretary has limited discretion in implementing these provisions. The changes included in these final regulations simply modify the Department's regulations implementing loan discharges for the outstanding balance of certain Perkins, FFEL, and Direct Loan Program loans for survivors of eligible public servants and other eligible victims of the September 11, 2001 terrorist attacks.

As noted in the interim final regulations, the Department has been developing the application necessary to implement the provisions of this rulemaking activity. The Federal Register notice implementing the interim final regulations also served as a Notice inviting comment on the collection of information associated with these regulations.

We have received 23 comments on the new Perkins, FFEL, and Direct Loan Discharge Application for September 11, 2001 Survivors. We are currently in the process of making revisions to the discharge application, based on the public comment that we have received and on changes made by these final regulations. We will make the discharge application available shortly after publication of the final regulations.

Based on our own review, we have determined that these final regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available.

You may view this document, as well as all other documents of this Department published in the Federal Register , in text or Adobe Portable Document Format (PDF) on the Internet at the following site: http://www.ed.gov/news/fedregister .

To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at (202) 512-1530.

The Office published a final rule in the Federal Register of August 22, 2007 (72 FR 46899), entitled “Revision of Patent Fees for Fiscal Year 2007.” In that final rule, there was a mathematical error in the computation of fees payable under 37 CFR 1.17(a)(4) and (a)(5). This document amends the final rule with the correct fees. Additionally, the text of existing 37 CFR 1.492(b)(2) through (b)(4) was inadvertently changed in that final rule. This document corrects the text of 37 CFR 1.492(b)(2) through (b)(4) in that final rule.

Section 553(d) of the Administrative Procedure Act (5 U.S.C. 553(d)) ordinarily requires a 30-day delay in the effective date of final rules after the date of their publication in the Federal Register . This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest. The changes in 37 CFR 1.17(a)(4) and (a)(5) reflect a technical error in the computation of the payable fee. The changes in 37 CFR 1.492(b)(2) through (b)(4) do not change the fee amounts from the final rule published on August 22, 2007, but merely correct the language consistent with the existing and intended text. The Office finds it impracticable to have a 30-day delayed effective date for these technical corrections as the Office must charge the correct fees as of the effective date. Furthermore, the Office finds that it is in the public's interest to correct the changes in text where no change is intended. Therefore, the Office is waiving the 30-day delay in effective date for the technical and computational corrections in this notice.

On May 23, 2007, we published a proposed rule in the Federal Register (72 FR 28908-28911), about two initiatives: (1) Extending the Move Update requirement to all Standard Mail and, (2) increasing the minimum frequency of Move Update processing from 185 days to 95 days prior to the date of mailing. The revised timeframe also will apply to all pieces in Standard Mail mailings. The proposed notice also invited public comment concerning the changes. The Postal Service received eight customer comments on the proposals.

We believe that the revised standards in this final rule are crucial to the continued vitality of the postal system as well as the business interests of mailers. In Fiscal Year 2004 the Postal Service handled 9.7 billion pieces of Undeliverable-as-Addressed Mail (UAA) mail at a cost of $1.979 billion dollars. This change will result in better address quality by removing incorrectly addressed pieces from subsequent mailings, which will reduce UAA mail.

In cooperation with the mailing industry, we are committed to reducing UAA mail volume in order to create and maintain a cost-efficient mailstream. Over the years, we have invested heavily in creating an automated mailstream to help drive costs out of the delivery system. However, an efficient automated mailstream works best when mailpieces have complete, correct, and current addresses. As discussed in the proposed rule, revisions to the Move Update standard are needed to improve the percentage of deliverable addresses for mailings entered at discounted rates. High quality addressing, best possible depth of ZIP+4 Codes, and accurate barcodes that result in the delivery of the mailpiece to the intended recipient in an efficient manner, should be primary tools that mailers use to reduce UAA mail volume.

In addition to revisions to DMM standards, the proposed rule also addressed the timing of the changes. When the Move Update requirement for First-Class Mail was instituted in 1997, a 9-month readiness period was provided. The Postal Service recognizes the magnitude of the adjustments to be made by the mailing industry to implement the revisions in this notice and believes that an 18-month period from the date of proposed rulemaking notice (May 23, 2007) to implementation of the changes provides ample time. The Postal Service also believes that the changes improve the overall cost effectiveness of mail delivery and contribute to rate stability and do not create unreasonable barriers to discount rate qualifications.

Part A of this final rule summarizes the new requirements and provides an analysis of the eight comments received to the Proposed Rule Notice. Part B contains the text of the proposed DMM standards.

The Move Update standard, which previously applied only to First-Class Mail, will be extended to include all Standard Mail. A key reason for this extension is that one of the conclusions of an independent study of the cost, volume, and characteristics of UAA mail pointed out that mail entered as Standard Mail accounted for 62.8 percent of all UAA mail volume.

Two commenters expressed full support for the proposed expansion of the Move Update requirement beyond presorted and automation rate First-Class Mail to Standard Mail. However, several commenters voiced concerns or made alternative recommendations regarding the proposed expansion.

One commenter voiced concern regarding the difficulty of complying with the Move Update requirement for small local businesses and nonprofit organizations. The Postal Service feels that there are many methods mailers can use in order to qualify and make this fit any business model. The list of authorized methods upon implementation of these requirements will include the following:

Additionally, two commenters proposed postponing implementation until the benefits of the recent CASS TM Cycle L changes, which were effective August 1, 2007, are realized. CASS Cycle L requires the integration and use of Delivery Point Validation (DPV TM ) and Locatable Address Conversion System (LACS Link TM ) as part of CASS certification and processing in order for mailers to be eligible for automation discounts. Most UAA mail is attributed to Standard Mail move-related reasons. CASS Cycle L changes do not affect move-related UAA problems.

Another commenter expressed concern that the alternative Move Update method was not listed as a stand-alone option to meet the Move Update requirement for Standard Mail. The alternative method is allowed for First-Class Mail due to mailer's concerns about incorporating change-of-address information into their mailing lists for mailpieces containing personal information. Therefore, the Postal Service does not consider alternative methods applicable to Standard Mail. However, addresses that have been processed through any Move Update method, including alternative methods for First-Class Mail, automatically meet the Move Update standard for Standard Mail. And lastly, one commenter asked if addresses received directly from their customers or clients may be claimed within a mailing at the First-Class Mail or Standard Mail discounted rates. The answer is yes, if mailed within the first 185 days of acquiring the address. When this final rule is implemented, the current requirement to perform Move Update processing within 185 days before mailing will be changed to 95-days.

As information, in addition to the four authorized Move Update methods listed above, addresses utilizing any of the three alternative addressing formats in DMM 602.3.0 (for example, “John Doe or Current Resident,” “Occupant,” “Postal Customer” etc.) will not be subject to the Move Update standard.

The Postal Service will increase the minimum frequency of Move Update processing from 185 days to 95 days prior to the date of mailing for First-Class Mail and for Standard Mail.

Two commenters voiced general support for the proposal, but expressed concerns about the 95-day window for processing addresses. One suggested keeping Move Update processing for First-Class Mail at 185 days and requiring Move Update processing for Standard Mail at an annual interval. The other commenter suggested requiring Move Update processing within 120 days instead of 95 days, asserting that the reduced window for processing will have a negative effect due to the planning cycles in use by many mailers.

We understand that certain operational changes may be necessary for the mailing industry to implement this proposal. However, the UAA mail problem is of such magnitude that it is in the best interests of all stakeholders to modify current practices in order to mitigate the problem. We also recognize that some mailers who are successfully reducing UAA mail within their operations have already set quarterly production cycles for their Move Update and Address Matching processing.

Reducing the processing window from 185 days to 95 days prior to the mailing date will lessen the effect of the natural deterioration of address currency, resulting in a significant decrease in UAA volume and the costs associated with the redirecting, re-handling, and disposing of mail.

Effective November 23, 2008, we will adopt the following amendments to the Mailing Standards of the United States Postal Service , Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1., 111.4.

I. General Information

Affected Entities: This action applies to State Agencies, nonprofit institutions, international organizations, and Alaska rural and native villages which are eligible to receive grants from funds included in EPA's State and Tribal Assistance Grants account pursuant to the Revised Continuing Appropriations Resolution, 2007, and the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2006 (Pub. L. 109-54).

The Revised Continuing Appropriations Resolution, 2007, Pub. L. 110-5, making further continuing appropriations for the fiscal year 2007, and for other purposes, states, in relevant part:

The specific requirements governing the award of the program grants are contained in the following documents: the Revised Continuing Appropriations Resolution, 2007, and the FY 2006 Appropriations Act. The requirements contained in these documents have been incorporated into this notice.

The Revised Continuing Appropriations Resolution, 2007, also states, in relevant part:

The United States-Mexico Border Program funds and the Alaska Rural and Native Villages Program funds will be awarded and administered by the Regional Offices. On September 28, 2000, the Assistant Administrator for Water and the Regional Administrators were delegated the authority to award grants and cooperative agreements for funds included in the STAG account. Accordingly, the Regions and Headquarters have the necessary authority to award grants and cooperative agreements for the United States-Mexico Border Program and the Alaska Rural and Native Villages Program.

The Agency's FY 2006 Appropriations Act contains the authorizing language for and requirements applicable to the United States-Mexico Border Program and the Alaska Rural and Native Villages Program.

The Agency's FY 2006 Appropriations Act provides $49,264,380, after rescission, for “architectural, engineering, planning, design, construction and related activities in connection with the construction of high priority water and wastewater facilities in the area of the United States-Mexico Border, after consultation with the appropriate border commission.” Pursuant to the Revised Continuing Appropriations Resolution, 2007, this funding level is maintained for FY 2007. The scope of work for grants awarded for the United States-Mexico Border Program must conform to the language contained in the Appropriations Act and the grant file should include documentation that describes the results of the discussions and consultations with the appropriate border commission. In implementing this program, EPA generally provides grant funding to the Border Environmental Cooperation Commission (BECC) for the Project Development Assistance Program (PDAP) and to the North American Development Bank (NADBank) for the Border Environment Infrastructure Fund (BEIF). Subgrants from BECC and NADBank should also contain documentation of the discussions with the appropriate border commission.

EPA cost participation on projects funded from the United States-Mexico Border appropriation item will be decided on a project-by-project basis. The EPA cost share will depend on a number of factors which have been separately defined within the context of the United States-Mexico Border Program.

On May 2, 1997, the Agency issued a memorandum  1 concerning “Program Requirements for Mexican Border Area Projects Funded under the Authority of this Agency's FY 1995, 1996 and 1997 Appropriations Acts.” That memorandum applies to the United States-Mexico Border Area projects funded under the authority of the Revised Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 Appropriations Act.

The Agency's FY 2006 Appropriations Act provides $34,485,066, after rescission, for:

Additionally, the Alaska Rural and Native Villages Program funds may be used to pay for activities specified in the Safe Drinking Water Act of 1996, (Pub. L. 104-182, Section 303), specifically: “training, technical assistance, and educational programs relating to the operation and management of sanitation services in rural and Native villages.” These include the Remote Maintenance Worker (RMW) and the Rural Utility Business Advisory (RUBA) programs.

Pursuant to the 2006 Alaska Rural and Native Villages Program Memorandum of Understanding, the State of Alaska has agreed to utilize the State's Environmental Review Process (SERP) for all projects funded by the program.

Federal funds from other programs may be used as all or part of the match for the United States-Mexico Border Program only if the statute authorizing those other programs specifically allows the funds to be used as a match for other Federal grants. Additionally, the other Federal programs must allow their appropriated funds to be used for the planning, design and/or construction of water, wastewater or groundwater infrastructure projects. Listed below are the major United States Federal programs whose grant funds can be used to provide all or part of the match for the United States-Mexico Border Program:

• Department of Agriculture, Rural Development program; and

• Department of Housing and Urban Development, Community Development Block Grant program.

As previously stated, Federal funds may be used as all or part of the match for other Federal grant programs only if the authorizing legislation includes such authority. The United States-Mexico Border Program funds and the Alaska Rural and Native Villages Program funds cannot be used as a source of matching funds for other Federal programs.

The Grants and Interagency Agreement Management Division (GIAMD) issued a policy memorandum (GPI 00-02) on March 30, 2000, that applies to all grants, including United States-Mexico Border Program grants and Alaska Rural and Native Villages Program grants awarded on or after April 1, 2000. Additionally, a clarification to the policy memorandum (GPI 00-02(a)) was issued by GIAMD on May 3, 2000. The two memorandums revised the Agency's interpretation of a provision contained in the general grant regulations at 40 CFR 31.23(a) concerning the approval of pre-award costs.

In essence, the GIAMD memorandums state that:

• Recipients may incur pre-award costs [up to] 90 calendar days prior to award provided they include such costs in their application, the costs meet the definition of pre-award costs and are approved by the EPA Project Officer and EPA Award Official.

• The award official can approve pre-award costs incurred more than 90 calendar days prior to grant award, in appropriate circumstances, if the pre-award costs are in conformance with the requirements set forth in OMB Circular A-87 and with applicable Agency regulations, policies and guidelines.

The GIAMD memorandums state that the award official can approve pre-award costs incurred prior to grant award in appropriate situations if the approval of the pre-award costs is consistent with the intent of the requirements for pre-award costs set forth in OMB Circular A-87 and are in conformance with Agency regulations, policies and guidelines. The following two situations meet these requirements:

• Any allowable costs incurred after the start of the fiscal year for which the funds were appropriated but before grant award (for FY 2007 projects, this date is October 1, 2006).

• Allowable facilities planning and design costs associated with the construction portions of the project included in the grant that were incurred before the start of the fiscal year for which the funds were appropriated (for FY 2007 projects, this date is October 1, 2006).

The Regions may not approve any pre-award costs for United States-Mexico Border Program grants or Alaska Rural and Native Villages Program grants, other than those that involve the two situations discussed above, without written approval from Headquarters. The request, with sufficient supporting documentation, should be submitted to the Director, Office of Wastewater Management, (Mail Code 4201M), USEPA, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. The Office of Wastewater Management will consult, in appropriate circumstances, with the GIAMD and the Office of General Counsel. If appropriate, a deviation from 40 CFR 31.23(a) will be processed and issued.

The Federal Laws and Executive Orders that apply to all EPA grants, including the United States-Mexico Border Program and the Alaska Rural and Native Villages Program which are authorized by the Revised Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 Appropriations Act, are as follows:

• Archeological and Historic Preservation Act, Pub. L. 93-291, as amended.

• Clean Air Act, Pub. L. 95-95, as amended.

• Clean Water Act, Titles III, IV and V, Pub. L. 92-500, as amended.

• Coastal Barrier Resources Act, Pub. L. 97-348.

• Coastal Zone Management Act, Pub. L. 92-583, as amended.

• Endangered Species Act, Pub. L. 93-205, as amended.

• Environmental Justice, Executive Order 12898.

• Flood Plain Management, Executive Order 11988 as amended by Executive Order 12148.

• Protection of Wetlands, Executive Order 11990 as amended by Executive Order 12608.

• Farmland Protection Policy Act, Pub. L. 97-98.

• Fish and Wildlife Coordination Act, Pub. L. 85-624, as amended.

• Magnunson-Stevens Fishery Conservation and Management Act, Pub. L. 94-265.

• National Environmental Policy Act, Pub. L. 91-190.

• National Historic Preservation Act, Pub. L. 89-655, as amended.

• Safe Drinking Water Act, Pub L. 93-523, as amended.

• Wild and Scenic Rivers Act, Pub. L. 90-54, as amended.

• Debarment and Suspension, Executive Order 12549.

• Demonstration Cities and Metropolitan Development Act, Pub. L. 89-754, as amended, and Executive Order 12372.

• Drug-Free Workplace Act, Pub. L. 100-690.

• Government Neutrality Toward Contractor's Labor Relations, Executive Order 13202 as amended by Executive Order 13208.

• New Restrictions on Lobbying, Section 319 of Pub. L. 101-121.

• Prohibitions relating to violations of the Clean Water Act or Clean Air Act with respect to Federal contracts, grants, or loans under Section 306 of the Clean Air Act and Section 508 of the Clean Water Act, and Executive Order 11738.

• Uniform Relocation and Real Property Acquisition Policies Act, Pub. L. 91-646, as Amended.

• Age Discrimination Act, Pub. L. 94-135.

• Equal Employment Opportunity, Executive Order 11246.

• Section 13 of the Clean Water Act, Pub. L. 92-500.

• Section 504 of the Rehabilitation Act, Pub. L. 93-112 supplemented by Executive Orders 11914 and 11250.

• Title VI of the Civil Rights Act, Pub. L. 88-352.

• EPA's FY 1993 Appropriations Act, Pub. L. 102-389.

• Section 129 of the Small Business Administration Reauthorization and Amendment Act, Pub. L. 100-590.

• Small, Minority and Women Owned Business Enterprises, Executive Orders 11625, 12138 and 12432.

Some of the authorities only apply to grants that include construction, e.g. , EO 13202. A more detailed description of the Federal laws, Executive Orders, OMB Circulars and their implementing regulations is contained in Module No. 2 of the EPA Assistance Project Officers Training Course which is available through the Regional Grants Management Offices.

The regulations at 40 CFR Part 31 apply to grants and cooperative agreements awarded to State and local (including tribal) governments. The regulations at 40 CFR Part 30 apply to grants with nonprofit organizations and with non-governmental for-profit entities. In appropriate circumstances, such as grants for demonstration projects, the research and demonstration grant regulations at 40 CFR Part 40 can be used to supplement either 40 CFR Part 30 or Part 31.

The Agency issued a memorandum  3 in January 1995, concerning the applicability of 40 CFR Part 29 (Intergovernmental Review) to the special projects authorized by the Agency's FY 1995 Appropriations Act. That memorandum also applies to the United States-Mexico Border Program and the Alaska Rural and Native Villages Program which are authorized by the Revised Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 Appropriations Act.

The Davis-Bacon Act does not apply to grants awarded under the authority of the Revised Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 Appropriations Act because neither the Resolution nor the Act includes language that makes it apply. However, if FY 2007 funds are used to supplement funding of a construction contract that includes Clean Water Act title II requirements ( e.g. , contracts awarded under the construction grants or coastal cities programs), the entire contract is subject to Davis-Bacon Act requirements, including the portion funded with FY 2007 funds.

The National Environmental Policy Act (NEPA) and other relevant applicable statutes and Executive Orders, such as the Endangered Species Act (ESA), apply to the United States-Mexico Border Program. The applicable NEPA regulations are the Council of Environmental Quality's implementing regulations at 40 CFR Parts 1500-1508 and EPA's NEPA regulations at 40 CFR Part 6, Subparts A-D.

The Agency issued a memorandum  4 on January 20, 1995, concerning NEPA compliance for the Special Appropriations Act Projects authorized by the Agency's FY 1995 Appropriations Act. That memorandum also applies to the United States-Mexico Border Program which is authorized by the Revised Continuing Appropriations Resolution, 2007, and the Agency's FY 2006 Appropriations Act. 5

The development of information needed to determine compliance with NEPA and other cross-cutting Federal requirements is an allowable cost that can, and should, be included in the scope of work of the grant if not performed prior to grant award. These activities can be funded on an incremental basis, by awarding a grant that only includes these activities, or as part of the entire project (i.e., planning, design and construction) with the stipulation, in the form of a grant condition, stating that EPA will not approve or fund any work beyond the conceptual design point  6 until the applicable requirements of such authorities have been met. The Agency issued a memorandum  7 on July 29, 2003, that contains a model grant condition that should be used in this situation. 8

It should be noted that NEPA and other cross-cutting Federal requirements that apply to the major Federal action (i.e., the approval and/or funding of work beyond the conceptual design point) cannot be delegated. Although EPA can fund the grantee or state/tribal development of an Environmental Information Document (EID) or other analysis to provide supporting information, EPA has the legal obligation to issue the NEPA documents, to sign NEPA determinations, and to fulfill other cross-cutting Federal requirements before approving or paying for design and/or construction.

When both EPA and another Federal agency are funding the same project, the agencies may negotiate an agreement for one to be the lead agency for performing grant oversight and management activities, including those related to NEPA and other cross-cutting Federal requirements. The lead agency can be the one which is providing the most funds for the project, or the agency that provided the initial funds for the project. If an environmental impact statement (EIS) is required, EPA should be a co-lead or cooperating agency so that it can adopt the EIS without recirculating it. If the project requires an environmental assessment (EA), EPA may adopt the other agency's EA and use it as a basis for its finding of no significant impact (FONSI), provided EPA has independently reviewed the EA and agrees with the analysis and circulates the FONSI and attached EA for the requisite 30-day comment period. Note that EPA may not use a categorical exclusion of another Federal agency unless EPA's regulations at 40 CFR Part 6 also provide for the categorical exclusion.

The authority for awarding grants for the United States-Mexico Border Program is the Revised Continuing Appropriations Resolution, 2007, and the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2006 (Pub. L. 109-54). The authority for awarding grants for the Alaska Rural and Native Villages Program is section 303 of the Safe Drinking Water Act Amendments of 1996 (Pub. L. 104-182), the Revised Continuing Appropriations Resolution, 2007, and Department of the Interior, Environment, and Related Agencies Appropriations Act, 2006 (Pub. L. 109-54).

The Catalog of Federal Domestic Assistance (CFDA) number for the United States-Mexico Border Program and the Alaska Rural and Native Villages Program is 66.202 “Congressionally Mandated Projects.” The Integrated Grants Management System (IGMS) code for the United States-Mexico Border Program and the Alaska Rural and Native Villages Program is XP, titled “Water Infrastructure Grants as authorized by EPA Appropriations.” The Object Class Code (budget and accounting information) for the United States-Mexico Border Program and the Alaska Rural and Native Villages Program is 41.83. Applicants should use Standard Form 424 to apply for the grants.

To be able to report on environmental and public health benefits, the Agency has decided to collect, and store in an appropriate database, the geographic location for grant funded infrastructure projects. Accordingly, all United States-Mexico Border Program grants and Alaska Rural and Native Villages Program grants authorized by the Revised Continuing Appropriations Resolution, 2007, and the FY 2006 Appropriations Act should include a term and condition stating that locational information must be submitted. For most projects, the specific information needed is the National Pollutant Discharge Elimination System (NPDES) number(s) or the Safe Drinking Water Information System (SDWIS) number(s). EPA's information technology (IT) systems will use the NPDES and the SDWIS numbers to determine the specific geographic parameters of the project. For those situations where NPDES and SDWIS identifiers are not appropriate, the longitude and latitude of the project should be provided.

Although a United States-Mexico Border Program grant may be awarded to one entity, the successful operations of the grant funded project may depend on the support and cooperation of other entities, municipalities, or utility districts. This is especially evident when one entity is providing wastewater treatment services or supplying drinking water to another entity. Accordingly, for projects involving interactions between two or more entities, the applicant should provide assurances that the grant funded project will function as intended for its expected life. Adequate assurance may be met through the creation of special service districts, regionalization of systems, or intermunicipal service agreements.

Special service districts and regionalization of systems are considered to be obligations in perpetuity to serve the customers of the newly created authority and automatically meet the expected lifetime requirements. The intermunicipal service agreement or contract is a legal document for cooperative ventures between separate entities, both of which wish to continue functioning with a large degree of independent control in their respective service areas. Such agreements will need to extend for a minimum number of years for an EPA funded project to be considered viable. For the purposes of the United States-Mexico Border Program, EPA will accept the following contract lifetimes as meeting the minimum standard  9 :

The scope of work of a grant may include planning, design and administrative activities, and the cost of land. Land need not be an “integral part of the treatment process” as in the Clean Water Act title II construction grant program. However, all elements included within the scope of work of the grant must conform to the requirements of 40 CFR Parts 30 or 31. This means, if planning, design and administrative activities are included in the grant, the procurement of those services and the contracts must comply with the applicable sections of Parts 30 or 31. If land is included, there will be a Federal interest in the land regardless of when it was purchased and the purchase must be (must have been) in accordance with the applicable sections of Parts 30 or 31 and the Uniform Relocation Assistance and Real Property Acquisition regulations for Federal and Federally assisted programs at 49 CFR Part 24.

As of August, 2006, the United States-Mexico Border Program established a policy that land would not be an allowable BEIF cost, even if it is an eligible item under the Appropriations Act. This policy was issued by the Deputy Director, Office of Wastewater Management, on August 3, 2006.

Funds appropriated for the United States-Mexico Border Program or the Alaska Rural and Native Villages Program may not be awarded solely to repay loans received from a State Revolving Fund or other indebtedness unless the facts of the case are such that this is the only way to award the funds that were appropriated for the project. Any request to use United States-Mexico Border Program or Alaska Rural and Native Villages Program funds to repay a loan, in whole or in part, must be approved, in writing, by EPA Headquarters. The request, with sufficient supporting documentation, should be submitted to the Director, Office of Wastewater Management, (Mail Code 4201M), USEPA, 1200 Pennsylvania Avenue, NW., Washington, DC 20460.

EPA Order 5700.7, 10 “Environmental Results Under Assistance Agreements,” applies to all non-competitive funding packages/funding recommendations submitted to the Grants Management Offices after January 1, 2005. The Order requires EPA Program Offices to: (1) Link proposed assistance agreements to the Agency's Strategic Plan/Government Performance and Results Act (GPRA) architecture; (2) ensure that outputs and outcomes are appropriately addressed in assistance agreement work plans  11 and funding recommendations; and (3) ensure that progress in achieving agreed-upon outputs and outcomes is adequately addressed in recipient progress reports and advanced monitoring activities.

EPA's 2006-2011 Strategic Plan   12 sets out five long-term goals. Each of these five goals is supported by a series of objectives and sub-objectives that identify, as precisely as possible, what environmental outcomes or results the EPA seeks to achieve within a defined time frame using resources expected to be available. The objectives and sub-objectives established in EPA's Strategic Plan are part of the “GPRA architecture” that is used to measure the EPA's progress in meeting its strategic goals.

Program offices must include in the funding package for a proposed assistance agreement a description of how the project fits within the EPA's Strategic Plan/GPRA architecture. In developing the aforementioned descriptions, a project officer must list all applicable EPA strategic goals and objectives and, where available, sub-objectives. The project officer must ensure that the Program Results Code(s) (PRCs) listed on the commitment notice is consistent with the selected strategic goals, objectives and sub-objectives. The Strategic Plan/Program Results Code Crosswalk, which summarizes the strategic goals, objectives, sub-objectives, and the PRCs for every EPA assistance agreement program, is attached to Appendix A of EPA Order 5700.7. Additionally, program offices must include in the funding package for a proposed assistance agreement an assurance that the program office has reviewed, or will review, the assistance agreement work plan  13 and that the work plan includes, or will include, well-defined outputs and, to the maximum extent practicable, well-defined outcomes.

EPA Order 5700.7 also establishes requirements for program office review of construction and non-construction interim and final recipient performance reports for progress in achieving outputs and outcomes contained in assistance agreement work plans. Under 40 CFR Parts 30 and 31, EPA may require recipients to submit performance/progress reports as frequently as quarterly but no less frequently than annually. These regulations also require recipients to provide the EPA with an acceptable final performance report at the end of a project. While performance reports are one way for the EPA to obtain information on a recipient's progress toward achievement of agreed-upon outputs and outcomes, program offices may also conduct mid-year and end-of-year reviews to evaluate recipient performance.

The review of recipient performance reports is largely the responsibility of the EPA project officer. The project officer must review interim  14 and final  15 performance reports to determine whether they adequately address the achievement of agreed-upon outputs/outcomes, including providing a satisfactory explanation for insufficient progress or a failure to meet planned accomplishments (when compared with the most recently approved project schedule and completion dates for project milestones). This review must be documented in the official project file. If a report does not adequately address the achievement of outputs/outcomes, the project officer should seek further explanation from the recipient and require appropriate corrective action.

EPA Order 5700.7 directs program offices, when conducting on-site reviews or desk reviews under EPA Order 5700.6, Policy on Compliance, Review and Monitoring , to include an assessment of the recipient's progress in achieving the outputs and outcomes set forth in the assistance agreement work plan. 16 If the assessment reveals significant problems in meeting agreed-upon outputs/outcomes, the project officer must require the recipient to develop and implement an appropriate corrective action plan and implementation schedule. The results of the assessment must be documented in the Grantee Compliance Database in a format determined by the Director of the GIAMD.

Grants awarded under the authority of an Appropriations Act are subject to assistance agreement regulations, OMB cost principles and Agency policies. The grants must be awarded and managed as any other assistance agreement.

The GIAMD has developed Grants Policy Issuances (GPIs) and directives to assist project officers and program offices in fulfilling and understanding their responsibilities. Three GPIs that are directly related to the award and management of United States-Mexico Border Program grants or Alaska Rural and Native Villages Program grants are GPI-07-01 “Management of Earmark Grants,” GPI-03-01—Attachment VI “Policy and Procedures for Funding Assistance Agreements,” and GPI-00-05 “Cost Review Guidance.”  17

OGD issued guidance “Assessing Grants Management Performance under the 2007 Performance Appraisal and Recognition System (PARS)” on January 17, 2007, to be used for 2007 PARS performance agreements/appraisals of project officers who are managing at least one active grant during the rating period and their supervisors/managers. This guidance requires that project officers and their supervisors/managers adequately address grants management responsibilities through the Agency's PARS process. A directive outlining roles and responsibilities for all EPA staff with grants management responsibilities is found at http://intranet.epa.gov/rmpolicy/ads/updates.htm .

EPA Order 5700.6A1, issued January 8, 2004, 18 streamlines post-award management of assistance agreements and helps ensure effective oversight of recipient performance and management. The Order encompasses both the administrative and programmatic aspects of the Agency's financial assistance programs. It requires each EPA program office providing assistance to develop and carry out a post-award monitoring plan, and conduct basic monitoring for every award. From the programmatic standpoint, this monitoring should ensure satisfaction of five core areas: (1) Compliance with all programmatic terms and conditions, (2) correlation of the recipient's work plan/application and actual progress under the award, (3) availability of funds to complete the project, (4) proper management of and accounting for equipment purchased under the award, and (5) compliance with all statutory and regulatory requirements of the program. If during monitoring it is determined that there is reason to believe that the grantee has committed or commits fraud, waste and/or abuse, then the project officer must contact the Office of the Inspector General. Advanced monitoring activities must be documented in the official grant file and the grantee compliance database.

In addition to the general requirements contained in EPA Order 5700.6A1, the following types of activities, which are directly related to construction projects, should be considered in the development of a post-award monitoring plan:

The project officers must review the grant application to determine that:

Grant applications should be carefully reviewed and processed in a timely manner. Additionally, the Regions may impose reasonable requirements through grant conditions in those situations considered necessary.

If you have not already done so, you and your staff should initiate discussions with the appropriate grant applicants to develop a detailed scope of work and to explain the grant application and review process. Additionally, the grant applicant should be provided with this Notice prior to grant award to ensure that the applicant is on notice of the applicable requirements before the grant is awarded.

The Congressional Review Act, 5 U.S.C. 801 et seq. , generally provides that before certain actions may take affect, the agency promulgating the action must submit a report, which includes a copy of the action, to each House of the Congress and to the Comptroller General of the United States. Since this final grant action contains legally binding requirements, it is subject to the Congressional Review Act, and EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of notice in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Throughout this document, wherever any reference to “we,” “us,” or “our” is used, we mean EPA.

EPA is approving a revision to the Louisiana SIP, the Louisiana CAIR NO X Trading Programs abbreviated SIP revision, submitted on August 20, 2007, by the State of Louisiana at Louisiana Administrative Code Title 33, Part III, Chapter 5, Sections 506 (A) and (B) (LAC 33:III.506 (A) and (B)). We are also approving revisions to the Louisiana SIP establishing administrative reporting requirements for all Louisiana CAIR programs; these revisions were submitted with the Louisiana CAIR SO 2 Trading Program on September 22, 2006 (LAC 33:III.506 (D) and (E)). Louisiana is covered by the CAIR NO X Annual and Ozone Season FIPs, which require participation in the EPA-administered CAIR FIP cap-and-trade programs for NO X annual and ozone emissions. Under this abbreviated SIP revision and consistent with the flexibility given to Louisiana in its CAIR NO X Annual and Ozone Season FIPs' provisions, the Louisiana provisions for allocating allowances under the Louisiana CAIR FIPs' NO X annual and ozone season trading programs are approved as part of the Louisiana SIP. EPA has determined that the abbreviated SIP revision meets the applicable requirements in 40 CFR 51.123(p)(1) and (ee)(2) with regard to NO X annual and ozone season allowance allocations. EPA, by ministerial action, will note in Appendix A.1. to Subpart EE of 40 CFR Part 97 that Louisiana has an approved SIP revision providing for NO X annual allowance allocations. Similarly, EPA will note in Appendix A to Subpart EEEE of 40 CFR Part 97 that Louisiana has an approved SIP revision providing for NO X ozone season allowance allocations. Since 40 CFR part 97 provides for automatic revision of the Louisiana CAIR FIP for NO X annual and ozone season emissions (under 40 CFR 52.984) upon approval of such an abbreviated SIP revision, the Louisiana rules for NO X annual and ozone season allowance allocations apply, rather than the Federal rules governing allocations, upon the effective date of approval.

EPA has also determined that this SIP revision adequately addresses the required elements of section 110(a)(2)(D)(i) of the Clean Air Act, 42 U.S.C. 7410(a)(2)(D)(i). The SIP revision contains provisions that address significant contribution, interference with maintenance, prevention of significant deterioration, and protection of visibility. The protection of visibility requirement will be re-evaluated after the regional haze SIP revision is completed and submitted to EPA.

EPA proposed to approve Louisiana's request to amend the SIP on August 15, 2007 (72 FR 45705). In that proposal, EPA also stated its intent to amend the CAIR FIP NO X Annual and Ozone Season Trading Programs through ministerial action and proposed the finding as to section 110(a)(2)(D)(i), as described above. The comment period closed on September 14, 2007. EPA received one comment from a regulated entity in support of our proposed approval. EPA is finalizing the approval as proposed based on the rationale stated in the proposal and the accompanying Technical Support Document (TSD). The TSD is available as specified in the section of this document identified as ADDRESSES .

Also in today's action, EPA is providing a technical correction to the amendatory language for the Louisiana CAIR Sulfur Dioxide (SO 2 ) Trading Program at 40 CFR part 52, subpart T, section 52.970. On July 20, 2007 (72 FR 39741), EPA published direct final rulemaking action approving the Louisiana CAIR SO 2 Trading Program as a SIP revision. This action contained amendments to 40 CFR part 52, Subpart T, § 52.970 which incorrectly incorporated “Section 506(c)” into the Louisiana SIP. Today we are correcting 40 CFR part 52, subpart T, § 52.970 to correctly incorporate “Section 506(C)” into the Louisiana SIP.

The Louisiana Department of Environmental Quality (LDEQ) initially proposed the Louisiana-specific CAIR NO X annual and ozone season allocation methodologies in January 2007 as revision AQ261 to the LAC and in February 2007 as a revision to the Louisiana SIP. As a result of extensive comments and subsequent rewrites, AQ261 was withdrawn from consideration. LDEQ proposed the revised CAIR NO X annual and ozone season allocation methodologies as revision AQ285 to the LAC and the Louisiana SIP in May 2007. The comment period on the AQ285 SIP revision ended on July 3, 2007. LDEQ responded to comments and made technical amendments to the allocation methodologies. The final rule revision was submitted to the Louisiana Legislative Oversight Committee (LOC) on July 12, 2007. At this time the LDEQ also requested that EPA parallel process this abbreviated revision to the Louisiana SIP in conjunction with the LDEQ's rulemaking activities. The LDEQ requested parallel processing of the Louisiana CAIR NO X Trading Programs abbreviated SIP revision to expedite Federal approval of the Louisiana NO X annual and ozone season allocation methodologies before the allowance recordation deadline. The Louisiana CAIR NO X Annual and Ozone Season FIP includes a NO X allowance recordation deadline of September 30, 2007, at 40 CFR 97.153 and 97.353. As explained in the preamble of our April 28, 2006, promulgation of the CAIR FIPs, EPA will only record State allowance allocations if EPA has approved a full or abbreviated SIP for the State which specifies the allocation methodology (see 71 FR 25354).

In order to expedite review, we proposed approval of the Louisiana CAIR NO X Trading Programs abbreviated SIP revision under a procedure called “parallel processing” whereby EPA proposes rulemaking action concurrently with the State's procedures for amending its regulations (40 CFR part 51, Appendix V, section 2.3). If the State's proposed revision is substantially changed, EPA evaluates those subsequent changes and may publish another notice of proposed rulemaking. If no substantial changes are made, EPA publishes a final rulemaking on the revisions after responding to any submitted comments. Final rulemaking action by EPA occurs only after the SIP revision has been fully adopted and submitted formally to EPA for incorporation into the SIP. In addition, any action by the State resulting in undue delay in the adoption of the rules may result in a re-proposal altering the approvability of the SIP revision.

The Louisiana LOC reviewed the final AQ285 from July 12-August 10, 2007, during which time the public was able to request a Legislative Oversight hearing. Since no hearing was requested by the deadline, the rule proceeded through the remainder of the Louisiana rulemaking process as finalized on July 12, 2007. The LDEQ published the final AQ285 in the August 20, 2007 Louisiana Register; the rule became effective upon publication.

The LDEQ submitted the final Louisiana CAIR NO X Trading Programs abbreviated SIP revision on August 20, 2007. This SIP submittal included a copy of the Louisiana Register publication, providing evidence that the rule is fully adopted and effective at the State level. No substantive changes were made to the final SIP revision; however, it is important to note that the LDEQ updated Appendix A—Public Notification, to include all pages of the comment letters. The SIP revision submitted on July 12, 2007, inadvertently omitted even numbered pages from some comment letters. EPA is able to proceed with our final rulemaking because the August 20, 2007, SIP submittal was not substantively changed from proposal and provided evidence that Louisiana formally adopted and submitted the revisions for inclusion in the SIP.

EPA has determined that today's technical correction to the Louisiana CAIR SO 2 citation falls under the “good cause” exemption in 5 U.S.C. 553(d)(3) of the Administrative Procedures Act (APA) which, upon finding “good cause,” authorizes agencies to dispense with public participation where public notice and comment procedures are impracticable, unnecessary or contrary to the public interest. Public notice and comment for this action are unnecessary because today's action to correct 40 CFR part 52 has no substantive impact on EPA's July 20, 2007, direct final rule approval of the Louisiana CAIR SO 2 Trading Program. In addition, EPA can identify no particular reason why the public would be interested in being notified of the correction of this error or in having the opportunity to comment on the correction prior to this action being finalized, since this correction action does not change the approval status.

EPA also finds that there is good cause for the approval of the Louisiana CAIR NO X Trading Programs abbreviated SIP revision and technical amendment to the Louisiana CAIR SO 2 citation to become effective on September 28, 2007, because a delayed effective date is unnecessary due to the nature of the approval, which allows the State to make allocations under its CAIR rules. The expedited effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rule actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction” and section 5 U.S.C. 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.”

CAIR SIP approvals relieve States and CAIR sources within States from being subject to allowance allocation provisions in the CAIR FIPs that otherwise would apply, allowing States to make their own allowance allocations based on their SIP-approved State rule. The relief from these obligations is sufficient reason to allow an expedited effective date of this rule under 5 U.S.C. 553(d)(1). In addition, Louisiana's relief from these obligations provides good cause to make this rule effective September 28, 2007, pursuant to 5 U.S.C. 553(d)(3). The purpose of the 30-day waiting period prescribed in 5 U.S.C. 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Where, as here, the final rule relieves obligations rather than imposes obligations, affected parties, such as the State of Louisiana and CAIR sources within the State, do not need time to adjust and prepare before the rule takes effect.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason and because this action will not have a significant, adverse effect on the supply, distribution, or use of energy, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves State law as meeting Federal requirements and imposes no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard and indicates that approval will result in ministerial changes to the appropriate appendices of the CAIR FIP's trading rules, and does not alter the relationship or the distribution of power and responsibilities established in the Act. The EPA interprets Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), as applying only to those regulatory actions that concern health or safety risks such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045 because it approves a State rule implementing a Federal standard. Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Because this rule merely approves a State rule implementing a Federal standard, EPA lacks the discretionary authority to modify today's regulatory decision on the basis of environmental justice considerations.

In reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 27, 2007. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

• Crop production (NAICS code 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers.

• Animal production (NAICS code 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers.

• Food manufacturing (NAICS code 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators.

• Pesticide manufacturing (NAICS code 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users.

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

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

Under section 408(g) of the FFDCA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2006-0191 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before November 27, 2007.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2006-0191, by one of the following methods:

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

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

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

In the Federal Register of August 16, 2006 (71 FR 47216) (FRL-7776-6), EPA issued a notice pursuant to section 408(d)(3) of the FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 0E6114) by BASF Corporation, 26 Davis Dr., P.O. Box 13528, Research Triangle Park, NC 27709-3528. The petition requested that 40 CFR 180.463 be amended by establishing a tolerance for residues of the herbicide quinclorac, 3,7-dichloro-8-quinoline carboxylic acid, in or on imported barley grain at 1.5 parts per million (ppm). That notice referenced a summary of the petition prepared by BASF Corporation, the registrant, which is available to the public in the docket, http://www.regulations.gov . There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has determined it appropriate to establish the tolerance for residues of the herbicide quinclorac in or on imported barley grain at 2.0 ppm. The reason for these changes is explained in Unit IV.C.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....” These provisions were added to the FFDCA by the Food Quality Protection Act (FQPA) of 1996.

Consistent with section 408(b)(2)(D) of the FFDCA, and the factors specified in section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerance for residues of quinclorac on imported barley grain at 2.0 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by quinclorac as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies are discussed in the final rule published in the Federal Register of March 26, 1999 (64 FR 14626) (FRL-6069-5).

For hazards that have a threshold below which there is no appreciable risk, the toxicological level of concern (LOC) is derived from the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment. Uncertainty/safety factors (UFs) are used in conjunction with the LOC to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the acute population adjusted dose (aPAD) and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. Short-term, intermediate-term, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the margin of exposure (MOE) called for by the product of all applicable UFs is not exceeded.

For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk and estimates risk in terms of the probability of occurrence of additional adverse cases. Generally, cancer risks are considered non-threshold. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm .

A summary of the toxicological endpoints for quinclorac used for human risk assessment is shown in the following Table of this unit.

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to quinclorac, EPA considered exposure under the petitioned-for tolerances as well as all existing quinclorac tolerances in (40 CFR 180.463). EPA assessed dietary exposures from quinclorac in food as follows:

i. Acute exposure . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

In estimating acute dietary exposure, EPA used food consumption information from the U.S. Department of Agriculture (USDA) 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). As to residue levels in food, EPA assumed all foods for which there are tolerances were treated and contain tolerance-level residues. Percent crop treated and/or anticipated residues were not used.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994-1996 and 1998 CSFII. As to residue levels in food, EPA assumed all foods for which there are tolerances were treated and contain tolerance-level residues. Percent crop treated and/or anticipated residues were not used.

2. Dietary exposure from drinking water . The Agency lacks sufficient monitoring data to complete a comprehensive dietary exposure analysis and risk assessment for quinclorac in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the environmental fate characteristics of quinclorac. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

Based on the Pesticide Root Zone Model /Exposure Analysis Modeling System (PRZM/EXAMS) and Screening Concentration in Ground Water (SCI-GROW) models, the estimated drinking water concentrations (EDWCs) of quinclorac for acute exposures are estimated to be 22.9 parts per billion (ppb) for surface water and 29 ppb for ground water. The EDWCs for chronic exposures are estimated to be 14.5 ppb for surface water and 29 ppb for ground water. The EDWCs were directly entered into the dietary exposure model (DEEM-FCID( TM )).

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Quinclorac is currently registered for the following residential non-dietary sites: Ornamental plantings and turfgrass. EPA assessed residential post-application exposure using the following assumptions:

i. Five percent of the application rate has been used to calculate the day-zero turf transferable residue (TTR) residue levels used for assessing risk from hand-to-mouth exposures, since quinclorac-specific turf transferable residue study data are not available.

ii. Twenty percent of the application rate has been used to calculate the day-zero turf transferable residue (TTR) residue levels used for assessing risk from object-to-mouth exposures (a higher percent transfer has been used for object-to-mouth behaviors, because it involves a teething action believed to be more analogous to DFR/leaf wash sample collection where 20 percent is also used).

iii. Three year old toddlers are expected to weigh 15 kilograms (representing an average weight from years one to six)

iv. Hand-to-mouth exposures are based on a frequency of 20 events/hour and a surface area per event of 20 cm 2 , representing the palmar surfaces of three fingers.

v. Saliva extraction efficiency is 50 percent meaning that every time the hand goes in the mouth approximately ½ of the residues on the hand are removed.

vi. Object-to-mouth exposures are based on 25 cm 2 surface area.

vii. Exposures durations for turfgrass scenarios are estimated to be 2 hours based on information in HED's Exposure Factors Handbook.

viii. Soil residues are contained in the top centimeter and soil density is 0.67 mL/gram.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of the FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to quinclorac and any other substances and quinclorac does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that quinclorac has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408 of the FFDCA provides that EPA shall apply an additional (“10X”) tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor. In applying this provision, EPA either retains the default value of 10X when reliable data do not support the choice of a different factor, or, if reliable data are available, EPA uses a different additional FQPA safety factor value based on the use of traditional UFs and/or special FQPA safety factors, as appropriate.

2. Prenatal and postnatal sensitivity . There is no evidence of increased pre- and/or postnatal susceptibility from exposure to quinclorac. Offspring effects were only noted at or above maternally toxic dose levels.

3. Conclusion . EPA has determined that reliable data show that it would be safe for infants and children to reduce the FQPA safety factor to 1X. That decision is based on the following findings:

i. The toxicity database for quinclorac is complete for the purposes of this action.

ii. There is no indication that quinclorac is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

iii. There is no evidence that quinclorac results in increased susceptibility in in utero rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100% crop treated and tolerance-level residues. Conservative ground and surface water modeling estimates were used. Similarly conservative Residential SOPs were used to assess post-application exposure to children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by quinclorac.

Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the aPAD and cPAD. The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given aggregate exposure. Short-term, intermediate-term, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the MOE called for by the product of all applicable UFs is not exceeded.

1. Acute risk . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to quinclorac will occupy <1% of the aPAD for the population group (females 13-49 years) receiving the greatest exposure.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to quinclorac from food and water will utilize 2% of the cPAD for the population group (children 1-2 years). Based on the current use patterns, chronic residential exposure to residues of quinclorac is not expected.

3. Short-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Quinclorac is currently registered for uses that could result in short-term residential post-application exposure and the Agency has determined that it is appropriate to aggregate chronic food and water and short-term exposures for quinclorac. The post-application exposure scenarios from the use on turf represent the worst-case estimates of exposure and risk.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded that food, water, and residential post-application exposures aggregated result in aggregate MOEs of 3,300 for infants (<1 year), 3,100 for children 1-2 years, and 3,200 for children 3-5 years. These values are greater than 100 and, therefore, indicate that risks are below the Agency's LOC.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Though residential post-application exposure could occur, no intermediate-term exposure scenarios are associated with quinclorac. Therefore, the aggregate risk is the sum of the risk from food and water and non-dietary (residential post-application exposures).

5. Aggregate cancer risk for U.S. population . Quinclorac is classified as “Group D, not classifiable as to carcinogenicity to humans,” under the 1986 Agency cancer classification guidelines. Available carcinogenicity studies indicate that there was equivocal evidence of an increase in the incidince of pancreatic acniar cell adenomas in the male rat, but no treatment-associated in increases in tumors were observed in female rats or in mice. A quantification of cancer risk is not warrented because the chronic RfD of 0.4 mg/kg/day is approximately 1,200-fold lower than the dose (487 mg/kg/day) that induced the benign pancreatic tumors. Thus, the chronic RfD will adequately account for all chronic effects, including the observed adenomas, likely to result from exposure to quinclorac. Additionally, if quinclorac is evaluated under the current 2005 Guidelines for Carcinogen Risk Assessment, quinclorac will be classified as “Not Likely to be Carcinogenic to Humans” since only benign tumors were seen in only one sex and in one species.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to quinclorac residues.

Adequate enforcement methodology (BASF Methods A8902 (plants) and 268/1 (livestock)) is available to enforce the tolerance expression. The methods may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov .

There are no Codex maximum residue limits (MRLs) established for quinclorac. A Canadian MRL of 2.0 ppm is established for residues of quinclorac in/on barley grain.

BASF Corporation initially requested a tolerance of 1.5 ppm be established for residues of quinclorac in or on imported barley grain. However, based on residue trials conducted in Canada and reviewed by Health Canada's Pest Management Regulatory Agency (PMRA), a MRL of 2.0 ppm was established for residues of quinclorac in or on barley grain in Canada. Due to trade-harmonization issues, EPA also supports a tolerance of 2.0 ppm for residues of quinclorac in or on imported barley grain.

Therefore, the tolerance is established for residues of quinclorac, 3,7-dichloro-8-quinoline carboxylic acid, in or on imported barley grain at 2.0 ppm.

This final rule establishes a tolerance under section 408(d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of the FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000) do not apply to this rule. In addition, This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

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

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

• Crop production (NAICS code 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers.

• Animal production (NAICS code 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers.

• Food manufacturing (NAICS code 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators.

• Pesticide manufacturing (NAICS code 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users.

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

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

Under section 408(g) of FFDCA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2006-0993 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before November 27, 2007.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA- HQ-OPP-2006-0993, by one of the following methods:

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

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

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

In the Federal Register of January 24, 2007 (72 FR 3132) (FRL-8110-9), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 6F7061) by Dow AgroSciences, LLC, 9330 Zionsville Road, Indianapolis, IN 46268. The petition requested that 40 CFR part 180 be amended by establishing a tolerance for residues of the herbicide florasulam N-(2,6-difluorophenyl)-8-fluoro-5-methoxy(1,2,4)triazolo(1,5-c)pyrimidine-2-sulfonamide, in or on barley, grain at 0.01 parts per million (ppm), barley, forage at 0.05 ppm, barley, hay at 0.05 ppm, barley straw at 0.05 ppm, oats, grain at 0.01 ppm, oats, forage at 0.05 ppm, oats, hay at 0.05 ppm, oats, straw at 0.05 ppm, rye, grain at 0.01 ppm, rye, forage at 0.05 ppm, rye, hay at 0.05 ppm, rye, straw at 0.05 ppm, triticale, grain at 0.01 ppm, triticale, forage at 0.05 ppm, triticale, hay at 0.05 ppm, triticale, straw at 0.05 ppm, wheat, grain at 0.01 ppm, wheat, forage at 0.05 ppm, wheat, hay at 0.05 ppm, and wheat, straw at 0.05 ppm. That notice referenced a summary of the petition prepared by Dow AgroSciences, LLC, the registrant, which is available to the public in the docket, http://www.regulations.gov . Comments were received on the notice of filing. B. Sachau commented that there are health implications listed for this chemical and a new pesticide should not be approved because the safety tests required by the EPA are insufficient. EPA's response to these comments is discussed in Unit IV.C. of this document

EPA is not establishing the proposed tolerances for barley, forage and rye, hay because EPA does not consider these items to be significant food commodities as noted in Table 1 of the OPPTS 860 guidelines. EPA is also not establishing the proposed tolerances for triticale. Triticale is covered by the tolerance for wheat as specified in 40 CFR 180.1(g).

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....” These provisions were added to FFDCA by the Food Quality Protection Act (FQPA) of 1996.

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerance for residues of florasulam, N-(2,6-difluorophenyl)-8-fluoro-5-methoxy(1,2,4)triazolo(1,5-c)pyrimidine-2-sulfonamide, on barley, grain at 0.01 ppm, barley, hay at 0.05 ppm, barley, straw at 0.05 ppm, oat, grain at 0.01 ppm, oat, forage at 0.05 ppm, oat, hay at 0.05 ppm, oat, straw at 0.05 ppm, rye, grain at 0.01 ppm, rye, forage at 0.05 ppm, rye, straw at 0.05 ppm, wheat, grain at 0.01 ppm, wheat, forage at 0.05 ppm, wheat, hay at 0.05 ppm, and wheat, straw at 0.05 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by florasulam as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov . The human health risk assessment document is available in the docket established by this action, which is described under ADDRESSES , and is identified as EPA-HQ-OPP-2006-0993 in that docket.

For hazards that have a threshold below which there is no appreciable risk, the toxicological level of concern (LOC) is derived from the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment. Uncertainty/safety factors (UFs) are used in conjunction with the LOC to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the acute population adjusted dose (aPAD) and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the margin of exposure (MOE) called for by the product of all applicable UFs is not exceeded.

For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk and estimates risk in terms of the probability of occurrence of additional adverse cases. Generally, cancer risks are considered non-threshold. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm .

A summary of the toxicological endpoints for florasulam used for human risk assessment is shown in Table 1 of this unit.

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to florasulam, EPA considered exposure under the petitioned-for tolerances . EPA assessed dietary exposures from florasulam in food as follows:

i. Acute exposure . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

No such effects were identified in the toxicological studies for florasulam; therefore, a quantitative acute dietary exposure assessment is unnecessary.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the Dietary Exposure Evaluation Method (DEEM-FCID) and the food consumption data from the USDA 1994-1996, and 1998 CSFII. As to residue levels in food, EPA assumed all foods for which there are tolerances were treated and contain tolerance-level residues.

iii. Cancer . There were no treatment-related tumors observed in carcinogenicity studies in rats and mice. Because EPA has concluded that florasulam is not a carcinogen, a cancer exposure assessment was not needed.

iv. Anticipated residue and percent crop treated (PCT) information . The chronic analyses assumed tolerance level residues, 100% crop treated (CT), and DEEM TM default processing factors for all registered and proposed commodities. For those processed commodities in the DEEM-FCID TM residue list which were not in DEEM TM , a processing factor of 1 was assumed.

2. Dietary exposure from drinking water . The Agency lacks sufficient monitoring data to complete a comprehensive dietary exposure analysis and risk assessment for florasulam in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the environmental fate characteristics of florasulam. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

The 5-OH degradate formed by demethylation of florasulam is by far the predominant environmental residue reaching maximum levels of 70% of applied material in the hydrolysis and metabolism (soil, aquatic) studies. This degradate is assumed to be of comparable toxicity to the parent. On this basis, the residues of concern in drinking water are the parent and 5-OH degradate. The Agency determined separate estimated drinking water concentrations (EDWCs) for these two compounds using FIRST (FQPA Index Reservoir Screening Tool) and SCI-GROW2 (Screening Concentration in Ground Water) models.

The modeled water residues were incorporated in the DEEM-FCID into the food categories “water, direct, all sources” and “water, indirect, all sources.” To arrive at the total EDWC, the maximum chronic surface water value for the parent was added to the maximum chronic surface water value for the major degradate. For the parent, the chronic aerial spray value (16.8 ppTr) was higher than the ground spray value. For the degradate, the ground spray value was the higher of the two (217.5 ppTr). Adding the 2 values (16.8 + 217.5) results in the total chronic EDWC of 234 ppTr, or 0.234 ppb. This information can be found under docket identification (ID) number EPA-HQ-OPP-2006-0993.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Florasulam is not registered for use on any sites that would result in residential exposure. Therefore, a residential exposure assessment was not conducted.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to florasulam and any other substances and florasulam does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that florasulam has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408 of FFDCA provides that EPA shall apply an additional (“10X”) tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor. In applying this provision, EPA either retains the default value of 10X when reliable data do not support the choice of a different factor, or, if reliable data are available, EPA uses a different additional FQPA safety factor value based on the use of traditional UFs and/or special FQPA safety factors, as appropriate.

2. Prenatal and postnatal sensitivity . There was no evidence of increased susceptibility and no residual uncertainties with regard to pre- and/or postnatal toxicity following in utero exposure to rats or rabbits and pre and/or post-natal exposures to rats.

3. Conclusion . EPA has determined that reliable data show that it would be safe for infants and children to reduce the FQPA safety factor to 1X. That decision is based on the following findings:

i. The toxicity database for florasulam is complete.

ii. There is no indication that florasulam is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

iii. There is no evidence that florasulam results in increased susceptibility following in utero exposure to rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100% CT and tolerance-level residues. Conservative ground and surface water modeling estimates were used. These assessments will not underestimate the dietary exposure and risks posed by florasulam. There are no registered or proposed residential uses of florasulam.

Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the aPAD and cPAD. The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given aggregate exposure. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the MOE called for by the product of all applicable UFs is not exceeded.

1. Acute risk . No acute dietary endpoint was identified; therefore, florasulam is not expected to pose an acute risk.

2. Chronic risk . The chronic dietary exposure analysis included both food and drinking water. The general U.S. population and all population subgroups have risk estimates that are below the level of concern. The most highly exposed population subgroup is children (1-2 years) which utilizes < 1% of the cPAD. The general U.S. population utilizes <1% of the cPAD. There are no residential uses for florasulam that result in chronic residential exposure to florasulam.

3. Short-term risk/Intermediate-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Florasulam is not registered for use on any sites that would result in residential exposure. Therefore, short-term and intermediate-term aggregate risk assessments were not conducted.

4. Aggregate cancer risk for U.S. population . Exposure to florasulam did not result in a treatment-related increase in tumor formation in rats or mice; therefore, florasulam is not expected to pose a cancer risk.

5. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to florasulam residues.

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

Maximum residue levels (MRLs) are established in Canada for residues of florasulam in barley, oats, and wheat grain at 0.01 ppm. No harmonization issues exist since the same tolerance level is recommended for the use in the United States. There are no Codex MRLs.

One comment was received in response to the notice of filing from B. Sachau, 15 Elm St., Florham Park, NJ 07932. The commenter objected to the sale or use of this product and the acceptance of anything except a zero tolerance. The commenter also indicated health implications from this chemical. However, the comment contained no scientific data or evidence to rebut the Agency's conclusion that there is a reasonable certainty that no harm will result from aggregate expose to florasulam, including all anticipated dietary exposure and all other exposures for which there is reliable information. The commenter also questioned the rigor of the safety testing submitted on florasulam; however, the comment was in the form of a conclusory statement and provided no supporting documentation or rationale for the position taken.

Therefore, the tolerance is established for residues of florasulam, N-(2,6-difluorophenyl)-8-fluoro-5-methoxy(1,2,4)triazolo(1,5-c)pyrimidine-2-sulfonamide, in or on barley, grain at 0.01 ppm, barley, hay at 0.05 ppm, barley, straw at 0.05 ppm, oat, grain at 0.01 ppm, oat, forage at 0.05 ppm, oat, hay at 0.05 ppm, oat, straw at 0.05 ppm, rye, grain at 0.01 ppm, rye, forage at 0.05 ppm, rye, straw at 0.05 ppm, wheat, grain at 0.01 ppm, wheat, forage at 0.05 ppm, wheat, hay at 0.05 ppm, and wheat, straw at 0.05 ppm.

This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000) do not apply to this rule. In addition, This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

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

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

• Crop production (NAICS code 111), e.g., agricultural workers; greenhouse, nursery, and floriculture workers; farmers.

• Animal production (NAICS code 112), e.g., cattle ranchers and farmers, dairy cattle farmers, livestock farmers.

• Food manufacturing (NAICS code 311), e.g., agricultural workers; farmers; greenhouse, nursery, and floriculture workers; ranchers; pesticide applicators.

• Pesticide manufacturing (NAICS code 32532), e.g., agricultural workers; commercial applicators; farmers; greenhouse, nursery, and floriculture workers; residential users.

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

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

Under section 408(g) of FFDCA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2006-0072 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk as required by 40 CFR part 178 on or before November 27, 2007.

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2006-0072, by one of the following methods:

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

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

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

In the Federal Register of April 26, 2006 (71 FR 24690 - 24692) (FRL-8063-6), EPA issued a notice pursuant to section 408(d)(3) of the FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 5F7009) by Bayer CropScience, 2 TW Alexander Drive, P.O. Box 12014, RTP, NC 27709. The petition requested that 40 CFR part 180 be amended by establishing a tolerance for combined residues of the herbicide AE 0172747 (tembotrione), 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione, and metabolite (M5), AE 1417268 (2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-4,6-dihydroxy-1,3-cyclohexanedione (expressed as tembotrione equivalents in or on corn, field, grain at 0.02 ppm; corn, field, forage at 0.5 ppm; corn, field, stover at 0.5 ppm; corn, sweet, kernel plus cob with husks removed at 0.03 ppm; corn, sweet, forage at 1.0 ppm; corn sweet, stover at 1.0 ppm; popcorn, grain at 0.01 ppm; Popcorn, stover, 0.25 ppm; cattle, liver at 0.5 ppm; cattle, meat byproducts, except liver at 0.07 ppm; goat, liver at 0.5 ppm; goat, kidney at 0.07 ppm; Hog Liver at 0.5; Hog, Kidney at 0.07 ppm, sheep, kidney at 0.07 ppm; sheep, meat byproducts at 0.5 ppm ; horse, kidney at 0.07 ppm; horse, meat byproducts at 0.5 ppm. There were no comments received in response to the notice of filing.

Based on the aggregate exposure from food and feed commodities resulting from the use-patterns proposed in the petition, the proposed tolerances were revised to account for both tembotrione and its metabolite M5, expressed as tembotrione equilivants. The aggregate risk assessment is discussed in Unit III, below. The reasons for these changes are also explained in Unit V.

For tembotrione, aggregate exposure risk assessments were performed for the following scenarios: acute aggregate exposure (food and drinking water), and chronic aggregate exposure (food and drinking water). Short- and intermediate-term assessments were not performed because there are no registered or proposed residential non-food uses. The chronic Reference Dose (cRfD) will be protective of cancer and non-cancer effects, because tembotrione is classified as “Suggestive Evidence of Carcinogenicity” and EPA's Cancer Assessment Review Committee (CARC ) recommended that a separate quantification of cancer risks is not required, while noting that the progression of non-neoplastic related lesions in rats was biologically plausible by non-genotoxic modes of action for the corneal tumors.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....” These provisions were added to FFDCA by the Food Quality Protection Act (FQPA) of 1996.

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for the petitioned-for tolerance for combined residues of tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy]methyl]benzoyl]-1,3-cyclohexanedione and metabolite (M5), 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-4,6-dihydroxy-1,3-cyclohexanedione, in or on corn, field, grain at 0.02 ppm; corn, field, forage at 0.60 ppm; corn, field, stover at 0.45 ppm; corn, sweet, kernel plus cob with husks removed at 0.04 ppm; corn, sweet, forage at 1.0 ppm; corn, sweet, stover at 1.2 ppm; corn, pop, grain at 0.02 ppm; corn, pop, stover at 0.35 ppm; cattle, liver at 0.40 ppm; cattle, meat byproducts, except liver 0.07 ppm; goat, liver at 0.40 ppm; goat, meat byproducts, except liver at 0.07 ppm; horse, liver at 0.40 ppm; horse, meat byproducts except liver at 0.07 ppm; sheep, liver at 0.40 ppm; sheep, meat byproducts, except liver at 0.07 ppm; poultry, liver at 0.07 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov . The referenced document is available in the docket established by this action, which is described under ADDRESSES , and is identified as EPA-HQ-OPP-2006-0072 in that docket.

For hazards that have a threshold below which there is no appreciable risk, the toxicological level of concern (LOC) is derived from the highest dose at which no adverse effects are observed (the NOAEL) in the toxicology study identified as appropriate for use in risk assessment. However, if a NOAEL cannot be determined, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment. Uncertainty/safety factors (UFs) are used in conjunction with the LOC to take into account uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the acute population adjusted dose (aPAD) and chronic population adjusted dose (cPAD). The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the margin of exposure (MOE) called for by the product of all applicable UFs is not exceeded.

For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk and estimates risk in terms of the probability of occurrence of additional adverse cases. Generally, cancer risks are considered non-threshold. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm .

A summary of the toxicological endpoints for tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione used for human risk assessment is shown in Table 1 of this unit.

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione, EPA considered exposure under the petitioned-for tolerances. EPA assessed dietary exposures from tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-tri fluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione in food as follows:

i. Acute exposure . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

Effects were identified in the toxicological studies for tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione; therefore, a quantitative acute dietary exposure assessment was necessary. The acute analysis assumed 100% crop treated (CT), Dietary Exposure Evaluation Model (DEEM (TM) ) 7.81 default processing factors, and tolerance-level residues for all foods. For drinking water, the entire distribution of estimated daily exposure values from the Pesticide Root Zone Modeling-Exposure Evaluation Analysis Modeling System (PRZM-EXAMS) run was incorporated in the acute probabilistic exposure analyses. The resulting acute dietary (food + water) risk estimates were <32% of the aPAD for the general U.S. population and <77% of the aPAD for all infants (<1 year old, the most highly-exposed population subgroup) at the 95th percentile; less than HED's LOC (100% aPAD). Even though the entire distribution of estimated daily drinking water exposure values was incorporated, this analysis is still conservative since tolerance-level residues, DEEM (TM) 7.81 default processing factors, and 100% CT were assumed. Also, the distribution of estimated daily drinking water exposure still assumes 100% CT and the maximum application rate.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA, 1994-1996, and 1998 Continuing Survey of Food Intake by Individuals. As to residue levels in food, EPA assumed all foods for which there are proposed tolerances were treated and contain tolerance-level residues. A conservative chronic dietary assessment assuming tolerance-level residues, DEEM (TM) 7.81 default processing factors, and 100% CT was also conducted. The highest estimate of chronic surface water exposure (1.05 parts per billion (ppb)) was used for drinking water in this analysis.

iii. Cancer . There was only suggestive evidence of carcinogenic potential based on the observance of squamous cell carcinomas in a rat carcinogenicity study. Quantification of cancer risk is not required. Dietary cancer risk concerns due to long-term consumption of tembotrione residues are adequately addressed by the chronic exposure analysis using the cPAD.

2. Dietary exposure from drinking water . The Agency lacks sufficient monitoring data to complete a comprehensive dietary exposure analysis and risk assessment for tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the environmental fate characteristics of tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione. Further, information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

Based on the PRZM/EXAMS and Screening Concentration in Ground Water (SCI-GROW) models, the estimated environmental concentrations (EECs) of tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione for acute exposures are estimated to be 5.84 parts per billion (ppb) for surface water and 0.0139 ppb for ground water. The EECs for chronic exposures are estimated to be 1.05 ppb for surface water and 0.0139 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 5.84 ppb was used to access the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 1.05 ppb was used to access the contribution to drinking water.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione is not registered for use on any sites that would result in residential exposure.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

Tembotrione, belongs to a class of herbicides (including mesotrione, pyrasulfotole, isoxaflutole and topramezone) that inhibit the liver enzyme 4-hydroxyphenylpyruvate dioxygenase (HPPD). As discussed above, EPA has concluded that the ocular effects caused by these herbicides has limited relevance to humans. Nonetheless, as a worst case scenario, EPA has assessed aggregate exposure to tembotrione based on ocular effects in rats. For similar reasons, a semi-quantitative screening cumulative assessment was conducted using the rat ocular effects and 100% crop treated information. The results of this screening analysis did not indicate a concern. In the future, assessments of HPPD-inhibiting herbicides will consider more appropriate models and cross species extrapolation methods.

For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408 of FFDCA provides that EPA shall apply an additional (“10X”) tenfold margin of safety for infants and children in the case of threshold effects to account for pre- and post-natal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA safety factor. In applying this provision, EPA either retains the default value of 10X when reliable data do not support the choice of a different factor, or, if reliable data are available, EPA uses a different additional FQPA safety factor value based on the use of traditional UFs and/or special FQPA safety factors, as appropriate.

2. Prenatal and postnatal sensitivity . There is evidence of increased susceptibility in rabbit and rat fetuses to in utero exposure to tembotrione compared to the doses for the effects found in maternal animals. In a developmental toxicity study in rabbits, the NOAEL of 1 milligram per kilogram of body weight per day (mg/kg bw/day) was based on decreased growth and/or delayed development of the skeleton and increased incidences of skeletal variations and anomalies in fetuses seen at a LOAEL of 10 mg/kg/day. This LOAEL is ten-fold lower than the dose resulting in maternal toxicity (100 mg/kg/day, few or no feces, late abortion, decreased body weight and food consumption). In a rat developmental toxicity study, increased skeletal variations (e.g., delayed ossifications) and other fetal effects (decreased fetal body weights and an increased number of runts) occurred at a dose of 25 mg/kg/day (the lowest dose tested), which is lower than the 125 mg/kg bw dose that caused marginal maternal toxicity (decreased body-weight gains and food consumption). In a rat developmental neurotoxicity study (DNT), decreased post-weaning body weight (males), decreased acoustic startle response and brain morphometric changes were seen in rat fetuses at a dose of 0.8 mg/kg/day (the lowest dose tested) which was lower than the dose of 16.3 mg/kg/day at which maternal toxicity occurred (cornel opacity during lactation).

Although, these studies provide evidence of increased susceptibility following pre- and post-natal exposures, the concern for increased susceptibility is low for several reasons. First, a well characterized NOAEL (with a sufficient margin from the LOAEL) protecting fetuses has been established in the rabbit prenatal study. Also, the prenatal developmental NOAELs or LOAELs for both the rabbit and rat studies are approximately 12 to 30-fold higher than the LOAEL used for the acute RfD. Although there were some marginal effects reported in the offspring in the rat 2-generation reproduction study at 1.4 mg/kg/day (the lowest dose tested), these parameters (ocular, decreased absolute brain weight, preputial separation) were also evaluated at the lower dose in the rat DNT study but were not found at the low dose tested (0.8 mg/kg/day). Therefore, a NOAEL has been identified for these effects. Other effects indicative of neurotoxicity (altered brain morphometrics, decrease in auditory startle response) were seen in the rat developmental neurotoxicity study at the lowest dose tested. The response for brain morphometrics seen at termination is considered to be marginal or equivocal since the changes were small and no clear dose response was observed. The decreased acoustic startle response was not found in young pups (post-natal day 22) but only observed in adult rats (post-natal day 60) and was statistically significant at the mid and high dose but not at the lowest dose tested.

3. Conclusion . Given the above-described data on pre- and post-natal effects, the only significant uncertainty concerns the acute RfD due to the failure to identify a NOAEL for the brain morphometric alterations found in the rat DNT. The LOAEL in the DNT is lower than the NOAEL and the LOAEL from the rabbit and rat developmental studies, and thus is the lowest dose reflective of potential acute effects. Because of the uncertainty as to the NOAEL for the acute effects (brain morphometric alterations) seen at 0.8 mg/kg/day in the DNT, EPA has retained the additional 10X FQPA safety factor in calculating the acute RfD. This is a conservative step given the equivocal nature of the brain morphometric alterations seen at the LOAEL in the DNT.

EPA has determined that reliable data show that it would be safe for infants and children to reduce the FQPA safety factor to 1X for assessing chronic risk. That decision is based on the following findings:

i. For the reasons described in Unit III.D.2., the toxicity database for tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione is adequate to assess chronic risk.

ii. Despite evidence of sensitivity in pre- and post-natal studies, as detailed in Unit III.D.2., the chronic RfD based on an adult animal study (chronic rat study) is considered to be protective of the chronic offspring toxicity found in the rat DNT and 2-generation reproduction studies. The 2-generation reproduction study did not identify a NOAEL for the chronic effects seen on brain weight and preputial separation but a NOAEL can be characterized from the DNT, as discussed above, at 0.8 mg/kg/day. The NOAEL used to set the chronic RfD is 20-fold lower than this 0.8 mg/kg/day dose and is not based on an effect as to which the data have raised sensitivity concerns. Similarly, the chronic rat study and the NOAEL from that study are protective of the chronic effects seen in the DNT study and the other chronic effects found in the 2-generation reproduction study. The endpoints of concern for the chronic RfD are based on ocular toxicity, body weight decreases, kidney toxicity, and changes in the clinical chemistry parameters. Target organ toxicity such as ocular toxicity, kidney toxicity, body weight changes and nervous system effects were assessed in the young through pre- and post-natal exposure to tembotrione in the 2-generation reproduction study and the DNT study. In those studies, these effects were observed at higher doses in the young than in the adults in the chronic rat study. Therefore, the chronic RfD is considered to be protective of effects in the young. As noted, the NOAEL (0.04 mg/kg/day) selected for the chronic RfD is 20-fold lower than the dose at which developmental and neurological effects were observed in any study; it is also 20-fold lower than the NOAEL for other chronic effects seen in the young.

iii. There are no residual uncertainties identified in the exposure data bases. The dietary food exposure assessments were performed based on 100% CT and tolerance-level residues of tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione.

Safety is assessed for acute and chronic risks by comparing aggregate exposure to the pesticide to the aPAD and cPAD. The aPAD and cPAD are calculated by dividing the LOC by all applicable UFs. For linear cancer risks, EPA calculates the probability of additional cancer cases given aggregate exposure. Short-, intermediate-, and long-term risks are evaluated by comparing aggregate exposure to the LOC to ensure that the MOE called for by the product of all applicable UFs is not exceeded.

1. Acute risk . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione will occupy 77% of the aPAD for the population group (infants (<1 year old) receiving the greatest exposure.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione from food and water will utilize 48% of the cPAD for the population group (children 3 to 5 years old). There are no residential uses for tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione that result in chronic residential exposure to tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione.

3. Short-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which does not exceed the Agency's level of concern.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which does not exceed the Agency's level of concern.

5. Aggregate cancer risk for U.S. population . Dietary cancer risk concerns due to long-term consumption of tembotrione residues are adequately addressed by the chronic exposure analysis using the cPAD.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione residues.

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

There is neither a Codex proposal, nor Canadian or Mexican limits for residues of tembotrione and its metabolites in or on crops or livestock commodities.

There were no comments received on the Notice of Filing of the pesticide petition.

Therefore, the tolerance is established for combined residues or residues of tembotrione, 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-(trifluoroethoxy)methyl]benzoyl]-1,3-cyclohexanedione, metabolite; 2-[2-chloro-4-(methylsulfonyl)-3-[(2,2,2-trifluorethoxy)methyl]benzoyl]-4,6-dihydroxycyclohexanedione, in or on corn, field, grain at 0.02 ppm; corn, field, forage at 0.60 ppm; corn, field, stover at 0.45 ppm; corn, sweet, kernel plus cob with husks removed at 0.04 ppm; corn, sweet, forage at 1.0 ppm; corn sweet, stover at 1.2 ppm; corn, pop, grain at 0.02 ppm; corn, pop, stover at 0.35 ppm; cattle, liver at 0.40 ppm; cattle, meat byproducts, except liver 0.07 ppm; goat, liver at 0.40 ppm; goat, meat byproducts, except liver at 0.07 ppm; horse, liver at 0.40 ppm; horse, meat byproducts except liver at 0.07 ppm; sheep, liver at 0.40 ppm; sheep, meat byproducts, except liver at 0.07 ppm; poultry, liver at 0.07 ppm.

This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000) do not apply to this rule. In addition, This rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

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

FR Doc. 07-3784 of August 3, 2007 (72 FR 43412) contained technical errors that this notice serves to identify and correct. The first involves the construction of the 2004 skilled nursing facility (SNF) market basket update. In the SNF prospective payment system (PPS) proposed rule for fiscal year (FY) 2008 (72 FR 25552, May 4, 2007), we proposed to discontinue the previous, 1997-based market basket's use of the Producer Price Index (PPI) for Industrial Chemicals, in favor of using a blended PPI composed of the PPIs for soap and other detergent manufacturing (North American Industrial Classification System (NAICS) 325611), polish and other sanitation good manufacturing (NAICS 325612), and all other miscellaneous chemical product and preparation manufacturing (NAICS 325998) in the 2004-based market basket, which we believed would better reflect SNF purchasing patterns. In the FY 2008 SNF PPS final rule, we finalized this proposal “* * * to revise the market basket to reflect more appropriate, industry-specific price proxies (such as the blended compensation and chemical price proxies)” (72 FR 43426, 43436).

However, in performing the actual calculations in the final rule, we inadvertently proxied the chemicals cost weight by the PPI for Industrial Chemicals rather than by the appropriate blended chemical price proxy. We note that this error did not affect the final market basket update factor of 3.3 percent, but did affect the labor-related share. The corrected labor-related share is 70.249, which is slightly higher than the 70.152 figure published in the FY 2008 SNF PPS final rule. Accordingly, in this notice, we are republishing corrected versions of Tables 6, 7, 10, 13, and 14 (as well as revising the corresponding portions of the final rule's preamble text) in order to reflect the final, corrected labor-related share.

In addition, we have determined that in the process of developing the most recent hospital wage index, two inpatient hospital providers with wage data that belonged in the Hartford-West Hartford-East Hartford, CT core-based statistical area (CBSA) were inadvertently included in rural Connecticut instead. Accordingly, in Table 8, we are revising the wage index value for CBSA Code 25540 (Hartford-West Hartford-East Hartford, CT) from 1.0937 to the corrected value of 1.0930. Similarly, in Table 9, we are revising the wage index value for CBSA Code 7 (rural Connecticut) from 1.1283 to the corrected value of 1.1711. As we are revising only a single entry in each of these two tables, we are not republishing Tables 8 and 9 in their entirety in this notice; however, we note that the corrected versions of both tables are available online on the SNF PPS Web site, at http://www.cms.hhs.gov/SNFPPS/04_WageIndex.asp . Moreover, we note that the corrected version of Table 14 that we are republishing in this notice also reflects these corrected values. We are also correcting a typographical error in the final rule's version of that table, which had inadvertently displayed the wage data update for rural New England incorrectly as a negative value.

In FR Doc. 07-3784 (72 FR 43412), make the following corrections:

1. On page 43421, Table 6 is corrected to read as follows:

2. On page 43422, Table 7 is corrected to read as follows:

3. On page 43424, third column, first full paragraph, line 7, the figure “$29,758” is corrected to read “$29,755”.

4. On page 43424, Table 10 is corrected to read as follows:

5. On page 43430, Table 13 is corrected to read as follows:

6. On page 43434, third column, final paragraph, line 19, the figure “9.6 percent” is corrected to read “9.5 percent”.

7. On page 43435, Table 14 is corrected to read as follows:

8. On page 43436, third column, lines 4-5, the figure “9.6 percent” is corrected to read “9.5 percent”.

9. On page 43446, the entry of “1.0937” that is displayed in Table 8 as the wage index value for CBSA Code 25540 (Hartford-West Hartford-East Hartford, CT) is corrected to read “1.0930”.

10. On page 43462, the entry of “1.1283” that is displayed in Table 9 as the wage index value for CBSA Code 7 (rural Connecticut) is corrected to read “1.1711”.

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a notice such as this take effect in accordance with section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). We also ordinarily provide a 30-day delay in the effective date of the provisions of a notice in accordance with section 553(d) of the APA (5 U.S.C. 553(d)). However, we can waive both the notice and comment procedure and the 30-day delay in effective date if the Secretary finds, for good cause, that a notice and comment process is impracticable, unnecessary or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice.

We find for good cause that it is unnecessary to undertake notice and comment rulemaking because this notice merely provides technical corrections to the regulations. We are not making substantive changes to our payment methodologies or policies, but rather, are simply implementing correctly the payment methodologies and policies that we previously proposed, received comment on, and subsequently finalized. The public has already had the opportunity to comment on these payment methodologies and policies, and this correction notice is intended solely to ensure that the FY 2008 SNF PPS final rule accurately reflects them. Therefore, we believe that undertaking further notice and comment procedures to incorporate these corrections into the update notice is unnecessary and contrary to the public interest.

Further, we believe a delayed effective date is unnecessary because this correction notice merely corrects inadvertent technical errors. The changes noted above do not make any substantive changes to the SNF PPS payment methodologies or policies. Moreover, we regard imposing a delay in the effective date as being contrary to the public interest. We believe that it is in the public interest for providers to receive appropriate SNF PPS payments in as timely a manner as possible and to ensure that the FY 2008 SNF PPS final rule accurately reflects our payment methodologies, payment rates, and policies. Therefore, we find good cause to waive notice and comment procedures, as well as the 30-day delay in effective date.

In Title 44 of the Code of Federal Regulations, revised as of October 1, 2006, on page 339, in § 64.4, paragraph (b), in the fourth sentence, remove the words “within the newly-month period,” and add the words “within the newly-acquired area the requirements of § 60.3(b) of this subchapter. During the six month period,” in their place.

In Title 47 of the Code of Federal Regulations, Parts 0 to 19, revised as of October 1, 2006, on page 45, in § 0.406, in paragraph (b)(2), the eighth sentence, beginning with “Additional procedures applicable . . .”, is removed and a sentence is added following the sixth sentence to read as follows:

In Title 48 of the Code of Federal Regulations, Chapter I (Parts 52 to 99), revised as of October 1, 2006, on page 80, in section 52.215-15, correct paragraph (b) and the source note to read as follows:

In Title 48 of the Code of Federal Regulations, Chapters 15 to 28, revised as of October 1, 2006, on page 185, reinstate section 1807.7201, and on page 204, reinstate section 1817.7300 to read as follows:

On May 3, 2007, the Pipeline and Hazardous Materials Safety Administration (PHMSA, we) published a final rule under Docket No. PHMSA-2005-23141 (HM-215F) to amend the Hazardous Materials Regulations (HMR; 49 CFR Parts 171-180) by revising and consolidating the requirements applicable to the use of the International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air, the International Maritime Dangerous Goods Code, the Canadian Transport of Dangerous Goods Regulations, and the International Atomic Energy Agency Safety Standards Series: Regulations for the Safe Transport of Radioactive Material. The final rule is effective as of October 1, 2007.

The Dangerous Goods Advisory Council (DGAC), an organization of industry stakeholders, filed an appeal to the May 3 final rule on June 4, 2007. We are addressing most elements of DGAC's appeal in a separate response, which will be included in the docket for this rulemaking. In the meantime, we are issuing this correction to address certain errors that DGAC identified in the text of the May 3 final rule.

The May 5 final rule added a new § 171.22, which provides authorization and conditions for the use of international standards and regulations for the commercial transportation of hazardous materials to, from, or within the United States. Paragraph (g) of this section requires shipments to conform to applicable HMR requirements, including the general packaging requirements in §§ 173.24 and 173.24a and the reuse, reconditioning, and remanufacture requirements in § 173.28. The notice of proposed rulemaking issued under this docket on January 27, 2006 (71 FR 4544) proposed to apply these requirements “for export shipments”. The phrase “for export shipments” was inadvertently dropped from the May 3 final rule. It was not our intention to require compliance with §§ 173.24, 173.24a, or 173.28 for import shipments. Therefore, in this final rule, we are reinserting the phrase “for export shipments” in paragraphs (g)(5) and (g)(6) of § 173.22.

The DGAC appeal also identifies a typographical error in § 171.12(a)(2). Use of the term “subpart” in § 171.12(a)(2) is incorrect. This paragraph should read: “When the provisions of this subchapter require a DOT specification or UN standard packaging to be used for transporting a hazardous material, a packaging authorized by the Transport Canada TDG Regulations may be used, subject to the limitations of this part, and only if it is equivalent to the corresponding DOT specification or UN packaging (see § 173.24(d)(2) of this subchapter) authorized by this subchapter.” We are correcting the typographical error in this final rule.

This final rule is published under authority of Federal Hazardous Materials Transportation Law (Federal Hazmat Law; 49 U.S.C. 5101 et seq. ). Section 5103(b) of Federal Hazmat Law authorizes the Secretary of Transportation to prescribe regulations for the safe transportation, including security, of hazardous materials in intrastate, interstate, and foreign commerce. This final rule corrects errors in a final rule published in the Federal Register on May 3, 2007.

This final rule is not considered a significant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget. This rule is not significant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034). There are no cost impacts associated with this final rule.

This final rule has been analyzed in accordance with the principles and criteria in Executive Order 13132 (“Federalism”). This final rule does not adopt any regulation that: (1) Has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; (2) imposes substantial direct compliance costs on State and local governments; or (3) preempts state law. Therefore, preparation of a federalism assessment is not warranted.

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this final rule does not have tribal implications, does not impose substantial direct compliance costs on Indian tribal governments, and does not preempt tribal law, the funding and consultation requirements of Executive Order 13175 do not apply.

I certify this final rule will not have a significant economic impact on a substantial number of small entities. This rule corrects a previously issued final rule by reinserting a dropped phrase and correcting a typographical error. There are no cost impacts associated with this rule.

This rule does not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It does not result in costs of $120.7 million or more to either State, local, or tribal governments, in the aggregate, or to the private sector, and is the least burdensome alternative that achieves the objective of the rule.

There are no new information collection requirements in this final rule.

There are no environmental impacts associated with this final rule.

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

On January 31, 2007, PHMSA, in cooperation with the Federal Aviation Administration (FAA), issued a final rule under Docket No. RSPA-04-17664 (HM-224B) enhancing the safety standards for transportation by air of compressed oxygen, other oxidizing gases and chemical oxygen generators (72 FR 4442). Specifically, the January 31 final rule:

(1) Requires cylinders of compressed oxygen and other oxidizing gases and packages of chemical oxygen generators to be placed in an outer packaging that meets certain flame penetration and thermal resistance requirements when transported aboard an aircraft;

(2) Revises the pressure relief device (PRD) setting limit on cylinders of compressed oxygen and other oxidizing gases transported aboard aircraft;

(3) Limits the types of cylinders authorized for transporting compressed oxygen aboard aircraft; and

(4) Converts most of the provisions of an oxygen generator approval into requirements in the HMR.

The following organizations submitted appeals to the January 31 final rule, in accordance with 49 CFR part 106: Air Canada (AC); Barlen and Associates, Inc. (Barlen); PSI Plus, Inc. (PSI); and United Airlines, Inc. (United). Delta Airlines (Delta) also submitted a letter expressing its general support for United's formal appeal. The appellants based their appeals on several aspects of the January 31 final rule, most notably, the effective date of certain requirements in the rule, cost and availability of the required outer packaging, marking requirements, and thermal resistance testing. We also received requests for clarification of certain requirements of the January 31 final rule. The Good View Trading Company (GVT) also expressed concerns about the impact the January 31 final rule will have on the current exceptions for live fish transported aboard aircraft.

In this final rule, we are granting the request to delay the mandatory effective date from October 1, 2007 until October 1, 2008 to require a new limit on the pressure relief device (PRD) settings on cylinders containing compressed oxygen or other oxidizing gases when transported aboard aircraft. We are clarifying the thermal resistance test methods for packagings for oxygen cylinders and oxygen generators in Appendix D to part 178. We are granting the request to include DOT specification 3E and 39 cylinders among the types of cylinders authorized for the transportation of compressed oxygen and other oxidizing gases aboard aircraft. In addition, we are providing a marking option to ensure easier identification of cylinders equipped with the new PRD and outer packagings meeting the flame penetration and thermal resistance requirements. The appeals and issues of the appellants and other concerned parties are discussed in detail below.

The January 31 final rule amended the HMR to require cylinders of compressed oxygen and other oxidizing gases and chemical oxygen generators to be transported in an outer packaging that: (1) Meets the same flame penetration resistance standards as required for cargo compartment sidewalls and ceiling panels in transport category airplanes; and (2) provides certain thermal protection capabilities so as to retain its contents during an otherwise controllable cargo compartment fire. The outer packaging standard adopted in the January 31 final rule addresses two safety concerns: (1) Protecting a cylinder and an oxygen generator that could be exposed directly to flames from a fire; and (2) protecting a cylinder and an oxygen generator that could be exposed indirectly to heat from a fire. These performance requirements must remain in effect for the entire service life of the outer packaging.

Under the January 31 final rule, an outer packaging for a cylinder containing compressed oxygen or another oxidizing gas and a package containing an oxygen generator must meet the standards in Part III of Appendix F to 14 CFR part 25, Test Method to Determine Flame Penetration Resistance of Cargo Compartment Liners. An outer packaging's materials of construction must prevent penetration by a flame of 1,700 °F for five minutes, in accordance with Part III of Appendix F, paragraphs (a)(3) and (f)(5) of 14 CFR part 25. A method for thermal resistance testing of packagings for oxygen cylinders and oxygen generators was added by the January 31 final rule under a new Appendix D to part 178 of the HMR. To ease understanding of and compliance with the flame penetration test requirements, in this final rule we are adding a new Appendix E to part 178, which will include the entire test procedure. This will eliminate the necessity for persons performing the flame penetration test to refer to the requirements in Appendix F to 14 CFR part 25.

In its appeal, United expresses concern about several aspects of these provisions, including international repercussions, risk assessment and analysis, effects of this rulemaking on travelers requiring medical oxygen, and the cost basis for the packaging required by the January 31 final rule. Specifically, United contends that no test data or other substantiation of compliance with requirements for outer packaging by any packaging manufacturer was placed in the public docket. United also states that although the January 31 final rule indicates at least one packaging manufacturer appears to have addressed the flame penetration and thermal penetration standard and is able to produce the required packaging, neither this company nor any other has actually produced it. In addition, United contends that because the packaging required by the January 31 final rule does not yet exist, the cost estimates made by the agency are unreliable.

We are not persuaded that the required packagings will be unavailable or that we have underestimated the cost of bringing them to market. PHMSA issued the January 31 final rule only after reviewing test data and other materials substantiating the development of packagings meeting the performance standard. Based on consultation with companies that are able to produce similar packaging and reviewing their packaging prototypes, supporting test documentation and cost estimates, we believe the required packaging will be available in sufficient time for the affected parties to comply with this requirement. (Because of its confidential proprietary nature, we did not post this documentation in the public docket for this rulemaking.) PHMSA and FAA intend to closely monitor the availability of the required packaging as the effective date of this provision approaches and will consider an extension of the compliance date for this requirement if it is determined that a sufficient supply of the required outer packaging is not available.

Likewise, the fact that the required packaging is not yet commercially available does not make the cost estimates for this rulemaking unreasonable. As referenced in the January 31 final rule, packaging manufacturers provided estimates of costs for the existing ATA specification 300 packagings and the new outer packaging. We utilized these estimates, in addition to our own research, in the regulatory evaluation (available for review in the public docket for this rulemaking). Although some of the figures provided by the commenters were slightly higher than ours, the differences were not significant. Accordingly, we believe that our estimate of a total cost of $10.8 million ($7.6 million discounted to present value) over 15 years, for the transport of oxygen cylinders, and $27.0 million ($16.9 million discounted to present value) over 15 years, for the costs associated with the transport of chemical oxygen generators, are reasonable estimates of the costs of this rulemaking despite the current lack of an available outer packaging in an after-market condition.

United also refers to the statement in the January 31 final rule that DOT intends to submit a paper to the International Civil Aviation Organization (ICAO) Dangerous Goods Panel to propose that the ICAO Technical Instructions be amended consistent with the requirements of the packaging required by the January 31 rulemaking. United requests that a copy of such a U.S. proposal be placed in the public docket for HM-224B, and that the views of other air carriers in the international community be considered. United states that PHMSA should collect input from the international community before concluding rulemaking action in this docket because of the international aviation environment and PHMSA's expressed stance on the benefits of global harmonization. United also recommends that if the new requirements are adopted internationally through ICAO, the compliance dates for affected carriers should coincide to avoid unnecessary compliance complexity in the aviation industry.

We agree that the international community should be considered when initiating any regulatory change that could potentially affect international commerce. As indicated in the January 31 final rule, it was PHMSA's intention to submit a working paper pertaining to this rulemaking for discussion at the meeting of the ICAO Dangerous Goods Panel (DGP). PHMSA submitted a paper to the DGP Working Group of the Whole (held April 30 to May 4, 2007) which provided information relative to the amendments to the HMR to enhance the requirements for the transportation of compressed oxygen, other oxidizing gases and chemical oxygen generators on aircraft. The working paper can be viewed on the public ICAO Web site at: http://www.icao.int/anb/FLS/DangerousGoods/FLSDG.cfm. A copy of this working paper has also been placed in the public docket for this rulemaking. However, we are not prepared to defer this rulemaking while changes to international standards are considered. As we explained in the January 31 final rule, the risk of an unintentional actuation of an oxygen generator or a cylinder containing oxygen or another oxidizing gas during an aircraft fire is a serious safety risk that we believe must be immediately addressed, without waiting for the outcome of international deliberations.

United also contends that the final rule is inconsistent with PHMSA's expressed commitment to promote risk-based, data-driven, and cost-effective standards. United asserts that PHMSA justified the January 31 rulemaking on a worst-case scenario that was not supported by actual data in the record and that affected parties therefore should be given time to review and comment on such data. As explained in the January 31 final rule, we have utilized a risk-based approach to the air transportation of compressed oxygen cylinders and oxygen generators since the tragic events of the ValuJet Airlines crash in 1996. FAA has established through testing that cylinders of compressed oxygen release their contents at temperatures well below those that aircraft cargo compartment liners and structures are designed to withstand. When the surface temperature of a cylinder of compressed oxygen reaches approximately 300 °F, the increase in internal pressure causes the cylinder's pressure relief device to open and release oxygen. The risk that such a release could vent directly into a fire significantly increases the risks posed by aircraft fires. FAA also found that use of an outer packaging specifically designed to provide both thermal protection and flame penetration may significantly lengthen the time a cylinder will retain its contents when exposed to fire or heat. Therefore, our rationale for this January 31 final rule is a continuation of our ongoing risk-based approach and is centered on the conclusions drawn from the “Evaluation of Oxygen Cylinder Overpacks Exposed to Elevated Temperatures” conducted by FAA (available for review in the public docket for this rulemaking).

United also contends that PHMSA did not adequately address the potential of the new packaging requirements to restrict air travel by individuals who need compressed oxygen to travel. It states that additional packaging cost and other related costs could dissuade air carriers from providing this service. The commenter also states that although PHMSA requested information on this scenario in the January 31 final rule, the impact could not be considered sufficiently without adequate and reliable information on the cost of the required packaging.

PHMSA is acutely aware of the specific needs of individuals who require compressed oxygen to travel, and has maintained ongoing dialogue with FAA and other agencies in an attempt to minimize requirements that may restrict their travel. For example, PHMSA and FAA have partnered with the Office of the Secretary of Transportation to develop a rulemaking that proposes to provide greater accommodations for persons with respiratory disabilities, and provide passengers free in-flight medical oxygen in accordance with applicable safety rules. See “Nondiscrimination on the Basis of Disability in Air Travel—Medical Oxygen and Portable Respiration Assistive Devices,” Docket No. OST-2005-22298, 70 FR 53108 (September 7, 2005), 70 FR 61241 (October 21, 2005).

The January 31 final rule complements the goal of providing a safer environment for people with disabilities by requiring cylinders of compressed oxygen and other oxidizing gases and packages of chemical oxygen generators to be placed in an outer packaging that meets certain flame penetration and thermal resistance requirements when transported aboard an aircraft. We note that the current regulations specified in § 175.501 of the HMR allow for the use of oxygen by passengers in the aircraft cabin and provide for the stowage of a combined total of six cylinders of compressed oxygen, which, under the conditions specified in this section, do not require that they be placed in the new outer packaging.

For the reasons cited above, the appeal to the requirement that an outer packaging for a cylinder containing compressed oxygen or another oxidizing gas and a package containing an oxygen generator must meet the standards adopted in the January 31 final rule is denied.

The January 31 final rule amended the HMR by adding a thermal resistance test for packagings for oxygen cylinders and oxygen generators in a new appendix (Appendix D) to part 178. United recommends that PHMSA clarify the test method described in Paragraph 4.1 of this appendix, which states, “It is recommended that the cylinder be closed at ambient temperature and configured as when filled with a valve and pressure relief device. The oxygen generator must be filled and may be tested with or without packaging.” United indicates that it understands from discussions that took place with PHMSA and its trade association after publication of the January 31 final rule that PHMSA did not intend to require testing of the outer packaging with inner receptacles containing hazardous materials. If an alternative filling material was intended, the commenter requests PHMSA clarify this portion of the appendix as applicable. United suggests that “any alternate material should exhibit comparable heat-absorbing properties of compressed oxygen in the cylinder, or oxidizing solid in the generator.” If, however, oven testing with packagings containing hazardous materials is required, the commenter is uncertain there is a testing facility capable of performing such a test.

In publishing the January 31 final rule, it was our intention to permit the thermal resistance test to be conducted on an oxygen cylinder that is either empty or filled with nitrogen. It was also our intention that an oxygen generator must be tested completely filled with its oxidizing agent. Therefore, in this final rule, we are granting United's request to clarify the test method described in Appendix D to Part 178. In addition, we are also providing an alternative to the use of thermocouples specified in the test methods of Appendix D to part 178.

United also expresses concern that the test protocol for outer packaging required by the January 31 final rule will change in the near future. For example, the commenter points out the footnote in the preamble at page 4444 of the January 31 final rule:

United states that the investment by itself and other air carriers in the newly required outer packaging is too substantial for the test performance temperature to be addressed in such vague terms. The commenter requests clarification of this statement and an assessment of the probability that it will result in a revision to the performance standard for outer packaging by, or relatively soon after, the October 1, 2007 mandatory compliance date.

We understand the commenter's concern regarding the footnote on page 4444 of the January 31 final rule which references FAA's ongoing evaluation of other non-ozone-depleting suppression agents that could eventually be used in cargo compartments. By including the footnote, our intention was to provide additional information about testing agents currently under consideration which may affect test performance temperatures. For clarification, FAA's halon replacement program was designed to develop minimum performance standards (MPS) for the various extinguishing systems used aboard aircraft. These MPS would establish a baseline test for new agents to demonstrate that the agent had comparable fire-fighting effectiveness to that of Halon 1211 and 1301. FAA has developed the MPS for hand-held fire extinguishers, waste bins, and cargo compartments. In addition, three halocarbon agents have been approved for use in hand-held fire extinguishers. While alternative agents are currently being evaluated, none have been approved for use on aircraft. Further, the FAA informs us that it has no plans at present to mandate the use of halon replacements. Therefore, we do not anticipate that a revision to the test protocol for outer packaging required by the January 31 final rule will occur in the near future.

The January 31 final rule revised the HMR to require a new limit on the pressure relief device (PRD) settings on cylinders containing compressed oxygen or other oxidizing gases when transported aboard aircraft. To ensure the cylinder contents are not released into an aircraft cargo compartment in the event of a fire, we amended the HMR to limit the PRD to a setting that will prevent it from releasing at temperatures the cylinder will experience while protected by the outer packaging. We also amended the HMR to require cylinders containing oxidizing gases, including oxygen, be equipped with PRDs that have a set pressure equal to the cylinder test pressure with allowable tolerances of −10 to plus zero percent. The effective date of this requirement for cylinders containing compressed oxygen and oxidizing gases was established in the January 31 final rule as the first requalification test due after October 1, 2007.

United requests that PHMSA delay the mandatory effective date from October 1, 2007 until October 1, 2008 in order to allow it and other air carriers to come into compliance with this requirement of the January 31 final rule. United states that “after cylinder manufacturers develop and implement new designs, conduct any required testing, complete the detailed approval process, and [sic] manufacture and distribute the new PRDs, it then will be necessary to transport these cylinders as air cargo to assure global distribution to all of United's facilities where replacements might need to be installed, and to accommodate breathing-oxygen needs for impaired passengers as part of United's current effort to serve such customers.” In addition, United states that procedures for oxygen cylinder maintenance and quality assurance programs must be revised, prompting additional training, testing and certification of both employees and their supervisors, and that “in addition to all the cylinders that may come due for periodic retest as early as October 1, 2007, it is assumed that any new oxygen cylinders purchased as replacement parts will need to be equipped with the new PRD as of that date.” United states the demand for PRDs will likely peak around the October 1, 2007 effective date specified in the January 31 final rule, and it foresees an inadequate supply of PRDs. The commenter further states that it has over 6,500 cylinders affected by this rule and, after discussions with the manufacturers of these cylinders and external repair facilities, it is concerned that bringing its cylinders into compliance with this requirement by the January 31 final rule effective date will not be achievable.

We accept the likelihood that more time may be necessary to allow for the testing, approval, distribution, and training associated with this requirement of the January 31 final rule. Therefore, we are extending the effective date for this provision from October 1, 2007 until October 1, 2008. By this revised date, the HMR requires a new limit on the PRD settings on cylinders containing compressed oxygen or other oxidizing gases when transported aboard aircraft. The effective date of this requirement for cylinders containing compressed oxygen and oxidizing gases is established as the first requalification test due after October 1, 2008.

In the January 31 final rule, we added a new § 173.168 that would: (1) Specify the means to be incorporated into an oxygen generator to prevent inadvertent actuation; (2) require the oxygen generator to be capable of withstanding a 1.8 meter drop with no loss of contents or actuation; and (3) specify packaging, shipping paper, and marking requirements for those oxygen generators that are installed in a piece of equipment sealed or otherwise packaged so it is difficult to determine if an oxygen generator is present. The effective date of these new requirements is October 1, 2007, except for the packaging requirement in paragraph (d) of § 173.168, which becomes effective on September 30, 2009. We received a request for clarification regarding these effective dates. One commenter requests clarification as to whether the requirements prior to the January 31 final rule pertaining to chemical oxygen generators, particularly approvals, were intended to remain in effect until the effective date of the January 31 final rule. For clarification, our intention in the January 31 final rule was for the current requirements concerning chemical oxygen generators, including approvals, to remain in effect until the overall effective date of the January 31 final rule. A similar issue was raised by the same commenter concerning the additional requirements for shipment of nonliquefied (permanent) and liquefied compressed gases in specification cylinders found in §§ 173.302a and 173.304a, respectively. The commenter asks whether it was PHMSA's intention to continue current outer packaging requirements for non-liquefied (permanent) and liquefied compressed gases in specification cylinders until the effective dates specified in these revised sections.

The answer is yes. It was also our intention in the January 31 final rule that the current requirements for the shipment of nonliquefied and liquefied compressed gases in specification cylinders remain in effect until the effective dates specified under these revised sections. In this final rule, we are revising the amendments to §§ 173.302a and 173.304a to clarify these effective dates and are re-designating them under new paragraph (f) of § 173.302—“Filling of cylinders with non-liquefied (permanent) compressed gases—” and new paragraph (f) of § 173.304—“Filling of cylinders with liquefied compressed gases—” respectively, to provide a more logical, user-friendly format. We are also revising § 173.301 to direct the user to these new paragraphs.

United also urges PHMSA to take further steps to ensure easier identification of cylinders equipped with the new PRD and outer packagings meeting the flame penetration and thermal resistance requirements. In its appeal, the commenter requests that PHMSA require manufacturers to distinguish between the modified cylinders, as well as the modified outer packaging, through the use of a uniform marking requirement. United asserts that such a marking requirement would have the benefit of clarifying DOT's jurisdiction over the manufacturers, specifically with respect to compliance with testing, hazmat employee training, and record-keeping provisions. In addition, United states that a consistent visible mechanism will allow its employees and DOT enforcement officials to determine whether a UN or ATA Specification 300 outer packaging meets the new rule versus prior requirements, and to identify with reliable ease and certainty which DOT and UN cylinders are authorized to transport specific hazardous materials by air. United stresses the importance of such a provision because of the common airline industry practice of conducting code share operations and participating in loaned parts programs.

PHMSA acknowledges the commenters' concerns that current labeling and marking requirements may not fully identify cylinders equipped with the new PRD and outer packagings meeting the flame penetration and thermal resistance requirements of the January 31 final rule. However, because we did not propose any additional marking or labeling requirements in the NPRM, we cannot formally adopt a uniform marking or labeling requirement in this final rule. Any new marking or labeling requirement must be proposed in a future rulemaking to allow for public comment. Instead, PHMSA and FAA have developed a voluntary marking that may be affixed to an outer packaging meeting the flame penetration and thermal resistance requirements of the January 31 final rule to indicate compliance with these provisions of the regulations. The marking is as follows:

We emphasize that this marking is not a requirement. We will consider proposing this marking as a uniform marking requirement in a future rulemaking, and, if this or some other marking is adopted, it would be incorporated into the HMR as an acceptable indication that the outer packaging meets the flame penetration and thermal resistance requirements and is in compliance with the requirements of the January 31 final rule.

The January 31 final rule revised the HMR to limit cylinders authorized for the transportation of compressed oxygen and other oxidizing gases aboard aircraft to DOT specifications 3A, 3AA, 3AL, and 3HT in order to minimize numerous PRD setting requirements for oxygen cylinders aboard aircraft.

Barlen comments that DOT 39 and DOT 3E cylinders are safer than 3AL cylinders and questions why these cylinders were eliminated in the January 31 final rule. PSI, a manufacturer of high-pressure steel DOT 39 and DOT 3E cylinders, requests reconsideration of the requirement to limit cylinders authorized for the transportation of compressed oxygen aboard aircraft and a delay in implementation of the requirements of the January 31 final rule. This commenter states the majority of the cylinders it manufactures are sold to companies producing gas mixtures used for gas calibration equipment and medical devices, such as blood gas analyzers. PSI notes that although DOT 3A and DOT 3AA cylinders are allowed in the January 31 final rule, these cylinders are not used for calibration gas mixtures because of their excessive weight. The commenter asserts that the requirements in the January 31 final rule would effectively ban the use of the only cylinders it manufactures. PSI adds that testing has shown steel DOT 39 and DOT 3E cylinders will survive fires for longer periods of time and be more resistant to higher failure temperatures than aluminum 3AL cylinders, and, along with Barlen, requests DOT to consider permitting the use of these cylinder types in addition to the DOT 3AL cylinders specified in the January 31 final rule. In addition, PSI requests DOT to allow limited quantities of oxygen-rich calibration gas mixtures to be transported on non-passenger aircraft such as those operated by Federal Express and UPS. Finally, PSI requests a delay in the implementation of this rule to allow for presentation of additional information.

We agree with the commenters that including DOT 39 and DOT 3E cylinders as cylinders authorized for the transportation of compressed oxygen and other oxidizing gases aboard aircraft does not pose an additional safety hazard and will provide carriers more flexibility when transporting these materials aboard aircraft. Therefore, we are revising the HMR to limit cylinders authorized for the transportation of compressed oxygen and other oxidizing gases aboard aircraft to DOT specifications 39, 3A, 3AA, 3AL, 3E, and 3HT, and UN pressure receptacles ISO 9809-1, ISO 9809-2, ISO 9809-3 and ISO 7866 cylinders, including a new limit on the PRD settings.

Currently, § 173.302(c) specifies that an authorized cylinder containing oxygen continuously fed to tanks containing live fish may be offered for transportation and transported. One commenter, the Good View Trading Company (GVT), expresses concern about the impact that the new outer packaging requirement in the January 31 final rule will have on the current exceptions for live fish transported aboard aircraft. In publishing the January 31 final rule, our intention was not to eliminate this exception. Therefore, for clarification, we are revising this section to specifically except it from the new outer packaging requirements.

In addition, on May 3, 2007, PHMSA published a final rule under Docket No. PHMSA-2005-23141 (HM-215F) in the Federal Register (72 FR 25161). The HM-215F final rule amended the HMR to revise and consolidate the requirements applicable to the use of the International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air, the International Maritime Dangerous Goods Code, Transport Canada's Transportation of Dangerous Goods Regulations, and the International Atomic Energy Agency's Safety Standards Series: Regulations for the Safe Transport of Radioactive Material. The revisions and reformatting provide a user-friendly format to promote understanding of the conditions and limitations on the use of international standards and regulations. In the HM-215F final rule, the ICAO Technical Instructions (formerly § 171.11) were re-designated as new § 171.24. As a result of this designation, the revisions adopted in this section under the January 31 final rule were inadvertently omitted. Therefore, we are republishing new § 171.24 as amended in the January 31 final rule for clarification.

This final rule is published under the authority of Federal hazardous materials transportation law (Federal hazmat law; 49 U.S.C. 5101 et seq. ). Section 5103(b) of Federal hazmat law authorizes the Secretary of Transportation to prescribe regulations for the safe transportation, including security, of hazardous material in intrastate, interstate, and foreign commerce.

This final rule is not a significant action under section 3(f) of Executive Order 12866 and was not reviewed by the Office of Management and Budget. This final rule is not a significant action under the Regulatory Policies and Procedures of the Department of Transportation. The revisions adopted in this final rule do not alter the cost-benefit analysis and conclusions contained in the Regulatory Evaluation prepared for the January 31, 2007 final rule. The Regulatory Evaluation is available for review in the public docket for this rulemaking.

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This final rule preempts State, local and Indian tribe requirements, but does not amend any regulation that has direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

The Federal hazardous materials transportation law, 49 U.S.C. 5101-5127, contains an express preemption provision (49 U.S.C. 5125(b)) that preempts State, local, and Indian tribe requirements on the following subjects:

(1) The designation, description, and classification of hazardous material;

(2) The packing, repacking, handling, labeling, marking, and placarding of hazardous material;

(3) The preparation, execution, and use of shipping documents related to hazardous material and requirements related to the number, contents, and placement of those documents;

(4) The written notification, recording, and reporting of the unintentional release in transportation of hazardous material; and

(5) The design, manufacture, fabrication, marking, maintenance, recondition, repair, or testing of a packaging or container represented, marked, certified, or sold as qualified for use in transporting hazardous material.

This final rule addresses items 2 and 5 above and preempts any State, local, or Indian tribe requirements not meeting the “substantially the same” standard.

Federal hazardous materials transportation law provides at § 5125(b)(2) that, if DOT issues a regulation concerning any of the covered subjects, DOT must determine and publish in the Federal Register the effective date of Federal preemption. The effective date may not be earlier than the 90th day following the date of issuance of the final rule and not later than two years after the date of issuance. This effective date of preemption is 90 days after the publication of this final rule in the Federal Register .

This final rule has been analyzed in accordance with the principles and criteria contained in Executive order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this final rule will not have tribal implications, does not impose substantial direct compliance costs on Indian tribal governments, and does not preempt tribal law, the funding and consultation requirements of Executive Order 13175 do not apply, and a tribal summary impact statement is not required.

The Regulatory Flexibility Act of 1980 requires an agency to review regulations to assess their impact on small entities unless the agency determines that a rule is not expected to have a significant impact on a substantial number of small entities. This final rule will not impose increased compliance costs on the regulated industry. The revisions, clarifications, and corrections we are making to the January 31, 2007 final rule will provide regulatory relief to persons transporting compressed oxygen, other oxidizing gases and chemical oxygen generators on aircraft by: Delaying the mandatory effective date from October 1, 2007 until October 1, 2008 to require a new limit on the pressure relief device (PRD) settings on cylinders containing compressed oxygen or other oxidizing gases when transported aboard aircraft; clarifying the thermal resistance test methods for packagings for oxygen cylinders and oxygen generators in Appendix D to Part 178, including DOT specification 3E and 39 cylinders to the types of cylinders authorized for the transportation of compressed oxygen and other oxidizing gases aboard aircraft; and providing a marking option to ensure easier identification of cylinders equipped with the new PRD and outer packagings meeting the flame penetration and thermal resistance requirements. Thus, DOT has determined that this final rule will not have a significant impact on a substantial number of small entities. Accordingly, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 605(b), DOT certifies that this rule will not have a significant economic impact on a substantial number of small entities. Therefore, I certify that this rule will not have a significant economic impact on a substantial number of small entities.

This final rule has been developed in accordance with Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act to ensure that potential impacts of draft rules on small entities are properly considered.

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

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

PHMSA currently has approved information collections under OMB Control Number 2137-0572, “Testing Requirements for Non-Bulk Packaging” with an expiration date of March 31, 2010, and OMB Control Number 2137-0557, “Approvals for Hazardous Materials” with an expiration date of March 31, 2008. This final rule imposes no new information collection and recordkeeping requirements.

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

Anyone is able to 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 DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.

In Title 49 of the Code of Federal Regulations, Parts 300 to 399, revised as of October 1, 2006, on page 276, in Appendix A to Part 386, reinstate Section IV to read as follows:

In order to preserve the remedial effect of civil penalties and foster compliance with the law, the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890), as amended by the Debt Collection Improvement Act of 1996 (the Act) (Pub. L. 104-134, 110 Stat. 1321-1373), requires Federal agencies to regularly adjust certain civil penalties for inflation (see 28 U.S.C. 2461 note). The law requires each agency to make an initial inflationary adjustment for all applicable civil penalties and to make further adjustments to these penalty amounts at least once every four years.

The FMCSA previously adjusted civil penalties for inflation by regulation on March 31, 2003 (68 FR 15381). Subsequent to these adjustments, Congress enacted the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) on August 10, 2005 (Pub. L. 109-59, 119 Stat. 1144). SAFETEA-LU reset several penalties at amounts required prior to adjustment for inflation and created new categories of penalties. The current penalties are found in 49 CFR part 386, Appendix A and B and 49 CFR 383.53(b).

Under 5 U.S.C. 553(b), the FMCSA finds good cause to dispense with prior notice and opportunity for comment. These procedures are unnecessary because inflation adjustments are ministerial acts required by statute. The adjustment simply recognizes that as inflation occurs, penalties should keep pace so that the impact of the penalty is not diminished with the passage of time.

Under the Act (28 U.S.C. 2461 note) the inflation adjustment for each applicable civil penalty is determined by increasing the maximum civil penalty amount per violation by the cost-of-living adjustment. The cost-of-living adjustment is defined as the amount by which the Consumer Price Index (CPI) for the month of June of the calendar year preceding the adjustment exceeds the CPI for the month of June of the year in which the amount of such civil penalty was last set or adjusted pursuant to law (section 5(b), 28 U.S.C. 2461 note). Any calculated increase under this adjustment is subject to a specific rounding formula set forth in the Act (section 5(a), 28 U.S.C. 2461 note).

For example, under Appendix A of 49 CFR part 386, part IV, paragraph (e), failure to return a written certification of correction as required by an out-of-service order is subject to a civil penalty. The penalty was adjusted for inflation on March 31, 2003 (68 FR 15381), resulting in a maximum penalty of $650 for per violation. The CPI was 203 in June 2006, and was 184 in June 2003 (see U.S. Department of Labor CPI index at ftp://ftp.bls.gov/pub/ special.requests/cpi/cpiai.txt ). Thus the inflation factor is 203/184 or 1.10. The new penalty amount after the increase is the result of multiplying $650 × 1.10 = $715. Under the statute, however, the increase is to be rounded to the nearest multiple of $100 in the case of penalties greater than $100 but less than or equal to $1,000. The amount of the increase in the daily maximum penalty was $65, rounded to the nearest multiple of $100 equals $100, so the new daily maximum penalty is $750. Therefore, Appendix A of 49 CFR part 386, part IV, paragraph (e) is revised to provide an adjusted maximum penalty of $750 per violation.

The 1.10 inflation factor is used to adjust penalties previously adjusted in 2003, which included penalties under the Federal Hazardous Materials Regulations (49 CFR parts 171-180); penalties under the Transportation Equity Act for the 21st Century (Pub. L. 105-178, 112 Stat. 107); commercial penalties established in the ICC Termination Act of 1995 (Pub. L. 104-88, 109 Stat. 809); and penalties enacted in the Motor Carrier Safety Improvement Act of 1999 (Pub. L. 106-159, 113 Stat. 1748 (Dec. 9, 1999)).

SAFETEA-LU revised or established several civil penalty amounts, which have been promulgated by final rule in 72 FR 36760, July 5, 2007. The FMCSA adjusts these penalties for inflation, using an inflation factor of 203/195 or 1.04, even though the penalties are less than four years old, to place all penalties on the same adjustment schedule. The Debt Collection Improvement Act of 1996 allows for more frequent adjustments, so long as agencies adjust civil penalties at least every four years.

Some penalties established by SAFETEA-LU were not included in the July 5, 2007, final rule. Footnote 2 in the preamble to that rule explained that changes in penalties made by section 4102(a) of SAFETEA-LU (amending 49 U.S.C. 521(b)(2)(B) to increase the penalties for recordkeeping and reporting violations) do not require any change in FMCSA regulations because they are automatically implemented by 49 CFR 386.81. Nevertheless, to avoid confusion on the part of the regulated community and to ensure that the listed regulatory penalties are consistent with those specified in SAFETEA-LU, FMCSA is updating the penalties in Appendix B to 49 CFR part 386, paragraphs (a)(1) and (a)(2).

Section 4209 of SAFETEA-LU also established new penalties for household goods brokers and motor carriers. In a proposed rule entitled “Brokers of Household Goods Transportation by Motor Vehicle” (RIN 2126-AA84), the FMCSA has proposed to add the penalties to 49 CFR part 386, paragraph (e) of Appendix B (72 FR 5947, Feb. 8, 2007). Those penalty amounts will not, however, be adjusted at this time because that rule is not yet final.

Appendices A and B are now adjusted for inflation. Because of the relatively low rate of recent inflation and the rounding formula required by the Act, most penalties remain unchanged from their previous levels.

In addition, the July 5, 2007, revisions to Appendix B to part 386 added paragraph (h). Today's rule modifies the second sentence of the introductory paragraph to Appendix B to reference paragraph (h).

The Administrative Procedure Act provides exceptions to its notice and public comment procedures when an agency finds there is good cause on the basis that those procedures are “impracticable, unnecessary, or contrary to the public interest.” (See 5 U.S.C. 553(b).) As stated above, the amendments made by this final rule are mandated by Congress. By making these amendments, the Agency is performing a nondiscretionary ministerial act. For this reason, the FMCSA finds good cause that notice and public comment are unnecessary. Further, the agency finds good cause under 5 U.S.C. 553(d)(3) to make the amendments effective upon publication.

The FMCSA has determined that this action is not a significant regulatory action within the meaning of Executive Order 12866 or within the meaning of Department of Transportation regulatory policies and procedures. The Office of Management and Budget (OMB) did not review this document. We expect the final rule, which is statutorily mandated to preserve the remedial effect of civil penalties, will have minimal costs. Therefore, a full regulatory evaluation is unnecessary.

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999, and it has been determined this action does not have federalism implications or limit the policymaking discretion of the States.

The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this action.

This action does not contain information collection requirements for purposes of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ).

The FMCSA is an Administration within the Department of Transportation (DOT). The FMCSA analyzed this rule under the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq. ) (NEPA), the Council on Environmental Quality Regulations implementing NEPA (40 CFR parts 1500-1508), and DOT Order 5610.1C, Procedures for Considering Environmental Impacts. This rule is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement since this action does not have any effect on the quality of the environment.

This rule does not impose an unfunded Federal mandate, as defined by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532 et seq. ), that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $120 million or more in any one year.

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

The FMCSA has analyzed this action under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environment risk to health or safety that may disproportionately affect children.

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

The FMCSA analyzed this action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We determined that it is not a “significant energy action” under that Executive Order because it will not be economically significant and will not be likely to have an adverse effect on the supply, distribution, or use of energy.

An inadvertent error occurred in the drafting of the final rule. In the Second Notice of Proposed Rulemaking (SNPRM) (71 FR 69412, Nov. 30, 2006), FTA proposed a new Appendix D to part 661 to amend the final assembly requirements for rolling stock. In the preamble to the final rule (72 FR 53688, Sept. 20, 2007), FTA announced that it was withdrawing the proposed language in the SNPRM and would instead continue to implement the terms of the March 18, 1997, Dear Colleague letter, with a few minor additions to reflect industry practices that have taken effect after the 1997 Dear Colleague letter was issued. In the process of drafting the final rule, text that was discussed in the preamble was not included in the final rule.

Accordingly, this document will correct that omission by removing the erroneous text in the September 20, 2007, final rule and replacing it with the correct text.

The snapper-grouper fishery is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council (Council) and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The commercial fishery for South Atlantic golden tilefish is managed under a commercial quota of 295,000 lb (133,810 kg), as specified in 50 CFR 622.42(e)(2), for the current fishing year, January 1 through December 31, 2007.

Under 50 CFR 622.43(a), NMFS is required to close the golden tilefish commercial fishery when its quota has been reached, or is projected to be reached, by filing a notification at the Office of the Federal Register . NMFS has determined the commercial quota of 295,000 lb (133,810 kg) for golden tilefish in the South Atlantic will be reached by October 3, 2007. Accordingly, the commercial fishery for South Atlantic golden tilefish is closed effective 12 noon, local time, October 3, 2007, through December 31, 2007, the end of the fishing year. The operator of a vessel with a valid commercial vessel permit for South Atlantic snapper-grouper having golden tilefish aboard must have landed and bartered, traded, or sold such golden tilefish prior to 12 noon, local time, October 3, 2007.

During the closure, the appropriate bag limits specified in 50 CFR 622.39(d)(1) and the applicable possession limits specified in 50 CFR 622.39(d)(2) apply to all harvest or possession of golden tilefish in or from the South Atlantic EEZ, and the sale or purchase of golden tilefish taken from the EEZ is prohibited. The prohibition on sale or purchase does not apply to sale or purchase of golden tilefish that were harvested, landed ashore, and sold prior to 12 noon, local time, October 3, 2007, and were held in cold storage by a dealer or processor.

This action responds to the best available information recently obtained from the fisheries. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to close the fishery constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(3)(B), as such procedures would be unnecessary and contrary to the public interest. Such procedures would be unnecessary because the rule itself already has been subject to notice and comment, and all that remains is to notify the public of the closure.

NMFS also finds good cause that the implementation of this action cannot be delayed for 30 days. There is a need to implement this measure in a timely fashion to prevent an overrun of the commercial quota of South Atlantic golden tilefish, given the capacity of the fishing fleet to harvest the quota quickly. Any delay in implementing this action would be contrary to the Magnuson-Stevens Act and the FMP. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is waived.

This action is taken under 50 CFR 622.43(a) and is exempt from review under Executive Order 12866.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

NMFS prohibited directed fishing for pollock in Statistical Area 630 in the GOA under § 679.20(d)(1)(iii) on August 28, 2007 (72 FR 48946, August 27, 2007). NMFS reopened the pollock fishery in Statistical Area 630 in the GOA for 72 hours on September 15, 2007 (72 FR 53169, September 18, 2007). NMFS reopened the pollock fishery in Statistical Area 630 in the GOA for 48 hours on September 21, 2007. NMFS prohibited directed fishing for pollock on September 23, 2007.

NMFS has determined that as of September 24, 2007 approximately 1,590 mt remain in the C season allowance of the 2007 pollock directed fishing allowance in Statistical Area 630 in the GOA. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C) and (a)(2)(iii)(D), and to fully utilize the C season allowance of the 2007 TAC of pollock in Statistical Area 630 in the GOA, NMFS is terminating the previous closure and is reopening directed fishing for pollock in Statistical Area 630 in the GOA.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of pollock in Statistical Area 630 in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 24, 2007.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

Without this inseason adjustment, NMFS could not allow the fishery for pollock in Statistical Area 630 in the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action (see ADDRESSES ) until October 10, 2007.

This action is required by § 679.25 and § 679.20 and is exempt from review under Executive Order 12866.