This correction is being published to correct the facsimile and electronic mail address, and add an overnight delivery address option for requestor submissions for final agency determinations as discussed in Subpart X.

In order to preserve the deterrent effect of civil penalties and foster compliance with the law, the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, as amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-134) (“the Act”), requires Federal agencies to regularly adjust each CMP provided by law within the jurisdiction of the agency. Also, the Act in part requires each agency to make further adjustments at least once every four years.

The Act provides that any increase in a CMP due to the calculated inflation adjustments shall apply only to violations that occur after the date the increase takes effect and states that the initial inflation adjustment may not exceed 10 percent of the existing penalty.

Under the Act, the inflation adjustment for each applicable CMP is determined by increasing the maximum civil penalty amount per violation by the cost-of-living adjustment. The “cost-of-living” adjustment is defined as the amount by which the Consumer Price Index (CPI) for the month of June of the calendar year preceding the adjustment exceeds the CPI for the month of June of the year in which the amount of such civil penalty was last set or adjusted pursuant to law. Any calculated increase under this adjustment is rounded to the nearest—

(1) Multiple of $10 in the case of penalties less than or equal to $100;

(2) Multiple of $100 in the case of penalties greater than $100 but less than or equal to $1,000;

(3) Multiple of $1000 in the case of penalties greater than $1000 but less than or equal to $10,000;

(4) Multiple of $5000 in the case of penalties greater than $10,000 but less than or equal to $100,000;

(5) Multiple of $10,000 in the case of penalties greater than $100,000 but less than or equal to $200,000; and

(6) Multiple of $25,000 in the case of penalties greater than $200,000.

28 U.S.C. 2461 note, sec. 5.

The following list summarizes the existing DOE regulations containing civil monetary penalties, and the penalties before and after adjustment.

In accordance with 5 U.S.C. 553(b), the Administrative Procedure Act, DOE generally publishes a rule in a proposed form and solicits public comment on it before issuing the rule in final. However, 5 U.S.C. 553(b)(B) provides an exception to the public comment requirement if the agency finds good cause to omit advance notice and public participation. Good cause is shown when public comment is “impracticable, unnecessary, or contrary to the public interest.”

DOE finds that providing an opportunity for public comment prior to publication of this rule is not necessary because DOE is carrying out a ministerial, non-discretionary duty specified in an Act of Congress. This rule incorporates requirements specifically set forth in 28 U.S.C. 2461 note requiring DOE to issue a regulation implementing inflation adjustments for all its civil penalty provisions. The formula for the amount of the penalty adjustment is prescribed by Congress. Prior notice and opportunity to comment are therefore unnecessary in this case because these changes are not subject to the exercise of discretion by DOE. These technical changes, required by law, do not substantively alter the existing regulatory framework nor in any way affect the terms under which DOE assesses civil penalties.

Today's rule has been determined not to be a significant regulatory action under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). Accordingly, this action was not subject to review under that Executive Order by the Office of Information and Regulatory Affairs of the Office of Management and Budget.

DOE has determined that this final rule is covered under the Categorical Exclusion found in DOE's National Environmental Policy Act regulations at paragraph A.5 of Appendix A to Subpart D, 10 CFR part 1021, which applies to rulemaking that amends an existing rule or regulation which does not change the environmental effect of the rule or regulation being amended. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment. As discussed above, DOE has determined that prior notice and opportunity for public comment is unnecessary and contrary to the public interest. In accordance with 5 U.S.C. 604(a), no regulatory flexibility analysis has been prepared for today's rule.

This final rule imposes no new information collection requirements subject to the Paperwork Reduction Act.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires Federal agencies to examine closely the impacts of regulatory actions on State, local, and tribal governments. Section 201 excepts agencies from assessing effects on State, local or tribal governments or the private sector of rules that incorporate requirements specifically set forth in law. Because this rule incorporates requirements specifically set forth in 28 U.S.C. 2461 note, DOE is not required to assess its regulatory effects under Section 201. Unfunded Mandates Reform Act sections 202 and 205 do not apply to today's action because they apply only to rules for which a general notice of proposed rulemaking is published. Nevertheless, DOE has determined that today's regulatory action does not impose a Federal mandate on State, local, or tribal governments or on the public sector.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this rule and has determined that it would not preempt State law and would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. No further action is required by Executive Order 13132.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this rule meets the relevant standards of Executive Order 12988.

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed today's rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001) requires Federal agencies to prepare and submit to the OMB, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. Today's regulatory action would not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

As required by 5 U.S.C. 801, DOE will submit to Congress a report regarding the issuance of today's final rule prior to the effective date set forth at the outset of this notice. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 801(2).

We issued a second supplemental notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That second supplemental NPRM was published in the Federal Register on September 25, 2009 (74 FR 48877). That second supplemental NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

We gave the public the opportunity to participate in developing this AD. We received no comments on the second supplemental NPRM or on the determination of the cost to the public.

We reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have required different actions in this AD from those in the MCAI in order to follow our FAA policies. Any such differences are highlighted in a Note within the AD.

We estimate that this AD will affect 697 products of U.S. registry. We also estimate that it will take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of this AD to the U.S. operators to be $111,520, or $160 per product.

We also estimate that the replacement specified in this AD will affect up to 306 parts. We estimate that it will take about 5 work-hours per part to comply with the replacement requirements of this AD. (Some airplanes have no affected parts and other airplanes have either one or two affected parts.) The cost of each required part is $27,507. Where the service information lists required parts costs that are covered under warranty, we have assumed that there will be no charge for these costs. As we do not control warranty coverage for affected parties, some parties may incur costs higher than estimated here. Based on these figures, we estimate the cost of the replacement specified in the AD on U.S. operators to be $8,539,542, or $27,907 per part.

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

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

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

For the reasons discussed above, I certify this AD:

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains the NPRM, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

EASA, which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2009-0003R1, dated January 13, 2009, to correct an unsafe condition for the specified Eurocopter model helicopters. That EASA AD superseded EASA AD 2009-003-E, dated January 6, 2009, which superseded EASA AD 2008-0162-E, dated August 26, 2008, which superseded Direction générale de l'aviation civile (DGAC) AD UF-2008-029, dated August 21, 2008.

EASA reports two cases of failure of the screw that secures the blade clamp. Analyses revealed that these failures of the screw were the result of assembly stress in the screw head and nonconforming screw hardness. Also, in some cases, the screw head was missing a lock-wiring hole making it impossible to install a safety-wire between the screw head and the nut. Failure of the clamp attachment screw can lead to damage to the main or tail rotor blades and is a risk for persons on the ground.

You may obtain further information by examining the DGAC and MCAI ADs and any related service information in the AD docket.

Eurocopter has issued Emergency Alert Service Bulletin (ASB) No. 30.00.66 for the Model AS332C, C1, L, and L1; and No. 30.20 for the Model SA330J, F, and G, both Revision 1 and both dated August 21, 2008. The ASBs specify removing the retaining clamp from the distributor, checking the blade clamp and attachment screw for interference between the screw head and the clamp, checking for a crack in the shank of the screw, checking for a lock-wiring hole in the screw, and identifying the clamp with a “V.” The actions described in the EASA MCAI AD are intended to correct the same unsafe condition as that identified in the service information.

These helicopters have been approved by the aviation authority of France, and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, the Technical Agent for France, has notified us of the unsafe condition described in the EASA MCAI AD. We are issuing this AD because we evaluated all information provided by the EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs.

We describe the action taken in the AD as an inspection rather than a check.

We estimate that this AD will affect about 16 helicopters of U.S. registry. We also estimate that it will take about 3 work-hours per helicopter to inspect the blade clamp and attachment screw and replace the screw on each helicopter. The average labor rate is $80 per work-hour. Required parts will cost about $200 per helicopter. Based on these figures, we estimate the cost of this AD on U.S. operators will be $7,040, assuming the clamp and attachment screw are replaced on each helicopter.

An unsafe condition exists that requires the immediate adoption of this AD. We find the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because failure of the clamp attachment screw can cause separation of the clamp and screw and damage to the main or tail rotor blades. Therefore, we have determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. However, we invite you to send us any written data, views, or arguments concerning this AD. Send your comments to an address listed under the ADDRESSES section of this AD. Include “Docket No. FAA-2009-1008; Directorate Identifier 2008-SW-62-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

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

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

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

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

Therefore, I certify this AD:

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

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

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

Discussion

We were notified by Cirrus Design Corporation that, during a quality assurance inspection test flight on a Model SR22 airplane, a compression fitting separated from an anti-ice fluid distribution line. They determined the root cause of this failure was improper crimping of the fitting during fabrication. The condition is possible on other SR22 airplanes since this fabrication procedure had not changed since approval of the flight into known icing system.

This condition, if not corrected, could result in anti-ice fluid distribution line separation. A line separation could result in a total loss of ice protection fluid supply to the protected surfaces, which would allow ice to build on the airplane and degrade the handling qualities and performance.

We reviewed Cirrus SR22 Service Bulletin SB 2X-30-08, dated November 9, 2009. The service information describes procedures for inspecting the anti-ice fluid distribution line compression fittings for proper installation. The service information also describes procedures for properly installing compression fittings on the anti-ice fluid distribution lines.

We are issuing this AD because we evaluated all the information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design. This AD requires you to inspect for proper installation of compression fittings on the anti-ice fluid distribution lines and repair any fittings that were not properly installed.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because a malfunction of the anti-ice system could result in a total loss of ice protection fluid supply to the protected surfaces. This condition would allow ice to build on the airplane and degrade the handling qualities and performance. Therefore, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and an opportunity for public comment. We invite you to send any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under the ADDRESSES section. Include the docket number “FAA-2009-1162; Directorate Identifier 2009-CE-066-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the AD. We will consider all comments received by the closing date and may amend the AD in light of those comments.

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

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

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket that contains the AD, the regulatory evaluation, any comments received, and other information on the Internet at http://www.regulations.gov; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone (800) 647-5527) is located at the street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

On October 27, 2009 (74 FR 55126), we published a final rule AD, FR Doc. E9-24391, in the Federal Register. That AD applies to GE CF6-80C2 series turbofan engines with certain thrust reverser ballscrew gearbox assembly adjustable-length end actuators installed. We need to make the following corrections:

The FAA proposed to amend 14 CFR part 39 with a proposed AD. The proposed AD applies to GE GE90-110B1, GE90-113B, and GE90-115B series turbofan engines with stage 6 LPT blades, P/N 1765M37P03 or P/N 1765M37P04, installed. We published the proposed AD in the Federal Register on June 24, 2009 (74 FR 30020). That action proposed to require initial and repetitive inspections for shroud interlock wear of the stage 6 LPT blades. That action also proposed to require replacing those blades with stage 6 LPT blades eligible for installation at the next engine shop visit as terminating action to the repetitive blade inspections.

You may examine the AD docket on the Internet at http://www.regulations.gov; or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is provided in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

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

One commenter, All Nippon Airways, requests that we include GE SB No. GE90-100 SB 72-0260, Revision 3, dated July 17, 2008, in Previous Credit paragraph (i).

We do not agree. That SB does not specifically call out the need to inspect engines with replacement, original configuration, stage 6 LPT blades. We did not change the AD.

All Nippon Airways and Japan Airlines requests that in paragraph (f), we correct the reference of what paragraphs to use in the SB, from “3.A through 3.A.(3)(g)(12)”, to “3.A through 3.A.(2)(g)(12)”.

We agree the reference needs correcting. We made the correction, but listed the latest revision of the SB, which is GE SB No. GE90-100 SB 72-0260, Revision 7, dated June 2, 2009. We also added SB No. GE90-100 SB 72-0260, Revision 6, dated May 1, 2009, to the Previous Credit paragraph.

GE Aviation requests that we change the Unsafe Condition paragraph (d) to state that, in each case, the engine continued to produce commanded thrust.

We do not agree. Although the statement is true, adding it would lessen the impact of, and detract from, the existing unsafe condition statement. We did not change the AD.

Boeing requests that we change the Unsafe Condition paragraph (d) to also state that there is a remote possibility of the unsafe condition event occurring on both engines on a given flight.

We do not agree. We considered the possibility of a dual-engine failure event during our safety analysis and when determining the appropriate compliance actions for this AD. We did not change the AD.

GE Aviation, Japan Airlines, and Eva Air request that we reference using latest GE SB in the AD, which is SB No. GE90-100 SB 72-0260, Revision 7, dated June 2, 2009.

We agree and have referenced the use of Revision 7 in the AD.

One commenter, V Australia, requests that we state to use “or later-FAA-approved revision of the SB” in the AD. The commenter states that Revision 7 has been issued since the proposed AD was issued, and it is likely that GE will issue more revisions.

We do not agree. Rulemaking requirements do not permit advance approval of unknown future revisions to service bulletins. We did not change the AD.

GE Aviation and Japan Airlines request that we add GE SB No. GE90-100 SB 72-0260, Revision 6, dated May 1, 2009, to the list of SB revisions in the Previous Credit paragraph (i).

We agree and added SB Revision 6 to that paragraph.

Japan Airlines requests that we change the Definition paragraph (j) to exclude the induction of engines into the shop for maintenance action that can be performed at line maintenance, but which is performed in the shop for operator convenience. The commenter states that making this change will help eliminate an unnecessary burden to the operators.

We do not agree. The existing engine shop visit definition is intended to lead operators to perform the terminating action as soon as possible. Doing this will reduce the reliance upon repetitive inspections and continued risk of blade failure. We did not change the AD.

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

We estimate that this AD will affect four GE GE90-110B1, GE90-113B, and GE90-115B series engines installed on airplanes of U.S. registry. We also estimate that it will take about 18 work-hours per engine to perform one inspection of the stage 6 LPT blades, and that the average labor rate is $80 per work-hour. Replacement stage 6 LPT blades will cost $258,280 per engine. We estimate that no additional labor costs will be incurred to perform the required blade replacements, because the replacements will be done during a scheduled engine shop visit. Based on these figures, we estimate the total cost of the AD for one inspection to U.S. operators to be $1,038,880.

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

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

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

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

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

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

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

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary at the address listed under ADDRESSES.

The EASA, which is the Technical Agent for the Member States of the European Community, has issued EASA AD No. 2008-0049-E, dated March 3, 2008 (Corrected: March 7, 2008), to correct an unsafe condition for Eurocopter Model SA 330 F, G, and J helicopters, all serial numbers, with MGB input flexible coupling sliding and fixed flanges assemblies installed that have been modified per MOD 0752416 and MOD 0752419, but have not been subject to maintenance scheduled inspection per Working Card 65.32.601 since new or since a complete overhaul of the MGB. There has been one report of the failure of a modified flexible coupling assembly on one of the MGB inputs, which EASA has deemed to be the result of the loss of the tightening torque load, or insufficient tightening of the nuts on the bolts attaching the disks of the flexible coupling to its sliding and fixed flanges. This condition, if not corrected, could result in progressive fatigue failure of the coupling discs, caused by extensive fretting on the faces and in the holes of the flexible coupling discs. If this unsafe condition develops on both the LH and RH MGB inputs, it could result in a complete loss of power to the transmission and subsequent loss of control of the helicopter.

Eurocopter has issued Emergency Alert Service Bulletin No. 05.95, dated March 3, 2008, which specifies readjusting or checking the tightening torque load of the nuts on the bolts attaching the flexible coupling to the sliding coupling flange and the bolts attaching the flexible coupling to the fixed coupling flange, in order to prevent any damage to the flexible couplings, which, over time, may lead to the loss of input drive to the MGB. The actions described in the MCAI are intended to correct the same unsafe conditions as those identified in the service information.

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, their Technical Agent, has notified us of the unsafe condition described in the MCAI AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe conditions exist and are likely to exist or develop on other helicopters of these same type designs.

The MCAI AD uses the term “flight hours” instead of “hours time-in-service”, as we have used in this AD. Also, the MCAI AD allows “use of later approved revisions” of the service information to comply with the MCAI AD. Our AD requires compliance in accordance with the Eurocopter EASB. Additionally, this AD requires “inspections” conducted by a qualified mechanic, instead of “checks”, which we allow a pilot to do. Finally, contacting Eurocopter Technical Support is not required by this AD as it is by the MCAI AD.

We estimate that this AD will affect about 14 helicopters of U.S. registry. We also estimate that it will take about:

• 8 work-hours per helicopter to remove the engine, re-adjust the tightening torque load, and re-install the engine for 10 helicopters in the fleet;

• 10 work-hours per helicopter to remove the engine, measure the tightening torque load, and re-install the engine on 3 helicopters in the fleet; and

• 12 work-hours to remove the engine, inspect and replace a damaged flexible coupling, and re-install the engine on 1 helicopter.

An unsafe condition exists that requires the immediate adoption of this AD. We find that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because loss of the tightening torque load or insufficient tightening of the nuts on the bolts attaching the disks of the flexible coupling to its sliding and fixed flanges could result in a complete loss of power to the transmission, and there are helicopters that will be required to comply with this AD within a short time period because of the criticality of this unsafe condition. Therefore, we have determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in fewer than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. However, we invite you to send us any written data, views, or arguments concerning this AD. Send your comments to an address listed under the ADDRESSES section of this AD. Include “Docket No. FAA-2009-1124; Directorate Identifier 2009-SW-35-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

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

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

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

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

Therefore, I certify this AD:

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

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

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

Schering-Plough Animal Health Corp., 556 Morris Ave., Summit, NJ 07901, has informed FDA of a change of name and mailing address to Intervet, Inc., 56 Livingston Ave., Roseland, NJ 07068. Accordingly, the agency is amending the regulations in 21 CFR 510.600(c) to reflect these changes.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Boehringer Ingelheim Vetmedica, Inc., 2621 North Belt Highway, St. Joseph, MO 64506-2002, filed NADA 141-297 that provides for the veterinary prescription use of PROZINC (protamine zinc recombinant human insulin), an injectable suspension for the reduction of hyperglycemia and hyperglycemia-associated clinical signs in cats with diabetes mellitus. The NADA is approved as of October 28, 2009, and the regulations are amended in 21 CFR 522.1160 to reflect the approval.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The agency has determined under 21 CFR 25.33 that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

This document contains final regulations that replace the temporary regulations in 26 CFR Part 1 relating to the reduction in taxable income for housing provided to displaced individuals under section 302 of the Katrina Emergency Tax Relief Act of 2005 (Pub. L. 109-73, 119 Stat. 2016) (KETRA). This document also applies these rules to individuals displaced in a Midwestern disaster area, as defined in section 702 of the Heartland Disaster Tax Relief Act of 2008 (Title VII of Division C of Pub. L. 110-343, 122 Stat. 3912) (HDTRA).

On December 12, 2006, temporary regulations (TD 9301) were published in the Federal Register (71 FR 74467). A notice of proposed rulemaking (REG-152043-05) cross-referencing the temporary regulations was also published in the Federal Register (71 FR 74482). No public hearing was requested or held. No written comments responding to the notice of proposed rulemaking were received. The proposed regulations are adopted as amended by this Treasury decision to implement section 702 of HDTRA.

Section 702 of HDTRA, enacted on October 3, 2008, applies section 302 of KETRA to the Midwestern disaster area. The Midwestern disaster area is the area for which the President declared (after May 19, 2008, and before August 1, 2008) a major disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170) (Stafford Act). The disaster occurred by reason of severe storms, tornados, or flooding in the states of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisconsin. The applicable disaster date for each state in the Midwestern disaster area is the date of the severe storm, tornado, or flooding giving rise to the Presidential declaration for that state. See Federal Register notices for each state at http://www.FEMA.gov . The reduction in taxable income for providing housing to a displaced individual in a Midwestern disaster area applies to taxable years beginning in 2008 or 2009.

Accordingly, the final regulations expand the scope of the temporary regulations to include taxpayers who provide housing in their principal residences to Midwestern disaster displaced individuals. The final regulations expand the definitions under § 1.9300-1T(e) of the temporary regulations relating to Hurricane Katrina to include the Midwestern disaster area.

The final regulations also clarify that the limitations on the reduction in taxable income apply separately to the Hurricane Katrina disaster area and the Midwestern disaster area. Thus, for example, a taxpayer may reduce taxable income by up to $2,000 for providing housing to Midwestern disaster displaced individuals even though the taxpayer reduced taxable income for providing housing to one or more Hurricane Katrina displaced individuals.

The temporary regulations provided that the maximum dollar limitation for a married individual who files a separate income tax return is $1,000. The final regulations provide that the maximum dollar limitation is $2,000 for married taxpayers filing jointly or separately. Married taxpayers filing separate income tax returns may allocate the $2,000 between the returns.

The final regulations authorize the Commissioner to apply these rules in additional guidance of general applicability, see § 601.601(d)(2) of the Internal Revenue Practice Regulations, if Congress extends relief under section 302 of KETRA to other disaster areas in the future.

These regulations apply to taxable years ending after December 11, 2006. Taxpayers who, after filing their tax returns for 2006 or 2008 as married filing separately, want to apply the rule allowing them to allocate the $2,000 maximum limitation between them, may do so by filing amended returns if the period of limitations on credit or refund under section 6511 has not expired.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking that preceded these final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Shareen S. Pflanz of the Office of the Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Department participated in their development.

I. Background

The Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297, 116 Stat. 2322) was enacted on November 26, 2002. The Act was effective immediately. The Act's purposes are to address market disruptions, ensure the continued widespread availability and affordability of commercial property and casualty insurance for terrorism risk, and allow for a transition period for the private markets to stabilize and build capacity while preserving state insurance regulation and consumer protections.

Title I of the Act establishes a temporary Federal program of shared public and private compensation for insured commercial property and casualty losses resulting from an act of terrorism. The Act authorizes Treasury to administer and implement the Terrorism Risk Insurance Program, including the issuance of regulations and procedures. The Program provides a Federal backstop for insured losses from an act of terrorism. Section 103(e) of the Act directs and gives Treasury authority to recoup Federal payments made under the Program through policyholder surcharges.

The Program was originally set to expire on December 31, 2005. On December 22, 2005, the Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109-144, 119 Stat. 2660) was enacted, which extended the Program through December 31, 2007. On December 26, 2007, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L. 110-160, 121 Stat. 1839) was enacted, which extends the Program through December 31, 2014.

The Reauthorization Act, among other changes, revised the recoupment provisions of the Act. These changes are explained below in the context of discussion of other provisions.

To assist insurers, policyholders, and other interested parties in complying with immediately applicable requirements of the Act, Treasury has issued interim guidance to be relied upon by insurers until superseded by regulations. Rules establishing general provisions implementing the Program, including key definitions, and requirements for policy disclosures and mandatory availability, can be found in Subparts A, B, and C of 31 CFR Part 50. Treasury's rules applying provisions of the Act to State residual market insurance entities and State workers' compensation funds are at Subpart D of 31 CFR Part 50. Rules setting forth procedures for filing claims for payment of the Federal share of compensation for insured losses are at Subpart F of 31 CFR Part 50. Subpart G of 31 CFR Part 50 contains rules on audit and recordkeeping requirements for insurers, while Subpart I of 31 CFR Part 50 contains Treasury's rules implementing the litigation management provisions of section 107 of the Act.

The proposed rule on which this final rule is based was published in the Federal Register at 73 FR 53798 on September 17, 2008. The proposed rule proposed to add a Subpart H on Recoupment and Surcharge Procedures to part 50, which comprises Treasury's regulations implementing the Act. It also proposed to add definitions in § 50.5 of Subpart A and amend §§ 50.60 and 50.61 of Subpart G. The proposed rule described how Treasury would determine the amounts to be recouped, the factors and considerations that would be the basis for establishing the specific surcharge amount, the procedures for Treasury's notification to insurers regarding the surcharges to be imposed, and the requirements for insurers to collect, report, and remit surcharges to the Treasury.

Treasury is now issuing this final rule after careful consideration of all comments received on the proposed rule. While this final rule largely reflects the proposed rule, Treasury has made several clarifications based on the comments. These changes appear in §§ 50.70(c), 50.74(c), and 50.74(e).

Treasury received comments on the proposed rule from two national insurance industry trade associations, a national insurance rating and data collection bureau, and one insurance company. As described further below, commenters generally agreed with the proposed rule and the approach as being compatible with business operations. There were no negative comments on the approach. In response to comments, Treasury is providing additional clarification and some modifications of provisions in the proposed rule that pertain to notification to insurers, meeting certain deadlines for the collection of surcharges, describing the policies and premium subject to surcharges, and closing out insurer reporting to Treasury. The comments received and Treasury's revisions to the proposed rule are summarized below.

The final rule describes how and when Treasury will determine recoupment amounts. Definitions of insurance marketplace aggregate retention amount, aggregate Federal share of compensation, mandatory and discretionary recoupment amounts, and uncompensated insured losses, which reflect requirements in the Act, are added to § 50.5.

The mandatory recoupment amount is the difference between the insurance marketplace aggregate retention amount for a Program Year and the aggregate amount, for all insurers, of uncompensated insured losses during such Program Year (unless the aggregate amount of uncompensated insured losses is greater than the insurance marketplace aggregate retention, in which case the mandatory recoupment amount is zero). For any Program Year beginning with 2008 through 2014, the insurance marketplace aggregate retention amount is the lesser of $27.5 billion and the aggregate amount, for all insurers, of insured losses from Program Trigger Events during the Program Year. For example, if the aggregate amount of insured losses from Program Trigger Events during the Program Year were $10 billion, the insurance marketplace aggregate retention amount would be $10 billion. The mandatory recoupment amount would be the difference between $10 billion and the aggregate amount of uncompensated insured losses. “Uncompensated insured losses” is generally the aggregate amount of insured losses from Program Trigger Events not compensated by the Federal Government because the losses are within insurer deductibles or the 15 percent insurer share, or are within the portion of the insured losses that exceed the insurer deductible but are otherwise not paid pursuant to section 103(e)(1) of TRIA. The amount of uncompensated insured losses depends on the distribution of those losses among insurers. So continuing with the above example, if uncompensated insured losses amounted to $8 billion and Federal payments amounted to $2 billion, the mandatory recoupment amount would be $2 billion (the difference between $10 billion and the aggregate amount of uncompensated insured losses of $8 billion). The amount the Secretary would be required to collect under section 103(e)(7)(C) of the Act would be 133 percent of $2 billion, or $2.67 billion.

Section 103(e)(7)(D) of the Act also provides the Secretary with discretionary authority to recoup additional amounts to the extent that the amount of Federal financial assistance exceeds the mandatory recoupment amount. The Secretary may recoup such additional amounts the Secretary believes can be recouped based on: the ultimate costs to taxpayers of no additional recoupment; the economic conditions in the commercial marketplace; the affordability of commercial insurance for small- and medium-sized businesses; and such other factors that the Secretary considers appropriate. The final rule refers to these considerations in § 50.70(b). Because of the great uncertainty as to economic conditions after the occurrence of an act of terrorism, Treasury believes it is prudent to retain maximum flexibility to address these considerations at a future time. In exercising this discretionary authority, however, Treasury generally intends to consider these various factors on a broad-scale basis.

The Reauthorization Act added section 103(e)(7)(E), which establishes deadlines by which the collection of terrorism loss risk-spreading premiums, which are required for mandatory recoupment, must be accomplished. The amounts and deadlines vary depending on when an act of terrorism occurs:

• For any act of terrorism that occurs on or before December 31, 2010, the Secretary shall collect all required premiums by September 30, 2012;

• For any act of terrorism that occurs between January 1 and December 31, 2011, the Secretary shall collect 35 percent of any required premiums by September 30, 2012, and the remainder by September 30, 2017; and

• For any act of terrorism that occurs on or after January 1, 2012, the Secretary shall collect all required premiums by September 30, 2017.

Because of these deadlines, one commenter raised a concern over the potential that recoupment could far outpace the payment of claims and therefore recommended the use of present value calculations and excess fund accounts to earn interest on funds provided in advance to the Federal Government. In the preamble to the proposed rule, Treasury had stated that the timing requirements for collecting “required premiums” means that surcharges must be sufficient to recoup Federal funds actually outlaid as of the target dates for recouping any Federal share of compensation for insured losses. Treasury ascertained that the commenter's concern was based on the potential for recouping ultimate Federal share amounts that would not actually be expended by Treasury until after the recoupment period. For clarification, Treasury has revised § 50.70 to state that required amounts will be collected “based on the extent to which payments for the Federal share of compensation have been made by the collection deadlines.” As illustrated in the example above, the required amounts include the additional 33 percent of the outlays. Continuing with the above example in which the Federal Government expects that Federal payments will reach $2 billion for an act of terrorism occurring prior to December 31, 2010, if as of September 30, 2012, $1 billion has actually been paid, recoupment should result in the collection of $1.33 billion by that date. The remaining amount of Federal payments plus 33 percent would be recouped after September 30, 2012.

Another commenter suggested additional language for the rule that would address Treasury's intention to not exceed required amounts in its establishment of surcharges, the avoidance of collecting de minimis amounts, and the handling of excess amounts collected. Treasury believes that the concerns raised were for the most part already addressed in the proposed rule § 50.72 which, in providing for the establishment of the surcharge, lists a number of factors and considerations including the collection timing requirements of section 103(e)(7)(E) of the Act, and the likelihood that the amount of the Federal Terrorism Policy Surcharge may result in the collection of an aggregate recoupment amount in excess of the planned recoupment amount. In addition, under the rule the Secretary may consider such other factors as the Secretary considers important, which could include the costs of collecting de minimis recoupment amounts.

Section 50.71(a) provides that if payments for the Federal share of compensation have been made for a Program Year, and Treasury determines that insured loss information is sufficiently developed and credible to serve as a basis for calculating recoupment amounts, then Treasury will make an initial determination of any mandatory or discretionary recoupment amounts for that Program Year. Ideally, Treasury will use loss information obtained from the submissions by insurers for the Federal share of compensation, as well as other industry sources, to determine the appropriate time to make an initial determination of recoupment amounts. Thereafter, as described under § 50.71(c), Treasury will at least annually examine the latest available information on insured losses to recalculate any recoupment amounts until such time as Treasury determines that the calculation is considered final. The final rule, in § 50.71(d), also provides that Treasury may issue a data call to insurers for the submission of information on insured losses from Program Trigger Events and for insurer deductible information.

Treasury must be prepared to initiate mandatory recoupment based on estimates, prospectively, of insured losses, the Federal share of compensation for insured losses, and the resulting Federal outlays. The Reauthorization Act added a provision (Section 103(e)(7)(F)) requiring the Secretary to publish, within 90 days of the date of an act of terrorism, an estimate of aggregate insured losses which shall be used as the basis for determining whether mandatory recoupment will be required. Proposed § 50.71(b) provided that Treasury would meet this requirement within 90 days after certification of an act of terrorism. Two commenters stated that this proposal should be revised because the statute requires that the estimate be published within 90 days after the occurrence of the act of terrorism.

“Act of terrorism” is a defined statutory term. Under Section 102(1)(A), an “act of terrorism” is any act which is certified by the Secretary, in concurrence with the Secretary of State and the Attorney General of the United States, and meets certain specified elements. Without certification, an act does not meet the definition of an “act of terrorism.”

Treasury believes that the most reasonable interpretation of Section 103(e)(7)(F) is that such an estimate of aggregate insured losses must be published 90 days after the certification of an act of terrorism. There is no limitation under Section 102(1) on the time the Secretary may take to certify, or determine not to certify, an act as an act of terrorism. Moreover, the purpose of this estimate is for use in determining whether mandatory recoupment will be required. Until there is a certification of an act of terrorism, there would be no basis to make Federal payments for insured losses and no need to consider whether mandatory recoupment would be required.

This interpretation is also consistent with the Procedural Order entered by the Judicial Panel on Multidistrict Litigation concerning the 90-day period in Section 107(a)(4) of the Act, which requires a designation by the Panel “not later than 90 days after the occurrence of an act of terrorism.” The order notes the definition of an “act of terrorism,” and accordingly provides that “the 90-day period for the Panel to designate the court or courts for litigation covered by the Act begins on the date that the Treasury Secretary certifies an act of terrorism.” Procedural Order filed June 1, 2004, available at http://www.treas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/pdf/order.pdf. For the above reasons, § 50.71(b)(1) is being adopted as proposed.

Once Treasury has determined an amount to be recouped, an assessment period and Surcharge amount will be established. The final rule includes new definitions for “Federal Terrorism Policy Surcharge” and ” Surcharge”, “assessment period” and “Surcharge effective date”, which are added to § 50.5 of the regulations. § 50.72(b) provides that the Surcharge is the obligation of the policyholder and payable to the insurer with the premium for a property and casualty insurance policy in effect during the assessment period.

An “assessment period” is defined as a period during which policyholders must pay, and insurers must collect, the Federal Terrorism Policy Surcharge for remittance to Treasury. Treasury's intention is that, to the extent possible, assessment periods will be in full-year increments in order to equitably impose the Surcharge on policyholders who have policy term effective dates throughout the year. Due to the collection deadlines, however, this may not always be feasible.

The definition for “Federal Terrorism Policy Surcharge” is the amount established by Treasury as a policy surcharge on policies of “property and casualty insurance” as that term is defined in § 50.5(u). The Surcharge is to be expressed as a percentage of the amount charged as written premium for commercial property and casualty coverage in such policies.

The factors and considerations Treasury will consider in establishing the amount of the Federal Terrorism Policy Surcharge are set out in § 50.72(a). They include requirements of the Act as well as other factors. In particular, Section 103(e)(7)(C) of TRIA as amended by the Reauthorization Act, requires that once a mandatory recoupment amount is determined, collections are to equal 133 percent of that amount. Section 103(e)(8)(D) of the Act requires Treasury, in determining the method and manner of imposing the Surcharge, to take into consideration the economic impact on commercial centers of urban areas, risk factors related to rural areas and smaller commercial centers, and various exposures to terrorism risk for different lines of insurance. In the preamble to the proposed rule, Treasury explained that while it will consider these factors at the time it becomes necessary to establish the amount of a Surcharge, for several reasons it is likely that the same Federal Terrorism Policy Surcharge would apply to all commercial property and casualty lines of insurance, as defined by the Act, and all rating classifications. Treasury explained that after discussions with industry experts, it was understood that variations in underlying premium amounts for commercial lines insurance policies already appear to substantially operate in a way that addresses the adjustment factors described in the Act. Treasury also stated its concern over the time and resources needed to perform the complex analyses and to construct and implement a detailed risk classification scheme reflecting these factors, as well as needing to meet collection deadlines based on estimates of future Federal outlays. However, based on a review of economic conditions at the time a Surcharge amount is established, Treasury stated that it might, if necessary, and within the collection timing constraints, mitigate economic impacts by imposing a lesser Surcharge over a longer period of time. In the proposed rulemaking, Treasury specifically solicited public comment on this approach. No comments were submitted on this issue.

Section 50.73 of the final rule states that Treasury will provide reasonable advance notice of any initial Surcharge effective date. This effective date shall be January 1, unless such date would not provide for sufficient notice of implementation while meeting the collection timing requirements of section 103(e)(7)(E) of the Act.

The purpose of a January 1 effective date is to coordinate with the National Association of Insurance Commissioners (NAIC) Annual Statement reporting period. In the preamble to the proposed rule, Treasury stated its belief that there is a clear advantage to coordinating an assessment period and the written premium and remitted Surcharge amounts with the calendar year basis for the NAIC Annual Statements. However, insurers also would ideally have 180 days' notice to implement the Surcharge. The timing of an act of terrorism, the emerging estimates of insured losses and resulting Federal outlays, and the requirement to collect the Surcharges by certain deadlines could impinge on Treasury's ability to provide the desired 180 days' notice to insurers of a Surcharge implementation as of January 1. Two possible alternatives for managing this circumstance were suggested for which Treasury specifically sought public comment.

The first alternative was a possible bifurcated notification to insurers. Treasury would notify insurers 180 days in advance of January 1, that an assessment period will commence, but the actual Surcharge amount would not yet be provided. This would allow insurers time to develop systems changes to implement a Surcharge. The actual Surcharge amount would be provided at a later date, perhaps at least 60 days in advance of January 1.

The second alternative was to relax the standard of a January 1 implementation date. The assessment period could start as of the first day of a later month, but continue through that calendar year. The result of this would be a more complicated reconciliation of written premium and Surcharge amounts with NAIC Annual Statement data, but would yet be substantially consistent with the NAIC Annual Statement reporting period.

Two commenters provided comments on the alternative approaches. Both supported the first (bifurcated) approach to notification. One commenter stated that Treasury should allow at least 90 days advance notice of the actual surcharge amount while the other commenter stated that Treasury should provide notice of the actual surcharge amount at least 60 days in advance of January 1. In considering how to proceed based on these comments, Treasury is mindful of the generally recognized downside of using an effective date other than January 1. We acknowledge that 90 days advance notice of the actual surcharge amount would be preferable. However, we believe that most insurers could make the final system changes with at least 60 days' notice. To have to implement surcharges and reconciliations with a later implementation date than January 1, just because a 90 day notice was not possible, would be more disruptive to more insurers. Therefore, in implementing the final rule in circumstances where all necessary information cannot be provided at least 180 days in advance, Treasury intends to use the bifurcated approach. This would include 180 days' notice of the commencement of an assessment period, and, at least 60 days notice and, if possible, as much as 90 days notice of the actual surcharge amount.

Treasury will provide notification annually as to continuation of the Surcharge. Treasury will also provide reasonable advance notice of any modification or cessation of the Surcharge. In such cases, Treasury anticipates providing at least 90 days' notice. Notifications will be accomplished through publications in the Federal Register or in another manner Treasury deems appropriate, based upon the circumstances of the particular act of terrorism.

Despite the strong preference for the bifurcated approach, Treasury must have the flexibility to meet the statutory collection deadlines even if that approach cannot be accomplished. The final rule retains the language of § 50.73(b) of the proposed rule, which allows the effective date to be other than January 1 if that date would not provide for sufficient notice of implementation while meeting the statutory collection deadlines. The second alternative described above would only be implemented as a fallback position.

Section 50.74 of the proposed rule specified that the Surcharge shall be imposed and collected on a written premium basis for policies that are in force during the assessment period. The proposed rule further provided that all new, renewal, mid-term, and audit additional premiums for a policy term would be subject to the Surcharge in effect on the policy term effective date. The preamble to the proposed rule noted that policies placed in force prior to the assessment period would not be subject to the Surcharge until renewal, regardless of mid-term endorsements. Two commenters suggested a clarification in the rule, referring to policies that “incept or renew” during the assessment period rather than policies that are “in force” during the assessment period. Treasury agrees that this is consistent with the intent and has made this change in the final rule.

One commenter noted that since return premium on audit would also be subject to the return of the Surcharge, the term “audit additional premiums” noted above should merely read “audit premiums.” Again, this is consistent with the intent and for the sake of clarity Treasury has made the suggested change in the final rule. For additional clarity, Treasury has modified the proposed rule § 50.74(e), which provided for the return of Surcharge amounts attributable to unearned premiums which are returned to policyholders, to state that Surcharge amounts are to be returned when attributable to any refunded premium.

As noted in the preamble of the proposed rule, the definition of property and casualty insurance was the result of extensive consultation, which produced a regulatory definition crafted in terms of specific lines of business employed in the NAIC's Exhibit of Premium and Losses of the NAIC Annual Statement, modified by the exceptions for certain types of insurance excluded by the Act.

Insurers will be obligated to implement the Federal Terrorism Policy Surcharge on a policyholder transaction level. There is a complicating factor in the definition of commercial property and casualty insurance in that certain exclusions in the definition create a possibility of individual policies providing types of insurance that are considered to fall both within and outside the Act's definition of property and casualty insurance. The authorities under the Act (at subsections 103(e)(8)(A) and (C)  1 ) limit the application of the Surcharge to the policy premium amount charged for property and casualty insurance coverage under the policy.

In the proposed rule, as a basic starting point, Treasury proposed that the Surcharge apply to the full premium for any policy falling within the definition of property and casualty insurance in proposed § 50.5(u), i.e., the premium for the policy is reported on the insurer's NAIC Annual Statement, or equivalent reporting document, in a specified commercial line of business as defined by Treasury's regulations. However, a portion of a policy's premium would not be subject to the Surcharge if, despite the line of business premium reporting to the NAIC, that portion of the premium is for coverage under the policy that is a type of insurance not considered to be commercial property and casualty insurance as specified in Treasury's regulations.

In the case of a policy providing multiple insurance coverages, where an insurer cannot identify the premium amount charged specifically for property and casualty coverage under the policy, the proposed rule provided for two circumstances. If the insurer estimates that the portion of the premium amount charged for coverage other than property and casualty insurance is de minimis to the total premium for the policy, the insurer may impose and collect from the policyholder a Surcharge amount based on the total premium for the policy. If the insurer estimates that the portion of the premium amount charged for coverage other than property and casualty insurance is not de minimis, the insurer shall impose and collect from the policyholder a Surcharge amount based on a reasonable estimate of the premium amount for the property and casualty insurance coverage under the policy.

One comment on the proposed rule was that it provides no guidance as to what is and what is not de minimis. Treasury intended for there to be some flexibility in applying this provision of the rule where there is a very small, but not specifically calculable portion of the premium that can be attributed to coverage that is not within the definition of property and casualty insurance.

The commenter urged Treasury to review analogous provisions of earlier TRIA regulations, such as those addressing insurer deductibles and direct earned premium calculations. It was unclear from this comment whether this was from the standpoint of concept or, more specifically, the 25 percent threshold for considering commercial coverage to be incidental to a policy for purposes of the definition of direct earned premium. If it is the latter, Treasury is satisfied that 25 percent of a premium is not a de minimis amount. However, in considering further guidance, because of the variety of insurer and policy premium circumstances, Treasury is reluctant to further define what is de minimis. As noted in the proposed rule preamble, Treasury will be developing reporting forms for the insurer submission of surcharges and will consider additional guidance in connection with that forms development. For the final rule, the relevant provision, § 50.74(c)(2), is unchanged.

As part of this rule, Treasury is adding a definition to § 50.5 for direct written premium, which is the premium information for commercial property and casualty insurance, as defined in the regulations, that is included by an insurer in column 1 of the Exhibit of Premiums and Losses of the NAIC Annual Statement or in an equivalent reporting requirement. Consistent with the discussion above, an insurer would subtract the premium that is not subject to the Surcharge. Otherwise, the full premium for the policy is included for Surcharge computation. Minor adjustments to the definition of direct earned premium to eliminate some inconsistencies between that definition and the new definition of direct written premium are included in the final rule as had been proposed. The definition of direct written premium has been crafted to be consistent with premium billing and collection practices on a transactional level, as well as consistent with state regulatory requirements for reporting written premiums. The Surcharge itself is not considered premium.

The proposed rule, in § 50.74(c)(1), stated that for purposes of applying the Surcharge, written premium basis means the premium amount charged a policyholder by an insurer for property and casualty insurance as defined in § 50.5(u), including all premiums, policy expense constants and fees defined as premium pursuant to the Statements of Statutory Accounting Principles (SSAP) established by the NAIC. One commenter asserted that since states can modify the SSAP, this section should allow for premium pursuant to the SSAP as adopted by the jurisdiction for which the premium is reported. Treasury has made this change in the final rule.

Section 50.74(f) provides that an insurer may satisfy its obligation to collect the Federal Terrorism Policy Surcharge by remitting the calculated Surcharge amount to Treasury, without actual collection, in circumstances where the expense of collecting the Surcharge from all policyholders during an assessment period exceeds the amount of the Surcharges anticipated to be collected.

The Federal Terrorism Policy Surcharge is a repayment of Federal financial assistance in an amount required by law. It is not a premium paid by a policyholder to an insurer. Proposed § 50.74(g) stated that no fee or commission shall be charged on the Federal Terrorism Policy Surcharge. Two commenters said that the provision should be expanded to provide that the surcharge is not subject to taxes or assessments. Section 106 of the Act generally preserves the jurisdiction or regulatory authority of the insurance commissioner (or any agency or office performing like functions) of any state over any insurer or other person except as specifically provided in the Act. Whether the surcharge is subject to taxes or assessments concerns state law as well as the issue of Federal preemption. Treasury has concluded that taxes and assessments should not be addressed in the regulation.

The proposed rule provided that if an insurer returns any unearned premium to a policyholder, it shall also return any Federal Terrorism Policy Surcharge collected that is attributable to the unearned premium. As noted earlier in the discussion of comments associated with treatment of audit premiums, § 50.74(e) of the final rule has been modified to address the refund of any premiums.

The final rule provides that the insurer shall have such rights and remedies to enforce the collection of the Surcharge that are equivalent to those that exist under applicable state or other law for nonpayment of premium. Insurers should follow the appropriate state law in such circumstances.

The effect of § 50.76 of the final rule is that, notwithstanding the definition of an insurer in prior § 50.5(f) (now redesignated as § 50.5(l)), the collection, reporting and remittance of Federal Terrorism Policy Surcharges to Treasury shall be the responsibility of each individual insurer entity as otherwise defined in § 50.5(f) without including affiliates. This is because affiliations of insurers that are relevant in determining insurer deductibles are not pertinent to the collection and remittance of the Surcharges.

Consistent with the Act, Treasury's approach to the collection and remittance of the Federal Terrorism Policy Surcharge is to place an obligation on the policyholder to pay the Surcharge and require the insurer to collect the Surcharge from each policyholder. The final rule provides insurers the means to address non-payment of the Surcharge and provides for the reporting and remittance of the Surcharge to Treasury according to calculated amounts that are based on statutory financial reporting already required by the States. The description of premium subject to the Surcharge in § 50.74(c) and the definition of “direct written premium” in § 50.5(g) and other provisions of the final rule on the treatment of the Surcharge at both the policy transaction and financial statement reporting levels have been crafted so that the Surcharge amounts calculated for remittance to Treasury will be equivalent to the actual collections. By relying on premium amounts that are reported to the States, and that are already subject to other audit requirements, Treasury expects that its own audit responsibilities can be accomplished with less focus on individual insurer compliance with the Surcharge collection than would otherwise be necessary. This will result in a more efficient mechanism for recoupment for Treasury, insurers, and policyholders.

In developing reporting and remittance frequency requirements, Treasury considered the amount of time insurers may be holding the funds collected prior to remittance to Treasury, and the current Value of Federal Funds published by the Treasury's Financial Management Service. Treasury also recognizes that a monthly accounting period is standard within the insurance industry. The final rule allows insurers to retain the interest (and therefore not have to separately account and remit such amounts to Treasury) on funds collected on a “written” basis and remitted monthly to Treasury. Treasury believes that this is a reasonably efficient approach to administering the collection and remittance requirements of the Act. Should the Value of Federal Funds at the time of any actual imposition of the Federal Terrorism Policy Surcharge be significantly greater than current levels, Treasury will revisit this issue.

Section 50.75 of the final rule calls for insurers to report and remit Federal Terrorism Policy Surcharges on a monthly basis, starting with the first month within the assessment period, through November of the calendar year and on an annual basis as of the last month. As discussed earlier, ideally and as intended, the first month within the assessment period would be January. The requirements are expected to ease the administrative burden by building upon reporting requirements already imposed by the States. The definition of “direct written premium” on which an insurer must report and the specific due dates for reporting in § 50.75(a) have been coordinated with NAIC Annual Statement requirements. The main reconciliation of information reported to Treasury and to NAIC would be accomplished with the year-end NAIC Annual Statements.

The collection timing requirements of section 103(e)(7)(E) of the Act generally require recoupment of certain amounts of Federal outlays through September 30, coinciding with the end of the Federal fiscal year. Treasury will estimate recoupment amounts and Surcharges so that these deadlines are met, while still keeping to an end of calendar year date for defining an assessment period. This end date will allow the reporting and reconciliation to be coordinated with Annual Statements.

To accommodate possible changes in the Federal Terrorism Policy Surcharge amount from one year to another, direct written premium is to be broken down by policy year. This is similar to requirements imposed at the state-level with regard to other assessments.

Since remittance is on a “written” basis, the proposed rule provided for a continued reporting requirement for one year following the end of the assessment period. One commenter noted that closing out reporting one year after the termination of the assessment period would be satisfactory for the vast majority of policies, but that some policies will have final audits that close after that time and that, in addition, the proposed rule was unclear with respect to policies with terms longer than one year. In developing the proposed rule and in considering this comment, Treasury has endeavored to strike a balance between the accounting of Surcharges and the costs of maintaining the systems for collecting, submitting, and reporting of Surcharges on the part of insurers and Treasury. After consulting with industry experts, Treasury believes that revisions to the written premium amounts that would occur more than one year after the termination of the assessment period, which would be associated with additional or returned premiums on policies that incepted or renewed in the assessment period, would be sufficiently small relative to the aggregate premium amounts to justify ending further adjustments to the Surcharge. Therefore in the final rule, clarifications have been added to §§ 50.74(c) and (e) to provide that insurers are no longer required to collect or refund Surcharges once the reporting requirement to Treasury has ended. Section 50.75(d) has also been revised to clarify that an insurer obtains credit for a refund of any Federal Terrorism Policy Surcharges previously remitted to Treasury through its submission of monthly or annual statements.

Treasury will be developing forms for the reporting and remittance of the Federal Terrorism Policy Surcharge and plans on implementing an electronic reporting and payment facility.

It is Treasury's intention that it's reporting requirements, coordinated and reconciled with other state-level reporting, will result in less of an audit burden than might otherwise be necessary. The final rule includes a revision of the current § 50.60 and an addition to the current § 50.61. The revision adds language to the effect that the Secretary of the Treasury, or an authorized representative, shall have, upon reasonable notice, access to all books, documents, papers and records of an insurer that are pertinent to the Federal Terrorism Policy Surcharge. The addition generally provides that records relating to premiums, Surcharges, collections and remittances to Treasury shall be retained by an insurer and kept available for review for not less than three (3) years following the conclusion of the assessment period or settlement of accounts with Treasury, whichever is later.

Insurers will be responsible for collecting appropriate Surcharge amounts from their policyholders. Because § 50.74(d) provides that insurers have rights and remedies to enforce collection that are equivalent to those that exist under state law for nonpayment of premium, Treasury believes insurers will have the requisite tools to collect the Surcharge. Treasury may rely on its authority to impose civil monetary penalties on an insurer pursuant to section 104(e)(1)(A) of the Act for the failure to charge, collect or timely remit proper Surcharge amounts to enforce the provisions of this final rule.

As noted under “Collecting the Surcharge,” the final rule includes some minor changes to the existing definition of “direct earned premium.” Although the complete definition is set out for information, no substantive changes were made to the existing § 50.5(d)(1)(iv), (d)(2), (d)(3), and (d)(4). Similarly, although the existing provision on recordkeeping is set out in § 50.61(a), no substantive changes were made to that provision.

Executive Order 12866, “Regulatory Planning and Review”. This rule is a significant regulatory action for purposes of Executive Order 12866, “Regulatory Planning and Review,” and has been reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility Act. Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., it is hereby certified that this rule will not have a significant economic impact on a substantial number of small entities. TRIA requires all insurers that receive direct earned premiums for commercial property and casualty insurance, to participate in the Program. Treasury is required to recoup all or a portion of the Federal share of compensation paid to insurers for insured losses in accordance with the Act. Insurers that are affected by these regulations tend to be large businesses, therefore Treasury has determined that the rule will not affect a substantial number of small entities. In addition, Treasury has determined that the economic impact of the rule is not significant. The Act requires that a policyholder surcharge be imposed on all policies of property and casualty insurance, as defined in the Act. The Act requires Treasury to provide for insurers to collect the surcharges and remit them to Treasury. Unless there is an act of terrorism, and a Federal sharing of compensation for insured losses requiring recoupment, there is no economic impact at all. The ability to collect surcharges is routine within the insurance industry. Should a surcharge be required, it would be collected and submitted by insurers based on existing normal business processes. The payment of a surcharge is the obligation of the policyholder. The insurer must collect the surcharge, but would do so through the normal payment by the policyholder of the insurance premium for property and casualty insurance. The economic impact on all commercial property and casualty insurers (including any that might be small entities) should thus be minimal. Treasury did not receive any comments at the proposed rule stage relating to the rule's impact on small entities. Accordingly, a regulatory flexibility analysis is not required.

Paperwork Reduction Act. The collection of information contained in this final rule has been approved by the OMB under the requirements of the Paperwork Reduction Act, 44 U.S.C. 3507(d) and has been assigned control number 1505-0207.

I. Background

The Terrorism Risk Insurance Act of 2002 (Pub. L. 107-297, 116 Stat. 2322) was enacted on November 26, 2002. The Act was effective immediately. The Act's purposes are to address market disruptions, ensure the continued widespread availability and affordability of commercial property and casualty insurance for terrorism risk, and allow for a transition period for the private markets to stabilize and build capacity while preserving state insurance regulation and consumer protections.

Title I of the Act establishes a temporary federal program of shared public and private compensation for insured commercial property and casualty losses resulting from an act of terrorism. The Act authorizes Treasury to administer and implement the Program, including the issuance of regulations and procedures. The Program provides a federal backstop for insured losses from an act of terrorism. Section 103(e) of the Act gives Treasury authority to recoup federal payments made under the Program through policyholder surcharges. The Act also contains provisions designed to manage litigation arising from or relating to an act of terrorism.

The Program originally was to expire on December 31, 2005; however, on December 22, 2005, the Terrorism Risk Insurance Extension Act of 2005 (Pub. L. 109-144, 119 Stat. 2660) was enacted, which extended the Program through December 31, 2007. On December 26, 2007, the Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L. 110-160, 121 Stat. 1839) was enacted, extending the Program through December 31, 2014.

The Reauthorization Act, among other Program changes, revised the provisions of the Act with regard to the cap on annual liability for insured losses of $100 billion. Previously, section 103(e)(3) stated that Congress would determine the procedures for and the source of any payments for insured losses in excess of the cap. This was deleted. Instead, this section now requires the Secretary of the Treasury to notify Congress not later than 15 days after the date of an act of terrorism as to whether aggregate insured losses are estimated to exceed the cap. TRIA, as amended by the Reauthorization Act, also requires the Secretary to determine the pro rata share of insured losses to be paid by each insurer incurring losses under the Program and that meets its deductible when insured losses exceed the cap, and to issue regulations for carrying this out.

To assist insurers, policyholders, and other interested parties in complying with immediately applicable requirements of the Act, Treasury has issued interim guidance for reference until issuance of superseding regulation. Rules establishing general provisions implementing the Program, including key definitions, and requirements for policy disclosures and mandatory availability, can be found in Subparts A, B, and C of 31 CFR Part 50. Treasury's rules applying provisions of the Act to State residual market insurance entities and State workers' compensation funds are at Subpart D of 31 CFR Part 50. Rules setting forth procedures for filing claims for payment of the Federal share of compensation for insured losses are at Subpart F of 31 CFR Part 50. Subpart G of 31 CFR Part 50 contains rules on audit and recordkeeping requirements for insurers, while Subpart I of 31 CFR Part 50 contains Treasury's rules implementing the litigation management provisions of section 107 of the Act.

The proposed rule on which this final rule is based was published in the Federal Register at 73 FR 56767 on September 30, 2008. The proposed rule proposed to add a Subpart J to part 50, which comprises Treasury's regulations implementing the Act. It also proposed to amend § 50.53 of Subpart F. The proposed rule described how Treasury would initially estimate whether the cap will be exceeded, the means by which Treasury would develop and maintain estimates for determining the pro rata share of insured losses to be paid, the factors that would be considered in determining a pro rata percentage of the insured losses that are to be paid in order to stay within the cap, and the application of the pro rata percentage in paying insured losses.

Treasury is now issuing this final rule after careful consideration of all comments received on the proposed rule. While this final rule largely reflects the proposed rule, Treasury has made several clarifications based on the comments received.

Treasury received comments on the proposed rule from two national insurance industry trade associations, a national insurance rating and data collection bureau, and one insurance company. Commenters generally noted that the approach to the administration of the cap is appropriate and efficient under the circumstances. Although Treasury invited the submission of alternatives to the proposed process for prorating insured losses when aggregate insured losses exceed the cap on annual liability, no other alternatives were submitted. In response to specific comments, Treasury has refined and clarified provisions in three areas: (1) Claims payments to be made immediately after an act of terrorism that is likely to exceed the cap on annual liability, but where specific pro rata amounts cannot yet be determined, (2) which insured losses will be affected by a pro rata determination, and (3) the prorating of insured losses where an insurer has not yet met its insurer deductible. The comments received and Treasury's revisions to the proposed rule are summarized below.

Proposed § 50.91 stated, in part, that pursuant to Section 103(e)(3) of the Act, the Secretary shall provide an initial notice to Congress within 15 days of the certification of an act of terrorism, stating whether the Secretary estimates that aggregate insured losses will exceed $100 billion for the Program Year. Two commenters requested that Treasury change the language of proposed § 50.91, in accordance with their reading of Section 103(e)(3), to require an initial notice to Congress within 15 days of the occurrence of an act of terrorism.

Section 103(e)(3) of the Act requires the Secretary to notify the Congress if estimated or actual aggregate insured losses exceed $100 billion during a Program Year. It further provides (as added by the Reauthorization Act) that “the Secretary shall provide an initial notice to Congress not later than 15 days after the date of an act of terrorism, stating whether the Secretary estimates that aggregate insured losses will exceed $100,000,000,000.”

“Act of terrorism” is a defined statutory term. Under Section 102(1)(A), an “act of terrorism” is any act which is certified by the Secretary, in concurrence with the Secretary of State and the Attorney General of the United States, to meet certain specified elements. Without certification, an act does not meet the definition of an “act of terrorism.”

Treasury believes that the most reasonable interpretation of the second sentence of Section 103(e)(3) is that the initial notice must be provided to Congress not later than 15 days after certification of an act of terrorism. There is no limitation under Section 102(1) on the time the Secretary may take to certify, or determine not to certify, an act as an act of terrorism. That time could in many circumstances be more than 15 days after the act. In addition, as noted in the preamble to the proposed rule, there may be significant challenges involved in obtaining data for an estimate of aggregate insured losses even within the 15 days following the certification of an act of terrorism.

This interpretation is also consistent with the Procedural Order entered by the Judicial Panel on Multidistrict Litigation concerning the 90-day period in Section 107(a)(4) of the Act, which requires a designation by the Panel “not later than 90 days after the occurrence of an act of terrorism.” The order notes the definition of an “act of terrorism” and accordingly provides that “the 90-day period for the Panel to designate the court or courts for litigation covered by the Act begins on the date that the Treasury Secretary certifies an act of terrorism.” Procedural Order filed June 1, 2004 is available at http://www.treas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/pdf/order.pdf.

For the above reasons, Treasury is adopting as the final rule § 50.91 as it was proposed.

Under the Reauthorization Act, the Secretary shall not make any payment for any portion of the amount of aggregate insured losses that exceeds $100 billion during any Program Year; and no insurer that has met its deductible shall be liable for the payment of any portion of the amount of such insured losses that exceeds $100 billion. Generally, Treasury's approach will be to establish any proration relatively conservatively when it is estimated that the cap will be reached, so that early payments are not inequitably higher than later payments, and so that, barring a subsequent act of terrorism in the same Program Year, later refinements to the proration will allow additional payments to policyholders for prior settled losses. During a Program Year, until events have transpired that lead Treasury to believe that the cap could be reached, it is our intention that no proration would be established.

The final rule includes a definition of “ pro rata loss percentage” (“PRLP”). This is the percentage determined by the Secretary to be applied against the amount that would otherwise be paid by an insurer under the terms and conditions of an insurance policy providing property and casualty insurance under the Program if there were no cap on annual liability. An insurer would apply the PRLP to compute the pro rata share of insured losses to be paid under an insurance policy.

The final rule provides that if Treasury estimates that insured losses may exceed the cap on annual liability for a Program Year, then Treasury will determine an initial PRLP and an effective date for that PRLP. This percentage applies in determining insured loss payments for insured losses incurred during the subject Program Year, starting with the effective date until Treasury determines a revised PRLP. Considerations in establishing the PRLP are: (1) Estimates of insured losses from insurance industry statistical organizations; (2) any data calls issued by Treasury; (3) expected reliability and accuracy of insured loss estimates and likelihood that insured loss estimates could increase; (4) estimates of insured losses and expenses not included in available statistical reporting; and (5) such other factors as the Secretary considers important. Revisions to the PRLP will be based on the same considerations, as needed. Notices of the initial and any revised PRLP will be provided through the Federal Register, or in another manner Treasury deems appropriate, based upon the circumstances of the act of terrorism under consideration.

In the preamble to the proposed rule, Treasury expressed its concern that there could be circumstances where we estimate that the cap on annual liability will be exceeded, but there is not yet adequate knowledge of insured losses with which to determine a PRLP. Allowing payments for early insured losses under the Program to continue without proration appears to be inequitable to those claimants with insured losses coming in later, for which the pro rata share calculation would have to be that much more severe. Treasury proposed that in such a circumstance it would call a brief hiatus in insurer loss payments of up to two weeks. During this time Treasury would develop a PRLP as quickly as possible. During this hiatus, insurers could still make payments, but with the understanding that the PRLP would be effective retroactively to the start of the hiatus. Any insured losses later submitted in support of an insurer's claim for the Federal share of compensation would be reviewed for compliance with the regulations pertaining to the pro rata share payments.

One commenter commented that, absent an agreement between Federal and State officials concerning the preemptive scope of the Reauthorization Act, State insurance departments and labor commissions may seek to require the continuation of full benefits despite the hiatus. Insurers may have no option but to continue paying full benefits which would place them at odds with the compensation to be provided later under a retroactive PRLP. The commenter suggested, as an alternative to the hiatus, establishing an initial conservative PRLP which would be replaced by a higher PRLP determined later.

Treasury included a provision on a hiatus in the proposed rule because we believe that it is consistent with our authority in the Reauthorization Act to implement our Program obligations. In developing the proposed rule, Treasury consulted with the National Association of Insurance Commissioners (NAIC), and has not received any further comments from that group. In considering the submitted comment, we do see merit in providing some flexibility in managing the circumstances that had prompted the proposed hiatus and have made some revisions to § 50.92(e) in the final rule. First, we have added a provision stating that we would consult with the relevant state authorities before initiating action. Second, while we have retained the hiatus as a possible action, we have also added the possible alternative of determining an interim PRLP. This separately defined term is an amount determined without the availability of information necessary for consideration of all factors listed in § 50.92(b). All other provisions applicable to the PRLP would apply to the interim PRLP. This would be a conservatively low percentage amount determined in order to facilitate initial partial payments of claims by insurers after an act of terrorism and prior to the time that information becomes available to determine a PRLP based on consideration of the factors listed in § 50.92(b).

The more refined and expectedly higher PRLP, as later determined, would be effective retroactively as of the effective date of the interim PRLP. Any insured losses submitted in support of an insurer's claim for the Federal share of compensation would then be reviewed for the insurer's compliance with pro rata payments in accordance with the effective date of the interim PRLP, or as later replaced by the subsequent PRLP as appropriate. Thus, an insurer would be able to make additional payments and claims for the Federal share on insured losses previously limited by the interim PRLP. This alternative should provide us with enough flexibility to quickly establish proration, if necessary, in the aftermath of an act of terrorism.

One commenter requested clarification as to how and when policyholders are to be notified that benefits will be adjusted pursuant to the PRLP. As provided in TRIP regulations (§ 50.15(b)), as a condition for payments of the federal share of compensation for insured losses, an insurer must disclose to the policyholder the existence of the cap on annual liability for losses, at the time of offer, purchase, and renewal of the policy. The timing and form of notification to the policyholder of the adjustment, once Treasury has provided public notice of its determination of a PRLP, is up to the discretion and management of the insurer as guided by any pertinent State requirements.

In the proposed rule, Treasury provided that the PRLP be applied by insurers prospectively on individual insured losses that have not been settled as of the effective date of a PRLP. The intention was that the process of proration would not retroactively require repayment of any claims already legitimately made (or agreed to be paid) to insureds for insured losses. The impracticality of recovering payments already made has been generally recognized.

Proposed § 50.93 directed insurers to apply the PRLP to determine the pro rata share of each insured loss to be paid by the insurer on all insured losses where there is not a signed settlement as of the effective date established by Treasury for the PRLP. The same procedure would apply whether this was an initial PRLP or a subsequent PRLP that supersedes the prior determination.

Two commenters raised concerns over the use of a “signed settlement” in determining whether an insured loss is subject to proration. One commenter noted that the types of claims generated by a terrorist event may not lend themselves to signed settlement agreements and therefore recommended that the rule should refer to a “claim paid” instead. The other commenter, addressing the same concern, suggested that the rule refer to a “complete and final settlement” and a “memorialization” of the settlement. After consideration of these comments, Treasury has modified the final rule to provide that an insurer “shall apply the PRLP to determine the pro rata share of each insured loss to be paid by the insurer on all insured losses where there is not an agreement on a complete and final settlement as evidenced by a signed settlement agreement or other means reviewable by a third party as of the effective date established by Treasury.” We believe that this allows reasonable flexibility for insurers settling claims before and after the effective date of a PRLP while requiring appropriate documentation that can be reviewed during an audit.

One commenter also noted that it appeared that the proposed rule would not allow “signed settlements” executed after an initial PRLP to be modified should the PRLP later increase. This circumstance was addressed in proposed § 50.95(a) which spoke to Treasury's determination of a final PRLP and “adjustments to previous insured loss payments.” We anticipate that it is most likely that Treasury would only increase the PRLP once it is clear what a final proration should be. However, in reviewing this comment we have determined that we can accommodate other increases in the PRLP should they be warranted prior to determining a final PRLP and allow payments on “prior settlements” to be increased. This will be accomplished by establishing the effective date of a higher PRLP retroactively to an appropriate earlier PRLP effective date, similar to the mechanism described above for the interim PRLP that would facilitate initial partial claim payments by insurers under § 50.92(e). This will allow insurers to determine any additional payment amounts and allow the submission of updated loss information to Treasury for purposes of determining the Federal share of compensation to be reviewed under the new PRLP criteria.

In proposed § 50.93(a), Treasury provided that the pro rata share is determined based on the final claim settlement amount that would otherwise be paid. If partial payments have already been made as of the effective date of the PRLP, then the pro rata share for that loss is the greater of the amount already paid or the amount computed by applying the PRLP to the estimated or actual final claim settlement amount. One commenter recommended the inclusion of words at the end of the subsection, for consistency and clarity, reinforcing that the PRLP is being applied to the final claim settlement amount “that would otherwise be paid.” The final rule has been revised to include this. Treasury noted in the preamble to the proposed rule that some insured losses, such as those associated with workers' compensation or business interruption, may involve ongoing regular payments. In these cases, the proration would still be determined based on the final claim settlement amount that would otherwise be paid.

In the claims procedures regulations (Subpart F) and in the forms for insurer submissions for the Federal share of compensation that Treasury has already promulgated, workers' compensation losses are required to be substantiated at the policy level. That is to say, underlying loss information on the bordereaux and reviewed by Treasury in determining the Federal share is submitted in aggregate by policy/employer rather than individual claimant/employee. In the proposed rule, Treasury proposed to continue that scheme. The application of the PRLP to determine the pro rata share would be against the estimated or actual unprorated loss amounts by policy (broken down by medical only, medical portion of indemnity, and indemnity portion of indemnity), following the way loss information has been required to be reported as part of the TRIP Certifications of Loss. Despite this calculation of the pro rata share at the policy level for purposes of reporting to Treasury, Treasury noted its expectation that insurers would prorate payments made to individual claimants.

One commenter suggested that for workers' compensation losses, the PRLP should be applied and controlled by Treasury at the claimant level rather than at the policy level. The comment also made note that workers' compensation losses could involve “hundreds or thousands of claimants from the same event at the same location.” The commenter also supplied an example of a scenario where the proration on a policy basis was carried out in such a way that the pro rata portion of the payment that otherwise would have been made to one claimant (58 percent) was significantly different than the pro rata portion of payment for another claimant (92 percent) under the same policy.

Treasury has carefully reviewed this comment along with the submitted example. In part, the disparity in the example is due to the timing of claims with the establishment of a PRLP, a circumstance that has generally been noted as possibly producing disparities in all lines of business, not just workers' compensation. We note that the disparity in pro rata portions of payments in the example was exacerbated by the manner in which the PRLP was applied at the claimant level. Application of the proration at the claimant level can be carried out in ways that are consistent with the rule, but can reduce or exacerbate disparities.

After considering this comment in the context of other authority and control concerns, Treasury has concluded that the proposed application of the PRLP to workers' compensation claims, controlled by Treasury at the policy level as described in the notice of proposed rulemaking, will be adopted in the final rule for the following reasons.

When establishing the claims process for TRIP, it was generally recognized that creating a system under which detailed reporting of insured losses would be required at the claimant level went beyond what is necessary for Treasury to fulfill its program obligations as a “reinsurer”. We believe that this is still fundamentally the right approach and do not want to require a more detailed reporting structure for all acts of terrorism because of the contingency that there might be a requirement to cap annual losses. Nor do we want to develop a system with two different levels of reporting dependent on whether annual losses are to be capped or not.

There is some flexibility in how an employer (the policyholder) and the insurer decide to manage payment streams. This includes how and when insurance payments to claimants are continued at a reduced level, or stopped after limits are reached. We expect proration to be done in some manner at the claimant level, but the detail as to exactly how that is done may depend on other factors and authorities that are not superseded by this rule.

Treasury's interest is in managing the proration due to the cap on annual losses in such a way that makes sense as a “reinsurer”. We continue to believe that this is best accomplished by controlling the application of proration at the policy level. However, as discussed below, we have provided for the possibility of some adjustments in the calculation of the Federal share of compensation for insured losses in the context of workers' compensation policies in one particular situation.

The same commenter also recommended language for § 50.93(a) to provide additional flexibility in workers' compensation cases for handling partial payments versus the final claim settlement amount. Under the commenter's assumption that proration and the computation of the Federal share of compensation would be computed at the claimant level, the commenter provided examples where an injured worker either had a shorter life or returned to work sooner than anticipated in the estimates of final claim settlement amount. Thus applying the PRLP to the actual final claim settlement amount produced a lower pro rata amount than the amount of partial payments already made, which were based on the expectation of a higher final claim settlement amount. An insurer therefore might not be fully compensated in the computation of the Federal share because it is based on applying the PRLP to the lower actual final settlement amount. However, in the provided examples where payments to an injured worker continued longer than anticipated in the estimates, applying the PRLP to the actual final claim settlement amount fully compensated the insurer. The commenter recommended modifying the proposed rule to provide that in cases where the estimated or actual settlement amount is lower than a prior estimate, then “the pro rata share of that loss is the greater of the amount already paid or the amount computed by applying the PRLP to the estimated or actual final claim settlement amount.”

The issue presented is another reason why Treasury believes that the better way to compute and control the pro rata share of losses under a workers' compensation policy for purposes of determining the Federal share of compensation is at the policy level. For a workers' compensation policy, in all likelihood the final claim settlement amount to which the PRLP is applied will remain an estimated amount for quite some time. As noted by the commenter, the fluctuation of the actual settlement amount from the estimated amount at the claimant level could be significant.

Treasury anticipates the estimate at the policy level would be a much more stable amount, taking into account that some actual payments to individual claimants may be less than the expected amounts while others may be greater. However, we do understand how even at the policy level, where perhaps a policy is covering a small number of employees, that a circumstance such as actual mortality differing from original assumptions could produce an unexpectedly large reduction in the estimated loss after payments have already been made. The final rule has been modified by adding a provision in § 50.93(c) allowing a workers' compensation insurer to submit for review information justifying an appropriate adjustment in the calculation of the Federal share of compensation.

A commenter noted the assumption that concerned insurance trade associations would work with Treasury to address the issue of what happens if an employer is unable to rely on its workers' compensation insurance for full payment of an injured worker's claim. No other comments specific to this issue have been submitted. This is not an issue addressed under the Act.

In the notice of proposed rulemaking, Treasury noted that in examining our authorities as stipulated in the Reauthorization Act, the conclusion was reached that we cannot provide for pro rata sharing of insured losses in such a way that an insurer's liability would be limited when it has not met its deductible. Thus, proposed § 50.93 provided that if an insurer has not yet made payments in excess of its insurer deductible, but estimates that it will exceed its deductible by making payments based on the application of the PRLP, then that insurer shall apply the PRLP as of the effective date of the PRLP. If an insurer has not yet made payments in excess of its insurer deductible, but estimates that it will not exceed its deductible by making payments based on the application of the PRLP, then that insurer may make payments on the same basis as prior to the effective date of the PRLP. In this latter circumstance, the decision to prorate as of the effective date of the PRLP would be up to the insurer. If the insurer prorates and does not exceed its deductible, then it would be liable for additional, retroactive loss payments that in the aggregate bring the insurer's total insured loss payments up to an amount equal to the lesser of its insured losses without proration or its insurer deductible. If the insurer does not prorate, but does exceed its deductible, then it would apply the PRLP to its remaining insured losses once it makes payments equal to its insurer deductible. Once an insurer exceeds its deductible and submits a claim for the Federal share of compensation, however, Treasury's review of eligible payments associated with the underlying losses and calculations for the Federal share would be based on the application of the PRLP as if the insurer had originally estimated that it would exceed its deductible while applying the PRLP to its insured losses.

Two comments were submitted regarding this provision of the proposed rule. One commenter urged Treasury to require that the PRLP be used by all insurers until loss estimates clearly demonstrate that an insurer will not reach its deductible. The commenter's concern was that an insurer might attempt to gain a competitive advantage in attracting or retaining business by underestimating losses to be within the insurer deductible and thus making higher loss payments by not applying the otherwise required PRLP.

A second commenter recommended that insurers be allowed to request Treasury approval of an individual insurer PRLP that is greater than the published PRLP so that an insurer can more quickly make payments that approach its insurer deductible amount. The commenter's concern was that the proposed rule appeared to allow only two choices: applying the PRLP with a delayed truing up with policyholders at a later date when Treasury has determined the final PRLP, or making unprorated payments to policyholders and possibly exceeding their insurer deductible without being eligible for a Federal sharing of losses above the deductible.

These two comments conflict with one another. Treasury's intention with § 50.93(c) of the proposed rule was to allow an insurer, that already knows that it will not meet its insurer deductible by applying the PRLP to its insured losses, to expeditiously meet its obligations to its policyholders. The onus for estimating its losses relative to its insurer deductible and the consequence for overpaying losses that should have been prorated, was placed on the insurer who, as opposed to Treasury, would have the most up to date information. On balance, Treasury believes that the objective of expediting complete payment of insured losses overrides the concern that an insurer might overpay to gain a competitive advantage. Any such overpayment will not affect the Federal share of compensation. Treasury believes that additional flexibility can be provided in the rule without requiring Treasury approval of individual insurer PRLP's. The final rule has been modified to allow an insurer that has not yet made payments in excess of its insurer deductible and that estimates it will not exceed its deductible making payments based on the application of the PRLP, to make payments “on the basis of applying some other pro rata amount it determines that is greater than the PRLP, where the insurer estimates that application of such other pro rata amount will result in it not exceeding its insurer deductible.” The insurer is still liable for loss payments that in the aggregate bring the insurer's total insured loss payments up to an amount equal to the lesser of its insured losses without proration or its insurer deductible.

Treasury proposed in § 50.94 of the proposed rule that it may issue a data call to insurers for the submission of insured loss information. We explained that we anticipate requesting summary level information on insured losses and insurer deductible information. Such a collection of data may be necessary not only for the purposes of the cap on annual liability, but also with regard to potential recoupment. Treasury further explained that we intend, to the extent possible, to rely on existing industry statistical reporting mechanisms in making initial estimates. However, in order to estimate whether the cap on annual liability will be reached and determine an initial or subsequent PRLP, it may be necessary to have more timely detail regarding insurer deductibles and reserves for insured losses from lines of business not normally included in existing industry reporting.

Two entities provided comments regarding the data call authority. Both recognized the appropriateness of Treasury collecting insurer loss data in order to meet Program obligations.

One commenter noted that proposed § 50.91 stated that the initial reporting obligation to Congress would be met based on loss information “compiled by insurance industry statistical organizations and any other information the Secretary in his or her discretion considers appropriate.” Further, Treasury indicated in the description of this section of the proposed rule that a data call may not be timely enough to meet the reporting obligation. The commenter stated that Treasury should consider adding clarifying language to § 50.94 reflecting this view. We reiterate that our intention is to meet the initial reporting obligation through data obtained from statistical organizations and other sources of general loss information. However, we do not wish to unnecessarily restrict the use of a data call if that became the only way for us to meet our statutory reporting obligation. Therefore, § 50.94 of the final rule has not been revised.

Both commenters asserted that data requested be “relevant and accessible” and that the request should minimize disruptions to insurer claims handling during a catastrophic event. One commenter further urged that Treasury “continue this current rulemaking, and determine and define what data they will need.”

In the Notice of Proposed Rulemaking, Treasury provided estimates of burden hours to comply with data requests as well as specific data elements for summary level loss information that is contemplated under a data call. This included initial information requested in the immediate aftermath of an act of terrorism as well as further information that might be requested as claims processes progressed. As part of the Paperwork Reduction Act requirements for this rulemaking, comments on the collection of information in the proposed rule were solicited for submission to the Office of Management and Budget (OMB) with a 60-day comment period. No comments were submitted.

In past development of information collection requirements associated with the Terrorism Risk Insurance Program, Treasury has benefited from both the formal processes and informal contacts with members of the insurance industry. We will continue both of these types of efforts in further development of the data call requirements.

Concerning the data calls contemplated by proposed § 50.94, one commenter requested that Treasury recognize that the claims data should be considered proprietary information of the submitting insurers and suggested that provisions be added to the regulation similar to what was included in “The Insurance Information Act of 2008”, which was introduced in, but not passed by the 110th Congress.

The Program does not intend to make insurer-specific data public. The regulation does not override other law that would otherwise be applicable. Any information submitted to Treasury would be subject to the Freedom of Information Act (FOIA). Treasury would handle any request for information that has been submitted by an insurer in response to a data call in accordance with Treasury's FOIA regulations at 31 CFR Part 1. This would include consideration of the applicability of FOIA exemptions, including those applicable to commercially or financially sensitive information.

One commenter raised the general topic of the interaction of the regulations with State law, and suggested that guidance on certain issues would be helpful to insurers. The issues noted were: How the payment hiatus interacts with State prompt payment laws; the extent to which a State regulator may modify the procedures in the regulations; and the extent to which a State regulator may require that a preference be applied to the full payment of certain lines, claims, or insureds.

Section 106(a) of the Act provides generally that nothing in the Act shall affect the jurisdiction or regulatory authority of the insurance commissioner (or any agency or office performing like functions) of any State over any insurer or other person except as specifically provided in the Act. Section 103(a)(2) of the Act provides that notwithstanding any other provision of State or Federal law, the Secretary shall administer the Program, and shall pay the Federal share of compensation for insured losses in accordance with subsection (e). Section 103(e)(2) requires Treasury to issue regulations for determining the pro rata share of insured losses under the Program when insured losses exceed $100 billion.

Treasury consulted with the National Association of Insurance Commissioners (NAIC) early in the process of formulating the proposed rule. If specific issues are raised in the future, Treasury will consider issuing further guidance as appropriate.

Executive Order 12866, “Regulatory Planning and Review”. This rule is a significant regulatory action for purposes of Executive Order 12866, “Regulatory Planning and Review,” and has been reviewed by the OMB.

Regulatory Flexibility Act. Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., it is hereby certified that this rule will not have a significant economic impact on a substantial number of small entities. TRIA requires all insurers that receive direct earned premiums for commercial property and casualty insurance to participate in the Program. The Act also defines “property and casualty insurance” to mean commercial lines, with certain specific exclusions. Insurers affected by these regulations tend to be large businesses, therefore Treasury has determined that the rule will not affect a substantial number of small entities. In addition, the Department has determined that any economic impact will not be significant. Under the Act, Treasury shall not make any payment for any portion of the amount of annual aggregate insured losses that exceed $100 billion and no insurer that has met its insurer deductible is liable for the payment of any portion of the amount of annual aggregate insured losses that exceeds $100 billion. Further, the Act requires the Secretary to determine the pro rata share of insured losses to be paid by each insurer and to issue regulations for determining the pro rata share of insured losses under the Program. If there is no act of terrorism, or there are insured losses cumulatively less than $100 billion (a level that is more than three times the amount reported by the insurance industry for the World Trade Center), this regulation has no economic impact. Should the legislatively mandated cap on annual losses be triggered, proration is carried out through existing insurer and policyholder processes for claiming, adjusting and settling insured losses. Moreover, for any affected commercial property and casualty insurers (including those that might be small entities), there is a favorable economic impact because the rule implements the statutory limitation on an insurer's liability. Treasury did not receive any comments at the proposed rule stage relating to the rule's impact on small entities. Accordingly, a regulatory flexibility analysis is not required.

Paperwork Reduction Act. The collection of information contained in this final rule has been approved by the OMB under the requirements of the Paperwork Reduction Act, 44 U.S.C. 3507(d), and has been assigned control number 1505-0208. Under the Paperwork Reduction Act, an agency may not conduct or sponsor, and an individual is not required to respond to, a collection of information unless it displays a valid OMB control number.

Executive Order 13132, “Federalism.” The rule may have federalism implications to the extent it deals with the making of payments by insurers to their policyholders under contracts of insurance, which is ordinarily regulated under State insurance law. However, TRIA established a temporary Federal program that is national in scope and significance. Section 106 of TRIA preserves the jurisdiction or regulatory authority of State insurance commissioners or similar offices, except as specifically provided in TRIA. Section 103(e)(2) requires Treasury to issue regulations for determining the pro rata share of insured losses under the Program when insured losses exceed $100 billion.

Treasury consulted with the NAIC early in the process of formulating the proposed rule. State insurance commissioners who are members of the NAIC Terrorism Insurance Working Group were given an opportunity to submit comments, and a few minor and technical comments were received and considered by Treasury. No further comments were received on the proposed rule.

The provision in the rule (§ 50.92(e)) where Treasury would call for a hiatus in payments by insurers in circumstances where the cap on annual liability may be exceeded, but an appropriate PRLP cannot yet be determined, could potentially conflict with State insurance laws prescribing fixed periods for insurers to pay claims. However, Treasury believes the impact is limited in the rule because the period of the hiatus is brief (up to two weeks), and it would apply shortly after an act of terrorism occurs. Treasury concluded that a brief hiatus may be necessary to carry out the purpose of the statute to establish shares of insured losses on a pro rata basis by avoiding the inequity of allowing early claims to be paid in full before a PRLP can be determined.

As noted above in response to a comment on the proposed rule, Treasury has modified the final rule to include the second option of an interim PRLP to address the circumstance where information necessary for consideration of all factors listed in § 50.92(b) is unavailable. The final rule also provides that Treasury will consult with relevant state authorities before a course of action is selected. These added provisions further mitigate the federalism implications.