This rule is issued under Marketing Agreement and Order No. 989, both as amended (7 CFR part 989), regulating the handling of raisins produced from grapes grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the order provisions now in effect, final free and reserve percentages may be established for raisins acquired by handlers during the crop year. This rule continues in effect the action that established final free and reserve percentages for NS raisins for the 2006-07 crop year, which began August 1, 2006, and ended July 31, 2007. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule continues in effect the action that established final volume regulation percentages for 2006-07 crop NS raisins covered under the order. The volume regulation percentages are 90 percent free and 10 percent reserve and were established through an interim final rule published on April 9, 2007 (72 FR 17362). Free tonnage raisins may be sold by handlers to any market. Reserve raisins must be held in a pool for the account of the Committee and are disposed of through various programs authorized under the order. For example, reserve raisins may be sold by the Committee to handlers for free use or to replace part of the free tonnage raisins they exported; used in diversion programs; carried over as a hedge against a short crop; or disposed of in other outlets not competitive with those for free tonnage raisins, such as government purchase, distilleries, or animal feed.

The volume regulation percentages are intended to help stabilize raisin supplies and prices, and strengthen market conditions. The Committee unanimously recommended final percentages for NS raisins on November 21, 2006.

Section 989.54 of the order prescribes procedures and time frames to be followed in establishing volume regulation. This includes methodology used to calculate percentages. Pursuant to § 989.54(a) of the order, the Committee met on August 15, 2006, to review shipment and inventory data, and other matters relating to the supplies of raisins of all varietal types. The Committee computed a trade demand for each varietal type for which a free tonnage percentage might be recommended. Trade demand is computed using a formula specified in the order and, for each varietal type, is equal to 90 percent of the prior year's shipments of free tonnage and reserve tonnage raisins sold for free use into all market outlets, adjusted by subtracting the carryin on August 1 of the current crop year, and adding the desirable carryout at the end of that crop year. As specified in § 989.154(a), the desirable carryout for NS raisins shall equal the total shipments of free tonnage during August and September for each of the past 5 crop years, converted to a natural condition basis, dropping the high and low figures, and dividing the remaining sum by three, or 60,000 natural condition tons, whichever is higher. For all other varietal types, the desirable carryout shall equal the total shipments of free tonnage during August, September and one-half of October for each of the past 5 crop years, converted to a natural condition basis, dropping the high and low figures, and dividing the remaining sum by three. In accordance with these provisions, the Committee computed and announced the 2006-07 trade demand for NS raisins at 219,870 tons as shown below.

Section 989.54(b) of the order requires that the Committee announce, on or before October 5, preliminary crop estimates and determine whether volume regulation is warranted for the varietal types for which it computed a trade demand. That section allows the Committee to extend the October 5 date up to 5 business days if warranted by a late crop.

The Committee met on September 6, 2006, and announced preliminary percentages for Zante Currant raisins. It met again on October 4, 2006, and announced preliminary percentages and a preliminary crop estimate for NS raisins of 259,557 tons, which is about 21 percent lower than the 10-year average of 327,410 tons. NS raisins are the major varietal type of California raisin. Adding the carryin inventory of 111,444 tons to the 259,557-ton crop estimate, plus an additional 31,975 tons of reserve raisins released to handlers for free use in August 2006, resulted in a total available supply of 402,976 tons, which was significantly higher (183 percent) than the 219,870-ton trade demand. Thus, the Committee determined that volume regulation for NS raisins was warranted. The Committee announced preliminary free and reserve percentages for NS raisins, which released 85 percent of the computed trade demand since a minimum field price (price paid by handlers to producers for their free tonnage raisins) had been established. The preliminary percentages were 72 percent free and 28 percent reserve.

In addition, preliminary percentages were announced for Dipped Seedless, Golden Seedless, and Other Seedless raisins. It was ultimately determined at Committee meetings held on November 21, 2006, and January 23, 2007, that volume regulation was only warranted for NS raisins. As in past seasons, the Committee submitted its marketing policy to USDA for review.

Pursuant to § 989.54(c), at its November 21, 2006, meeting, the Committee announced interim percentages for NS raisins to release slightly less than the full trade demand. Based on a revised NS crop estimate of 244,300 tons (down from the October estimate of 259,557 tons), interim percentages for NS raisins were announced at 89.75 percent free and 10.25 percent reserve.

Pursuant to § 989.54(d), the Committee also recommended final percentages at its November 21, 2006, meeting to release the full trade demand for NS raisins. Final percentages were recommended at 90 percent free and 10 percent reserve. The Committee's calculations and determinations to arrive at final percentages for NS raisins are shown in the table below:

By the end of the crop year, final deliveries of NS raisins totaled 282,999 tons. Thus, handlers were provided with an additional 63,129 tons over the computed trade demand, but the additional tonnage did not appear to impact marketing conditions.

In addition, USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” (Guidelines) specify that 110 percent of recent years' sales should be made available to primary markets each season for marketing orders utilizing reserve pool authority. This goal was met for NS raisins by the establishment of final percentages, which released 100 percent of the trade demand and the offer of additional reserve raisins for sale to handlers under the “10 plus 10 offers.” As specified in § 989.54(g), the 10 plus 10 offers are two offers of reserve pool raisins which are made available to handlers during each season. For each such offer, a quantity of reserve raisins equal to 10 percent of the prior year's shipments is made available for free use. Handlers may sell their 10 plus 10 raisins to any market.

Based on 2005-06 NS shipments of 301,460 natural condition tons, 30,146 tons should have been made available in each of the 10 plus 10 offers, or a total of 60,292 tons. However, this amount was not available in the reserve. Thus, all available reserve pool raisins were offered to handlers for free use through the 10 plus 10 offers.

The first 10 plus 10 offer was made in February 2007. A total of 30,146 tons was made available to raisin handlers; all the raisins were purchased and released to handlers during the 2006-07 crop year. The second offer was made in July 2007. A total of 20,923 tons (the balance of the reserve pool) was made available to handlers; 14,793 tons were purchased and released to handlers in 2007-08. Adding the 30,146 tons of 10 plus 10 reserve raisins to the 219,870 ton trade demand figure, plus the 111,444 tons of 2005-06 carryin NS inventory, plus the 31,975 tons of 10 plus 10 raisins released to handlers in August 2006, equates to 393,435 tons of natural condition raisins, or 370,686 tons of packed raisins, that were available to handlers for free use or primary markets. This is about 130 percent of the quantity of NS raisins shipped during the 2005-06 crop year (301,460 natural condition tons or 284,030 packed tons).

In addition to the 10 plus 10 offers, § 989.67(j) of the order provides authority for sales of reserve raisins to handlers under certain conditions such as a national emergency, crop failure, change in economic or marketing conditions, or if free tonnage shipments in the current crop year exceed shipments during a comparable period of the prior crop year. Such reserve raisins may be sold by handlers to any market. When implemented, the additional offers of reserve raisins make even more raisins available to primary markets, which is consistent with USDA's Guidelines.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 23 handlers of California raisins who are subject to regulation under the order and approximately 4,000 raisin producers in the regulated area. Small agricultural service firms are defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $6,500,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. No more than 10 handlers, and a majority of producers, of California raisins may be classified as small entities. Thirteen of the 23 handlers subject to regulation have annual sales estimated to be at least $6,500,000, and the remaining 10 handlers have sales less than $6,500,000.

Since 1949, the California raisin industry has operated under a Federal marketing order. The order contains authority to, among other things, limit the portion of a given year's crop that can be marketed freely in any outlet by raisin handlers. This volume control mechanism is used to stabilize supplies and prices and strengthen market conditions. If the primary market (the normal domestic market) is over-supplied with raisins, grower prices decline substantially.

Pursuant to § 989.54(d) of the order, this rule continues in effect the action that established final volume regulation percentages for 2006-07 crop NS raisins. The volume regulation percentages are 90 percent free and 10 percent reserve. Free tonnage raisins may be sold by handlers to any market. Reserve raisins must be held in a pool for the account of the Committee and are disposed of through certain programs authorized under the order.

Volume regulation was warranted this season because acquisitions of 282,999 tons through July 31, 2007, combined with the carryin inventory of 111,444 tons, plus 31,975 tons of 10 plus 10 reserve raisins that were released to handlers in August 2006, resulted in a total available supply of 426,418 tons, which is about 194 percent higher than the 219,870 ton trade demand.

The volume regulation procedures have helped the industry address its marketing problems by keeping supplies in balance with domestic and export market needs, and strengthening market conditions. The volume regulation procedures fully supply the domestic and export markets, provide for market expansion, and help reduce the burden of oversupplies in the domestic market.

Raisin grapes are a perennial crop, so production in any year is dependent upon plantings made in earlier years. The sun-drying method of producing raisins involves considerable risk because of variable weather patterns.

Even though the product and the industry are viewed as mature, the industry has experienced considerable change over the last several decades. Before the 1975-76 crop year, more than 50 percent of the raisins were packed and sold directly to consumers. Now, about 64 percent of raisins are sold in bulk. This means that raisins are now sold to consumers mostly as an ingredient in another product such as cereal and baked goods. In addition, for a few years in the early 1970s, over 50 percent of the raisin grapes were sold to the wine market for crushing. Since then, the percent of raisin-variety grapes sold to the wine industry has decreased.

California's grapes are classified into three groups—table grapes, wine grapes, and raisin-variety grapes. Raisin-variety grapes are the most versatile of the three types. They can be marketed as fresh grapes, crushed for juice in the production of wine or juice concentrate, or dried into raisins. Annual fluctuations in the fresh grape, wine, and concentrate markets, as well as weather-related factors, cause fluctuations in raisin supply. This type of situation introduces a certain amount of variability into the raisin market. Although the size of the crop for raisin-variety grapes may be known, the amount dried for raisins depends on the demand for crushing. This makes the marketing of raisins a more difficult task. These supply fluctuations can result in producer price instability and disorderly market conditions.

Volume regulation is helpful to the raisin industry because it lessens the impact of such fluctuations and contributes to orderly marketing. For example, producer prices for NS raisins remained fairly steady between the 1993-94 through the 1997-98 seasons, although production varied. As shown in the table below, during those years, production varied from a low of 272,063 tons in 1996-97 to a high of 387,007 tons in 1993-94.

According to Committee data, the total producer return per ton during those years, which includes proceeds from both free tonnage plus reserve pool raisins, has varied from a low of $904.60 in 1993-94 to a high of $1,049.20 in 1996-97. Total producer prices for the 1998-99 and 1999-2000 seasons increased significantly due to back-to-back short crops during those years. Record large crops followed and producer prices dropped dramatically for the 2000-01 through 2003-04 crop years, as inventories grew while demand stagnated. However, producer prices were higher for the 2004-05 and the 2005-06 crop years, as noted below:

There are essentially two broad markets for raisins—domestic and export. Domestic shipments have been generally increasing in recent years. Although domestic shipments decreased from a high of 204,805 packed tons during the 1990-91 crop year to a low of 156,325 packed tons in 1999-2000, they increased from 174,117 packed tons during the 2000-01 crop year to 186,358 tons during the 2005-06 crop year. Export shipments ranged from a high of 107,931 packed tons in 1991-92 to a low of 91,599 packed tons in the 1999-2000 crop year. Since that time, export shipments increased to 106,755 tons of raisins during the 2004-05 crop year, but fell to 97,672 tons in 2005-06.

The per capita consumption of raisins has declined from 2.07 pounds in 1988 to 1.44 pounds in 2005. This decrease is consistent with the decrease in the per capita consumption of dried fruits in general, which is due to the increasing availability of most types of fresh fruit throughout the year.

While the overall demand for raisins has increased in two out of the last three years (as reflected in increased commercial shipments), production has been decreasing. Deliveries of NS dried raisins from producers to handlers reached an all-time high of 432,616 tons in the 2000-01 crop year. This large crop was preceded by two short crop years; deliveries were 240,469 tons in 1998-99 and 299,910 tons in 1999-2000. Deliveries for the 2000-01 crop year soared to a record level because of increased bearing acreage and yields. Deliveries for the 2001-02 crop year were at 377,328 tons, 388,010 tons for the 2002-03 crop year, 296,864 for the 2003-04 crop year, and 265,262 tons for the 2004-05 crop year. After three crop years of high production and a large 2001-02 carryin inventory, the industry diverted raisin production to other uses or removed bearing vines. Diversions/removals totaled 41,000 acres in 2001; 27,000 acres in 2002; and 15,000 acres of vines in 2003. These actions resulted in declining deliveries of 296,864 tons for the 2003-04 crop year and 265,262 tons for the 2004-05 crop year. Although deliveries increased in 2005-06 to 319,126 tons, this may have been because fewer growers opted to contract with wineries, as raisin variety grapes crushed in 2005-06 decreased by 161,000 green tons, the equivalent of over 40,000 tons of raisins.

The order permits the industry to exercise supply control provisions, which allow for the establishment of free and reserve percentages, and establishment of a reserve pool. One of the primary purposes of establishing free and reserve percentages is to equilibrate supply and demand. If raisin markets are over-supplied with product, producer prices will decline.

Raisins are generally marketed at relatively lower price levels in the more elastic export market than in the more inelastic domestic market. This results in a larger volume of raisins being marketed and enhances producer returns. In addition, this system allows the U.S. raisin industry to be more competitive in export markets.

The reserve percentage limits what handlers can market as free tonnage. Data available as of July 31, 2007, showed that deliveries of NS raisins were at 282,999 tons. The 10 percent reserve limited the total free tonnage to 254,699 natural condition tons (.90 × the 282,999 ton crop). Adding the 254,699 ton figure with the carryin of 111,444 tons, plus the 62,121 tons of 10 plus 10 reserve raisins that were released to handlers during the 2006-07 crop year (31,975 tons in August 2006 and 30,146 tons in March 2007) made the total free supply equal to 428,264 natural condition tons.

To assess the impact that volume regulation has on the prices producers receive for their product, a price dependent econometric model was estimated. This model is used to estimate producer prices both with and without the use of volume regulation. The volume regulation used by the raisin industry would result in decreased shipments to primary markets. Without volume regulation the primary market (domestic) could be over-supplied resulting in lower producer prices and the build-up of unwanted inventories.

With volume regulation, producer prices are estimated to be approximately $65 per ton higher than without volume regulation. This price increase is beneficial to all producers regardless of size and enhances producers' total revenues in comparison to no volume regulation. Establishing a reserve allows the industry to help stabilize supplies in both domestic and export markets, while improving returns to producers.

Free and reserve percentages are established by varietal type, and usually in years when the supply exceeds the trade demand by a large enough margin that the Committee believes volume regulation is necessary to maintain market stability. Accordingly, in assessing whether to apply volume regulation or, as an alternative, not to apply such regulation, it was determined that volume regulation was warranted during the 2006-07 season for only one of the nine raisin varietal types defined under the order.

The free and reserve percentages continue in effect the release of the full trade demand and apply uniformly to all handlers in the industry, regardless of size. For NS raisins, with the exception of the 1998-99 and 2004-05 crop years, small and large raisin producers and handlers have been operating under volume regulation percentages every year since 1983-84. There are no known additional costs incurred by small handlers that are not incurred by large handlers. While the level of benefits of this rulemaking is difficult to quantify, the stabilizing effects of the volume regulations impact small and large handlers positively by helping them maintain and expand markets even though raisin supplies fluctuate widely from season to season. Likewise, price stability positively impacts small and large producers by allowing them to better anticipate the revenues their raisins will generate.

AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

There are some reporting, recordkeeping and other compliance requirements under the order. The reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The requirements are the same as those applied in past seasons. Thus, this action imposes no additional reporting or recordkeeping requirements on either small or large raisin handlers. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. The information collection and recordkeeping requirements have been previously approved by the Office of Management and Budget (OMB) under OMB Control No. 0581-0178. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, as noted in the initial regulatory analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, the Committee's meetings were widely publicized throughout the raisin industry and all interested persons were invited to attend the meetings and participate in the Committee's deliberations. Like all Committee meetings, the August 15, September 6, October 4, November 21, 2006, and the January 23, 2007, meetings were public meetings and all entities, both large and small, were able to express their views on this issue.

Also, the Committee has a number of appointed subcommittees to review certain issues and make recommendations to the Committee. The Committee's Reserve Sales and Marketing Subcommittee met on August 15, September 6, October 4, November 21, 2006, and January 23, 2007, and discussed these issues in detail. Those meetings were also public meetings and both large and small entities were able to participate and express their views.

An interim final rule concerning this action was published in the Federal Register on April 9, 2007. Copies of the rule were mailed by the Committee's staff to all Committee members and alternates and raisin handlers. In addition, the rule was made available through the Internet by USDA and the Office of the Federal Register. That rule provided for a 60-day comment period which ended June 8, 2007. One comment was received during the comment period; it was not relevant to the rulemaking action. Accordingly, no changes were made to the rule, based on comment received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register (72 FR 17362, April 9, 2007) will tend to effectuate the declared policy of the Act.

The President signed the Energy Policy Act of 2005 (Pub. L. 109-58, 119 Stat. 594) into law on August 8, 2005. It contains a provision on national source tracking that requires the NRC to issue regulations establishing a mandatory tracking system for radiation sources in the United States. The NRC issued the final rule for the National Source Tracking System on November 8, 2006 (71 FR 65686).

The National Source Tracking System rule requires licensees to report information on the manufacture, transfer, receipt, disassembly, and disposal of nationally tracked sources. This information will be entered into a computerized data base. The National Source Tracking System will capture information on the origin of each nationally tracked source (manufacture or import), all transfers to other licensees, all receipts of nationally tracked sources, and endpoints of each nationally tracked source (disassembly, disposal, decay, or export). Ultimately, the National Source Tracking System will be able to provide a domestic life history account of all nationally tracked sources.

The compliance dates for licensees to report initial source inventories was November 15, 2007, for Category 1 sources and November 30, 2007, for Category 2 sources. These were also the dates to start reporting source transactions for entry into the system. The NRC anticipated that system development and all testing would be complete and the National Source Tracking System would be operational by November 2007. However, system development has taken longer than anticipated and the system will not be ready to accept data by November 2007. Therefore, the NRC is revising the compliance dates for which reporting is to start.

The requirements for Category 1 nationally tracked sources will now be implemented by January 31, 2009. This means that by this date any licensee that possesses a Category 1 level source must have reported its initial inventory and must begin reporting all transactions involving Category 1 sources to the National Source Tracking System. The requirements for Category 2 nationally tracked sources will also be implemented by January 31, 2009. By this date, all licensees must have reported their initial inventories of Category 2 nationally tracked sources and begin reporting all transactions to the National Source Tracking System.

Paragraph (h) is revised to require a licensee to report its initial inventory of Category 1 nationally tracked sources by January 31, 2009, and the inventory of Category 2 nationally tracked sources by January 31, 2009.

Generally, NRC rulemaking involves issuing rules using the public notice and comment procedures set forth in the Administrative Procedure Act (APA). Typically, a proposed rule is issued for comment and any comments submitted are evaluated in the agency's development of the final rule. But under 5 U.S.C 553(b)(3)(B), a Federal agency such as the NRC may dispense with those procedures where it finds for “good cause” that notice and public procedures thereon are “impracticable, unnecessary, or contrary to the public interest.” In this case, notice-and-comment procedures are not required because the usual public rulemaking procedures are impracticable. The National Source Tracking System will not be ready to accept data received from licensees by the original compliance dates in the final rule. Compliance with the rule by those dates is not feasible, and no purpose would be served by seeking public comment on whether to extend the compliance dates. Therefore, under 5 U.S.C. 553(b)(3)(B), good cause exists to dispense with notice and comment procedures.

In addition, this rule is immediately effective upon publication in accordance with 5 U.S.C. 553(d)(1) because it is a substantive rule granting or recognizing an exemption or relieving a restriction. Specifically, the rule relieves licensees from the requirement to report initial source inventories and source transactions for entry into the National Source Tracking System by the dates for compliance specified in the final rule.

For the purpose of Section 223 of the Atomic Energy Act (AEA), the Commission is amending 10 CFR part 20 under one or more of Sections 161b, 161i, or 161o of the AEA. Willful violations of the rule will be subject to criminal enforcement.

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the Federal Register on September 3, 1997 (62 FR 46517), § 20.2207 in the final rule on National Source Tracking is classified as Compatibility Category “B.” The NRC program elements in this category are those that apply to activities that have direct and significant transboundary implications. An Agreement State should adopt program elements essentially identical to those of NRC. Agreement State and NRC licensees would report their transactions to the National Source Tracking System. The data base would be maintained by NRC. The Agreement States are expected to adopt legally binding requirements on their licensees such that all licensees, both NRC and Agreement States, will begin reporting at the same time.

The National Technology Transfer Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this final rule, the NRC is revising the compliance dates for licensees to begin reporting information on source transactions and initial source inventories of nationally tracked sources to the National Source Tracking System. This action does not constitute the establishment of a standard that contains generally applicable requirements.

The NRC has determined that this final rule is the type of action described as a categorical exclusion in 10 CFR 51.22(c)(3)(iii). Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this final rule.

This final rule does not contain new or amended information collection requirements that are subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing requirements were approved by the Office of Management and Budget, approval numbers 3150-0014, 3150-0001, and 3150-0202.

The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid OMB control number.

A regulatory analysis has not been prepared for this final rule because it relieves restrictions and does not impose any regulatory burdens on licensees.

The NRC has determined that the backfit rule (§§ 50.109, 70.76, 72.62, or 76.76) does not apply to this final rule because this amendment does not involve any provisions that would impose backfits as defined in the backfit rule. Therefore, a backfit analysis is not required.

In accordance with the Congressional Review Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs of Office of Management and Budget.

Consistent with U.S. Government policy to facilitate trade for civilian end-uses in the PRC, BIS amended the EAR in a final rule on June 19, 2007 (72 FR 33646) by creating a new authorization for “validated end-users” (VEUs) located in eligible destinations to which eligible items (commodities, software and technology, except those controlled for missile technology or crime control reasons) may be exported, reexported or transferred without a license, in conformance with Section 748.15 of the EAR. As established in the June 19 rule, the PRC is the initial destination eligible for exports, reexports and transfers under Authorization VEU.

Authorization VEU is a mechanism to facilitate increased high-technology exports to companies in the PRC that have a record of using such items responsibly. VEUs will be able to obtain eligible items that are on the Commerce Control List without having to wait for their suppliers to obtain export licenses from BIS. A wide range of items are eligible for Authorization VEU. In addition, Authorization VEU may be used by foreign reexporters, and does not have an expiration date.

This final rule amends Supplement No. 7 to Part 748 of the EAR to identify five companies with 14 eligible facilities in the PRC as VEUs and to identify the items that may be exported, reexported, or transferred to them. The VEUs listed in Supplement No. 7 to Part 748 were reviewed and approved by the U.S. Government in accordance with the provisions of Section 748.15 and Supplement Nos. 8 and 9 to Part 748 of the EAR.

Approving these five end-users as VEUs is expected to facilitate exports to civilian end-users in the PRC. After analyzing historical licensing data, BIS anticipates that approval of these five companies as VEUs should significantly reduce the value of trade that requires a license for export or reexport to the PRC. Approximately $54 million of items described as “eligible items” in this notice were licensed for export to these five end-users in 2006. This $54 million represents about 18% of all licensed exports to the PRC in 2006. Approval of these companies as VEUs also represents a significant savings of time for suppliers and end-users. Authorization VEU will eliminate the burden on exporters and reexporters of preparing license applications and on BIS for processing such applications, as exports and reexports will be made without licenses. This savings will enable exporters and reexporters to supply the VEUs much more quickly, thus enhancing the competitiveness of the exporters, reexporters, and end-users in the PRC.

To ensure appropriate facilitation of exports and reexports, on-site reviews of the VEUs may be warranted pursuant to paragraph 748.15(a)(2) and Section 7(iv) of Supplement No. 8 to Part 748 of the EAR. If such reviews are warranted, BIS will inform the PRC Ministry of Commerce.

Since August 21, 2001, the Export Administration Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp, p. 783 (2002)), as extended most recently by the Notice of August 15, 2007 (72 FR 46137, August 16, 2007), has continued the EAR in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222.

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

2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by the OMB under control number 0694-0088, “Multi-Purpose Application”, which carries a burden hour estimate of 58 minutes to prepare and submit form BIS-748; and for recordkeeping, reporting and review requirements in connection with Authorization Validated End-User, which carries an estimated burden of 30 minutes per submission. This rule is expected to result in a decrease in license applications submitted to BIS. Total burden hours associated with the Paperwork Reduction Act and Office and Management and Budget control number 0694-0088 are not expected to increase significantly as a result of this rule.

3. This rule does not contain policies with Federalism implications as that term is defined under Executive Order 13132.

4. The provisions of the Administrative Procedure Act requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sheila Quarterman, Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044.

Background

On November 25, 2002, the President signed the Homeland Security Act of 2002, 6 U.S.C. 101 et seq. , Public Law 107-296, (the “HSA”), establishing the Department of Homeland Security (“DHS”). Pursuant to section 403(1) of the HSA (6 U.S.C. 203(1)), the United States Customs Service was transferred from the Department of the Treasury to DHS effective March 1, 2003. Under section 1502 of the HSA, the Customs Service was renamed as the “Bureau of Customs and Border Protection”. Subsequently, on April 23, 2007, a notice was published in the Federal Register (72 FR 20131) informing the public that DHS had changed the name of the Bureau of Customs and Border Protection to “U.S. Customs and Border Protection” effective March 31, 2007.

The HSA reserved customs revenue functions to the Department of the Treasury. Treasury Department Order No. 100-16 delegated general authority vested in the Secretary of the Treasury over customs revenue functions (with certain specified exceptions) to the Secretary of Homeland Security.

Section 402 of Title IV of the Security and Accountability for Every Port Act of 2006 (“SAFE Port Act”), Public Law 109-347, established a new Office of International Trade (OT) to be headed by an Assistant Commissioner within U.S. Customs and Border Protection (CBP). Section 402(d)(2)(A) and (B) of the SAFE Port Act specifically authorized the Commissioner of CBP to transfer the assets, functions, and personnel of the Office of Strategic Trade (OST) and the Office of Regulations and Rulings (ORR) to OT. Pursuant to his authority under section 402(d)(2)(C), the Commissioner authorized the transfer of certain assets, functions, or personnel within the Office of Field Operations (OFO) to the OT.

Prior to the establishment of OT on October 15, 2006, the functions of trade policy and program development were split among three offices within CBP: the Office of Strategic Trade, the Office of Regulations and Rulings, and the Office of Field Operations. The OT consolidates the trade policy, program development, and compliance measurement functions of CBP into one office without creating dual reporting mechanisms or overlapping and redundant management structures.

The OT includes all functions and staff from the former Office of Strategic Trade (OST) and the former Office of Regulations and Rulings (ORR), as well as designated national program managers and specialists, national analysis specialists from OFO Headquarters and the national account managers currently stationed at ports of entry.

The OT is responsible for the following functions:

(1) Providing national strategic direction to facilitate legitimate trade while protecting the American economy from unfair trade practices.

(2) Directing national enforcement responses through effective targeting of goods crossing the border as well as strict, swift punitive actions against companies participating in predatory trade practices.

(3) Coordinating with international partners to ensure effective enforcement of textile admissibility issues as well as the enforcement of free trade agreement eligibility.

(4) Cooperating with other U.S. agencies and like-minded foreign governments to achieve effective enforcement of intellectual property rights.

(5) Maintaining effective internal controls over the revenue process.

(6) Coordinating with other government agencies and international partners to identify risks to detect and prevent contaminated agricultural or food products from harming the American public or the nation's economy.

(7) Promoting trade facilitation and partnership with the importing community and trade associations by streamlining the flow of legitimate shipments and fostering corporate self-governance as a means of achieving compliance with trade laws and regulations.

(8) Managing a risk-based audit program to respond to allegations of commercial fraud and to conduct corporate reviews of internal controls to ensure importers comply with trade laws and regulations.

(9) Providing legal tools to promote facilitation and compliance with customs, trade and border security requirements through: the issuance of all CBP regulations, legally binding rulings and decisions, informed compliance publications and structured programs for external CBP training and outreach on international trade laws and CBP regulations.

This document sets forth amendments to the CBP regulations (19 CFR chapter I) to reflect the new CBP organizational structure resulting from the creation of the Office of International Trade, as well as the transfer of the former U.S. Customs Service to DHS and the subsequent renaming of the Customs Service to CBP.

The amendments set forth in this document include the removal of certain provisions within part 171 of the CBP regulations (specifically, paragraphs (b) and (c) of § 171.62 and § 171.63) relating principally to the role of the Department of the Treasury in the consideration of supplemental petitions for relief from fines, penalties, and forfeitures. These provisions are no longer necessary or appropriate due to the transfer of CBP to DHS, the delegation of authority over certain customs revenue functions from the Department of the Treasury to the DHS, and the delegation of certain authorities from DHS to CBP as set forth in Delegation Number 7010.3 dated May 11, 2006.

The CBP regulations contain a significant number of references to offices that either no longer exist or have a different functional context. The changes set forth in this document to correct these references are non-substantive and relate to internal agency organization matters.

Because the technical corrections set forth in this document merely conform to the Homeland Security Act of 2002 and section 402 of the SAFE Port Act, CBP finds that good cause exists for dispensing with notice and public procedure as unnecessary under 5 U.S.C. 553(b)(B). In addition, these amendments concern matters relating to agency organization and personnel which are not subject to prior notice and comment procedures pursuant to 5 U.S.C. 553(a)(2) and (b)(A). For these same reasons, pursuant to 5 U.S.C. 553(d)(3), CBP finds that good cause exists for dispensing with the requirement for a delayed effective date.

Because this document is not subject to the notice and public procedure requirements of 5 U.S.C. 553, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. )

These amendments do not meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

This document is limited to technical corrections of CBP regulations. Accordingly, it is being signed under the authority of 19 CFR 0.1(b)(1).

In accordance with section 513(f)(1) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360c(f)(1)), devices that were not in commercial distribution before May 28, 1976, the date of enactment of the Medical Device Amendments of 1976 (the amendments), generally referred to as postamendments devices, are classified automatically by statute into class III without any FDA rulemaking process. These devices remain in class III and require premarket approval, unless the device is classified or reclassified into class I or class II, or FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the act, to a predicate device that does not require premarket approval. The agency determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807) of FDA's regulations.

Section 513(f)(2) of the act provides that any person who submits a premarket notification under section 510(k) of the act for a device that has not previously been classified may, within 30 days after receiving an order classifying the device in class III under section 513(f)(1) of the act, request FDA to classify the device under the criteria set forth in section 513(a)(1) of the act. FDA shall, within 60 days of receiving such a request, classify the device by written order. This classification shall be the initial classification of the device type. Within 30 days after the issuance of an order classifying the device, FDA must publish a notice in the Federal Register announcing such classification (section 513(f)(2) of the act).

In accordance with section 513(f)(1) of the act, FDA issued an order on September 20, 2006, classifying the INRange Remote Medication Management System in class III because it was not substantially equivalent to a device that was introduced or delivered for introduction into interstate commerce for commercial distribution before May 28, 1976, or a device that was subsequently reclassified into class I or class II. On September 25, 2006, INRange Systems, Inc., submitted a petition requesting classification of the INRange Remote Medication Management System under section 513(f)(2) of the act. The manufacturer recommended that the device be classified into class II (Ref. 1).

In accordance with section 513(f)(2) of the act, FDA reviewed the petition in order to classify the device under the criteria for classification set forth in 513(a)(1) of the act. Devices are to be classified into class II if general controls, by themselves, are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide reasonable assurance of the safety and effectiveness of the device for its intended use. After review of the information submitted in the petition, FDA determined that remote medication management systems can be classified into class II with the establishment of special controls. FDA believes that these special controls, in addition to general controls, are adequate to provide reasonable assurance of the safety and effectiveness of the device. The device is assigned the generic name “Remote Medication Management System.” A remote medication management system is a device composed of clinical and communications software, a medication delivery unit, and medication packaging. The system is intended to store the patient's prescribed medications in a delivery unit, to permit a health care professional to remotely schedule the patient's prescribed medications, to notify the patient when the prescribed medications are due to be taken, to release the prescribed medications to a tray of the delivery unit accessible to the patient on the patient's command, and to record a history of the event for the health care professional. The system is intended for use as an aid to health care professionals in managing therapeutic regimens for patients in the home or clinic.

FDA has identified the following risks to health associated with this type of device:

• Improper dosage delivered to patient,

• Cross-contamination of medications—unintended drug interactions,

• Compromised information security,

• Failure of the device—inability to deliver medication,

• Electromagnetic interference—electromagnetic emissions interfering with other medical devices or electromagnetic susceptibility causing the device to function improperly due to emissions of other devices, and

• Electrical and mechanical hazards—electrical shock, pinching.

1. Background

The Treasury Tax and Loan (TT&L) program encompasses two separate components: A depositary component through which we collect Federal tax deposits and payments from business taxpayers for employee withholding and other types of taxes, and an investment component through which we invest short-term operating balances not needed for immediate cash outlays. Examples of the investment component are retention of tax deposits, direct investments, term investments or other investment programs. Approximately 950 TT&L depositaries borrow excess short-term Treasury operating funds by participating in the investment component of the TT&L program. Through agreements executed pursuant to Part 203, participating depositaries borrow Treasury funds in the form of a note secured with collateral pledged to Treasury and pay interest to Treasury on these balances.

We have revised Part 203 to reflect recent operational changes and changes in terminology to the TT&L program, and to streamline and simplify the regulation. Because the predominant intent of this rulemaking is to improve the clarity of the regulation, we have removed some procedural and technical requirements and provisions, such as references to specific Forms and filing instructions, from the existing regulation. All of the technical requirements that we have removed and that still apply are contained in Volume IV of the Treasury Financial Manual (see http://www.fms.treas.gov/tfm/vol4/index.html ). Those technical requirements that don't still apply have been deleted. For example, current § 203.10 sets forth procedures for financial institutions to enroll taxpayers in the Electronic Federal Tax Payment System (EFTPS) that no longer accurately reflect the actual process. Accordingly, we have deleted the substance of current § 203.10 from the regulation. The current procedures for enrolling taxpayers in EFTPS are found in Volume IV of the Treasury Financial Manual, Part 1, Chapter 2200.

In addition, we have removed some of the existing provisions of the regulation because they duplicate provisions of 31 CFR part 210, which sets forth the rules governing the Federal government's participation in the Automated Clearing House (ACH) system. For example, the substance of current § 203.15 has been deleted from the interim final regulation because everything in current § 203.15 is covered in 31 CFR part 210 (see § 210.8(b)(1)). For the same reason, the substantive provisions of current § 203.12, which address ACH credit and debit transactions, have been deleted.

Although a number of new terms have been added to describe components of the TT&L program, most aspects of the operation of the program are not changing. For example, the new term “Treasury Investment Program (TIP)” is the automated system within the TT&L program that receives tax collection data, invests funds, and monitors collateral pledged to secure invested funds and public money. The new term “Paper Tax System (PATAX)” is the automated system within TIP that collects, adjusts, and reports paper Federal tax deposits (FTDs).

The revisions to this rule reflect changes that have been made to the TT&L program over recent years. One of the most significant changes requires depositaries to have collateral in place before any funds are credited to their TIP main account balance or Special Direct Investment (SDI) account balance. Previously, a depositary had until the end of the day to have collateral in place after the funds were credited to its account. This change helps ensure that Treasury investments are adequately secured at all times. Another change, reflected in § 203.20, is that with the implementation of the Treasury Investment Program, transactions now post to financial institutions' reserve accounts throughout the day.

Another change to the TT&L program occurred in 2001, when the Department of the Treasury announced that after December 31, 2000, Federal Reserve Banks (FRBs) would no longer accept FTD paper coupons. The change affected only a small percentage (less than one-half of one percent) of FTD deposits. It was no longer cost-effective for the FRBs to process the small number of FTD paper coupons they received annually. We have deleted § 203.18(b) of the current regulation to reflect this change. Financial institutions that are TT&L depositaries will still accept paper coupons. For those taxpayers who do not have an account with a TT&L depositary or who do not wish to pay taxes electronically through EFTPS, FMS has a mail-in option.

Other changes to the TT&L program and Part 203 are discussed in the section-by-section analysis below.

Amended § 203.1 is substantively unchanged from current § 203.1, except that language has been added to clarify that there are various ways that a financial institution may participate in the TT&L program. A financial institution may choose to participate in the TT&L program by becoming an investor depositary, a retainer depositary, and/or a collector depositary, or by processing tax payments through EFTPS. Amended § 203.1 clarifies that a financial institution does not become a TT&L depositary, as defined, by processing tax payments through EFTPS.

We have made a number of changes to the definitions set forth at § 203.2. Several definitions have been deleted because they are not used in the interim final regulation. These include: “Direct Access transaction,” “Electronic Tax Application,” “Electronic Tax Application reference number,” “Input Message Accountability Data,” and “Transaction trace number.” Other terms defined in the current regulation are replaced by new terminology in the interim final regulation, including “Federal Reserve account” (replaced by “Reserve account”), “Federal Reserve Bank of the district” (replaced by “Federal Reserve Bank (FRB)”), “Federal Tax Deposit system” (replaced by “Paper Tax System (PATAX)”), “Note option” (replaced by “Retainer depositary” and “Investor depositary”), and “Remittance option” (replaced by “Collector depositary”). Several new terms have been added to reflect enhancements to the TT&L program, including “Capacity,” “Dynamic investment,” “Investment program,” “Special Direct Investment (SDI) account balance,” “Term Investment Option (TIO) account balance,” “Treasury Investment Program (TIP),” “Treasury Support Center (TSC),” and “TIP main account balance.” A number of definitions have been reworded to make them easier to understand, but are substantively unchanged. Significant changes to specific definitions are discussed below.

The new term “balance limit” is defined and replaces the term “maximum balance” in current Part 203. Although the term “maximum balance” is used in current Part 203, it is not defined.

The new term “capacity” is being added to refer to the additional amount of a direct investment or special direct investment that a designated depositary is willing to receive or the additional amount of tax deposits that a designated depositary is willing to retain. The TIP main account balance or SDI account balance, current collateral value, pending withdrawals, and pending investments are considered when determining capacity.

The new term “collector depositary” is used to describe a depositary that uses the “remittance option” under current Part 203 to better reflect the activity performed by the depositary.

The new term “dynamic investment” is used to describe investments placed throughout the day.

The new term “Federal Reserve Bank” replaces “Federal Reserve Bank of the district” in current Part 203.

The new term “investment program” is used to provide an all-inclusive name for the programs through which Treasury invests excess operating cash. Examples of the investment component are retention of tax deposits, direct investments, and term investments. Depositaries do not have to accept paper-based Federal Tax Deposit coupons (PATAX) to participate in the investment program.

The new term “investor depositary” is used to describe one of the two kinds of depositaries that are referred to as “note option” depositaries in the current regulation. An investor depositary is a depositary authorized to participate in the investment program. In the interim final regulation, the terms “investor depositary” and “retainer depositary” are specific terms that replace the less specific term “note option” in the current regulation.

The new term “PATAX” replaces the term “Federal Tax Deposit System” in current Part 203, to better reflect the activity performed by the system.

The new term “Reserve account” replaces “Federal Reserve account” in current Part 203. The definition incorporates the concept that a financial institution's reserve account may in some cases be the reserve account of the financial institution's correspondent bank.

The new term “retainer depositary” is used to describe a certain kind of depositary known as a “note option” depositary in the current regulation. A retainer depositary is a depositary that retains a portion of the Federal tax deposits it accepts. In the interim final regulation, the terms “investor depositary” and “retainer depositary” replace the less specific term “note option” in the current regulation. Retainer depositaries do not have to accept paper-based Federal Tax Deposit coupons (PATAX).

The reference to direct access transactions in the current definition of “same-day payment” has been deleted in the amended definition because these transactions are no longer available. These transactions have been replaced by Fedwire® non-value transactions.

This definition has been changed to delete the reference to note account and to add a reference to Borrower-In-Custody (BIC) arrangements.

The new term “SDI account balance” is being added because there is now a separate account for SDI funds. In the current regulation, SDI funds are allowed to be commingled with direct investment funds and retained tax deposits.

The new term “TIO account balance” is being added to replace “Term note balance.”

The new term “TIP” is being added to describe the automated system within the TT&L program that receives tax collections, invests funds, and monitors collateral pledged to secure invested funds.

The new term “TIP main account balance” is being added to distinguish retained tax deposits and direct investments funds from SDI funds.

The new term “TSC” is being added to refer to the centralized office located at an FRB that is responsible for monitoring collateral pledged and managing the TT&L program participation for designated depositaries.

The definition of “TT&L depositary” has been changed to reflect new terminology.

The definition of “TT&L program” has been revised to add references to PATAX, TIP, and EFTPS.

We have added a new § 203.3 to clarify the different kinds of TT&L depositaries and the circumstances in which a financial institution must be a TT&L depositary. A financial institution must be a TT&L depositary in order to participate in either PATAX or the investment program, but not in order to participate in EFTPS alone. There are three kinds of TT&L depositaries:

• Collector depositaries—depositaries that accept paper tax payments and may accept electronic tax payments, but that do not retain any such deposits in a TIP main account or accept direct or special direct investments. A collector depositary may accept term investments.

• Retainer depositaries—depositaries that accept electronic and/or paper tax payments and retain a portion of the tax deposits in a TIP main account balance but do not accept direct or special direct investments. A retainer depositary may accept term investments.

• Investor depositaries—depositaries that participate in the investment program by accepting direct investments, special direct investments, and dynamic investments. Investor depositaries may accept electronic and/or paper tax payments and may retain a portion of those tax deposits. An investor depositary may also accept term investments.

Amended § 203.4 sets forth the criteria a financial institution must meet to be eligible for designation as a TT&L depositary. The criteria in the amended rule are unchanged from those in the current § 203.3.

Amended § 203.5 sets forth the substance of current § 203.4 with certain changes. Subsection (a) is unchanged except that language contained in current § 203.6 which provides that Treasury will not compensate depositaries for servicing and maintaining a TT&L account, or for processing tax payments through EFTPS or P AT AX, has been relocated to § 203.5(a).

Amended § 203.5(b) simplifies the current regulation by deleting references to specific forms, which are set forth in procedural instructions.

We have not made any substantive change to the obligations of TT&L depositaries described in current § 203.5.

We have not revised § 203.7 except for minor wording changes.

Amended § 203.8 is unchanged from current § 203.8 except that terminology has been updated.

We have not made any substantive changes to § 203.9.

Amended § 203.10 sets forth the substance of current § 203.11. The second sentence of current § 203.11(a) is deleted because it restates the point made in amended § 203.9 that a financial institution need not be a TT&L depositary in order to process payments through EFTPS.

Details regarding some of the requirements of Fedwire® value transactions which are set forth in current § 203.13(b) have been eliminated as unnecessary. References to direct access transactions set forth in current § 203.713(d) have been deleted because these transactions are no longer available.

We have not made any substantive changes to the application or calculation of EFTPS interest assessments.

We have not made any substantive changes to the appeal and dispute resolution procedures.

We have not changed the scope of subpart C.

Amended § 203.15 sets forth the provisions of current § 203.18, with a number of changes. We have deleted entirely the substance of § 203.18(b), which provides that FRBs must accept FTDs directly from taxpayers and sets forth procedures governing 13 these transactions. FRBs no longer accept FTDs directly from the taxpayer. We also have deleted from this section many procedural steps that are adequately addressed in procedural instructions.

Amended § 203.16 sets forth the substance of current § 203.19. The order of subsections (a) and (b) has been reversed.

Amended § 203.17 sets forth the substance of current § 203.20, except that the order of subsections (a) and (b) has been reversed.

We have not revised the scope of subpart D.

Amended § 203.19 sets forth the substance of current § 203.22 with the addition of dynamic investments and term investments.

We have not changed the provisions governing TIP main account balances, SDI account balances, and no account balances. The section title was changed to reflect the inclusion of the no account balances.

The classes of securities or instruments that are acceptable collateral to secure deposits and investments, and their respective valuations, as described in 31 CFR part 380, can be viewed at Treasury's Bureau of the Public Debt's Web site at 14 http://www.treasurydirect.gov/instit/statreg/collateral/collateral_fiscalprograms.htm#ttl

Amended § 203.21(c)(2) has been updated to reflect changes in the Uniform Commercial Code (which provides a private sector analogue for Treasury's BIC arrangements), relative to perfecting security interests in BIC collateral. Section 203.21(e) has also been changed. Under current § 203.21(f), when a TT&L depositary pledges acceptable securities that are not negotiable without its endorsement or assignment, it may, in lieu of placing its unqualified endorsement on each security, provide an irrevocable power of attorney authorizing the FRB to assign the securities. Amended § 203.21(e) states that by pledging acceptable securities which are not negotiable without the depositary's endorsement or assignment, a TT&L depositary, in lieu of placing its unqualified endorsement on each security, automatically grants the FRB an irrevocable power of attorney to endorse, assign or transfer the securities. The purpose of this change is to relieve both TT&L depositaries and the FRB from the administrative burden associated with providing a power-of-attorney each time such securities are pledged.

The public is invited to submit comments on the interim rule which will be taken into account before this interim rule is confirmed as final.

This interim final rule does not substantively change the TT&L program but rather describes operational changes that have already taken place, updates terminology, and removes duplicative or unnecessary provisions. The updates in this rule will avoid confusion about the operation of the program. Under 5 U.S.C. 553(b), this rule is exempt from prior notice and comment rulemaking requirements on the grounds that the amendments are non-substantive and further delay in making these amendments is unnecessary and contrary to the public interest. For the same reasons, good cause exists to make the rule effective upon publication.

Executive Order 12866 requires each agency in the Executive branch to write regulations that are simple and easy to understand. We invite comment on how to make this final rule clearer. For example, you may wish to discuss: (1) Whether we have organized the material to suit your needs; (2) whether the requirements of this final rule are clear; or (3) whether there is something else we could do to make this rule easier to understand.

The final rule does not meet the criteria for a “significant regulatory action” as defined in Executive Order 12866. Therefore, the regulatory review procedures contained therein do not apply.

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq .) do not apply.

This rule contains no new collections of information. Therefore, the Paperwork Reduction Act does not apply.

The National Forest Management Act (NFMA), codified in part at Title 16 U.S.C. 472a(d), requires the Secretary of Agriculture to advertise all sales of forest products unless the appraised value of the sale is less than $10,000, or the Secretary determines that extraordinary conditions exist, as defined by regulation. The requirement to advertise sales unless extraordinary conditions exist applies to the substitution of timber outside a sale contract area.

Prior to NFMA, the Government Accountability Office (formerly the General Accounting Office) held that substitution of timber outside the contract area for timber in the contract area violated the Agency's authority to sell timber. 1 Since the passage of NFMA, but in the absence of a regulation defining “extraordinary conditions,” the Agriculture Board of Contract Appeals has decided similarly in several cases. 2

Before authorizing activities on National Forest System lands, the Forest Service must ensure compliance with applicable laws and regulations and with conditions on the ground at the time of the authorization. Even so, after entering into timber sale contracts, environmental changes may occur such as the listing of a new species on the endangered species list, or a catastrophic event may occur, such as a large wildfire, resulting in the need to modify the contracts. Also, court orders and decisions resulting from environmental litigation may require making changes to existing contracts even when those contracts are not specifically named in the litigation if they are similar to contracts that were named. When this occurs, it is essential for Forest Service officials to have flexibility to adjust management activities and contractual arrangements without incurring enormous financial liability associated with unilateral modifications or contract cancellations.

At the time a sale is sold, there is no way to predict what future litigation or environmental changes may occur that will result in the sale contract needing to be changed. Each occurrence is a unique situation that constitutes an extraordinary condition. The Forest Service needs the ability to provide replacement timber or forest products for contracts that must be modified to prevent environmental degradation or resource damage, or as a result of administrative appeals, litigation, court orders, or catastrophic events that occur after contract award. Thus, the Forest Service promulgated an interim final rule, published June 16, 2006 (71 FR 34823), on noncompetitive sale of timber and other forest products based on the Secretary of Agriculture's determination that extraordinary conditions exist whenever a timber or forest products contract needs to be modified or canceled to address such unexpected changes. This benefits the Government by providing contracting officers with an opportunity to avert costly claims by providing replacement timber or forest products from outside the contract area when replacement timber is not available within the contract area. Replacement timber also helps maintain the industry infrastructure, which in turn will maintain forest management options.

A 60-day comment period on the interim final rule was initiated on June 16, 2006, (71 FR 34823). Only two respondents replied. One respondent is an individual and the other respondent is a timber industry association.

Comment 1: The constraints that the value of replacement material may not exceed the value of the material it is replacing by more than 10% or $10,000, whichever is less, are too restrictive and will hamper implementation and use of this valuable tool. On small amounts of replacement timber, 10% may represent a very small amount of money, and on large volumes the $10,000 may represent a small percentage of value. If one or both of these numbers has some basis in law and cannot be removed, the only fair way to deal with this situation is to have these be upper and lower limits.

Response 1: The limitations were intended to reduce potential impacts to other purchasers while making the purchaser of a sale that must be modified or terminated whole. Replacement timber from outside the sale area will most likely come from some other sale that would otherwise be offered competitively on the open market. Offering substantially more replacement timber than the amount or value being deleted by a unilateral termination goes beyond making a purchaser whole, circumvents fair and open competition and could have detrimental consequences to other purchasers, the public, and Forest Service program objectives. For the following reasons the Forest Service agrees that the 10% limit is unnecessary but disagrees that the $10,000 limit is overly restrictive.

The National Forest Management Act (NFMA) requires advertising sales greater than $10,000 in appraised value unless the Secretary determines, as defined by regulation, that extraordinary conditions exist (16 U.S.C. 472a(d)). The intent of this rule is to establish the Secretary's determination of extraordinary conditions so that replacement timber of similar quantity and value can be obtained from outside the sale area without advertisement, even when its total value is greater than $10,000. The Forest Service recognizes, however, that exact matches with the original contract value, quantity and quality are unlikely and that a defined measure of acceptable deviation is necessary. The Forest Service believes that providing replacement timber volume with an appraised value of no more than $10,000 over the original contract value is an acceptable amount of deviation. The premise for this is that the original value of the timber being replaced was established after advertisement and the opportunity for competitive bidding in accordance with the advertisement and competition requirements of NFMA and its implementing regulations. Therefore, only the value of replacement timber exceeding the value of the original timber volume being replaced was not previously subject to advertisement and competition requirements. Advertisement and competition of the excess replacement timber is not required by NFMA or the regulations so long as the excess value remains at or below $10,000.

The rules at 36 CFR 223.112 require that contract modifications must not be done in a manner that would be injurious to the United States. For the reasons stated above, the Forest Service believes that replacement timber valued at no more than $10,000 over the original contract value adequately accounts for differences in contract and replacement timber value and ensures that contracts are not modified in a manner that would be injurious to the United States. Imposing the $10,000 upper limit on the value of replacement timber establishes a reasonable and acceptable measure of deviation, prevents a purchaser from getting a potential windfall, and eliminates the need for the Forest Service to determine, on a case-by-case basis, the level of acceptable deviation that may result in a modification that is not injurious to the United States. The Forest Service does not believe this upper limit is overly restrictive and will retain it in the final rule. The Forest Service agrees, however, that the 10% limit imposed in the interim final rule is not necessary for determining an acceptable level of deviation, and for that reason, it will be eliminated from the final rule.

The respondent suggested that if there was an upper limit there should be a corresponding lower limit on the value of replacement timber. For example, if $50,000 of replacement timber is needed, applying the $10,000 limit addressed above would require the value of replacement timber to be no less than $40,000. The Forest Service disagrees as this would have the effect of guaranteeing replacement timber which is simply an alternative remedy, when it is available, to liquidated damages addressed in the contracts. Although the rule provides broad authority for authorizing replacement timber for a variety of reasons, neither the rule nor the contracts require the Forest Service to provide, or the purchaser to agree to replacement timber. No changes are made in response to this portion of the comment.

Comment 2: The Forest Service should clarify the standard used to determine what volume will be removed from a contract because of wildfire or similar catastrophic event.

Response 2: The reference to catastrophic events in the interim final rule has led to confusion with some interpreting this to mean that the Forest Service would replace catastrophically damaged timber with comparable undamaged timber. This was not the intent. Replacement timber is only a remedy for a contract termination or partial termination under subsection B/BT8.34 Contract Termination. Replacement timber is not a remedy for a contract termination or partial termination under subsection B/BT8.22 Termination for Catastrophe. However, a single sale could be terminated under both B/BT8.22 and B/BT8.34.

For example, a fire catastrophically damages 60% of a sale area including several uncut units and timber between those units. Pursuant to B/BT8.32 Modification for Catastrophe, the Forest Service and Purchaser try, but cannot reach agreement on a modification for harvesting the catastrophically affected timber, and elect termination under B/BT8.22. The remaining 40% of the sale was not damaged, includes “green” units that the purchaser wants to cut, and pursuant to B/BT8.32 Modification for Catastrophe the parties agree could be logged separately from the catastrophically damaged timber. But, the Forest Service determines that because of the changed conditions caused by the fire, harvesting the remaining green units will cause environmental degradation and starts the process to terminate that portion of the contract pursuant to B/BT8.34. Replacement timber from outside the sale area could be considered for the undamaged timber included under the B/BT8.34 termination but not for the damaged timber included under the B/BT8.22 termination. Although the catastrophic event caused the situation leading to a decision to terminate the undamaged portions of the sale, the actual reason to terminate is to prevent environmental degradation. Referencing catastrophic events in the rule is unnecessary and because the reference can be misinterpreted it has been eliminated in the final rule.

Contracts awarded prior to the April 2004 version of the Timber Sale Contract do not contain references to replacement timber in event of a termination but the rule potentially could be applied to those contracts as well via a contract modification. The Forest Service agrees that more clarification of how the rule could be applied to those contracts would help and will do that with an amendment to the Timber Sale Administration Handbook FSH 2409.15. But no changes to the rule are needed to address this situation.

Comment 3: Offering substitute timber outside the sale area specified in the contract is a common sense approach to meeting contractual obligations and maintaining an equitable balance of risk. Replacement timber will help maintain the industry infrastructure which will maintain forest management options.

Response 3: The Forest Service agrees. No changes are made in response to this comment.

Comment 4: The respondent opposed the determination of “extraordinary conditions” likening it to an environmental assault emanating from the U.S. Department of Agriculture and suggesting that the determination is based on the desires of lobbyists working for the timber industry in corrupt Washington.

Response 4: The Forest Service disagrees that the determination of extraordinary conditions is made based on the desires of timber industry lobbyists. The determination has precedent supporting it. In 1996, the Secretary promulgated an interim final rule set out at 36 CFR 223.85(b), that defined extraordinary conditions for sales released pursuant to section 2001(k) of the 1995 Rescissions Act (61 FR 14618, April 3, 1996). The 1996 rule has reduced claims by allowing timber from outside the sale area specified in the contract to be substituted, without advertisement, on specific timber sales in Washington and Oregon affected by the 1995 Rescissions Act. A similar result is anticipated with this rule. The only impact of this determination is to allow replacement timber or other forest products without advertisement. The Forest Service may consider only such timber or forest products for replacement purposes for which the agency has completed the appropriate environmental analysis and made a decision to authorize its harvest. Additionally, any applicable comment, appeal, or objection process for the harvest must have been completed. No changes are made in response to this comment.

Comment 5: Respondent supported the concept of replacement timber in lieu of contract cancellations noting that this will benefit the public by encouraging on-the-ground resource management while minimizing taxpayer burdens associated with damage claims.

Response 5: The Forest Service agrees. No changes are made in response to this comment.

Comment 6: Replacement timber will help maintain the industry infrastructure, which will in turn maintain forest management options.

Response 6: The Forest Service agrees. No changes are made in response to this comment.

The interim final rule in § 223.85(c), specified that extraordinary conditions, as provided for in 16 U.S.C. 472a(d), includes those conditions under which contracts for the sale or exchange of timber or other forest products must be suspended, modified, or terminated under the terms of such contracts to prevent environmental degradation or resource damage, or as the result of administrative appeals, litigation, court orders, or catastrophic events. The reference to catastrophic events in the interim final rule led to confusion with some interpreting this to mean that the Forest Service would replace catastrophically damaged timber with comparable undamaged timber. The intent was to address situations where harvesting the remaining green timber on a catastrophically damaged sale would result in environmental degradation or resource damage. In those situations, replacement timber would be an alternative to harvesting the remaining green timber or canceling the contract. The intent of the rule was not to replace catastrophically damaged timber with undamaged timber. The reference to catastrophically damaged timber has been removed in this final rule.

Section 223.85(c), of the interim final rule specified that the value of replacement timber or forest products may not exceed the value of the material it is replacing by more than 10% or $10,000, whichever is less as determined by standard Forest Service appraisal methods. Based on comments received on the interim final rule, and further evaluation by the Forest Service, the 10% limit has been removed in the final rule.

Section 223.85(c), of the interim final rule specified that the replacement timber or forest products must come from the same National Forest as the original contract. In some cases, several proclaimed National Forests have been combined under one Forest Supervisor for administration purposes. The term National Forest in this paragraph refers to an administrative unit headed by a single Forest Supervisor. This distinction has been added to the final rule.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), which the President signed into law on March 22, 1995, the Agency has assessed the effects of this rule on State, local, and tribal governments and the private sector. This rule does not compel the expenditure of $100 million or more by any State, local, or tribal governments or anyone in the private sector. Therefore, a statement under section 202 of the Act is not required.

This rule has been reviewed under USDA procedures and Executive Order 12866, Regulatory Planning and Review, as amended by E.O. 13422 on January 23, 2007. The Office of Management and Budget (OMB) has determined that this is not a significant rule. This rule will not have an annual effect of $100 million or more on the economy nor adversely affect productivity, competition, jobs, the environment, public health or safety, nor State or local governments. This rule will not interfere with an action taken or planned by another agency nor raise new legal or policy issues. Finally, this action will not alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients of such programs. Accordingly, this rule is not subject to OMB review under Executive Order 12866.

Moreover, this rule has been considered in light of Executive Order 13272 regarding proper consideration of small entities and the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), which amended the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). A final regulatory flexibility assessment has been made and it has been determined that this action will not have a significant economic impact on a substantial number of small entities as defined by SBREFA. The rule has no adverse or special impacts on small business, small not-for-profit organizations, or small units of the Government because it imposes no additional requirements on the affected public.

Section 31.12 of Forest Service Handbook 1909.15 (57 FR 43180, September 18, 1992) excludes from documentation in an environmental assessment or impact statement “rules, regulations, or policies to establish Servicewide administrative procedures, program processes, or instructions.” The Agency's assessment is that this rule falls within this category of actions and that no extraordinary circumstances exist, and therefore, the preparation of an environmental assessment or environmental impact statement for this rule is not required.

This rule has been analyzed in accordance with the principles and criteria contained in Executive Order 12360, and it has been determined that the rule will not pose the risk of a taking of private property, as the rule is limited to the establishment of administrative procedures.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. After adoption of this rule, (1) all State and local laws and regulations that conflict with this rule or that would impede full implementation of this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) this rule would not require the use of administrative proceedings before parties could file suit in court challenging its provisions.

The Agency has considered this rule under the requirements of Executive Order 13132, Federalism. The Agency has made an assessment that the rule conforms with the federalism principles set out in this Executive order; would not impose any compliance costs on the States; and would 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.

This rule does not have tribal implications as defined by Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Therefore, advance consultation with Tribes is not required.

This rule does not require any record keeping or reporting requirements or other information collection requirements as defined in 5 CFR part 1320 not already approved for use and, therefore, imposes no additional paperwork burden on the public. Accordingly, the review provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq. ) and implementing regulations at 5 CFR part 1320 do not apply.

Regulated Entities. Categories and entities potentially regulated by this action include the following, which were previously identified by EPA as potentially regulated or affected by CAIR, the CAIR FIPs, or CAMR:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists examples of the types of entities EPA is now aware could potentially be regulated by this action. Other types of entities not listed could also be affected. To determine whether a facility is regulated, carefully examine the applicability provisions and definitions in CAIR, the CAIR FIPs, CAMR, and the proposed CAMR Federal Plan. 1 All references related to applicability and definitions for these rules have been provided in a single list only once and will not be referenced again in this action to avoid unnecessary repetition.

As discussed below, EPA believes that the vast majority of biomass cogeneration units are operated by the pulp and paper industry. The following table identifies NAICS codes for entities in the pulp and paper industry. This table is not intended to be exhaustive, but rather the table may help identify entities potentially affected by today's action, although today's action may affect entities in other industries in addition to pulp and paper.

If you have questions regarding the applicability of this action to a particular entity, consult your EPA Regional Office or EPA's Clean Air Markets Division.

Worldwide Web. In addition to being available in the docket, an electronic copy of this action will also be available on the Worldwide Web through EPA's Office of Air and Radiation. Following signature by the Administrator, a copy of this action will be posted on the CAIR and CAMR pages at http://www.epa.gov/cair and http://www.epa.gov/camr.

Outline. The information presented in this preamble is organized as follows:

On July 3, 2007 (72 FR 36404), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Virginia. The NPR proposed approval of Virginia's plan to control particulate matter emissions from pulp and paper mills (9 VAC 5, Chapter 40, Article 13, Rule 4-13). The formal SIP revision was submitted by the Commonwealth of Virginia on June 21, 2005. Other specific requirements of Virginia's plan to control particulate matter from pulp and paper mills and the rational for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information (1) that are generated or developed before the commencement of a voluntary environmental assessment; (2) that are prepared independently of the assessment process; (3) that demonstrate a clear, imminent and substantial danger to the public health or environment; or (4) that are required by law.

On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts. * * *” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.”

Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.”

Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its program consistent with the Federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the Clean Air Act is likewise unaffected by this, or any, state audit privilege or immunity law.

EPA is approving the amendments to an existing regulation (9 VAC 5, Chapter 40, Article 13, Rule 4-13) submitted on June 21, 2005 as a revision to the Virginia SIP.

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, 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 requirement, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. 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 CAA. 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 . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 18, 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, approving the amendments to Virginia's regulation to control particulate matter from pulp and paper mills, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

In the following, whenever “we,” “us,” or “our” are used, we mean the United States Environmental Protection Agency.

On July 27, 2007 (72 FR 41246), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Pennsylvania. The NPR proposed approval of Pennsylvania's redesignation request, a SIP revision that establishes a maintenance plan for Mercer County that provides for continued attainment of the 8-hour ozone NAAQS for at least 10 years after redesignation, and a 2002 base year emissions inventory. The formal SIP revisions were submitted by PADEP on March 27, 2007. Other specific requirements of Pennsylvania's redesignation request SIP revision for the maintenance plan and the rationales for EPA's proposed actions are explained in the NPR and will not be restated here. No public comments were received on the NPR.

However, on December 22, 2006, the U.S. Court of Appeals for the District of Columbia Circuit vacated EPA's Phase 1 Implementation Rule for the 8-hour Ozone Standard. (69 FR 23951, April 30, 2004). South Coast Air Quality Management Dist. v. EPA , 472 F.3d 882 (D.C.Cir. 2006). On June 8, 2007, in South Coast Air Quality Management Dist. v. EPA , Docket No. 04-1201, in response to several petitions for rehearing, the D. C. Circuit clarified that the Phase 1 Rule was vacated only with regard to those parts of the rule that had been successfully challenged. Therefore, the Phase 1 Rule provisions related to classifications for areas currently classified under subpart 2 of Title I, part D of the CAA as 8-hour nonattainment areas, the 8-hour attainment dates and the timing for emissions reductions needed for attainment of the 8-hour ozone NAAQS remain effective. The June 8 decision left intact the Court's rejection of EPA's reasons for implementing the 8-hour standard in certain nonattainment areas under subpart 1 in lieu of subpart 2. By limiting the vacatur, the Court let stand EPA's revocation of the 1-hour standard and those anti-backsliding provisions of the Phase 1 Rule that had not been successfully challenged. The June 8 decision reaffirmed the December 22, 2006 decision that EPA had improperly failed to retain measures required for 1-hour nonattainment areas under the anti-backsliding provisions of the regulations: (1) Nonattainment area New Source Review (NSR) requirements based on an area's 1-hour nonattainment classification; (2) Section 185 penalty fees for 1-hour severe or extreme nonattainment areas; and (3) measures to be implemented pursuant to section 172(c)(9) or 182(c)(9) of the CAA, on the contingency of an area not making reasonable further progress toward attainment of the 1-hour NAAQS, or for failure to attain that NAAQS.

In addition the June 8 decision clarified that the Court's reference to conformity requirements for anti-backsliding purposes was limited to requiring the continued use of 1-hour MVEBs until 8-hour budgets were available for 8-hour conformity determinations, which is already required under EPA's conformity regulations. The Court thus clarified that 1-hour conformity determinations are not required for anti-backsliding purposes.

For the reasons set forth in the proposal, EPA does not believe that the Court's rulings alter any requirements relevant to this redesignation action so as to preclude redesignation, and do not prevent EPA from finalizing this redesignation. EPA believes that the Court's December 22, 2006 and June 8, 2007 decisions impose no impediment to moving forward with redesignation of this area to attainment, because even in light of the Court's decisions, redesignation is appropriate under the relevant redesignation provisions of the CAA and longstanding policies regarding redesignation requests.

In its proposal, EPA proposed to find that the area had satisfied the requirements under the 1-hour standard whether the 1-hour standard was deemed to be reinstated or whether the Court's decision on the petition for rehearing were modified to require something less than compliance with all applicable 1-hour requirements. Because EPA proposed to find that the area satisfied the requirements under either scenario, EPA is proceeding to finalize the redesignation and to conclude that the area met the requirements under the 1-hour standard applicable for purposes of redesignation under the 8-hour standard. These include the provisions of EPA's anti-backsliding rules, as well as the additional anti-backsliding provisions identified by the Court in its rulings. In its June 8, 2007 decision the Court limited its vacatur so as to uphold those provisions of the anti-backsliding requirements that were not successfully challenged. Therefore, EPA finds that the area has met the anti-backsliding requirements, see 40 CFR 51.900 et seq. ; 70 FR 30592, 30604 (May 26, 2005) which apply by virtue of the area's classification for the 1-hour ozone NAAQS, as well as the four additional anti-backsliding provisions identified by the Court, or that such requirements are not applicable for purposes of redesignation. In addition, with respect to the requirement for transportation conformity under the 1-hour standard, the Court in its June 8 decision clarified that for those areas with 1-hour MVEBs, anti-backsliding requires only that those 1-hour budgets must be used for 8-hour conformity determinations until replaced by 8-hour budgets. To meet this requirement, conformity determinations in such areas must continue to comply with the applicable requirements of EPA's conformity regulations at 40 CFR Part 93. The court clarified that 1-hour conformity determinations are not required for anti-backsliding purposes.

EPA is approving the Commonwealth of Pennsylvania's redesignation request, maintenance plan, and the 2002 base year emissions inventory because the requirements for approval have been satisfied. EPA has evaluated Pennsylvania's redesignation request that was submitted on March 27, 2007 and determined that it meets the redesignation criteria set forth in section 107(d)(3)(E) of the CAA. EPA believes that the redesignation request and monitoring data demonstrate that Mercer County has attained the 8-hour ozone standard. The final approval of this redesignation request will change the designation of Mercer County from nonattainment to attainment for the 8-hour ozone standard. EPA is approving the maintenance plan for Mercer County submitted on March 27, 2007 as a revision to the Pennsylvania SIP. EPA is also approving the MVEBs submitted by PADEP in conjunction with its redesignation request. In addition, EPA is approving the 2002 base year emissions inventory submitted by PADEP on March 27, 2007 as a revision to the Pennsylvania SIP. In this final rulemaking, EPA is notifying the public that we have found that the MVEBs for volatile organic compounds (VOC) and nitrogen oxides (NO X ) in Mercer County for the 8-hour ozone maintenance plan are adequate and approved for conformity purposes. 1 As a result of our finding, Mercer County must use the MVEBs from the submitted 8-hour ozone maintenance plan for future conformity determinations. The adequate and approved MVEBs are provided in the following table:

Mercer County is subject to the CAA's requirement for the basic nonattainment areas until and unless it is redesignated to attainment.

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, 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 requirement, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. 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 CAA. 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 . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 18, 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, approving the redesignation of Mercer County to attainment for the 8-hour ozone NAAQS, the associated maintenance plan, the 2002 base year emission inventory, and the MVEBs identified in the maintenance plan, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

FRA has broad statutory authority to regulate railroad safety. The Locomotive Inspection Act (formerly 45 U.S.C. 22-34, now 49 U.S.C. 20701-20703) was enacted in 1911. It prohibits the use of unsafe locomotives and authorizes FRA to issue standards for locomotive maintenance and testing. In order to further FRA's ability to respond effectively to contemporary safety problems and hazards as they arise in the railroad industry, Congress enacted the Federal Railroad Safety Act of 1970 (Safety Act) (formerly 45 U.S.C. 421, 431 et seq. , now found primarily in chapter 201 of Title 49). The Safety Act grants the Secretary of Transportation rulemaking authority over all areas of railroad safety (49 U.S.C. 20103(a)) and confers powers necessary to detect and penalize violations of any rail safety law. This authority was subsequently delegated to the FRA Administrator (49 CFR 1.49) (Until July 5, 1994, the Federal railroad safety statutes existed as separate acts found primarily in title 45 of the United States Code. On that date, all of the acts were repealed, and their provisions were recodified into title 49).

Pursuant to its general statutory rulemaking authority, FRA promulgates and enforces rules as part of a comprehensive regulatory program to address the safety of railroad track, signal systems, communications, rolling stock, operating practices, passenger train emergency preparedness, alcohol and drug testing, locomotive engineer certification, and workplace safety. In the area of locomotive safety, FRA has issued regulations, found at 49 CFR part 229 (“part 229”), addressing topics such as inspections and tests, safety requirements for brake, draft, suspension, and electrical systems, and cabs and cab equipment. All references to parts and sections in this document shall be to parts and sections located in Title 49 of the Code of Federal Regulations. FRA continually reviews its regulations and revises them as needed to keep up with emerging technology.

On July 12, 2004, the Association of American Railroads (AAR), on behalf of itself and its member railroads, petitioned the FRA to delete the requirement as contained in 49 CFR 229.131. The petition and supporting documentation asserted that contrary to popular belief, depositing sand on the rail will not have any significant influence on the emergency stopping distance of a train. Subsequent to the petition, FRA and interested industry members began identifying various issues related to locomotive safety standards with the intent that FRA would potentially address the issues through its Railroad Safety Advisory Committee (RSAC).

In March 1996, FRA established the RSAC, which provides a forum for developing consensus recommendations on rulemakings and other safety program issues. The Committee includes representation from all of the agency's major customer groups, including railroads, labor organizations, suppliers and manufacturers, and other interested parties. A list of member groups follows:

On February 22, 2006, FRA presented, and the RSAC accepted, the task of reviewing existing locomotive safety needs and recommending consideration of specific actions useful to advance the safety of rail operations. The RSAC established the Locomotive Safety Standards Working Group (Working Group) to handle this task and develop recommendations for the full RSAC to consider. Members of the Working Group, in addition to FRA, included the following:

The task statement approved by the full RSAC sought immediate action from the Working Group regarding the need for and usefulness of the existing regulation related to locomotive sanders. The task statement established a target date of 90 days for the Working Group to report back to the RSAC with recommendations to revise the existing regulatory sander provision. The Working Group conducted two meetings that focused almost exclusively on the sander requirement. The meetings were held on May 8-10, 2006, in St. Louis, Missouri, and on August 9-10, 2006, in Fort Worth, Texas. Minutes of these meetings have been made part of the docket in this proceeding. After broad and meaningful discussion related to the potential safety and operational benefits provided by equipping locomotives with operative sanders, the Working Group reached consensus on a recommendation for the full RSAC.

On September 21, 2006, the full RSAC unanimously adopted the Working Group's recommendation on locomotive sanders as its recommendation to FRA. The RSAC recommendation included the Working Group's consensus rule text, and requested that FRA draft a regulatory proposal related to the use of sanders on locomotives performing switching service at outlying locations. The Working Group's discussion of outlying locations was based on an apparent need to distinguish locations that did not have sufficient access to a sand delivery system from those that do have such access. FRA reviewed and accepted the RSAC's recommendation and developed a regulatory proposal based on that recommendation. The specific regulatory language recommended by the RSAC was amended slightly for clarity and consistency, and FRA independently developed proposed provisions related to the use of sanders on locomotives used in switching service at outlying locations.

On March 6, 2007, FRA published a Notice of Proposed Rulemaking (NPRM). See 72 FR 9904. FRA solicited written comments from the public in the NPRM in accordance with the Administrative Procedure Act (5 U.S.C. 553). Consideration of public comment allows FRA to access additional viewpoints from interested parties and include them when appropriate. By the close of the comment period on May 7, 2007, two sets of comments were received. Comments were received on May 4, 2007 from the BLET, and on May 7, 2007 from the AAR. The comments can be classified into three general categories: (1) Responses to specific requests for comments that were made in the NPRM; (2) inquiries regarding the treatment of locomotives that switch position en route changing between lead and trailing positions in the consist under paragraph 229.131(b)(1) and (b)(2); and, (3) remarks concerning the portions of the NPRM that were developed independently by FRA (the definition of sand delivery system and paragraph 229.131(c)(1)).

In order to further clarify written comments received during the comment period, comments were discussed by the Working Group at the June 8, 2007 meeting in Chicago. The discussion, although limited in scope, furthered FRA's understanding of the written comments that were received. Obviously, there can be a tremendous benefit to clarity when in-person oral communication is permitted, including: (1) An opportunity for a party to refine a comment based on one or more questions from the Agency or other party; (2) observations of verbal tone and physical expressions that facilitate better understanding; and (3) an opportunity to accommodate a party that is more effective at communicating orally than it is in writing. Based on its thorough review, FRA addresses each of the comments in the relevant regulatory paragraphs of the section-by-section analysis provided below.

FRA continues to agree with the Working Group's determination that locomotive sanders provide limited safety benefits and that the primary benefits derived from the devices are operational. Accordingly, this final rule retains the NPRM's goal of preserving the limited safety benefits of the devices while addressing the overly restrictive nature of the existing provision. This rule provides appropriate relief from the existing requirement by creating a more precise standard. The final rule requires sander maintenance based on operational realities instead of the current time-based standard. The final rule provides relief according to specific identified operational conditions. The rule distinguishes between the following conditions: lead and non-lead locomotives; locomotives in road service and switching service; and, locomotives at locations with or without a sand delivery system. These distinctions better reflect current railroad operations while maintaining the current level of safety provided by sanders. The rule also harmonizes the sander requirement with the existing Canadian requirements by placing a fourteen-day limit on service for lead locomotives in road service with inoperative sanders.

Throughout the preamble discussion of this rule, FRA refers to comments, views, suggestions, or recommendations made by members of the Working Group. When using this terminology, FRA is referring to views, statements, discussions or positions identified or contained in the minutes of the Working Group meetings. These documents have been made part of the docket in this proceeding and are available for public inspection as discussed in the ADDRESSES portion of this document. These points are discussed to show the origin of certain issues and the course of discussions on those issues at the working group level. We believe this helps illuminate factors FRA has weighed in making its regulatory decisions, and the logic behind those decisions. The reader should keep in mind, of course, that only the full RSAC makes recommendations to FRA, and it is the consensus recommendation of the full RSAC on which FRA is acting.

The NPRM provided a comprehensive technical discussion addressing the usefulness of sand in the operation of locomotives. See 72 FR 9906-08. The discussion evaluated: the effect of sand on adhesion, and braking distance; as well as the current use of sand as instructed by railroad operating rules and training. The discussion demonstrates that having operative sanders benefits the locomotive, and that the benefit could be realized while allowing greater operational flexibility. Two expected benefits from the use of sand concern extended range dynamic braking and lite locomotives. FRA expects the use of sand in conjunction with extended range dynamic braking will provide some benefit. Extended range dynamic braking is currently used extensively to slow trains and (with rolling resistance and perhaps the independent brake) bring them to a stop. Locomotive engineers may utilize dynamic brakes rather than the automatic train brake, where possible, in order to conserve fuel and avoid undesired emergency brake applications. FRA also expects that sand applied on multiple axles could be an important contributor to maintaining satisfactory stopping distances of lite locomotive consists under unfavorable conditions (wet rail, etc.). Locomotives are frequently moved in order to reposition power throughout the fleet. For these lite locomotives, sand will remain on the rail long enough to assist adhesion between the wheels and the rail for a lite locomotive consist. FRA does not believe it is necessary to reiterate the technical discussion in this final rule and directs parties interested in that discussion to the NPRM. See 72 FR 9906-08.

Relaxing the locomotive sanding requirement will maintain safety and will allow railroads to better utilize their locomotive fleets. The current requirement allows a locomotive found with a defective sander to continue in service to the next forward location where repairs can be made or the next calendar day inspection, whichever occurs first. Under the new requirement contained in this final rule, a lead locomotive in an over-the-road train may continue to be utilized by the railroad for up to fourteen days; in the case of a trailing locomotive, it may continue to be utilized by the railroad until placed in a facility with a sand delivery system or departure from an initial terminal.

The final rule recognizes the reality that sanding may reach optimal effectiveness even where one or more locomotive sanders in a consist is inoperative. Locomotives are routinely equipped with two sanders at each end. Often a consist will contain multiple locomotives. Each locomotive in a multiple-locomotive consist distributes sand to the rail. As a result, when each of the locomotives in a multiple locomotive consist are operating with all sanders operative, the train potentially distributes more sand to the rail than it will utilize. At that point, the effect of the sand on the train would be the same if one or two sanders in the consist were inoperative.

Requirements for sanders can be traced back to the steam locomotive era. At that time, sanding the rail was thought to enhance adhesion between the steam locomotive wheel and the rail. Modern diesel locomotives rely on wheel slip and wheel creep devices, as well as sand, to provide adhesion between the wheel and rail. Where sanders are inoperative on a diesel locomotive, the total loss of adhesion would be less than it would have been for a steam locomotive. Notably, any reduced adhesion would limit the ability of the locomotive to pull its train. Loss of the ability to pull the train is a productivity concern that is not being addressed by this final rule.

This final rule also recognizes the fact that sanding the rail in braking mode provides little additional adhesion to a train, because train handling depends primarily on train brakes to maintain train dynamics. The locomotive braking has limited effect. As stated in the technical discussion contained in the NPRM, by the time the locomotives in the consist have passed over the sanded rail, little to no sand remains on the rail and little or no benefit is provided to train braking.

FRA is adding the term “sand delivery system” in this section. The term will mean a permanently stationed or fixed device designed to deliver sand to locomotive sand boxes that do not require the sand to be manually delivered or loaded. A sand delivery system will be considered permanently stationed if it is at a location at least five days a week for at least eight hours per day.

FRA is also adding the term “initial terminal.” The definition of this term will be identical to that currently contained in 49 CFR 232.5 and 238.5. The term will mean “a location where a train is originally assembled.”

FRA is amending this section to exempt locomotives operated under paragraphs 229.131(b) and (c)(1) from the movement for repair provision contained in § 229.9. In general, § 229.9 currently provides movement for repair requirements for equipment found with non-complying conditions under part 229. Paragraphs 229.131(b) and (c)(1) in this rule contain specific requirements relating to the movement and continued use of locomotives with defective sander equipment. Because the paragraphs specifically address movement for repair, applying § 229.9 would be superfluous or conflicting, and is no longer necessary.

FRA is also making a clarifying amendment to this section of part 229. Section 229.9 currently contains the following exception that reads: “[e]xcept as provided in * * * 229.125(h).” The exception relates to locomotive auxiliary lights and although a correct citation when originally inserted into the regulations, later amendments to that section resulted in redesignation of the paragraphs. The exception should refer to § 229.125(g). Like § 229.131(b) and (c)(1), § 229.125(g) sets forth movement for repair requirements specific to that section. Consequently, FRA is making this clarification in this regulatory proceeding.

Paragraph (a). This paragraph establishes a general requirement that locomotives be equipped with operative sanders before departing an initial terminal. Any time a locomotive is in use before leaving the initial terminal, it will be required to have operative sanders. The term “in use” has been consistently applied to mean when a locomotive is capable of being used. Thus, the locomotive does not have to actually be used to be in use. Examples of a locomotive in use are when a locomotive has been inspected, or a locomotive is on a ready track. FRA agrees with the RSAC's recommendation that the initial terminal would be an appropriate place to initially require operative sanders, because it is a place where sander maintenance can usually be accomplished without imposing a significant burden on the railroad. In many instances, locations where trains are initiated are equipped with sand delivery systems and are capable of making repairs to the sander mechanisms. FRA notes that this rule will permit locomotives to be released from daily locomotive inspections with inoperative sanders. However, the rule will require sanders to be repaired or handled for repair under § 229.9 if defective when the locomotive is preparing to depart from an initial terminal. In instances where repairs cannot be performed, a locomotive may be dispatched from an initial terminal but only under the strict provisions contained in § 229.9. Thus, the locomotive could only continue in use to the nearest forward location where necessary repairs could be effectuated or to the locomotive's next calendar day inspection, whichever occurs first. FRA further notes that if a locomotive is at an initial terminal for its train and that location has a sand delivery system or is otherwise capable of making sander repairs, then the locomotive may not legally depart that location with inoperative sanders. FRA also intends to make clear that a locomotive's sanders will only be considered operative if appropriate amounts of sand are deposited on each rail in front of the first power operated wheel set in the direction of movement.

FRA recognizes that this rule will be less restrictive than the movement for repair provisions currently contained in § 229.9. In most instances, locomotives will likely encounter an initial terminal less frequently than a daily inspection. This will facilitate more efficient railroad operations. Under the current provision, a railroad will take a locomotive out of service when a sander defect is found at the daily inspection. By requiring operative sanders less frequently, the new requirement allows the railroad to keep the locomotive in service for longer periods of time. With more locomotives in service, the railroad will be able to better utilize its power throughout its fleet.

Paragraph (b). This paragraph contains the requirements for handling locomotives used in road service where sanders become inoperative after departure from an initial terminal. Road service will be distinguished from yard service because the type of service affects the need for sand. Locomotives performing road service will likely be in longer trains and run at higher speeds than those performing switching service. The existing definition of switching service, as it appears in §§ 229.5 and 232.5, provides background for the distinction between road service and switching service. Switching service means “assembling cars for train movements * * * or moving rail equipment in connection with work service that does not constitute a train movement.” Any movement that is not considered “switching service” would be considered “road service.” Therefore, any service which constitutes a “train movement” would be considered “road service” for purposes of this section. The preamble to the final rule related to part 232 (66 FR 4104, January 17, 2001) contains detailed discussion of the factors that are to be considered when determining what constitutes a “train movement.” See 66 FR 4148-49.

Paragraph (b)(1). This paragraph establishes requirements related to lead locomotives being used in road service where sanders are discovered to be inoperative after departure from an initial terminal. Once inoperative sanders are discovered on these locomotives, there are four triggers that will determine how long a lead locomotive will be permitted to remain in service with inoperative sanders. The triggers are: the next initial terminal; a location where it is placed in a facility with a sand delivery system; its next periodic inspection under § 229.23; or fourteen calendar days from the date the sanders are first discovered to be inoperative, whichever occurs first.

FRA agrees with the Working Group's determination that the four triggering events will ensure that sanders are repaired in a timely fashion while providing railroads the ability to better utilize their locomotive fleets. Under the existing rule, a locomotive can move only until the next daily inspection with inoperative sanders. Utilizing four different triggers allows the railroad a greater degree of operational flexibility. Each trigger provides a logical point at which sander maintenance should and can be conducted without impacting a railroad's operation to a significant degree. The initial terminal is an appropriate place to require operative sanders for the reasons stated in paragraph 229.131(a). When a locomotive is placed in a facility that has a sand delivery system it is appropriate to require a railroad to provide sander maintenance. Placed in a facility is intended to mean actually placed on trackage with access to the sand delivery system, and not merely passing through a location with a sand delivery system on the premises. Similarly, when a locomotive is given its required periodic inspection it is expected that the location will be capable of providing repairs and additional sand to the locomotive sanders with little burden. Permitting a lead locomotive to remain in service for no longer than fourteen days is reasonable as it permits the locomotive to reach the destination of a long-distance train run, ensures timely repairs to the sanders, and is more consistent with the current Canadian requirement.

One commenter sought clarification on how FRA will enforce this rule when a lead locomotive is switched to a trailing position en route. As three of the triggering events are identical for both lead and trailing locomotives, they would be equally applicable to either type of locomotive and further clarification is unnecessary. With regard to how the calendar-day triggering event will be applied, FRA agrees that further clarification would be beneficial. After a lead locomotive is switched to a trailing position, the days will continue to be counted pursuant to the fourteen day requirement (along with the three other triggers) of this paragraph. For example, if locomotive XYZ-12345 is operating in the lead position and is found to have an inoperative sander on Monday June 25, the calculation of days pursuant to this paragraph begins on that day. Monday, June 25 is day one. On Tuesday, June 26, locomotive XYZ-12345 is switched to a trailing position in the consist. While in a trailing position, the days continue to be counted. Tuesday, June 26 is counted as day two. Under this scenario, the fourteenth calendar day for locomotive XYZ-12345 is Sunday July 8. Therefore, if the inoperative sander is not repaired prior to being used on or after July 9, the operating railroad would be in violation of this paragraph.

Comments were also received regarding the definition of sand delivery system. One commenter suggested adding a requirement to have each railroad identify to FRA all facilities that fit within the definition, and obtain permission from FRA to close the facility or reduce hours. While this comment is insightful, FRA believes that the commenter's suggested requirement would be inconsistent with the spirit of the RSAC's consensus rule text. The rule aims to maintain safety while better accommodating current operational realities by providing more flexibility when appropriate. Adding this requirement would create a more rigid process that would significantly increase the burden on both FRA and the railroads with a marginal effect on safety. According to the rule that was proposed, railroads will be required to repair inoperative sanders when the locomotive is placed in a facility equipped with a sand delivery system. Formally identifying and changing locations through an approval process would cause delay. The delay would adversely affect operations and inhibit appropriate flexibility.

Another commenter sought clarification regarding two related issues: (1) Whether a mobile unit, for example a mobile truck, could be considered a sand delivery system; and, (2) how the five day per week, eight hour per day, requirement will be calculated? The rule does not provide for special treatment for mobile units. Any unit that fits the definition will be treated as a sand delivery system, including mobile units. Railroads are expected to utilize all available information to accurately anticipate which locations will be equipped with a sand delivery system for each week. At a minimum, locations where on average a sand delivery system is permanently stationed (i.e. is at the location at least five days per week for at least eight hours per day) over the previous four weeks, would be determined to be a location equipped with a sand delivery system for the following week. This determination may be refuted by the railroad with additional information.

Paragraph (b)(2). This paragraph contains the requirements for handling trailing locomotives that are being used in road service when sanders are discovered to be inoperative after departure from an initial terminal. Once inoperative sanders are discovered, the rule sets forth three triggering events that will determine how long a trailing locomotive will be permitted to remain in service with inoperative sanders. The triggering events in this paragraph are identical to those in paragraph (b)(1) except for the elimination of the fourteen day requirement. FRA agrees with the Working Group's determination that the need to provide sand to a trailing locomotive is less critical than it is for a lead locomotive. The engineer operating the train or locomotive consist may be more familiar with the lead locomotive than with the trailing locomotive. The engineer is likely to be operating from the lead locomotive, and thus, that locomotive is less likely to be switched out of the consist while moving over the road.

The term “trailing locomotive,” as used in this paragraph, specifically refers to a locomotive that is located behind the lead locomotive in a train or locomotive consist. The NPRM specifically included “distributed power locomotives.” A distributed power locomotive, as defined in § 229.5, is a locomotive that is part of a distributed power system that provides control to a number of locomotives dispersed in a consist from command signals originating in the lead locomotive. Distributed power locomotives are also trailing locomotives because they are located behind the lead locomotive in the train. FRA sought and received comments concerning the relevance of listing “trailing locomotives” and “distributive power locomotives” in the rule text. Both commenters confirmed that distributive power locomotives are a type of trailing locomotive. Thus, distributive power locomotives are covered by this paragraph whether or not they are specifically mentioned, because they are covered by the term “trailing locomotive.” FRA believes that it is unnecessary to list both terms and is removing the words “distributive power locomotive” in the final rule.

One commenter asked how FRA will enforce this rule when a trailing locomotive is switched to the lead en route. FRA agrees that this issue will benefit from clarification. A locomotive will be considered a lead locomotive anytime it is placed in the lead position of the consist. If a locomotive is switched into the lead en route, and the sanders are known to be inoperative, the fourteen day requirement prescribed in paragraph (b)(1) applies to that locomotive (along with the three other triggers contained in paragraph (b)(1)) starting on the day when it is switched to the lead. For purposes of counting the amount of days that the locomotive has been in the lead, the calendar day that the locomotive is switched into the lead will count as day one. The date that the locomotive is placed in the lead is required to be recorded on that locomotive's bad order tag. Updating the bad order tag on the day that the locomotive is switched to the lead, to reflect the date that the locomotive was switched to the lead, will ensure that the railroad and FRA will be able to conveniently know the status of that locomotive relative to the requirements of this rule.

Paragraph (c). This paragraph establishes requirements for handling locomotives used in switching service where sanders become inoperative. The Working Group and the full RSAC recommended that the use of sand on locomotives performing switching service should be distinguished from locomotives being used in road service as described above in paragraph (b). Included as part of the RSAC's recommendation to FRA in this area, was a request that FRA unilaterally develop criteria for the handling of locomotives being used in switching service that experience inoperative sanders. The request specifically related to the identification of what constitutes locomotives at “outlying locations” and the identification of the triggering events for repairing inoperative sanders on such locomotives. FRA accepted this recommendation. FRA considered the discussions and views provided by members of the Working Group when developing this portion of the rule.

Rather than attempt to define what constitutes an “outlying location,” FRA believes that the most appropriate method of distinguishing between switching locomotives and the locations where they operate, is to base the determination on the existence of a sand delivery system at the location. FRA believes that locomotives being used in switching service at a location with a sand delivery system should be able to be maintained and handled for repair in a more timely manner, with less disruption to railroad operations, than locomotives being used in switching service at locations without sand delivery systems. If there is no sand delivery system at a location, then the railroad is required to send maintenance vehicles or crews to the location or is required to move the locomotive to another location to effectuate necessary repairs. This can have a significant impact on the efficiency and continuity of switching operations at certain locations. Thus, paragraphs (c)(1) and (c)(2) separate the requirements for maintaining the sanders on locomotives being used in switching service based on the presence of a sand delivery system at the location where the locomotive is being used.

Paragraph (c)(1). This paragraph contains requirements for handling locomotives being used in switching service at locations that are not equipped with a sand delivery system. In order to remain consistent with the overall design of the recommendation submitted by the RSAC, FRA believes that some operational flexibility needs to be provided to locomotives being used in switching service at locations not capable of quickly delivering sand or making necessary repairs. As noted above, the simplest way of making this determination is based on whether or not the location has a sand delivery system. FRA believes that seven days is a reasonable amount of time to permit railroads to provide necessary sander attention to a locomotive being used in switching service at a location that does not have a sand delivery system. This amount of time is consistent and within the time frame in which locomotives used in switching service will need some other type of maintenance or attention, most likely re-fueling. The seven day mark appears to be a reasonable outer-limit for the requirement. The second triggering event in this paragraph is if the locomotive becomes due for its periodic inspection pursuant to § 229.23 of this part.

In the NPRM, FRA solicited and received comments on this paragraph. While one commenter agreed that the proposed seven day time-line was reasonable; another commenter suggested dividing the requirement into two distinct groups to allow for more precise treatment. The commenter explained that a requirement based on a given number of days would be appropriate for the inoperative sanders that are inoperative because they lack sand, however, sanders that are inoperative due to a mechanical defect should be repaired sooner if mechanical forces have an opportunity to inspect the locomotive. This suggestion has some merit, but would likely overburden enforcement resources. Dividing the requirement into two categories would add another layer of complexity to the rule. Enforcing two separate categories would raise additional issues that require further FRA investigation. For example, FRA would need to find out why the sander is inoperative in order to determine how to properly enforce the requirement. FRA believes that the less complex scheme from the proposed rule will be more effective.

Paragraph (c)(2). This paragraph establishes requirements for handling locomotives used in switching service at locations equipped with a sand delivery system. FRA agrees with the opinions of the Working Group and full RSAC that sanders on these types of locomotives can be maintained with little burden on a railroad's operation as they are already at the location where sand can be delivered and effective repairs can be effectuated. Therefore, FRA accepts the RSAC's recommendation and retains the existing requirements applicable to these locomotives. Consequently, when sanders become inoperative on these locomotives they will have to be handled in accordance with the provisions contained in § 229.9.

Paragraph (d). This paragraph will ensure that any locomotive with inoperative sanders is properly tagged under the tagging provisions contained in § 229.9(a). As paragraphs (b) and (c)(1) provide railroads with more flexibility with regard to using a locomotive with inoperative sanders than what is currently permitted by § 229.9, FRA wants to ensure that proper notification and records are maintained on in-service locomotives with inoperative sanders. Thus, FRA will require that locomotives operating with defective sanders be tagged in accordance with the provisions contained in § 229.9(a). This will also ensure that the individuals operating the locomotive are fully informed as to the fact that the locomotive they are operating does not have working sanders.

This rule has been evaluated in accordance with existing policies and procedures, and determined to be non-significant under both Executive Order 12866 and DOT policies and procedures (44 FR 11034; February 26, 1979). FRA has prepared and placed in the docket a regulatory analysis addressing the economic impact of this rule. Document inspection and copying facilities are available at 1120 Vermont Avenue, 7th Floor, Washington, DC 20590. Photocopies may also be obtained by submitting a written request to the FRA Docket Clerk at Office of Chief Counsel, Federal Railroad Administration, 1200 New Jersey Ave., SE., W12-140, Washington, DC 20590.

As part of the regulatory impact analysis, FRA has assessed quantitative measurements of cost and benefit streams expected from the adoption of this rule. For the twenty year period the estimated quantified costs are minimal. For this same period the estimated quantified benefits have a Net Present Value of $70.6 million.

The major benefits anticipated from implementing this rule include: A reduction in the number of times locomotives have sand loaded or the number of times the sanders are made operative. This reduction produces a reduction in injuries related to the operation of filling sand boxes on the locomotive and the number of missed days related to these injuries. Finally, the rule would harmonize the sander requirement with the Canadian rule by placing a fourteen day limit on service for lead locomotives being used in road service with inoperative sanders.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) and Executive Order 13272 require a review of proposed and final rules to assess their impact on small entities. FRA has prepared and placed in the docket an Analysis of Impact on Small Entities (AISE) that assesses the small entity impact of this rule. Document inspection and copying facilities are available at the Federal Docket Management Facility located at 1200 New Jersey Ave., SE., W12-140, Washington, DC 20590. Docket material is also available for inspection on the Internet at http://www.regulations.gov. Photocopies may also be obtained by submitting a written request to the FRA Docket Clerk at Office of Chief Counsel, Stop 10, Federal Railroad Administration, 1120 Vermont Avenue, NW., Washington, DC 20590; please refer to Docket No. FRA-2005-23080.

“Small entity” is defined in 5 U.S.C. 601 as a small business concern that is independently owned and operated, and is not dominant in its field of operation. The U.S. Small Business Administration (SBA) has authority to regulate issues related to small businesses, and stipulates in its size standards that a “small entity” in the railroad industry is a railroad business “line-haul operation” that has fewer than 1,500 employees and a “switching and terminal” establishment with fewer than 500 employees. SBA's “size standards” may be altered by Federal agencies, in consultation with SBA and in conjunction with public comment.

Pursuant to that authority FRA has published a final statement of agency policy that formally establishes “small entities” as being railroads that meet the line-haulage revenue requirements of a Class III railroad. See 68 FR 24891 (May 9, 2003). Currently, the revenue requirements are $20 million or less in annual operating revenue. The $20 million limit is based on the Surface Transportation Board's threshold of a Class III railroad carrier, which is adjusted by applying the railroad revenue deflator adjustment (49 CFR part 1201). The same dollar limit on revenues is established to determine whether a railroad shipper or contractor is a small entity.

For this rule over 600 railroads could potentially be affected. The rule will impact all locomotives except those propelled by steam power. Given this application, only railroads that operate steam locomotives exclusively, will be unaffected. For those railroads that will be affected the impact will be minimal, if any. The focus is on permitting additional flexibility in the use of locomotives with inoperative sanders. It is anticipated that the additional flexibility will produce mostly positive impacts, i.e., savings and injury reductions.

The AISE developed in connection with this Final Rule concludes that this rule will not have a significant economic impact on a substantial number of small entities. Thus, FRA certifies that this rule is not expected to have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act or Executive Order 13272. In order to determine the significance of the economic impact for the final rule's Regulatory Flexibility Act requirements, FRA invited comments in the NPRM. No comments were received.

The rule contains a substantive change of one section of the existing regulation, § 229.131. The modification would not change the current information collection activity. The information collection burden associated with the final rule already exists under § 229.9. OMB clearance for the current rule has been granted and no further approval is sought at this time.

FRA is not authorized to impose a penalty on persons for violating information collection requirements which do not display a current OMB control number, if required. The OMB control number assigned for information collection related to this rule is OMB No. 2130-0004.

FRA has analyzed this rule in accordance with the principles and criteria contained in Executive Order 13132, issued on August 4, 1999, which directs Federal agencies to exercise great care in establishing policies that have federalism implications. See 64 FR 43255. This rule will not have a substantial effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among various levels of government. This rule will not have federalism implications that impose any direct compliance costs on State and local governments.

FRA notes that the RSAC, which endorsed and recommended the majority of the rule to FRA, has as permanent members two organizations representing State and local interests: AASHTO and the Association of State Rail Safety Managers (ASRSM). Both of these State organizations concurred with the RSAC recommendation endorsing this rule. The RSAC regularly provides recommendations to the FRA Administrator for solutions to regulatory issues that reflect significant input from its State members. To date, FRA has received no indication of concerns about the Federalism implications of this rulemaking from these representatives or of any other representatives of State government. Consequently, FRA concludes that this rule has no federalism implications, other than the preemption of state laws covering the subject matter of this rule, which occurs by operation of law under 49 U.S.C. 20106 whenever FRA issues a rule or order.

FRA has evaluated this regulation in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321 et seq. ), other environmental statutes, Executive Orders, and related regulatory requirements. FRA has determined that this regulation is not a major FRA action (requiring the preparation of an environmental impact statement or environmental assessment) because it is categorically excluded from detailed environmental review pursuant to section 4(c)(20) of FRA's Procedures. 64 FR 28547, May 26, 1999. Section 4(c)(20) reads as follows:

Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $132,300,000 or more (adjusted annually for inflation) in any 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. This rule will not result in the expenditure, in the aggregate, of $132,300,000 or more in any one year, and thus preparation of such a statement is not required.

FRA wishes to inform all potential petitioners for reconsideration that anyone is able to search the electronic form of all comments received into any agency docket 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://www.regulations.gov .

Section 648.72(c) of the regulations implementing the Fishery Management Plan (FMP) for the Atlantic Surfclam and Ocean Quahog Fisheries allows the Administrator, Northeast Region, NMFS (Regional Administrator) to suspend annually, by publication of a notification in the Federal Register , the minimum size limit for Atlantic surfclams. This action may be taken unless discard, catch, and biological sampling data indicate that 30 percent of the Atlantic surfclam resource is smaller than 4.75 inches (120 mm) and the overall reduced size is not attributable to harvest from beds where growth of the individual clams has been reduced because of density-dependent factors.

At its June 2007 meeting, the Mid-Atlantic Fishery Management Council voted to recommend that the Regional Administrator suspend the minimum size limit for the 2008, 2009, and 2010 fishing years. In accordance with the provisions of the FMP, the Regional Administrator will publish the suspension of the surfclam minimum size if the proportion of undersized surfclams is under 30 percent of the total surfclam landings for each fishing year.

Commercial surfclam data for 2007 were analyzed to determine the percentage of surfclams that were smaller than the minimum size requirement. The analysis indicated that 8.99-percent of the overall commercial landings were composed of surfclams that were less than 4.75 inches (120 mm). Based on these data, the Regional Administrator adopts the Council's recommendation and suspends the minimum size limit for Atlantic surfclams from January 1 through December 31, 2008.

This action is authorized by 50 CFR part 648 and is exempt from review under Executive Order 12866.