The Grain Inspection, Packers and Stockyards Administration (GIPSA), enforces the P&S Act (7 U.S.C. 181 et seq. ). Under authority granted to us by the Secretary of Agriculture (Secretary), we are authorized (7 U.S.C. 228) to create those regulations necessary to carry out the provisions of the P&S Act that specify requirements for regulated entities that purchase livestock or poultry.

The regulations under the P&S Act have specific requirements for (1) scales that regulated entities use for weighing livestock, poultry or feed and (2) packers purchasing livestock on a carcass grade, weight, or grade and weight basis.

The Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171) (Act) amended the P&S Act to add “swine contractor” as a regulated entity. Section 10502 of the Act defined swine contractor as “* * * any person engaged in the business of obtaining swine under a swine production contract for the purpose of slaughtering the swine or selling the swine for slaughter, if (a) the swine is obtained by the person in commerce; or (b) the swine (including products from the swine) obtained by the person is sold or shipped in commerce.”

Adding “swine contractor” to specific sections of the regulations would dispel any confusion among swine contractors regarding which regulations under the P&S Act are applicable to them. It would also allow GIPSA to more easily identify and enforce violations of the P&S Act.

We propose to amend Section 201.71 of the regulations under the P&S Act (9 CFR 201.71) to incorporate by reference the 2009 edition of NIST Handbook 44. We would also provide instructions on how to obtain copies of the handbook, which includes updated standards for operating, maintaining, and testing scales and standards for electronic devices.

We also propose to revise this section of the regulations by adding the term “swine contractors,” as follows:

• § 201.71(a) would state that swine contractors must operate, maintain, and test scales according to the requirements of the 2009 edition of Handbook 44, Specifications, Tolerances, and Other Technical Requirements for Weighing and Measuring Devices;

• § 201.71(b) would require swine contractors to use scales equipped with a printing device which shall record weight values on a scale ticket or other document; and

• § 201.71(d) would require swine contractors to use only scales that are found, upon testing and inspection, to be in a condition to give accurate weights.

The proposed changes to add swine contractor as a regulated entity would make this section consistent with other regulations under the P&SA Act regarding regulated entities that have been amended to include swine contractors.

We considered the option of not adding swine contractors to the regulations; we would continue to protect the interest of swine producers indirectly through regulation of packers, dealers, and market agencies. That option, however, is contrary to the intent of Congress, which amended the P&S Act to give GIPSA specific authority over swine contractors. We also considered not revising the regulations under the P&S Act regarding the standards for operating, maintaining, and testing scales and standards for electronic devices. Choosing this option, however, would not provide up-to-date standards for electronic devices as new technology emerges, nor would it provide consistency with the standards imposed by the States' departments of weights and measures.

This proposed rule would make it clear that swine contractors as well as other regulated entities must operate, maintain, and test scales according to the requirements of the 2009 edition of NIST Handbook 44 and to use scales in good condition and equipped with a printing device to record weight values. Since regulated entities are required under State law to comply with NIST Handbook 44, there would be no new costs or burden to comply.

The Office of Management and Budget (OMB) has designated this rule as not significant for the purposes of Executive Order 12866.

We have determined that this proposed rule will not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). While this proposed rule would affect swine contractors, most such entities do not meet the definition for small entities in the Small Business Act (13 CFR 121.201). Therefore, we are not providing an initial regulatory flexibility analysis.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. These actions are not intended to have retroactive effect. This rule will not pre-empt state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule.

This proposed rule does not contain new or amended information collection requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). It does not involve collection of new or additional information by the federal government.

GIPSA 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.

For the reasons set forth in the preamble, we propose to amend 9 CFR part 201 to read as follows:

I. Comments

FHFA invites comments on all aspects of the proposed Privacy Act Implementation regulation and will take all comments into consideration before issuing a final regulation.

Copies of all comments received will be posted without change on the FHFA Internet Web site, http://www.fhfa.gov, and will include any personal information provided. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m. at the Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel at (202) 414-3751.

The Privacy Act of 1974 serves to balance the Federal Government's need to maintain information about individuals while protecting individuals against unwarranted invasions of privacy stemming from Federal agencies' collection, maintenance, use, security, and disclosure of personal information about them that is contained in systems of records.

The Privacy Act requires each Federal agency to publish rules describing its Privacy Act procedures and any system of records it exempts from provisions of the Privacy Act, including the reasons for the exemption.

Pursuant to the Privacy Act, FHFA will inform the public of each system of records it maintains by separately publishing notices of each system of records in the Federal Register and also on the FHFA Web site at http://www.fhfa.gov. The notices will describe the standards for FHFA employees, regarding collection, use, maintenance, or disclosure of records in the system and identify whether information in the system is exempt from provisions of the Privacy Act. The system manager responsible for the system will also be identified and any other contact information will be included. Moreover, notices will inform individuals with detailed information regarding the exercise of their rights, such as what procedures to take to determine whether a system contains a record pertaining to them, how to access those records pertaining to them, how to seek to amend or correct information in a record about them, or, how to contest adverse determinations with respect to such a record.

The Housing and Economic Recovery Act of 2008 (HERA), Public Law No. 110-289, 122 Stat. 2654, amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (Act) (12 U.S.C. 4501 et seq. ) and the Federal Home Loan Bank Act (12 U.S.C. 1421-1449) to establish FHFA as an independent agency of the Federal Government  1 to ensure that the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation (collectively, the Enterprises), and the Federal Home Loan Banks (Banks) (collectively, the regulated entities) are capitalized adequately; foster liquid, efficient, competitive and resilient national housing finance markets; operate in a safe and sound manner; comply with the Act and rules, regulations, guidelines and orders issued under the Act, and the respective authorizing statutes of the regulated entities; and carry out their missions through activities authorized and consistent with the Act and their authorizing statutes; and, that the activities and operations of the regulated entities are consistent with the public interest.

The Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal Housing Finance Board (FHFB) will be abolished one year after enactment of HERA. However, the regulated entities continue to operate under regulations promulgated by OFHEO and FHFB; and such regulations are enforceable by the Director of FHFA until such regulations are modified, terminated, set aside, or superseded by the Director. 2

Section 1201 of HERA requires the Director, prior to promulgating regulations relating to the Banks, to consider the differences between the Banks and the Enterprises. 3 The Director considered the differences between the Banks and the Enterprises as they relate to the above factors and determined that pending the publication of consolidated Systems of Records Notices, FHFA will maintain the Systems of Records established by FHFB and OFHEO, respectively. The Director requests comments from the public about whether differences related to these factors should result in a revision to the proposed rule as they relate to the Banks.

This proposed section describes the purpose of the proposed regulation, which is to implement the Privacy Act, and explains FHFA general policies and procedures for individuals requesting access to records, amending or correcting records, and requesting an accounting of disclosures of records.

This proposed section sets forth definitions of some terms in this part.

This proposed section explains what an individual must do to submit a valid request to FHFA for access to records or information to amend or correct records or for an accounting of disclosures of records. It also describes the information an individual is to provide, allowing FHFA to identify the records sought and determine whether the request can be granted.

This section, as proposed, describes the period of time within which FHFA will respond to requests. It also explains that FHFA will grant or deny requests in writing, provide reasons if a request is denied in whole or in part, and explain the right of appeal.

This proposed section describes when and how an individual may appeal FHFA determination on a Privacy Act request and how and within what period of time FHFA will make determinations on an appeal.

This section, as proposed, explains that requesters are expected to pay fees for the duplication of records that they requested.

This section, as proposed, explains that some exemptions from the Privacy Act exist, how they are made effective, what the effect of an exemption is, and how to identify if an exemption applies.

This proposed section explains how FHFA generally protects records under the Privacy Act.

This proposed section explains that FHFA collects Social Security numbers only when authorized and describes the conditions under which they may be collected.

This proposed section lists the responsibilities of FHFA employees under the Privacy Act.

The proposed regulation does not contain any information collection requirement that requires the approval of OMB under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation does not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of the proposed regulation under the Regulatory Flexibility Act. The General Counsel of FHFA certifies that the proposed regulation is not likely to have a significant economic impact on a substantial number of small business entities because the regulation is applicable to the internal operations and legal obligations of FHFA.

Accordingly, for the reasons stated in the preamble, under 12 U.S.C. 4526, FHFA proposes to amend Title 12 CFR Chapters IX, XII and XVII as follows:

2. Add part 1204 to subchapter A.

I. Background A. Statutory and Regulatory Background

Effective July 30, 2008, Division A of HERA, Public Law No. 110-289, 122 Stat. 2654 (2008), titled the Federal Housing Finance Regulatory Reform Act of 2008, created FHFA as an independent agency of the Federal Government. HERA transferred supervisory and oversight responsibilities over the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Banks (collectively, Regulated Entities) from the Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal Housing Finance Board (FHFB) to FHFA. The Regulated Entities continue to operate under regulations promulgated by OFHEO and FHFB until such time as the existing regulations are supplanted by regulations promulgated by FHFA.

Each Bank is a cooperative institution that is owned by its members, all of which must comply with certain statutory requirements in order to become members. To be eligible for Bank membership, an applicant must be one of the several types of financial institutions listed in section 4(a)(1) of the Bank Act, must meet certain other eligibility criteria, and must purchase stock of the Bank, as set forth in sections 4 and 6 of the Bank Act. See 12 U.S.C. 1424, 1426. The existing FHFB regulation implementing the membership eligibility and minimum stock purchase provisions of the Bank Act (Membership Regulation) is codified at 12 CFR part 925. The proposed rule would relocate part 925 in its entirety to part 1263, and would amend certain provisions of the existing Membership Regulation to accommodate the addition of CDFIs to the institutions that may become Bank members.

As a threshold matter, in order to be eligible for Bank membership, an applicant must be authorized under federal or state law to become a member of, purchase stock in, do business with, and maintain deposits in, the Bank to which the applicant has applied for membership. Prior to amendment by HERA, section 4(a)(1) provided that any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, savings bank, or federally insured depository institution (including credit unions) was eligible to become a Bank member. Thus, until HERA was enacted a CDFI could not become a member of a Bank unless it also was a federally insured depository institution, such as a community development bank, thrift or credit union. As of September 30, 2008, 125 such depository institution CDFIs had become members of the Bank System. Section 1206 of HERA amended section 4(a)(1) to make all CDFIs that are certified by the CDFI Fund of the US Department of the Treasury under the Community Development Banking and Financial Institutions Act of 1994 (CDFI Act) eligible to become members of a Bank. See 12 U.S.C. 1424(a)(1) (as amended). Thus, loan funds, venture capital funds and state-chartered credit unions without federal deposit insurance are now eligible for Bank membership provided they are certified by the CDFI Fund and have the authority under state law to do those things necessary to become a member, i.e., to buy Bank stock, borrow and pledge collateral. The proposed rule would apply only to those newly eligible institutions. CDFIs that also are eligible for membership because they are federally insured depository institutions would continue to follow the existing rules relating to membership for depository institutions.

All institutions that are eligible for membership under section 4(a)(1) also must comply with certain additional criteria specified in section 4(a)(1) and (2) in order to be approved for membership. Specifically, under section 4(a)(1), as amended by HERA, an applicant must demonstrate that it: (a) Is duly organized under state or federal law; (b) either is subject to inspection and regulation under banking or similar laws or is certified as a CDFI under the CDFI Act; and (c) makes such home mortgage loans as are long-term loans. In addition, under section 4(a)(2), an insured depository institution applicant must: (a) Have at least 10 percent of its total assets in residential mortgage loans (unless it qualifies as a “community financial institution”)  1 ; (b) be in sound financial condition such that a Bank may safely make advances to it; (c) have a character of management that is consistent with sound and economical home financing; and (d) have a home-financing policy that is consistent with sound and economical home financing. 12 U.S.C. 1424(a)(1), (2).

The existing Membership Regulation expands on those statutory requirements and further establishes a review and approval process for applications for membership in a Bank. See 12 CFR 925.2, 925.3. Any institution seeking membership in a Bank is required to submit an application to the Bank for approval. 2 The Membership Regulation also includes separate provisions governing the admission of depository institutions and insurance companies, respectively, recognizing that each type of institution operates under a different business model and a different regulatory structure. The proposed rule would follow a similar approach for CDFIs, and would establish separate provisions for CDFI applicants, recognizing that they too operate in a different environment and under a different regulatory structure. The proposed rule would delineate the documentation and other information that a CDFI applicant must submit to a Bank as part of a membership application, as well as the standards that a CDFI applicant must meet in order to be deemed to have satisfied the various statutory and regulatory requirements for membership. 3

Once a Bank has approved a CDFI for membership, the CDFI must purchase the required amount of Bank stock in order to complete the process of becoming a member of the Bank. See 12 U.S.C. 1426. The specific amount of stock that any new member, including a CDFI, must purchase is set out in each Bank's capital structure plan, and will vary from Bank to Bank. 4 Typically, an institution must purchase a certain amount of stock in order to become a member, and may be required to purchase additional stock in order to borrow from the Bank or to obtain other services from the Bank. In addition to purchasing stock, any member, including a CDFI, that wishes to borrow from its Bank must pledge certain types of collateral to secure its repayment obligation, and must otherwise demonstrate to the Bank that it is creditworthy. Under the Bank Act, a member may pledge only the following types of collateral for an advance: (a) Fully disbursed, whole first mortgages on improved residential property not more than 90 days delinquent, or securities representing a whole interest in such mortgages; (b) securities issued, insured or guaranteed by the U.S. Government or any agency thereof; (c) cash or deposits of a Bank; (d) other real estate-related collateral acceptable to the Bank, provided its value is readily ascertainable and the Bank can perfect its interest; and (e) for institutions that qualify as “community financial institutions,” secured loans for small business, agriculture or community development activities, or securities representing a whole interest in such secured loans. See 12 U.S.C. 1430(a)(3) (as amended). Each Bank sets its own lending and collateral policies, which may vary from Bank to Bank and which will apply to all borrowing members of that Bank.

Under the Bank Act and FHFA regulations, all members also must comply with certain community investment and first-time homebuyer lending standards in order to maintain access to long-term advances. See 12 U.S.C. 1430(g)(2); 12 CFR part 944. As discussed below, FHFA believes that any CDFI that becomes a member of a Bank should be able to satisfy the current community support requirements and therefore is not proposing to establish community support requirements unique to CDFIs, but welcomes comment on whether certain CDFIs may have difficulties in complying with the current requirements that would warrant establishing separate community support standards for CDFIs.

CDFIs are private nonprofit and for-profit financial institutions providing financial services dedicated to economic development and community revitalization in underserved markets. The CDFIs comprise diverse institutional structures and business lines. The four categories of institutions eligible for CDFI certification and CDFI Fund financial support are: (1) Federally regulated insured depository institutions and holding companies (bank CDFIs); (2) credit unions, whether federally or state chartered; (3) community development loan funds, which are unregulated institutions specializing in financing of housing, businesses or community facilities that provide health care, childcare, educational, cultural or social services; and (4) community development venture capital funds, which are unregulated institutions that provide equity and debt-with-equity-features to small and medium-sized businesses in distressed communities.

The CDFIs serve as intermediary financial institutions that promote economic growth and stability in low-and-moderate-income communities. A large number are not-for-profit community development organizations with a long history of providing lending and services to low-and-moderate-income communities. They provide a unique range of financial products and services, such as mortgage financing for low-income and first-time homebuyers; homeowner or homebuyer counseling; financing for not-for-profit affordable housing developers; flexible underwriting and risk capital for needed community facilities; financial literacy training; technical assistance; and commercial loans and investments to assist small start-up businesses in low-income areas. Some CDFIs provide community facilities such as child care centers alongside affordable housing.

Frequently, CDFIs serve communities that are underserved by conventional financial institutions and may offer products and services that are not available from conventional financial institutions. Their lending and community support activities are thus consistent with the Banks' housing mission. By stabilizing the communities in a Bank's District, CDFIs can provide added value to that Bank as well as its members.

There is no single source of information covering all CDFIs, but reports from the CDFI Fund and other organizations provide a picture of the industry. A 2007 study by Abt Associates, 5 which included both certified and uncertified CDFIs, estimated that there were as many as 1,122 CDFIs throughout the country in 2005. The CDFI Fund reported that there were 804 certified CDFIs as of March 1, 2008. 6 Loan funds, most of which are nonprofit organizations, accounted for 68 percent of the certified CDFIs. Eighteen percent of certified CDFIs were credit unions, 10 percent were banks or holding companies, and 3.5 percent were community venture funds.

CDFIs are generally small in asset size. The CDFI Fund reported that the average asset size for certified CDFIs was $32 million for depository institutions and $22.5 million for non-depository institutions. 7 Despite the typical CDFI's relatively small asset size, studies demonstrate meaningful impact to low-and-moderate income communities by these intermediaries. The CDFIs provide diverse financial services and other benefits to urban, rural and Native communities. A 2003-2005 trend analysis by the CDFI Fund  8 reported that its sample of CDFIs financed over 90,000 units of housing, 80,000 of which were affordable housing units. This group of CDFIs also provided financing and counseling for over 12,000 first-time homebuyers over this period. The Opportunity Finance Network, a trade association of 160 CDFI members, reports that over the past 20 years, its members financed over 533,394 housing units. 9 Given the credit conditions across the country, demand for CDFI products and services is expected to increase. In a recent survey conducted by the Opportunity Finance Network, CDFI respondents reported an increase in demand for their products as a result of the declining availability of bank credit. 10 However, one common problem facing non-depository CDFIs is that they do not have access to long-term funding, limiting their ability to provide housing finance to their communities.

The CDFI Fund of the U.S. Treasury was created to promote economic revitalization and community development through investment in and financial and technical assistance to CDFIs. See 12 U.S.C. 4701(b). The CDFI Fund promotes these purposes through several programs, including the CDFI Program, the New Markets Tax Credit Program, the Bank Enterprise Award Program and Native Initiatives. See 12 U.S.C. 4701 et seq. ; 12 CFR part 1805; http://www.cdfifund.gov.

An institution must apply to the CDFI Fund in order to receive awards under its programs. See 12 U.S.C. 4704; 12 CFR 1805.200. To receive a CDFI award, an institution must be certified by the CDFI Fund as a qualifying CDFI under the CDFI Act. An institution may apply for CDFI certification at any time. If an organization is already certified as a CDFI, the CDFI Fund may require as a condition for receiving an award, that a CDFI submit a Certification of Material Events form attesting that there has been no occurrence that affects the organization's strategic direction, mission or business operation and, thereby, its status as a CDFI. An applicant for CDFI certification must meet each of the following general requirements in order to be certified as a CDFI:

(i) Is a legal entity at the time of certification application;

(ii) Has a primary mission of promoting community development;

(iii) Is a financing entity;

(iv) Principally serves an economically distressed area, low-income population, or other population that lacks access to financing (known as an eligible “target market”);

(v) Provides technical assistance, training or other development services in conjunction with its financing activities;

(vi) Is accountable to its target market through representation on its board or other means; and

(vii) Is a non-governmental entity that is not controlled by one or more governmental entities (Tribal governments excluded).

See 12 U.S.C. 4702(5); 12 CFR 1805.201.

The CDFI certification eligibility requirements are more fully elaborated in the CDFI program regulations. See 12 CFR 1805.201. The CDFI Fund is not a regulator of CDFIs, and does not evaluate their safety and soundness during either the certification or awards application processes at the level that would be conducted by a financial safety and soundness regulator. The CDFI Fund regulations further state that a CDFI certification does not constitute an opinion by the CDFI Fund as to the financial viability of the certified CDFI or that the CDFI will be selected to receive an award from the CDFI Fund. See 12 CFR 1805.201(a). Thus, receipt of a certification or award alone does not indicate that a CDFI is financially sound, but only that it meets the certification or award eligibility criteria.

Section 1201 of HERA requires the FHFA Director to consider the differences between the Banks and the Enterprises in rulemakings that affect the Banks with respect to the Banks' cooperative ownership structure, mission of providing liquidity to members, affordable housing and community development mission, capital structure and joint and several liability. See 12 U.S.C. 4513(f). In preparing the proposed rule, the Director considered these factors and determined that the rule is appropriate, particularly because the proposed amendments would implement statutory provisions of the Bank Act that apply only to the Banks. See 12 U.S.C. 1424(a). Nonetheless, FHFA requests comments about whether these factors should result in a revision of the proposed amendment as it relates to the Banks.

The proposed rule would relocate the Membership Regulation in its entirety from part 925 of the FHFB regulations to part 1263 of the FHFA regulations. The proposed rule also would amend certain provisions of the relocated Membership Regulation to allow CDFIs to become Bank members. Although those amendments are not evident from the regulatory text of the proposed rule because the provisions are being relocated in their entirety, any material revisions to the regulatory text are discussed in this preamble.

As noted previously, approximately 125 depository institutions that also are CDFIs have already become members of a Bank by virtue of their status as federally insured depository institutions. Under the terms of this proposed rule, any such institutions that seek to become members of a Bank in the future would be required to follow the existing membership regulations and procedures applicable for insured depository institutions. The amendments embodied in this proposed rule are intended to apply only to those types of CDFIs that were not eligible for membership prior to the passage of HERA, such as loan funds, venture capital funds and credit unions with state or private insurance.

Consistent with the scope of the proposed regulation, FHFA is proposing to amend the definitions section of the Membership Regulation by revising existing definitions and adding new definitions to reflect the statutory changes related to CDFI members. Thus, section 1263.1 of the proposed rule defines “community development financial institution” and “CDFI” to include any institution that is certified as a CDFI by the CDFI Fund of the U.S. Department of the Treasury, other than a bank or savings association that is insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq. ) or a credit union that is insured under the Federal Credit Union Act (12 U.S.C. 1751 et seq. ). Because federally insured depository institutions and credit unions already are eligible for membership under the pre-HERA law, the definition of CDFI excludes those institutions. The proposal also defines “CDFI credit union” as a state chartered credit union that has been certified by the CDFI Fund and does not have federal deposit insurance. The CDFI credit unions are the only types of depository institution that are affected by the HERA CDFI amendments and, for reasons stated below, those entities will be evaluated for financial condition under the same provisions that currently apply to state chartered credit unions that are currently eligible for membership because they are insured by the National Credit Union Administration (NCUA).

The proposed rule also adds or revises several other definitions in order to accommodate the admission of CDFIs to Bank membership. Those defined terms are “appropriate regulator,” “CDFI Fund,” “gross revenues,” “operating expenses,” “restricted assets,” “total assets,” and “unrestricted cash and cash equivalents.” The proposal would revise the existing definition of “appropriate regulator” to add CDFI credit unions to the list of financial institutions included within the current rule. As noted previously, FHFA is proposing to subject CDFI credit unions to the same financial condition provisions that apply to state chartered credit unions that are insured by the NCUA, and these definitions are consistent with that approach. Most of the other new definitions relate to terms that are used elsewhere in the proposal to measure the financial condition and performance of those CDFIs that are not subject to state or federal regulation. Generally speaking, these financial definitions are intended to reflect the terms used in the financial performance standards employed by the CDFI Fund or by third-party auditors experienced in assessing the financial performance of the CDFIs. FHFA requests comments on whether the proposed definitions are appropriate in the context of assessing the financial condition of CDFI applicants.

Apart from those new or revised definitions, the proposed rule carries over into part 1263 all of the existing definitions from the Membership Regulation, some of which include minor clarifying or technical changes.

Subpart B of the current Membership Regulation includes several provisions—§§ 925.2 to 925.5—relating to the process for the submission and consideration of applications for membership. The proposed rule would relocate all of those provisions without substantive change to proposed §§ 1263.2, 1263.3, 1263.4, and 1263.5, respectively. The proposed rule would make minor changes to certain of those provisions, none of which are intended to change the substance of those provisions.

Subpart C of the current Membership Regulation includes 13 provisions relating principally to the eligibility requirements for membership and how they are to be applied to the various types of institutions that may become members of a Bank. Some of these regulatory provisions are readily applicable to CDFIs in the same manner as other financial institutions, but others require some adaptation to reflect the unique characteristics of CDFIs. The proposed rule would amend certain of these provisions to address the statutory changes that have allowed CDFIs to become members. In proposing these amendments, FHFA has sought to develop regulatory standards that recognize the unique characteristics of CDFIs and the valuable contribution they make to their communities, while remaining sufficiently rigorous to comply with the statutory requirements.

General eligibility requirements. Section 4(a)(1) of the Bank Act requires that all applicants for Bank membership meet certain requirements for membership. These requirements are currently listed in § 925.6(a) of the Membership Regulation and are being retained in the proposed rule at proposed § 1263.6(a). With respect to proposed § 1263.6(a), the only change to the existing regulatory text would be to add “community development financial institution” to the list of entities eligible for membership. As discussed above, that term has been defined to exclude federally insured depository institutions and credit unions, because such institutions are already authorized to become Bank members.

Section 4(a)(2) of the Bank Act further requires any “insured depository institution” applicant to have at least 10 percent of its assets in residential mortgage loans, be in sound financial condition, and have sound management and home financing policy. 12 U.S.C. 1424(a)(2). The term “insured depository institution” is defined in the Bank Act to include any federally-insured bank, savings association or credit union, and thus does not include the newly-eligible CDFIs or insurance companies. See 12 U.S.C. 1422(9). Nonetheless, the Bank Act does not preclude FHFA from applying these concepts to other types of applicants, based on its authority to ensure that the Banks operate in a safe and sound manner and carry out their public policy missions. Indeed, FHFA's predecessor agency, FHFB, exercised that authority to require all applicants without federal deposit insurance, i.e., insurance companies, to have mortgage- related assets that reflect a commitment to housing finance. 12 CFR 925.6(c); See 58 FR 43522 (Aug. 17, 1993). FHFB reasoned that such an approach treated all applicants in an equitable and consistent manner, and was consistent with the housing finance mission of the Banks. See id. at 43531-43533. FHFA believes that rationale can apply as well to the newly eligible CDFI applicants, and thus is proposing to require such CDFI applicants to have mortgage related assets that reflect a commitment to housing finance. FHFA expects that the Banks will assess the commitment to housing finance requirements in light of the unique community development focus of the business of CDFIs. Because the language of the current regulation already applies to any applicant that is not an insured depository institution, no amendment to proposed § 1263.6(c) is necessary to affect this change.

In a similar manner, the proposed rule would require the newly eligible CDFI applicants to satisfy requirements relating to financial condition, character of management and home financing policy. When FHFB extended those provisions to insurance companies, it reasoned that they were sufficiently important to concepts of safety and soundness and the housing finance mission to warrant doing so. See 58 FR at 43533. FHFA believes that the same rationale should apply to the newly eligible category of CDFI applicants. Thus, the proposed rule would retain the provisions within Subpart C, which would be amended as necessary to implement the CDFI provisions of HERA. The amendments to particular provisions within Subpart C are discussed separately below.

Duly organized requirement. Section 4(a)(1)(A) of the Bank Act requires that an applicant for membership be duly organized under the laws of any state or of the United States. 12 U.S.C. 1424(a)(1)(A). Section 1263.7 of the proposed rule would amend the current language of § 925.7, which implements this provision, to provide that a newly eligible CDFI applicant shall be deemed to be duly organized if it is incorporated under state law. The current regulation allows an applicant to satisfy this provision if it is chartered as one of several types of depository institutions or as an insurance company. Because most CDFIs will not have such a charter, FHFA believes that being incorporated under state law is sufficient to demonstrate that a CDFI meets this requirement of the statute.

Inspection and regulation requirement. Section 4(a)(1)(B) of the Bank Act generally requires an applicant for membership to be subject to inspection and regulation under state or federal banking or similar laws. In the case of a CDFI, the statute imposes an alternative requirement, which is that the applicant be certified by the CDFI Fund. See 12 U.S.C. 1424(a)(1)(B). Accordingly, newly-eligible CDFI applicants are not required to meet the inspection and regulation requirement and, therefore, there is no need to amend the existing regulatory language, which would be carried over into proposed § 1263.8. As discussed earlier, the requirement that a CDFI applicant be certified by the CDFI Fund in order to be eligible for membership is addressed by the definition of “CDFI” in proposed § 1263.1. The proposed rule, however, does make certain clarifying revisions to the existing regulation text of proposed § 1263.8, which are not intended to alter the substance of the provision.

Long-term mortgage loans requirement. Section 4(a)(1)(C) of the Bank Act requires that an applicant for membership make long-term home mortgage loans. 12 U.S.C. 1424(a)(1)(C). “Long-term” is defined in § 925.1 to include loans with a term to maturity of five years or greater. 12 CFR 925.1. “Home mortgage loan” is defined in § 925.1 to include, among other things, first mortgages on one-to-four family or multifamily property, and mortgage pass-through securities backed by such mortgages. See id. Section 925.9 of the Membership Regulation, which implements these provisions, provides that an applicant is deemed to meet this requirement if, based on the applicant's most recent regulatory financial report filed with its appropriate regulator, the applicant originates or purchases long-term home mortgage loans. 12 CFR 925.9. Some newly-eligible CDFI applicants, such as loan funds and venture capital funds, do not file regulatory financial reports. Accordingly, proposed § 1263.9 would amend the existing language to provide that a Bank shall determine whether a CDFI applicant meets the “makes long-term home mortgage loans” requirement based on other documentation provided to the Bank, and contemplates that a Bank can decide what level of documentation can best allow it to determine whether a particular type of CDFI satisfies this requirement.

Financial condition requirements. The current Membership Regulation includes two separate provisions relating to the financial condition of applicants for membership. Section 925.11 relates to depository institutions (which includes federally insured state chartered credit unions), while § 925.16 relates to insurance companies. The proposed rule would relocate those provisions to proposed §§ 1263.11 and 1263.16, respectively, and would amend both of them to incorporate language relating to CDFI applicants.

In proposed § 1263.11, FHFA would require CDFI credit unions to comply with the same financial condition requirements that currently apply to state chartered credit unions that are insured by the NCUA. 11 All credit unions chartered by a particular state operate under the same state laws and regulations. All are subject to oversight by the same state regulatory agency and would have the same financial reporting and examination requirements at the state level. Thus, for this category of CDFI, FHFA believes that it is most appropriate for the Banks to evaluate financial condition under the same regulatory provisions that apply to all other credit union and depository institution applicants. Those provisions are set out in proposed § 1263.11(a) and (b) and require the Banks to evaluate the financial condition of the applicants based on information in the regulatory financial reports they file with their applicable regulators, their audited financial statements, and the examination reports prepared by their regulators. The key distinction for CDFI credit unions is that they are not subject to oversight by the NCUA and consequently do not file financial regulatory reports with the NCUA. Nonetheless, the CDFI credit unions should file comparable reports with their appropriate state regulator, and FHFA believes that those documents can be used by the Banks to assess the financial condition of the CDFI credit unions, applying the same criteria as in the existing regulations. To the extent that any state chartered credit unions without NCUA insurance may not in fact file regulatory financial reports with their state regulator that are comparable to those filed by NCUA-regulated credit unions, or are not required to have audited financial statements or submit to regulatory examinations, FHFA requests comments on what other documentation such entities would prepare that would provide the Banks with comparable information about their financial condition.

To bring the CDFI credit unions within the scope of the current financial condition requirements for depository institutions, the proposed rule would amend the existing regulatory text in two locations. The first amendment would revise proposed § 1263.11(a) to list the types of depository institutions that are subject to its provisions and to include CDFI credit unions within that list. The second amendment would add a new provision, proposed § 1263.11(b)(3)(iii), which would require all CDFI credit unions to meet certain performance trend criteria. Under the current regulation, the only depository institutions that must satisfy those criteria are institutions with a composite examination rating of “2” or “3”. Because the CDFI credit unions are not subject to oversight by the NCUA and because the Banks may be less familiar with state examination ratings, FHFA believes that it is prudent to require all such CDFI credit unions to demonstrate that their earnings, nonperforming assets, and allowance for loan and lease losses are consistent with the existing performance criteria. Apart from those amendments, proposed § 1263.11 would retain all of the language from the existing § 925.11. FHFA requests comments on whether the application of these standards is appropriate for CDFI credit unions and whether the nature or extent of oversight and examination by a state regulator differs in any manner that would require any of the provisions in this section to be modified. For example, the current rule requires the submission of quarterly regulatory financial reports and information from a regulatory examination report. To the extent that any state chartered CDFI credit unions might not have quarterly reports, financial statements audited by a certified public accountant or regulatory examination reports, FHFA seeks information on the types of financial condition statements and regulatory reports that such entities do submit and what types of examination and rating are provided by the state regulators.

For all other CDFIs, such as CDFI loan funds and venture capital funds, FHFA is proposing new financial condition requirements. These requirements would be incorporated into the existing provisions relating to insurance companies, set out in proposed § 1263.16(b). Institutions in this category of CDFIs are not subject to the same degree of state or federal oversight as are depository institutions and insurance companies. Thus, they may not be able to provide the Banks with documentation similar to examination reports or periodic regulatory financial reports to aid the Banks in assessing their financial condition. Although these CDFIs will have been certified by the CDFI Fund, that process does not include an assessment of the CDFI's financial condition. Moreover, the type and extent of available financial documentation will differ for the various categories of CDFIs. Although some CDFI loan funds and venture capital funds may be able to obtain private ratings that would be analogous to those relating to depository institutions, those are not routinely generated. Because of those differences, FHFA is proposing to establish separate financial documentation requirements and approval standards for assessing the financial condition of this category of CDFIs, which are intended to be analogous to those applicable to other applicants, while taking into account the unique characteristics of CDFIs.

The structure of proposed § 1263.16(b) would generally parallel that used for depository institutions, i.e., the regulation would identify the types of financial documents that a Bank must review in assessing a CDFI's financial condition and would establish standards for determining whether an applicant's financial condition is sufficiently sound to admit it to Bank membership. Those amendments are described below.

Section 1263.16(b)(1) of the proposed rule would specify two categories of financial documents that a Bank must obtain and review when assessing a CDFI's financial condition, and would authorize a Bank to request any additional documents that it deems necessary to assessing the financial condition of the CDFI applicant. The first category of documentation relates to financial statements, and requires the submission of an independent audit that has been conducted within the prior year by a certified public accounting firm, in accordance with generally accepted auditing standards (GAAS), as well as more recent quarterly financial statements, if those are available. An applicant also must submit financial statements for the two years prior to the most recent audited financial statement. At a minimum, all such financial statements must include income and expense statements, statements of activities, statements of financial position, and statements of cash flows. The financial statements for the most recent year also must include detailed disclosures or schedules relating to the affiliates of the CDFI applicant regarding the financial position of each affiliate, their lines of business, and the relationship between the affiliates and the applicant CDFI.

FHFA believes that the use of a GAAS-consistent audited financial statement is a uniform and reliable means by which an applicant can demonstrate to a Bank that it is in sound financial condition, particularly in the absence of the regulatory financial and examination reports that the Banks typically consider in evaluating other depository institutions and insurance companies for membership. Nonetheless, FHFA requests comments on whether there might be alternatives to GAAS-compliant audited financial statements that would allow a Bank to assess accurately the financial condition of a CDFI applicant. If certain CDFIs do not typically obtain audited financial statements, FHFA might consider allowing the Banks to use alternative financial statements, but asks that any persons recommending such alternatives provide detailed information about the quality of such alternatives and the frequency at which they would be prepared. Examples of such alternatives might include financial statements that, while not prepared by a certified public accounting firm, would be substantially similar to audited financial statements, or financial statements prepared by a CDFI that have some other means of assuring that they accurately present its financial condition. FHFA will consider allowing the use of such alternative financial statements in the final rule if it can be reasonably assured that the Banks can rely on them to determine that the CDFI applicant is in sound financial condition.

Section 1263.16(b)(1)(ii) and (iii) of the proposed rule further requires a CDFI applicant to provide the Bank with a copy of the certification it has received from the CDFI Fund, as well as any other financial information concerning its financial condition that is requested by the Bank. With respect to the issue of certification, each CDFI applicant generally must provide a certification issued by the CDFI Fund no more than three years prior to the date of the CDFI's application for Bank membership. If an applicant's CDFI certification does not meet that requirement, the applicant must submit to the Bank a written statement that there have been no material events or occurrences since the date of certification that would adversely affect its strategic direction, mission, or business operations, and thereby its status as a CDFI.

Section 1263.16(b)(2) of the proposed rule sets out minimum financial condition standards that a CDFI must meet in order to become a member of a Bank. Those standards relate to net assets, earnings, loan loss reserves, and liquidity, and are described below.

Net asset ratio. The proposed rule would require that a CDFI applicant have a ratio of net assets to total assets of at least 20 percent, which is intended to address the capital adequacy of the CDFI. For purposes of this provision, “net assets” is to be calculated as the residual value of assets (including restricted assets) over liabilities and is to be based on information derived from the applicant's most recent financial statements.

FHFA is proposing this approach because it understands that the inclusion of restricted assets within net assets is consistent with the approach used by the CDFI Fund and others in the CDFI industry, as well as with the accounting standards for nonprofit entities. Restricted assets typically appear on CDFI balance sheets when donor or government funds are specifically designated as capital, and are thereby “restricted” as to their possible uses. When used in this manner, the capital may be classified as restricted, but it is nonetheless available to absorb any losses. For example, the CDFI Fund commonly awards funding for loan loss reserves, which may serve to lower a CDFI's borrowing costs. FHFA requests comment on the inclusion of restricted assets in the net asset ratio, and on the proposed use of a minimum net asset ratio of 20 percent for membership eligibility.

Earnings. The proposed rule would require a CDFI applicant to demonstrate that it has some earnings capacity. Thus, an applicant must show that it has generated a positive net income for any two of the three most recent years. For purposes of this provision, net income would be defined as gross revenues less total expenses, based on information derived from the applicant's most recent financial statements. In the definitions section of the regulation, the proposal defines “gross revenues” to mean total revenues received from all sources, including earnings from operations, grants and other donor contributions. This requirement is adapted from the earnings requirement for insured depository institutions in the current regulation, which requires that the applicant's adjusted net income be positive in four of the six most recent calendar quarters. Because CDFIs may not typically file quarterly regulatory reports, and generally obtain an audit of their financial statements only once a year, FHFA proposes to require that earnings be positive in two of the three most recent years, rather than four of the six most recent calendar quarters. FHFA requests comment on the appropriateness of this measure of earnings and on the proposed minimum eligibility standard.

Loan loss reserves. The proposed rule would require that an applicant's ratio of loan loss reserves to loans and leases 90 or more days delinquent, including loans sold with full recourse, be not less than 30 percent. The information to determine compliance with this provision should be derived from the applicant's most recent financial statements. Loan loss reserves, which help the CDFIs self-insure against losses, are defined within this provision to mean a specified balance sheet account that reflects the amount reserved for loans expected to be uncollectible. The proposed rule is intended to provide a flexible and relative standard, to acknowledge the CDFIs' mission and loan origination practices while also requiring a buffer to protect the organization's continued solvency and ongoing operation. The 30 percent threshold is half of the requirement that would apply to depository institution applicants. FHFA is proposing to allow the lower ratio in recognition of a historically lower delinquency rate among CDFI-originated loans, which have performed equal to or better than prime loans. As noted, the CDFIs' fundamental mission is to stabilize communities. Most CDFIs hold the loans they make and, consequently, the risk in portfolio. These two conditions prompt the use of careful underwriting, intensive homeowner and financial counseling, and subsidies to assure borrower affordability. CDFIs have the ability to modify a loan in response to a borrower's adverse life event, thus preventing a foreclosure. Given these unique circumstances, lower loan loss reserves would permit more capital to go to borrowers. However, given current housing market conditions, FHFA requests comment on the appropriateness of the proposed loan loss reserve measure, the rationale for the different standard for CDFIs, or whether there are any alternative standards that might also serve this purpose.

Liquidity ratio. The proposed rule would require that an applicant's operating liquidity ratio be no less than 1.0 for the current year, i.e., the year during which a CDFI applies for membership, as well as in at least one of the two years preceding the current year. The operating liquidity ratio is to include in the numerator unrestricted cash and cash equivalents and in the denominator the average quarterly operating expense for the four most recent quarters. FHFA believes that this operating liquidity ratio provides a measure of funds available to pay expenses and creditors by requiring a CDFI to have sufficient liquidity to cover average operating expenses for one quarter. FHFA requests comment on the appropriateness of the proposed requirement for operating liquidity.

Self-Sufficiency or Sustainability Ratio. The self-sufficiency or sustainability ratio is a measure used to evaluate the extent to which a CDFI can cover its expenses from earned revenue and, by inference, the CDFI's independence from grants and loans. The ratio is computed as earned revenue divided by total expenses. Full self-sufficiency is achieved when a CDFI achieves a ratio of 1.0 (100 percent) or greater. However, self-sufficiency ratios are affected by the type of services and grant programs operated by the CDFI. In some cases, the self-sufficiency ratio may not adequately portray the financial condition of the CDFI, and too stringent a ratio could countermand the service delivery requirements for certification by the CDFI Fund. See 12 U.S.C. 4701(b). The proposed rule does not include a requirement for the self-sufficiency ratio, but FHFA seeks comment on whether to include a standard for the self-sufficiency ratio as part of the minimum financial condition standards for CDFI members and, if so, what the threshold standard should be. 12

CDFI Bank Holding Companies. FHFA understands that there are some bank holding companies that are certified as CDFIs, but it is not including that category of institution in the proposed rule. Any bank holding company would, by definition, control a federally insured commercial bank, which is eligible for Bank membership in its own right. Given that authority, FHFA believes that the appropriate vehicle for Bank membership for such enterprises is through the existing process for insured depository institutions. Nonetheless, FHFA requests comment on whether it should include in the final rule additional provisions relating to bank holding company membership based on CDFI status. To the extent that any commenters address this issue, FHFA also asks that they provide information about specific holding companies that operate as CDFIs, their relationships to their depository institution subsidiaries, and how membership via the CDFI provisions would provide benefits not available as a result of the depository institution becoming a member.

Character of Management. The current § 925.12 requires that an applicant's character of management be consistent with sound and economical home financing. To meet the existing requirement, an applicant must provide the Bank with a certification that it has not, since the applicant's most recent regulatory examination report, been subject to any enforcement actions, criminal, civil or administrative proceedings, or criminal, civil or administrative monetary liabilities, lawsuits or judgments.

The proposed rule would amend the existing provision by replacing the reference to “applicant” with a listing of the types of entities to which proposed § 1263.12(a) would apply. The list would include the institutions currently covered by this provision, i.e., depository institutions and insurance companies, and also would add CDFI credit unions to that category. As noted previously, because state chartered credit unions that are insured by NCUA must comply with this provision, FHFA believes that those provisions should apply as well to state chartered credit unions that qualify as CDFI credit union applicants.

Because certain of the newly-eligible CDFIs, such as loan funds and venture capital funds, are not regulated and, therefore, do not undergo regulatory examinations and are not subject to enforcement actions, the proposed rule would amend proposed § 1263.12(b) to require such applicants to provide to the Bank the same certification, except for enforcement actions, with respect to the past three years. In light of the fact that these CDFIs are not subject to CAMELS-type ratings produced by the banking regulators, which evaluate an institution's management, FHFA requests comment on whether there are any other means by which a Bank can assess the character of a CDFI applicant's management.

Home Financing Policy. Under the current Membership Regulation, applicants with a “Satisfactory” or better Community Reinvestment Act (CRA) rating are deemed to meet the requirement that their home financing policy is consistent with sound and economical home financing. Section 1263.13(b) of the proposed rule would retain the existing requirement that applicants not subject to the CRA—such as CDFI applicants—must provide a written justification, acceptable to the Bank, explaining how and why their home financing policy is consistent with the Bank System's housing finance mission.

Rebuttable Presumptions. Section 925.17 of the Membership Regulation allows presumptions of compliance or noncompliance with certain membership eligibility requirements to be rebutted, upon meeting certain requirements set forth in that regulation. The proposed rule would amend the regulatory language to enable newly-eligible CDFI applicants to rebut presumptive noncompliance with such membership eligibility requirements, in the same manner as other applicants may do under the current regulations.

Accordingly, the proposed rule would extend the existing rebuttal provisions relating to presumptive noncompliance with the financial condition and character of management requirements to CDFI applicants. Such applicants could rebut those presumptions by submitting a written justification providing substantial evidence, acceptable to the Bank, demonstrating that their financial condition and character of management are both consistent with the standards for approval as members.

Proposed § 1263.17(e)(2) would provide that if a CDFI applicant or any of its directors or senior officers has been the subject of any criminal, civil or administrative proceedings reflecting upon creditworthiness, business judgment, or moral turpitude in the past three years, the applicant must provide a written analysis indicating that the proceedings will not likely have a significantly deleterious effect on the applicant's operations. The written analysis must address the severity of the charges, and any mitigating action taken by the applicant or its directors or senior officers.

Proposed § 1263.17(e)(3) would provide that if there are any known potential criminal, civil or administrative monetary liabilities, material pending lawsuits, or unsatisfied judgments against the CDFI applicant or any of its directors or senior officers in the past three years that are significant to the applicant's operations, the applicant must provide a written analysis acceptable to the Bank indicating that the liabilities, lawsuits or judgments will not likely cause the applicant to fall below its applicable net asset ratio set forth in proposed § 1263.16(b)(2)(i). The written analysis shall state the likelihood of the applicant or its directors or senior officers prevailing, and the financial consequences if the applicant or its directors or senior officers do not prevail.

The proposed rule would make various technical changes to the stock purchase requirements currently set forth in various provisions of Subpart D. At present, the minimum stock purchase requirements specified in § 925.20(a) are based on statutory provisions that cease to apply to a Bank once it has converted its capital structure to the form required by the Gramm-Leach-Bliley Act (GLB Act). Because all but one of the Banks has completed its capital conversion, proposed § 1263.20 is being amended to add language to indicate that the minimum stock purchase requirement for a member shall be the minimums specified in each Bank's capital structure plan. For members of the Bank that has not converted, the stock purchase requirement shall continue to be as specified in the Membership Regulation. The proposed rule also makes some conforming changes to proposed §§ 1263.21 and 1263.22, both of which relate to distinctions based on conversion to the GLB Act capital structure.

The proposed rule makes no substantive changes in any of the remaining subparts of the Membership Regulation. In Subpart H, relating to the reacquisition of membership, the proposed rule would delete language from the current § 925.30(b) relating to institutions that withdrew from membership prior to December 31, 1997, as the passage of time has rendered that language moot.

Section 10(g)(1) of the Bank Act requires FHFA to establish standards of community investment or service for members of the Banks to maintain continued access to long-term Bank advances, taking into account factors such as a member's performance under the CRA and the member's record of lending to first-time homebuyers. See 12 U.S.C. 1430(g)(1), (2). The FHFB regulation setting forth such “community support” standards is at 12 CFR part 944. Under these provisions, a Bank member that is subject to the CRA is deemed to meet the CRA standard if its most recent CRA evaluation is “outstanding” or “satisfactory.” See 12 CFR 944.3(b)(1). A member also is presumed to meet the first-time homebuyer lending standard if its CRA evaluation is “outstanding” and there are no public comments or other information to the contrary. 12 CFR 944.3(c). Members that are not subject to the CRA, such as credit unions and insurance companies, are only required to meet the first-time homebuyer lending standard. Id. Because the newly eligible CDFIs are not subject to the CRA, they would only be subject to the first-time homebuyer lending standard. Section 944.3(c)(1) includes a non-exclusive list of eligible activities that meet the first-time homebuyer lending standard, such as: having an established record of lending to first-time homebuyers; providing homeownership counseling programs for first-time homebuyers; providing or participating in marketing plans and related outreach programs targeted to first-time homebuyers; and providing technical assistance or financial support to organizations that assist first-time homebuyers. See id. at 944.3(c)(1).

FHFA believes that a CDFI should be able to comply with these requirements, even if it is not subject to the CRA and may have limited experience in lending to first-time homebuyers. Nonetheless, FHFA requests comments on whether it is appropriate to apply the current requirements to CDFIs or whether it would be appropriate to adopt an alternative community support standard for CDFIs that recognizes their unique mission and business practices while still complying with this statutory requirement.

Apart from the amendments authorizing certified CDFIs to become Bank members, HERA included certain other amendments relating to “community development activities.” Section 1211 of HERA amended the Bank Act to broaden the circumstances under which “community financial institutions” (CFI), which are FDIC-insured members with average total assets of $1 billion or less, may obtain advances. Specifically, HERA allowed CFIs to obtain long-term advances for the purpose of funding “community development activities” and further allowed CFIs to pledge secured loans for “community development activities” as collateral for their advances. Because a CFI must be an institution with FDIC insurance, it does not appear that any of the newly eligible CDFIs, all of which would lack FDIC insurance, would be eligible to take advantage of these amendments to the advances and collateral provisions of the Bank Act. Nonetheless, the Finance Agency requests comments on whether there is any basis in the legislative history to HERA or otherwise on which it could reasonably rely to construe the new CFI provisions as applying to CDFIs as well as CFIs.

The information collection contained in the current Membership Regulation, entitled “Members of the Banks,” has been assigned control number 2590-0003 by the Office of Management and Budget (OMB). The proposed rule, if adopted as a final rule, would not substantively or materially modify the approved information collection. Consequently, FHFA has not submitted any information to OMB for review under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501, et seq.

The proposed rule, if adopted as a final rule, will apply only to the Banks, which do not come within the meaning of “small entities,” as defined in the Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). Therefore, in accordance with section 605(b) of the RFA, 5 U.S.C. 605(b), the General Counsel of FHFA hereby certifies that the proposed rule, if promulgated as a final rule, will not have a significant economic impact on a substantial number of small entities.

For the reasons stated in the preamble, FHFA proposes to amend chapters IX and XII of title 12 of the Code of Federal Regulations as follows:

Under Title VIII of the Alaska National Interest Lands Conservation Act (ANILCA) (16 U.S.C. 3111-3126), the Secretary of the Interior and the Secretary of Agriculture (Secretaries) jointly implement the Federal Subsistence Management Program. This program grants a preference for subsistence uses of fish and wildlife resources on Federal public lands and waters in Alaska. The Secretaries first published regulations to carry out this program in the Federal Register on May 29, 1992 (57 FR 22940). The Program has subsequently amended these regulations several times. Because this program is a joint effort between Interior and Agriculture, these regulations are located in two titles of the Code of Federal Regulations (CFR): Title 36, “Parks, Forests, and Public Property,” and Title 50, “Wildlife and Fisheries,” at 36 CFR 242.1-28 and 50 CFR 100.1-28, respectively. The regulations contain subparts as follows: Subpart A, General Provisions; Subpart B, Program Structure; Subpart C, Board Determinations; and Subpart D, Subsistence Taking of Fish and Wildlife.

Consistent with subpart B of these regulations, the Departments established a Federal Subsistence Board to administer the Federal Subsistence Management Program. The Board is made up of:

• Chair appointed by the Secretary of the Interior with concurrence of the Secretary of Agriculture;

• Alaska Regional Director, U.S. Fish and Wildlife Service;

• Alaska Regional Director, U.S. National Park Service;

• Alaska State Director, U.S. Bureau of Land Management;

• Alaska Regional Director, U.S. Bureau of Indian Affairs; and

• Alaska Regional Forester, U.S. Forest Service.

Through the Board, these agencies participate in the development of regulations for subparts A, B, and C, which set forth the basic program, and they continue to work together on regularly revising the subpart D regulations, which, among other things, set forth specific harvest seasons and limits.

In administering the program, the Secretaries divided Alaska into 10 subsistence resource regions, each of which is represented by a Regional Council. The Regional Councils provide a forum for rural residents with personal knowledge of local conditions and resource requirements to have a meaningful role in the subsistence management of fish and wildlife on Federal public lands in Alaska. The Regional Council members represent varied geographical, cultural, and user diversity within each region.

The Regional Councils have a substantial role in reviewing this proposed rule and making recommendations for the final rule. The Federal Subsistence Board (Board), through the Regional Councils, will hold meetings on this proposed rule at the following locations in Alaska, on the following dates:

The Board, through the Regional Councils, will hold a second series of meetings in February through April 2010, to receive comments on specific proposals and to develop recommendations to the Board. Meeting dates and locations will be published in the Federal Register prior to those meetings:

A notice will be published of specific dates, times, and meeting locations in local and statewide newspapers prior to both series of meetings. Locations and dates may change based on weather or local circumstances. The amount of work on each Regional Council's agenda determines the length of each Regional Council meeting.

The Board will discuss and evaluate proposed changes to the subsistence management regulations during a public meeting scheduled to be held in Anchorage, AK, on May 4, 2010. The Council Chairs, or their designated representatives, will present their respective Councils' recommendations at the Board meeting. Additional oral testimony may be provided on specific proposals before the Board at that time. At that public meeting, the Board will deliberate and take final action on proposals received that request changes to this proposed rule.

Proposals to the Board to modify wildlife harvest regulations and customary and traditional use determinations must include the following information:

a. Name, address, and telephone number of the requestor;

b. Each section and/or paragraph designation in this proposed rule for which changes are suggested;

c. A statement explaining why each change is necessary;

d. Proposed wording changes; and

e. Any additional information that you believe will help the Board in evaluating the proposed change.

The Board rejects proposals that fail to include the above information, or proposals that are beyond the scope of authorities in § _ .24, subpart C (the regulations governing customary and traditional use determinations), and §§ _ .25, and _ .26, subpart D (the general and specific regulations governing the subsistence take of wildlife). During the May 4, 2010, meeting, the Board may defer review and action on some proposals to allow time for local cooperative planning efforts, or to acquire additional needed information. The Board may elect to defer taking action on any given proposal if the workload of staff, Regional Councils, or the Board becomes excessive. These deferrals may be based on recommendations by the affected Regional Council(s) or staff members, or on the basis of the Board's intention to do least harm to the subsistence user and the resource involved. The Board may consider and act on alternatives that address the intent of a proposal while differing in approach.

As expressed in Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” the Federal officials that have been delegated authority by the Secretaries are committed to honoring the unique government-to-government political relationship that exists between the Federal Government and Federally Recognized Indian tribes (tribes) as listed in 73 FR 18533 (April 4, 2008). The Alaska National Interest Lands Conservation Act does not specifically provide rights to tribes for the subsistence taking of wildlife, fish, and shellfish. However, because tribal members are affected by subsistence fishing, hunting, and trapping regulations, the Secretaries have elected to provide tribes an opportunity to consult on this rule.

The Secretaries will engage in outreach efforts for this rule, including a notification letter, to ensure that tribes are advised of the mechanisms by which they can participate. The Board provides a variety of opportunities for consultation: Proposing changes to the existing rule; commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Advisory Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, email, or phone at any time during the rule-making process. The Secretaries will commit to efficiently and adequately reviewing the government-to-government consultation process with regard to subsistence rulemaking.

The Board will consider tribes' information, input, and recommendations, and address their concerns as much as practicable. However, in keeping with ANILCA § 805(c), the Board shall follow recommendations of the Regional Advisory Councils for the taking of fish and wildlife unless their recommendation is determined to be not supported by substantial evidence, violates recognized principles of fish and wildlife conservation, or would be detrimental to the satisfaction of subsistence needs. The Board will inform the tribes how their recommendations were considered.

Subpart D regulations are subject to periodic review and revision. The Federal Subsistence Board completes the biennial process of revising subsistence hunting and trapping regulations in even-numbered years and subsistence fishing and shellfish regulations in odd-numbered years; public proposal and review processes take place during the preceding year. The Board also addresses customary and traditional use determinations during the applicable biennial cycle.

The text of the final rule published June 24, 2008 (73 FR 35726) for the 2008-10 subparts C and D regulations is the text of this proposed rule. These regulations will take effect on July 1, 2010, unless subsequent Board action changes elements as a result of the public review process outlined above in this document.

A Draft Environmental Impact Statement (DEIS) that described four alternatives for developing a Federal Subsistence Management Program was distributed for public comment on October 7, 1991. The Final Environmental Impact Statement (FEIS) was published on February 28, 1992. The Record of Decision (ROD) on Subsistence Management for Federal Public Lands in Alaska was signed April 6, 1992. The selected alternative in the FEIS (Alternative IV) defined the administrative framework of an annual regulatory cycle for subsistence regulations.

A 1997 environmental assessment dealt with the expansion of Federal jurisdiction over fisheries and is available at the office listed under FOR FURTHER INFORMATION CONTACT . The Secretary of the Interior, with concurrence of the Secretary of Agriculture, determined that expansion of Federal jurisdiction does not constitute a major Federal action significantly affecting the human environment and, therefore, signed a Finding of No Significant Impact.

An ANILCA Section 810 analysis was completed as part of the FEIS process on the Federal Subsistence Management Program. The intent of all Federal subsistence regulations is to accord subsistence uses of fish and wildlife on public lands a priority over the taking of fish and wildlife on such lands for other purposes, unless restriction is necessary to conserve healthy fish and wildlife populations. The final section 810 analysis determination appeared in the April 6, 1992, ROD and concluded that the Federal Subsistence Management Program, under Alternative IV with an annual process for setting subsistence regulations, may have some local impacts on subsistence uses, but will not likely restrict subsistence uses significantly.

During the subsequent environmental assessment process for extending fisheries jurisdiction, an evaluation of the effects of this rule was conducted in accordance with section 810. That evaluation also supported the Secretaries' determination that the rule will not reach the “may significantly restrict” threshold that would require notice and hearings under ANILCA section 810(a).

The information collection requirements contained in this rule have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and assigned OMB control number 1018-0075, which expires October 31, 2009. We may not conduct or sponsor, and you are not required to respond to, a collection of information unless it displays a current valid OMB control number.

The Office of Management and Budget (OMB) has determined that this rule is not significant and has not reviewed this rule under Executive Order 12866. OMB bases its determination upon the following four criteria:

a. Whether the rule will have an annual effect of $100 million or more on the economy or adversely affect an economic sector, productivity, jobs, the environment, or other units of the government.

b. Whether the rule will create inconsistencies with other agencies' actions.

c. Whether the rule will materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients.

d. Whether the rule raises novel legal or policy issues.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq. ) requires preparation of flexibility analyses for rules that will have a significant effect on a substantial number of small entities, which include small businesses, organizations, or governmental jurisdictions. In general, the resources to be harvested under this rule are already being harvested and consumed by the local harvester and do not result in an additional dollar benefit to the economy. However, we estimate that 2 million pounds of meat are harvested by subsistence users annually and, if given an estimated dollar value of $3.00 per pound, this amount would equate to about $6 million in food value statewide. Based upon the amounts and values cited above, the Departments certify that this rulemaking will not have a significant economic effect on a substantial number of small entities within the meaning of the Regulatory Flexibility Act.

Under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801 et seq. ), this rule is not a major rule. It does not have an effect on the economy of $100 million or more, will not cause a major increase in costs or prices for consumers, and does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

Title VIII of ANILCA requires the Secretaries to administer a subsistence priority on public lands. The scope of this program is limited by definition to certain public lands. Likewise, these regulations have no potential takings of private property implications as defined by Executive Order 12630.

The Secretaries have determined and certify pursuant to the Unfunded Mandates Reform Act, 2 U.S.C. 1502 et seq., that this rulemaking will not impose a cost of $100 million or more in any given year on local or State governments or private entities. The implementation of this rule is by Federal agencies and there is no cost imposed on any State or local entities or tribal governments.

The Secretaries have determined that these regulations meet the applicable standards provided in Sections 3(a) and 3(b)(2) of Executive Order 12988, regarding civil justice reform.

In accordance with Executive Order 13132, the rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. Title VIII of ANILCA precludes the State from exercising subsistence management authority over fish and wildlife resources on Federal lands unless it meets certain requirements.

The Alaska National Interest Lands Conservation Act does not specifically provide rights to tribes for the subsistence taking of wildlife, fish, and shellfish. And while, for this rule, EO 13175 does not require the agencies to consult with tribes, the Secretaries have elected to provide tribes an opportunity to consult on this rule. The Board will provide a variety of opportunities for consultation through: Proposing changes to the existing rule; commenting on proposed changes to the existing rule; engaging in dialogue at the Regional Advisory Council meetings; engaging in dialogue at the Board's meetings; and providing input in person, by mail, e-mail, or phone at any time during the rulemaking process.

On May 18, 2001, the President issued Executive Order 13211 on regulations that significantly affect energy supply, distribution, or use. This Executive Order requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This rule is not a significant regulatory action under Executive Order 13211, affecting energy supply, distribution, or use, and no Statement of Energy Effects is required.

Theo Matuskowitz drafted these regulations under the guidance of Peter J. Probasco of the Office of Subsistence Management, Alaska Regional Office, U.S. Fish and Wildlife Service, Anchorage, Alaska. Additional assistance was provided by:

• Daniel Sharp, Alaska State Office, Bureau of Land Management;

• Sandy Rabinowitch and Nancy Swanton, Alaska Regional Office, National Park Service;

• Drs. Warren Eastland and Glenn Chen, Alaska Regional Office, Bureau of Indian Affairs;

• Jerry Berg and Carl Jack, Alaska Regional Office, U.S. Fish and Wildlife Service; and

• Calvin Casipit, Alaska Regional Office, U.S. Forest Service.

For the reasons set out in the preamble, the Federal Subsistence Board proposes to amend 36 CFR 242 and 50 CFR 100 for the 2010-11 and 2011-12 regulatory years.

Our intent is to use the best available commercial and scientific data as the foundation for all endangered and threatened species classification decisions. Comments or suggestions from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning this proposed rule to downlist the Oregon chub are hereby solicited. Comments particularly are sought concerning:

(1) Biological information concerning the Oregon chub, including competition from non-native species and the risks associated with loss of genetic diversity in isolated populations;

(2) Relevant data concerning any current or likely future threats (or lack thereof) to the Oregon chub;

(3) Additional information concerning the range, distribution, population size and population trends of the Oregon chub, including the locations of any additional populations; and

(4) Information regarding management plans or other mechanisms that provide protection to Oregon chub or their habitats.

You may submit your comments and materials concerning this proposed rule by one of the methods listed in the ADDRESSES section. We will not accept comments sent by e-mail or fax or to an address not listed in the ADDRESSES section.

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

Comments and materials we receive, as well as supporting documentation we used in preparing this proposed rule, will be available for public inspection on http://www.regulations.gov , or by appointment during normal business hours at the Oregon Fish and Wildlife Office, 2600 SE. 98th Avenue, Suite 100, Portland, Oregon 97266, (503/231-6179).

The Act provides for one or more public hearings on this proposal, if requested. Requests must be received by the date specified in DATES . Such requests must be made in writing and addressed to the Field Supervisor ( see FOR FURTHER INFORMATION CONTACT section above).

In our December 30, 1982, Review of Vertebrate Wildlife for Listing as Endangered or Threatened Species Under the Act, we listed the Oregon chub as a Category 2 candidate species (47 FR 58454). Category 2 candidates, a designation no longer used by the Service, were species for which information contained in Service files indicated that proposing to list was possibly appropriate but additional data were needed to support a listing proposal. The Oregon chub maintained its Category 2 status in both the September 18, 1985 (50 FR 37958) and January 6, 1989 (54 FR 554) Notices of Review.

On April 10, 1990, the Service received a petition to list the Oregon chub as an endangered species and to designate critical habitat. The petition and supporting documentation were submitted by Dr. Douglas F. Markle and Mr. Todd N. Pearsons, both affiliated with Oregon State University. The petitioners submitted taxonomic, biological, distributional, and historical information and cited numerous scientific articles in support of the petition. The petition and accompanying data described the Oregon chub as endangered because it had experienced a 98 percent range reduction and remaining populations faced significant threats. On November 1, 1990, the Service published a 90-day finding indicating that the petitioners had presented substantial information indicating that the requested action may be warranted and initiated a status review (55 FR 46080).

On November 19, 1991, the Service published a 12-month finding on the petition concurrent with a proposal to list the species as endangered (56 FR 58348). A final rule listing the Oregon chub as endangered was published in the Federal Register on October 18, 1993 (58 FR 53800). A 5-year review of the Oregon chub's status was completed in February 2008 (U.S. Fish and Wildlife Service 2008a, pp. 1-34); this review concluded that the Oregon chub's status had substantially improved since listing, and that the Oregon chub no longer met the definition of an endangered species, but does meet the definition of a threatened species, under the Act. The review, therefore, recommended that the Oregon chub should be downlisted from endangered to threatened.

On March 10, 2009, the Service published a proposed rule to designate critical habitat (74 FR 10412) for the Oregon chub. The public comment period on the proposed critical habitat rule closes on May 11, 2009.

The Oregon chub is a small minnow (Family: Cyprinidae) endemic to the Willamette River Basin in western Oregon (Markle et al. 1991, p. 288). The Oregon chub has an olive-colored back grading to silver on the sides and white on the belly (Markle et al. 1991, p. 286). Oregon chub are found in slack water off-channel habitats such as beaver ponds, oxbows, side channels, backwater sloughs, low-gradient tributaries, and flooded marshes. These habitats usually have little or no water flow, silty and organic substrate, and abundant aquatic vegetation for hiding and spawning cover (Pearsons 1989, p. 12; Scheerer and McDonald 2000, p. 9). Summer temperatures in shallow ponds inhabited by Oregon chub generally exceed 16 degrees Celsius (C) (61 degrees Fahrenheit (F)) (Scheerer et al. 1998, p. 26). In the winter months, Oregon chub are found buried in detritus or concealed in aquatic vegetation (Pearsons 1989, p. 16).

Oregon chub reach maturity at about 2 years of age (Scheerer and McDonald 2003, p. 78) and in wild populations can live up to 9 years. Most individuals over 5 years old are females (Scheerer and McDonald 2003, p. 68). Oregon chub spawn in warm (16 to 21 degrees C (61 to 70 degrees F)) shallow water from June through August (Scheerer and McDonald 2000, p. 10). The diet of Oregon chub collected in a May sample consisted primarily of copepods, cladocerans, and chironomid larvae (Markle et al. 1991, p. 288).

In the early 1990s, Oregon chub populations were found predominantly in the Middle Fork Willamette River (Middle Fork), with a few, small populations found in the Mid-Willamette River, Santiam River, and Coast Fork Willamette River (Coast Fork). The species is now well distributed throughout the Willamette Basin (in Polk, Marion, Linn, Lane and Benton Counties, Oregon), with populations in the Santiam River (8 sites), Mid-Willamette River (6 sites), McKenzie River (4 sites), Middle Fork (14 sites), and Coast Fork (3 sites) (Scheerer et al. 2007, p. 2). There are currently 19 populations that contain more than 500 adults each; 16 of these have a stable or increasing trend (Scheerer 2008a, p. 6).

The Service published a final recovery plan for the Oregon chub in 1998 (U.S. Fish and Wildlife Service 1998). Recovery plans are intended to guide actions to recover listed species and to provide measurable objectives against which to measure progress towards recovery, however, precise attainment of the recovery criteria is not a prerequisite for downlisting or delisting. The Oregon chub recovery plan established the following criteria for downlisting the species from endangered to threatened:

(1) Establish and manage 10 populations of at least 500 adults each;

(2) All of these populations must exhibit a stable or increasing trend for 5 years; and

(3) At least three populations must be located in each of the three sub-basins of the Willamette River identified in the plan (Mainstem Willamette River, Middle Fork, and Santiam River).

The recovery plan established the following criteria for delisting ( i.e., removing the species from the List of Endangered and Threatened Wildlife):

(1) Establish and manage 20 populations of at least 500 adults each;

(2) All of these populations must exhibit a stable or increasing trend for 7 years;

(3) At least four populations must be located in each of the three sub-basins (Mainstem Willamette River, Middle Fork, and Santiam River); and

(4) Management of these populations must be guaranteed in perpetuity.

Recovery actions specified in the recovery plan to achieve the downlisting and delisting goals included managing existing sites, establishment of new populations, research into the ecology of the species, and public education and outreach to foster greater understanding of the Oregon chub and its place in the natural environment of the Willamette Basin (U.S. Fish and Wildlife Service 1998, pp. 28-44).

When the Oregon chub was listed as endangered in 1993, it was known to occur at only nine locations within a 30-kilometer (18.6-mile) reach of the Willamette River, representing just two percent of its historical range (58 FR 53800, p. 53801). Since 1992, the Service, Oregon Department of Fish and Wildlife (ODFW), U.S. Army Corps of Engineers (Corps), U.S. Forest Service, Oregon Parks and Recreation Department and Oregon Department of Transportation have funded ODFW staff to conduct surveys for Oregon chub throughout the Willamette Valley. ODFW has surveyed 650 off-channel habitats and small tributaries in the Willamette River Basin (Scheerer 2007, p. 92), greatly increasing our knowledge of the current and potential habitat available to the Oregon chub. Other research projects have resulted in new information on the species' habitat use, timing of spawning, and age and growth patterns (U.S. Fish and Wildlife Service 2008a, pp. 13-15).

The status of the Oregon chub has dramatically improved since it was listed as endangered. The improvement is due largely to the implementation of actions identified in the Oregon chub recovery plan. This includes the discovery of many new populations as a result of ODFW's exhaustive surveys of the basin, and the establishment of additional populations via successful reintroductions within the species' historical range (Scheerer 2007, p. 97). To date, Oregon chub populations have been introduced at 15 sites (7 in the Mainstem Willamette Sub-basin, 5 in the Middle Fork Sub-basin, and 3 in the Santiam Sub-basin) (Scheerer et al. 2007, p. 2; Scheerer 2008a, p. 6). Introduced populations have been established in suitable habitats with low connectivity to other suitable aquatic habitats to reduce the risk of invasion by nonnative fishes ( see Factor C below for more information) (Scheerer 2007, p. 98). At present, 9 of these populations persist and exhibit stable or increasing trends; 1 population was reintroduced too recently to evaluate success ( i.e., the population introduced in 2008 at St. Paul Ponds); and 5 introduced populations have been extirpated or are not likely to remain viable. Reasons for reintroduction failures include: pond desiccation, low dissolved oxygen, unauthorized introductions of nonnative predatory fishes, and high mortality of introduced fish (Scheerer et al. 2007, p. 2; Scheerer 2008a, p. 6; Scheerer 2009a, p. 1).

Currently, there are 36 Oregon chub populations, of which 19 have more than 500 adults (Scheerer et al. 2007, p. 2; Scheerer 2008a, p. 6). Fifteen years have passed since listing, and the species is now relatively abundant and well distributed throughout much of its presumed historical range. The risk of extinction has been substantially reduced as threats have been managed, and as new populations have been discovered and re-established. The Oregon chub has exceeded or met nearly all of the criteria for downlisting to threatened described in the recovery plan. A review of the species' current status relative to the downlisting criteria follows.

Downlisting Criterion 1: Establish and manage 10 populations of at least 500 adults each. This criterion has been exceeded. There are 19 populations with more than 500 adult Oregon chub (table 1).

Downlisting Criterion 2: All of these populations must exhibit a stable or increasing trend for 5 years. This criterion has been exceeded; there are 16 populations with at least 500 adults that are stable or increasing (table 1). Scheerer et al. (2007, p. 4) defined abundance trends as increasing, declining, stable, or not declining using linear regression of abundance estimates over time for each population with more than 500 adult fish over the last 5 years. When the slope of this regression was negative and significantly different from zero (P<0.10), the population was categorized as declining. When the slope was positive and significantly different from zero (P<0.10), the population was categorized as increasing. When the slope was not significantly different from zero (P>0.10), Scheerer et al. (2007, p. 4) calculated the coefficient of variation of the abundance estimates to discriminate between populations that were stable ( i.e., low variation in population abundance estimates) and those that were unstable but not declining ( i.e., high variation in population abundance estimates). When the coefficient of variation was less than 1.0, the population was defined as stable; otherwise, the population was considered unstable but not declining (table 1).

Downlisting Criterion 3: At least three populations (which meet criteria 1 and 2 above) must be located in each of the three sub-basins of the Willamette River (Mainstem Willamette River, Middle Fork Willamette, and Santiam River). This criterion has been exceeded in two sub-basins, and is nearly accomplished in the third. In the Mainstem Willamette River sub-basin, there are 6 populations with 500 or more Oregon chub with stable or increasing trends; in the Middle Fork Willamette sub-basin, there are 8 populations with 500 or more Oregon chub with stable or increasing trends; and in the Santiam River sub-basin, there are 3 populations with 500 or more Oregon chub, but only 2 with stable or increasing trends over the last 5 years (Table 1). Five-year trends were calculated for abundant populations (>500 individuals for the last 5 years) only. Table 1 shows the populations by sub-basin.

The Oregon Chub Working Group (Working Group) was formed in 1991. This group of Federal and State agency biologists, academics, land managers and others meet each year to share information on the status of the Oregon chub, results of new research, and ongoing threats to the species. The Working Group has been an important force in improving the conservation status of the Oregon chub.

An interagency conservation agreement was established for the Oregon chub in 1992, prior to listing (U.S. Fish and Wildlife Service 1998, p. 59). ODFW, Oregon Department of Parks and Recreation, Corps, U.S. Bureau of Land Management, U.S. Fish and Wildlife Service, and U.S. Forest Service are the parties to the agreement. The objectives of the conservation agreement are to: (1) Establish a task force drawn from participating agencies to oversee and coordinate Oregon chub conservation and management actions, (2) protect existing populations, (3) establish new populations, and (4) foster greater public understanding of the species, its status, and the factors that influence it (U.S. Fish and Wildlife Service 1998, pp. 65-66).

The Oregon chub is designated as “Sensitive-Critical” by ODFW. The “Sensitive” species classification was created under Oregon's Sensitive Species Rule (OAR 635-100-040) to address the need for a proactive species conservation approach. The Sensitive Species List is a nonregulatory tool that helps focus wildlife management and research activities, with the goal of preventing species from declining to the point of qualifying as “threatened” or “endangered” under the Oregon Endangered Species Act (ORS 496.171, 496.172, 496.176, 496.182 and 496.192). Species designated as Sensitive-Critical are those for which listing as threatened or endangered would be appropriate if immediate conservation actions were not taken. This designation encourages but does not require the implementation of any conservation actions for the species.

Section 4 of the Act and its implementing regulations (50 CFR part 424) set forth the procedures for listing species, reclassifying species, or removing species from listed status. “Species” is defined by the Act as including any species or subspecies of fish or wildlife or plants, and any distinct vertebrate population segment of fish or wildlife that interbreeds when mature (16 U.S.C. 1532(16)). Once the “species” is determined, we then evaluate whether that species may be endangered or threatened because of one or more of the five factors described in section 4(a)(1) of the Act. We must consider these same five factors in reclassifying or delisting a species. For species that are already listed as threatened or endangered, this analysis of threats is an evaluation of both the threats currently facing the species and the threats that are reasonably likely to affect the species in the foreseeable future following the delisting or downlisting and the removal or reduction of the Act's protections.

A species is “endangered” for purposes of the Act if it is in danger of extinction throughout all or a significant portion of its range, and is “threatened” if it is likely to become endangered within the foreseeable future throughout all or a significant portion of its range. The word “range” is used here to refer to the range in which the species currently exists, and the word “significant” refers to the value of that portion of the range being considered to the conservation of the species. The “foreseeable future” is the period of time over which events or effects reasonably can or should be anticipated, or trends reasonably extrapolated; see discussion following Factor E, below.

Following a rangewide threats analysis we evaluate whether the Oregon chub is threatened or endangered in any significant portion(s) of its range.

Historical records indicate that the Oregon chub was distributed throughout the Willamette Basin, from the Clackamas River in the north, to the Coast Fork and Middle Fork in the south (Markle 1991, p. 288). When the Oregon chub was listed as endangered in 1993, the species was known to exist at only nine locations, representing only 2 percent of the species' historical range (Markle 1991, pp. 288-289; Scheerer et al. 2007, p. 2). Four of these locations had fewer than 10 individuals (Scheerer et al. 2007, p. 2). This precipitous decline in the species' abundance and distribution was attributed to the extensive channelization, dam construction, and chemical contamination that occurred in the Willamette Basin, particularly from the 1940s through the late 20th century (Pearsons 1989, pp. 29-30).

There are at least 371 dams in the Willamette River Basin, most of which were constructed during the period 1950 to 1980 (Hulse et al. 2002, p. 30). These dams reduced the magnitude, extent, and frequency of flooding in the basin, which dramatically reduced the amount of slough and side channel habitats used by the Oregon chub (Hulse et al. 2002, pp. 28-30). Other structural changes, such as revetment and channelization, diking and drainage, and the removal of floodplain vegetation, eliminated or altered the side channels and sloughs used by the Oregon chub, and destroyed the natural processes that replenish these slack water habitats (Hjort et al. 1984, p. 73; Sedell and Frogatt 1984, p. 1833; Hulse et al. 2002, p. 27). Analysis of historical records shows that over one-half of the Willamette's sloughs and alcoves had been lost by 1995 (Hulse et al. 2002, p. 18). Although the Oregon chub evolved in a dynamic environment in which flooding periodically created and reconnected habitat for the species, currently most populations of Oregon chub are isolated from other chub populations due to the reduced frequency and magnitude of flood events and the presence of migration barriers such as impassable culverts and beaver dams (Scheerer et al. 2007, p. 9).

In the 15 years since the Oregon chub was listed as endangered, concerted efforts by Federal, State, and local governments and private landowners have increased the number of Oregon chub populations from 9 to 36 (Scheerer et al. 2007, p. 2; Scheerer 2008a, p. 6). This dramatic increase in the number of populations is a result of the discovery of new populations through extensive surveys of suitable habitats throughout the Willamette Basin and the establishment of new populations through successful reintroductions within their historical range (Scheerer 2007, p. 97). Since 1992, Oregon chub have been reintroduced to 15 locations, resulting in the successful establishment of 9 populations (Scheerer et al. 2007, p. 2; Scheerer 2008a, p. 6).

The analysis of threats in the final rule to list the Oregon chub as an endangered species and the recovery plan for the species discussed numerous potential threats to water quality in Oregon chub habitats. Many Oregon chub populations occur near rail, highway, and power transmission corridors, agricultural fields, and within public park and campground facilities, and there was concern that these populations could be threatened by chemical spills, runoff, or changes in water level or flow conditions caused by construction, diversions, or natural desiccation (58 FR 53800, October 18, 1993; U.S. Fish and Wildlife Service 1998, p. 14, Scheerer 2008c, p. 1). In the 15 years since listing, a few of these concerns have been realized, and are discussed in the paragraphs below.

Excessive siltation from ground disturbing activities in the watershed, such as logging upstream of Oregon chub habitat, can degrade or destroy Oregon chub habitat. The threat of siltation due to logging in the watershed has been identified at five sites: Green Island North Channel, Finley Gray Creek Swamp, East Fork Minnow Creek Pond, Buckhead Creek, and Wicopee Pond (Scheerer 2008c, p. 1). In the 1990s, a large part of the Minnow Creek Watershed in the Middle Fork Willamette Sub-basin was logged; flood events in the watershed in 1996, 1997, and 1998 caused accelerated sedimentation in the beaver pond at East Fork Minnow Creek Pond, and over half of the open water wetted area of the Oregon chub habitat there was lost as sediment filled the pond (Scheerer 2009b, p. 1). The Oregon chub population in East Fork Minnow Creek Pond declined dramatically following these floods and the resulting sedimentation (Scheerer 2009b, p. 1).

Water quality investigations at sites in the Middle Fork and Mainstem Willamette sub-basins have found some adverse effects to Oregon chub habitats. Nutrient enrichment may have caused the crash of the Oregon chub population at Oakridge Slough on the Middle Fork. The slough is downstream from the Oakridge Sewage Treatment Plant and has a thick layer of decaying organic matter, which may limit the amount of useable habitat available to the chub (Buck 2003, p. 2). In the late 1990s, the Oregon chub population in Oakridge Slough peaked at nearly 500 individuals; since then, the population has apparently declined to zero (Scheerer et al. 2007, p. 2). Increased nitrogen and phosphorus concentrations have been detected in the slough; while the nutrient concentrations are not believed to be directly harmful to Oregon chub, the elevated nutrient levels may have resulted in eutrophication of the pond, with associated anoxic conditions unsuitable for chub, or increased plant and algal growth that severely reduced habitat availability (Buck 2003, p. 12).

Studies at William L. Finley National Wildlife Refuge have found evidence of elevated levels of nutrients and pesticides in Oregon chub habitats (Materna and Buck 2007, p. 67). Water samples were collected in 1998 from Gray Creek Swamp, which is home to a large population of Oregon chub. Analyses detected three herbicides, although all were below criteria levels recommended for protection of aquatic life; however, one form of nitrogen (total Kjeldahl N) exceeded Environmental Protection Agency criteria levels recommended for protection of aquatic life in the Willamette Valley (Materna and Buck 2007, p. 67). The source of the contamination is likely agricultural runoff from farm fields adjacent to the refuge (Materna and Buck 2007, p. 68). We note that EPA's recommended criteria for protection of aquatic life are not intended to be protective of all aquatic life, and may not be fully protective of the Oregon Chub. EPA and the Service are working together to assess the effects of pollutants on the Oregon chub through section 7 consultation on Oregon water quality standards.

Fluctuating water levels in Lookout Point Reservoir on the Middle Fork Willamette River were limiting the breeding success of the Oregon chub population in Hospital Pond, which provides habitat for the species in a pool connected to the reservoir by a culvert. In 2001, 2002, and 2003, the Corps, which manages Lookout Point Reservoir, implemented a series of projects to protect the population of Oregon chub in Hospital Pond. The goal was to allow the Corps to manage the water level in Lookout Point Reservoir independently of the water elevation in Hospital Pond. The Corps installed a gate on Hospital Pond's outlet culvert and lined the porous berm between the pond and reservoir; these modifications allow the Corps to maintain the water level needed to support Oregon chub spawning in Hospital Pond independent of the water level in the reservoir (U.S. Fish and Wildlife Service 2002, pp. 1-11). The Corps also excavated additional area to create more suitable spawning habitat in the pond (U.S. Fish and Wildlife Service 2003, pp. 1-3). The result of these management actions has been a large stable population of Oregon chub in Hospital Pond (Scheerer 2008a, p. 6).

Most of the known Oregon chub populations occur on lands with some level of protective status and management ( see Table 1). The Service manages several Oregon chub populations on the Finley and Ankeny units of the Willamette Valley National Wildlife Refuge Complex (Refuge). Recovery of the Oregon chub is a high priority for the Refuge. The Refuge actively monitors the status of the populations, habitat quality, and nonnative fish presence; when threats are detected, the Refuge implements management actions to reverse the threats (Smith 2008, p. 1).

Five populations of Oregon chub occur on lands managed by the Corps; the Corps manages Oregon chub in accordance with the Service's biological opinion on the Willamette Project. In July 2008, the Corps, Bonneville Power Administration (BPA), and Bureau of Reclamation (BOR) completed formal consultation with the Service under section 7(a)(2) of the Endangered Species Act on the operation and maintenance of the Willamette Project, the system of 13 dams and associated impoundments that provide flood control, irrigation, municipal and industrial water supply, navigation, fish and wildlife conservation, flow augmentation, hydroelectric power generation, and recreation to the Willamette Valley. The Service concluded that the project would not jeopardize the continued existence of the Oregon chub (U.S. Fish and Wildlife Service 2008b, pp. 1-204). The Service's biological opinion describes the measures that will be implemented by the Corps, BPA, and BOR to maintain and improve habitat for the Oregon chub. These measures include:

(1) Monitoring the status of Oregon chub populations affected by operation and maintenance of the dams to gain a better understanding of the influence of the Willamette Project on species;

(2) Managing water levels in Oregon chub habitats directly affected by reservoir operations;

(3) Relocating Oregon chub from ponds adversely affected by reservoir operations to new locations with better prospects for long-term protection;

(4) Studies to identify the effects of flow management on Oregon chub habitats; and

(5) Funding a pilot study to investigate the impact of floodplain restoration and reconnection on fish communities in river reaches below Willamette Project dams.

Operation and maintenance of the Willamette Project under the new biological opinion will result in improved protections for the Oregon chub and new information that will benefit the species throughout the Willamette Basin.

The Oregon Department of Transportation has developed and is implementing a plan to protect and enhance Oregon chub populations on the agency's properties or those which may be affected by highway maintenance on the Santiam River, Coast Fork Willamette River, and Middle Fork Willamette River (Scheerer 2005, pp. 1-21).

The Oregon chub populations at Elijah Bristow State Park and Jasper Park on the Middle Fork are managed by the Oregon Parks and Recreation Department, which uses the Service's recovery plan as guidance to ensure conservation of the chub populations within the parks (Schleier 2008).

The U.S. Forest Service monitors and manages several Oregon chub populations on the Middle Fork (Scheerer 2008b, p. 1).

In addition to the management and protection provided to the Oregon chub on Federal and State lands, two Safe Harbor Agreements have been completed to guide management of Oregon chub populations on private lands. Safe Harbor Agreements are voluntary arrangements between the Service and cooperating non-Federal landowners to promote management for listed species on non-Federal property while giving assurances to participating landowners that no additional future regulatory restrictions will be imposed. The Service's Oregon Fish and Wildlife Office is preparing a programmatic Safe Harbor Agreement to allow more landowners to enroll in the program, which, based on past experience, is likely to result in the reintroduction of Oregon chub populations on more private lands throughout the species' historical range.

Summary of Factor A: The Oregon chub has experienced extensive loss of slough and side-channel habitat due to hydrological changes resulting from dam construction and channelization in the Willamette Valley. However, many new habitats have been artificially created and are being managed to maintain populations of Oregon chub. Habitat quality is threatened by water quality degradation, though this has been documented at only a few sites. Habitat conditions have improved to the point where the species is not presently in danger of extinction. However, without continued protections provided by the Act, or long-term management agreements, the Oregon chub would likely become endangered in the foreseeable future due, in part, to the destruction, modification or curtailment of its habitat.

Overutilization was not a factor in listing nor is it currently known to be a threat to the Oregon chub.

The proliferation of predatory nonnative fish is the largest current threat to Oregon chub populations (Scheerer et al. 2007, p. 14). Nearly half of the fish species found in the Willamette Basin are introduced; the basin contains 31 native fish species and 29 nonnative species (Hulse et al. 2002, p. 44). The large-scale alteration of the Willamette Basin's hydrologic system ( i.e., construction of dams and the resultant changes in flood frequency and intensity) has created conditions that favor nonnative predatory fishes, and reservoirs throughout the basin have become sources of continual nonnative fish invasions in the downstream reaches (Li et al. 1987, p. 198).

Oregon chub are most abundant at sites where nonnative fishes are absent (Scheerer 2007, p. 96). Predatory nonnative centrarchids (bass and sunfish) and Ameiurus spp. (bullhead catfish) are common in the off-channel habitats used by Oregon chub (Scheerer 2002, p. 1075). Sites with high connectivity to adjacent flowing water frequently contain nonnative predatory fishes and rarely contain Oregon chub (Scheerer 2007, p. 99). The presence of centrarchids and bullhead catfishes is probably preventing Oregon chub from recolonizing suitable habitats throughout the basin (Markle et al. 1991, p. 291).

Management for Oregon chub has focused on establishing secure, isolated habitats free of nonnative fishes. However, natural flood events may breach barriers to connectivity allowing invasion by nonnative fishes. During the 1996 floods in the Willamette Basin, nonnative fishes invaded the habitats of the two largest Oregon chub populations in the Santiam River; in the next 2 years, these populations declined by more than 50 percent, and had not recovered to pre-1996 levels more than 5 years later (Scheerer 2002, p. 1078).

Game fish have also been intentionally introduced into chub ponds. An illegal introduction of largemouth bass ( Micropterus salmoides ) at an Oregon chub population site on the Middle Fork apparently caused a significant decline in that population from over 7,000 fish to approximately 2,000 fish from 2000 to 2007 (Scheerer et al. 2007, p. 14). The ubiquity of nonnative fishes in the Willamette Basin has created a substantial challenge to the recovery of the Oregon chub. Scheerer et al . (2007, pp. 10-14) conclude, “The resulting paradox is that the frequent interaction of the river with the floodplain habitats * * *, conditions which historically created off-channel habitats and aided in the dispersal of chub and the interchange of individuals among populations, now poses a threat to Oregon chub by allowing dispersal of nonnative species.”

Nonnative fishes may also serve as sources of parasites and diseases for the Oregon chub. However, disease and parasite problems have not been identified in this species, nor has the issue been studied.

Summary of Factor C: Predatory nonnative fishes are the greatest current threat to the recovery of the Oregon chub. Nonnative fishes are abundant and ubiquitous in the Willamette River Basin, and continual monitoring and management are required to protect existing Oregon chub populations from invasion. Predation remains a concern, but as the status of the species has improved since listing ( i.e., more populations have been established and are being managed to minimize threats), the relative effect of the threat of predatory nonnative fishes has declined. Nevertheless, predation continues to impact the Oregon chub such that it is likely to become endangered in the foreseeable future without continued protection under the Act.

Before the Oregon chub was federally listed as endangered in 1993, the species had no regulatory protections. Upon its listing as endangered, the species benefited from the protections of the Endangered Species Act, which include the prohibition against take and the requirement for interagency consultation for Federal actions that may affect the species. Section 9 of the Act and Federal regulations pursuant to section 4(d) of the Act prohibit the take of endangered and threatened species without special exemption. “Take” is defined as to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct (50 CFR 17.3). “Harm” is further defined to include significant habitat modification or degradation that results in death or injury to listed species by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering; “harass” is defined as intentional or negligent actions that create the likelihood of injury to listed species to such an extent as to significantly disrupt normal behavior patterns, which include, but are not limited to, breeding, feeding, or sheltering (50 CFR 17.3).

Section 7(a)(1) of the Act requires all Federal agencies to utilize their authorities in furtherance of the purposes of the Act by carrying out programs for the conservation of endangered species and threatened species. Section 7(a)(2) of the Act requires Federal agencies to ensure that any action authorized, funded, or carried out by them is not likely to jeopardize the continued existence of listed species or adversely modify their critical habitat. Thus, listing the Oregon chub provided a variety of protections, including the prohibition against take and the conservation mandates of section 7 for all Federal agencies. Because the Service has regulations that prohibit take of all threatened species (50 CFR 17.31(a)), unless modified by a special rule issued pursuant to section 4(d) of the Act (50 CFR 17.31(c)), the regulatory protections of the Act are largely the same for species listed as endangered and as threatened; thus, the protections provided by the Act will remain in place if the Oregon chub is reclassified as a threatened species.

The Oregon chub is designated as “Sensitive-Critical” by ODFW. This designation is a nonregulatory tool that helps focus wildlife management and research activities, with the goal of preventing species from declining to the point of qualifying as “threatened” or “endangered” under the Oregon Endangered Species Act (ORS 496.171, 496.172, 496.176, 496.182 and 496.192). Sensitive-Critical designation encourages but does not require the implementation of any conservation actions for the species ( see the discussion above under Additional Conservation Measures).

The Oregon chub is not protected by any other regulatory mechanisms.

Summary of Factor D: The regulatory mechanisms in effect under the Endangered Species Act provide a prohibition against take, the affirmative conservation mandate of section 7(a)(1), and the protection against jeopardy of section 7(a)(2); these regulatory mechanisms will remain in place if the Oregon chub is downlisted to threatened. A program of conservation actions will be implemented by the Corps, BPA, and BOR as a result of the Service's biological opinion on the Willamette Project. However, because there are no other regulatory mechanisms in place beyond the Act, the inadequacy of regulatory mechanisms still threatens the Oregon chub.

Almost half of all the fish species in the Willamette River are not native to the basin (Hulse et al. 2002, p. 44). Along with the direct threat of predation ( see Factor C, above), nonnative fish compete with Oregon chub for food resources. Competition with nonnative fishes may contribute to the decline and exclusion of Oregon chub from suitable habitats. Observed feeding strategies and diet of nonnative fishes, particularly juvenile centrarchids and adult mosquitofish ( Gambusia affinis ) overlap with the diet and feeding strategies described for the Oregon chub (Li et al. 1987, pp. 197-198). Thus, direct competition for food between Oregon chub and nonnative species may limit the distribution and expansion of the species; however, no studies have focused on the topic of competitive exclusion to date.

Historically, floods provided the mechanism of dispersal and genetic exchange for Oregon chub populations throughout the Willamette Basin (Scheerer 2002, p. 1078). The current management focus on protecting Oregon chub populations in isolation, which protects the species from the introduction of predatory nonnative fishes, may be having negative genetic implications (Scheerer 2002, p. 1078). This lack of connectivity means that movement of individuals among populations occurs rarely, if at all, which results in little or no genetic exchange among populations (Scheerer et al. 2007, p. 9). Research is under way to determine if Oregon chub populations have distinct genetic characteristics in the different sub-basins of the Willamette River (Ardren et al. 2008, p. 1). There is concern that an unintended effect of managing for isolated populations may be genetic drift and inbreeding. If this proves to be the case, managers may need to move fish among populations to fulfill the role that natural flooding once played (Scheerer et al. 2007, p. 15).

Summary of Factor E: Competition from nonnative species and the loss of genetic diversity as a result of managing Oregon chub populations in isolated habitats are potential threats that could affect Oregon chub populations throughout the species' range. However, the magnitude of these threats is unknown.

The term “threatened species” means any species (or subspecies or, for vertebrates, distinct population segments) that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range. The Act does not define the term “foreseeable future.” For the purpose of this proposed rule, we defined the “foreseeable future” to be the extent to which, given the amount and substance of available data, we can anticipate events or effects, or reliably extrapolate threat trends, such that we reasonably believe that reliable predictions can be made concerning the future as it relates to the status of the species at issue.

In considering the foreseeable future as it relates to the status of the Oregon chub, we considered the threats to the Oregon chub, historical declines, and ongoing conservation efforts.

With respect to the Oregon chub, in the absence of the Act's regulatory protections, historical population declines, and range contraction, which were the result of habitat loss, predation by nonnative fishes, and the lack of sufficient regulatory mechanisms are expected to continue throughout the species' range. We have no information to suggest that the threats identified above are likely to be reduced in the foreseeable future, nor that regulatory mechanisms will materialize to address or ameliorate the ongoing threats to the species. Thus, future Oregon chub population declines and range contraction, similar to what has been observed in the past, is a reasonable expectation without continued protection under the Act.

We have carefully assessed the best scientific and commercial data available and have determined that the Oregon chub is not currently in danger of extinction. We believe that the species now meets the definition of a threatened species throughout all of its range. It has exceeded two of the downlisting criteria and is on the brink of meeting the third. Recovery plans are intended to guide and measure recovery. Recovery criteria for downlisting and delisting are developed in the recovery planning process to provide measurable goals on the path to recovery; however, precise attainment of all recovery criteria is not a prerequisite for downlisting or delisting. Rather, the decision to revise the status of a listed species is based solely on the analysis of the 5 listing factors identified in section 4 of the Act. The Act provides for downlisting from endangered to threatened when the best available data indicates that a species, subspecies, or distinct population segment is no longer in danger of extinction.

At the time we completed the Recovery Plan for the Oregon Chub in 1998, we attempted to describe what the range, abundance, and distribution of Oregon chub populations should be before downlisting and delisting. These estimates were manifested in the downlisting and delisting criteria discussed above, and these criteria effectively established the Service's position on what constitutes “threatened,” in the case of downlisting criteria, and “recovered,” in the case of the delisting criteria. Because the downlisting criteria have not been precisely met, the proposed finding in this rule represents a departure from the Service's previously articulated description of “threatened,” and so must be further explained.

We compared current Oregon chub population information with the downlisting criteria for each sub-basin and estimated the amount by which each population goal's had been exceeded. The result of this comparison is shown in table 2.

Although these totals do not incorporate the 5-year stable or increasing trend aspect of the downlisting criteria, the number of chub in these basins greatly exceeds the minimum required in the downlisting criteria for both the number of populations and the number of individual fish. Taken together, along with the 5-factor analyses discussed above, it is clear that the status of the chub is likely far more secure than it might be with 4,500 fish in 9 populations across 3 sub-basins with 5-year stable or increasing trends.

The number of populations has increased from 9 to 36 since the species was listed in 1993; there are 16 large (>500 individuals) populations with stable or increasing trends. The species is well distributed throughout the Willamette Basin, and most of these populations have some type of protective management and appear to be viable as long as they are monitored and adaptively managed. Although many of the threats have been reduced by recovery efforts, threatened status is appropriate because the species is likely to become endangered in the foreseeable future without the protections of the Act or long-term management agreements and adaptive management actions. In addition, concerns remain regarding the genetic implications of managing Oregon chub in isolated ponds, cut off from potential interactions with other populations in the basin.

Threats to existing habitats remain, including manipulation of flows which can lead to desiccation, nutrient and pesticide runoff, and vegetative succession in shallow pond environments. The chief threat to existing Oregon chub populations is nonnative fish invasions, which may occur as a result of flood events, intentional introductions, or through connections between isolated chub habitats and adjacent watercourses. However, as the status of the species has improved since listing ( i.e., more populations have been established and are being managed to minimize threats), the relative effect of the threat of predatory nonnative fishes has declined. Monitoring for nonnative fish invasions and adaptively managing in response to such invasions is necessary for the long-term viability of this species.

Having determined that the Oregon chub is threatened throughout its range, we next considered whether it is in danger of extinction in any significant portions of its range.

The Act defines an endangered species as one “in danger of extinction throughout all or a significant portion of its range,” and a threatened species as one “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” The term “significant portion of its range” is not defined by statute. For purposes of this finding, a significant portion of a species' range is an area that is important to the conservation of the species because it contributes meaningfully to the representation, resiliency, or redundancy of the species. The contribution must be at a level such that its loss would result in a decrease in the ability to conserve the species.

The first step in determining whether a species is threatened or endangered in a significant portion of its range is to identify any portions of the range of the species that warrant further consideration. The range of a species can theoretically be divided into portions in an infinite number of ways. However, there is no purpose to analyzing portions of the range that are not reasonably likely to be significant and endangered. To identify only those portions that warrant further consideration, we determine whether there is substantial information indicating that: (1) The portions may be significant, and (2) the species may be in danger of extinction there. In practice, a key part of this analysis is whether the threats are geographically concentrated in some way. If the threats to the species are essentially uniform throughout its range, no portion warrants further consideration. Moreover, if any concentration of threats applies only to portions of the range that are unimportant to the conservation of the species, such portions will not warrant further consideration.

If we identify any portions of a species' range that warrant further consideration, we then determine whether in fact the species is threatened or endangered in any significant portion of its range. Depending on the biology of the species, its range, and the threats it faces, it may be more efficient in some cases for the Service to address the significance question first, and in others the status question first. Thus, if the Service determines that a portion of the range is not significant, the Service need not determine whether the species is threatened or endangered there. If the Service determines that the species is not threatened or endangered in a portion of its range, the Service need not determine if that portion is significant. If the Service determines that both a portion of the range of a species is significant and the species is threatened or endangered there, the Service will specify that portion of the range where the species is in danger of extinction pursuant to section 4(c)(1) of the Act.

The terms “resiliency,” “redundancy,” and “representation” are intended to be indicators of the conservation value of portions of the species' range. Resiliency allows the species to recover from periodic disturbance. A species will likely be more resilient if large populations exist in high-quality habitat that is distributed throughout the range of the species in such a way as to capture the environmental variability within the range of the species. It is likely that the larger size of a population will help contribute to the viability of the species. Thus, a portion of the range of a species may make a meaningful contribution to the resiliency of the species if the area is relatively large and contains particularly high-quality habitat or if its location or characteristics make it less susceptible to certain threats than other portions of the range. When evaluating whether or how a portion of the range contributes to resiliency of the species, it may help to evaluate the historical value of the portion and how frequently the portion is used by the species. In addition, the portion may contribute to resiliency for other reasons—for instance, it may contain an important concentration of certain types of habitat that are necessary for the species to carry out its life-history functions, such as breeding, feeding, migration, dispersal, or wintering.

Redundancy of populations may be needed to provide a margin of safety for the species to withstand catastrophic events. This does not mean that any portion that provides redundancy is a significant portion of the range of a species. The idea is to conserve enough areas of the range such that random perturbations in the system act on only a few populations. Therefore, each area must be examined based on whether that area provides an increment of redundancy that is important to the conservation of the species.

Adequate representation ensures that the species' adaptive capabilities are conserved. Specifically, the portion should be evaluated to see how it contributes to the genetic diversity of the species. The loss of genetic diversity may substantially reduce the ability of the species to respond and adapt to future environmental changes. A peripheral population may contribute meaningfully to representation if there is evidence that it provides genetic diversity due to its location on the margin of the species' habitat requirements.

Applying the process described above, we evaluated the range of the Oregon chub to determine if any units could be considered a significant portion of its range. A case could be made that each of the three sub-basins discussed in the recovery plan (Mainstem Willamette River, Middle Fork Willamette, and Santiam River) (U.S. Fish and Wildlife Service 1998, pp. 27-28) are significant portions of the range of the Oregon chub. As discussed above, a portion of a species' range is significant if it is part of the current range of the species and is important to the conservation of the species because it contributes meaningfully to the representation, resiliency, or redundancy of the species. The contribution must be at a level such that its loss would result in a decrease in the ability to conserve the species. Each of the three sub-basins clearly meets these criteria, as described in the recovery plan (U.S. Fish and Wildlife Service 1998, pp. 27-28).

Next we must determine if the threats to the Oregon chub are nonuniformly distributed, such that populations in any of the sub-basins experience a higher level of threat than populations in any other sub-basin. The primary remaining threats to the species are introduction of predatory nonnative fishes into chub ponds and water quality degradation. Extensive surveys of the Willamette Basin have found that predatory nonnative fishes are abundant and widespread in each of the sub-basins (Scheerer 2007, p. 97). Threats to water quality, including chemical spills, agricultural runoff, and drought, are not restricted to any portion of the Oregon chub's range, and are equally likely to occur in any of the three sub-basins. The threats associated with reduced genetic exchange among populations are not yet well understood; it seems likely, however, that the potential genetic consequences of management for isolated populations ( e.g., inbreeding and genetic drift) could be experienced across the range of the species, since protection of isolated ponds is the management goal for populations in all three of the sub-basins.

In summary, the primary threats to the Oregon chub are relatively uniform throughout the species' range. We have determined that none of the existing or potential threats, either alone or in combination with others, currently place the Oregon chub in danger of extinction throughout all or a significant portion of its range. However, without the continued protections of the Act or long-term management agreements, the Oregon chub is likely to become endangered throughout its range in the foreseeable future. Threatened status is therefore appropriate for the Oregon chub throughout its entire range.

If this proposed rule is made final, it would revise 50 CFR 17.11(h) to reclassify the Oregon chub from endangered to threatened on the List of Endangered and Threatened Wildlife. However, this reclassification does not significantly change the protection afforded this species under the Act. The regulatory protections of section 9 and section 7 of the Act ( see Factor D, above) would remain in place. Anyone taking, attempting to take, or otherwise possessing Oregon chub, or parts thereof, in violation of section 9 is subject to a penalty under section 11 of the Act. Pursuant to section 7 of the Act, all Federal agencies must ensure that any actions they authorize, fund, or carry out are not likely to jeopardize the continued existence of the Oregon chub. Whenever a species is listed as threatened, the Act allows promulgation of special rules under section 4(d) that modify the standard protections for threatened species found under section 9 of the Act and Service regulations at 50 CFR 17.31 and 17.71, when it is deemed necessary and advisable to provide for the conservation of the species. There are no 4(d) rules in place or proposed for the Oregon chub, because there is currently no conservation need to do so for the species. This reclassification would have no effect on the current proposal to designate critical habitat for the Oregon chub.

In accordance with our policy published in the Federal Register on July 1, 1994 (59 FR 34270), and the Office of Management and Budget's Final Information Quality Bulletin for Peer Review, dated December 16, 2004, we will seek the expert opinions of at least three appropriate and independent specialists regarding the science in this proposed rule. We will invite these peer reviewers to comment, during the public comment period, on the specific assumptions and conclusions regarding the proposed downlisting. We will consider all comments and information received during the comment period on this proposed rule during preparation of a final rulemaking. Accordingly, the final decision may differ from this proposal.

Section 4(b)(5)(D) of the Act requires that we hold one public hearing on this proposal, if requested. Requests must be received within 45 days of the date of publication of the proposal in the Federal Register ( see DATES ). Such requests must be made in writing and be addressed to the Field Supervisor at the address in the FOR FURTHER INFORMATION CONTACT section above.

We are required by Executive Orders 12866 and 12988 and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in the ADDRESSES section. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that are unclearly written, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

Office of Management and Budget (OMB) regulations at 5 CFR part 1320, which implement provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ), require that Federal agencies obtain approval from OMB before collecting information from the public. This rule does not contain any new collections of information that require approval by OMB under the Paperwork Reduction Act. This rule will not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

We have determined we do not need to prepare an Environmental Assessment or an Environmental Impact Statement, as defined under the authority of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ), in connection with regulations adopted pursuant to section 4(a) of the Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244).

A complete list of all references cited herein is available upon request from the Oregon Fish and Wildlife Office ( see FOR FURTHER INFORMATION CONTACT ).

The primary authors of this document are Cat Brown and Doug Baus at the Oregon Fish and Wildlife Office in Portland, Oregon ( see FOR FURTHER INFORMATION CONTACT ).

Accordingly, we hereby propose to amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below: