FSA proposed to move the majority of its Farm Loan Programs direct loan making and servicing rules from Chapter XVIII to Chapter VII of the Code of Federal Regulations (CFR) in a proposed rule it published on February 9, 2004 (69 FR 6055-6121). Prior to the Department of Agriculture Reorganization Act of 1994 (1994 Act), Chapter XVIII contained the former Farmers Home Administration (FmHA) program regulations and Chapter VII contained the former Agricultural Stabilization and Conservation Service (ASCS) program regulations. The 1994 Act abolished both FmHA and ASCS and consolidated FmHA's Farm Loan Programs and ASCS programs under the newly created FSA, while the remaining FmHA programs were transferred to the Rural Development mission area agencies. With the exceptions listed below, this final rule removes from Chapter XVIII references to FmHA Farm Loan Programs, now operated by FSA.

As a result of the 1994 Act, some of the CFR subparts published by FmHA were used by FSA and one or more of the Rural Development mission area agencies, while others were used exclusively by FSA. The Farm Loan Programs direct loan making and servicing rules were dispersed throughout Chapter XVIII, making their use difficult for all but the most well-informed user. Therefore, in a final rule published on November 8, 2007 (72 FR 63241-63361), FSA is moving its Farm Loan Programs regulations from Chapter XVIII to Chapter VII, and is consolidating and reorganizing them in a logical manner making them easier to use by the general public, applicants and borrowers, and FSA. In the proposed rule of February 9, 2004, FSA stated that when the final rule was published, it would remove the Chapter XVIII subparts used only by FSA. However, as provided in the prefatory remarks to the final rule published on November 8, 2007, FSA will continue to use subpart G of 7 CFR part 1940, subpart C of 7 CFR part 1951, and subpart B of 7 CFR part 1956 until it publishes a final rule revising 7 CFR 799 for environmental procedures and 7 CFR part 792 for debt settlement policies and procedures.

Lastly, FSA is amending 7 CFR parts 771, 772, 773, and 774 to remove CFR citations that no longer are valid.

This rule has been determined to be not significant under Executive Order 12866 and was not reviewed by OMB.

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-602), the undersigned has determined and certified by signature of this document that this rule will not have a significant economic impact on a substantial number of small entities. This rule does not impose any new requirements on FSA applicants and borrowers. In some cases, existing information collections and regulatory requirements have been reduced as a result of streamlining the loan making and servicing application processes.

FSA has completed an Environmental Assessment (EA) in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4347, the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508) and the FSA regulations for compliance with NEPA, 7 CFR part 1940, subpart G. A finding of no significant impact (FONSI) was determined as a result of the EA process. The final EA and FONSI are available for review at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ecrc&topic=enl-ea . FSA will accept comments on the final EA and FONSI for a period of 30 days from the date of publication of this rule.

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

This final rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All state and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings in accordance with 7 CFR parts 11 and 780 must be exhausted before bringing suit in court challenging action taken under this rule unless those regulations specifically allow bringing suit at an earlier time.

For reasons contained in the Notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs within this rule are excluded from the scope of E.O. 12372, which requires intergovernmental consultation with State and local officials.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, requires Federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments or the private sector of $100 million or more in any 1 year. When such a statement is needed for a rule, section 205 of the UMRA requires FSA to prepare a written statement, including a cost benefit assessment, for proposed and final rules with “Federal mandates” that may result in such expenditures for state, local, or tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates, as defined under Title II of the UMRA, for state, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

The amendments to 7 CFR 1806, 1901, 1924, 1925, 1927, 1951, and 1955 contained in this final rule have been approved by OMB under control numbers 0575-0042, 0575-0075, 0575-0087, 0575-0088, 0575-0093, 0575-0147, 0575-0158, and 0575-0172. In accordance with 5 CFR 1320, FSA submitted to OMB correction worksheets to transfer applicable information collections to FSA-assigned OMB control numbers.

FSA 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.

FSA has posted on the e-Gov Web site at http://www.sc.egov.usda.gov all the forms an applicant or borrower has to complete in their entirety, or review and execute. Further, FSA has made available its handbooks at http://www.fsa.usda.gov/FSA/webapp?area=home&subject=lare&topic=hbk . Applicants or borrowers may download and review any agency handbook through the “Laws and Regulations” link, and become familiar with the requirements for applying for benefits.

These changes affect the following FSA programs as listed in the Catalog of Federal Domestic Assistance:

This rule is issued under Marketing Agreement No. 125 and Order No. 966, both as amended (7 CFR part 966), regulating the handling of tomatoes grown in Florida, 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.”

The Department of Agriculture (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 marketing order now in effect, Florida tomato handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable tomatoes beginning August 1, 2007, and continue until amended, suspended, or terminated. 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. Such 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 decreases the assessment rate established for the Committee for the 2007-08 and subsequent fiscal periods from $0.035 per 25-pound carton to $0.0325 per 25-pound carton of tomatoes.

The Florida tomato marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers of Florida tomatoes. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2006-07 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on August 23, 2007, and unanimously recommended 2007-08 expenditures of $2,101,000.00 and an assessment rate of $0.0325 per 25-pound carton of tomatoes. In comparison, last year's budgeted expenditures were $2,193,700. The assessment rate of $0.0325 is $0.0025 lower than the rate currently in effect. Last season the industry shipped 2.6 million 25-pound cartons more than the Committee had anticipated, providing greater revenues than expected from assessments. The Committee's 2006-07 expenses were $200,000 less than budgeted, and they utilized less from reserves than anticipated. The Committee also recommended a reduced budget for 2007-08. Therefore, the Committee voted to recommend a reduced assessment rate.

The major expenditures recommended by the Committee for the 2007-08 year include $900,000 for education and promotion, $467,000 for salaries, $320,000 for research, and $71,000 for employee retirement. Budgeted expenses for these items in 2006-07 were $1,000,000, $445,900, $320,000, and $67,000, respectively.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses, less carry-in and reserve revenues totaling $476,000, by expected shipments of Florida tomatoes. Tomato shipments for the year are estimated at 50 million 25-pound cartons, which should provide $1,625,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve will be adequate to cover budgeted expenses. Funds in the reserve (currently approximately $780,000) will be kept within the maximum permitted by § 966.44 of the order, which states that excess funds cannot exceed one fiscal period's expenses.

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate is effective for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2007-08 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this initial 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 the 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 100 producers of tomatoes in the production area and approximately 70 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $6,500,000.

Based on industry and Committee data, the average annual price for fresh Florida tomatoes during the 2006-07 season was approximately $7.69 per 25-pound container, and total fresh shipments for the 2006-07 season were 52,505,687 25-pound cartons of tomatoes. Committee data indicates that approximately 25 percent of the handlers handle 94 percent of the total volume shipped outside the regulated area. Based on the average price, about 75 percent of handlers could be considered small businesses under SBA's definition. In addition, based on production data, grower prices as reported by the National Agricultural Statistics Service, and the total number of Florida tomato growers, the average annual grower revenue is below $750,000. Thus, the majority of handlers and producers of Florida tomatoes may be classified as small entities.

This rule decreases the assessment rate established for the Committee and collected from handlers for the 2007-08 and subsequent fiscal periods from $0.035 to $0.0325 per 25-pound carton of tomatoes. The Committee unanimously recommended 2007-08 expenditures of $2,101,000 and an assessment rate of $0.0325 per 25-pound carton. The assessment rate of $0.0325 is $0.0025 lower than the 2006-07 rate. The quantity of assessable tomatoes for the 2007-08 season is estimated at 50 million 25-pound cartons. Thus, the $0.0325 rate should provide $1,625,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve will be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2007-08 year include $900,000 for education and promotion, $467,000 for salaries, $320,000 for research, and $71,000 for employee retirement. Budgeted expenses for these items in 2006-07 were $1,000,000, $445,900, $320,000, and $67,000, respectively.

Last season the industry shipped 2.6 million 25-pound cartons more than the Committee had anticipated, providing greater revenues than expected from assessments. The Committee's 2006-07 expenses were $200,000 less than budgeted, and they utilized less from reserves than anticipated. The Committee also recommended a reduced budget 2007-08. Therefore, the Committee voted to recommend a reduced assessment rate.

The Committee reviewed and unanimously recommended 2007-08 expenditures of $2,101,000, which included a decrease in the education and promotion budget. Prior to arriving at this budget, the Committee considered information from various sources, such as the Committee's Executive Subcommittee, Finance Subcommittee, Research Subcommittee, and Education and Promotion Subcommittee. Alternative expenditure levels were discussed by these groups, based upon the relative value of various research projects to the tomato industry. The assessment rate of $0.0325 per 25-pound carton of assessable tomatoes was then determined by dividing the total recommended budget, less carry-in and reserve revenues totaling $476,000, by the quantity of tomatoes, estimated at 50 million 25-pound cartons for the 2007-08 fiscal period.

A review of historical information and preliminary information pertaining to the upcoming 2007-08 fiscal period indicates that the grower price for the 2007-08 season could range between $3.89 and $16.05 per 25-pound carton of tomatoes. Therefore, the estimated assessment revenue for the 2007-08 fiscal period as a percentage of total grower revenue could range between 0.2 and 0.8 percent.

This action decreases the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committee's meeting was widely publicized throughout the Florida tomato industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the August 23, 2007, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this interim final rule, including the regulatory and informational impacts of this action on small businesses.

This action imposes no additional reporting or recordkeeping requirements on either small or large Florida tomato handlers. 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.

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.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

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 information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) The 2007-08 fiscal period began on August 1, 2007, and the marketing order requires that the rate of assessment for each fiscal period apply to all assessable tomatoes handled during such fiscal period; (2) this action decreases the assessment rate for assessable tomatoes beginning with the 2007-08 fiscal period; (3) handlers are aware of this action which was unanimously recommended by the Committee at a public meeting and is similar to other assessment rate actions issued in past years; and (4) this interim final rule provides a 60-day comment period, and all comments timely received will be considered prior to finalization of this rule.

On August 9, 2006, we published a proposed rule in the Federal Register (71 FR 45444-45447) in which we proposed to amend the regulations in 9 CFR part 98 regarding the importation of animal germplasm by removing specific restrictions on sheep semen from regions where scrapie exists and requiring the inclusion of additional information on the international health certificate accompanying sheep and goat semen. This action would relieve restrictions on imported sheep semen while continuing to provide safeguards against the introduction and dissemination of scrapie.

Comments were required to be received by October 10, 2006. We received seven comments by that date, from the Canadian Food Inspection Agency, a sheep industry association, sheep breeders, and private citizens. One commenter supported the proposed rule as written. Another commenter stated that there should be a ban on all imports of animal semen into the United States, but did not offer specific comments on the provisions of the proposed rule. The remaining commenters were generally supportive of the proposed rule but made suggestions or raised issues about its provisions.

The Canadian Food Inspection Agency stated that it believed Canada's scrapie program is equivalent to the United States' program and, therefore, sheep semen from Canada should be allowed to be imported without restrictions. The commenter stated that the risk of new strains of scrapie being introduced into the United States from Canada is minimal.

As we stated in the proposed rule, in 1996, when the regulations allowing semen to be imported from Canada without restrictions were established, Canada had a scrapie control program that we regarded as equivalent to that in the United States. In 2001, however, the United States went from a control program to an eradication program which is now in full implementation. Canada has not conducted a scrapie prevalence study and does not conduct national slaughter surveillance for the disease. To fully evaluate Canada's program we would need a complete description of the program, including numbers and geographic representation of their surveillance and efforts to monitor for unusual strains. We are making no changes to the rule as a result of this comment.

One commenter stated that semen imported from any country should be distributed only to flocks listed in the Scrapie National Database to provide for better traceability in the event of a disease outbreak.

APHIS notes that semen imported from regions not recognized as scrapie-free—at this time, everywhere in the world except Australia and New Zealand—will still be required to be distributed only to listed flocks. We believe the new recordkeeping requirements for first generation (F1) progeny resulting from imported semen will provide sufficient information to conduct traceback investigations in the event of a disease outbreak. We are making no changes as a result of this comment.

One commenter stated that the requirement that only flocks in the Scrapie Flock Certification Program may receive imported semen should be eliminated entirely.

The intent of the proposed rule is to allow all flocks listed in the Scrapie National Database to use semen imported from anywhere in the world; there will be no restrictions on distribution of semen imported from regions recognized as scrapie-free. This does not unreasonably limit distribution of imported semen since there is a high compliance rate for flock premises listing through the National Scrapie Eradication Program, and because any flock may be listed by making a toll-free phone call. To further facilitate distribution of imported semen, we have added a provision in this final rule that allows imported semen to be further distributed to any other listed flock with written notification to the Veterinary Services area office.

One commenter suggested that the identification and recordkeeping requirements for F1 progeny resulting from imported semen should be made a condition of the import permit rather than a separate agreement. The commenter further stated that APHIS should distribute special eartags for identifying F1 progeny at the time the permit is approved. The commenter stated that these suggestions would reduce the burden on both producers and APHIS.

We agree with this commenter and have made changes in this final rule to incorporate these suggestions. Since there will be no written agreement separate from the permit, this final rule also includes a provision that APHIS may view and copy records of F1 progeny during normal business hours.

One commenter stated that any imported semen should be accompanied by a certificate of genetic testing of the donor ram for resistance to scrapie.

While we agree that information from genetic testing may be useful to sheep breeders, we do not believe that requiring genetic testing of donor rams as a condition for importing semen into the United States is warranted because it would put excessive restrictions on the importation of semen for some breeds in which the scrapie-resistant genotypes do not exist. If an importer wants to see results of genetic testing from a donor ram, that individual should request it from the seller.

One commenter asked that the restriction of selling rams born as a result of artificial insemination using imported semen only to listed flocks be relaxed. The commenter stated that sheep breeders currently are too limited as to whom they may sell such rams.

Although there will be identification and recordkeeping requirements for F1 progeny resulting from the use of imported semen, the proposed rule, when finalized, will remove other restrictions on the sale of F1 progeny. This will apply both to existing F1 progeny from imported semen as well as to F1 lambs born after the new regulations take effect.

One commenter questioned the accuracy of the statement in the proposed rule's economic analysis that only 114 farms of the estimated 43,891 engaged in sheep and goat farming in 2002 had a market value of $500,000 or more per year in agricultural products sold and Government payments.

APHIS believes this estimate to be accurate. The figures were obtained from the 2002 Census of Agriculture, which is the most recent year for which we have data.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the changes discussed in this document.

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

The regulations in § 98.37 have restricted the importation of sheep semen from regions other than Australia, Canada, and New Zealand due to scrapie concerns. These restrictions have included provisions requiring the semen to be transferred only to females in a United States flock that participates in the Scrapie Flock Certification Program (SFCP), the semen originates from a donor animal participating in a program equivalent to the United States SFCP and that the semen is accompanied by a certificate attesting to the above conditions. Additionally, the regulations have required the importer to provide APHIS with information regarding control programs, surveillance, and disease incidence in the exporting region, as well as information on the health status of other ruminants in the region in order to export sheep semen to the United States.

All these restrictions on imports of sheep and goat semen were put in place due to scrapie concerns and with the goal of preventing the spread of scrapie in domestic animals. However, further scientific research, as well as experience, has demonstrated to APHIS that sheep and goat semen pose a minimal risk of transmitting scrapie. Therefore, this final rule will eliminate restrictions on sheep semen being imported from regions other than Australia, Canada, and New Zealand by removing the provisions of § 98.37 from our regulations. In their place, we will require that sheep or goat semen from scrapie-affected regions be accompanied by an international veterinary certificate as recommended in the World Organization for Animal Health's (OIE) Terrestrial Animal Health Code. Consequently, this final rule will bring the United States' import standards for sheep and goat semen in harmony with recognized international standards, while still protecting against scrapie introduction into the United States.

These changes in the regulations will have a direct effect on importers of sheep semen and those businesses involved in support activities for animal production, which includes, among other activities, establishments providing breeding services. The number of establishments engaged in support activities for animal breeding is tracked by the U.S. Census Bureau. In 2001, the latest year for which information is available, there were 3,999 establishments in the North American Industry Classification System (NAICS) subsector 1152, which comprises establishments primarily engaged in performing activities related to raising livestock. 1 The annual payroll for these 3,999 establishments was $452.3 million, which translates into an average annual payroll per establishment of $113,106. The U.S. Small Business Administration (SBA) size standard for this particular sector is $6 million or less in annual receipts. 2 Unfortunately, the Census data do not include annual receipts for these establishments; however, based on the annual payroll per establishment, it is reasonable to conclude that the majority of these businesses would be considered small by SBA definitions.

A variety of animal production support activities other than artificial insemination for sheep are included in NAICS subsector 1152. APHIS does not have specific information on the number and size of businesses providing artificial insemination services. Based on the data for all NAICS 1152 businesses, we believe they are primarily small entities with annual receipts of not more than $6 million.

Additionally, it is possible this final rule may indirectly affect domestic sheep and goat producers. The Census of Agriculture for 2002, the most recent year for which we have data, estimated that there were 43,891 farms engaged in sheep and goat farming. 3 The SBA size standard for sheep and goat farming (NAIS subsector 1124) is $750,000 or less in annual receipts. The 2002 Census estimates the total market value of all agricultural products sold by domestic sheep and goat farmers to be over $445 million, which translates into an average of $10,147 per farm. When combined with Government payments, the average per-farm market value agricultural products sold is $10,815. 4 Only 114 farms are classified as having $500,000 or more in market value of agricultural products sold and Government payments. So, at least 43,777, or 99 percent, of farms engaged in sheep and goat farming would be considered small by SBA standards.

Foreign exporters of sheep semen from countries other than Australia, Canada, and New Zealand might also benefit from the removal of import restrictions on sheep semen. However, as non-U.S. entities, they lie outside the scope of the Regulatory Flexibility Act and are not considered in this economic analysis.

As this rule will lift some of the import restrictions on imported semen from regions that are not considered scrapie-free, there will be a reduction in compliance requirements. In place of the current requirements, imported sheep or goat semen will have to be accompanied by an international veterinary certificate consistent with OIE standards. This certificate will have to be completed by a veterinary officer prior to being exported to the United States, and as such would not pose any compliance requirements for domestic entities.

Importers of sheep semen, as well as firms engaged in agricultural support activities, specifically those providing artificial insemination services, could possibly benefit from the final rule. Imports of sheep semen are not tracked as a separate line item by USDA's Foreign Agricultural Service. However, Veterinary Services of APHIS tracks raw data and estimates there were 2,491 straws of sheep semen imported in 2004 and only 1 straw in 2003, with Australia being the primary exporter. 5 It is possible that the changes to the regulations will encourage exports of sheep and goat semen to the United States in response to reduced import restrictions. Laws of supply and demand dictate that increased supply will result in lower prices. However, if this happens it will be over the long run because currently there is not a large demand for sheep semen in the United States, as evidenced by the number of imports. In fact, domestic sheep and goat producers rarely rely on artificial insemination as a means of breeding animals because it is too expensive. Artificial insemination technology is primarily practiced by the seedstock industry. Thus, the market for imported sheep semen is small, consisting primarily of producers that raise less common breeds and desire imported semen to improve and diversify their genetics. 6

It is possible these changes to the regulations could have an indirect effect on domestic sheep and goat breeders over the long run. However, a variety of conditions would have to be met for this situation to materialize. These conditions include, but are not limited to, artificial insemination technology becoming a more cost effective approach to sheep and goat production versus using breeding animals. Essentially, the only way sheep and goat breeders would be affected over the long run is if the process of artificial insemination becomes cheaper than purchasing or maintaining replacement breeding animals. As of January 1, 2005, there were inventories of 4.53 million head of breeding sheep and goats in the United States. Thus, it is possible that, as the process of artificial insemination becomes more cost effective and as imported sheep semen becomes more readily available and technologies improve, sheep and goat producers will substitute away from buying replacement breeding animals and use artificial insemination instead. However, as stated previously, this situation is long term in nature and highly conditional.

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

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

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

The FCA adopted a final rule on December 20, 2006, amending our disclosure and reporting requirements for Farm Credit System (System) institutions. 1 As part of that rulemaking, we added a requirement in § 630.5(d) to include a report by management assessing the effectiveness of internal control over financial reporting in the System-wide annual report to investors. We also added a requirement that the external auditor of the Funding Corporation review, attest, and report on management's assessment of internal control over financial reporting. The December 2006 rulemaking adding § 630.5(d) did not receive any objections to requiring an external auditor to report on management's assessment of internal control over financial reporting in the System-wide annual report to investors. Commenters did ask that the attestation reporting requirement be similar to that of Public Company Accounting Oversight Board (PCAOB) auditing standards, and we agreed. We further explained that the external auditor's attestation report should conform to other applicable industry standards, which we identified as those regulations of the Securities and Exchange Commission (SEC) implementing the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley). 2 Although the System is not covered by the provisions of Sarbanes-Oxley, nor regulated by the SEC, we generally regard SEC rules as the industry standard in this area, and we continue to follow this same general approach with consideration given to the unique cooperative structure of the System.

On June 27, 2007, the SEC revised its requirement regarding the external auditor's attestation report. 3 The SEC now requires the external auditor to express an opinion directly on the effectiveness of internal control over financial reporting instead of reporting on management's assessment of internal control over financial reporting. The SEC continues to require external auditors to evaluate whether management has included appropriate disclosures in its assessment report. Further, on July 25, 2007, the SEC approved PCAOB Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting That Is Integrated With an Audit of Financial Statements.”  4 Auditing Standard No. 5 is intended to increase the accuracy of financial reports and reduce costs by making audits more risk-based and scalable to company size and complexity. Auditing Standard No. 5 requires the external auditor to form an opinion on the effectiveness of internal control over financial reporting except in the circumstance of a scope limitation that would result in the auditor disclaiming an opinion. The external auditor generally disclaims an opinion when significant limitations prevent him from performing all the tests necessary to complete the audit and render an opinion. Auditing Standard No. 5 also requires the external auditor to modify his or her opinion on the effectiveness of internal control over financial reporting if the auditor determines that management's assessment is not fairly stated.

The FCA is amending § 630.5(d)(2) to conform with applicable industry standards for auditor attestations on internal control over financial reporting. The requirement in § 630.5(d)(2) for the external auditor of the Funding Corporation to review, attest, and report on management's assessment of internal control over financial reporting is no longer consistent with industry standards. Industry standards now require attestation reports to opine on the effectiveness of internal control over financial reporting. The amendment in this rulemaking will conform with these new standards.

The provision of § 630.5(d)(2), as amended by this direct final rulemaking, requires the external auditor of the Funding Corporation to include in the attestation report, an opinion on the effectiveness of internal control over financial reporting. The revised requirement reduces confusion, clarifies reporting, and more effectively communicates the external auditor's responsibility in relation to management's process and necessarily conveys whether management's assessment is fairly stated.

We are amending § 630.5(d)(2) by a direct final rulemaking. The Administrative Conference of the United States recommends direct final rulemaking for Federal agencies to enact noncontroversial regulations on an expedited basis, without the usual notice and comment period. 5 This process enables us to reduce the time and resources we need to develop, review, and publish a final rule while still affording the public an adequate opportunity to comment or object to the rule.

In a direct final rulemaking, we notify the public that the rule will become final on a specified future date unless we receive significant adverse comment during the comment period. A significant adverse comment is one where the commenter explains why the rule would be inappropriate (including challenges to its underlying premise or approach), ineffective, or unacceptable without a change. In general, a significant adverse comment would raise an issue serious enough to warrant a substantive response from the agency in a notice-and-comment proceeding.

We believe that a direct final rulemaking is the appropriate method for amending § 630.5(d)(2) to conform to new industry standards. We do not anticipate there will be significant adverse comments. We received no objectionable comments to the December 2006 rulemaking that added the requirement for an external auditor attestation, which conformed with SEC requirements at the time. Further, we stated at that time our intent to remain consistent with industry standards in this area, and commenters agreed. If, however, we receive a significant adverse comment during the comment period, we will publish a notice of withdrawal of the relevant provisions of this rule that will also indicate how further rulemaking will proceed. If we receive no significant adverse comment, we will publish notice of the effective date of the rule following the required Congressional waiting period under section 5.17(c)(1) of the Farm Credit Act of 1971, as amended.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), FCA hereby certifies that the direct final rule will not have a significant economic impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, Farm Credit System institutions are not “small entities” as defined in the Regulatory Flexibility Act.

Discussion

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to certain Boeing Model 747-400, 747-400D, 747-400F, 757-200, 767-200, 767-300, and 767-300F series airplanes. That NPRM was published in the Federal Register on July 3, 2007 (72 FR 36378). That NPRM proposed to require inspecting to determine the date code of the time delay relay for the cargo fire suppression system, and replacing the relay if necessary.

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

ABX Air states that it removed the affected relay from its Boeing Model 767-200 airplanes in accordance with Boeing Service Bulletin 767-26-0016, and therefore cannot perform the proposed requirements. ABX requests that we state in the AD that the proposed requirements apply only to airplanes with the time delay relay installed.

We agree that the AD does not apply to airplanes that do not have the time delay relay installed. However, we disagree with the request to change the AD to specify that it does not apply to airplanes with the relay removed. Paragraph (g) of the AD requires an inspection of specific relays and notes the part numbers. If that part number is not installed on the airplane, the airplane is not subject to the replacement requirements of paragraph (h) of the AD. We have not changed the AD in this regard.

Boeing requests that we revise the Summary section of the NPRM to clarify which bottles are discharged by the time delay relay. Specifically Boeing requests that we add the word “secondary” as shown in the following sentence: “The time delay relay controls when the secondary fire bottles discharge.”

We agree that the addition of the word “secondary” clarifies the sentence. We have changed the Summary section of the AD as requested. We have also added the sentence to paragraph (d) of the AD for clarity.

Boeing requests that we clarify the second paragraph of the Discussion section of the NPRM because that paragraph states that the listed airplanes have two halon bottles. Boeing states that some of the systems have more than two halon bottles.

We agree that Boeing's clarification improves the paragraph. However, since that section of the preamble does not reappear in the final rule, no change to the final rule is necessary.

As requested by Boeing, we have added an “in” before the words “Table 1” in paragraph (c) of this AD, and we have added the word “an” before the words “uncontrollable fire” in paragraph (d) of this AD.

We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are about 1,871 airplanes of the affected design in the worldwide fleet. This AD affects about 702 airplanes of U.S. registry. The inspection takes about 1 work hour per airplane, at an average labor rate of $80 per work hour. Based on these figures, the estimated cost of the AD for U.S. operators is $56,160, or $80 per airplane.

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to certain Boeing Model 767-200, -300, and -300F series airplanes. That NPRM was published in the Federal Register on June 20, 2007 (72 FR 33926). That NPRM proposed to require a one-time inspection of each fuel quantity indication system (FQIS) wire harness connector for corrosion of the shield-to-backshell connection, corrosion on the ground jumper, and damage to the ground jumper; a loop resistance test of each FQIS wire harness; and related investigative and corrective actions if necessary.

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

Florida West International Airways requests that we revise the compliance threshold from 48 months to 60 months in order to “stay standard with” the compliance time for Boeing special attention service bulletins.

An anonymous private citizen notes that corrosion gets worse over time, so it is appropriate to give a longer compliance threshold to newer aircraft. The commenter suggests maintaining the 48-month threshold for airplanes that have 12 or more years' time-in-service, and revising the compliance threshold to 16 years from airplane delivery for airplanes that have less than 12 years' time-in-service.

We do not agree with the requests to revise the compliance threshold. In Boeing Special Attention Service Bulletin 767-28-0087, dated February 5, 2007, the manufacturer recommended that the inspections begin within 48 months after the release of the service bulletin. Although Boeing might have a standard compliance threshold for special attention service bulletins, that threshold can change based upon the nature of a given unsafe condition.

In addition, the goal of the inspection at the 48-month threshold is to detect and correct any corrosion in the affected area, and to do all applicable actions to prevent it from happening in the future. While it is true that corrosion worsens over time, we consider it inappropriate to allow airplanes to fly for up to 16 years with the potential for corrosion to continue to progress in this area.

In developing an appropriate compliance time for this AD, we considered the serious nature of the unsafe condition as well as the recommendations of the manufacturer, the availability of any necessary repair parts, and the practical aspect of accomplishing the required inspection within an interval of time that corresponds to the normal maintenance schedules of most affected operators. In light of these factors, we have determined that the 48-month initial compliance threshold, as proposed, is appropriate. We do not find it necessary to change the AD in this regard. However, under the provisions of paragraph (g) of the final rule, we will consider requests for adjustments to the compliance time if data are submitted to substantiate that such an adjustment would provide an acceptable level of safety.

Boeing requests that we revise Note 1 of the NPRM and the Relevant Service Information section of the NPRM to remove the words “* * * and replacing the wire harness,” in reference to the procedures in Cinch Service Bulletin CN1156-28-02, Revision C, dated July 31, 2006. Boeing explains that the Cinch service bulletin does not contain information about replacing the wire harness; that information is in Boeing Special Attention Service Bulletin 767-28-0087.

Boeing also requests that we remove the date and revision level from the reference to the Cinch service bulletin. Boeing states that a date is not appropriate because Boeing Special Attention Service Bulletin 767-28-0087 does not specify a date when it refers to the Cinch service bulletin. In addition, Boeing points out that the Cinch service bulletin could be revised by the time the AD is issued, and the information would then be out of date.

We agree with the request to remove the words “* * * and replacing the wire harness,” from Note 1 of the NPRM for the reasons provided.

We also agree with the request to remove the date and revision level from the Cinch service bulletin identified in Note 1 of the NPRM. It is our general practice, as specified by the Office of the Federal Register, to put a date and revision level (if applicable) on all documents incorporated by reference into an AD. However, in this case, the Cinch service bulletin is described only in a note, and therefore it is not incorporated by reference into the AD. Therefore, it is not necessary for us to put a date on documents that we refer to only in a note, though in most cases a date is appropriate or important.

We have revised Note 1 of the final rule to make the requested changes. However, since the Relevant Service Information section of the NPRM does not reappear in the final rule, no other change to the final rule is necessary.

We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the change described previously. We have determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

There are about 482 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this AD.

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

Discussion

We have evaluated five in-service airplanes to examine the settings for the angle-of-attack (AOA)/stall warning system, following an accident that occurred on a Cessna Model 560 (Citation V) airplane during an instrument landing approach in icing conditions. The evaluation indicated that some airplanes may have an improperly adjusted stall warning system. All five of the airplanes exhibited an out-of-tolerance condition with respect to the margin between the stall warning and pre-stall roll-off. On two of the airplanes, the stall warning system provided an inadequate airspeed margin between the stall warning and stall. An inadvertent stall due to the inadequate stall warning margin provided by an improperly adjusted stall warning system, if not corrected, could result in loss of controllability of the airplane.

Cessna has issued temporary changes (TCs) to the Cessna Model 560 Citation Ultra Airplane Flight Manual (AFM), as identified in the “Cessna Model 560 (Citation Ultra) TCs” table.

Cessna has also issued TCs to the Cessna Model 560 Citation V AFM, as identified in the “Cessna Model 560 (Citation V) TCs” table.

TCs 56FMA TC-R11-16, 56FMA TC-R11-20, 560FM TC-R13-08, and 560FM TC-R13-09 provide procedures for exterior inspection of the wings. TCs 56FMA TC-R11-17 and 560FM TC-R13-10 provide procedures for the surface deice system. TCs 56FMA TC-R11-19 and 560FM TC-R13-12 provide emergency procedures for an inadvertent stall (buffet/roll-off). TCs 56FMA TC-R11-21 and 560FM TC-R13-13 provide procedures for safe flight under icing conditions. TCs 56FMA TC-R11-23, 56FMA TC-R11-24, 56FMA TC-R11-25, 56FMA TC-R11-26, 560FM TC-R13-14, 560FM TC-R13-15, 560FM TC-R13-16, and 560FM TC-R13-17 provide procedures for determining approach and landing data. TCs 56FMA TC-R11-27 and 560FM TC-R13-18 provide operational limitations for minimum airspeeds in normal and icing conditions. TCs 56FMA TC-R11-28, 56FMA TC-R11-29, 56FMA TC-R11-30, 560FM TC-R13-19, and 560FM TC-R13-20 provide procedures for determining landing speed and distance factors with residual ice or anti-ice systems selected “on” independent of icing conditions.

We have reviewed Cessna Service Bulletin SB560-34-143, dated September 7, 2007, including Attachment and Service Bulletin Supplemental Data. The service bulletin describes procedures for installing new minimum airspeed placards to notify the flightcrew of the proper airspeeds for operating in normal and icing conditions. The service bulletin also describes procedures for incorporating certain TCs into the AFM and sending a maintenance transaction report to the manufacturer.

We have also reviewed Cessna Alert Service Letters ASL560-34-34 (for airplanes equipped with a single AOA system) and ASL560-34-35 (for airplanes equipped with a dual AOA system), both Revision 1, both dated October 2, 2007, both including Attachments. The service letters describe procedures for doing a functional test of the AOA system, which involves determining whether the calibration of the AOA system is correct and adjusting the calibration settings if necessary. The service letters also describe procedures for removing the temporary airspeed placard installed in accordance with Cessna Service Bulletin SB560-34-143 and submitting the AOA system test data sheet and a maintenance transaction report to the manufacturer.

Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition.

The unsafe condition described previously is likely to exist or develop on other airplanes of the same type design. For this reason, we are issuing this AD to prevent an inadvertent stall due to the inadequate stall warning margin provided by an improperly adjusted stall warning system, which could result in loss of controllability of the airplane. This AD requires accomplishing the actions specified in the service information described previously, except as discussed under “Difference between the AD and Service Information.”

Although the Accomplishment Instructions of Cessna Service Bulletin SB560-34-143 and Cessna Alert Service Letters ASL560-34-34 and ASL560-34-35 describe procedures for submitting a maintenance transaction report to the manufacturer, this AD does not require that action. However, if operators accomplish the functional test as specified in Cessna Alert Service Letters ASL560-34-34 and ASL560-34-35, this AD requires submitting the AOA system test data sheet to the manufacturer.

We consider this AD interim action. We are currently considering requiring a functional test of the AOA system to adjust the calibration settings of the AOA system, which, in addition to the AFM revisions, would constitute terminating action for the placard installation required by this AD. However, the planned compliance time for the functional test would allow enough time to provide notice and opportunity for prior public comment on the merits of the functional test.

Since an unsafe condition exists that requires the immediate adoption of this AD, we have found that notice and opportunity for public comment before issuing this AD are impracticable, and that good cause exists to make this AD effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not provide you with notice and an opportunity to provide your comments before it becomes effective. However, we invite you to send any written data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-0190; Directorate Identifier 2007-NM-234-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

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

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

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

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

For the reasons discussed above, I certify that the regulation:

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

You may examine the AD docket on the Internet at http://dms.dot.gov or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Operations office (telephone (800) 647-5527) is located on the ground floor of the West Building at the DOT street address stated in the ADDRESSES section.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to certain Boeing Model 737-600, -700, -700C, -800 and -900 series airplanes. That NPRM was published in the Federal Register on March 30, 2007 (72 FR 15073). That NPRM proposed to require an inspection of the fillet sealant at the inboard and outboard sides of the receptacles in the wheel wells of the main landing gear, and related investigative/corrective actions if necessary.

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

Boeing and AirTran Airways support the NPRM's proposed actions.

AirTran Airways requests that the expected parts usage and parts availability be reviewed and addressed for feasibility prior to the release of the final rule to ensure that parts shortages will not necessitate requests for unnecessary alternative means of compliance or adjustments of the compliance time. The commenter adds that there are 36 part numbers that could possibly need replacement if there is corrosion beyond the acceptable limits in the service bulletin. Of these 36 connectors, 9 part numbers are not available; of those, 5 do not appear to be in the production pipeline. Quite a few part numbers show less than a dozen available.

We agree with the request and have coordinated with Boeing regarding AirTran's concern. The NPRM cited Boeing Special Attention Service Bulletin 737-24-1169, dated December 15, 2006. Since we issued the NPRM, Boeing has revised the service bulletin. Revision 1, dated August 6, 2007, provides optional connector part numbers, which will ensure adequate replacement parts for the specified corrective actions. The remaining information in Revision 1 is essentially unchanged. We have revised paragraphs (c) and (f) of this final rule to refer to Revision 1 of the service bulletin as the appropriate source of service information for the applicability and the required actions. We have included credit for actions previously performed in accordance with the original service bulletin.

We have carefully reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We have determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are about 333 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this AD.

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation.

On June 27, 2007, the FAA proposed to amend Title 14 of the Code of Federal Regulations (14 CFR part 71) by amending Class E5 airspace at Mooresville, NC, (72 FR 35209). This action provides adequate Class E5 airspace for IFR operations at Lowe's Mooresville Heliport, Mooresville, NC. Designations for Class E are published in FAA Order 7400.9R, dated August 15, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR 71.1. The Class E designations listed in this document will be published subsequently in the Order.

Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.

This amendment to part 71 of the Code of Federal Regulations (14 CFR part 71) amends the Class E5 airspace at Mooresville, NC.

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

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

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional Class E airspace at Mooresville, NC.

History

On August 21, 2007, the FAA published in the Federal Register a notice of proposed rulemaking to amend Class E airspace at Helena, MT (72 FR 46584). This action would improve the safety of IFR aircraft executing this new LOC/BC-C SIAP approach procedure at Helena Regional Airport, Helena, MT. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9R signed August 15, 2007, and effective September 15, 2007, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in that Order.

This action amends Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class E airspace at Helena, MT. Additional controlled airspace is necessary to accommodate IFR aircraft executing a new LOC/BC-C SIAP approach procedure at Helena Regional Airport, Helena, MT

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes additional controlled airspace at Helena Regional Airport, Helena, MT.

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 6033(i)(1) relating to the notification requirement for entities not currently required to file an annual information return under section 6033(a)(1). Section 6033(i)(1) was added by section 1223(a) of the Pension Protection Act of 2006, Public Law 109-208 (120 Stat. 1090 (2006)) (PPA 2006), effective for annual periods beginning after 2006. Section 6033(i)(1) requires the Treasury Secretary to promulgate regulations that describe the time and manner in which certain tax-exempt organizations not currently required to file an annual information return are to submit an annual electronic notice including information set forth in section 6033(i)(1)(A) through (F). Section 1223 of the PPA 2006 also contains new rules for termination, loss of exempt status, and reinstatement. These new rules do not require regulations for implementation and are therefore not addressed in this temporary regulation but are discussed in this preamble. Substantive and administrative rules related to termination, loss of exempt status, and reinstatement will be considered in separate guidance and other publications.

Prior to the PPA 2006, either by operation of law or through discretionary exceptions, certain organizations were not required to file an information return (for example, Form 990, “Return of Organization Exempt From Income Tax”). Section 6033(a)(3)(A)(ii) provided a mandatory exception from filing by certain organizations (other than private foundations) described in section 6033(a)(3)(C), whose annual gross receipts were normally not more than $5,000. Section 6033(a)(3)(B) provided a discretionary exception under which the Secretary relieved certain other organizations from filing. Exercising this discretionary authority, the IRS published Announcement 82-88 (1982-25 IRB 23 (June 21, 1982)), which provided an exception for organizations whose annual gross receipts were not normally in excess of $25,000 from filing Form 990 for tax years ending on or after December 31, 1982. The new electronic notice provision of section 6033(i)(1) applies to organizations whose gross receipts are low enough that they are not required to file information returns under sections (a)(3)(A)(ii) or (a)(3)(B). The substance of this electronic notice is discussed below in this preamble. See § 601.601(d)(2)(ii)( b ).

Section 6033(i)(2) provides that organizations required to submit annual electronic notification are also required to provide notice of termination upon the termination of the existence of the organization. The time and manner of the notice of termination is not specified in the statute.

Section 6033(j), added by section 1223(b) of the PPA 2006, provides that if an organization required to file an annual information return under section 6033(a)(1) or submit an electronic notice under section 6033(i) fails to provide the required return or notice for three consecutive years, the organization's tax-exempt status is revoked. The revocation is effective from the date the Secretary determines was the last day the organization could have timely filed the third required information return or submitted the notice. Any organization whose tax-exempt status is revoked under section 6033(j)(1) must apply in order to obtain reinstatement of that status regardless of whether such organization was originally required to make an application for tax-exempt status. If, upon application for reinstatement of tax-exempt status, an organization can show to the satisfaction of the Secretary evidence of reasonable cause for the failure to file the information return or submit the notice, the organization's tax-exempt status may, in the discretion of the Secretary, be reinstated retroactive to the date of revocation.

Section 7428(b), regarding limitations on declaratory judgments relating to status and classification of certain tax-exempt organizations, was amended by section 1223(c) of the PPA 2006 and provides that no action may be brought under section 7428 with respect to any revocation of tax-exempt status described in section 6033(j)(1), for failure to provide the required return under section 6033(a)(1) or notice under section 6033(i) for three consecutive years.

Section 6652(c)(1)(E), added by section 1233(d) of the PPA 2006, provides that there is no monetary penalty for failure to submit any notice required under section 6033(i).

Section 6033(i)(1) provides that the annual notification, in electronic form, shall set forth: (A) The legal name of the organization, (B) any name under which the organization operates or does business, (C) the organization's mailing address and Internet Web site address (if any), (D) the organization's taxpayer identification number, (E) the name and address of a principal officer, and (F) evidence of the continuing basis for the organization's exemption from the filing requirements under section 6033(a)(1). The temporary regulations also provide that additional information necessary to process the notification may be required. For example, an organization will be required to state the tax period for which it is submitting the electronic notification.

The mailing address required by section 6033(i)(1)(C) and submitted in the annual electronic notification shall be the organization's last known address as provided by § 301.6212-2(a) of the Regulations on Procedure and Administration. This last known address may be updated as provided under § 301.6212-2 or by clear and concise notification as described in Rev. Proc. 2001-18 (2001-1 CB 708). The IRS will use this last known address as the organization's address of record and will direct all mailings to this address. See § 601.601(d)(2)(ii)( b ).

By submitting the annual electronic notification described in this paragraph, an organization acknowledges that it is not required to file a return under section 6033(a) because its gross receipts are not normally in excess of $25,000. In order to make this determination, the organization must keep records that enable it to calculate its gross receipts. All organizations are required to maintain records under section 6001. These records will provide evidence of the continuing basis for the organization's exemption from the filing requirements under section 6033(a)(1).

The temporary regulations restate that an organization, even though relieved from filing a return under section 6033(a), is still required under § 1.6033-2(i) and (j) to inform the IRS in writing of any changes in the organization's character, operation, or purpose; provide additional information; and file other returns of information and unrelated business tax returns. Organizations are also reminded that if the organization is required to file an unrelated business tax return, Form 990-T, “Exempt Organization Business Income Tax Return,” the filing of the Form 990-T does not relieve the organization from the requirement of submitting the annual electronic notification under section 6033(i).

The statute requires that the annual notification be submitted electronically. There is no provision in the temporary regulations for any paper notification. However, if an organization that is required to submit an annual electronic notification files a complete Form 990 or Form 990EZ, “Short Form Return of Organization Exempt From Income Tax,” the annual notification requirement of section 6033(i) shall be deemed satisfied. The annual notification requirement is not satisfied if the Form 990 or Form 990-EZ contains only those items of information that would have been required by submitting the notification in electronic form.

The notification shall be submitted on or before the 15th day of the fifth calendar month following the close of the period for which the notification is required to be submitted. Thus, an organization with an accounting period ending December 31, 2007, is required to submit the annual notification by May 15, 2008.

The electronic notification is not a return because it does not contain sufficient data to calculate tax liability or determine tax-exempt status. Moreover, the electronic notification does not purport to be a return. The electronic notification simply identifies an organization and indicates the basis for it not having to file an information return under section 6033(a)(1). Because the electronic notification is not a tax or information return, submission of the notification does not trigger the period of limitations for assessment under section 6501(g)(2). However, the filing of a complete Form 990 or Form 990-EZ, as noted in this preamble, will start the period of limitations for assessment under section 6501(g)(2). Furthermore, there is no monetary penalty for failure to file under section 6033(i). To further distinguish the electronic notification from a tax or information return, the temporary regulations provide that the electronic notification is submitted to the IRS, rather than filed or furnished, the terms used in connection with tax and information returns.

The notifications required by section 6033(i) are subject to public disclosure and inspection. See section 6104 (generally applicable to Form 990 information returns). Further, this provision does not affect any other obligations an organization may have to file other required information and or tax returns, or penalties for failure to file such returns.

Form 990-N, “Electronic Notification (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ,” has been developed to satisfy the requirements of section 6033(i)(1). The IRS plans to deliver a simple, Internet based process for submitting the e-Postcard, Form 990-N. It is anticipated that organizations that do not have access to a computer can use their local public library to file the e-Postcard. Because the system will be Internet based, organizations should not need to purchase software to file the e-Postcard. The temporary regulations provide that the annual electronic notification shall be submitted in accordance with instructions and publications, including those provided at the IRS Web site for exempt organizations.

In general, every organization exempt from taxation under section 501(a) that is not required to file a return described in § 1.6033-2(a)(2), other than an organization described in section 401(a) (qualified pension, profit-sharing, and stock bonus plans) or section 501(d) (religious and apostolic organizations), is required to submit an annual electronic notice under section 6033(i). However, a organization that is required to file or files an annual information return under section 6033(a)(1) should not submit an annual electronic notification under section 6033(i). This includes any organization included in a group return as provided in § 1.6033-2 for that year; all private foundations required to file Form 990-PF, “Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation”; section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ; a section 501(c)(21) black lung trust required to file Form 990-BL, “Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Person”; and any organization that is required to file or files an annual information return under section 6033(a)(1) on any other form prescribed by the IRS for that purpose.

Neither annual information returns under section 6033(a)(1) nor annual electronic notices under section 6033(i) are required to be filed or submitted by an organization exemption from taxation under section 501(a) that is a church, an interchurch organization of local units of a church, a convention or association of churches, or an integrated auxiliary of a church (as defined in § 1.6033-2(h)); an exclusively religious activity of any religious order; a mission society sponsored by or affiliated with one or more churches or church denominations, more than half of the activities of which society are conducted in, or directed at persons in, foreign countries; an educational organization (below college level) that is described in section 170(b)(1)(A)(ii), that has a program of a general academic nature, and that is affiliated (within the meaning of § 1.6033-2(h)(2)) with a church or operated by a religious order; a State institution, the income of which is excluded from gross income under section 115(a); an organization described in section 501(c)(1); or an organization that is a governmental unit or an affiliate of a governmental unit exempt from Federal income tax under section 501(a) as described in Rev. Proc. 95-48 (1995-2 CB 418). See § 601.601(d)(2)(ii)( b ).

If an organization exempt from taxation under section 501(a) is not exempted in either of the two preceding paragraphs, the organization must submit an annual electronic notice. Thus, a black lung trust that normally has gross receipts of $25,000 or less is not required to file Form 990-BL but is required to submit an electronic notification. A section 509(a)(3) supporting organization of a religious organization that normally has gross receipts of $5,000 or less is not required to file Form 990 or Form 990-EZ but is required to submit an electronic notification.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For the applicability of the Regulatory Flexibility Act, please refer to the cross-reference notice of proposed rulemaking published elsewhere in this issue of the Federal Register . Pursuant to section 7805(f) of the Internal Revenue Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

The principal author of these regulations is Monice Rosenbaum, of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in their development.

The PBGC's regulations prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits of terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions are intended to reflect current conditions in the financial and annuity markets.

Three sets of interest assumptions are prescribed: (1) A set for the valuation of benefits for allocation purposes under section 4044 (found in Appendix B to part 4044), (2) a set for the PBGC to use to determine whether a benefit is payable as a lump sum and to determine lump-sum amounts to be paid by the PBGC (found in Appendix B to part 4022), and (3) a set for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology (found in Appendix C to part 4022).

This amendment (1) adds to Appendix B to part 4044 the interest assumptions for valuing benefits for allocation purposes in plans with valuation dates during December 2007, (2) adds to Appendix B to part 4022 the interest assumptions for the PBGC to use for its own lump-sum payments in plans with valuation dates during December 2007, and (3) adds to Appendix C to part 4022 the interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology for valuation dates during December 2007.

For valuation of benefits for allocation purposes, the interest assumptions that the PBGC will use (set forth in Appendix B to part 4044) will be 5.37 percent for the first 20 years following the valuation date and 5.04 percent thereafter. These interest assumptions represent a decrease (from those in effect for November 2007) of 0.09 percent for the first 20 years following the valuation date and 0.09 percent for all years thereafter.

The interest assumptions that the PBGC will use for its own lump-sum payments (set forth in Appendix B to partaves\rules.xml 4022) will be 3.00 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. These interest assumptions represent a decrease (from those in effect for November 2007) of 0.25% in the immediate annuity rate and are otherwise unchanged. For private-sector payments, the interest assumptions (set forth in Appendix C to part 4022) will be the same as those used by the PBGC for determining and paying lump sums (set forth in Appendix B to part 4022).

The PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.

Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during December 2007, the PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

The PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

We encourage you to participate in evaluating this test schedule by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this deviation CGD08-07-032, indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8½ by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. Comments must be received by January 14, 2008.

The Louisiana Department of Transportation and Development has requested that the operating regulation of the S433 pontoon span bridge, located on Liberty Bayou at mile 2.0 in Slidell, St. Tammany Parish, Louisiana, be changed in order to make more efficient use of operating resources. Currently, the draw of the S433 Bridge opens on signal, except that from 9 p.m. to 5 a.m. the draw opens on signal if at least 12 hours notice is given, as required by 33 CFR 117.469. The Coast Guard previously published a notice of proposed rulemaking [CGD08-06-10] on May 4, 2006 (86 FR 26290). The proposed rule would have changed the regulation governing the operation of the (S433) pontoon span bridge across Liberty Bayou, mile 2.0, at Slidell, St. Tammany Parish, Louisiana. The rule, as previously proposed, would have changed the notice required for an opening from 12 hours to 4 hours. A final rule for that proposed change was not published. Subsequently, the bridge owner has requested that the notice for an opening be changed so that the bridge will open on signal, except that from 7 p.m. to 7 a.m., the bridge will open on signal if at least 2 hours notice is given.

A Supplemental Notice of Proposed Rulemaking [CGD08-06-010], is being issued in conjunction with this Temporary Deviation to obtain public comments. The Coast Guard will evaluate public comments from this Test Deviation and the above referenced Supplemental Notice of Proposed Rulemaking to determine if a permanent special drawbridge operating regulation is warranted.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Request for Comments

We encourage you to participate in evaluating this test schedule by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this deviation [CGD08-07-037], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. Comments must be received by January 14, 2008.

The Louisiana Department of Transportation and Development has requested that the operating regulation of the SR 22 swing span bridge, located on the Tchefuncta River at mile 2.5 in Madisonville, St. Tammany Parish, Louisiana, be changed in order accommodate the flow of vehicular traffic at rush hour peaks. Currently, the draw of the SR 22 Bridge in Madisonville opens on signal, except that, from 5 a.m. to 8 p.m., the draw need open only on the hour and half-hour.

This Temporary Deviation from Drawbridge Operating Regulations allows the bridge to operate as follows: The draw of the SR 22 Bridge, mile 2.5 at Madisonville, shall open on signal from 7 p.m. to 6 a.m. From 6 a.m. to 7 p.m., the draw need only open on the hour and half hour, except that, from 6 a.m. to 9 a.m. and from 4 p.m. to 7 p.m. Monday through Friday except Federal holidays, the draw need only open on the hour.

A Notice of Proposed Rulemaking [CGD08-07-38] is being issued in conjunction with this Temporary Deviation to obtain public comments. The Coast Guard will evaluate public comments from this Temporary Deviation and the above referenced Notice of Proposed Rulemaking to determine if a permanent special drawbridge operating regulation is warranted.

In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

On November 19, 2004, at 69 FR 67692, NARA published a proposed rule making schedules media neutral. In response, we received comments from five Federal agencies and from a private firm that does records management work for Federal agencies. Four public interest groups submitted comments on a related proposed records disposition schedule modifying the General Records Schedules (GRS) to implement the proposed rule insofar as the rule applies to previously approved schedules. The notice inviting public comment on the proposed disposition schedule N1-GRS-05-1 was published on November 16, 2004 (69 FR 67182). We considered the comments on both the proposed rule and the proposed disposition schedule in developing this final rule.

All five agencies and the consulting firm generally endorsed NARA's proposals regarding media neutrality. However, three of the agencies and the consulting firm felt that the new regulations should allow agencies more than 45 days to notify NARA when they convert previously scheduled permanent records to an electronic format. One of these agencies suggested allowing agencies up to 90 days, while another agency suggested that NARA require annual updates. The third agency that addressed this issue suggested that the regulation require notification “as soon as possible.” The consulting firm suggested that notifying NARA be done as part of annual or other periodic reviews conducted by agency records managers to identify new or modified recordkeeping systems. NARA agrees that 45 days is probably not sufficient. Consequently, the final regulation allows agencies up to 90 days to notify NARA when permanent records are converted to an electronic format.

One agency commented on the wording in the regulation regarding records maintained on agency web sites. This agency thought the term “web version,” which NARA used in the proposed rule, was not sufficiently clear. In response to this comment, NARA has used the expression “copies of records that are maintained on an agency web site.” We believe that this wording clarifies NARA's intent.

The agency which commented on web site records also questioned why the proposed regulations did not allow previously approved schedules to be applied to temporary program records with retention periods of 20 years or more or to records containing observational and social science raw data. (The consulting firm which submitted comments also questioned these exclusions.) This agency suggested instead that “the provisions for media neutral schedules [in 36 CFR 1228.24(b)(3)] should be grandfathered to include all previously approved records schedules and not limited to those approved after the final date of this ruling.” We did not adopt either suggestion. Based on our analysis of all comments on the proposed rule and disposition schedule, instead, the regulations now allow retrospective media neutrality for temporary program records only when the records are converted to scanned images or, in the case of temporary audiovisual records, from traditional media to any digital format. This matter is addressed in more detail in the following discussion of the comments NARA received from several public interest organizations.

Four public interest groups also addressed NARA's media neutral proposals. These organizations did not comment on the regulations directly but provided comments on the NARA-prepared disposition schedule (Disposition Job N1-GRS-05-1) that modified GRS 20 to reflect the proposed regulations. Their comments on the proposed GRS 20 revisions concerning retrospective media neutrality as they relate to the provisions of the proposed rule are discussed below.

None of the public interest groups commented on NARA's proposal to make previously approved schedule items media neutral in the case of permanent records. However, all of these groups were critical of retrospective media neutrality as it relates to temporary program records, arguing that the enhanced search capabilities and manipulability of electronic records might increase the value of records that were appropriately temporary if maintained in paper form. In their view, if the proposed GRS modifications and regulations pertaining to media neutrality were implemented, records warranting permanent retention or a longer temporary retention period if maintained electronically could be destroyed without NARA review.

Both this final rule and the approved schedule modifying GRS 20 now allow for retrospective media neutrality for temporary program records only if records are converted to scanned images in the case of textual records or to digital media in the case of sound recordings, moving images, and still photography. We note that this action reflects long-standing NARA policy on conversion to scanned images. Since the 1990s, NARA has authorized agencies to dispose of scanned images of temporary hard copy records in accordance with previously approved schedules so long as the basic content and function of the records remain the same.

While scanned images of hard copy records can with proper indexing be searched more easily than the original documents, the information in the records cannot be manipulated in the same fashion as a database. It is this manipulability that renders some databases of historical value even if the related paper records are temporary. Hence, the final rule and the related changes to GRS 20 now mandate the submission of a new schedule to NARA when an agency converts temporary program records that are textual in nature to an electronic format other than scanned image. This will afford NARA the opportunity to assess the value of the electronic records to determine if their manipulability renders them potentially permanent. This consideration, enhanced manipulability, does not apply if an agency uses a digital format for its still pictures or other temporary audiovisual records. In all instances, therefore, where an agency converts temporary audiovisual records to a digital format, the previously approved retention period may be applied.

The GRS and the regulations, as initially proposed, would have allowed agencies to apply retrospectively previously approved schedules to electronic systems that merge information drawn from more than one previously scheduled temporary record series so long as the electronic records are maintained for the longest retention period specified in the previously approved schedules. Two of the public interest groups took issue with this, arguing that electronic systems that merge information from multiple hard copy files are likely to be more valuable than the component hard copy series considered individually. NARA agrees and has revised the final rule to allow agencies to apply previously approved schedules to electronic records drawn from multiple temporary series only if the records are housekeeping in nature and are either covered by temporary items in the GRS or by agency schedules for administrative records. In the case of temporary program records, agencies must submit a new schedule if an electronic system is drawn from multiple previously scheduled series.

One public interest group commented that NARA's proposals did not take into account that converting hard copy records to an electronic format, by decreasing storage costs and increasing search capabilities and manipulability might justify retaining the electronic versions longer than the previously approved hard copy documents. NARA is well aware that how long temporary records should be retained may change over time, even absent a change in the recordkeeping medium. NARA expects agencies to re-evaluate their needs periodically. If agencies determine that a series of records warrants a longer retention period for any reason, they should submit a schedule to NARA. Even though the General Records Schedules are mandatory, agencies can submit schedules requesting an exception if the retention periods specified in the GRS do not meet their needs.

We have modified the provisions of the proposed rule and the disposition schedule to address the comments. NARA published a notice for the revised NARA-prepared disposition schedule on August 9, 2007 (72 FR 44875), and approved the schedule on September 26, 2007.

This rule is a significant regulatory action for the purposes of Executive Order 12866 and has been reviewed by the Office of Management and Budget. As required by the Regulatory Flexibility Act, I certify that this rule will not have a significant impact on a substantial number of small entities because it affects Federal agencies. This regulation does not have any federalism implications. This rule is not a major rule as defined in 5 U.S.C. Chapter 8, Congressional Review of Agency Rulemaking.

In the Federal Register of November 9, 2007, page 72 FR 63662, in the first column in the “Dates” entry, correct the reference “ Effective date: November 9, 2007” to read “ Effective date: December 10, 2007.”

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rules we are approving with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB).

On September 17, 2007, these rules were found to meet the completeness criteria in 40 CFR part 51, Appendix V, which must be met before formal EPA review.

We approved a version of these rules into the SIP on the dates listed: ICAPCD Rule 101 on November 23, 2005 and MBUAPCD Rule 101 on July 23, 2004.

Section 110(a) of the CAA requires states to submit regulations that control volatile organic compounds, oxides of nitrogen, particulate matter, and other air pollutants which harm human health and the environment. These rules were developed as part of the local agency’s program to control these pollutants.

Imperial Rule 101, Definitions, is amended by adding new definitions associated with Rule 207.1, Federal Major Modification, Rule 214.1, Mobile Source Emission Reduction Credit Banking, and Rule 217, Large Confined Animal Facilities. In addition, definitions that became obsolete because of the newly adopted regulations were removed.

Monterey Rule 101, Definitions, is amended by revising the definition of ‘Exempt Compounds and Volatile Organic Compounds’ to be consistent with the federal definition and by updating the definition of ‘Household Rubbish, Garbage, Trash’ to match the definition in Rule 438, Open Outdoor Fires.

EPA's technical support document (TSD) has more information about these rules.

These rules describe administrative provisions and definitions that support emission controls found in other local agency requirements. In combination with the other requirements, these rules must be enforceable (see section 110(a) of the Act) and must not relax existing requirements (see sections 110(l) and 193). EPA policy that we used to help evaluate enforceability requirements consistently includes the Bluebook ((Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations, (EPA, May 25, 1988) and the Little Bluebook ((Guidance Document for Correcting Common VOC & Other Rule Deficiencies, (EPA Region 9, August 21, 2001). However, EPA approval of these definitions in Rule 101 should not be interpreted as EPA approval of the other rules in which these definitions are used.

We believe these rules are consistent with the relevant policy and guidance regarding enforceability and SIP relaxations. The TSDs have more information on our evaluation.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rules. If we receive adverse comments by December 17, 2007, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on January 14, 2008. This will incorporate these rules into the federally enforceable SIP.

Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”

These rules do not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. )

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions.

These rules will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

Under sections 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

These rules will 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, because it merely approves a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This final rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, 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. Thus, Executive Order 13175 does not apply to this rule.

Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

These rules are 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.

These rules are not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical.

The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective December 17, 2007.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 14, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Table of Contents I. Availability of SIP Compilations. II. What Is the Basis for This Document? III. What Is Being Made Available Under This Document? IV. What Are the Documents and Materials Associated With the SIP? V. Background. A. Relationship of National Ambient Air Quality Standards (NAAQS) to SIPs. B. What Is a State Implementation Plan? C. What Is Federally-Enforceable? I. Availability of SIP Compilations

This notice identifies the appropriate EPA Regional Offices to which you may address questions of SIP availability and SIP requirements. In response to the 110(h) requirement following the 1990 Clean Air Act Amendments, the first notice of availability was published in the Federal Register on November 1, 1995 at 60 FR 55459. The second notice of availability was published in the Federal Register on November 18, 1998 at 63 FR 63986. The third notice of availability was published in the Federal Register on November 20, 2001 at 66 FR 58070. The fourth notice of availability was published in the Federal Register on December 22, 2004 at 69 FR 76617. This is the fifth notice of availability of the compilations of Federally-enforceable State Implementation Plans for each state.

In addition, information on the content of EPA-approved SIPs is available on the Internet through the EPA Regional Web sites. Regional Web site addresses for Regional information are provided in the regional contacts list above.

Section 110(h)(1) of the Clean Air Act mandates that not later than 5 years after the date of enactment of the Clean Air Act Amendments of 1990, and every three years thereafter, the Administrator shall assemble and publish a comprehensive document for each State setting forth all requirements of the applicable implementation plan for such State and shall publish notice in the Federal Register of the availability of such documents.

Section 110(h) recognizes the fluidity of a given State SIP. The SIP is a living document which can be revised by the State with EPA approval as necessary to address the unique air pollution problems in the State. Therefore, EPA from time to time must take action on SIP revisions containing new and/or revised regulations. On May 31, 1972 (37 FR 10842), EPA approved, with certain exceptions, the initial SIPs for 50 states, four territories and the District of Columbia. [ Note: EPA approved an additional SIP—for the Northern Mariana Islands—on November 10, 1986 (51 FR 40799)]. Since 1972, each State and territory has submitted numerous SIP revisions, either on their own initiative, or because they were required to as a result of various amendments to the Clean Air Act. This notice of availability informs the public that the SIP compilation has been updated to include the most recent requirements approved into the SIP. These approved requirements are Federally-enforceable.

The Federally-enforceable SIP is indeed a complex document, containing both many regulatory requirements and non-regulatory items such as plans and emission inventories. Regulatory requirements include State-adopted rules and regulations, source-specific requirements reflected in consent orders, and in some cases, provisions in the enabling statutes. Following the 1990 Clean Air Act Amendments, the first section 110(h) SIP compilation availability notice was published on November 1, 1995 (61 FR 55459). At that time, EPA announced that the SIP compilations, comprised of the regulatory portion of each State SIP, were available at the EPA Regional Office serving that particular State. In general, the compilations made available in 1995 did not include the source-specific requirements or other documents and materials associated with the SIP. With the second notice of availability in 1998, the source-specific requirements and the “non-regulatory” documents [e.g., attainment plans, rate of progress plans, emission inventories, transportation control measures, statutes demonstrating legal authority, monitoring networks, etc.] were made available and will remain available for public inspection at the respective regional office listed in the ADDRESSES section above. If you want to view these documents, please make an appointment with the appropriate EPA Regional Office and arrange for a mutually agreeable time.

EPA-approved non-regulatory control measures include control strategies (such as transportation control measures, local ordinances, state statutes, and emission inventories, or may include regulations provided on other sections of the State-specific subpart of 40 CFR part 52), which have been submitted for inclusion in the SIP by the state. These control measures must have gone through the state rulemaking process and the public given an opportunity to participate in the rulemaking. EPA also took rulemaking action on these control measures and those which have been EPA-approved or conditionally approved are listed along with any limitations on their approval, if any. Examples of EPA-approved documents and materials associated with the SIP include, but are not limited to, the following subject matter: SIP Narratives; Particulate Matter Plans; Carbon Monoxide Plans; Ozone Plans; Maintenance plans; Vehicle Inspection and Maintenance (I/M) SIPs; Emissions Inventories; Monitoring Networks; State Statutes submitted for the purposes of demonstrating legal authority; Part D nonattainment area plans; Attainment demonstrations; Transportation control measures (TCMs); Committal measures; Contingency Measures; Non-regulatory and Non-TCM Control Measures; 15% Rate of Progress Plans; Emergency episode plans; Visibility plans. As stated above the “non-regulatory” documents are available for public inspection at the appropriate EPA Regional Office.

EPA has established National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, which are widespread common pollutants known to be harmful to human health and welfare. The present criteria pollutants are: Carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur oxides. See 40 CFR part 50 for a technical description of how the levels of these standards are measured and attained. State Implementation Plans provide for implementation, maintenance, and enforcement of the NAAQS in each state. Areas within each state that are designated nonattainment are subject to additional planning and control requirements. Accordingly, different regulations or programs in the SIP will apply to different areas. EPA lists the designation of each area at 40 CFR part 81.

The State Implementation Plan is a plan for each State which identifies how that State will attain and/or maintain the primary and secondary National Ambient Air Quality Standards (NAAQS) set forth in section 109 of the Clean Air Act and 40 Code of Federal Regulations 50.4 through 50.12 and which includes Federally-enforceable requirements. Each State is required to have a SIP which contains control measures and strategies which demonstrate how each area will attain and maintain the NAAQS. These plans are developed through a public process, formally adopted by the State, and submitted by the Governor's designee to EPA. The Clean Air Act requires EPA to review each plan and any plan revisions and to approve the plan or plan revisions if consistent with the Clean Air Act.

SIP requirements applicable to all areas are provided in section 110. Part D of title I the Clean Air Act specifies additional requirements applicable to nonattainment areas. Section 110 and part D describe the elements of a SIP and include, among other things, emission inventories, a monitoring network, an air quality analysis, modeling, attainment demonstrations, enforcement mechanisms, and regulations which have been adopted by the State to attain or maintain NAAQS. EPA has adopted regulatory requirements which spell out the procedures for preparing, adopting and submitting SIPs and SIP revisions; that are codified in 40 CFR part 51.

EPA's action on each State's SIP is promulgated in 40 CFR part 52. The first section in the subpart in 40 CFR part 52 for each State is generally the “Identification of plan” section which provides chronological development of the State SIP. Or if the state has undergone the new Incorporation by Reference format process (see 62 FR 27968; May 22, 1997), the identification of plan section identifies the State-submitted rules and plan elements which have been Federally approved. The goal of the State-by-State SIP compilation is to identify those rules under the “Identification of plan” section which are currently Federally-enforceable. In addition, some of the SIP compilations may include control strategies, such as transportation control measures, local ordinances, State statutes, and emission inventories, or may include regulations provided in other sections of the State-specific subpart of part 52. Some of the SIP compilations may not identify these other Federally-enforceable elements.

The contents of a typical SIP fall into three categories: (1) State-adopted control measures which consists of either rules/regulations or source-specific requirements (e.g., orders and consent decrees); (2) State-submitted “non-regulatory” components (e.g., attainment plans, rate of progress plans, emission inventories, transportation control measures, statutes demonstrating legal authority, monitoring networks, etc.); and (3) additional requirements promulgated by EPA (in the absence of a commensurate State provision) to satisfy a mandatory section 110 or part D (Clean Air Act) requirement.

Enforcement of the state regulation before and after it is incorporated into the Federally-approved SIP is primarily a state responsibility. However, after the regulation is Federally approved, EPA is authorized to take enforcement action against violators. Citizens are also offered legal recourse to address violations as described in section 304 of the Clean Air Act.

You should note that, when States have submitted their most current State regulations for inclusion into Federally-enforceable SIPs, EPA will begin its review process of submittals as soon as possible. Until EPA approves a submittal by rulemaking action, State-submitted regulations will be State-enforceable only; therefore, State-enforceable SIPs may exist which differ from Federally-enforceable SIPs. As EPA approves these State-submitted regulations, the regional offices will continue to update the SIP compilations to include these applicable requirements.

The final rule, entitled “Medicare Programs; Physicians' Referrals to Health Care Entities With Which They Have Financial Relationships (Phase III),” published in the Federal Register on September 5, 2007 (72 FR 51012), interpreted and implemented certain provisions of section 1877 of the Social Security Act (the Act). Under section 1877 of the Act, if a physician or a member of a physician's immediate family has a financial relationship with a health care entity, the physician may not make referrals to that entity for the furnishing of designated health services (DHS) payable under the Medicare program, and the entity may not bill for the services, unless an exception applies.

The Phase III final rule includes provisions under which referring physicians will be treated as “standing in the shoes” of their physician organizations for purposes of applying the rules that describe direct and indirect compensation arrangements in § 411.354 (72 FR 51026 through 51030). A “physician organization” is defined at § 411.351 as “a physician (including a professional corporation of which the physician is the sole owner), a physician practice, or a group practice that complies with the requirements of § 411.352.” Therefore, for purposes of determining whether a direct or indirect compensation arrangement exists between a physician and an entity to which the physician refers Medicare patients for DHS, the referring physician stands in the shoes of: (1) Another physician who employs the referring physician; (2) his or her wholly-owned professional corporation; (3) a physician practice (that is, a medical practice) that employs or contracts with the referring physician; or (4) a group practice of which the referring physician is a member or independent contractor. The referring physician is considered to have the same compensation arrangements (with the same parties and on the same terms) as the physician organization in whose shoes the referring physician stands.

Subsequent to the publication of Phase III, we received informal comments on the Phase III “stand in the shoes” provisions from affected industry stakeholders. These comments addressed the application of the Phase III “stand in the shoes” provisions in the academic medical center (AMC) setting or similar settings (such as a nonprofit integrated health care system in which each affiliated organization qualifies for exemption from federal income taxation under section 501(c)(3) of the Internal Revenue Code (for purposes of this final rule, referred to as an “integrated section 501(c)(3) health care system”)) where “support payments” or other similar monetary transfers are common. The commenters asserted that, under Phase III, support payments that previously did not trigger application of the physician self-referral law will need to satisfy the requirements of an exception if, for example, a DHS entity component (for example, a hospital) of an AMC transfers funds to the faculty practice plan component of the AMC. Specifically, in the situation where a physician stands in the shoes of his or her faculty practice plan, the compensation arrangement between the AMC component providing the support payment and the faculty practice plan will be considered to be a direct compensation arrangement between the component and the physician. If the component making the support payment is a DHS entity to which the physician refers Medicare patients, the arrangement between the component and the faculty practice plan would need to satisfy the requirements of a direct compensation arrangement exception if the physician were to continue referring Medicare patients to the component for DHS. A similar analysis applies in the case of an integrated section 501(c)(3) health care system that includes both a hospital affiliate and a nonprofit physician practice affiliate. According to the commenters, it is unlikely that the requirements of any available exception could be satisfied given the nature of support payments (that is, support payments usually are not tied to specific items or services provided by the faculty practice plan (or nonprofit group practice within the health system), but rather are intended to support the overall mission of the AMC or nonprofit integrated health system).

We understand the commenters' concerns and intend to review the application of the Phase III “stand in the shoes” provisions in the situations described above. In addition, we are cognizant of the special nature of AMCs and nonprofit integrated health care systems, specifically with respect to their community service and teaching missions. In order to evaluate fully the impact of the Phase III “stand in the shoes” provisions on remunerative relationships within AMCs and nonprofit integrated health care systems that, prior to Phase III, did not trigger application of the physician self-referral laws, we are delaying the date of applicability of the provisions in § 411.354(c)(1)(ii), § 411.354(c)(2)(iv), and § 411.354(c)(3) for 12 months after the effective date of Phase III (that is, until December 4, 2008) as to the following compensation arrangements between the following physician organizations and entities ONLY:

• With respect to an AMC as described in § 411.355(e)(2), compensation arrangements between a faculty practice plan and another component of the same AMC; and

• With respect to an integrated section 501(c)(3) health care system, compensation arrangements between an affiliated DHS entity and an affiliated physician practice in the same integrated section 501(c)(3) health care system.

We note that, in a prior rulemaking (Phase I), in response to a comment that compensation arrangements between organizations regulated under the IRS rules pose minimal risk of program or patient abuse, we indicated that regulation under IRS rules, though beneficial, is not necessarily sufficient to prevent fraud or abuse (66 FR 917). Our action delaying the date of applicability of the Phase III provisions in § 411.354(c)(1)(ii), § 411.354(c)(2)(iv), and § 411.354(c)(3) with respect to integrated section 501(c)(3) health care systems should not be read as a reversal of our previous position. As stated above, we are delaying the date of applicability of these provisions in a targeted manner in order to evaluate any unintended impact of the Phase III “stand in the shoes” provisions.

We ordinarily publish a notice of proposed rulemaking and invite public comment on the proposed rule. The notice and comment rulemaking procedure is not required, however, if the rule is interpretive or procedural in nature, and it may be waived if there is good cause that it is impracticable, unnecessary, or contrary to the public interest and we incorporate in the rule a statement of such a finding and the reasons supporting that finding. Likewise, we ordinarily provide for a delayed date of applicability of a final rule, but we are not required to do so if the rule is procedural or interpretive. Where a delayed date of applicability is required, this requirement may be waived for good cause. Although we believe that this rule is procedural in nature and, therefore, prior notice and comment and a delayed date of applicability are not necessary, to the extent that it could be considered to be a substantive rule, we set forth below our finding of good cause for the waiver of notice and comment rulemaking and the waiver of a delayed date of applicability.

Our implementation of this action without opportunity for public comment and without a delayed date of applicability is based on the good cause exceptions in 5 U.S.C. 553(b)(3)(B) and (d), respectively. We find that seeking public comment on this action is impracticable, unnecessary, and contrary to the public interest. We are implementing this delayed date of applicability as a result of our review of the informal comments on the Phase III “stand in the shoes” provisions from various stakeholders. As discussed above, we understand from those comments that, unless we delay the date of applicability of § 411.354(c)(1)(ii), § 411.354(c)(2)(iv), and § 411.354(c)(3) with respect to the compensation arrangements described herein only, compensation arrangements that previously did not trigger application of the physician self-referral law may need to satisfy the requirements of an exception, requiring renegotiation of a large number of contracts, or the restructuring of many common arrangements involving AMCs and integrated 501(c)(3) health care systems, potentially causing significant disruption within the health care industry. We are concerned that the disruption could unnecessarily inconvenience Medicare beneficiaries or interfere with their medical care and treatment. Likewise, if we do not make this final rule effective upon publication, arrangements described herein that have been in compliance may fall temporarily out of compliance.

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).

We do not believe that this delay in the date of applicability will result in any significant economic impact on any small entity. Until the effective date of the provisions of § 411.354(c)(1)(ii), § 411.354(c)(2)(iv), and § 411.354(c)(3) with respect to the types of compensation arrangements described herein as subject to the delayed date of applicability, physicians, AMCs, and certain nonprofit integrated health care systems do not have to comply with the requirements of the “stand in the shoes” provisions of the Phase III final rulemaking and may continue to rely on whichever appropriate exceptions they used before the creation of the new provisions.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.