The FAA invites interested persons to participate in formulating this policy by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting it. The most helpful comments explain (with pertinent references to the text of the policy) the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, please send only one copy of written comments, or if you are filing comments electronically, please submit your comments only one time.

We will file in the docket all comments we receive. We will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may make changes in light of the comments we receive.

You can get an electronic copy using the Internet by:

(1) Searching the Federal eRulemaking Portal at http://www.regulations.gov;

(2) Visiting the Office of Rulemaking's Web page at http://www.faa.gov/avr/arm/index.cfm; or

(3) Accessing the Government Printing Office's Web page at http://www.gpoaccess.gov/fr/index.html.

You can also get a copy by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-9680. Make sure to identify the docket number or notice number of this rulemaking.

On April 5, 2010 [64 FR 17047], the Federal Aviation Administration published a policy statement entitled “Special Issuance of Airman Medical Certificates to Applicants Being Treated With Certain Antidepressant Medications.” The FAA established a public docket for this policy (FAA-2009-0773) and opened a 30-day comment period until May 5, 2010. The Air Line Pilots Association, International (ALPA) submitted a comment, dated May 5, 2010, requesting that the FAA extend the comment period.

In its comment ALPA stated this policy change is “an important step in the direction of increasing airline safety.” In ALPA's view, however, “the new protocol has raised a substantial number of questions regarding its application.” ALPA requested an opportunity for a 45-day comment period and specified that this comment period should begin “after the FAA has had the opportunity to answer the specific questions raised about the policy's practical application.”

The FAA has evaluated ALPA's request for additional time to comment and is not opposed to re-opening the comment period. Re-opening the comment period for 45 days appears unwarranted, however, given the few comments received regarding the policy and its practical application during the original 30-day comment period. Therefore, the FAA will re-open the comment period for 30 days.

ALPA has not formally submitted to the public docket its specific questions about the policy's practical application and, as mentioned, few commenters provided input in this regard during the open comment period. To receive appropriate consideration, therefore, the FAA requests specific information regarding these concerns be provided during the next 30 days of the re-opened comment period.

In accordance with Sec. 11.47(c) of title 14, Code of Federal Regulations, the FAA has reviewed ALPA's comment for extension of the comment period to Docket FAA-2009-0773. Since the comment period has already closed, the FAA will re-open it for a period of 30 days. The petitioner has shown a substantive interest in the policy and has provided good cause to grant re-opening of the comment period. The FAA has determined that re-opening the comment period is consistent with the public interest and that good cause exists for taking this action.

Accordingly, the comment period is re-opened until June 25, 2010.

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, Philip D. Moeller, and John R. Norris.

1. In this Final Rule, the Commission revises the contract reporting requirements for (1) intrastate natural gas pipelines  1 providing interstate transportation service pursuant to section 311 of the Natural Gas Policy Act of 1978 (NGPA)  2 and (2) Hinshaw pipelines providing interstate service subject to the Commission's Natural Gas Act (NGA) section 1(c) jurisdiction pursuant to blanket certificates issued under § 284.224 of the Commission's regulations. 3 The revised reporting requirements are intended to increase market transparency, without imposing unduly burdensome requirements on the pipelines. Specifically, the Final Rule revises § 284.126(b) and replaces Form No. 549—Intrastate Pipeline Annual Transportation Report with the new Form No. 549D, so as to (1) increase the reporting frequency from annual to quarterly, (2) include certain additional types of information and cover storage transactions as well as transportation transactions, 4 (3) establish a procedure for Form No. 549D to be filed in a uniform electronic format and posted on the Commission's Web site, and (4) hold that those reports must be public and may not be filed with information redacted as privileged. The Commission is also modifying its policy concerning periodic reviews of the rates charged by section 311 and Hinshaw pipelines to extend the cycle for such reviews from 3 years to 5 years.

2. NGPA section 311 authorizes the Commission to allow intrastate pipelines to transport natural gas “on behalf of” interstate pipelines or local distribution companies served by interstate pipelines “under such terms and conditions as the Commission may prescribe.”  5 NGPA section 601(a)(2) exempts transportation service authorized under NGPA section 311 from the Commission's NGA jurisdiction. Congress adopted these provisions in order to eliminate the regulatory barriers between the intrastate and interstate markets and to promote the entry of intrastate pipelines into the interstate market. Such entry eliminates the need for duplication of facilities between interstate and intrastate pipelines. 6 Shortly after the adoption of the NGPA, the Commission authorized Hinshaw pipelines to apply for NGA section 7 certificates, authorizing them to transport natural gas in interstate commerce in the same manner as intrastate pipelines may do under NGPA section 311. 7

3. Subpart C of the Commission's Part 284 open access regulations (18 CFR § 284.121-126) implements the provisions of NGPA section 311 concerning transportation by intrastate pipelines. Those regulations require that intrastate pipelines performing interstate service under NGPA section 311 must do so on an open access basis. 8 However, consistent with the NGPA's goal of encouraging intrastate pipelines to provide interstate service, the Commission has not imposed on intrastate pipelines all of the Part 284 requirements imposed on interstate pipelines. 9 For example, when the Commission first adopted the Part 284 open access regulations in Order No. 436, the Commission exempted intrastate pipelines from the requirement that they offer open access service on a firm basis. 10 The Commission found that requiring intrastate pipelines to offer firm service to out-of-state shippers could discourage them from providing any interstate service, because such a requirement could progressively turn the intrastate pipeline into an interstate pipeline against its will and against the will of the responsible state authorities. Similarly, Order No. 636-B exempted intrastate pipelines from the requirements of Order No. 636. 11 Those requirements included capacity release, electronic bulletin boards (now Internet Web sites), and flexible receipt and delivery points.

4. Section 284.224 of the regulations provides for the issuance of blanket certificates to Hinshaw pipelines to provide open access transportation service “to the same extent that, and in the same manner” as intrastate pipelines are authorized to perform such service by Subpart C.

5. The Commission currently has less stringent transactional reporting requirements for NGPA section 311 intrastate pipelines and Hinshaw pipelines, than for interstate pipelines. In Order No. 637, 12 the Commission revised the reporting requirements for interstate pipelines in order to provide more transparent pricing information and to permit more effective monitoring for the exercise of market power and undue discrimination. As adopted by Order No. 637, § 284.13(b) requires interstate pipelines to post on their Internet Web sites basic information on each transportation and storage transaction with individual shippers, including revisions to a contract, no later than the first nomination under a transaction. This information includes:

• The name of the shipper.

• The contract number (for firm service).

• The rate charged.

• The maximum rate.

• The duration (for firm service).

• The receipt and delivery points and zones covered.

• The quantity of natural gas covered.

• Any special terms or details, such as any deviations from the tariff.

• Whether any affiliate relationship exists.

6. Section 284.13(c) of the Commission's regulations also requires interstate pipelines to file with the Commission on the first business day of each calendar quarter an index of its firm transportation and storage customers and to publish the same information on their Web sites. The information required to be included in the Index of Customers does not include the rates paid by the customers. Section 284.13(e) requires interstate pipelines to file semi-annual reports of their storage injection and withdrawal activities, including the identities of the customers, the volumes injected into and withdrawn from storage for each customer and the unit charge and total revenues received. Order No. 637 did not modify the reporting requirements for NGPA section 311 intrastate pipelines and Hinshaw pipelines provided in § 284.126(b) and (c) of the Commission's regulations.

7. Section 284.126(b) of the Commission's regulations requires intrastate pipelines to file with the Commission annual reports of their transportation transactions, but not their storage transactions. Those Form No. 549 reports must include the following information:

• The name of the shipper receiving transportation service.

• The type of service performed ( i.e. firm or interruptible).

• The total volumes transported for the shipper, including for firm service a separate statement of reservation and usage quantities.

• Total revenues received for the shipper, including for firm service a separate statement of reservation and usage revenues.

8. Unlike the interstate pipelines' reporting requirement (§ 284.13(b)), the current version of § 284.126(b) does not require intrastate pipelines to include in these Form No. 549 reports the rate charged under each contract, the duration of the contract, the receipt and delivery points and zones or segments covered by each contract, whether the contract includes any special terms and conditions, and whether there is an affiliate relationship between the pipeline and the shipper.

9. Section 284.126(c) requires Section 311 intrastate pipelines and Hinshaw pipelines to file Form No. 537, a semi-annual report of their storage activity, within 30 days of the end of each complete storage and injection season. This requirement is substantially the same as the § 284.13(e) requirement that interstate pipelines file such semi-annual reports of their storage activity.

10. In November 2008, the Commission issued a Notice of Inquiry (NOI), requesting comments on whether the Commission should impose additional reporting requirements on NGPA section 311 intrastate pipelines and on Hinshaw pipelines. 13 The NOI stated that, in a contemporaneous order, the Commission was denying a request by interstate storage provider with market based rates  14 for waiver of the requirements that interstate pipelines post the rates charged in firm and interruptible transactions no later than first nomination for service. In that order, the Commission held that the fact some interstate storage companies have been authorized to charge market-based rates does not justify exempting them from the requirements in section 284.13(b) that they post the rates charged in each storage transaction. The SGRM order held that the existing posting requirements for interstate pipelines are necessary to provide shippers with the price transparency they need to make informed decisions, and the ability to monitor transactions for undue discrimination and preference. 15 The Commission also found that the requested exemption would be contrary to NGA section 4(c)'s requirement that “every natural gas company * * * keep open * * * for public inspection * * * all rates.”  16

11. However, in recognition of interstate storage providers' concern about the competitive effects of the disparate reporting requirements for interstate pipelines and section 311 intrastate pipelines, the NOI stated that the Commission was interested in exploring (1) whether the disparate reporting requirements for interstate and intrastate pipelines have an adverse competitive effect on the interstate pipelines and (2) if so, whether the Commission should modify the posting requirements for Section 311 intrastate pipelines and Hinshaw pipelines in order to make them more comparable to the § 284.13(b) posting requirements for interstate pipelines. Accordingly, the Commission sought comments to assist it in evaluating whether changes in the Commission's posting requirements should be considered in order to remove any competitive disadvantage for interstate pipelines, as compared to intrastate pipelines providing interstate transportation and storage services under Section 311 of the NGPA and to Hinshaw pipelines providing such service pursuant to a § 284.224 blanket certificate.

12. Based upon a review of the comments received in response to the NOI, the Commission issued a Notice of Proposed Rulemaking (NOPR), 17 proposing to revise its transactional reporting requirements for intrastate and Hinshaw pipelines in order to increase market transparency, without imposing unduly burdensome requirements on those pipelines. The Commission proposed to increase the availability and usefulness of the transactional information reported by intrastate and Hinshaw pipelines by requiring that (1) the existing annual § 284.126(b) transactional reports be filed on a quarterly basis, (2) the quarterly reports include certain additional types of information and cover storage transactions as well as transportation transactions, (3) the quarterly reports be filed in a uniform electronic format and posted on the Commission's Web site, and (4) the reports must be public and may not be filed with information redacted as privileged.

13. The Commission invited all interested parties to comment on all aspects of the NOPR. The Commission also elaborated on the proposed uniform electronic format in a separate Notice Requesting Comments On Proposed Standardized Electronic Information Collection (Information Notice). 18

14. Comments on the NOPR and Information Notice were due on November 4, 2009. Sixteen parties filed comments. A list of Commenters and Abbreviations is included as an appendix to this order. Most commenters were Section 311 or Hinshaw pipelines or their associations, but interstate pipelines, exploration & production companies, and an association of municipal consumers also filed comments. We discuss the comments below in the context of reviewing, amending, and promulgating each aspect of this Final Rule.

15. In this section, we address contentions by some commenters that the Commission lacks authority under NGPA section 311 to require intrastate pipelines to file more detailed transactional reports. While some commenters contest specific aspects of our proposal as it affects Hinshaw pipelines, no commenter questions the Commission's general authority under NGA sections 4 and 10 to require Hinshaw pipelines to file more detailed transactional reports.

16. In the NOPR, the Commission stated that NGPA section 311(c) authorizes the Commission to prescribe the “terms and conditions” under which intrastate pipelines perform interstate service. The NOPR concluded that its proposal to require intrastate pipelines to file and make public the proposed transactional reports so that shippers and others can monitor NGPA section 311 transactions for undue discrimination is well within the Commission's broad conditioning authority under § 311(c).

17. TPA claims that the Commission lacks statutory authority to enact the proposed regulations, arguing that “Congressional intent [was] that transactions under NGPA Section 311 are to be subjected to minimal regulation.”  19 Enogex, along with TPA, adds that the proposed reporting requirements are “in direct contravention of Section 311 of the NGPA and the legislative intent,” because compliance would be “unduly burdensome,” and because disclosure would harm the pipelines' business position. 20

18. Other commenters, citing the legislative history of the NGPA, argue that the proposed regulations are lawful. Clayton Williams states that “to the extent the intrastate pipeline is involved in an authorized” interstate transaction, the Commission has jurisdiction to review that transaction. 21 Similarly, Texas Alliance argues that claims of undue burden are too conclusory, and that the NGPA's jurisdiction is actually based on whether a given activity of a Section 311 pipeline is interstate or intrastate. 22 Clayton Williams argues that it is the purpose of Section 311 to “help integrate gas markets,” and that “reasonable rules have always been part of the 311 world.”  23 Further, Apache argues for even more frequent and detailed reporting, stating, “the Commission has jurisdiction and discretion to require * * * [intrastate] pipelines to report the same information during the same time frame about natural gas transactions that the interstate pipelines are required to report.”  24 Apache reasons “that interstate pipelines and Section 311 and Hinshaw pipelines are held to the same prohibition on undue discrimination,”  25 so the transparency regulations necessary to ensure compliance should be the same as well.

19. The Commission's statutory authority to impose reporting requirements on Section 311 pipelines derives from NGPA section 311(c), which states, “any authorization granted under this section shall be under such terms and conditions as the Commission may prescribe.”  26 This blanket authority is well-established as the ground for the previous reporting requirements for Form No. 549. As the Commission reasoned in the rulemaking establishing a previous version of this reporting requirement, “section 311 tasks the Commission with the responsibility to ensure rates and charges are fair and equitable. For the Commission to carry out this responsibility, it is important for rates charged to be reported.”  27 None of the commenters in this docket challenge the legality of the previous reporting requirements. The new reporting requirements are not so different in scope or burden as to generate serious questions about the Commission's long-established statutory authority to require transactional reporting.

20. TPA's characterization that the NGPA limits the Commission to “minimal regulation,”  28 is misleading and unsupported. While Congress sought to encourage intrastate pipelines to participate in the interstate transportation market by enabling them to do so without bearing the burden of full Commission regulation under the NGA, 29 this does not mean that Commission regulation under NGPA section 311 was to be minimal. In Associated Gas Distributors v. FERC, 30 the court affirmed the Commission's use of its NGPA section 311(c) conditioning authority to impose conditions necessary to assure that section 311 intrastate pipelines do not engage in undue discrimination. The court also stated “that the Commission has been correct in its belief that under § 311 it should assert the traditional regulatory approach in areas where it is needed to protect the public from market dominance by natural gas companies.”  31 Requiring intrastate pipelines to file quarterly transactional reports to permit the Commission, shippers, and others to monitor for undue discrimination is fully within the scope of this conditioning authority.

21. While the Commission will consider the burden question in more detail below, commenters have provided no persuasive evidence that the Final Rule is somehow so burdensome as to be beyond Commission's jurisdiction. As compared to the requirements for interstate pipelines, the Final Rule is limited in the scope of the reports, the burden of publishing a report, and the frequency of the reports. As discussed below, the Commission held itself to these limitations so that the § 284.126(b) requirements should remain lighter than the § 284.13(b) interstate requirements and so that the value of the increased flow of information exceeds the increased burden of reporting. Any further lightening would risk undermining the Final Rule's ability to increase transparency and improve the functioning of the transportation market.

22. Upon review of the comments received in response to the NOI, the Commission held that its primary goal in revising the transactional reporting requirements for intrastate and Hinshaw pipelines would be to increase market transparency. 32 As the Commission reasoned, “[t]ransactional information provides price transparency so shippers can make informed purchasing decisions, and also permits both shippers and the Commission to monitor actual transactions for evidence of possible abuse of market power or undue discrimination.”  33 The Commission found that certain types of additional information should be published in order to enable shippers, other market participants, and the Commission “to determine the extent to which particular transactions are comparable to one another,”  34 a prerequisite for determining the rights of similarly situated shippers and for detecting undue discrimination.

23. The Commission stated in the NOPR that it “believes that the revised reporting requirements * * * avoid[ ] unduly burdensome requirements that might discourage * * * participating in the interstate market.”  35 In proposing the frequency, content, and format of the reports, the Commission sought the best balance of minimizing the reporting burden and maximizing the competitive effects on the markets. For example, the Commission proposed to host reporting data on its own Web site, and encouraged intrastate pipelines to comment on the preferred file format, in order to help the Commission lessen the information technology burden for pipelines. 36

24. Several intrastate pipelines argue that the Commission failed to identify sufficiently compelling reasons for revising the reporting requirements. These commenters argue that further transparency is unnecessary, or that the proposal would have little practical benefit. 37 Enogex, for example, argues that “[i]n view of the minimal amount of concern expressed by interstate pipelines * * * the Commission should have terminated this proceeding.”  38 AOG suggests that the Commission should, if not abandon the proposal, at least “more narrowly tailor[ it] to address a perceived problem [regarding] * * * transparency.”  39 TPA claims that further transparency in the section 311 and Hinshaw transportation and storage markets is not needed because the United States' natural gas commodity sales hubs are the most price-transparent in the world. 40 TPA further complains that commenters have yet to “cite[ ] any specific examples of adverse market impacts” from the status quo, and “no entity has asked the Commission to expand the Section 311 reporting requirements to increase transparency,” and is therefore “not reasoned decision making.”  41

25. Several pipelines argue that the new regulations place them at a competitive disadvantage compared to pipelines that only operate under the NGA or under state jurisdiction, or compared to shippers. Similarly, several pipelines complain that the current proposal could be too burdensome, 42 potentially causing some pipelines to abandon the Section 311 or Hinshaw markets. 43

26. Enogex and Enstor contend that the proposed reporting requirements would harm NGPA section 311 storage providers with market-based rates. Enogex argues that letting competitors see its rate information would limit its own ability to “capture rates”, calling it “tantamount to rescinding market-based rate authority.”  44 Enogex asserts the Commission should at least exempt storage services provided at market-based rates.

Enogex argues that sufficient public information already exists on storage services, and that the Commission has stated when it authorizes market-based rates that such providers lack market power, thus reducing the need for regulatory scrutiny. 45 Enstor is also concerned that the proposed reporting requirements, particularly the requirement to report quarterly revenues received from each storage customer, would allow customers “to recreate the storage positions” that resulted in another customer receiving favorable rates. 46 Shippers, Enstor argues, should not have more information about the pipeline than the pipeline has about its shippers.

27. Atmos goes further, warning “of potential collusion or other anticompetitive behaviors that can be facilitated by untimely public disclosure of transaction-specific information.”  47

28. Other commenters, however, applaud the NOPR, arguing that the information sought in the reports would help enable the market to function more efficiently. Cities, Clayton Williams, and Texas Alliance ask the Commission to expand reporting requirements in order to provide greater transparency, especially in the Texas market. 48 Cities and others contend that this “lack of competition in the intrastate pipeline market in Texas” could be ameliorated by “making information and records available both to the public and to shippers.”  49 For example, Clayton Williams provides a detailed narrative suggesting that it could have pursued allegations that a pipeline has been engaging in unlawful business practices, if only it had more publicly available information to support its allegation. 50

29. These commenters further argue that lack of transparency harms the integrity of national price indices, 51 and that the Commission's proposed new regulations will help state-level transparency, and thus state-level markets, as well. 52 Apache also responds to TPA's argument that interstate pipelines have not sought out the proposed regulation: “It can be expected that most interstate pipelines would hope to levelize the playing field by eliminating regulation for all pipelines, rather than increasing regulation for all.”  53 However, Apache urges, new regulations are warranted based on the expected usefulness of improved access to market information.

30. These commenters also argue that publicly available data is vital to eliminate unfair advantages. 54 For example, Apache argues that intrastate and interstate pipelines both face the same economic environment and therefore should report the same information. 55 Constellation argues that existing regulations harm the market by leaving shippers without enough information to “make fully informed purchasing decisions.”  56 Texas Alliance and Clayton Williams, likewise, argue that transparency helps limit the abuse of the monopoly power that some pipelines have over upstream shippers. 57

31. Commenters also dismiss the notion that the current proposal could be too burdensome. 58 Apache argues, “[a] Section 311 pipeline is not going to forego the opportunity to earn money merely because it must comply with a transactional posting requirement.”  59 As Texas Alliance phrases it, the reason why the rulemaking “is so strongly opposed by the Texas intrastate pipelines and their association [is that i]t threatens to let sunshine in where they prefer the dark.”  60

32. In this Final Rule, the Commission is adopting the proposed quarterly transactional reporting requirements for section 311 and Hinshaw pipelines, with several clarifications discussed in subsequent sections of this rule. The Commission finds that these transactional reporting requirements appropriately balance the need for increased transparency of intrastate and Hinshaw pipeline transactions, while avoiding unduly burdensome requirements that might discourage such pipelines from participating in the interstate market.

33. Transactional information provides price transparency so shippers can make informed purchasing decisions, and also permits both shippers and the Commission to monitor actual transactions for evidence of possible abuse of market power or undue discrimination. The existing reporting requirements in § 284.126 are inadequate for this purpose. For example, the annual reports of transportation transactions required by existing § 284.126(b) do not include (1) the rates charged by the pipeline under each contract, (2) the receipt and delivery points and zones or segments covered by each contract, (3) the quantity of natural gas the shipper is entitled to transport, store, or deliver, (4) the duration of the contract, or (5) whether there is an affiliate relationship between the pipeline and the shipper. Similarly, the semi-annual storage reports required by existing § 284.126(c) do not include the rates charged by the storage provider in each contract, the duration of each contract, or whether there is an affiliate relationship between the storage provider and its customer.

34. However, all this information is necessary to allow the Commission, shippers, and others to determine the extent to which particular transactions are comparable to one another for purposes of monitoring for undue discrimination. For example, contracts for service on different parts of a pipeline system or with different durations may not be comparable to one another. In addition, the requirement that affiliate relationships between the pipeline and its shippers be reported will allow the Commission and interested parties to monitor whether the pipeline is favoring its affiliates. The additional information required to be reported by the Final Rule is also necessary to allow shippers to make informed decisions about their capacity purchases. Shippers need to know the price paid for capacity over a particular path to enable them to decide, for instance, how much to offer for the specific capacity they seek.

35. The Commission also finds that the lack of transparency ultimately harms not only shippers, but the pipelines themselves, whose individual actions to protect market advantage work collectively to make intrastate transportation less attractive. Without transparency and trust, efficient free-market allocation of resources is not possible. As the specific example reported by Clayton Williams shows, the current market's lack of transparency fosters, at the very least, an atmosphere of mistrust. While TPA may plausibly assert that natural gas commodity sales hubs are the most price-transparent commodity markets in the world, the same cannot be said of the market for intrastate transportation. It is the Commission's obligation to ensure transparency at all stages of the natural gas market over which it has jurisdiction, because inefficiencies and unfair treatment in one stage of the market can lead to harm elsewhere in the market. Accordingly, we find that there is a need for revised regulations that improve market transparency.

36. Exempting storage services provided at market-based rates is also unwarranted. A Commission finding that a service provider lacks market power should not be read to mean that its shippers are at no risk of undue discrimination or other unlawful practices. Furthermore, it is still in the public interest to disseminate market information concerning the transactions of market-based storage services. As the Commission reasoned in a previous rulemaking, “[i]t is even more critical for the Commission to review pricing when the Commission is relying on competition to regulate rates, rather than scrutinizing the underlying cost of service. Thus, we will not exempt intrastate storage companies charging market-based rates from the requirement to file * * * reports.”  61 Posting rates charged in previous market-based transactions leads to greater transparency and competition. As the Commission found, in Order No. 637-A, with respect to alleged competitive harm to individual firms:

37. Further, we are convinced the burdens to respondents will be small relative to the gains that the new regulations will bring to the market. The burden test goes to the heart of our regulatory authority: One purpose of the NGPA was to induce intrastate pipelines to participate in the interstate market by ensuring that it would not be unduly burdensome to do so. 63 As discussed in more detail below, we are minimizing the burden of these new transactional reporting requirements in several ways. For example, we are not imposing a daily posting requirement, such as we have required of interstate pipelines. Therefore, the transactional reports required by the Final Rule will not require section 311 and Hinshaw pipelines to maintain internet Web sites. We are also clarifying several of the specific proposed reporting requirements as requested by commenters in a manner that should reduce the burden of compliance. Finally, while the reports must be filed in a standardized electronic format, the Commission will develop an electronic form in a PDF format that can be downloaded from the FERC Web site and saved to a user's computer desktop. In addition, the Commission will develop an XML Schema that can be used by Respondents who wish to file an XML file.

38. In addition, since the establishment of the first intrastate pipeline reporting requirements, electronic communications have reduced the cost of reporting transactional information. Given these advances in data management, collecting and compiling information for the proposed quarterly reports should be no more burdensome at present than it was to manage the lesser amount of information required when the Commission first established transactional reporting for intrastate pipelines.

39. We consider the question of undue burden not only in isolation, but in the context of a pipeline's entire jurisdictional business, and relative to the benefits to the market. 64 The new requirements aim to empower shippers “to determine the extent to which particular transactions are comparable to one another.”  65 In this way, the Commission gives shippers increased ability to protect themselves from undue discrimination, and thus be less dependent on Commission investigations to protect their rights. The new reporting requirements also provide information that may assist state and local regulatory bodies, without interfering in their autonomy of action.

40. In response to the pipelines that suggest that they have an overriding confidentiality interest, or that even raise the specter that increased transparency may cause unlawful behavior, we disagree. The Commission's decades of experience in enforcement have confirmed the wisdom of what jurists have long held in the related realm of financial disclosure: “confidentiality interest is not absolute, however, and can be overcome by a sufficiently weighty government purpose. * * * `Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.' ”  66

41. The Final Rule, in accordance with the NOPR, requires Form No. 549D transactional reports under § 284.126(b) to be filed on a quarterly basis, to include certain additional types of information and cover storage as well as transportation, and to be filed in a uniform electronic format and posted on the Commission's Web site without redaction.

42. In addition, the Final Rule clarifies or amends the NOPR on several points elaborated below. We clarify that pipelines are to file their Form No. 549D transactional reports on a contract-by-contract basis for each shipper, rather than on a transaction-by-transaction basis. We adopt a common identification requirement for shippers. For receipt and delivery points, however, pipelines need only use an industry common code where one is already in use, and may report wells and other gathering systems in the aggregate. We clarify that pipelines should continue to only report on their jurisdictional activities. Finally, we provide several clarifications regarding the data format and technical protocols, with the result being a flexible framework similar to the “simple spreadsheet” concept proposed by some commenters.

43. The version of § 284.126(b)(1) proposed in the NOPR calls for a quarterly report that contains information on “each transportation and storage service provided.” Neither the proposed regulations nor the preamble to the NOPR directly defined the word “service.” In the preamble, in the context of rejecting daily posting, the Commission rejected the option of “daily postings of information about individual transactions.”  67 However, the preamble also states that pipelines should report “additional information concerning each transaction.”  68

44. Some commenters express concern that the NOPR's phrasing is unclear as to whether pipelines are to make their reports on a contract-by-contract basis or a transaction-by-transaction basis. 69 They point out that a shipper may schedule numerous transactions during a quarter under a single contract. For example, a shipper may have a single interruptible contract, but may schedule separate transactions at different rates using different receipt and delivery points on a daily basis. AGA, for example, “urges the Commission to clarify that Hinshaw pipelines are required to report their `contracts' on a quarterly basis in a manner similar to what they currently report [rather than r]equiring information to be reported separately for each individual `transaction.' ”  70 Other commenters are concerned that the Commission intends to require separate reports for each transaction. TPA, for example, complains that under “the onerous approach * * * proposed in the NOPR,” a pipeline with “multiple daily transactions under single contracts could [be] * * * reporting thousands of individual transportation transactions.”  71

45. Apache and Jefferson take the opportunity to propose alternative approaches to the question of what should be reported. Apache argues that “[f]ull transparency regarding all natural gas transactions on a real-time basis, comparable to the reporting requirements of interstate pipelines, is the only comprehensive way to protect natural gas consumers to ensure the integrity of the market.”  72 Nevertheless, Apache clarifies that it supports the NOPR as “a helpful improvement over the status quo.”  73 Jefferson argues that the level of detail proposed in the NOPR for the reports is too burdensome and too far beyond what is required to address the actual disparities between interstate and intrastate reporting. 74 Accordingly, Jefferson proposes limiting the report to 22 fields. 75

46. We clarify that pipelines are to report the required transactional information in Form No. 549D on a contract-by-contract basis for each shipper, rather than on a transaction-by-transaction basis. In general, a pipeline will be required to make a separate data entry for each of a shipper's contracts under a given rate schedule. The pipeline should aggregate all nominations and shipments under each contract for the quarter. In other words, while the reports will contain information on each transaction, that information will be aggregated by contract for each shipper for each type of service provided.

47. If the pipeline charges a shipper multiple prices for different transactions or shipments under a single contract and service, the pipeline would still file a single report for that contract, with the following information. The pipeline would report the volume-weighted average rate charged under that contract for the quarter. The pipeline would also include a list of all the various rates charged during the quarter in the appropriate comment field for that contract. The pipeline would not be required to state the volumes associated with each rate or the dates each rate was charged. Similarly, the pipeline would list the receipt and delivery points used during each quarter for each contract, but is not required to separately report the rates charged and volumes received and delivered at each point.

48. We decline the opportunity to radically alter the type of information reported, as suggested by Apache and Jefferson. Based on the comments in this docket, the Commission believes that refinements to the NOPR are more certain to ensure a fair balance of the additional transparency benefits that would accrue to the market versus the administrative costs of compliance.

49. In the NOPR, the Commission found that increasing the frequency of the § 284.126(b) transactional reports from annual to quarterly would provide market participants and the Commission with more timely and more useful information concerning the transactions entered into by intrastate pipelines. The Commission stated that it sought to balance the benefits of increased transactional transparency against the need to avoid creating undue burden for the responding pipelines. The Commission highlighted that “one primary difference will remain between the reporting requirements for interstate pipelines and the Section 311 and Hinshaw pipelines: Interstate Pipelines will post transactional information daily on their Web sites, while Section 311 and Hinshaw pipelines will submit this information in a quarterly report to the Commission.”  76 The Commission noted alternative proposals from commenters, but found that a quarterly filing requirement would strike the appropriate balance.

50. Most commenters support quarterly reporting. Even some parties who urge the Commission to cancel the rulemaking docket nevertheless state that they could accept limited quarterly reporting. 77 Some shippers, while generally supportive of the NOPR, state that they would prefer daily reporting is the best way to ensure transparency and competitive markets. 78 The pipelines, however, consider the possibility of daily reporting to be “very costly, particularly if daily posting on a Web site was required,”  79 due “to the [sheer] volume of reporting” of each day's transactions. 80

51. The Final Rule adopts the NOPR's proposal to require quarterly reporting by section 311 and Hinshaw pipelines. The Commission continues to find that a quarterly reporting requirement strikes the appropriate balance of increasing transparency without imposing undue burdens on section 311 and Hinshaw pipelines. One purpose of the NGPA was to induce intrastate pipelines to participate in the interstate market by ensuring that it would not be unduly burdensome to do so. 81 This participation by intrastate pipelines eliminates the need for duplication of facilities between interstate and intrastate pipelines. 82 Thus, as the court has stated, “Congress intended that intrastate pipelines should be able to compete in the transportation market without bearing the burden of full regulation by FERC under the Natural Gas Act.”  83

52. In the NOPR, the Commission stated that a daily reporting requirement would require all intrastate and Hinshaw pipelines to maintain their own Web sites for this purpose, and such daily postings of information about individual transactions would be significantly more burdensome than a quarterly reporting requirement. As described above, several pipeline commenters have reaffirmed that a daily posting requirement would be very costly. In addition, Constellation, while stating that daily posting would provide more transparency, agrees that at this time such a requirement appears unduly burdensome. 84

53. Only two commenters request that the Commission require daily reporting. They contend that real-time reporting of individual transaction data would allow more immediate monitoring of whether the pipeline is engaging in undue discrimination and provide more useful price transparency. The Commission recognizes that daily posting could enable shippers and others to observe potentially discriminatory actions more quickly. However, the quarterly reports will provide similar information, enabling shippers and others to file complaints if they believe such information suggests a pattern of discrimination by the pipeline. Given the interest in avoiding placing undue burdens on section 311 and Hinshaw pipelines, the Commission finds that the quarterly reporting requirement, together with our other changes to the reporting requirements including the requirement that all reports be public, appropriately balances the need for more transparency with the interest in encouraging section 311 and Hinshaw pipelines to participate in the interstate pipeline grid.

54. The NOPR proposed requiring intrastate pipelines to report several new elements of information, among them the primary receipt and delivery points covered by the contract. The NOPR proposed that the reports include the “industry common code” for each receipt and delivery point in order to minimize any ambiguity as to what receipt and delivery points are being reported and to ensure that all reporting pipelines identify such points in a consistent manner. 85 Similarly, the NOPR proposed that, when reporting the identity of a given shipper, respondents should include not only the full legal name, but also an “identification number” for each shipper. 86

55. However, the NOPR stated that, while the Commission was aware of some shipper identification standards and receipt and delivery point codes that are used in the natural gas industry (for example, Dun & Bradstreet, Inc.'s D-U-N-S identification numbers for shippers), the Commission was reluctant to choose any particular standard without input as to that standard's cost-effectiveness and usefulness. Accordingly, the Commission sought comment on two related questions: (1) What sort of shipper identification numbers and receipt and delivery point common industry codes are currently used or readily available to section 311 and Hinshaw pipelines?; and (2) Which shipper identification standard or standards and receipt and delivery point codes, if any, should be used? 87

56. Some commenters argue that using industry common codes to report receipt and delivery points would be highly burdensome, due to the cost of obtaining common code identifiers from a third-party registry. According to Jefferson, the annual charge for licensing common location codes is $1,670 for 1-20 points, $3,506 for 21-100 points, and $5,428 for 100+ points. 88 Enogex protests that it “does not have `primary' and `secondary' points on its system, but rather uses standard receipt and delivery points. As a result, Enogex does not have * * * common codes,” and urges that the Commission reject this element as “base[d] * * * on the business practices of interstate pipelines.”  89 TPA voices similar concerns. Jefferson and ONEOK suggest letting respondents use their own meter codes instead. AGA suggests, as a compromise, that pipelines that do not already use common codes should be allowed “to use an interstate pipeline's Data Reference Number (DRN) for points of interconnection with an interstate pipeline and use [their own] proprietary code where a DRN has not already been assigned.”  90

57. AOG and Cranberry, whose pipelines perform gathering functions, state that they do not keep organized records of who has contract rights to which receipt or delivery points. 91 AOG proposes that, instead of differentiating among receipt points that are gas wells, they “would simply identify all receipt points as `AOG system.' ”  92 Cranberry proposes that the Commission waive the requirement to report receipt and delivery points where, as with their system, all shippers have access to all or numerous points, and no common industry codes exist. 93

58. The proposal to require use of standardized shipper identification numbers also raised some concerns. Jefferson estimated that “it will cost approximately $24,000 annually to utilize a third-party service to verify a unique shipper identification number such as a D-U-N-S® number,” and suggests removing this requirement. 94 TPA likewise argues that intrastate providers would have no use for D-U-N-S numbers other than filing the proposed reports. TPA proposes having the public reports only “contain coded references to individual shippers and points, with the key to the code available to the Commission” for investigation but otherwise kept confidential; in the alternative TPA suggests that the exact legal name of the shipper should be sufficient. 95 Most pipelines, however, did not object to standardized shipper identification, and “AGA supports the use of the D-U-N-S® Number as a common company identifier.”  96

59. We acknowledge the concern of some pipelines that requiring all pipelines to use industry common codes for receipt and delivery points could prove to be expensive, and we have adjusted § 284.126(b)(1)(iv) of the final regulations accordingly. Where respondents already use Industry Common Codes in their existing business practices (such as wherever an intrastate system interconnects with an NGA interstate system), they must use those codes in their reports. However, where respondents do not use Industry Common Codes, they should report using the same point identification system that they use for scheduling with shippers. In addition, respondents who do not use Industry Common Codes must publish a list of all the jurisdictional receipt and delivery point codes they use for scheduling, along with the county and state of each point, and the name of the jurisdictional pipeline (if any) that interconnects at each point. This list should be filed as a separate narrative alongside the respondent's initial report; if the list should change at any time, the respondent should include a narrative alongside its next quarterly report updating the list.

60. The Commission also acknowledges the particular challenges in reporting receipt points for systems that perform a gathering function. Accordingly, for gas received from dedicated wells or gathering lines, respondents may instead note as the receipt point the common point where the gathered gas is considered to enter the pipeline's transmission system. Respondents who use this method in their reports must develop their list of jurisdictional receipt and delivery points accordingly.

61. In contrast with receipt and delivery points, however, standardized shipper identification is not unduly burdensome in comparison to the benefit to the Commission and market participants of being certain of the true identity of a pipeline's shippers. As of the date that the Commission approves this Final Rule, we observe that it is possible to both create a D-U-N-S number  97 and search for any company's D-U-N-S number  98 for free. Further, since standardized shipper identification numbers, by their nature, do not change with time, respondents will not need to spend time verifying each number every quarter. Accordingly, the time and expense spent on verifying the identity of one's shippers should be reasonable.

62. In the NOI, the Commission sought comment on whether any of the proposed reporting requirements should exempt certain classes of respondents, based on the type of service provided or on the respondent's size. Having considered the comments received, the Commission did not provide for any exemptions in the NOPR. The Commission reasoned that so long as reports were hosted on the FERC Web site and no more frequent than quarterly, they would not be unduly burdensome to prepare and file. 99

63. AOG asks the Commission to exempt companies with de minimis jurisdictional activity. In particular, AOG suggests a cut-off “somewhere between 2.2 and 50 million MMBtu,”  100 or for entities with under 500 employees. ONEOK similarly argues that it should be excluded, but does not proffer a cut-off point.

64. In addition to the above exemption requests, AGA suggests two clarifications as a means of minimizing the burden for all respondents. First, AGA asks the Commission to “clearly state that Hinshaw pipelines are required to report only those contracts authorized by their limited jurisdictional certificates and are not required to report on retail or intrastate activities that are not regulated by the Commission.”  101 Second, “AGA also recommends that the Commission explicitly state as part of the Final Rule in this proceeding that it will not prosecute, penalize or otherwise impose remedies on parties for inadvertent errors in reporting.”  102

65. The Commission rejects the requests for exemptions based on size or type of activity. As the Commission reasoned in the NOPR, since the reports and data are to be hosted on the FERC Web site and filed no more frequently than quarterly, they should not be unduly burdensome to prepare and file. The Commission has not exempted any section 311 or Hinshaw pipelines from filing the existing reports required by § 284.126, using current Form No. 549. With the clarifications made to the technical protocols discussed below, the Commission is confident that, after the transition to the new reporting format, it will not be significantly more burdensome for pipelines to prepare and file each Form No. 549D report required by this rule, than it has been to file the existing Form No. 549 Intrastate Pipeline Annual Transportation report. In addition, if a pipeline has de minimis jurisdictional activity, it follows that it should have relatively few transactions to report, thereby minimizing its burden of completing the necessary report.

66. We grant AGA's requested clarification that Hinshaw pipelines are required to report only those contracts authorized by their limited jurisdictional certificates and are not required to report on retail or intrastate activities that are not regulated by the Commission. Similarly section 311 pipelines are only required to report contracts for NGPA section 311 interstate service, and not contracts for non-jurisdictional intrastate service.

67. In response to the AGA's second request, the Commission states that because Form No. 549D is a new information collection, we will focus any enforcement efforts on instances of intentional submission of false, incomplete, or misleading information to the Commission, of failure to report in the first instance, or of failure to exercise due diligence in compiling and reporting data. 103

68. The NOPR proposed to require that the reports filed pursuant to revised § 284.126(c) be posted without any information redacted as privileged. The Commission stated that currently, when a report is filed subject to a request for privileged treatment, any person desiring to see the report must file a formal request, pursuant to the Freedom of Information Act (FOIA) and § 385.1112 of the Commission's Rules of Practice and Procedure, 104 that the Commission make the report public. Due to the expense and delay caused by this additional step, in practice these requests have been infrequent. The Commission stated that allowing pricing information to be confidential undermines the Commission's goals of preventing undue discrimination and promoting price transparency, while a prohibition on the confidential treatment of § 284.126(b) reports would further all of these policy goals. The Commission noted concerns about the commercial sensitivity of the information to be reported, but found, based on the comments filed, that “a quarterly reporting requirement should allay any concerns regarding the commercial sensitivity of contract data.”  105

69. In addition to the policy considerations, the Commission found that its governing statutes support public treatment of data reported both by Hinshaw pipelines and by NGPA Section 311 pipelines. Accordingly, the NOPR proposed that the standardized reporting form include a statement that the report will be public.

70. TPA and some individual pipelines argue that the Commission must retain the traditional confidentiality process in Rule 1112 and § 388.112 of the Commission's regulations. 106 TPA argues that a policy of public disclosure would violate both Commission precedent and § 388.112, which call for case-by-case review of requests to release information. 107 ONEOK and TPA argue that complying with the proposed regulations could violate the confidentiality provisions of existing contracts. 108 Enstor and ONEOK suggest that many market-oriented shippers and large industrial end-users would seek to avoid Section 311 transactions in order to protect their trading positions. 109

71. Enstor particularly urges the Commission to amend the proposed § 284.126(b)(1)(viii) requirement to report “Total revenues received for the shipper.” Enstor argues that, when applied to “interruptible storage services (such as parking and lending),” this requirement would compel reporting of information “that is not currently disclosed by interstate natural gas companies.”  110 Especially if unredacted, reporting individual shipper revenues “even on a quarterly basis” would do “catastrophic” damage to a pipeline's “business model, as well as to market liquidity.”  111

72. However Apache, Cities, Clayton Williams, Texas Alliance, and Yates expressly support public reporting, in order for the reports to serve the purported goal of benefitting market participants. 112 Clayton Williams cites the specific example of Texas's “grossly inadequate”  113 state-level data, which it claims is responsible for rampant discriminatory behavior in Texas markets.

73. As we clarified in the preceding section, the revised reporting requirements adopted by this rule apply only to contracts for interstate service which are subject to our jurisdiction under the NGA in the case of Hinshaw pipelines or NGPA section 311 in the case of intrastate pipelines. While we regulate the interstate services of Hinshaw pipelines in a more light-handed manner than we regulate interstate pipelines, nevertheless the courts have made clear that such regulation of Hinshaw pipelines must comply with the basic requirements of the NGA, including sections 4 and 5 of the NGA. 114 In SGRM, the Commission pointed out that NGA section 4(c) requires that “under such rules and regulations as the Commission may prescribe, every natural gas company shall * * * keep open for public inspection * * * all rates * * * together with all contracts which in any manner affect or relate to such rates.” The Commission concluded that:

74. Accordingly, our requirement that the quarterly reports of Hinshaw pipelines concerning their jurisdictional contracts be posted without any information redacted is simply carrying out NGA section 4(c)'s requirement for public disclosure of rate and contract information “under such regulations and regulations as the Commission may prescribe.” Furthermore, NGA section 23(a)(1) directs the Commission “to facilitate price transparency in markets for the sale or transportation of physical natural gas in interstate commerce.”  116

75. While the NGPA does not contain an express public disclosure provision similar to NGA section 4(c), Section 311(c) of the NGPA authorizes the Commission to prescribe the “terms and conditions” under which intrastate pipelines perform interstate service. Requiring NGPA section 311 pipelines to publicly disclose transactional information for the purpose of allowing shippers and others to monitor NGPA Section 311 transactions for undue discrimination is well within the Commission's broad conditioning authority under Section 311(c). 117

76. We reject TPA's argument that the Commission procedural rules in §§ 385.1112 and 388.112 require the Commission to allow pipelines to request confidential or privileged treatment of their transactional reports. The existence of those procedural rules does not prevent the Commission from establishing, in this rulemaking proceeding after notice and comment, a category of document, i.e., the Form 549D reports required by this rule, which must be made public in order for the Commission to carry out its statutory responsibilities under the NGA and the NGPA. Such automatic disclosure requirements already apply to various other reports filed with the Commission, including for example the FERC Form Nos. 2, 2-A, and 3-Q financial reports required by §§ 260.1, 260.2, and 260.300. 118

77. As a matter of policy, we find that Hinshaw and section 311 pipelines must file their Form No. 549D reports as public in order to achieve the Final Rule's purpose of improving transparency, monitoring discrimination, and fostering efficient markets. The Commission recognizes the concern of some pipelines that disclosure of commercially sensitive information will enable a shipper to know what the pipeline is charging other shippers and thus prevent the pipeline from being able to negotiate the best price for the services it offers. In Order No. 637-A, the Commission exercised its discretion concerning the manner of public disclosure to delay interstate pipelines' posting of transactional information until the first nomination of service under the contract, rather than requiring posting upon execution of the contract. The Commission stated that this would temper any potential disadvantages from the public disclosure requirement, because the first nomination could be significantly after the contract was executed. In light of our more light-handed regulation of Hinshaw and section 311 pipelines and our desire to minimize undue burdens on such pipelines, we are permitting a longer delay between contract execution and disclosure by only requiring such reports to be filed quarterly. This should temper any potential adverse effects from disclosure.

78. However, public disclosure of all information in the quarterly reports is necessary to permit all market participants to monitor the market and detect undue discrimination. The Commission also expects and hopes that market participants will use the information from these reports in order to educate themselves about market conditions. Regardless of any adverse effect on individual entities, public disclosure will improve the market as a whole by improving efficiency and competition.

79. Finally, while ONEOK and TPA assert that the disclosure requirement could violate the confidentiality provisions of pipelines' existing contracts, most jurisdictional contracts include provisions that the contract is subject to all rules adopted by the Commission. Moreover, the Commission has previously held that such confidentiality provisions violate Commission policy. For example, in Bay Gas Storage Co., 119 the Commission required a section 311 pipeline to remove from its Statement of Operating Conditions a provision that the terms of any storage or transportation service agreement must be kept confidential with certain exceptions, holding that the provision was “contrary to the Commission's favoring public disclosure of the provisions of service contracts under NGPA section 311.” If any Hinshaw or section 311 pipeline believes that it is subject to a binding contractual obligation to keep confidential any information required to be disclosed by this rule, it must file that contract with the Commission so that it can be modified to remove any such provision.

80. The NOPR proposed that Commission Staff develop a mandatory, standardized electronic format for the Form No. 549D reports. The goals are to facilitate data submission, to provide the public timely and easy access to the information, and to avoid the costs of requiring intrastate pipelines to maintain a NAESB-compliant Web site.

81. The Commission introduced its proposed format in the Information Notice. The Information Notice provided a table showing proposed Form No. 549D data elements to be collected each quarter from each respondent. It also included an example of data entries reported by a sample pipeline for one shipper, a Proposed Form No. 549D Data Dictionary and Reporting Units, and draft Instructions for Reporting Data. The Commission also asked for comments on the technological issue of whether the proposed standardized format should be developed using XML or an ASP.NET Web-based form.

82. The discussion of information technology in the NOPR and Information Notice garnered widespread concern from pipelines. The chief concern of pipelines is that they may have to engage in extensive training or outsourcing in order to understand and comply with the Commission's directive. 120 AGA reports that “one company has estimated the cost of developing an in-house solution for XML Schema reporting to be approximately $30,000.”  121 Jefferson reported its own estimate of $130,000 “to develop a quarterly report similar to the proposed Form No. 549D in the XML Schema format.”  122 Jefferson also stated, however, that it could not support ASP.NET unless the Commission could first guarantee that the format would not “require[] a filer to manually enter data,” or otherwise make the data submission and correction process laborious. 123

83. In order to reduce this compliance burden, AGA along with Duke recommend that the Commission support not only the XML and ASP.NET approaches, but also “a simple spreadsheet with the data in tabular form that the intrastate and Hinshaw pipelines could complete and file with the Commission using the eFiling portal.”  124 TPA urges the Commission to not adopt a form at all, but rather allow pipelines to continue to file reports similar in format and content to what they file now. 125 In the alternative, TPA recommends making both XML and ASP.NET available. 126

84. AGA also “recommends that the Commission develop a Frequently Asked Questions Web page or other Web-based Query System to assist intrastate and Hinshaw pipelines in complying with the new standardized electronic information filing requirements.”  127 AGA, TPA, and Jefferson have several questions in this vein regarding specific elements and definitions from the Information Notice. 128

85. Cities, along with Constellation, praise the Commission's decision “to shoulder the burden of Web site maintenance and standards compliance.”  129 Yates, while generally supporting the Commission's proposal, argues that it would not be unduly burdensome to require pipelines to maintain their own Web sites on which they regularly publish transactional data. 130

86. The Commission will use XML to collect and process the data required by the Form No. 549D report and present it in a timely manner on its Web site. The Commission recognizes that some respondents may prefer not to use XML. Other respondents have experience with the format or for efficiency purposes would use XML. Therefore, the Commission will allow respondents at the beginning of each quarter to select the method  131 of filing most appropriate to their circumstances as described below:

For respondents who prefer not to use XML, the Commission will develop an electronic form in a PDF format that can be downloaded from the FERC Web site and saved to a user's computer desktop. The form can be viewed and updated using Adobe Acrobat Reader version 9 or higher. The fillable-PDF form will look like a standard document, so that a clerk or any other employee(s) will be able collaborate on filling it out, saving it, and submitting the fillable-PDF electronically to the Commission. 132 The data will be verified and validated before it will be officially accepted by the Commission. Each respondent's filing would be publicly available in eLibrary within 1 day after filing. The public would also be able to download the entire Form No. 549D database for the quarter from the FERC Web site a few days after the filing deadline. Respondents would be able to correct any errors in their initial filings by filing a revised fillable PDF Form No. 549D with the Commission. 133

This method of filing is for those respondents who have some experience with XML, or have a relatively large number of shippers and contracts to report on each quarter. The Commission would develop an XML Schema for Form No. 549D and make it available for download on the FERC Web site. Respondents would have to test and successfully validate their XML filing against the XML Schema for Form No. 549D prior to submitting it electronically to the Commission. Once the XML file is submitted, the Commission will examine it to ensure that it is formatted properly and validates against FERC's XML Schema for Form No. 549D before it is officially accepted by the Commission. Each respondent's filing would be publicly available in eLibrary within 1 day after filing. The public would also be able to download the entire Form No. 549D database for the quarter from the FERC Web site a few days after the filing deadline. Respondents would be able to correct any errors in their initial filings by resubmitting another XML file.

87. An updated data dictionary, paper copy of the Fillable PDF Form No. 549D, an example of the filled out Form No. 549D, and Instructions are attached as an appendix to this order. At a date closer to the deadline for filing the first Form No. 549D, the Commission will issue a notice for a Workshop in which Commission Staff will explain the overall filing process, including the fillable-PDF Form No. 549D, data dictionary, XML Schema and will answer any technical questions. Commission Staff are also directed to set up a form549D e-mail box ( form549d@ferc.gov ) where respondents can send questions. Commission staff will also provide online filing guidance and technical advice to respondents who request it, in line with the Commission's current guidelines for contact between Staff and regulated entities.

88. Finally, to the extent possible, the General Instructions for Form No. 549D developed by the Commission Staff will conform with the instructions for eTariff filing, so that pipelines shall use the same names to refer to the same objects and concepts in both their Statements of Operating Conditions and their quarterly reports. In this manner, the Commission hopes to address all of the above-noted concerns with regard to information technology for the Form No. 549D.

89. Section 311 of the NGPA provides that the rates of intrastate pipelines performing transportation service under the NGPA shall be fair and equitable. Section 284.123 of the Commission's regulations implements this requirement for section 311 pipelines, and § 284.224(e)(i) provides that provides that Hinshaw pipelines performing interstate service will be subject to the same rate requirements that apply to intrastate pipelines under § 284.123. As a general matter, the Commission's review of the rates of both section 311 and Hinshaw pipelines is more light-handed than its review of the rates of interstate pipelines. For example, when intrastate and Hinshaw pipelines file a request for a rate change, the Commission does not impose the five-month suspension typically imposed on interstate pipeline rate increases, and it uses advisory, non-evidentiary proceedings to resolve the issues, rather than setting the case for an evidentiary hearing before an Administrative Law Judge, as it does for interstate pipeline rate cases. 134

90. However, as part of this overall, more light-handed regulation of intrastate and Hinshaw pipelines, the Commission has established a policy of reviewing the rates of both types of pipelines every three years in order to ensure that the rates affecting interstate services remain fair and equitable. 135 The Commission has stated that the triennial rate review of section 311 intrastate and Hinshaw pipelines enables the Commission to determine whether their rates have become unfair and unreasonable because the cost of service data upon which they are based have become stale.

91. The primary difference in the Commission's regulation of section 311 and Hinshaw pipelines is the procedural vehicle through which the three-year rate review of those pipelines' rates is performed. This difference arises from the difference in the statutes under which we regulate the two types of pipelines. For the reasons discussed in full in Green Canyon Pipe Line Co., 136 the Commission has broad conditioning authority under NGPA section 311(c), which it has consistently exercised to require intrastate pipelines to file new petitions for rate approval every three years. However, the United States Court of Appeals for the District of Columbia Circuit has held that the Commission cannot require interstate pipelines subject to its NGA jurisdiction to make new rate filings under NGA section 4. 137 Consistent with that finding, the Commission in Consumers Energy Co. 138 only required Hinshaw pipelines performing interstate service under a § 284.224 certificate to submit a triennial informational filing in the form specified in § 154.313 of the Commission's regulations for minor rate changes.

92. While the triennial rate review requirement is not part of the Commission's regulations, the Commission has consistently imposed that requirement as a condition of its approval of each rate filing by a section 311 or Hinshaw pipeline. The Commission has done this, whether the pipeline has chosen to elect a state-based rate pursuant to § 284.123(b)(1) or has proposed a rate for a Commission-approved rate pursuant to § 284.123(b)(2). 139

93. While the NOPR did not directly raise the issue of whether the Commission should modify its triennial rate review policy, Duke points out in its comments that Order No. 636 removed the requirement that interstate pipelines file new rate cases every three years. It contends that, in order to treat section 311 pipelines and Hinshaw pipelines similarly: “the Commission should either reimpose a periodic rate filing requirement on interstate pipelines or eliminate the triennial filing requirement currently imposed on intrastate and Hinshaw pipelines.”  140

94. Other commenters argue that the triennial rate review requirement renders any additional information collection partly or wholly unnecessary. TPA predicts that the proposed reports “would not likely yield significant transparency benefits,” because Section 311 pipelines already must file Statements of Operating Conditions with maximum rates and submit cost of service filings to the Commission and to state officials. 141 Enogex argues that the triennial rate review offers the Commission and other interested parties sufficient opportunity to review the rates and contracts of Section 311 pipelines. Enogex further argues that most interstate pipelines are not subject to rate reviews that are as detailed or frequent, and that Section 311 pipelines would be unduly burdened if further reporting were required. 142

95. As noted above, the Commission generally requires triennial rate reviews of section 311 intrastate and Hinshaw pipelines to ensure that the Commission has current information and rates have not become stale. Since these pipelines are not subject to the same reporting requirements, nor the same level of rate review, as interstate pipelines, the Commission can not eliminate periodic rate review without abrogating its duty to continually assure fair and equitable rates.

96. However, the Commission is sensitive to concerns that the improved reporting requirements could prove too burdensome, when considered in aggregation with other burdens such as triennial rate review. In recent years, the Commission has found it only occasionally necessary to impose rate reductions during these periodic reviews. It is our expectation that the improved reporting requirements will instill further market discipline, thus helping to continue this favorable trend. It thus appears that requiring all section 311 and Hinshaw pipelines to make filings for a review of their rates every three years imposes an unnecessary burden on both the pipelines and the Commission, as compared to the public benefits obtained by such rate review. Accordingly, the Commission has decided to modify its triennial rate review policy in order to decrease the frequency of review from three to five years. Therefore, the Commission intends in future orders approving rates filed by section 311 and Hinshaw pipelines to include a condition requiring a review of those rates five years from the date the approved rates took effect. Any pipelines subject to a requirement to file a triennial rate review after the issuance of this Final Rule may file a request for an extension of time consistent with the revised policy announced here.

97. Several commenters expressed concern over the speed with which the Commission would adopt and implement the proposed reporting requirements. Three suggestions raised by Jefferson and others were to hold conferences or otherwise delay the issuance of the Final Rule, delay the effective date of the Final Rule, and establish a safe harbor period.

98. First, Jefferson and others seek to delay the issuance of the Final Rule. Jefferson argues that the proposed format “[r]equires additional guidance in the form of industry conferences and workshops prior to the Commission's issuance of a Final Rule to avoid conflicts in interpretation of each proposed data element, develop a consensus regarding proposed technical reporting formats, and to give intrastate and Hinshaw pipelines an opportunity to present information that would more accurately represent the burden of reporting.”  143 TPA, while also requesting a conference, urges the Commission to postpone any activity in this docket until after the Commission has completed the implementation and appeals process for the rulemaking in Order No. 720, which also concerns intrastate pipeline reporting, and assesses the impact of that rule before considering any further regulations. 144

99. Second, Jefferson requests “an implementation period of at least 18 months from the issuance of a final rule * * * regardless of the technical format ultimately selected.”  145 AGA also requests a delayed effective date, without specifying a length. 146

100. Third, Jefferson requests a one year safe-harbor period, during which pipelines will not be penalized for inadvertent reporting errors. 147

101. The Final Rule will become effective on April 1, 2011. Pursuant to the regulations, the Form No. 549D quarterly report for the period January 1, 2011 through March 31, 2011 must be eFiled on or before May 1, 2011. Based on the comments from all shippers, we believe that this allows a sufficient period before implementation of the revised reporting requirement to allow reporting pipelines to familiarize themselves with the new reporting format and update their internal processes, if necessary. As noted above, Commission Staff plans to hold a technical workshop on a date to be announced in the near future for the purpose of assisting reporting pipelines in this transition.

102. We will not institute a safe-harbor period. However, as stated above in this order, because this is a new information collection, the Commission will focus any enforcement efforts on instances of intentional submission of false, incomplete, or misleading information to the Commission, of failure to report in the first instance, or of failure to exercise due diligence in compiling and reporting data. 148

103. In the NOPR, in accordance with the requirements of the Office of Management and Budget (OMB), the Commission estimated that on an annual basis the burden to comply with the rule as proposed would be as follows:

Using an hourly rate of $150 to estimate the costs for filing and other administrative processes, the Commission estimated the total cost for all respondents to be $262,500.

104. Many pipelines strongly disagreed with the Commission's burden estimate. Most prominently, commenters urge the Commission to consider the initial implementation burden. Atmos states that it spent five months on the first annual report required by Order No. 704. 149 AGA estimates that the development of an XML Schema alone would cost $30,000 per respondent, for an initial total burden of $3.75 million. 150 Enogex estimates the “major information systems upgrades to allow Enogex to track, report, and maintain the level of detailed data necessary * * * [at] $3 to $4 million.” 151

105. Commenters also disagreed with the estimated ongoing annual burden. AGA estimated annual reporting would take over 12 hours per respondent to complete, which for 125 respondents would be an annual burden of $900,000. 152 TPA also believes that annual burdens will be significantly higher, especially if the Commission chooses a format that requires manual data entry. 153 “[D]ue to the large number of small-volume, interruptible 311 transactions * * * the burden of additional reporting might outweigh the benefits of participating,” TPA warns. 154 Jefferson estimates 24 hours per quarter per respondent, with thousands of dollars in fees to third party information technology vendors. 155 In addition, Jefferson and others provide separate estimates of the cost of using industry common codes for shippers and receipt and delivery points, as detailed above in this order. 156

106. The Office of Management and Budget (OMB) regulations require that OMB approve certain reporting, record keeping, and public disclosure requirements (collections of information) imposed by an agency. 157 The Commission has submitted notification of these proposed information collection requirements to OMB for its review and approval under section 3507(d) of the Paperwork Reduction Act of 1995. 158

107. The requirement for intrastate pipelines to post additional information regarding their transactions would impose an initial burden on pipelines as they organize their corporate data to be compatible with the data elements selected by the Commission for Form No. 549D. Certain pipelines have asserted in comments that the costs could include the reconfiguring of information collection systems. However, given that this information is used in their business, the Commission still believes that the burden that would be imposed by this proposed requirement is largely for the collection of this information. 159 As stated above in this Final Rule, intrastate pipelines can choose to submit their quarterly Form No. 549D using a Commission-provided Fillable PDF form. 160 In this instance, intrastate pipelines would not be required to incur costs to learn XML or develop an XML Schema. Even if an intrastate pipeline chose to file an XML file, it would not incur costs to develop an XML Schema. The Schema would be developed by the Commission and provided to pipelines in order to validate their submission before eFiling it to the Commission. While the Commission erred in not including this burden in its original estimate, we nevertheless find that the burden estimates provided by commenters are far too high. These estimates were based on assumptions that the Commission would require a far more intensive volume of reports—transaction-by-transaction reports instead of contract-by-contract reports—and that the Commission would require the more technologically challenging XML data format without developing a “simple spreadsheet” form to guide respondents.

108. OMB regulations require OMB to approve certain information collection requirements imposed by agency rule. The Commission submitted notification of this rule to OMB. The Commission has developed a cost estimate of the initial implementation burden and revised the estimate of the ongoing annual burden concomitant with the decision allow multiple versions of the report. The analysis began with an examination of a representative sample of over one-third of the companies currently filing a Form No. 537, the semi-annual storage report, or Form No. 549, the annual transportation report. Studying the level and type of services performed for their shippers made it possible to split the industry between those that would logically file using the PDF form because of the relatively small number of shippers and services, and those that would incur the addition up-front effort associated with developing tools for filing the report using the Commission's XML schema. This analysis estimates that the 70 percent of Respondents that average less than five shippers transacting in a given quarter would file using the PDF form. The other 30 percent would incur addition development costs associated with the XML-based report to offset the larger on-going burden cost associated with reporting more shippers, services, and contracts. Cost estimates were developed for the initial burden and the on-going burden for each of the permissible file methods, using prevailing Houston labor costs and the most efficient hourly split of manpower by legal, accounting, regulatory and IT departments. The initial burden was split between effort involved in the initial review and planning procedures to ensure compliance with the rulemaking and the effort required to develop and implement the new procedures. The PDF startup effort would require an average 68 person-hours or $4,354 per Respondent. The XML startup effort would require an additional 128 person-hours, primarily associated with the increased IT development and testing requirements, for an estimated initial burden of $11,287 per Respondent. The start-up burden estimates for complying with this Final Rule are as follows:

To estimate ongoing burden, the Commission analyzed two sets of costs: The per-report cost for the effort by the legal accounting, IT and regulatory departments related to changes in the mix of shippers and services, and the per-contract costs related to the effort populate the report with the information associated with each shipper by service type and by contract. For the first set of costs, this analysis estimates the PDF form to require 11 person-hours at an estimated cost of $596 per report, and the XML Schema 10 man-hours at an estimated cost of $556 per report. For the per-contract set of costs, this analysis estimates the PDF form to require $663 per report and the XML Schema $543 per report, for the average Respondent.

Title: Form No. 549D.

Action: Proposed Information Posting and Information Filing.

OMB Control No: xxxx-xxxx.

Respondents: Business or other for profit.

Frequency of Responses: Quarterly posting requirements.

Necessity of the Information: The quarterly filing of additional information by intrastate pipelines is necessary to provide information regarding the price and availability of natural gas transportation services to market participants, state commissions, the Commission, and the public. The filing would contribute to market transparency by empowering market participants to determine the extent to which particular transactions are comparable to one another; and it would allow the monitoring of potentially manipulative or unduly discriminatory activity.

Interested persons may obtain information on the reporting requirements by contacting the following:

109. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 161 The Commission has categorically excluded certain actions from these requirements as not having a significant effect on the human environment. 162 The actions taken here fall within categorical exclusions in the Commission's regulations for rules that are corrective, clarifying or procedural, for information gathering, analysis, and dissemination, and for sales, exchange, and transportation of natural gas that requires no construction of facilities. 163 Therefore an environmental review is unnecessary and has not been prepared in this rulemaking.

110. The Regulatory Flexibility Act of 1980 (RFA)  164 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. The Commission is not required to make such analysis if proposed regulations would not have such an effect.

111. Most of the natural gas companies regulated by the Commission do not fall within the RFA's definition of a small entity. 165 Approximately 125 natural gas companies are potential respondents subject to the requirements adopted by this rule. For the year 2008 (the most recent year for which information is available), 4 companies had annual revenues of less than $7 million. This represents 3.2 percent of the total universe of potential respondents or only a very few entities that may have a significant burden imposed on them. In addition, by providing entities with an option of how they file the information, the Commission has provided alternatives, thereby lessening the economic impact for smaller entities while still accomplishing the regulatory objective of increasing market transparency. In view of these considerations, the Commission certifies that this Final Rule's amendments to the regulations will not have a significant impact on a substantial number of small entities.

112. In addition to publishing the full text of this document, except for the Appendix, in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document, including the Appendix, via the Internet through FERC's Home Page ( http://www.ferc.gov ) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

113. From FERC's Home Page on the Internet, this information is available on eLibrary. The full text of this document, including the Appendix, is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

114. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at public.referenceroom@ferc.gov.

115. These regulations are effective April 1, 2011. The quarterly report for transactions occurring during the period January 1, 2011 through March 31, 2011 must be filed on or before May 1, 2011. The Commission has determined that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.

On April 28, 2009, we published in the Federal Register a notice of proposed rulemaking entitled “Revision of LNG and LHG Waterfront Facility General Requirements” (74 FR 19159). We received four letters commenting on the proposed rule, containing a total of 38 comments. No public meeting was requested and none was held.

Over the last decade, the worldwide production and transportation of liquefied natural gas (LNG) has increased substantially. Currently, the United States consumes about 25 percent of the world's annual natural gas production. Over the next 20 years, U.S. natural gas consumption is projected to increase. Should domestic gas production not meet this demand, increased marine LNG imports may be needed to help resolve this likely shortfall. Currently, there are nine waterfront LNG facilities in the United States: eight are import facilities, and one is an export facility. To meet rising demand, the energy industry has submitted dozens of proposals to build LNG import facilities along our coasts, and an unspecified number of proposals are in the early planning stages.

We have not seen, and do not expect, a similar increase in the production and transportation of liquefied hazardous gas (LHG). Although LNG and LHG facilities and the cargoes they handle are different in nature, we believe the vessels that transport these cargoes pose similar risks to the waterway environment and the area surrounding the marine transfer area of the facility when transfer operations are underway.

Safety and security of our ports and waterways have become paramount concerns since the events of September 11, 2001. Currently, the owner or operator intending to construct, modify, or reactivate an LNG or LHG facility must submit a Letter of Intent (LOI) to the Coast Guard. Information obtained in the LOI enables the Coast Guard to provide specific input, in a Letter of Recommendation (LOR), to an agency having jurisdiction for siting, construction, and operation. The LOR serves as the Coast Guard's recommendation to the jurisdictional agency as to the suitability of the waterway for LNG or LHG marine traffic on the waterway associated with the proposed facility or modification to an existing facility.

In the case of LNG waterfront facilities regulated by FERC, the LOI has been augmented by a Waterway Suitability Assessment (WSA). The WSA is an applicant-prepared risk-based assessment designed to document and address all safety and security concerns related to the movement of LNG for a particular U.S. port or waterway. As discussed below, since 2005, FERC regulations have required prospective applicants for FERC authorization to site, construct, and operate LNG facilities to submit WSAs to the Coast Guard. The Coast Guard's Office of Operating and Environmental Standards (CG-5222) maintains guidance on preparation and submission of WSAs to the Coast Guard. Contact details are located under the section heading FOR FURTHER INFORMATION CONTACT .

In April 2009, the Coast Guard proposed a rule that would establish the WSA requirement in Coast Guard regulations, better aligning the regulations of the Coast Guard and FERC with regard to LNG. Although FERC generally does not regulate LHG facilities, the Coast Guard proposed to establish the WSA requirement for both LNG and LHG facilities because of the similarities between those cargoes.

FERC regulates LNG import facilities located onshore or in State waters, but generally does not regulate facilities receiving marine deliveries of LHG. This section provides background information specific to FERC-regulated LNG facilities. The Coast Guard provided this information in the NPRM; we repeat it here for the convenience of the reader.

On October 18, 2005, FERC published a final rule in the Federal Register (70 FR 60426) implementing the Energy Policy Act of 2005 and creating procedures for the review of LNG terminals and other natural gas facilities. The FERC final rule amended 18 CFR parts 153 and 157 by requiring LNG facility owners and operators to submit WSAs to the Coast Guard as part of the FERC pre-filing process. Although FERC regulations, not Coast Guard regulations, require the WSA, the Coast Guard considers the applicant's WSA in developing its LOR.

FERC requires applicants seeking FERC's authorization to site, construct, and operate new LNG facilities, and some applicants seeking authority to make modifications to an existing or approved LNG facility, to make an initial filing to FERC and, concurrently, submit an LOI and a Preliminary WSA to the Coast Guard. After the submission of the initial filing, the Director of FERC's Office of Energy Projects (Director) determines whether the applicant may begin the pre-filing process. If the applicant meets the requirements to begin the pre-filing process, the Director will issue a notice that begins the pre-filing process.

During the pre-filing process, the applicant must satisfy several requirements, including the requirement in 18 CFR 157.21(f)(13) that an applicant “[c]ertify that a Follow-on WSA will be submitted to the U.S. Coast Guard no later than the filing of an application with the Commission (for LNG terminal facilities and modifications thereto, if appropriate). The applicant shall certify that the U.S. Coast Guard has indicated that a Follow-On WSA is not required, if appropriate.”

The applicant must wait at least 180 days after the commencement of the FERC pre-filing process before starting the FERC filing process. Thus, the FERC regulations result in the LOI being submitted at least 180 days before the applicant files an application for authorization to construct the facility with FERC, even though the Coast Guard regulations for new and modified facilities only require the LOI to be submitted at least 60 days before construction begins.

The Coast Guard received letters from four commenters, containing a total of 38 comments on the NPRM. All comments received are available in the public docket for this rulemaking, where indicated under ADDRESSES . Below, we respond to all comments received, and describe changes made in response to specific comments.

The Coast Guard received multiple comments expressing support for the proposed rule. In general, comments supported clarification of the existing regulatory regime for LNG and LHG marine transfer facilities. Specifically, the Coast Guard received one comment expressing general support for the proposed rule, one comment urging the Coast Guard to implement the proposed revisions of its regulations, one comment indicating the commenter “strongly supports” the Coast Guard's efforts to reconcile its regulations with FERC regulations, and one comment acknowledging the “importance of, and the Coast Guard's desire for, a coordinated, clearly-defined review process” resulting in a recommendation to the permitting authority. Additional supportive comments are discussed below. The Coast Guard appreciates these supportive comments.

Some commenters made reference to the role the LOI, WSA, and LOR may play in other agencies' environmental review of LNG or LHG projects. The Coast Guard understands that a permitting agency may use a variety of documents, including the LOI, WSA, or LOR, to aid in the development of its environmental analysis. These documents may contain environmental data: for example, § 127.007 requires the LOI to include charts identifying environmentally sensitive areas. Nonetheless, maritime safety and security concerns, rather than environmental review, are the primary drivers in creation of the LOI, WSA, and LOR, and the Coast Guard encourages Federal, State, and local agencies to view these documents in that context.

Finally, one commenter noted that the NPRM did not expressly state that the revised regulations would become effective on a prospective basis. For clarity, the Coast Guard confirms that the revised regulations will become effective upon the date indicated in the DATES section above.

Two commenters made comments regarding § 127.007(a), which discusses LOIs.

First, one commenter noted slightly different language between §§ 127.007(a) and (e), in that the proposed § 127.007(a) required an LOI for construction expanding or modifying terminal (facility) operations, while § 127.007(e) required a WSA for any new construction. Although the Coast Guard did not intend any substantive difference in the wording of these two provisions, we agree that the differing language could result in confusion. The commenter recommended that § 127.007(e) read the same as § 127.007(a), to make this point clearer. The Coast Guard agrees that the two provisions should be consistent and has revised the proposed §§ 127.007(a) and (e) for clarity and consistency. The text of the final rule reflects this change.

Second, the same commenter recommended that § 127.007(a) be changed to trigger the LOI requirement when construction “would change the conditions reported in the last WSA” or, in the alternative, when the construction “also requires filing a permit request with the Federal Energy Regulatory Commission (FERC).” Although the Coast Guard finds these recommendations too narrow, it concurs with the broader point that the LOI requirement is triggered when an applicant files with a permitting agency having jurisdiction. Section 127.007(a) applies to facilities not regulated by FERC—for example, LHG facilities—and facilities that do not yet have a WSA. For that reason, the Coast Guard declines to adopt the commenter's recommendations as written. As stated in the proposed regulatory text, however, the deadline for submitting the LOI is based on the owner or operator's decision to file with the permitting agency having jurisdiction. The Coast Guard does not require an LOI if the owner or operator does not file with a permitting agency having jurisdiction. In the unlikely event that no permitting agency has jurisdiction or no filing is required, the Coast Guard will not require an LOI or issue an LOR; however, the COTP retains his or her authority to ensure the maritime safety and security of the waterway.

The commenter noted that § 127.007 would require an LOI 1 year prior to the terminal (facility) improving its moorings by increasing hook or bollard capacity, modifying a gangway to improve access, or adding mooring monitoring systems. The Coast Guard concurs with this characterization if such expansion or modification of the marine transfer area of the facility requires the owner or operator to file with the permitting agency having jurisdiction over the facility and the expansion or modification results in an increase in the size and/or frequency of the LNG or LHG marine traffic on the waterway associated with the facility. Accordingly, the Coast Guard has modified the text of §§ 127.007(a) and (e) to specify that an LOI is required for construction, expansion, or modification that would increase the size and/or frequency of the LNG or LHG marine traffic on the waterway associated with the proposed facility or modification to an existing facility.

The commenter implied that it is undesirable to require an LOI 1 year prior to the type of improvements listed. However, such advance notice is necessary to the Coast Guard's maritime safety and security missions. If an owner or operator submits an LOI for a modification that does not require 1 year to review, the Coast Guard expects to issue the LOR within a shorter timeframe.

Separately, a different commenter stated that requiring an LOI 1 year prior to construction is not a FERC requirement and therefore “appears inconsistent with the goals of harmonizing” and aligning Coast Guard regulations with FERC regulations. Aligning Coast Guard regulations with FERC regulations is one goal of this rulemaking; the 1-year period between LOI and construction is designed to work with the FERC pre-filing process in which the LOI must be submitted at least 180 days before the applicant files its application for authorization to construct the facility with FERC. However, Coast Guard regulations must be broader and encompass more situations than FERC's regulations, in part because they apply to facilities FERC does not regulate. The Coast Guard requires the LOI at least 1 year prior to construction in order to allow adequate time for risk assessment.

Finally, to improve clarity, the Coast Guard added language to § 127.007(c)(2) specifying that the LOI must include the name, address, and telephone number of the Federal, State, or local agency having jurisdiction “for siting, construction, and operation.”

Two commenters commented on issues involving the WSA.

One commenter suggested § 127.007(g) be changed to require that WSAs contain a detailed analysis of the elements listed in §§ 127.007(f)(2) and 127.009(e) of this part. The commenter expressed concern that the proposed regulation required the Follow-on WSA to contain a detailed analysis of the elements the Coast Guard will consider in issuing the LOR but, as proposed, did not require a detailed analysis of the elements listed in the Preliminary WSA. The commenter correctly pointed out that this omission conflicted with our explanation of the proposed rule in the preamble to the NPRM, in which we indicated that the “Follow-on WSA would contain a detailed analysis of the topics in the Preliminary WSA, and a detailed analysis of any other safety or security impacts to the port and waterway identified by the Captain of the Port.” The Coast Guard has modified the text of the final rule to include § 127.007(f)(2) as well as §§ 127.009(d) and (e).

A different commenter made general comments about the waterway suitability assessment process. This commenter said risk to the waterway must be adequately assessed, and that “leaving such an important review as voluntary” would be inadequate. The Coast Guard concurs that assessment of the waterway is vital. The owner or operator's WSA and the Coast Guard's review of that document are key elements of the risk management process. Coast Guard review ensures that the owner or operator has adequately assessed potential risks associated with vessel transit in the context of waterway safety and security as part of the Coast Guard's cooperation with the permitting agency. Because of the importance of this process, FERC regulations have made WSAs mandatory since 2005 for LNG facilities located onshore and in State waters. This rule will align Coast Guard regulations with existing FERC regulations for the mandatory assessment of the waterway, and will extend waterway suitability assessment measures to LHG facilities as well.

Additionally, the commenter sought “any data we can get from a Waterway Suitability Assessment” and, specifically, the “proponent's chart identifying what they consider environmentally sensitive.” The Coast Guard strives to fully involve all port-level stakeholders in the Coast Guard's review of an applicant's WSA. When feasible, those stakeholders include those local and State entities with jurisdiction over a proposed facility. This rulemaking does not alter that process. Similarly, this rulemaking does not alter the availability of data submitted to the Coast Guard in the owner or operator's WSA.

One commenter submitted comments regarding the requirement that each LOI contain information on the frequency of LNG or LHG shipments to or from the facility. Specifically, the commenter described the requirement as “unprecedented in regulation” and “impossible to reliably assess.” The commenter stated that the “frequency and number of vessels has no bearing on” waterway suitability, and recommended rewording § 127.007(c)(6) to exclude mention of the frequency of shipments. The Coast Guard disagrees with these comments and recommendation.

The requirement that the LOI contain “the frequency of LNG shipments to or from the facility” was present in the 1988 final rule that created § 127.007, and has remained in place since that date (53 FR 3370). When the requirement was extended to LHG in 1995, the preamble to that final rule, published in the Federal Register on August 3, 1995, stated that the “purpose of the `Letter of Intent' is to give the [Captain of the Port] general notice of both the type and estimated number of LHG vessels that may call at the facility and the size of shipments. This information can easily be obtained from the facility-design specifications” (60 FR 39788). Every LOI provided by an owner or operator to the Coast Guard has included information on the frequency of shipments. With the exception of re-numbering the paragraph and re-ordering the terms “LNG” and “LHG,” the NPRM did not propose changes to this requirement, and the Coast Guard intends no change to the current methods of compliance.

For all these reasons, the Coast Guard does not believe that the frequency of shipments is impossible to assess. As discussed in more detail below, the Coast Guard's mission of public stewardship requires that we consider activity in the waterway, and the impact of LNG and LHG vessel traffic, when evaluating waterway suitability. Therefore, the Coast Guard believes it necessary to include this information in the LOI.

One commenter submitted several comments on whether the Coast Guard should consider the density and character of marine traffic in a waterway when evaluating the suitability of the waterway for LNG or LHG vessel transit. Specifically, the commenter recommended deleting § 127.009(b) because the commenter feels that considering other marine traffic favors existing waterway uses to the detriment of new or expanding waterway uses not subject to a waterway suitability assessment requirement, and “puts the Coast Guard in a position of determining which waterway user should have usage rights and which should not.”

Contrary to the commenter's statement that these are “Commerce issues beyond the intended purpose of the Coast Guard,” the Coast Guard engages daily in managing the safe and secure movement of vessels, particularly vessels in interstate commerce, and in balancing the needs of many different waterway users. To clarify, however, the LOR does not “determine which waterway user should have usage rights”; rather, the LOR is the Coast Guard's recommendation to the jurisdictional agency as to the suitability of the waterway for LNG or LHG marine traffic.

The commenter notes that port management plans and safety and security zones are tools the Coast Guard uses to manage competing waterway priorities; other tools include notices of arrival and departure, regulated navigation areas, navigational “rules of the road,” and COTP orders. To take the latter example, under the authority of the Ports and Waterway Safety Act or the Maritime Transportation Security Act of 2002, the Coast Guard COTP may order any vessel, whether a recreational craft or an LNG vessel, to make way for another when necessary for waterway safety and security. Such plans, zones, and orders take place pursuant to their own administrative processes, separate from the waterway suitability assessment or LOR. The LOR, by contrast, serves as the Coast Guard's recommendation to the agency having jurisdiction over siting, construction, and/or operation on whether the Coast Guard considers the waterway associated with a proposed facility or modification to an existing facility suitable for the LNG or LHG marine traffic. Additionally, the LOR often contains information helpful to the jurisdictional agencies for improving safety and security of the waterway for LNG or LHG marine traffic.

Input based solely on whether the vessel could physically transit the waterway would not serve the Coast Guard's missions or the needs of the agencies to which the LOR is issued, and would needlessly withhold the Coast Guard's expertise in waterway management. The Coast Guard's evaluation of waterway suitability necessarily includes evaluation of maritime safety and security risks posed by and to other vessels. Therefore, the Coast Guard declines the commenter's recommendation that we delete § 127.009(b).

First, to improve clarity, the Coast Guard added language to § 127.009 specifying that the LOR is issued to the Federal, State, or local agency having jurisdiction “for siting, construction, and operation.”

In addition, one commenter made comments regarding the LOR.

Specifically, the commenter urged the Coast Guard to “provide for contemporaneous notice” of the LOR to the owner or operator. The Coast Guard had intended that owners or operators receive a copy of the LOR, and we agree that the regulation should reflect that practice. Accordingly, the final rule specifies that the owner or operator will receive a copy of the LOR at the same time the Coast Guard sends the LOR to the government agency having jurisdiction for siting, construction, and operation.

The same commenter “believes that the applicant should have an opportunity to seek clarification or reconsideration of provisions contained in the LOR at the time of its issuance to other jurisdictional agencies.” Recommendations expressed in the LOR represent the Coast Guard's professional input and are provided in the context of the Federal, State, or local jurisdictional agency's proceedings, which provide for participation and public comments. Therefore, additional information may be submitted by the owner or operator, the public, or the Coast Guard, to the Federal, State, or local agency with jurisdiction. To the extent the comment addresses a process for clarifying or reconsidering the recommendation contained in a particular LOR, such a process is outside the scope of this rulemaking. This rule aligns FERC and Coast Guard regulations with regard to the timing and content of submissions under 33 CFR 127.007, and clarifies the recipients of the LOR under § 127.009.

One commenter recommended modifying § 127.009 to include a timeline for Coast Guard review of the WSA and issuance of the LOR. The Coast Guard shares the commenter's desire for timely review of LOIs and WSAs, and strives to issue LORs promptly. Current policy states that the COTP should issue the LOR before the permitting agency completes its environmental review. However, the Coast Guard does not intend to restrict the COTP in his or her review, especially given the possibility of changing circumstances, and does not intend to establish a right to a response in a specified time.

One commenter submitted comments on the differences between LNG and LHG. The commenter did not object to applying similar regulatory requirements to both LNG and LHG vessels, but asked the Coast Guard to “recognize and maintain the important factual distinctions between LNG and LHG.” Specifically, the commenter urged that “regulatory requirements that may be appropriate to the regulation of LHG may not be appropriate or necessary for transfer operations concerning LNG.”

The Coast Guard understands the commenter's concern. We recognize that the chemical properties of LNG differ from those of LHG, and that the risk of transporting these materials does vary. We also acknowledge, as we have done in the past, the well-documented safety record associated with LNG vessel transport. At this time, the Coast Guard finds no reason to apply different waterway suitability methodologies to these materials. However, the results of a waterway suitability assessment are always specific to the commodity and waterway being evaluated.

33 CFR 127.005 defines a facility as “either a waterfront facility handling LHG or a waterfront facility handling LNG.” These terms are clearly defined to mean any structure capable of being used to transfer LNG or LHG, in bulk, to or from a vessel. For consistency, and to avoid redundancy, the Coast Guard has modified the text of the final rule to use the term “facility” instead of “waterfront facility.”

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. Accordingly, OMB has not reviewed it under that Order.

Public comments on the NPRM are summarized in Part IV of this publication. We received no public comments that would alter our assessment of the impacts discussed in the NPRM.

In this rule, the Coast Guard seeks to revise the requirements for waterfront facilities handling LNG or LHG. For LNG waterfront facilities, this rulemaking aligns the Coast Guard's submission deadlines with those of FERC. This rulemaking aligns the Coast Guard's submission deadlines for LHG waterfront facilities with those of LNG waterfront facilities. The Coast Guard believes it is necessary to require a WSA for both types of facilities and to provide consistency with FERC regulations regarding LNG facilities. This rule also provides consistency for other Coast Guard regulations that address both LNG and LHG facilities.

As noted above, the LOI and WSA are not new requirements for LNG facilities. Starting in 2005, FERC regulations required that LNG facility owners and or operators submit the LOI earlier than required by the Coast Guard regulations, and submit a Preliminary and Follow-on WSA to the Coast Guard. The procedure for the owner or operator to submit a WSA to the Coast Guard is not new for the LNG industry because LNG facility owners and operators have been submitting WSAs to the Coast Guard since 2005. As of December 2009, we have received 19 WSAs for LNG waterfront facilities with only one submittal since July 2008.

We expect that new waterfront LNG facilities that become operational in the future will not incur additional costs over and above existing waterfront LNG facilities as a result of this rule, because the LNG industry has been conducting WSAs as a common industry practice. We also expect existing LNG facilities to continue to operate according to industry standards and similarly to not incur additional regulatory costs. The rule eliminates industry confusion as the Coast Guard aligns its regulations with those of FERC.

As noted above, the submission of an LOI is not a new requirement for LHG facilities. However, the submission of a WSA for LHG facilities is a new requirement, but will apply only to new LHG facilities or existing facilities that seek to expand or modify operations that result in an increase in the size and/or frequency of LHG marine traffic on the waterway associated with a proposed facility or modification to an existing facility. Only one LHG facility has submitted a proposal to the Coast Guard to expand operations; this proposal currently is under review with regulatory authorities pursuant to existing regulations. In the future, the Coast Guard expects only one to two new or existing LHG facilities per year may become operational or may seek to expand or modify maritime operations.

Additionally, the Coast Guard contacted several industry representatives and obtained cost estimates for completing a WSA. The estimates varied greatly and are a function of the waterway environment and the geographic location and uniqueness of each facility. Cost estimates were between $80,000 and $1.2 million per WSA. We believe that these costs will have minimal effect on an LHG facility owner or operator's decision to expand operations.

Finally, this rule benefits the economy by ensuring the proposed waterway is suitable for the safe and secure navigation of LNG or LHG vessels and the transfer of these cargoes.

The collection of information burden associated with this rule is discussed in section V.D., below.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

In the NPRM, we certified under 5 U.S.C. 605(b) that the proposed rule would not have a significant economic impact on a substantial number of small entities. We received no public comments that would alter our certification in the NPRM. We have found no additional data or information that would change our findings in the NPRM.

Large corporations own the nine existing waterfront LNG facilities and we expect this type of ownership to continue in the future. This type of ownership also exists for the approximately 159 LHG facilities operating in the United States. Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule will call for the collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. The title and description of the information collections, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.

This rule modifies one existing OMB-approved collection, 1625-0049. The summary of the revised collection follows:

Title: Waterfront Facilities Handling Liquefied Natural Gas (LNG) and Liquefied Hazardous Gas (LHG).

OMB Control No.: 1625-0049.

Summary of the Collection of Information: The Coast Guard requires the submittal of a Letter of Intent (LOI) for LNG and LHG facilities that plan new construction or intend to expand existing operations to alert the Coast Guard of transfers of LNG or LHG, in bulk. In addition, a waterway suitability assessment will be required for a facility that intends new construction, expansion or modification of an existing facility, which results in an increase in the size and/or frequency of LNG or LHG marine traffic on the associated waterway.

Need for Information: The LOI is needed to alert the cognizant Coast Guard Captain of the Port (COTP) that a facility plans to conduct transfers of LNG or LHG, in bulk. It also provides a point of contact at the facility. Once the Coast Guard receives the letter, the COTP can direct the necessary enforcement activity to ensure that the operator complies with all of the requirements in 33 CFR part 127. The LOI also provides some of the information used by the COTP to determine the suitability of the waterway associated with a proposed facility or modification to an existing facility for LNG or LHG marine traffic. Changes to the information in the LOI are required to be submitted whenever they occur.

Use of Information: This information is required to ensure COTPs learn of the opening or reopening of a facility handling LNG or LHG far enough in advance to allocate resources and to plan enforcement strategies. COTPs will also have the information necessary to properly evaluate the suitability of a waterway for vessels carrying LNG or LHG.

Description of the Respondents: Respondents are the facilities themselves.

Number of Respondents: The existing OMB-approved number of respondents is 107. Based on our data, this rule will increase that number by 61 respondents to a total of 168 respondents.

Frequency of Response: The existing OMB-approved number of responses is 3,059 annually. This rule will increase that number by 1,936. The total number of responses will be 4,995.

Burden of Response: The existing OMB-approved burden of response is the same for the rule. We have maintained our estimates of the frequency of response for each item in the collection based on industry information, and we have added information regarding a WSA.

Estimate of Total Annual Burden: The existing OMB-approved total annual burden is 2,838 hours. This rule will increase that number by 6,666 hours, which includes 4,928 hours for the addition of a WSA to the collection of information, and 1,738 hours to account for a change in the number of respondents. The estimated total annual burden will be 9,504 hours.

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we have submitted a copy of this rule to OMB for its review of the collection of information. OMB has not yet completed its review of this collection. Therefore, the Coast Guard will not enforce the revisions this rule makes to information collection requirements at 33 CFR 127.007 until the collection is approved by OMB. We will publish a document in the Federal Register informing the public of OMB's decision to approve, modify, or disapprove the collection.

You are not required to respond to a collection of information unless it displays a currently valid OMB control number.

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any 1 year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded under section 2.B.2, figure 2-1, paragraph (34)(a) of the Instruction. This rule involves regulations which are editorial or procedural, such as those updating addresses or establishing application procedures. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES .

Regulatory Information

On March 2, 2010 we published a notice of proposed rulemaking (NPRM) entitled Safety Zone; AVI May Fireworks Display; Laughlin, Nevada, NV in the Federal Register (75 FR 9370). We received 0 comments on the proposed rule. No public meeting was requested, and none was held.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Due to the need for immediate action, the restriction of vessel traffic is necessary to protect life, property and the environment; therefore, a 30-day notice is impracticable. Delaying the effective date would be contrary to the safety zone's intended objectives of protecting persons and vessels involved in the event, and enhancing public and maritime safety.

The AVI Resort and Casino is sponsoring the AVI May fireworks display, which is to be held at the AVI Resort and Casino on the Lower Colorado River in Laughlin, Nevada. A temporary safety zone is necessary to provide for the safety of the show's crew, spectators, participants of the event, participating vessels, and other vessels and users of the waterway.

There were no comments submitted and no changes were made to the regulation.

The Coast Guard is establishing a temporary safety zone on the navigable waters of the Lower Colorado River, Laughlin, NV in support of the AVI May fireworks display adjacent to the AVI Resort and Casino on the Lower Colorado River, Laughlin, NV. The safety zone will be effective from 8 p.m. to 9:45 a.m. on May 30, 2010. The safety zone is set as an 800 foot radius around the firing site in approximate position: 35°00.45′ N, 114°38.18′ W.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. This determination is based on the size and location of the safety zone. While vessels will not be allowed to transit through the designated safety zone during the specified times, the zone exists for only a short period of time and will be enforced only during a period where vessel traffic is light.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in a portion of the Colorado River from 8 p.m. to 9:45 p.m. on May 30, 2010.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: The safety zone will only be in effect for one hour and 45 minutes late in the evening when vessel traffic is low. Before the effective period, we will publish a Local Notice to Mariners (LNM).

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), in the NPRM we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

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

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

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction. This rule involves establishment of a safety zone.

An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES .

I. Does this Action Apply to Me?

You may be potentially affected by this action if you manufacture, import, process, or use the chemical substance contained in this revocation. Potentially affected entities may include, but are not limited to:

• Manufacturers, importers, or processors of the subject chemical substance (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the applicability provisions in § 721.5. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

The Agency proposed revocation of this SNUR in the Federal Register of December 31, 2009 (74 FR 69320) (FRL-8796-6). The comment period for the proposed rule closed on February 1, 2010; EPA received no comments on the action.

Based on the results of submitted biodegradation testing, EPA has determined that the substance is readily biodegradable, mitigating concerns for chronic toxicity to aquatic organisms. Therefore, EPA no longer finds that releases to water resulting in stream concentrations that exceed 1 parts per billion (ppb) may cause significant adverse environmental effects. Based on available information, the substance no longer meets the concern criteria at § 721.170(b)(4)(ii). Therefore, EPA is revoking the SNUR for this chemical substance pursuant to § 721.185(a)(4).

Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including those listed in TSCA section 5(a)(2). Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture, import, or process the chemical substance for that use. The mechanism for reporting under this requirement is established under § 721.5.

Upon conclusion of the review for PMN P-95-1772, based on the concern criteria in § 721.170(b)(4)(ii), EPA determined that there was a concern for potential environmental effects of the substance and promulgated a non-5(e) SNUR for this chemical substance.

Under § 721.185, EPA may at any time revoke a SNUR for a chemical substance which has been added to subpart E of 40 CFR part 721, if EPA makes one of the determinations set forth in § 721.185(a)(1) through (a)(6). Revocation may occur on EPA's initiative or in response to a written request. EPA has determined that the criteria set forth in § 721.185(a)(4) have been satisfied for the chemical substance. Therefore, EPA is hereby revoking the SNUR provisions for this chemical substance. When this revocation becomes final, EPA will no longer require notice of intent to manufacture, import, or process this substance for any significant new uses. In addition, export notification under section 12(b) of TSCA triggered by this SNUR will no longer be required.

This rule revokes or eliminates an existing regulatory requirement and does not contain any new or amended requirements. As such, the Agency has determined that this SNUR revocation will not have any adverse impacts, economic or otherwise.

The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). This rule does not contain any information collections subject to approval under the Paperwork Reduction Act (PRA), (44 U.S.C. 3501 et seq .). Since this rule eliminates a reporting requirement, the Agency hereby certifies pursuant to section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .), that this SNUR revocation will not have a significant economic impact on a substantial number of small entities.

For the same reasons, this action does not require any action under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). This rule has neither Federalism implications, because it will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), nor tribal implications, because it will not have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes, as specified in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000).

This action is not subject to Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and it does not address environmental health or safety risks disproportionately affecting children. It is not subject to Executive Order 13211, entitled Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use. Because this action does not involve any technical standards, section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note), does not apply to this action. This action does not involve special considerations of environmental justice related issues as required by Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

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

Environmental protection, Reporting and recordkeeping requirements.

Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

You may access a frequently updated electronic version of 40 CFR part 174 through the Government Printing Office's e-CFR site at http://www.gpoaccess.gov/ecfr . To access the harmonized test guidelines referenced in this document electronically, please go to http://www.epa.gov/oppts and select “Test Methods and Guidelines.”

Under FFDCA section 408(g), 21 U.S.C. 346a(g), any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2008-0763 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before July 26, 2010. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2008-0763, by one of the following methods:

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

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

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

In the Federal Register of November 14, 2008 (73 FR 67512) (FRL-8388-3), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 7E7231) by Interregional Research Project Number 4 (IR-4), Rutgers University, 500 College Rd. East, Suite 201 W., Princeton, NJ 08540 (on behalf of the United States Department of Agriculture-Agricultural Research Service-Appalachian Fruit Research Station (USDA-ARS-AFRS), 2217 Wiltshire Rd., Kearneysville, WV 25430). The petition requested that 40 CFR part 174 be amended by establishing an exemption from the requirement of a tolerance for residues of the coat protein of plum pox virus. This notice referenced a summary of the petition prepared by the petitioner, IR-4 (on behalf of USDA-ARS-AFRS), which is available in the docket, http://www.regulations.gov . There were no comments received in response to the notice of filing.

Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to section 408(c)(2)(B) of FFDCA, in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in section 408(b)(2)(C) of FFDCA, which require EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue.... ” Additionally, section 408(b)(2)(D) of FFDCA requires that the Agency consider “available information concerning the cumulative effects of [a particular pesticide's] residues and other substances that have a common mechanism of toxicity.”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness, and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

The coat protein of plum pox virus is produced by a plant-infecting Potyvirus in Prunus species, which include plum (cultivated and native or wild species), peaches, almonds, nectarines, and cherries. Such stone fruits are a natural source and sink for plum pox virus. When the gene that is responsible for producing the coat protein in infected plants is genetically engineered into uninfected plum trees, the plants become resistant to the devastating disease this virus causes, which is known as “Plum Pox.” The C5 HoneySweet Plum (C5 plum) tree has been genetically engineered to contain the gene responsible for the coat protein. Ribonucleic acid (RNA) fragments derived from the virus coat protein gene cause the plant’s natural protection mechanism, post-transcriptional gene silencing (PTGS), to be primed to resist virus infection, should it occur. Although non-engineered plants initiate PTGS upon infection with the virus, the serious damage caused by the virus (such as fruit degradation and leaf chlorosis) is not prevented.

The exemption from the requirement of a tolerance for residues of nucleic acids that are part of a plant-incorporated protectant established under 40 CFR 174.507 covers the coat protein gene (sometimes called the “transgene”) of plum pox virus. The reason for establishing an exemption from the requirement of a tolerance for residues of the coat protein of plum pox virus (as opposed to the coat protein gene ) is that insertion of the gene into the C5 plum includes an open reading frame, and so the production of this protein, and thus residues of the protein in or on food, is theoretically possible. In the unlikely event that any protein is produced, dietary exposure could result. However, no virus coat protein has been detected in the C5 plum during years of extensive field trials, which is likely attributed to the early initiation of the PTGS protective mechanism in the C5 plum plants (Ref. 1). That is, while the coat protein of plum pox virus is produced in non-transgenic Prunus species infected with plum pox virus, it has not been observed (but is theoretically possible) in the transgenic plums.

To determine whether the coat protein of plum pox virus could potentially cause toxicity or allergenicity, the petitioner submitted results of an amino acid sequence similarity study. This study used two methods to compare the deduced amino acid sequence of the plum pox virus coat protein (as it could potentially be produced in the C5 plum) with sequence databases of known food allergens, toxins, and antinutrients. In the first analysis for overall similarity to toxins, allergens and anti-nutrients, none of the sequence analyses produced alignments greater than 35% identity over a window of 80 amino acids. In the second analysis specifically for allergen epitopes (regions of potential binding for triggering allergic reactions), there were no matching regions of eight amino acids, which is considered the threshold needed to indicate a potential hazard. These studies follow the guidance of the Codex Alimentarius for the safety assessment of foods derived from biotechnology (Ref. 2). Therefore, these data demonstrated that no food allergenicity, toxicity, or antinutrient effects would be expected from dietary exposure to the transgene, the overlapping plum DNA, or the protein (if it were produced) in the C5 plum.

Based upon the results of the submitted amino acid sequence similarity studies discussed in Unit III.B., the fact that plum pox virus coat protein has been in the human diet without adverse effects, and the reasonable expectation that no plum pox coat protein will be expressed in the C5 plum, the Agency granted the petitioner’s waiver request for an in vitro digestibility study.

The petitioner reported that since research began with the C5 plum in 1992, approximately 80 trees have been tested. Neither Agricultural Research Service (ARS) production staff, numbering approximately 20 people in the United States (West Virginia), nor personnel performing testing in Spain, Poland, Romania, the Czech Republic, and Chile, have, to the knowledge of EPA, experienced hypersensitivity or other adverse effects. Therefore, no hypersensitivity effects are expected from exposure to the coat protein of plum pox virus (if it were produced) in the C5 plum. The Agency expects to be notified if such a hypersensitivity incident were to occur.

The petitioner submitted scientifically based rationales, described in Unit. III.E., to justify the requested waivers of the following microbial pesticide toxicology data requirements: Tier I - acute oral toxicity/pathogenicity (Harmonized Test Guideline 885.3050), acute dermal toxicity/pathogenicity (Harmonized Test Guideline 885.3100), acute pulmonary toxicity/pathogenicity (Harmonized Test Guideline 885.3150), and acute injection toxicity/pathogenicity (Harmonized Test Guideline 885.3200). The Agency uses the microbial pesticide data requirements (see 40 CFR 158.2130) because the C5 plum has virus sequences similar to microbial products based on plant viruses. Basing the decision to grant the requested waiver of the data requirements on the available data and information without requiring further toxicity testing and residue data is similar to the Agency position regarding toxicity testing and the requirement of residue data for microbial products based on plant viruses from which this plant-incorporated protectant was derived (see 40 CFR 158.2130). For microbial products, further toxicity testing and residue data are triggered by significant adverse acute effects in studies such as the mouse oral toxicity study, to verify the observed adverse effects and clarify the source of these effects (Tiers II & III).

Several pertinent issues were considered by the Agency concerning the potential for dietary hazards from the C5 plum before determining whether to grant the petitioner’s waiver requests. When considering registrations for plant-incorporated protectants to be used in food commodities, the potential for dietary exposure to novel proteins that may possess toxic, allergenic, or antinutrient properties must be evaluated. Sufficient information demonstrating that plant viruses are both in the human diet and exist in the human intestine without negative effects was reviewed by the Agency. Since Potyviruses contain other proteins in addition to coat protein and are not the only plant viruses found in food commodities, humans can be exposed to a wide range of plant virus proteins (Ref. 3). Proteins of plant viruses, including the coat protein from plum pox virus, neither act as antinutrients when ingested, nor possess any properties that lead to toxicity or allergenicity (Ref. 4). Therefore, based on the lack of hazard from existing dietary exposure to plant viruses and the low expected potential for expression of the plum pox coat protein, there is a reasonable certainty of no harm from the aggregate exposure to the residues of the coat protein of plum pox virus, should it be expressed.

Another consideration is the product of the coat protein gene of plum pox virus as inserted into the C5 plum. In the natural virus infection, its replication intermediates do not require DNA since a virus-encoded, RNA-Dependent RNA-polymerase is used. To express the gene in a plant, a DNA copy must be made and incorporated into the plant’s genome, so that the plant will express messenger ribonucleic acid (mRNA) homologous to the virus coat protein only. Often for a Potyvirus, this means also adding a start codon and short leader sequence since the viral start codon is distant from the coat protein sequence in the normal viral RNA genome (Ref. 4). As discussed in Unit III.B., a full sequence analysis and comparison with known toxins, allergens, and antinutrients demonstrated that neither the coat protein gene nor the plum pox coat protein gene inserted into the C5 plum were sufficiently homologous to trigger an adverse reaction.

Consideration of the low potential for production of protein is important since the silenced inserted gene has an open reading frame. Although there are known instances where suppression of gene-silencing can occur (e.g., PTGS inhibition such as produced by some other plant viruses, and low temperature growth), there are no foreseeable events that would lead to a breakdown in resistance under field conditions for the C5 plum. PTGS virtually eliminates the possibility of translation of virus coat protein from viral mRNA. When the coat protein gene insert is transcribed to the mRNA for the coat protein of plum pox virus, the mRNA is quickly cleaved and thus cannot be translated into the protein. If the plant becomes infected with the virus, the PTGS mechanism rapidly degrades the mRNA from the virus and prevents the production of new virions within the plant’s tissues (Ref. 1).

In light of these considerations, the Agency granted the petitioner’s requests to waive the listed data requirements.

1. Ravelonandro, M., J. Kundu, P. Briard, M. Monison and R. Scorza. 2007. The Effect of Co-Existing Prunus Viruses on Transgenic Plum Pox Virus Resistant Plums. ISHS Acta Horticulturae 738: International Symposium on Biotechnology of Temperate Fruit Crops and Tropical Species, pp. 653-656.

2. Codex Alimentarius (2003) Foods Derived from Biotechnology, United Nations, Food and Agriculture Organization, World Health Organization.

3. Zhang, T., M. Breitbart, W. H. Lee, J.-Q. Run, C. L. Wei, S. W. L. Soh, M. L. Hibberd, E. T. Liu, F. Rohwer, Y. Ruan. 2006. RNA Viral Community in Human Feces: Prevalence of Plant Pathogenic Viruses. PLOS Biology 4(1):108-118.

4. Shukla, D. D., C. W. Ward. A. A. Brunt. 1994. The Potyviridae. CAB International. University Press. Cambridge, UK.

In examining aggregate exposure, section 408 of FFDCA directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

The Agency has considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue and to other related substances. These considerations include dietary exposure under the tolerance exemption for residues of the coat protein of plum pox virus, all other exemptions in effect for residues of virus coat proteins and virus coat protein gene plant-incorporated protectants, and exposure from non-occupational sources. Exposure to the coat protein of plum pox virus via the inhalation or dermal routes is not likely, since PTGS virtually eliminates the possibility of translation of the coat protein of plum pox virus from viral mRNA. In the event the protein is expressed in the C5 plum, it would be contained within plant cells, either eliminating the possibility of dermal and inhalation exposure, or reducing those exposure routes to negligible levels. This same evidence supports the Agency’s conclusion that oral exposure from drinking water would be highly unlikely. Even if exposure occurred through an unlikely route, such as inhalation, the potential for the coat protein of plum pox virus to be an allergen is low, as evidenced by the lack of sequence homology with known allergens and the lack of hypersensitivity incidents in individuals handing C5 plum trees, fruits, and other plant tissues during 18 years of research. Exposure via residential or lawn use to infants and children is also not expected because the use sites for the coat protein gene of plum pox virus are agricultural. In the unlikely event that the C5 plum expresses any viral coat protein, oral exposure from ingestion of fresh or processed fruit could occur, but as discussed in Unit. III.E., the protein would not be expected to cause any adverse reactions.

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

EPA has not found the coat protein of plum pox virus to share a common mechanism of toxicity with any other substances, and the coat protein of plum pox virus does not appear to produce a toxic metabolite. For the purposes of this tolerance exemption action, therefore, EPA has assumed that the coat protein of plum pox virus does not have a common mechanism of toxicity with other substances. For information regarding EPA’s efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA’s website at http://www.epa.gov/pesticides/cumulative .

FFDCA section 408(b)(2)(C) provides that EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database unless EPA determines that a different margin of safety will be safe for infants and children.

Based on its review and consideration of all of the data and other information submitted by the petitioner discussed in Unit III., in addition to its previous knowledge of plant viruses and plant virus coat proteins discussed in Unit III.E., EPA concludes that there is a reasonable certainty that no harm will result to the United States population, including infants and children, from aggregate exposure to residues of the coat protein of plum pox virus. This includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion because the data available on the coat protein of plum pox virus demonstrate a lack of toxicity and pathogenicity. Plum pox Potyvirus (including the coat protein of plum pox virus) is not known to produce any recognized toxins, novel proteins, antinutrients, virulence factors, or enzymes normally associated with pathogen invasiveness or toxicity in mammals. Thus, there are no threshold effects of concern and, as a result, the Agency has concluded that the additional tenfold margin of safety for infants and children is unnecessary in this instance.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint U.N. Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

The Codex has not established a MRL for the coat protein of plum pox virus.

The Agency concludes that there is a reasonable certainty that no harm will result to the United States population, including infants and children, from aggregate exposure to residues of the coat protein of plum pox virus. Therefore, an exemption is established for residues of the coat protein of plum pox virus in or on the food commodities of fruit, stone, Group 12; and almond.

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

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

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

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

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.gpoaccess.gov/ecfr . To access the harmonized test guidelines referenced in this document electronically, please go to http://www.epa.gov/oppts and select “Test Methods and Guidelines.”

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2009-0920 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before July 26, 2010. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2009-0920, by one of the following methods:

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

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

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

In the Federal Register of February 4, 2010 (75 FR 5793) (FRL-8807-5), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 9F7639) by Syngenta Crop Protection, Inc., P.O Box 18300, Greensboro, NC 27419. The petition requested that 40 CFR 180.226 be amended by establishing tolerances for residues of the herbicide diquat, 6,7-dihydrodipyrido(1,2-a:2'1'-c)pyrazinediium, derived from application of the dibromide salt and calculated as the cation, in or on canola, meal at 3.0 parts per million (ppm); and canola, seed at 1.0 ppm. That notice referenced a summary of the petition prepared by Sygenta Crop Protection, Inc., the registrant, which is available in the docket, http://www.regulations.gov . There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has increased the tolerance levels for canola, meal and canola, seed to 6.0 ppm and 2.0 ppm, respectively. The reason for these changes is explained in Unit IV.C.

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

Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for diquat dibromide including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with diquat dibromide follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Diquat dibromide exhibits low acute toxicity via the oral and inhalation routes of exposure but is moderately to severely toxic via the dermal route of exposure. Diquat dibromide is not a skin irritant nor a dermal sensitizer, but it is considered a moderate to severe eye irritant.

Subchronic and chronic studies in several species indicate multiple target sites for diquat dibromide toxicity. In subchronic dermal exposure studies in rats, diquat dibromide showed evidence of severe systemic toxicity, including high mortality and clinical signs. In a subchronic inhalation study in rats, the lung was determined to be the primary target site for inhalation toxicity. Chronic feeding studies in dogs, rats, mice, and rabbits indicate that target sites include the eyes and kidneys in both males and females and the adrenals and epididymides in males. There was no evidence of neurotoxicity in acute and subchronic studies in rats and no evidence of endocrine disruption or immunotoxicity in the toxicology studies available for diquat dibromide. In accordance with the 1986 Guidelines for Carcinogen Risk Assessment, diquat dibromide was classified in Group E (evidence of non-carcinogenicity to humans), based on a lack of evidence of carcinogenicity in acceptable studies in rats and mice and a lack of concern for mutagenicity.

There was no evidence of increased quantitative or qualitative susceptibility of in utero animals or of offspring in developmental toxicity studies in mice, rabbits, and rats or in the 2-generation reproduction study in rats. Effects in the offspring were observed only at or above dose levels which resulted in parental toxicity.

Specific information on the studies received and the nature of the adverse effects caused by diquat dibromide as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document “Diquat Dibromide: HED Risk Assessment for Tolerance Reassessment Eligibility Document (TRED.),” p. 10 in docket ID number EPA-HQ-OPP-2010-0920.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD) and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm .

A summary of the toxicological endpoints for diquat dibromide used for human risk assessment can be found at http://www.regulations.gov in the document “Diquat Dibromide: Human Health Risk Assessment for the Section 18 Use on Canola in Oklahoma and Kentucky,” p. 3 in docket ID number EPA-HQ-OPP-2010-0920.

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to diquat dibromide, EPA considered exposure under the petitioned-for tolerances as well as all existing diquat dibromide tolerances in 40 CFR 180.226. EPA assessed dietary exposures from diquat dibromide in food as follows:

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

Such effects were identified for diquat dibromide. In the acute neurotoxicity study in rats, clinical signs of systemic toxicity (e.g., piloerection, diarrhea, urinary incontinence, upward curvature of the spine, subdued behavior) and decreased body-weight gains were observed after a single dose. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by Individuals (CSFII). As to residue levels in food, EPA assumed tolerance-level residues and 100 percent crop treated (PCT) for all existing uses of diquat dibromide and the proposed new use on canola.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994-1996 and 1998 CSFII. As to residue levels in food, EPA assumed tolerance-level residues and 100 PCT for crops with direct diquat uses. For crops with tolerances to cover irrigation with diquat-treated water, anticipated residue levels from irrigation trials were used in conjunction with estimates of percent of crops irrigated. For fish, average residues were assumed. Default processing factors from Dietary Exposure Evaluation Model v.7.81 were used in the analysis for all processed commodities, except potato chips and dried potato flakes, which have their own tolerances based on submitted processing data.

iii. Cancer . Based on the results of carcinogenicity studies in rats and mice, EPA classified diquat dibromide in Group E (evidence of non-carcinogenicity to humans). Therefore, an exposure assessment to evaluate cancer risk is unnecessary for this chemical.

iv. Anticipated residue and PCT information . Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to section 408(f)(1) of FFDCA that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such Data Call-Ins as are required by section 408(b)(2)(E) of FFDCA and authorized under section 408(f)(1) of FFDCA. Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area.

The Agency estimated the PCT for existing uses as follows:

EPA estimated PCT for several commodities that have tolerances to cover inadvertent residues of diquat from irrigation with diquat dibromide-treated water: Barley 36%; corn 19%; legume vegetables (subgroup 6C) 32%; oats 7%; sorghum 15%; soybean 9%; sugarcane 54%; and wheat 14%. One hundred PCT was assumed for all other irrigated crops and crops with direct diquat dibromide uses.

EPA estimated PCT for these commodities by estimating the percent crop irrigated, which serves as an upperbound for crops that may be exposed to diquat in irrigation water. The percent crop irrigated is an estimate of the share of total production that is irrigated, and is based on 2009 data from USDA's National Agricultural Statistics Service. Use of these estimates in the exposure assessment is conservative, because it is the equivalent of assuming 100% of irrigated crops are irrigated with water from diquat-treated canals. In fact, even in areas with surface water delivery systems, all irrigation canals may not be treated with diquat. Additionally, some crops, even in the heavily irrigated areas of the West, are not irrigated, such as dryland grain production.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which diquat dibromide may be applied in a particular area.

2. Dietary exposure from drinking water . Diquat dibromide is registered for both terrestrial and aquatic uses. The Agency used screening level water exposure models to estimate residues of diquat in drinking water from the terrestrial uses. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of diquat dibromide. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

Based on the First Index Reservoir Screening Tool (FIRST) and Screening Concentration in Ground Water (SCI-GROW) models, the estimated drinking water concentrations (EDWCs) of diquat dibromide from terrestrial uses for acute exposures are estimated to be 13.2 parts per billion (ppb) for surface water and 0.006 ppb for ground water. The EDWCs for chronic exposures are estimated to be 0.4 ppb for surface water and 0.006 ppb for ground water.

Diquat dibromide is registered for aquatic weed control and, as such, may be applied directly to bodies of water. The maximum contaminant level (MCL) for diquat established by the EPA Office of Water is 20 ppb. EPA does not expect residues from direct applications of diquat dibromide to water to exceed the MCL because of the tendency of diquat to sorb nearly irreversably to soil and sediment.

Since direct aquatic applications are estimated to result in higher concentrations of diquat in drinking water than terrestrial uses, EPA used the MCL of 20 ppb to assess the contribution to drinking water in both the acute and chronic dietary risk assessments.

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

Diquat dibromide is currently registered for the following uses that could result in residential exposures: Applications to turf, recreational ponds and lakes; general weed control in and around home and garden sites; and landscape uses by residential handlers. EPA assessed residential exposure using the following assumptions: Residential handlers may receive short-term dermal and inhalation exposure when applying diquat dibromide products. EPA assessed short-term dermal and inhalation residential handler exposures for four scenarios: Mixing, loading, and applying products with a low-pressure handwand or backpack sprayer; and applying diquat dibromide products in an aerosol can or using a trigger pump sprayer. Adults and children may also be exposed to diquat dibromide residues on a short-term basis through dermal contact with treated turf and from swimming activities in treated recreational ponds and lakes. In addition, toddlers may receive short-term oral exposure from incidental ingestion during post-application activities on treated turf. EPA assessed the following post-application exposure scenarios:

i. Adult and toddler post-application dermal exposure,

ii. Recreational exposure from playing golf on treated turf,

iii. Toddlers' incidental ingestion of pesticide residues on lawns from hand-to-mouth transfer,

iv. Toddlers' object-to-mouth transfer from mouthing of pesticide-treated turfgrass,

v. Toddlers' incidental ingestion of soil from pesticide-treated residential areas, and

vi. Recreational exposure of adults and children from swimming in treated ponds and lakes.

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www.epa.gov/pesticides/trac/science/trac6a05.pdf .

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

EPA has not found diquat dibromide to share a common mechanism of toxicity with any other substances, and diquat dibromide does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that diquat dibromide does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act (FQPA) Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity . The prenatal and postnatal toxicity database for diquat dibromide includes developmental toxicity studies in rats, mice, and rabbits and a 2-generation reproduction toxicity study in rats. There was no evidence of increased quantitative or qualitative susceptibility of fetuses or offspring in any of these studies.

In the developmental study in rats, fetal effects (decreased fetal, litter, and gravid uterine weights; an increased incidence of fetuses with hemorrhagic kidney; and delayed skeletal ossification) occurred at a higher dose than the dose causing effects in maternal animals (decreased body-weight gains and food consumption during dosing). At the LOAEL for fetal effects, maternal effects included one death and clinical signs (piloerection and subdued activity). In the developmental study in rabbits, fetal effects (decreased fetal body weight, an increased incidence of friable/mottled livers, and an increased incidence of minor skeletal alterations) also occurred at a higher dose than the dose causing maternal toxicity (body-weight loss and decreased food consumption). At the LOAEL for fetal effects, maternal effects included deaths and clinical signs (diarrhea, subdued activity, thin appearance, mucus, blood, little or no feces in tray). Results in the mouse developmental toxicity study were similar. Fetal effects (decreased fetal body weight and an increased incidence of overall skeletal alterations) occurred at a higher dose than the dose causing maternal toxicity (mortality, clinical signs (piloerection, respiratory sounds), and decreased body weight gain during the dosing period). Maternal effects at the LOAEL for fetal effects included additional clinical signs (abnormal posture, lethargy, tremors, unsteadiness on feet, emaciation, ptosis) and a slight decrease in body weight (91% of control) at termination.

In the 2-generation reproduction study in rats, offspring effects included a decreased number of live pups per litter on days 1-22, decreased pup body weight gain during lactation, and an increased incidence of kidney lesions. Parental effects, including clinical signs, ulceration of the tongue, and partial/ total cataract, were observed at the same dose causing toxicity in the offspring.

3. Conclusion . EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity database for diquat dibromide is adequate to assess its prenatal and postnatal toxicity. In accordance with Part 158 Toxicology Data requirements, an immunotoxicity study (Harmonized Test Guideline 870.7800) is required for diquat dibromide. In the absence of specific immunotoxicity studies, EPA has evaluated the available toxicity data for evidence of immunotoxicity. There are no indications in the available studies that organs associated with immune function, such as the thymus and spleen, are affected by diquat dibromide. Therefore, EPA does not believe that conducting immunotoxicity testing will result in a point of departure lower than those already selected for diquat dibromide, and an additional database uncertainty factor is not needed to account for the lack of this study.

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

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

iv. There are no significant residual uncertainties identified in the exposure databases for diquat dibromide. Additional information from the canola residue studies on the length of storage of canola samples prior to analysis and confirmatory residue data for canola are required. However, as explained in this Unit, EPA does not expect these data to have a measurable impact on exposure estimates for diquat dibromide.

a. Data from the West German and United Kingdom field trials on the length of storage of canola samples prior to analysis were not submitted. EPA is requiring these data; however, EPA already has data for other crops showing that diquat dibromide is stable in frozen storage for 6 to 8 months. In addition, based on its structure, EPA expects diquat dibromide to be stable in frozen storage much longer than the 6 to 8 months for which data are available. Therefore, EPA does not expect the length of time the samples were stored to affect its conclusions regarding the field trial studies.

b. EPA has determined that the residue trials conducted in European Union (EU) countries are adequate to support tolerances and conditional registration of diquat dibromide as a preharvest desiccant on canola in the United States. However, EPA is aware that the Interregional Research Project number 4 (IR-4) has conducted field trials in the U.S. that would support this same use pattern. Residues of diquat dibromide on canola grown in the U.S. are not expected to differ significantly from residues reported in the EU studies, since harvest aid/desiccant applications are made late in the growing season with little time between application and harvest. In addition, since the recommended tolerances for canola seed and meal have been increased by a factor of 2X to harmonize with Codex (See Unit IV.C below), there is little chance residues in the U.S. trials will exceed these tolerances. Nevertheless, since the IR-4 field work has already been completed and the study reports will be available in July, 2011, EPA is requiring that these studies be submitted as a condition of registration to confirm the tolerance levels. EPA notes that canola is a minor contributor to estimated dietary exposure in both the acute and chronic dietary exposure assessments, accounting for less than 1% of total exposure for the most highly exposed population subgroup (children 1 to 2 years old) in each case. Therefore, even if the U.S. field trials were to indicate higher residues than the EU trials, the impact on dietary exposure would be negligible.

The acute dietary food exposure assessment was performed based on 100 PCT and tolerance-level residues. The chronic dietary exposure assessment was refined using reliable irrigation data from USDA, average residues for fish from valid residue studies, and anticipated residues for irrigated crops that were derived from valid irrigation trials. The established MCL of 20 ppb used in the acute and chronic dietary exposure assessments is a conservative value that is considered protective of exposures from both terrestrial and direct aquatic applications of diquat dibromide. EPA used similarly conservative assumptions to assess postapplication exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by diquat dibromide.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute aPAD and chronic cPAD. For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to diquat dibromide will occupy 1% of the aPAD for children, 1 to 2 years old, the population group receiving the greatest exposure.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to diquat dibromide from food and water will utilize 35% of the cPAD for children, 1 to 2 years old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of diquat dibromide is not expected.

3. Short-term risk . Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Diquat dibromide is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to diquat dibromide.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 110 for infants and toddlers, 150 for children 6 to 12 years old, and 260 for teenagers and adults. The aggregate MOEs for infants and toddlers include dietary exposures from food and drinking water as well as dermal and incidental oral postapplication exposures from activities on treated turf. The aggregate MOE for children includes dietary exposures from food and drinking water as well as dermal postapplication exposure from activities on treated turf and exposures from swimming in ponds and lakes treated with diquat dibromide. The aggregate MOEs for teenagers and adult population subgroups include dietary exposures, residential handler dermal exposures, dermal postapplication exposures from activities on treated turf, and exposures from swimming in ponds and lakes treated with diquat dibromide. EPA did not aggregate residential handler inhalation exposures with exposures by other routes in the aggregate exposure assessment for teenagers and adults, since the effects associated with inhalation exposure (increased mean lung weight in males, mottling and reddening of lungs in females, and lung lesions) are different from those used to assess the dermal and oral routes (body-weight loss and decreased food consumption). Inhalation MOEs for residential handlers ranged from 570 (aerosol can application) to 11,000,000 (trigger sprayer). Because EPA's level of concern for diquat dibromide is a MOE of 100 or below, these MOEs are not of concern.

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

EPA did not establish a POD for use in assessing intermediate-term residential exposures, because diquat dibromide is not registered for any use patterns that would result in such exposures. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for diquat dibromide.

5. Aggregate cancer risk for U.S. population . Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, diquat dibromide is not expected to pose a cancer risk to humans.

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

Adequate enforcement methodology (High Performance Liquid Chromatographic Method (HPLC)) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov . Method A (a spectrophotometric method) in the Pesticide Analytical Manual (PAM) Vol. II. is also available to enforce tolerances for residues of diquat in/on plant and livestock commodities.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by section 408(b)(4) of FFDCA. The Codex Alimentarius is a joint U.N. Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, section 408(b)(4) of FFDCA requires that EPA explain the reasons for departing from the Codex level.

The Codex has established an MRL for diquat in or on rapeseed (which includes canola seed) at 2.0 ppm. This MRL is the same as the tolerance being established for diquat dibromide on canola, seed in the United States.

EPA has increased the tolerance level for canola, seed from 1.0 ppm to 2.0 ppm to harmonize with the established Codex MRL of 2.0 ppm for rapeseed. EPA has also increased the tolerance level for canola meal from 3.0 ppm to 6.0 ppm. The tolerance level for meal was derived by applying the maximum theoretical concentration factor of 3X for canola meal to the canola seed tolerance of 2.0 ppm.

EPA is also correcting minor errors in the regulations for diquat at 40 CFR 180.226, as follows: EPA is correcting typographical errors in the chemical name for diquat in paragraphs (a)(2)(i) and (a)(3). EPA is also removing paragraph (a)(4), which reads “There are no U.S. registrations as of December 6, 1995.” This statement was originally included as a footnote to import tolerances for banana and coffee, established in the Federal Register of March 27, 1996 (61 FR 13474) (FRL-5348-1). The statement was inadvertently moved to a separate paragraph in subsequent editions of the CFR. EPA is correcting this error by removing paragraph (a)(4) and adding an updated statement regarding U.S. registrations as a footnote to the banana and coffee tolerances. The updated footnote to the table in paragraph (a)(3) reads “There are no U.S. registrations as of May 26, 2010.”

Therefore, tolerances are established for residues of diquat, 6,7-dihydrodipyrido(1,2-a:2'1'-c)pyrazinediium derived from application of the dibromide salt and calculated as the cation, in or on canola, meal at 6.0 ppm; and canola, seed at 2.0 ppm.

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

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

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

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

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR cite at http://www.gpoaccess.gov/ecfr . To access the harmonized test guidelines referenced in this document electronically, please go to http://www.epa.gov/ocspp and select “Test Methods and Guidelines.”

Under section 408(g) of FFDCA, 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2009-0273 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before July 26, 2010. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket that is described in ADDRESSES . Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit this copy, identified by docket ID number EPA-HQ-OPP-2009-0273, by one of the following methods:

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

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

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

In the Federal Register of June 10, 2009 (74 FR 27538) (FRL-8417-7), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 9F7547) by Makhteshim-Agan of North America, Inc., 4515 Falls of Neuse Road, Raleigh, NC 27609. The petition requested that 40 CFR 180.598 be amended by establishing tolerances for residues of the insecticide novaluron, N -[[[3-chloro-4-[1,1,2-trifluoro-2- (trifluoromethoxy)ethoxy]phenyl]amino]carbonyl]-2,6-difluorobenzamide, in or on sorghum, grain at 3 parts per million (ppm); sorghum, aspirated grain fractions at 25 ppm; sorghum, forage at 6 ppm; and sorghum, stover at 40 ppm. Additionally, the petition requested to amend existing tolerances of novaluron in or on poultry, fat from 0.40 ppm to 7.0 ppm; poultry, meat from 0.03 ppm to 0.40 ppm; poultry, meat byproducts from 0.04 ppm to 0.80 ppm; hog, fat from 0.05 ppm to 1.5 ppm; hog, meat from 0.01 ppm to 0.07 ppm; hog, meat byproducts from 0.01 ppm to 0.15 ppm; and eggs from 0.05 ppm to 1.5 ppm. That notice referenced a summary of the petition prepared by Makhteshim-Agan of North America, Inc., the registrant, which is available in the docket, http://www.regulations.gov . There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA has revised the proposed tolerance for hog, meat byproducts and has additionally determined that individual tolerances on poultry, liver; poultry, kidney; hog, liver; and hog, kidney are necessary. The reason for these changes is explained in Unit IV.C.

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

Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for novaluron including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with novaluron follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Novaluron has low acute toxicity via the oral, dermal and inhalation routes of exposure. It is not an eye or skin irritant and is not a dermal sensitizer. In subchronic and chronic toxicity studies, novaluron primarily produced hematotoxic effects (toxicity to blood) such as methemoglobinemia, decreased hemoglobin, decreased hematocrit, and decreased RBCs (or erythrocytes) associated with increased erythropoiesis. Increased spleen weights and/or hemosiderosis in the spleen were considered to be due to enhanced removal of damaged erythrocytes and not to an immunotoxic effect.

There was no maternal or developmental toxicity seen in the rat and rabbit developmental toxicity studies up to the limit doses. In the 2-generation reproductive toxicity study in rats, both parental and offspring toxicity (increased spleen weights) were observed at the same dose. Reproductive toxicity (decreases in epididymal sperm counts and increased age at preputial separation in the F1 generation) was observed at a higher dose than the hematotoxicity.

Clinical signs of neurotoxicity and neuropathology were seen in the rat acute neurotoxicity study at the limit dose. However, no signs of neurotoxicity or neuropathology were observed in the subchronic neurotoxicity study in rats at similar doses or in any other subchronic or chronic toxicity study in rats, mice or dogs. In addition, there were no clinical signs of toxicity observed in the acute oral toxicity study with novaluron (LD 50 >5,000 milligrams/kilogram (mg/kg)). Therefore, there is no concern for neurotoxicity resulting from exposure to novaluron.

There was no evidence of carcinogenic potential in either the rat or mouse carcinogenicity studies and no evidence of mutagenic activity in the submitted mutagenicity studies, including a bacterial ( Salmonella, E. coli ) reverse mutation assay, an in vitro mammalian chromosomal aberration assay, an in vivo mouse bone-marrow micronucleus assay and a bacterial DNA damage/repair assay. Based on the results of these studies, EPA has classified novaluron as “not likely to be carcinogenic to humans.”

Specific information on the studies received and the nature of the adverse effects caused by novaluron as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document: “Novaluron: Human-Health Risk Assessment for Proposed Section 3 Use on Grain Sorghum.” at pages 27-30 in docket ID number EPA-HQ-OPP-2009-0273.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level - generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD) - and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm .

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

1. Dietary exposure from food and feed uses . In evaluating dietary exposure to novaluron, EPA considered exposure under the petitioned-for tolerances as well as all existing novaluron tolerances in 40 CFR 180.598. EPA assessed dietary exposures from novaluron in food as follows:

i. Acute exposure . Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. No such effects were identified in the toxicological studies for novaluron; therefore, a quantitative acute dietary exposure assessment is unnecessary.

ii. Chronic exposure . In conducting the chronic dietary exposure assessment EPA used the food consumption data from the United States Department of Agriculture (USDA) 1994-1996 and 1998 Continuing Surveys of Food Intakes by Individuals (CSFII). As to residue levels in food, EPA incorporated average percent crop treated (PCT) data for apples, cabbage, cotton, pears, and potatoes and estimated PCT data for the new use on sorghum; 100 PCT was assumed for the remaining food commodities. The Agency utilized anticipated residues (ARs) for most commodities, including meat, milk, hog, and poultry commodities. Average field trial residues were used for pome fruit, sugarcane, bushberry, Brassica leafy greens, stone fruit, bell pepper, nonbell pepper, cucumber, summer squash, cantaloupe, strawberry, succulent snap bean, dry bean seed, and Swiss chard, and average greenhouse trial residues for tomato. Empirical processing factors for apple juice (translated to pear and stone fruit juice), tomato paste and puree, and Dietary Exposure Evaluation Model (DEEM) default processing factors for the remaining processed commodities were used to estimate anticipated residues in processed foods.

iii. Cancer . Based on the data summarized in Unit III.A., EPA has concluded that novaluron does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and PCT information . Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area.

The Agency estimated the average PCT for existing uses as follows:

Apples at 15%; cabbage at 10%; cotton at 2.5%; pears at 10%; and potatoes at 2.5%.

In most cases, EPA uses available data from USDA/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and the National Pesticide Use Database for the chemical/crop combination for the most recent 6-7 years. EPA uses an average PCT for chronic dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than one. In those cases, 1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA uses a maximum PCT for acute dietary risk analysis. The maximum PCT figure is the highest observed maximum value reported within the recent 6 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%.

The Agency estimated the PCT for new uses as follows:

Grain sorghum at 5%.

EPA utilized estimated PCT data in the chronic dietary risk assessment for the new use on grain sorghum, based on the market leader approach. The market leader approach is the comparison of the PCT with all chemicals of a specific type (i.e., herbicide, insecticide, etc.) on a specific crop and choosing the highest PCT (market leader) as the PCT for the new use. This method of estimating a PCT for a new use of a registered pesticide or a new pesticide produces a high-end estimate that is unlikely, in most cases, to be exceeded during the initial 5 years of actual use. The predominant factors that bear on whether the estimated PCT could be exceeded are: The extent of pest pressure on the crops in question; the pest spectrum of the new pesticide in comparison with the market leaders as well as whether the market leaders are well-established for this use; and resistance concerns with the market leaders.

Novaluron has a relatively narrow spectrum of activity compared to the market leaders and specifically targets lepidopterous insects, which are not key pests of grain sorghum. Additionally, there are no resistance or pest pressure issues identified for the use of novaluron on grain sorghum. All information currently available has been considered for use on grain sorghum, and EPA concludes that it is unlikely that the actual grain sorghum PCT with novaluron will exceed the estimated PCT for new uses during the next 5 years.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which novaluron may be applied in a particular area.

2. Dietary exposure from drinking water . The residues of concern in drinking water are novaluron and its chlorophenyl urea and chloroaniline degradates. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for novaluron and its degradates in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of novaluron. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm .

The following models were used to assess residues of concern in drinking water: The Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) for parent novaluron in surface water; the First Index Reservoir Screening Tool (FIRST) for chlorophenyl urea and chloroaniline degradates in surface water; and the Screening Concentration in Ground Water (SCI-GROW) model for novaluron, chlorophenyl urea and chloroaniline in ground water. The estimated drinking water concentrations (EDWCs) of novaluron, chlorophenyl urea, and chloroaniline for chronic exposures for non-cancer assessments are estimated to be 0.76 parts per billion (ppb), 0.89 ppb and 2.6 ppb, respectively, for surface water and 0.0056 ppb, 0.0045 ppb and 0.0090 ppb, respectively, for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. The highest drinking water concentrations were estimated for surface water. Of the three EDWC values for surface water, the chronic EDWC for the terminal metabolite, chloroaniline, is the highest (assuming 100% molar conversion from parent to aniline). This is consistent with the expected degradation pattern for novaluron. Therefore, for chronic dietary risk assessment, the water concentration value for chloroaniline of 2.6 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Novaluron is not registered for any specific use patterns that would result in residential exposure.

4. Cumulative effects from substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” EPA has not found novaluron to share a common mechanism of toxicity with any other substances, and novaluron does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that novaluron does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www.epa.gov/pesticides/cumulative .

1. In general . Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity . The prenatal and postnatal toxicology database for novaluron includes rat and rabbit prenatal developmental toxicity studies and a 2-generation reproduction toxicity study in rats. There was no evidence of increased quantitative or qualitative susceptibility following in utero exposure to rats or rabbits in the developmental toxicity studies and no evidence of increased quantitative or qualitative susceptibility of offspring in the reproduction study. Neither maternal nor developmental toxicity was seen in the developmental studies up to the limit doses. In the reproduction study, offspring and parental toxicity (increased absolute and relative spleen weights) were similar and occurred at the same dose; additionally, reproductive effects (decreases in epididymal sperm counts and increased age at preputial separation in the F1 generation) occurred at a higher dose than that which resulted in parental toxicity.

3. Conclusion . EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity database for novaluron is complete except for immunotoxicity testing. Recent changes to 40 CFR part 158 make immunotoxicity testing (OPPTS Guideline 870.7800) required for pesticide registration; however, the existing data are sufficient for endpoint selection for exposure/risk assessment scenarios, and for evaluation of the requirements under the FQPA. Although effects were seen in the spleen in two studies, as explained in Unit III.A., EPA has concluded that novaluron does not directly target the immune system and the Agency does not believe that conducting a functional immunotoxicity study will result in a NOAEL lower than the regulatory dose for risk assessment; therefore, an additional database uncertainty factor is not needed to account for potential immunotoxicity.

ii. There were signs of neurotoxicity in the acute neurotoxicity study in rats, including clinical signs (piloerection, fast/irregular breathing), functional observation battery (FOB) parameters (head swaying, abnormal gait), and neuropathology (sciatic and tibial nerve degeneration). However, the signs observed were not severe, were seen only at the limit dose (2,000 mg/kg/day) and were not reproducible. No signs of neurotoxicity or neuropathology were observed in the subchronic neurotoxicity study in rats at doses up to 1,752 mg/kg/day in males and 2,000 mg/kg/day in females or in any other subchronic or chronic toxicity study in rats, mice or dogs, including the developmental and reproduction studies. In addition, no clinical signs of toxicity were observed in the acute oral toxicity study (LD 50 > 5,000 mg/kg). Therefore, novaluron does not appear to be a neurotoxicant, and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

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

iv. Although storage stability data has been requested for grain sorghum forage, grain, and stover, there are no residual uncertainties identified in the exposure databases because acceptable storage stability data is available for various commodities which demonstrate the stability of novaluron in/or on food commodities for up to 15.3 months, which exceeds the longest storage time (9.0 months for grain sorghum forage) of the grain sorghum commodities in the field trials. The chronic dietary food exposure assessment utilized tolerance level residues or anticipated residues that are based on reliable field trial data, and reliable data from processing studies or worst case assumptions. The chronic assessment also utilized PCT data (average PCT for several currently registered commodities and estimated PCT data for the new use on grain sorghum), which have a valid basis and are considered to be reliable. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to novaluron in drinking water. Residential exposures are not expected. These assessments will not underestimate the exposure and risks posed by novaluron.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. No adverse effect resulting from a single oral exposure was identified and no acute dietary endpoint was selected. Therefore, novaluron is not expected to pose an acute risk.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to novaluron from food and water will utilize 32% of the cPAD for children 1 to 2 years old, the population group receiving the greatest exposure. There are no residential uses for novaluron.

3. Short- and intermediate-term risk . Short- and intermediate-term aggregate exposure takes into account short- and intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Because no short- or intermediate-term adverse effect was identified, novaluron is not expected to pose a short- or intermediate-term risk.

4. Aggregate cancer risk for U.S. population . Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, novaluron is not expected to pose a cancer risk to humans.

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

The following adequate enforcement methodologies are available to enforce the tolerance expression: A gas chromatography/electron-capture detection (GC/ECD) method and a high-performance liquid chromatography/ultraviolet (HPLC/UV) method. The methods may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov .

There are no Codex, Canadian or Mexican maximum residue limits (MRLs) established for residues of novaluron in or on grain sorghum commodities associated with this petition. There are Codex MRLs established for poultry, meat; poultry, edible offal of; and eggs at 0.01 ppm; and meat (mammalian other than marine) at 10 ppm. Additionally, there are Canadian MRLs established for meat of hogs and meat byproducts of hogs at 0.01 ppm. EPA's analysis of data used to determine the secondary residues in animal commodities, including the dietary burden in the United States for registered/proposed uses of novaluron, supports establishing tolerances in poultry, meat at 0.40 ppm; poultry, liver and kidney at 0.8 ppm; hog, meat at 0.07 ppm; and egg at 1.5 ppm. Therefore, U.S. tolerances on these animal commodities cannot be harmonized with the associated Codex or Canadian MRLs.

Based on analysis of the data supporting the petition, EPA has revised the proposed tolerance for hog, meat byproducts from 0.15 ppm to 0.10 ppm. Additionally, the Agency has determined that individual tolerances on poultry, liver at 0.80 ppm; poultry, kidney at 0.80 ppm; hog, liver at 0.10 ppm; and hog, kidney at 0.10 ppm are necessary. These revisions are based on the following:

Several tolerances for secondary residues in animal commodities have been established for novaluron based on reasonably balanced dietary burdens (RBDBs) derived from feedstuff percentages. However, new RBDBs have been established based on the proposed/established uses of novaluron, thus necessitating revisions in the proposed/established tolerances for secondary residues in or on poultry and hog commodities. Therefore, the Agency has revised the proposed tolerance for hog, meat byproducts from 0.15 ppm to 0.10 ppm and has determined that individual tolerances are necessary for hog, liver and hog, kidney at 0.10 ppm; and poultry, liver and poultry, kidney at 0.80 ppm.

Therefore, tolerances are established for residues of novaluron, N -[[[3-chloro-4-[1,1,2-trifluoro-2- (trifluoromethoxy)ethoxy]phenyl]amino]carbonyl]-2,6-difluorobenzamide, in or on sorghum, grain, grain at 3.0 ppm; grain, aspirated fractions at 25 ppm; sorghum, grain, forage at 6.0 ppm; sorghum, grain, stover at 40 ppm; poultry, fat at 7.0 ppm; poultry, meat at 0.40 ppm; poultry, liver at 0.80 ppm; poultry, kidney at 0.80 ppm; poultry, meat byproducts at 0.80 ppm; hog, fat at 1.5 ppm; hog, meat at 0.07 ppm; hog, liver at 0.10 ppm; hog, kidney at 0.10 ppm; hog, meat byproducts at 0.10 ppm; and egg at 1.5 ppm.

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

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

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

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

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

Table of Contents I. Background II. Waiver of Proposed Rulemaking and Comment III. Definition of “Underserved Rural Community” A. Definition of Rural B. Definition of Underserved IV. Collection of Information Requirements V. Regulatory Impact Analysis A. Introduction B. Why Is This Rule Needed? C. Costs and Benefits D. Regulatory Flexibility Act Analysis E. Executive Order 13132—Federalism F. Unfunded Mandates Reform Act of 1995 Regulation Text I. Background

The ORHP was authorized in December 1987 through Public Law 100-203 and is located in the HRSA. Congress charged ORHP with informing and advising HHS on matters affecting rural hospitals and health care and coordinating activities within HHS that relate to rural health care.

Section 10501(l) of Public Law 111-148 adds Section 749B to the Public Health Service Act (42 U.S.C. 293k et seq. ) by authorizing the Rural Physician Training Grant Program. HRSA is authorized to establish this new grant program for the purposes of assisting eligible entities in recruiting students most likely to practice medicine in underserved rural communities; providing rural-focused training and experience; and increasing the number of recent allopathic and osteopathic medical school graduates who practice in underserved rural communities. As required by section 749B(f), not later than 60 days after the date of enactment of Public Law 111-148, the Secretary shall, by regulation, define “underserved rural community” for purposes of this section. HRSA must create an operational definition of “underserved rural community” to help in determining how to allocate funding for the approved activities in the grant.

We note that ordinarily we publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. However, for the reasons that follow, the agency has determined to proceed directly with this IFR with request for comment pursuant to 5 U.S.C. 553(b)(3)(B) because it has determined that good cause exists which makes the usual notice and comment procedure impractical, unnecessary, and contrary to the public interest. Nevertheless, we are providing the public with a 60-day period following publication of this document to submit comments on the IFR, and appropriate comments received will be used to determine whether to amend this rule and/or will be used to inform the development of the program guidance which will delineate the structure and requirements for the grant program (upon appropriation of funds to implement the grant).

As mentioned above, section 749B(f) requires the Secretary to publish this regulation 60 days after the date of enactment of Public Law 111-148. We have determined that the usual notice and comment procedure would be impractical in this case because those procedures take significantly longer than 60 days.

We also believe it is unnecessary to undertake rulemaking involving prior notice and comment because this IFR will have limited impact, as it defines “underserved rural communities” only for purposes of the Rural Physician Training Grant Program and will not change grant or funding eligibility for any other grant program currently available through ORHP or HRSA.

Additionally, we believe it is unnecessary to undertake prior notice and comment rulemaking because, while funds for this program have not yet been appropriated, such funds might become available with little notice and awarding the funds quickly would serve an important public interest because of the necessity of assisting underserved rural communities to attract and retain needed allopathic and osteopathic medical school graduates to serve in their communities.

HRSA proposes to combine two existing definitions for “underserved” and “rural” by using the rural definition utilized by the ORHP Rural Health Grant Programs and the geographic based Health Professions Shortage Area (HPSA) and Medically Underserved Area (MUA) definitions as established by HRSA's OSD in the BHPr.

For the purposes of the Rural Physician Training Grant Program outlined in section 749B of the Public Health Services Act, HRSA must define “underserved rural communities.” In order to maintain consistency through the various Rural Health Grant Programs, we propose to use the definition for “rural” that is used for the ORHP Rural Health Grant Programs. ORHP uses a two-tiered method to determine geographic eligibility for its grant programs. All counties that are not designated as part of a Metropolitan Statistical Area (MSAs) by the Office of Management and Budget (OMB) are considered rural. This means that counties classified as part of a Micropolitan area are also considered rural. Metropolitan and Micropolitan statistical areas (metro and micro areas) are geographic entities defined by the OMB for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics. A metro area contains a core urban area of 50,000 or more population, and a micro area contains an urban core of at least 10,000 (but less than 50,000) population. Each metro or micro area consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured by commuting to work) with the urban core. The current list of MSAs and updates are available on the Internet at http://www.census.gov/population/www/metroareas/metrodef.html.

Due to the fact that entire counties are designated as Metropolitan when, in fact, large parts of many of these counties may be rural in nature, ORHP has sought a method of identifying sub-county sections of these Metropolitan counties that should also be considered/designated as rural. Rather than exclude large numbers of arguably rural citizens from eligibility for the Rural Health Grant Programs, ORHP sought a rational, data-driven method to identify/designate rural areas inside of Metropolitan counties. ORHP funded the development of “Rural/Urban Commuting Area Codes” (RUCAs), by the WWAMI Rural Research Center at the University of Washington in cooperation with the Department of Agriculture's Economic Research Service, to categorize various levels of rurality and make possible designation of “rural” areas within MSAs. Using commuting data from the Census Bureau, every census tract in the United States is assigned a RUCA code. Currently, there are ten primary RUCA codes with 30 secondary codes based on 2000 Census data and 2004 ZIP Code areas ( see Table 1).

Those Census tracts within MSAs that have RUCA codes 4 through 10 are considered rural for the purposes of ORHP Rural Health Grant Programs. In addition, those Census Tracts within MSAs that have RUCA codes 2 or 3, are individually larger than 400 square miles in area, and have a population density of less than 30 people per square mile, also are considered rural. (More information on RUCAs is available at http://www.ers.usda.gov/briefing/Rurality/RuralUrbanCommutingAreas/ or at http://depts.washington.edu/uwruca/. ) ORHP has previously used this definition of rural for Rural Health Grant Programs. The RUCA definition is further described in a Federal Register Notice published on May 3, 2007 (Vol. 72, No. 85; pgs 24589-24591). In preparing guidance for the Rural Physician Training Grant Program, HRSA will use the most current list of eligible rural counties as determined by the ORHP and published on their Web site at http://datawarehouse.hrsa.gov/RuralAdvisor/RuralHealthAdvisor.aspx.

In summary, for the purposes of the Rural Physician Training Grant Program, HRSA is proposing to define the rural portion of the “underserved rural communities” as:

(a) Any non-Metropolitan County, including Micropolitan counties; or

(b) Within a Metropolitan county, all Census Tracts that are assigned a RUCA code of 4-10; or

(c) Census Tracts within a Metropolitan Area with RUCA codes 2 and 3 that are larger than 400 square miles and have population density of less than 30 people per square mile.

As previously stated, for the purposes restricted to the Rural Physician Training Grant Program, outlined in section 749B of the Public Health Services Act, HRSA is also required to define the “underserved” portion of the term “underserved rural communities.”

HRSA's OSD in the BHPr is responsible for developing shortage/underservice designation criteria and for using the established criteria to decide if a geographic area, population group, or facility is a HPSA or a Medically Underserved Area or Population (MUA/P), or both. Three types of HPSAs may be designated: those with shortages of primary medical care, dental, or mental health providers. Urban or rural geographic areas and population groups may be designated as MUA/P or HPSA; certain medical or other public facilities are also eligible for HPSA designation.

Location in a designated HPSA and MUA/P establishes initial eligibility for many Federal and State programs (such as National Health Service Corps placements, Health Center funding, Federally Qualified Health Center and/or Rural Health Clinic certification). The criteria established to identify geographic areas, population groups, or facilities with shortages of primary health care, dental, or mental health providers are located at 42 CFR Part 5. HPSA designations are based on the population-to-provider ratio in a defined service area, together with other factors indicative of unusually high needs or insufficient capacity. More information on all the factors needed to be designated as a HPSA can be found at the OSD's Web site: http://bhpr.hrsa.gov/shortage/hpsadesignation.htm. MUA/P designations utilize an Index of Medical Underservice to calculate a score for each area, based on a weighted combination of four factors: The ratio of primary medical care physicians per 1,000 population, infant mortality rate, percentage of the population with incomes below the poverty level, and percentage of the population age 65 or over.

Information on HPSA and MUA/P designation status, including the date of the most recent designation or update, is available on the HRSA Data Warehouse Web site: http://datawarehouse.hrsa.gov/GeoAdvisor/ShortageDesignationAdvisor.aspx, or at the HRSA Web site http://hpsafind.hrsa.gov/ and http://muafind.hrsa.gov. In preparing guidance for the Rural Physician Training Grant Program, HRSA will use the most current list of eligible HPSAs and MUAs as determined by the OSD and published on their Web site. The OSD Web site list is the most up-to-date list available and removes areas that no longer qualify for designation, even if the Federal Register list has not yet been updated.

As required by Section 5602 of Public Law 111-148, HRSA plans to establish a comprehensive methodology and criteria for designation of MUPs and Primary Care HPSAs [under sections 330(b)(3) and 332 of the Public Health Service (PHS) Act, respectively], using a Negotiated Rulemaking process as outlined in the Federal Register on May 11, 2010 (Volume 75, Number 90). Any change that HRSA makes to the methodology used to determine designations will not alter the definition for the Rural Physician Training Grant Program.

For the purposes of the Rural Physician Training Grant Program, HRSA is defining the “underserved” portion of the term “underserved rural community” to include current:

(a) Geographic Primary Care Health Professions Shortage Areas (HPSAs), (Federally designated under section 332(a)(1)(A) of the PHS Act) located in rural areas as defined above; or

(b) Medically Underserved Areas (MUAs) (Federally designated under section 330(b)(3) of the PHS Act) located in rural areas as defined above.

HRSA is not including Federally-designated Dental or Mental Health HPSAs for purposes of defining “underserved rural communities” for the Rural Physician Training Grant Program, as this Program is specifically targeted to students at or recent graduates of schools of allopathic and osteopathic medicine (Sec. 749B (a-b)), and therefore not focusing on Mental Health or Dental Health providers.

For purposes of defining “underserved rural communities” for the Rural Physician Training Grant Program, HRSA is not including population-based HPSA designations, MUP designations, or facility-based HPSA designations.

The operational definition of “underserved rural community” will be applied to determine whether applicants meet the statutory eligibility and priority criteria of the Rural Physician Training Grant program. These requirements are based on the ability to identify geographic places. The MUP and population HPSA designations are used to target a group of people, not a geographic place. The facility-based designation is given to an actual facility. While there is a geographic boundary within which qualifying underserved populations are located, this boundary also contains many people who are not underserved ( e.g. homeless populations within a community that would otherwise not be underserved). Using this boundary as if it captures the same level of underservice as geographic shortage areas (without additional restrictions on the specific patient population within that boundary) could easily result in qualifying programs and program designs which do not fulfill the grant program's intended purpose.

HRSA is seeking public comments, through this IFR, on the following definition for “Underserved Rural Community—Those communities that:

(a) Located in:

i. Any non-Metropolitan County, including Micropolitan counties; or

ii. Within a Metropolitan county, all Census Tracts that are assigned Rural-Urban Commuting Area Codes (RUCAs) code of 4-10; or

iii. Census Tracts within a Metropolitan Area with RUCA codes 2 and 3 that are larger than 400 square miles and have population density of less than 30 people per square mile; and

(b) Being in a current:

i. Federally-designated Primary Health Care Geographic Health Professions Shortage Area (HPSA), (under section 332(a)(1)(A) of the PHS Act) or

ii. Federally-designated Medically Underserved Area (MUA) (under section 330(b)(3) of the PHS Act).

This IFR contains no new information collection requirements subject to review by OMB under the Paperwork Reduction Act.

This IFR is technical in nature. This new regulation is meant to define “underserved rural communities” solely for purposes related to the Rural Physician Training Grant Program, as outlined in section 749B of the Public Health Service Act. This will not change grant or funding eligibility for any other grant program administered through ORHP or HRSA.

We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993, as further amended), the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532) (UMRA), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).

This regulation is required to implement section 749B of the Public Health Service Act (42 U.S.C. 293) as amended by section 10501(l) of Public Law 111-148.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any one year). We have determined that this IFR is not an economically significant rule. Moreover, the Secretary has determined that this IFR is not a “major rule” within the meaning of the statute providing for Congressional Review of Agency Rulemaking, 5 U.S.C. 801.

The Regulatory Flexibility Act requires agencies to analyze options for regulatory relief of small businesses if a rule has a significant impact on a substantial number of small entities. The Secretary has determined that no resources are required to implement the requirements in this IFR. Therefore, in accordance with the Regulatory Flexibility Act of 1980 and the Small Business Regulatory Enforcement Act of 1996, which amended the Regulatory Flexibility Act, the Secretary certifies that this IFR will not, if implemented, have a significant impact on a substantial number of small entities.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. The Secretary has reviewed this IFR in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” This rule would not “have substantial direct effects on the States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires cost-benefit and other analyses before any rulemaking if the rule includes a “Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.” The current inflation adjusted statutory threshold is approximately $130 million. The Department has determined that this rule would not constitute a significant rule under the Unfunded Mandates Reform Act, because it would impose no mandates.

In accordance with the provisions in Executive Order 12866, this IFR was reviewed by OMB.

The FMC amends Part 501 and § 502.604 of Part 502 of Title 46 of the Code of Federal Regulations to reflect the reorganization of the agency that took effect on January 31, 2010. The FMC was reorganized by restoring the position of the Managing Director to serve as the Commission's Chief Operating Officer responsible for the management and coordination of the Commission's major organizational components to ensure all offices are cohesively directed toward achieving fair and efficient ocean transportation that helps improve the nation's economy. The reorganization also gives heightened priority to the role of the Commission's Office of Consumer Affairs and Dispute Resolution Services (CADRS), which assists exporters and other consumers and works with the public and ocean transportation industry to mediate disputes without costly lawsuits. The Director of CADRS will serve as the Commission's Ombudsman and handle inquiries and complaints about industry issues and Commission services. CADRS will continue to provide the public and ocean transportation industry a variety of impartial, speedy, and confidential alternative dispute resolution (ADR) services, such as mediation and arbitration. As an independent office, it will be able to assist parties in a neutral and confidential manner, enabling disputants to discuss matters while knowing that their discussions and any information revealed in a dispute resolution proceeding will not be made available to any other Commission official or staff members. This rule also corrects typographical errors in § 501.41(a) of Part 501 and § 535.401(g) of Part 535.

Because the changes made in this proceeding only address internal agency operating procedure and organization, which do not require notice and public procedure pursuant to the Administrative Procedure Act, 5 U.S.C. 553, this rule is published as final. The Chairman of the Commission certifies, pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.

This rule is not a “major rule” under 5 U.S.C. 804(2).

Changes are to DEAR parts 928, 931, 932, 933, 935, 936, 937, 941, 942, 949, 950, 951, and 952. No changes are proposed for DEAR parts 927, 929, 930, 934, 938, 939, 940, 943, 944, 945, 946, 947, and 948. DOE will separately propose rules for changes to parts 927 and 945, respectively.

This action updates the existing Department of Energy Acquisition Regulation (DEAR). Subchapters E, F, and G have sections that need to be updated to conform to the FAR. None of the changes are substantive or of a nature to cause any significant expense for DOE or its contractors.

DOE published a notice of proposed rulemaking on January 7, 2010 (75 FR 964), with a public comment period ending on February 8, 2010. DOE received no comments.

DOE amends the DEAR as follows:

1. Section 932.501-2 is amended to reflect current procedures for unusual progress payments.

2. Subpart 932.6 is amended to update the DEAR to conform with changes to a FAR section title within subpart 32.6 which was revised by Federal Acquisition Circular 2005-027 effective October 18, 2008.

3. Section 935.010 is amended by revising paragraphs (c) and (d). The report submittal process has been changed to electronic submission using the DOE Energy Link System (E-Link) at http://www.osti.gov/elink. The contracting officer shall require the contractors to use E-Link to submit a record with each report.

4. Part 936 is amended to redesignate 936.202 as 936.202-70 and change the title of that section to read “specification charges.”

5. Part 937 is revised to add a new subpart, Subpart 937.2—Advisory and Assistance Services and section 937.204 Guidelines for determining availability of personnel. Sections 937.204(a), (b), (d), and (e) are added to conform to FAR 37.204 to provide the DOE guidelines for determining availability of sufficient personnel with the requisite training and capabilities to perform the evaluation or analysis of proposals. It also clarifies which DOE officials are responsible for making the determinations prescribed at FAR 37.204 (a), (b), (d), and (e).

6. Section 941.201-70 is amended to update the DOE Order reference by removing the remainder of the sentence after the second “FAR” and adding in its place “part 41 and the Department of Energy (DOE) Order 430.2B, Departmental Energy, Renewable Energy and Transportation Management, or its successor.”

7. Section 942.803 is amended at paragraph (c) by removing the reference to 942.70 Audit Services which is no longer a subpart.

8. Section 949.101 is revised to add “Senior” before “Procurement Executive.” to conform the use of the Procurement Executive title within the FAR.

9. Subpart 949.5 is removed and reserved. There is no longer a need for a DEAR termination clause for Architect-Engineer contracts.

10. Section 951.102 paragraph (e)(4) is amended to remove the “(iii)” in the paragraph numbering to conform with numbering in the FAR.

11. Section 952.247-70 is amended to remove repetitive language.

12. The rule text is amended as noted in the table at paragraph 16, by removing “FAR” or “FAR part” and replacing it with “48 CFR” or “48 CFR part” and by updating other CFR citations. Section 931.205-47(h)(1) is amended by changing the capitalization of the word “part” in two places. Section 952 has several changes in punctuation at 952.235-71 and 952.250-70.

Today's regulatory action 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 rule is not subject to review under that Executive Order by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).

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 United States 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 if 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 Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires that an agency prepare an initial regulatory flexibility analysis for any regulation for which a general notice or rulemaking is required, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities (5 U.S.C. 605(b)). This rule updates references in the DEAR that apply to public contracts and does not impose any additional requirements on small businesses. Today's rule does not alter any substantive rights or obligations and, consequently, today's rule will not have a significant cost or administrative impact on contractors, including small entities. On the basis of the foregoing, DOE certifies that this rule would not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 605(b).

This final rule does not impose a collection of information requirement subject to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Existing burdens associated with the collection of certain contractor data under the DEAR have been cleared under OMB control number 1910-4100.

DOE has concluded that promulgation of this rule falls into a class of actions which would not individually or cumulatively have significant impact on the human environment, as determined by DOE's regulations (10 CFR part 1021, subpart D) implementing the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq. ). Specifically, this rule is categorically excluded from NEPA review because the amendments to the DEAR are strictly procedural (categorical exclusion A6). Therefore, today's rule does not require an environmental impact statement or environmental assessment pursuant to NEPA.

Executive Order 13132, 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. The Executive Order requires agencies to have an accountability process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations (65 FR 13735). DOE has examined today's rule and has determined that it does not preempt State law and does 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.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires a Federal agency to perform a written assessment of costs and benefits of any rule imposing a Federal mandate with costs to State, local or Tribal governments, or to the private sector, of $100 million or more. This rule does not impose any Federal mandate on State, local or Tribal governments or on the private 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 rulemaking or policy that may affect family well-being. This rule will have no 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 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 Office of Information and Regulatory Affairs of the Office of Management and Budget, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgates 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; (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 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 rule is not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.

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.

As required by 5 U.S.C. 801, the Department will report to Congress promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(3).

Issuance of today's rule has been approved by the Office of the Secretary.