The agencies' CRA regulations establish CRA performance standards for small and intermediate small banks and savings associations. The regulations define small and intermediate small institutions by reference to asset-size criteria expressed in dollar amounts, and they further require the agencies to publish annual adjustments to these dollar figures based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPIW), not seasonally adjusted, for each twelve-month period ending in November, with rounding to the nearest million. 12 CFR 25.12(u)(2), 228.12(u)(2), 345.12(u)(2), and 563e.12(u)(2). This adjustment formula was first adopted for CRA purposes by the OCC, Board, and FDIC on August 2, 2005, effective September 1, 2005. 70 FR 44256. As explained in the preamble to these agencies' proposed rule, this particular index is used in other federal lending regulations such as the Home Mortgage Disclosure Act (HMDA). See 12 U.S.C. 2808; 12 CFR 203.2(e)(1).

OTS adopted an annual adjustment to the asset thresholds in its CRA rule on March 22, 2007, effective July 1, 2007. 72 FR 13429. As OTS explained in the preamble, OTS decided to index the asset thresholds in the same way as the other Federal banking agencies to ensure consistency between the standards used to evaluate savings associations and the standards used to evaluate banks. 72 FR at 13432. OTS also noted that the particular adjustment formula adopted is also used under HMDA. Id. Thus, it is an indexing method already familiar to both the agencies and regulated financial institutions. By adopting an adjustment formula consistent with that of the other federal banking agencies, OTS acted consistently with section 303 of the Riegle Community Development and Regulatory Improvement Act of 1994(12 U.S.C. 4803), which OTS interpreted as encouraging the federal banking agencies to work jointly to make uniform all regulations and guidelines implementing common statutory or supervisory policies.

The threshold for small banks and small savings associations was revised most recently effective January 1, 2010 (74 FR 68662 (Dec. 29, 2009)). The CRA regulations, as revised on December 29, 2009, provide that banks and savings associations that, as of December 31 of either of the prior two calendar years, had assets of less than $1.098 billion are “small banks” or “small savings associations.” Small banks and small savings associations with assets of at least $274 million as of December 31 of both of the prior two calendar years and less than $1.098 billion as of December 31 of either of the prior two calendar years are “intermediate small banks” or “intermediate small savings associations.” 12 CFR 25.12(u)(1), 228.12(u)(1), 345.12(u)(1), and 563e.12(u)(1). This joint final rule further revises these thresholds.

During the period ending November 2010, the CPIW increased by 2.21 percent. As a result, the agencies are revising 12 CFR 25.12(u)(1), 228.12(u)(1), 345.12(u)(1), and 563e.12(u)(1) to make this annual adjustment. Beginning January 1, 2011, banks and savings associations that, as of December 31 of either of the prior two calendar years, had assets of less than $1.122 billion are “small banks” or “small savings associations.” Small banks or small savings associations with assets of at least $280 million as of December 31 of both of the prior two calendar years and less than $1.122 billion as of December 31 of either of the prior two calendar years are “intermediate small banks” or “intermediate small savings associations.” The agencies also publish current and historical asset-size thresholds on the Web site of the Federal Financial Institutions Examination Council at http://www.ffiec.gov/cra/.

Under 5 U.S.C. 553(b)(B) of the Administrative Procedure Act (APA), an agency may, for good cause, find (and incorporate the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

The amendments to the regulations to adjust the asset-size thresholds for small and intermediate small banks and savings associations result from the application of a formula established by a provision in the CRA regulations that the agencies previously published for comment. See 70 FR 12148 (Mar. 11, 2005), 70 FR 44256 (Aug. 2, 2005), 71 FR 67826 (Nov. 24, 2006), and 72 FR 13429 (Mar. 22, 2007). Sections 25.12(u)(1), 228.12(u)(1), 345.12(u)(1), and 563e.12(u)(1) are amended by adjusting the asset-size thresholds as provided for in §§ 25.12(u)(2), 228.12(u)(2), 345.12(u)(2), and 563e.12(u)(2).

Accordingly, since the agencies' rules provide no discretion as to the computation or timing of the revisions to the asset-size criteria, the agencies have determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary.

The effective date of this joint final rule is January 1, 2011. Under 5 U.S.C. 553(d)(3) of the APA, the required publication or service of a substantive rule shall be made not less than 30 days before its effective date, except, among other things, as provided by the agency for good cause found and published with the rule. Because this rule adjusts asset-size thresholds consistent with the procedural requirements of the CRA rules, the agencies conclude that it is not substantive within the meaning of the APA's delayed effective date provision. Moreover, the agencies find that there is good cause for dispensing with the delayed effective date requirement, even if it applied, because their current rules already provide notice that the small and intermediate asset-size thresholds will be adjusted as of December 31 based on twelve-month data as of the end of November each year.

The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. 5 U.S.C. 603 and 604. As noted previously, the agencies have determined that it is unnecessary to publish a general notice of proposed rulemaking for this joint final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agencies reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

Pursuant to Executive Order 12866, OMB's Office of Information and Regulatory Affairs has designated this final rule to be significant but not to have an annual effect on the economy of $100 million or more.

Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532 (Unfunded Mandates Act), requires that an agency must prepare a budgetary impact statement before promulgating any final rule for which a general notice of proposed rulemaking was published. As discussed above, the agencies have determined that the publication of a general notice of proposed rulemaking is unnecessary. Accordingly, this joint final rule is not subject to section 202 of the Unfunded Mandates Act.

On August 11, 2010, we issued AD 2010-17-18, amendment 39-16412 (75 FR 52255, August 25, 2010), for all Air Tractor Models AT-802 and AT-802A airplanes. That AD requires you to repetitively inspect (using the eddy current method) the two outboard fastener holes in both of the wing main spar lower caps at the center splice joint for cracks and repair or replace any cracked spar, and changes the safe life for certain SN ranges. That AD resulted from the FAA's evaluation of service information issued by Air Tractor and our determination that we needed to add inspections, add modifications, and change the safe life for certain SN ranges. We issued that AD to detect and correct cracks in the wing main spar lower cap at the center splice joint, which could result in failure of the spar cap and lead to wing separation and loss of control of the airplane.

Since we issued AD 2010-17-18, we have evaluated a comment from David Ligon, Air Tractor, and determined that we should reduce the applicability from all serial numbers beginning with SN-0001 as required by the previous AD to SN-0001 through SN-0269. Airplane SN-0270 and subsequent wing main spar components are life limited at 11,700 hours time-in-service as described in Air Tractor, Inc. AT 802/802A Airworthiness Limitations, Pages 6-i, 6-1, and 6-2, dated: September 16, 2009.

We reviewed the following service information from Snow Engineering Co.:

• Service Letter #80GG, revised December 21, 2005;

• Service Letter #284, dated October 4, 2009;

• Service Letter #281, dated August 1, 2009;

• Service Letter #245, dated April 25, 2005;

• Service Letter #240, dated September 30, 2004;

• Process Specification #197, page 1, revised June 4, 2002; pages 2 through 4, dated February 23, 2001; and page 5, dated May 3, 2002;

• Drawing Number 20995, Sheet 3, dated November 25, 2005;

• Drawing Number 20995, Sheet 2, Rev. D., dated November 25, 2005; and

• Drawing Number 20975, Sheet 4, Rev. A., dated January 7, 2009.

The service information describes procedures for the following actions:

• Inspection (repetitively) of the two outboard fastener holes in both of the wing main spar lower caps at the center splice joint for cracks;

• Repair or replacement of any cracked spar cap; and

• Modification option to extend the safe life limit.

We are issuing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires accomplishing the actions specified in the service information described previously. The AD also requires sending the inspection results (if cracks are found) to Andrew McAnaul, Aerospace Engineer, ASW-150 (c/o MIDO-43), 10100 Reunion Place, Suite 650, San Antonio, Texas 78216; phone: (210) 308-3365; fax: (210) 308-3370.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because the public has already had the opportunity to comment on the actions of this unsafe condition. This action only reduces the applicability from that already required by the previous AD. Therefore, we find that notice and opportunity for prior public comment are unnecessary and that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not provide you with notice and an opportunity to provide your comments before it becomes effective. However, we invite you to send any written data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2010-0827 and directorate identifier 2010-CE-029-AD at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

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

We estimate that this AD affects 121 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary center splice plate installation that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need this center splice plate installation:

We estimate the following costs to do any necessary extended splice block installation that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need this extended splice block installation:

We estimate the following costs to do any necessary cold-work lower spar cap fastener holes that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need this cold-work lower spar cap fastener holes:

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

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

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

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

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

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

(3) Will not affect intrastate aviation in Alaska, and

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

This amendment to part 95 of the Federal Aviation Regulations (14 CFR part 95) amends, suspends, or revokes IFR altitudes governing the operation of all aircraft in flight over a specified route or any portion of that route, as well as the changeover points (COPs) for Federal airways, jet routes, or direct routes as prescribed in part 95.

The specified IFR altitudes, when used in conjunction with the prescribed changeover points for those routes, ensure navigation aid coverage that is adequate for safe flight operations and free of frequency interference. The reasons and circumstances that create the need for this amendment involve matters of flight safety and operational efficiency in the National Airspace System, are related to published aeronautical charts that are essential to the user, and provide for the safe and efficient use of the navigable airspace. In addition, those various reasons or circumstances require making this amendment effective before the next scheduled charting and publication date of the flight information to assure its timely availability to the user. The effective date of this amendment reflects those considerations. In view of the close and immediate relationship between these regulatory changes and safety in air commerce, I find that notice and public procedure before adopting this amendment are impracticable and contrary to the public interest and that good cause exists for making the amendment effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The Securities and Exchange Commission is adopting an amendment to temporary rule 206(3)-3T [17 CFR 275.206(3)-3T] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] that extends the date on which the rule will sunset from December 31, 2010 to December 31, 2012.

On September 24, 2007, we adopted, on an interim final basis, rule 206(3)-3T, a temporary rule under the Investment Advisers Act of 1940 (the “Advisers Act”) that provides an alternative means for investment advisers who are also registered as broker-dealers to meet the requirements of section 206(3) of the Advisers Act when they act in a principal capacity in transactions with certain of their advisory clients. 1 In December 2009, we extended the rule's sunset period by one year to December 31, 2010. 2

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). 3 Under section 913 of the Dodd-Frank Act, we are required to conduct a study, and provide a report to Congress, concerning the obligations of broker-dealers and investment advisers, including the standards of care applicable to those intermediaries and their associated persons. 4 We intend to deliver the report concerning this study, as required by the Dodd-Frank Act, no later than January 21, 2011. 5

Section 913 of the Dodd-Frank Act also authorizes us to promulgate rules concerning, among other things, the legal or regulatory standards of care for broker-dealers, investment advisers, and persons associated with these intermediaries for providing personalized investment advice about securities to retail customers. In enacting any rules pursuant to this authority, we are required to consider the findings, conclusions, and recommendations of the mandated study. The study and our consideration of the need for further rulemaking pursuant to this authority are part of our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers in connection with the Dodd-Frank Act. 6

In light of these legislative developments, we proposed on December 1, 2010 to extend the date on which rule 206(3)-3T will sunset for a limited amount of time, from December 31, 2010 to December 31, 2012. 7 We received 10 comment letters addressing our proposal prior to the expiration of the comment period. 8 Six of these commenters generally supported extending rule 206(3)-3T, 9 and two commenters opposed an extension. 10 Two other commenters did not address the extension directly. 11 The comments we received on our proposal are discussed below. After considering each of the comments, we are extending the rule's sunset period by two years to December 31, 2012, as proposed.

We are amending rule 206(3)-3T only to extend the rule's expiration date by two years. Absent further action by the Commission, the rule will expire on December 31, 2012. We are adopting this extension because, as we discussed in the Proposing Release, we believe that firms' compliance with the substantive provisions of rule 206(3)-3T provides sufficient protection to advisory clients to warrant the rule's continued operation for the additional two years while we conduct the study mandated by section 913 of the Dodd-Frank Act and consider more broadly the regulatory requirements applicable to broker-dealers and investment advisers. 12 As part of our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers, we intend to carefully consider principal trading by advisers, including whether rule 206(3)-3T should be substantively modified, supplanted, or permitted to expire.

If we permit rule 206(3)-3T to expire on December 31, 2010, after that date investment advisers also registered as broker-dealers who currently rely on rule 206(3)-3T would be required to comply with section 206(3)'s transaction-by-transaction written disclosure and consent requirements without the benefit of the alternative means of complying with these requirements currently provided by rule 206(3)-3T. This could limit the access of non-discretionary advisory clients of advisory firms that are also registered as broker-dealers to certain securities. In addition, certain of these firms have informed us that, if rule 206(3)-3T were to expire on December 31, 2010, it would be disruptive to their clients, and the firms would be required to make substantial changes to their disclosure documents, client agreements, procedures, and systems.

We expect to revisit the relief provided in rule 206(3)-3T soon after the completion of our study in January 2011. Although we anticipate that will occur prior to the amended expiration date for the temporary rule, we want to ensure that we have sufficient time to engage in any potential rulemaking or other process that may emerge from either the study or any broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers prior to the rule's expiration.

As discussed above, six commenters generally supported our proposal to amend rule 206(3)-3T to extend it, 13 and two commenters opposed it. 14 Commenters who supported the extension cited the disruption to investors that would occur if the rule expired at this time, asserting that investors would be forced to change their accounts and would lose access to a wider range of securities. 15 Commenters who supported the extension of the rule also asserted that allowing the rule to sunset would prove disruptive to advisory firms that are registered as broker dealers: they explained that expiration of the rule would act as an operational barrier to their ability to engage in principal trades with their customers. 16 These and other commenters further explained that, if the rule were allowed to expire, firms relying on the rule would be required to make considerable changes to their disclosure documents, client agreements, procedures, and technical systems at substantial expense. 17 These commenters agreed that extending the rule while the Commission conducted its review of the obligations of broker-dealers and investment advisers, as mandated by the Dodd-Frank Act, would be the least disruptive option.

Conversely, two commenters questioned whether the rule benefits clients and asserted that the Commission should not further extend the rule in light of what they view as risks posed by the compliance issues that the staff identified. 18 One commenter, while opposing the extension, encouraged the Commission to take additional measures to protect clients from the conflicts of interest raised by principal trading if we chose to extend the rule. 19 Another commenter challenged the proposition that firms and investors would face disruptions if the rule sunsets, asserting that few firms and investors rely on the rule. 20

On balance, and after careful consideration of these comments, we conclude that the benefits from extending this rule outweigh the potential costs of an extension. First, we believe that permitting the rule to sunset just before we commence a comprehensive review of the obligations of broker-dealers and investment advisers could produce substantial disruption for investors with accounts serviced by firms relying on the rule. These investors might lose access to securities available through principal transactions and be forced to convert their accounts in the interim, only to face the possibility of future change — and the costs and uncertainty such additional change may entail. 21 This disruption will be avoided if we maintain the status quo while we engage in our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers. 22 We continue to believe that the rule benefits investors because it provides investors with access to a wider range of securities and protects investors who hold billions of dollars in advisory accounts.

In reaching this conclusion, we have paid particular attention to our staff's observations about firms' compliance with the rule. We emphasize that we share the commenters' concerns about the compliance issues that the staff identified, the critical aspects of which we summarized in the Proposing Release. 23 Having carefully considered the staff's observations, we conclude that the requirements of rule 206(3)-3T, coupled with regulatory oversight informed by those observations, will adequately protect advisory clients during the extension. Throughout the period of the extension, the staff will examine firms with higher risk characteristics, including firms that engage in principal transactions in reliance on rule 206(3)-3T, 24 and continue to take appropriate action to help ensure that firms are complying with the rule's conditions, including referring firms to the Division of Enforcement for possible enforcement action if warranted. One commenter asserted that the burdens placed on firms by rule 206(3)-3T are too stringent. 25 As this commenter noted, the staff did not identify instances of “dumping,” a harm that section 206(3) is designed to redress, and we believe that the conditions and limitations in the rule serve as appropriate safeguards during the pendency of the extension.

We note that one commenter asserted that even if principal trading relief may have been appropriate when we originally adopted rule 206(3)-3T in 2007, it no longer is. 26 In particular, the commenter contended that the valuation of certain securities—such as municipal bonds—has become much more difficult, such that “a much greater amount of due diligence is required of the investment adviser who engages in advising clients on purchases of individual municipal bonds.” But extension of the rule does not have any bearing on an adviser's due diligence obligations. The standard of care to which advisers are subject and the duties they owe clients are in no way diminished by their reliance on rule 206(3)-3T. 27

Second, we further conclude that the extension of the rule's sunset date is warranted to avoid the disruption to firms relying on the rule that will occur if the rule expires. The letters submitted by three commenters demonstrated that some firms in fact do rely on the rule, and that those firms will be faced with uncertainty and disruption of operations should the rule expire just as the Commission is about to begin a comprehensive review process that may ultimately produce a different regulatory standard. 28 One commenter that represents securities firms described that large and small firms have relied upon the rule, and provided data showing that a substantial number of accounts and volume of trades would be affected by a change in the rule. 29

We received four comment letters specifically addressing the duration of our proposed extension of rule 206(3)-3T. 30 Three expressed support for extending the rule for an additional two years, but argued that the rule should be made permanent. 31 One of these commenters cited uncertainty and its attendant costs as a reason to make the rule permanent. 32 Other commenters supported a shorter extension of the rule. For example, one commenter supported a one-year extension. 33 This commenter stated that a one-year extension of the rule strikes the proper balance between the concerns of investor protection and the burden of potential revised regulations applying to investment advisers and broker-dealers. 34 Two commenters generally opposed the extension and supported allowing the rule to expire: One commenter stated alternatively that the Commission should adopt a one-year extension with the imposition of other measures to ensure firms' compliance with the rule and with their fiduciary obligations generally, and the other indicated that it would support an extension of six months if the Commission provided “further explanation and supporting evidence.”  35

As we noted in the Proposing Release, we believe that the rule should be extended only for a limited amount of time. 36 That period of time, however, must be long enough to permit the Commission to engage in any rulemaking prompted by our study under section 913 of the Dodd-Frank Act and our broader review of regulatory requirements applicable to investment advisers and broker-dealers. Having considered the comments regarding the duration of the extension, and taking into account the importance of the issues that this process will address, the Commission believes on balance that a two-year extension is necessary to give the Commission adequate time to complete any such rulemaking. Because that process cannot begin until the completion of the study required by the Dodd-Frank Act, adopting a six-month or one-year extension, as certain commenters recommended, most likely would not provide sufficient time for such rulemaking, and thus could result in greater uncertainty (along with its attendant costs) for investors and firms that rely on the rule. We believe that certainty in this area is important, and we will complete any relevant rulemaking as soon as is feasible consistent with administrative procedure.

A number of commenters also raised issues that were beyond the scope of our proposal to extend rule 206(3)-3T, including the broader legal and policy questions related to the meaning, scope, and application of a fiduciary standard and the appropriate considerations related to principal trading. 37 These comments pertain to our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers, and we will consider these comments in conducting this broader review.

The amendment to rule 206(3)-3T is effective on December 30, 2010. The Administrative Procedure Act generally requires that an agency publish a final rule in the Federal Register not less than 30 days before its effective date. 38 However, this requirement does not apply if the rule is a substantive rule which grants or recognizes an exemption or relieves a restriction, or if the rule is interpretive. 39 Rule 206(3)-3T is a rule that recognizes an exemption and relieves a restriction and in part has interpretive aspects.

Rule 206(3)-3T contains “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995. 40 The Office of Management and Budget (“OMB”) approved the burden estimates presented in the 2007 Principal Trade Rule Release, 41 first on an emergency basis and subsequently on a regular basis. OMB approved the collection of information with an expiration date of March 31, 2011. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The title for the collection of information is: “Temporary rule for principal trades with certain advisory clients, rule 206(3)-3T” and the OMB control number for the collection of information is 3235-0630. The 2007 Principal Trade Rule Release and the Proposing Release solicited comments on our PRA estimates, but we did not receive comment on them. 42

The amendment to the rule we are adopting today—to extend rule 206(3)-3T for two years—does not affect the burden estimates contained in the 2007 Principal Trade Rule Release. Therefore, as was the case when we extended rule 206(3)-3T in December 2009, we are not revising our Paperwork Reduction Act burden and cost estimates submitted to OMB as a result of this amendment. We will submit burden and cost estimates as part of our routine renewal of OMB's approval of the rule's collection of information.

Other than extending rule 206(3)-3T's sunset period for two years, we are not otherwise modifying the rule from the form in which we initially adopted it on an interim final basis in September 2007 or as final in December 2009. We discussed the benefits provided by rule 206(3)-3T in both the 2007 Principal Trade Rule Release and the 2009 Extension Release.

In summary, as explained in the 2007 Principal Trade Rule Release, the 2009 Extension Release, and the Proposing Release, 43 we believe the principal benefit of rule 206(3)-3T is that it maintains investor choice and protects the interests of investors who formerly held an estimated $300 billion in fee-based brokerage accounts. A resulting second benefit of the rule is that non-discretionary advisory clients of advisory firms that are also registered as broker-dealers have easier access to a wider range of securities which, in turn, should continue to lead to increased liquidity in the markets for these securities and promote capital formation in these areas. A third benefit of the rule is that it provides the protections of the sales practice rules of the Securities Exchange Act of 1934 (“Exchange Act”)  44 and the relevant self-regulatory organizations because an adviser relying on the rule must also be a registered broker-dealer. Another benefit of rule 206(3)-3T is that it provides a lower cost alternative for an adviser to engage in principal transactions.

One commenter disputed a number of the benefits of rule 206(3)-3T we have described above. The commenter did not provide any specific data, analysis, or other information in support of its comment. 45 No commenter provided any substantive or specific evidence to contradict the Commission's previous conclusion that the rule benefits investors, and the Commission continues to believe that the rule provides those benefits. 46

In addition to the general benefits described above, there also are benefits to extending the rule for an additional two years. By extending the rule for two years, non-discretionary advisory clients who have had access to certain securities because of their advisers' reliance on the rule to trade on a principal basis will continue to have access to those securities without disruption. If we chose not to extend the rule in its current form, firms currently relying on the rule would be required to restructure their operations and client relationships on or before the rule's current expiration date—potentially only to have to do so again shortly thereafter (first when the rule expires or is modified, and again if we adopt a new approach after the study mandated by the Dodd-Frank Act, discussed above, is complete). Firms relying on the rule will continue to be able to offer clients and prospective clients access to certain securities on a principal basis as well and will not need during this two-year period to incur the cost of adjusting to a new set of rules or abandoning the systems established to comply with the current rule. In other words, extension will avoid disruption to clients and firms during the period while we complete the study mandated by section 913 of the Dodd-Frank Act and our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers.

We also discussed the costs associated with rule 206(3)-3T in the 2007 Principal Trade Rule Release, the 2009 Extension Release, and the Proposing Release. 47 In the 2007 Principal Trade Rule Release, we presented estimates of the costs of each of the rule's disclosure elements, including: Prospective disclosure and consent; transaction-by-transaction disclosure and consent; transaction-by-transaction confirmations; and the annual report of principal transactions. We also provided estimates for the following related costs of compliance with rule 206(3)-3T: (i) The initial distribution of prospective disclosure and collection of consents; (ii) systems programming costs to ensure that trade confirmations contain all of the information required by the rule; and (iii) systems programming costs to aggregate already-collected information to generate compliant principal transactions reports. We did not receive comments directly addressing with supporting data the cost-benefit analysis we presented in the 2007 Principal Trade Rule Release. 48 We do not believe that a two-year extension of rule 206(3)-3T would materially affect those costs. 49

We recognize that, as a result of our amendment, firms relying on the rule will incur the costs associated with complying with the rule for two additional years. We also recognize that a temporary rule, by nature, creates uncertainty, which in turn, may generate costs and inefficiency. 50 However, we believe that a temporary extension of the rule is the most appropriate action that we can take at this time while we conduct the study mandated by section 913 of the Dodd-Frank Act and consider more broadly the regulatory requirements applicable to broker-dealers and investment advisers. 51

Section 202(c) of the Advisers Act mandates that the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is necessary or appropriate in the public interest, consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. 52

We explained in the 2007 Principal Trade Rule Release, the 2009 Extension Release, and the Proposing Release, the manner in which rule 206(3)-3T, in general, would promote these aims. 53 We continue to believe that this analysis generally applies today.

As noted in the 2009 Extension Release and Proposing Release, we received comments on the 2007 Principal Trade Rule Release from commenters who opposed the limitation of the temporary rule to investment advisers that are also registered as broker-dealers, as well as to accounts that are subject to both the Advisers Act and Exchange Act as providing a competitive advantage to investment advisers that are also registered broker-dealers. 54 Based on our experience with the rule to date, just as we noted in the 2009 Extension Release and Proposing Release, we have no reason to believe that broker-dealers (or affiliated but separate investment advisers and broker-dealers) are put at a competitive disadvantage to advisers that are themselves also registered as broker-dealers;  55 however we intend to continue to evaluate these effects in connection with our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers.

We received one comment letter arguing that rule 206(3)-3T would impede capital formation because it would lead to “more numerous and more severe violations * * * of the trust placed by individual investors in their trusted investment adviser.”  56 While we share the view that numerous and severe violations of trust could theoretically impede capital formation, we have not seen any evidence that rule 206(3)-3T has caused this result. We also reiterate that, in addition to conducting a broader review, we will continue to consider any potential violations of the rule and take appropriate action as necessary.

The Commission has prepared the following Final Regulatory Flexibility Analysis (“FRFA”) regarding the amendment to rule 206(3)-3T in accordance with 5 U.S.C. 604. We prepared and included an Initial Regulatory Flexibility Analysis (“IRFA”) in the Proposing Release. 57

We are adopting an amendment to rule 206(3)-3T to extend the rule for two years in its current form because we believe that it would be premature to require firms relying on the rule to restructure their operations and client relationships before we complete our study and our broader consideration of the regulatory requirements applicable to broker-dealers and investment advisers. The objective of the amendment to rule 206(3)-3T, as discussed above, is to permit firms currently relying on rule 206(3)-3T to limit the need to modify their operations and relationships on multiple occasions, both before and potentially after we complete our study and any related rulemaking.

We are amending rule 206(3)-3T pursuant to sections 206A and 211(a) of the Advisers Act [15 U.S.C. 80b-6a and 15 U.S.C. 80b-11(a)].

We received one comment letter related to our IRFA. 58 The commenter stated that extending the rule temporarily, rather than permanently, would create uncertainty, thereby causing certain inefficiencies, particularly with regard to smaller firms. 59 We recognize that a temporary rule, by nature, creates uncertainty, which in turn may generate costs and inefficiency, especially for smaller firms. However, as discussed above, we believe that a temporary extension of the rule is the most appropriate approach at this time while we conduct the study mandated by section 913 of the Dodd-Frank Act and consider more broadly the regulatory requirements applicable to broker-dealers and investment advisers. 60

Rule 206(3)-3T is an alternative method of complying with Advisers Act section 206(3) and is available to all investment advisers that: (i) Are registered as broker-dealers under the Exchange Act; and (ii) effect trades with clients directly or indirectly through a broker-dealer controlling, controlled by or under common control with the investment adviser, including small entities. Under Advisers Act rule 0-7, for purposes of the Regulatory Flexibility Act an investment adviser generally is a small entity if it: (i) Has assets under management having a total value of less than $25 million; (ii) did not have total assets of $5 million or more on the last day of its most recent fiscal year; and (iii) does not control, is not controlled by, and is not under common control with another investment adviser that has assets under management of $25 million or more, or any person (other than a natural person) that had $5 million or more on the last day of its most recent fiscal year. 61

As noted in the Proposing Release, we estimate that as of November 1, 2010, 680 SEC-registered investment advisers were small entities. 62 As discussed in the 2007 Principal Trade Rule Release, we opted not to make the relief provided by rule 206(3)-3T available to all investment advisers, and instead have restricted it to investment advisers that also are registered as broker-dealers under the Exchange Act. 63 We therefore estimate for purposes of this FRFA that 38 of these small entities (those that are both investment advisers and broker-dealers) could rely on rule 206(3)-3T. 64 We did not receive any comments on these estimates.

The provisions of rule 206(3)-3T impose certain reporting or recordkeeping requirements, and our amendment will extend the imposition of these requirements for an additional two years. The two-year extension will not alter these requirements.

Rule 206(3)-3T is designed to provide an alternative means of compliance with the requirements of section 206(3) of the Advisers Act. Investment advisers taking advantage of the rule with respect to non-discretionary advisory accounts are required to make certain disclosures to clients on a prospective, transaction-by-transaction and annual basis.

Specifically, rule 206(3)-3T permits an adviser, with respect to a non-discretionary advisory account, to comply with section 206(3) of the Advisers Act by, among other things: (i) Making certain written disclosures; (ii) obtaining written, revocable consent from the client prospectively authorizing the adviser to enter into principal trades; (iii) making oral or written disclosure and obtaining the client's consent orally or in writing prior to the execution of each principal transaction; (iv) sending to the client confirmation statements for each principal trade that disclose the capacity in which the adviser has acted and indicating that the client consented to the transaction; and (v) delivering to the client an annual report itemizing the principal transactions. Advisers are already required to communicate the content of many of the disclosures pursuant to their fiduciary obligations to clients. Other disclosures are already required by rules applicable to broker-dealers.

Our amendment will only extend the rule for two years in its current form. Advisers currently relying on the rule already should be making the disclosures described above.

The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish our stated objective, while minimizing any significant adverse impact on small entities. 65 Alternatives in this category would include: (i) Establishing different compliance or reporting standards or timetables that take into account the resources available to small entities; (ii) clarifying, consolidating, or simplifying compliance requirements under the rule for small entities; (iii) using performance rather than design standards; and (iv) exempting small entities from coverage of the rule, or any part of the rule.

We believe that special compliance or reporting requirements or timetables for small entities, or an exemption from coverage for small entities, may create the risk that the investors who are advised by and effect securities transactions through such small entities would not receive adequate disclosure. Moreover, different disclosure requirements could create investor confusion if it creates the impression that small investment advisers have different conflicts of interest with their advisory clients in connection with principal trading than larger investment advisers. We believe, therefore, that it is important for the disclosure protections required by the rule to be provided to advisory clients by all advisers, not just those that are not considered small entities. Further consolidation or simplification of the rule for investment advisers that are small entities would be inconsistent with the Commission's goals of fostering investor protection.

We have endeavored through rule 206(3)-3T to minimize the regulatory burden on all investment advisers eligible to rely on the rule, including small entities, while meeting our regulatory objectives. It was our goal to ensure that eligible small entities may benefit from the Commission's approach to the new rule to the same degree as other eligible advisers. The condition that advisers seeking to rely on the rule must also be registered as broker-dealers and that each account with respect to which an adviser seeks to rely on the rule must be a brokerage account subject to the Exchange Act, and the rules thereunder, and the rules of the self-regulatory organization(s) of which it is a member, reflect what we believe is an important element of our balancing between easing regulatory burdens (by affording advisers an alternative means of compliance with section 206(3) of the Act) and meeting our investor protection objectives. 66 Finally, we do not consider using performance rather than design standards to be consistent with our statutory mandate of investor protection in the present context.

The Commission is amending rule 206(3)-3T pursuant to sections 206A and 211(a) of the Advisers Act.

It is the policy of Customs and Border Protection (CBP) to periodically review title 19 of the Code of Federal Regulations (19 CFR) to ensure that it is accurate and up-to-date so that the importing and general public is aware of CBP requirements and procedures regarding import-related activities. As part of this review policy, CBP has determined that a correction to 19 CFR part 141 is necessary.

Section 141.61 of the CBP regulations (19 CFR 141.61) prescribes the manner by which entry and entry summary documentation must be completed. Within § 141.61, paragraph (g) requires an importer to indicate on the CBP Form 7501 the manner by which the declared transaction value on imported merchandise was determined. This requirement is authorized by § 15422(a) of the Food, Conservative, and Energy Act of 2008 (the “Act”), Public Law 110-234, 122 Stat. 1547 (19 U.S.C. 1484 note), in which Congress required CBP to collect for a one-year period beginning August 20, 2008, and ending August 19, 2009, from importers information on whether the transaction value of imported merchandise is determined on the basis of the price paid by the buyer in the first or earlier sale occurring prior to introduction of the merchandise into the United States.

On August 25, 2008, CBP published an interim rule as CBP Dec. 08-31 in the Federal Register (73 FR 49939) implementing the Act's first sale declaration requirement that for a specified time period importers were required to declare, at the time of entry, the transaction value method employed. As the statutory authority for the importer declaration requirement expired on August 19, 2009, this document amends 19 CFR 141.61 by removing paragraph (g).

Because the technical corrections set forth in this document merely conform to existing law, CBP finds that good cause exists for dispensing with notice and public procedure as unnecessary under 5 U.S.C. 553(b)(B). For this same reason, pursuant to 5 U.S.C. 553(d)(3), CBP finds that good cause exists for dispensing with the requirement for a delayed effective date.

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

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

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

The Intelligence Reform and Terrorism Prevention Act of 2004, Public Law 108-458, at Subtitle E, section 5501(a)(2), amended INA 212(d)(3)(A), replacing a bar against a waiver for an alien who is ineligible for a nonimmigrant visa under INA 212(a)(3)(E) with a bar against a waiver for an alien who is ineligible for a nonimmigrant visa under clauses (i) or (ii) of INA 212(a)(3)(E). The same legislation also amended INA 212(a)(3)(E) to add clause (iii), to which the waiver bar does not apply. This rule amends 22 CFR Part 40 to conform to these amended provisions.

This regulation involves a foreign affairs function of the United States and, therefore, in accordance with 5 U.S.C. 553(a)(1), is not subject to the rule making procedures set forth at 5 U.S.C. 553.

Because this final rule is exempt from notice and comment rulemaking under 5 U.S.C. 553, it is exempt from the regulatory flexibility analysis requirements set forth at sections 603 and 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604). Nonetheless, consistent with section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. This regulates individual aliens who are ineligible under INA 212(a)(3)(E)(i) and 212(a)(3)(E)(ii) and does not affect any small entities, as defined in 5 U.S.C. 601(6).

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4, 109 Stat. 48, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This rule will not result in any such expenditure, nor will it significantly or uniquely affect small governments.

This rule is not a major rule as defined by 5 U.S.C. 804, for purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign-based companies in domestic and import markets.

The Department of State has reviewed this proposed rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866 and has determined that the benefits of this final regulation justify its costs. The Department does not consider this final rule to be an economically significant action within the scope of section 3(f)(1) of the Executive Order since it is not likely to have an annual effect on the economy of $100 million or more or to adversely affect in a material way the economy, a sector of the economy, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Nor will the rule have federalism implications warranting the application of Executive Orders No. 12372 and No. 13132.

The Department has reviewed the regulations in light of sections 3(a) and 3(b)(2) of Executive Order No. 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This rule does not impose information collection requirements under the provisions of the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is contrary to the public interest not to issue a rule that is effective by December 21, 2010. Good cause exists to issue a temporary rule amending Section 165.1108, due to the opening of the Broadway cruise ship terminal and the anticipated arrival of cruise ships immediately thereafter, including on December 22, 2010. It is in the public interest to avoid the potential disruption that could be caused to major roadways just onshore. Moreover, security interests can continue to be maintained during the ensuing notice and comment rulemaking to amend Section 165.1108(b)(2). In addition, this rule will relieve an unnecessary burden imposed by varying interpretations of 33 CFR 165.1108(b)(2) while providing an effective security zone regulation in its place during a notice-and-comment rulemaking to amend § 165.1108(b)(2). As noted in the Discussion of the Rule section below, the Coast Guard will initiate a separate, notice-and-comment rulemaking proposing to amend 33 CFR 165.1108(b)(2) while this temporary rule is in effect.

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 because it is contrary to the public interest not to suspend 33 CFR 165.1108(b)(2) and issue an effective temporary rule for moored cruise ships in San Diego Harbor by December 21, 2010.

Based on experience with actual security zone enforcement operations, the COTP San Diego has concluded that a security zone encompassing all navigable waters, extending from the surface to the sea floor, within a 100 yard radius around any cruise ship that is moored at any berth within the San Diego port area inside the sea buoys bounding the Port of San Diego would provide for the safety of the cruise ship, vessels, and users of the waterway.

The Coast Guard is establishing a temporary security zone regulation from December 21, 2010, through June 20, 2011. The security zones created by this temporary final rule will encompass all navigable waters, extending from the surface to the sea floor, within a 100 yard radius around any cruise ship that is moored at any berth within the San Diego port area inside the sea buoys bounding the Port of San Diego. These security zones are necessary to provide for the safety of the cruise ship, vessels, and users of the waterway. Entry into these zones will be prohibited unless specifically authorized by the Captain of the Port (COTP) San Diego, or his or her designated representative.

This temporary rule also suspends paragraph (b)(2) of 33 CFR 165.1108. The Coast Guard will initiate a separate, notice-and-comment rulemaking, to amend § 165.1108(b)(2) and clarify what is meant by its reference to “shore area.” The COTP has determined the security zones for moored cruise ships in San Diego Harbor need not include any land.

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.

It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this rule to be so minimal that full Regulatory Evaluation is unnecessary. Most of the entities likely to be affected are pleasure craft engaged in recreational activities and sightseeing. In addition, due to National Security interests, the implementation of this temporary security zone regulation is necessary for the protection of the United States and its people. The size of the zones is the minimum necessary to provide adequate protection for cruise ships.

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 San Diego Bay within a 100-yard radius of cruise ships covered by this temporary final rule while it is effective from December 21, 2010 through June 20, 2011.

This security zone regulation will not have a significant economic impact on a substantial number of small entities for the following reasons. Vessel traffic can pass safely around the zones. Before the arrival of any cruise ship that would activate a security zone under this temporary final rule, the Coast Guard will issue local notice to mariners (LNM) and broadcast notice to mariners (BNM) alerts via VHF-FM marine channel 16 before the security zone is enforced.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can 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 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 effect 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 which 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 the establishment of security zones.

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

For information related to a specific State, local, or Tribal permitting authority, please contact the appropriate EPA regional office:

Entities affected by this action include States, local permitting authorities, and Tribal authorities.

Entities potentially affected by this rule also include sources in all industry groups, which have a direct obligation under the Clean Air Act (CAA or Act) to apply for and operate pursuant to a title V permit for GHGs that meet the applicability thresholds set forth in the Tailoring Rule. The majority of entities potentially affected by this action are expected to be in the following groups:

The information presented in this preamble is organized as follows:

This action finalizes EPA's proposal to narrow the approval of title V operating permit programs that we included in what we call the proposed Tailoring Rule, “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule: Proposed Rule,” 74 FR 55292, 55340 (October 27, 2009). EPA finalized the Tailoring Rule by Federal Register notice dated June 3, 2010, “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule: Final Rule,” 75 FR 31,514.

In the final Tailoring Rule, EPA narrowed the applicability of title V to GHG-emitting sources at or above specified thresholds by setting thresholds at which GHG emissions become subject to regulation for Prevention of Significant Deterioration (PSD) and title V purposes. 1 Title V requires all “major sources,” and certain other sources, to apply for and operate pursuant to an operating permit, which is generally issued by a State or local permitting authority pursuant to an approved State title V program. As discussed in more detail subsequently, “major source” under title V includes any source that emits, or has the potential to emit, 100 tons per year (tpy) or more of any air pollutant. Under EPA's longstanding interpretation, codified in the final Tailoring Rule, this requirement applies to emissions of air pollutants “subject to regulation.” Absent the Tailoring Rule, GHGs would become “subject to regulation” for title V purposes on January 2, 2011. Under the Tailoring Rule, however, a source becomes a “major source” subject to title V requirements based on its GHG emissions only if, as of July 1, 2011, it emits GHGs at or above 100,000 tpy measured on a carbon dioxide equivalent (CO 2 e) basis, and it also emits GHGs at levels at or above the statutory 100 tpy mass-based threshold generally applicable to all pollutants subject to regulation. The Tailoring Rule thresholds alleviate the overwhelming administrative burdens and costs that using the statutory thresholds alone for the permitting thresholds would place on title V permitting authorities and sources.

However, in proposing the Tailoring Rule, EPA recognized that even after it finalized the Tailoring Rule, some approved State title V programs would—until they were revised—continue to use the statutory thresholds for purposes of the permitting thresholds, even though the States would not have sufficient resources to implement the title V program at those levels. Accordingly, the proposed Tailoring Rule included a proposal to limit EPA's previous approval of title V programs to the extent those provisions required permits for sources whose emissions of GHG equal or exceed 100 tpy but are less than the permitting threshold of the Tailoring Rule. 2 When EPA finalized the Tailoring Rule, EPA did not finalize that part of the proposal. Instead, EPA waited to collect more information from the States to determine whether such action was necessary, and if so, for which States. As detailed in the following, EPA is now finalizing that part of the Tailoring Rule proposal for most permitting authorities.

EPA asked States to submit information—in the form of letters due within 60 days of publication of the Tailoring Rule (which we refer to as the 60-day letters)—that would help EPA determine whether it needed to narrow its approval of any title V programs. Some States informed EPA in their “60 day letters” or subsequently that they have adequate authority to issue permits to sources of GHGs and that they have interpreted the requirements of their approved title V programs consistent with the final Tailoring Rule thresholds. Other States and permitting authorities either indicated that their programs would require changes to permit GHG sources at the final Tailoring Rule thresholds, or did not provide a clear indication of the scope of their title V programs with respect to GHG sources.

Thus, in this action, EPA is narrowing its previous approval of most State title V programs to the extent the programs require title V permits for sources of GHG emissions below the Tailoring Rule thresholds. The other portions of these title V programs, including portions requiring permits for GHG-emitting sources with emissions at or above the Tailoring Rule thresholds, remain approved. States affected by this rule will not be required to take any action under the Federal CAA as a result of this rule.

The effect of EPA narrowing its approval in this manner is that there will be no Federally-approved title V program that requires permits for sources due to emissions of GHG below the final Tailoring Rule threshold of 100,000 tpy CO 2 e (and 100 tpy mass basis). This action ensures that the Federally-approved programs applicable in the affected States do not require title V permitting for sources due to their status as major sources of GHG emissions as of January 2, 2011.

We assume familiarity here with the statutory and regulatory background discussed in the preambles for the Tailoring Rule proposal and final action, and will only briefly summarize that background here.

Title V of the CAA requires, among other things, a “major source” to obtain an operating permit that: consolidates all CAA requirements applicable to the source into a document; includes conditions necessary to assure compliance with such requirements; provides for review of these documents by EPA, States, and the public; and requires permit holders to track, report, and annually certify their compliance status with respect to their permit requirements.

A “major source” is defined to include, among other things, a source that actually emits or has the potential to emit 100 tpy or more of “any air pollutant.” CAA sections 501(2), 302(j). See also 40 CFR 70.2 and 71.2. Since 1993, EPA has interpreted the CAA to define a “major source” for purposes of title V to include any source that emits, or has the potential to emit, at least 100 tpy of an air pollutant subject to regulation under the CAA. Memorandum from Lydia N. Wegman, Deputy Director, Office of Air Quality Planning and Standards, U.S. EPA, “Definition of Regulated Air Pollutant for Purposes of Title V” (Apr. 26, 1993); 75 FR 31553-54.

In recent months, EPA completed four distinct actions related to regulation of GHGs under the CAA. These actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which we issued in a single final action, 3 the “Johnson Memo Reconsideration” (also called the “Timing Decision”), 4 the “Light-Duty Vehicle Rule” (LDVR, or simply the “Vehicle Rule”), 5 and the “Tailoring Rule.”  6 In the Endangerment Finding, which is governed by CAA § 202(a), the Administrator exercised her judgement, based on an exhaustive review and analysis of the science, to conclude that “six greenhouse gases taken in combination endanger both the public health and the public welfare of current and future generations.” 74 FR 66496. The Administrator also found “that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare under CAA section 202(a).” Id. The Endangerment Finding led directly to promulgation of the Vehicle Rule, also governed by CAA § 202(a), in which EPA set standards for the emission of GHGs for new motor vehicles built for model years 2012-2016. 75 FR 25324. The other two actions, the Timing Decision and the Tailoring Rule, governed by the PSD and title V provisions in the CAA, were issued to address the automatic statutory triggering of these programs for GHGs due to the establishment of the first controls for GHGs under the Act. More specifically, the Timing Decision reiterated EPA's interpretation that only pollutants subject to regulation under the Act can trigger major source status for purposes of title V, and further concluded that the earliest date GHG would be subject to regulation for purposes of title V would be January 2, 2011. The Tailoring Rule established a series of steps by which PSD and title V permit requirements for GHG could be phased in, starting with the largest sources of GHG emissions. 75 FR 31514.

In the proposed Tailoring Rule, EPA proposed a major stationary source threshold for purposes of title V of 25,000 tpy for GHG on a CO 2 e basis, for at least a specified period. EPA recognized that even so, approved State title V programs would—until they were revised—continue to use the statutory threshold of 100 tpy for GHG on a mass basis for purposes of the permitting threshold, even though permits for sources below the Tailoring Rule threshold were not required under Federal regulations and the States would not have sufficient resources to implement the title V program at the statutory threshold for GHG-emitting sources. This would result in the same problems of overwhelming administrative burdens and costs that we designed the Tailoring Rule to address. Accordingly, the proposed Tailoring Rule included a proposal to limit EPA's previous approval of title V programs to the extent those provisions required permits for sources whose emissions of GHG equal or exceed 100 tpy but are less than the permitting threshold of the Tailoring Rule.

EPA relied for its authority for the proposed limitations of approval on CAA section 301(a), as it incorporates the authority of an agency to reconsider its actions, and in the Administrative Procedure Act (APA) section 553. See 74 FR 55345. EPA indicated in the proposal that it considered and decided against issuing a notice of deficiency under CAA section 502(i)(1), in part because EPA did not anticipate that program submissions would be necessary following EPA's action to limit approvals. 74 FR 55345-55346.

In the final Tailoring Rule, EPA adopted a 100,000 tpy CO 2 e permitting threshold for title V permitting of GHG emissions as of July 1, 2011, committed the agency to take future steps addressing smaller sources, and excluded the smallest sources from title V permitting for GHG emissions until at least April 30, 2016.

The mechanism EPA chose in the final rule to implement the 100,000 tpy CO 2 e threshold for GHG emissions was slightly different than what EPA had proposed. In response to comments from States, in place of providing a definition in part 70 of “major source” with thresholds specific to GHG sources, the final Tailoring Rule amended the definition of “major source” to reflect EPA's long-standing interpretation that applicability for “major stationary source” under CAA sections 501(2)(B) and 302(j) and 40 CFR 70.2 and 71.2 is triggered by sources of pollutants “subject to regulation.” EPA then reflected the permitting thresholds for GHGs within a definition of the term “subject to regulation” that was also added to parts 70 and 71.

Some States advised EPA that they would likely be able to implement the Tailoring Rule thresholds by interpreting provisions in their approved title V programs. A State's implementation of the Tailoring Rule in this manner would obviate the need for EPA to narrow its approval of the State's title V program. Thus, in the final Tailoring Rule, EPA deferred making any decision regarding whether to narrow its approval of any title V programs until after learning how States intended to implement the Tailoring Rule. Rather than taking final action on our proposal to limit approval for State title V programs, EPA asked States to submit information—in the form of letters due within 60 days of publication of the final Tailoring Rule (which we refer to as the 60-day letters)—that would help EPA determine what action it would need to take to ensure that GHG sources would be permitted consistent with the final Tailoring Rule, and specifically for which States it would need to limit its approval of State title V programs.

Almost all States submitted 60-day letters. After reviewing the letters, some States have indicated that they have been able to interpret their existing approved title V programs in a manner consistent with the final Tailoring Rule. Other permitting authorities indicated that they needed regulatory or legislative changes either to implement title V permitting for GHG sources, or else to apply the final Tailoring Rule thresholds when they implement title V permitting for GHG sources. Some States indicated that some regulatory or legislative changes to their title V programs were necessary, but did not clearly indicate which types of changes were required. In some cases, the State's 60-day letter addressed PSD permitting but not title V permitting, or else did not clearly distinguish between the two programs in discussing how the State intended to implement permitting of GHG sources. Finally, a few States did not submit 60-day letters.

Most States that need to take some action indicated that they were actively in the process of updating their title V programs to be consistent with the final Tailoring Rule. Indeed, many programs were projected, as of the date of the 60-day letter, to be revised to incorporate the Tailoring Rule threshold at the State level before January 2, 2011.

EPA is taking final action to narrow its approval of the title V program for certain States. In the final Tailoring Rule, EPA established levels of GHG emissions for purposes of determining applicability of title V. However, most EPA-approved State title V programs currently provide that sources of GHGs will become subject to title V requirements even where the sources emit GHGs below the final Tailoring Rule thresholds. Under the final Tailoring Rule, GHGs emitted below the Tailoring Rule thresholds are not treated as a pollutant “subject to regulation” under the CAA (and thus, under the final Tailoring Rule, a source emitting GHGs below the Tailoring Rule thresholds would not be treated as a major stationary source subject to title V on account of its GHG emissions). Thus, EPA is now narrowing its approval of most approved title V programs so that those title V programs are approved to apply to GHG-emitting sources only if those sources emit GHGs at or above the final Tailoring Rule thresholds. EPA is accomplishing this by reconsidering and narrowing its previous approval of those title V programs to the extent they apply to GHG-emitting sources that emit below the final Tailoring Rule thresholds.

In the proposed Tailoring Rule, EPA proposed to narrow its approval for all 50 States, as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. 7 EPA now finalizes this narrowing of approval for the States with title V programs that will apply to GHG emissions at below-Tailoring Rule levels as of January 2, 2011, and for States that EPA cannot clearly determine do not fall in this category. The States for whom EPA is narrowing its approval of the title V program in this action are: Alabama, California, Colorado, District of Columbia, Georgia, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virgin Islands, Virginia, Washington, West Virginia, and Wisconsin. For all the other States—States with no authority to permit sources due to their status as major sources of GHG or States which apply the Tailoring Rule thresholds by interpretation—EPA is not taking final action on its proposal to narrow its approval of the title V program at this time because those States will not subject GHG sources with emissions below the Tailoring Rule thresholds to the requirements of title V on January 2, 2011.

For most States, title V programs are Federally-approved only under 40 CFR part 70, and EPA need only amend Appendix A to part 70 in order to narrow its approval of the title V program. However, in some cases, States have chosen to submit their title V programs as part of their State implementation plans (SIPs) and EPA has approved those programs into the SIP as codified in 40 CFR part 52. Three States [Arizona (Pinal County Air Quality Control District)], Minnesota, and Wisconsin) whose title V programs require narrowing have title V applicability provisions that were Federally approved under both part 70 and part 52. For these States, EPA is amending its approval of the title V program in both part 70 and part 52, in order to ensure that the scope of the approved title V program is consistent in both parts.

EPA is narrowing its previous approval for most State title V programs because of an important flaw in the approved title V programs. EPA is rescinding its previous approval for the part of the title V program that is flawed, and EPA is leaving in place its previous approval for the rest of the program. Since there is no need under Federal law to permit sources below the final Tailoring Rule threshold, the title V programs whose approval is being narrowed by this action will continue to be fully approved under CAA section 502.

Among the minimum requirements for a title V program are those for “adequate personnel and funding to administer the program.” CAA section 502(b)(4). These requirements need to be understood in context of Congress' clear concern for “the need for expeditious action by the permitting authority on permit applications and related matters.” CAA section 502(b)(8); see also CAA sections 502(b)(6), 502(b)(7), & 503(c), 40 CFR 70.4(b)(8).

The flaw in the prior approved programs is that certain program provisions were phrased so broadly that they could, under certain circumstances, sweep in more sources than the permitting authority could process in an expeditious manner in light of the resources that were available or could be made available. Thus, EPA is narrowing the scope of its approval of those title V provisions to include, for purposes of GHG emissions, only title V permitting for sources emitting GHGs at or above final Tailoring Rule thresholds. EPA believes permitting at these thresholds will require resources at a level consistent with the descriptions of adequate resources the State provided, and EPA determined in the final Tailoring Rule that States will have adequate resources to issue operating permits to sources emitting GHGs at this level.

As noted above, for three States it is necessary to revise the SIP in order to narrow the approved title V program. The basis for narrowing the program is the same under part 52 as under part 70. Indeed, EPA does not believe it would make sense to narrow its approval under part 70 without also narrowing its approval under part 52. Accordingly, for these States EPA is not only exercising its authority to reconsider its approval of the title V program, but also its authority to reconsider and to correct errors in its approval of a SIP.

EPA is narrowing its approval of the title V programs for all States that have indicated that they have authority under their title V programs to issue permits to sources of GHG emissions, but at the statutory level of 100 tpy or more on a mass emissions basis. As a precautionary measure, EPA is also narrowing its approval for States that did not clearly indicate to EPA whether they are in this situation. EPA recognizes that the actual status of the States subject to this rule varies to some degree; while some States have authority to issue permits to sources due to their emissions of GHGs under their title V programs but at the statutory threshold only, other States may have been able to alter their State regulations but have not yet submitted such changes or had them approved by EPA, and still other States did not provide a 60-day letter with sufficient information to determine the status of their title V permit programs in relation to GHG sources. EPA believes it is appropriate to narrow the approved title V program for all of these States. In the case of programs that have made State-level changes but have not yet received EPA approval for those changes, this approach provides an efficient means of ensuring that at no time is there a requirement under a Federally-approved program for sources below the final Tailoring Rule threshold to obtain a permit. For this reason, as a precautionary matter, EPA is narrowing approval for States that did not inform us that they can implement the thresholds in the final Tailoring Rule under their current approved programs.

Some States may lack authority to require permits for GHG sources at all. Where there is clear and unambiguous evidence that such State programs do not require permits for any sources due to their status as a major source of GHG emissions, EPA is not narrowing such programs, because they do not present the flaw discussed previously. 8 There may be some States that similarly lack authority to issue title V permits to sources due to their status as major sources of GHG emissions, but have not clearly articulated that fact to EPA in their 60-day letters. EPA intends to narrow its approval for all States where the status of the title V program in relation to major sources of GHG is unclear. Although it may turn out that some of these programs do not present the flaw discussed previously, EPA is only narrowing its approval of programs “to the extent” they require sources of GHG in excess of the threshold to apply for title V permits as major sources of GHG. Thus, if indeed a State's program does not require permits for these sources at all, there are no consequences to sources or the permitting authority from EPA's decision to narrow the scope of the State's approval. 9 On the other hand, if EPA were to refrain from narrowing its approval, and then learn that the program indeed does require sources that emit or have the potential to emit 100 tpy or more of GHGs on a mass basis to apply for title V permits, there would be significant adverse consequences for the permitting authority and sources, as described previously in this final rule and in the final Tailoring Rule. Accordingly, EPA is refraining from narrowing the title V programs for States that cannot implement the Tailoring Rule thresholds only if EPA is certain that those State programs do not require permits for sources due to their emissions of GHG.

The following section discusses these issues in more detail, beginning with the title V applicability provisions; then the minimum State program requirements; and then how the two, read together, gave rise to the flaws in the approved State title V programs.

Each of the States subject to this rule has an approved title V operating permits program and has not clearly indicated to EPA that it has the ability to permit sources of GHG consistent with the thresholds in the final Tailoring Rule. In most of these States, the approved title V program contains applicability provisions that are written broadly to include all pollutants subject to regulation under the CAA for the purposes of determining whether a source is a major source covered by the title V operating permits program. As a result, as soon as EPA promulgates a rule regulating a new pollutant under any provision of the CAA, these title V programs expand to cover additional sources that are major for that new pollutant. Depending on the pollutant, and the number and size of sources that emit it, these applicability provisions could result in a required significant and rapid expansion of the title V program. This is precisely what is happening at present, now that GHG will become subject to regulation under CAA section 202(a) and will become subject to PSD when emitted from certain stationary sources starting on January 2, 2011.

Importantly, the States affected by this action do not interpret their applicability provisions or any other provision in the title V programs to incorporate any limits on title V applicability with respect to new pollutants, and the programs do not contain any other mechanism that would allow the State to interpret applicability more narrowly, at least for GHGs. As a result, the affected States' title V applicability provisions include no way to limit the speed or extent of the expansion a title V program might be required to undergo to address new pollutants.

This sudden expansion of permitting responsibilities is precisely what is now happening in the case of GHGs. As described in the Timing Decision and final Tailoring Rule, GHG will become subject to regulation on January 2, 2011. EPA defined GHGs as the group of six air pollutants made up of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, and perfluorocarbons. 75 FR 31514, 31519 (June 3, 2010) (Tailoring Rule discussion); 75 FR 25324 (May 7, 2010) (LDVR). Absent the limits of the final Tailoring Rule, sources that emit or have the potential to emit at least 100 tpy of GHGs would be potentially subject to title V permitting as of that date. EPA does not have information showing that the approved title V programs in States subject to this rule can interpret their programs more narrowly, to apply to only GHG-emitting sources at or above the final Tailoring Rule thresholds. In contrast, as noted elsewhere, several other States are able to interpret their title V programs more narrowly and, as a result, are not subject to this action.

The scale of the administrative program needed to effectively permit all sources emitting GHGs at the 100 tpy level has highlighted the unconstrained nature of the title V program's applicability provisions. EPA has recognized that immediately subjecting major sources of GHGs at the 100 tpy level to title V requirements is administratively unmanageable and creates absurd results that were not intended by Congress when it enacted title V. Thus, in the final Tailoring Rule, EPA implemented limits on when GHGs become “subject to regulation” for purposes of title V, such that emissions of GHGs will not trigger major source status, and thus will not trigger title V permit requirements, unless the source emits both 100 tpy of GHG on a mass basis and 100,000 tpy CO 2 e of GHG as of July 1, 2011 or later. EPA included this limit in its regulations, and through this limit greatly reduced the extent of title V applicability. This limit was set at a level at which EPA determined States would have the resources to implement a title V program for GHG emissions. By contrast, the approved State programs that are subject to this rule do not incorporate the thresholds of the final Tailoring Rule. As a result, many or all of these State programs implement title V applicability for GHG sources more broadly—indeed, much more broadly, to far more sources and to much smaller sources—than EPA's regulations do. This is problematic to the extent it may interfere with the State's ability to meet minimum requirements for title V programs, as discussed in the following section.

Each of the States subject to this rule submitted a title V program for approval. In order to be approved by EPA, the State program was required to meet certain minimum requirements laid out in the CAA and in 40 CFR part 70. One of these requirements, contained in section 502(b)(4), specifies that every program must provide “for adequate personnel and funding to administer the program.” These requirements are further detailed in 40 CFR 70.4(b)(6) through (b)(8).

As noted previously in this rule, and in the Tailoring Rule, the CAA also contains several other provisions making clear Congress' intent that title V permits be processed in an expeditious manner, and these are likewise reflected in 40 CFR part 70. See generally CAA section 502 and 40 CFR 70.4.

Therefore, at the time that the State submitted the title V program for EPA approval, the title V program was required to include assurances that adequate resources would be available to process title V permits in an expeditious manner, according to the requirements of the CAA and part 70.

The title V programs affected by this action, however, will not be able to meet these minimum requirements for a title V program as a result of their applicability to GHG-emitting sources. In the proposed and final Tailoring Rule, EPA stated that on a nationwide basis, applying title V to GHG-emitting sources at the 100 tpy level will result in far greater numbers of sources (over 6 million) requiring permitting than currently do (about 15,000), and the great majority of these additional sources would be smaller than the sources currently subject to title V. EPA added that the administrative burdens associated with permitting these large numbers of small sources would overwhelm the affected permitting authorities. As a result, for each State, EPA proposed to rescind approval of the part of the title V program that applies title V to GHG-emitting sources below the Tailoring Rule thresholds. During the comment period on this proposal, no authority contested this understanding of the facts, none stated that it could administer title V at the 100 tpy levels, and none contested the proposal on grounds that it has adequate resources. In the final Tailoring Rule, EPA refined, on the basis of comments, the precise extent of the administrative burden, but confirmed that the burden was overwhelming and that States lacked adequate resources. As noted above, in the final Tailoring Rule, EPA requested that States submit letters within 60 days of publication of the rule describing how they intended to implement title V for GHG-emitting sources. In those letters, none of the States claimed they could, or intended to, implement the approved title V program at the statutory levels. From all this, it is clear that none of the States had included in the title V program submitted for approval an adequate plan or strategy to assure resources to administer the title V program for their GHG-emitting sources at the 100 tpy level.

We note that there is nothing inherently problematic with a title V program submission that did not include the previously-described plan to acquire additional resources. Only title V programs that lack appropriate constraints to limit title V applicability for new pollutants (consistent with Federal law) to match their resources must be narrowed to include such constraints. 10

Based on the previous analysis, it is clear that EPA's approval of the title V programs subject to this action was flawed. They each are structured in a manner that may impose a title V permitting requirement on sources of pollutants newly subject to regulation under the Act without limitations, and yet they do not have a plan for acquiring resources to adequately permit large new categories of sources. As explained previously, the combination of these title V programs' broader applicability to additional stationary sources that emit pollutants newly subject to regulation, and the failure of the approved title V program to plan for adequate resources for that broader applicability—and to ensure that permits could be issued consistent with the requirements for expeditious processing of permit applications—is a flaw in these programs. In short, the title V program applicability provisions and the assurances provided in the State program submission are mismatched and therefore EPA needs to reconsider its approval of these programs. As discussed previously, EPA's recently promulgated GHG rules have highlighted this flaw.

It may be true that at the time the affected States submitted their State programs for approval, the precise course of events that have recently transpired concerning GHGs and that have exposed the mismatch between title V applicability and State assurances may have been difficult to foresee. Even so, it could have been generally foreseen that the breadth of the affected State program applicability provisions, combined with the programs' limited State assurances, was at least a potential mismatch that could eventually lead to title V applicability greatly outstripping permitting authority resources. EPA does not believe it is required to wait for that to occur, and then issue a Notice of Deficiency (NOD), to address the issue. Rather, this is a flaw in the title V programs that provides a basis for EPA to reconsider its approval.

In the proposed Tailoring Rule, EPA proposed to narrow its approval for all approved State programs. EPA now finalizes this narrowing of approval for only the States which have indicated that their title V programs will apply to sources that emit or have the potential to emit at least 100 tpy of GHG as of January 2, 2011, or for which EPA has not been able to clearly establish whether or not the program will apply to such sources. The States for which EPA is narrowing its approval of the approved State title V program in this action include: Alabama, California, Colorado, District of Columbia, Georgia, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virgin Islands, Virginia, Washington, West Virginia, and Wisconsin. For each of these States, EPA is finalizing an amendment to Appendix A of 40 CFR part 70 that will state “For any permitting program located in the State, insofar as the permitting threshold provisions concern the treatment of sources of GHG emissions as major sources for purposes of title V, EPA approves such provisions only to the extent they require permits for such sources where the source emits or has the potential to emit at least 100,000 tpy CO 2 e, as well as 100 tpy on a mass basis, as of July 1, 2011.”  11 EPA is also finalizing very similar language in the SIPs of Arizona, Minnesota and Wisconsin in order to ensure that the federally approved title V program in each of these States is appropriately narrowed under part 52 as well as part 70. The language being used for this final narrowing rule reflects minor changes from the language proposed in the Tailoring Rule in order to clarify and reflect the decisions about permitting thresholds reached in the final Tailoring Rule.

EPA notes that the following States have stated either that they can permit major sources of GHG in their approved title V program consistent with the Tailoring Rule thresholds or that they have no authority under their current approved title V program to permit sources due to their status as major sources of GHG: Alaska, Arkansas, Arizona, Connecticut, Delaware, Florida, Idaho, Indiana, Kentucky, Massachusetts, Michigan, Montana, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, Puerto Rico, Texas, and Wyoming. Accordingly, it is not necessary at present to narrow the title V program approval for these States. As noted previously, EPA intends to work with these States as necessary, through program revisions, notices of deficiency and/or application of the Federal title V program, to assure that major sources of GHGs in all States are subject to title V programs, but only at the Tailoring Rule thresholds.

EPA has determined that this flaw in the approved State programs warrants reconsideration of the prior program approvals, and narrowing of those approvals. EPA believes it may reconsider its prior actions under authority inherent in CAA section 502, with further support from CAA section 301(a), and the reconsideration mechanisms provided under CAA section 307(b) and APA section 553(e). 12 In addition, with respect to the two SIP revisions, EPA has authority to correct errors in SIP approvals, as well as to reconsider them.

In approving the State programs under CAA 502(d), EPA retained authority to revise that action. The courts have found that an administrative agency has the inherent authority to reconsider its decisions, unless Congress specifically proscribes the agency's discretion to do so. See, e.g., Gun South, Inc. v. Brady, 877 F.2d 858, 862 (11th Cir. 1989) (holding that agencies have implied authority to reconsider and rectify errors even though the applicable statute and regulations do not provide expressly for such reconsideration); Macktal v. Chao, 286 F.3d 822, 826-26 (5th Cir. 2002); Trujillo v. General Electric Co., 621 F.2d 1084, 1086 (10th Cir. 1980) (“Administrative agencies have an inherent authority to reconsider their own decisions, since the power to decide in the first instance carries with it the power to reconsider”); see also New Jersey v. EPA, 517 F.3d 574 (DC Cir. 2008) (holding that an agency normally can change its position and reverse a prior decision but that Congress limited EPA's ability to remove sources from the list of hazardous air pollutant source categories, once listed, by requiring EPA to follow the specific delisting process at CAA section 112(c)(9)). 13

Section 301(a) of the CAA, in conjunction with CAA section 502 and the case law just described, provides statutory authority for EPA's reconsideration action in this rulemaking. Section 301(a) of the CAA authorizes EPA “to prescribe such regulations as are necessary to carry out [EPA's] functions” under the CAA. Reconsidering prior rulemakings, when necessary, is part of “[EPA's] functions” under the CAA. Cf. CAA section 307(b). Furthermore, the case law previously cited establishes that a grant of authority to approve State title V programs carries with it the inherent right to reconsider that approval, particularly since Congress has not prescribed any specific alternative mechanism for such reconsideration. Thus, CAA sections 502 and 301(a) confer authority upon EPA to undertake this rulemaking.

EPA finds further support for its authority to narrow its approvals in APA section 553(e), which requires EPA to give interested persons “the right to petition for the issuance, amendment, or repeal of a rule,” and CAA section 307(b)(1), which expressly contemplates that persons may file a petition for reconsideration under certain circumstances (at the same time that a rule is under judicial review). The right to petition to reconsider, amend, or repeal presumes that an agency has the discretion to grant such a petition. If EPA has the authority to grant a petition from another person to reconsider, amend or repeal a rule if justified under the CAA, then it follows that EPA should be considered as having authority to reconsider, amend or repeal a rule when it determines such an action is justified under the CAA, even without a petition from another person.

EPA recently used its authority to reconsider prior actions and limit its prior approval of a SIP in connection with California conformity SIPs. See, e.g., 68 FR 15720, 15723 (discussing prior action taken to limit approvals); 67 FR 69139 (taking final action to amend prior approvals to limit their duration); 67 FR 46618 (proposing to amend prior approvals to limit their duration, based on CAA sections 110(k) and 301(a)). EPA had previously approved SIPs with emissions budgets based on a mobile source model that was current at the time of EPA's approval. Later, EPA updated the mobile source model. But, even though the model had been updated, emissions budgets would continue to be based on the older, previously approved model in the SIPs, rather than the updated model. To rectify this problem, EPA conducted a rulemaking that revised the previous SIP approvals so that the approvals of the emissions budgets would expire early, when the new ones were submitted by States and found adequate, rather than when a SIP revision was approved. This helped California more quickly adjust its regulations to incorporate the newer model.

EPA notes that it considered but decided not to use the NOD process, which is explicitly provided for in CAA section 502(i), to address the flaw presented by these program approvals. There are several reasons why EPA determined that it was neither necessary nor appropriate to use the NOD process to address this issue in this rule.

The CAA provides that the NOD is to be used “whenever the Administrator makes a determination that a permitting authority is not adequately administering or enforcing a program” and provides that States must correct the deficiency within 18 months. CAA section 502(i).

Here, the problem is not with the way the State is administering or enforcing its approved State title V program. States are issuing permits, and modifications, and enforcing the various requirements of title V as provided for under the Act. The flaw is the mismatch between the breadth of the applicability provisions and the limited State assurances of adequate resources, in light of the possibility that a very large number of new major sources could become subject to title V. This flaw does not relate at all to the current administration and enforcement of the title V program, but rather to the overbroad nature of the underlying structure and scope of the title V program. The distinction is further underlined by the fact that section 502(i) contemplates that States would need to take corrective action to address the notice of deficiency. However, in the case of the flaw addressed here, EPA believes that no further State action will be necessary to address this mismatch once the approved title V program has been narrowed by this action. 14

EPA views the NOD as specific authority for addressing specific circumstances, but concludes that it is not the sole means of changing an approved State program, and it is not the appropriate means in these circumstances. EPA believes nothing in section 502(i) displaces its authority to reconsider prior program approvals and, for the reasons described previously in this rule and in the Tailoring Rule proposal, concludes that such a reconsideration and narrowing is warranted and appropriate.

With respect to the two SIPs being revised, EPA is also exercising its authority to correct errors in SIPs, pursuant to CAA section 110(k)(6), as well as its authority to reconsider its actions. Under CAA section 110(k)(6), once EPA determines that its action in approving the PSD SIPs was in error, EPA has the authority to correct the error in an “appropriate” manner, and through the same process as the original approval, but without requiring any further State submission.

EPA's narrowing of its approval of the title V program corrects an error by addressing the flaw previously discussed, that the approved program could, under certain circumstances, sweep in more sources than the permitting authority could process in an expeditious manner in light of the resources that were available or could be made available. EPA believes correcting these SIPs is a reasonable exercise of its authority for the reasons stated herein and for the reasons stated in the PSD Narrowing Rule (“Limitation of Approval of Prevention of Significant Deterioration Provisions Concerning Greenhouse Gas Emitting-Sources in State Implementation Plans”).

Comments: Several industry commenters (4019, 4118, 4691, 5083, 5140, 5181, 5278, 5317) and one State commenter (4019) generally disagreed with our proposal to narrow our approval of previously-approved title V programs. Specific arguments against the proposed approach include the following:

• The EPA has overstated its authority under CAA section 301(a). The DC Circuit has observed that section 301(a)(1) “does not provide the Administrator with carte blanche authority to promulgate any rules, on any matter relating to the CAA, in any manner that the Administrator wishes.” Where the CAA includes express provisions—such as section 110(k)(5) (the SIP call provision)—EPA is required to follow those provisions. (4019, 5083, 5140, 5181, 5278, 5317).

• The EPA's invocation of 5 U.S.C. 553(e) is legally indefensible. The EPA has mentioned no outstanding petition for EPA to revisit its PSD SIP approvals, so section 553(e) appears to be inapposite. Even where section 553(e) applies, it merely directs agencies to allow parties to seek revisions of rules; it plainly does not permit agencies to disregard procedural requirements—whether under the APA or under organic statutes such as the CAA—that agencies must follow in effecting any such revisions. (5317)

An industry commenter (4298) supports EPA's efforts to limit or conform its prior approvals through CAA sections 301(a)(1) and 110(k)(6) with respect to applicability thresholds. However, the commenter believes EPA should take affirmative steps to ensure that States immediately either revise their regulations to raise existing lower thresholds or demonstrate that they have adequate resources and funding to manage their programs utilizing those existing lower thresholds.

The same commenter states that EPA should issue a NOD, under CAA section 502(i)(1), to all States concurrent with the final Tailoring Rule, unless a State can demonstrate that it has commenced and is committed to finalizing any changes necessary under State law to make it consistent with the Tailoring Rule (4298). The commenter adds that EPA should not finalize any action that would trigger GHG permitting until each State program has been amended. Another commenter (5306) suggests EPA establish an expeditious deadline for States to submit corrective program revisions by adopting model guidelines to help inform State rulemaking, and EPA should complete this process by the end of 2010. The commenter explains that EPA can promptly issue a notice of deficiency and call for expeditious corrective action. See 42 U.S.C. 7661a(i). (5306).

Several comments state that there is no provision in title V, similar to error correction provisions for SIPs, for EPA to use to correct an error in its original approval of a title V program (5140, 5181, 5278).

Response: As discussed previously, EPA believes that it has authority under sections 502 and 301 to reconsider its approvals of State title V programs and under section 110 to reconsider SIP approvals and correct errors in the SIP. Section 502(d) explicitly requires EPA to approve or disapprove State title V programs, and EPA believes under the case law cited previously, this authority inherently includes the authority for EPA to reconsider its prior approval. EPA is citing CAA 307(b) and APA section 553(e) to indicate that Congress understood that EPA had the authority to reconsider its action in response to a petition. There is no reason to believe that EPA's authority to reconsider its action is limited solely to situations where a person has filed a petition. 15

While Congress “undoubtedly can limit an agency's discretion to reverse itself,” and “EPA may not construe a statute in a way that completely nullifies textually applicable provisions meant to limit its discretion,” New Jersey v. EPA, 517 F.3d 574, 583 (DC Cir. 2008) (quotation omitted), there is no evidence that Congress limited EPA's discretion to reconsider its decisions with respect to title V program approvals, or that EPA's approach would nullify any provisions intended to limit its discretion. The only provision that commenters have identified as potentially limiting EPA's discretion is section 502(i), but that section is explicitly directed to the administration and enforcement of an approved program. Where there are problems with how an approved program is being implemented, the notice of deficiency process provides an avenue for working with States to fix those problems. Where, however, EPA realizes (as here) that its approval of a program was based on a structural flaw in the program—that is, a mismatch between the scope of sources potentially covered and the resources to cover them—that may cause future problems with administrability, there is no reason to believe that Congress intended to limit EPA's ability to reconsider its decision.

As noted previously, the distinction between current deficiencies in the administration and enforcement of the title V program, as compared to the overbroad nature of the underlying structure and scope of the title V program, is further underlined by the fact that section 502(i) contemplates that States would need to take corrective action to address the notice of deficiency. However, in the case of the flaw addressed here, EPA believes that no further State action will be necessary once the approved title V program has been narrowed by this action.

The conclusion that Congress did not intend to limit EPA's ability to reconsider its decisions is further supported by the fact that (unlike the situation the DC Circuit considered in New Jersey v. EPA, discussed previously) Congress did not establish any specific substantive limits on EPA's discretion in issuing a notice of deficiency. Rather, EPA is to issue a notice “whenever the Administrator makes a determination that a permitting authority is not adequately administering and enforcing a program * * * ” Section 502(i)(1). Thus, EPA's decision to reconsider its approval in no way nullifies any provisions meant to limit its discretion.

Finally, the fact that there is no provision similar to section 110(k)(6) for title V provides no basis for concluding that Congress intended to limit EPA's ability to reconsider its approvals. Section 110(k)(6) was enacted in response to a court decision, Concerned Citizens of Bridesburg v. EPA, 836 F.2d 777 (2d Cir. 1987), where the court narrowly construed EPA's authority to correct errors in SIP approvals as limited to typographical or similar errors. In response, Congress added section 110(k)(6) as part of the 1990 amendments to make clear that EPA has authority to correct any errors. No court has ever suggested that EPA lacks authority to reconsider its decisions to approve title V programs, and under the case law the lack of an explicit mechanism to correct errors in title V program approvals is entirely consistent with EPA's view that such authority is inherent in CAA section 502, as discussed previously.

EPA believes this case law also supports its authority to reconsider the approvals into part 52 of two title V programs which are being narrowed. Furthermore, EPA believes we have authority not only to reconsider these SIP approvals, but also to narrow these SIPs using our error correction authority under CAA section 110(k)(6). EPA disagrees with commenters who believe that this provision may only be used for technical or clerical errors. EPA's view is that Section 110(k)(6) of the CAA is available to correct any error EPA made in approving a SIP. The text of CAA section 110(k)(6) applies the provision broadly to any mistake, and does not limit the provision's applicability to only technical or clerical errors. Congress's passage of CAA section 110(k)(6) in 1990 in fact indicated Congress's intent to reinforce EPA's broad authority to unilaterally correct any errors in SIP approvals, coming as it did after the Third Circuit adopted a narrow interpretation of error correction authority in Concerned Citizens of Bridesburg v. U.S. EPA, 836 F.2d 777 (1987). 16

EPA notes that the question of whether EPA should have postponed promulgation of the Vehicle Rule until each State title V program had been revised is not germane to this rule, and EPA is not, in this rule, reopening any issue as to the timing of its promulgation of the Vehicle Rule. Nonetheless, EPA had compelling reasons to issue the Vehicle Rule at the time it did so. In the Vehicle Rule, EPA explained that although it has some discretion with respect to the timing of standards, our discretion was not unlimited, and that three years had already passed since the Supreme Court had directed EPA to take appropriate actions under CAA section 202(a). 75 FR 25402. EPA explained further that any additional delay in setting standards would frustrate implementation of the national program for regulation of motor vehicles, resulting in substantial prejudice to vehicle manufacturers and consumers. 75 FR 25326. EPA also explained that consideration of indirect stationary source costs has no relevance to the issue of the appropriate level at which to set vehicle emission standards. Vehicle Rule RTC 5-456.

As noted previously, once the Federally-approved program is narrowed, the obligation under Federally approved programs to apply for a permit will no longer exist for sources below the Tailoring Rule thresholds. Further, EPA notes that the Agency has no authority to amend State law, but the majority of States have informed EPA that they are revising their State programs to incorporate the thresholds in the final Tailoring Rule for GHG-emitting sources. Indeed, many programs report that these changes will be in place by January 2, 2011. Other programs report that their changes will be implemented by the spring of 2011, which should be timely for State law purposes in light of the fact that sources newly subject to title V generally have up to a year to file their application.

EPA is continuing to work with States to implement the final Tailoring Rule and title V permitting for GHG sources. EPA intends to use program revisions, notices of deficiency and/or application of the Federal title V program, as appropriate, in order to assure that GHG sources in all States are subject to title V programs (and that those programs are not overwhelmed by permitting sources below the Tailoring Rule thresholds). EPA reiterates that once the Federally-approved program is narrowed (in this action), the obligation under Federally approved programs to apply for a permit will no longer exist for sources below the Tailoring Rule thresholds. EPA reiterates further that this approach is preferable to the NOD process for States subject to this action and that it is not necessary to issue notices of deficiency as part of this rulemaking.

This rule is being issued under CAA § 307(d)(1)(V). CAA section 307(d) specifies that rules issued under its provisions are not subject to APA section 553. Thus, the 30-day delay in effective date from the date of signature required under the APA does not apply. In addition, APA section 553(d) provides exceptions to this requirement for good cause and for any action that grants or recognizes an exemption or relieves a restriction. The effect of this rule is to relieve many small sources (and permitting authorities) from permitting obligations under title V and to address the potential for permitting authorities to be overwhelmed by processing permits not required under 40 CFR part 70. Therefore, EPA finds that there is good cause for an immediate effective date, and that an immediate effective date is consistent with the purposes underlying APA section 553(d). In addition, since this is not a major rule under the Congressional Review Act (CRA), the 60-day delay in effective date required for major rules under the CRA does not apply. This rule is thus effective upon publication.

Under Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action” because it will raise novel legal or policy issues. Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under EO 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action.

This action does not impose any new information collection burden. Instead, this will significantly reduce costs incurred by sources and permitting authorities relative to the costs that would be incurred if EPA did not revise this rule. In the final Tailoring Rule, EPA stated that based on its GHG threshold data analysis, it estimated that over 6 million new facilities nationally would be required to obtain operating permits based on applying an emissions threshold for major source status of 100 tpy of GHG emissions on a mass basis. This was compared with the approximately 15,000 title V permits that have been issued to date. Thus, without the final Tailoring Rule, the administrative burden for permitting GHG emissions would increase 400-fold, an unmanageable increase. The current action takes further steps to implement the burden-reduction implemented by the final Tailoring Rule by raising the GHG thresholds in the approvals of the title V programs of the identified State and local agencies from 100 tpy to the higher thresholds required under the final Tailoring Rule (100,000 tpy CO2e under title V during step 2 of the final Tailoring Rule implementation). However, OMB has previously approved the information collection requirements contained in the existing regulations under 40 CFR part 70 under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0336. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In making such determinations, the impact of concern is any significant adverse economic impact on small entities (5 U.S.C. 603 and 604). This rule will relieve Federal regulatory burdens for affected small entities, including small businesses that are subject to title V permitting in the affected States by raising the GHG applicability thresholds in those States to the levels specified in the final Tailoring Rule, which in turn, will result that fewer sources being subject to title V permitting in those States. Thus, the program changes provided by this rule will not result in a significant economic impact on a substantial number of small entities.

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or Tribal governments or the private sector. The action is merely an administrative action designed to ensure consistency with the requirements of the final Tailoring Rule. This action does not require any State or local permitting agency or private entity to take on any new regulatory burdens; any burden resulting from changing State or local GHG thresholds was already accounted for in the final Tailoring Rule, which already imposes the higher GHG thresholds addressed by this action. Thus, this action is not subject to the requirements of sections 202 or 205 of the UMRA.

This action is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. This rule is expected to result in cost savings and administrative burden reduction for affected permitting agencies and sources in the affect States, including governments.

This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This action merely seeks to reduce the number of sources subject to title V permitting in the affected States by raising the GHG thresholds in those States to the levels specified in the final Tailoring Rule, resulting in a significant reduction in burdens for affected State and local agencies. Thus, Executive Order 13132 does not apply to this action. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicited comment on the proposed action from State and local officials.

Subject to Executive Order 13175 (65 FR 67249, November 9, 2000) EPA may not issue a regulation that has Tribal implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by Tribal governments, or EPA consults with Tribal officials early in the process of developing the proposed regulation and develops a Tribal summary impact statement.

EPA has concluded that this action may have Tribal implications. However, it will neither impose substantial direct compliance costs on Tribal government, nor preempt Tribal law. There are no Tribal authorities with an EPA-approved part 70 title V permitting program to date; 17 however, this may change in the future.

EPA consulted with Tribal officials early in the process of developing the final Tailoring Rule, which the current rule helps to implement, to allow them to have meaningful and timely input into its development. EPA specifically solicited comments from Tribal officials on the proposal for this approach to narrowing title V program approvals, which was part of the GHG Tailoring Rule proposal (74 FR 55292, October 27, 2009). EPA consulted with Tribal officials early in the regulatory development process for the GHG Tailoring Rule, including by publishing an Advanced Notice of Proposed Rulemaking (73 FR 44354, July 30, 2009), where we received several comments from Tribal officials which were considered in the proposed and final rules.

EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the EO has the potential to influence the regulation. This action is not subject to EO 13045 because it does not establish an environmental standard intended to mitigate health or safety risks.

This action is not a “significant energy action” as defined in Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Further, we have concluded that this rule is not likely to have any adverse energy effects because it does not create any new requirements for sources in the energy supply, distribution, or use sectors.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has concluded that it is not practicable to determine whether there would be disproportionately high and adverse human health or environmental effects on minority and/or low income populations from this rule. This rule is necessary in order to allow for the continued implementation of permitting requirements established in the Clean Air Act. Specifically, without this rule, the affected States' CAA title V permitting programs would become overwhelmed and unmanageable by the untenable number of GHG sources that would become newly subject to them. This would result in severe impairment of the functioning of these programs with potentially adverse human health and environmental effects nationwide. Under this rule and the findings under the final Tailoring Rule, EPA is ensuring that the affected States' CAA permitting programs continue to operate by limiting their applicability to the maximum number of sources the programs can possibly handle. This approach is consistent with congressional intent as it phases in applicability, starting with the largest sources initially, and then other sources over time, so as not to overwhelm State permitting programs. By doing so, this rule allows for the maximum degree of environmental protection possible while providing regulatory relief for the unmanageable burden that would otherwise exist. Therefore, we believe it is not practicable to identify and address disproportionately high and adverse human health or environmental effects on minority populations and low income populations in the United States under this final rule, though we do believe that this rule will ensure that States can continue to issue title V permits to significant sources of air pollution.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective December 30, 2010.

Under section 307(b)(1) of the Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the District of Columbia Circuit by February 28, 2011. Any such judicial review is limited to only those objections that are raised with reasonable specificity in timely comments. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Under section 307(b)(2) of the Act, the requirements of this final action may not be challenged later in civil or criminal proceedings brought by us to enforce these requirements. Pursuant to section 307(d)(1)(V) of the Act, the Administrator determines that this action is subject to the provisions of section 307(d). Section 307(d)(1)(V) provides that the provisions of section 307(d) apply to “such other actions as the Administrator may determine.” This action finalizes some, but not all, elements of a previous proposed action—the Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule Proposed Rule (74 FR 55292, October 27, 2009).

Section 307(b)(1) of the CAA indicates which Federal Courts of Appeal have jurisdiction for petitions of review of final actions by EPA. This section provides, in part, that petitions for review must be filed in the Court of Appeals for the District of Columbia Circuit: (i) When the agency action consists of “nationally applicable regulations promulgated, or final actions taken, by the Administrator,” or (ii) when such action is locally or regionally applicable, if “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.”

This rule narrowing approvals of title V programs is “nationally applicable” within the meaning of section 307(b)(1). This rule narrows the approval of most approved title V programs across the country. At the core of this rulemaking is EPA's interpretation of its authority to reconsider its prior approvals under the Clean Air Act, and its application of that interpretation to areas across the country. EPA is finalizing this rule with a goal of ensuring that no State will become unable to implement national Clean Air Act requirements, including those for permitting sources of greenhouse gases. This action is being taken on the basis of a single administrative record. The factual questions in this rule are not unique to particular geographical areas, but are asked uniformly of all States. The large number of States, spanning much of the country, being affected, the common core of knowledge and analysis involved in formulating the rule, and the common legal interpretation advanced of section 502 and other sections of the Clean Air Act, all combine to make this a nationally applicable rule.

For the same reasons, the Administrator also is finding that this action is based on determinations of nationwide scope and effect for the purposes of section 307(b)(1). This is particularly appropriate because, in the report on the 1977 Amendments that revised section 307(b)(1) of the CAA, Congress noted that the Administrator's determination that an action is of “nationwide scope or effect” would be appropriate for any action that has a scope or effect beyond a single judicial circuit. H.R. Rep. No. 95-294 at 323, 324, reprinted in 1977 U.S.C.C.A.N. 1402-03. Here, the scope and effect of this rulemaking extends to numerous judicial circuits since most approved title V programs across the country are affected by this action. EPA also applied a consistent analytical approach broadly across the country to determine which action to take, and for which States. EPA used a nationally applicable, uniform legal interpretation of section 502 and other sections of the Clean Air Act and of EPA's general authority in conducting this analysis. In these circumstances under section 307(b)(1), the Administrator is finding the rule to be based on determinations of “nationwide scope or effect” and for jurisdiction to be in the DC Circuit.

Thus, any petitions for review of the narrowing of title V program approvals must be filed in the Court of Appeals for the District of Columbia Circuit by February 28, 2011.

The statutory authority for this action is provided by sections 110, 301 and 502 of the CAA as amended (42 U.S.C. 7410, 7601 and 7661a). This action is also subject to section 307(d) of the CAA (42 U.S.C. 7407(d)).

Section 129(a)(5) of the CAA requires EPA to conduct a 5-year review of the solid waste incinerator new source performance standards (NSPS) and emission guidelines (EGs) and revise both, as appropriate. Accordingly, in the May 10, 2006, edition of the Federal Register , EPA promulgated revised LMWC rules under sections 111 and 129 of the CAA. Section 129(b)(2) of the CAA requires states to submit to EPA for approval state plans and revisions that implement and enforce the amended EGs, in this case, 40 CFR part 60, subpart Cb. State plans and revisions must be at least as protective as the EGs, and become federally enforceable as a section 111(d)/129 plan revision upon approval by EPA. The procedures for adoption and submittal of state plans and revisions are codified in 40 CFR part 60, subpart B.

The required Florida 111(d)/129 Plan revision was submitted by FDEP to EPA on July 12, 2007. EPA has reviewed the plan revision for existing LMWC units in the context of the requirements of 40 CFR part 60, and subparts B and Cb, as amended. State plans must include the following nine essential elements: (1) Identification of legal authority, (2) identification of mechanism for implementation, (3) inventory of affected facilities, (4) emissions inventory, (5) emissions limits, (6) compliance schedules, (7) testing, monitoring, recordkeeping, and reporting, (8) public hearing records, and (9) annual state progress reports on facility compliance.

Federal regulations found at 40 CFR 60.26 require the plan to demonstrate that the State has legal authority to adopt and implement the emission standards and compliance schedules. FDEP has demonstrated that it has the legal authority to adopt and implement the emission standards and compliance governing MWC emissions. FDEP's legal authority is derived from state law found at Florida Statutes (F.S.) Sec. 403.031 (Definitions), F.S. Sec. 403.061 (Department powers and duties), F.S. Sec. 403.0872 (Title V air operating permits), and F.S. Sec. 403.8055 (Authority to adopt federal standards by reference). F.S. Subsections 403.061(6), (7), (8), and (13) give the authority for obtaining information and for requiring recordkeeping, and use of monitors. F.S. Subsection 403.061(35) gives the department authority to exercise the duties, powers, and responsibilities required of the State under the CAA. The sections of the Florida Statutes that give authority for compliance and enforcement authority are 403.121 (Judicial and administrative remedies), F.S. Sec. 403.131 (Injunctive relief), F.S. Sec. 403.141 (Civil remedies), and 403.161 (Civil and criminal penalties) Finally, F.S. Sec. 119.07 is the authority for making the information available to the public. Furthermore, FDEP has submitted and EPA has approved a previous Florida 111(d)/129 Plan for LMWCs that demonstrate the required legal authority (40 CFR 62.2355). Therefore, the Plan meets the requirements of 40 CFR 60.26.

The subpart B provision at 40 CFR 60.24(a) requires that state plans include emissions standards, defined 40 CFR 60.21(f) as “a legally enforceable regulation setting forth an allowable rate of emissions into the atmosphere, or prescribing equipment specifications for control of air pollution emissions.” Florida Administrative Code (F.A.C.) Chapter 62-204.800, “Federal Regulations Adopted by Reference” has been amended to incorporate revisions to subpart Cb. These amendments to F.A.C. Rule 62-204.800(8) and (9), for Standards of Performance for New Stationary Sources and Emission Guidelines and Compliance Times, respectively, were proposed on April 6, 2007, and became effective on May 31, 2007. These rules meet the requirement of 40 CFR 60.24(a) to have a legally enforceable emission standard.

Federal regulations found at 40 CFR 60.25(a) require the plan to include a complete source inventory of all LMWC units. FDEP has identified ten (10) affected facilities. An affected facility is not exempt from applicable sections 111(d)/129 requirements because it is not listed in the inventory compiled by FDEP. The affected facilities identified by FDEP are shown in the table below:

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq., and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act. This interim rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification. This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This interim rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform. This interim rule meets the applicable standards of Executive Order 12988.

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq., and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act. This interim rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification. This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This interim rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform. This interim rule meets the applicable standards of Executive Order 12988.

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq., and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act. This interim rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification. This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This interim rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform. This interim rule meets the applicable standards of Executive Order 12988.

In the interim final rule with request for comments that appeared in the December 1, 2010 Federal Register (FR Doc 2010-29596 (75 FR 74864)), there were technical and typographical errors that are identified and corrected in the Correction of Errors section below. The provisions in this correction notice are effective as if they had been included in the December 1, 2010 interim final rule with request for comments entitled “Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements under the Patient Protection and Affordable Care Act.”

Accordingly, the corrections are effective January 1, 2011.

In the regulation text and preamble sections regarding the scope of the regulation, on pages 74921 and 74867, respectively, we are correcting a typographical error by replacing the Public Health Service Act section reference from “2718(b)(A)(ii)” to “2718(b)(1)(A)(ii)”.

In the regulation text section regarding exceptions to the general aggregate reporting requirements (§ 158.120(d)) we are making two changes. On page 74922 (§ 158.120(d)(1)), we are replacing the words “State that has jurisdiction over” the certificate of coverage, which was inadvertently used, with “issue State of” the certificate of coverage. The correct phrase was inadvertently deleted and should be corrected.

On page 74923 (§ 158.120(d)(4)), we are inserting the words “non-U.S.” before “citizens working in their home country.” The words “non-U.S.” were inadvertently omitted and are necessary to make clear that this exception does not apply to U.S. citizens working in their home country. We have corrected the preamble section on page 74871 as well to reflect this revision to the text.

On page 74923 (§ 158.140(a)(1)), regarding group conversion charges, we are adding a sentence that we inadvertently omitted. The sentence clarifies paragraph(a)(1) with respect to an issuer that transfers portions of earned premium associated with group conversion privileges between group and individual lines of business in its Annual Statement accounting.

Also on page 74923, we are deleting a phrase from §§ 158.140(a)(2) and (3), regarding reimbursement for clinical services provided to enrollees. The preamble makes clear we intended to adopt the NAIC model regulation language, which does not include this phrase. The phrase had appeared in an earlier draft of the NAIC model regulation, and was correctly deleted from part of the interim final rule, but was inadvertently retained in subparagraphs (a)(2) and (3). Because the preamble makes clear that we intended to adopt the NAIC model regulation language, and the inconsistency between § 158.140(a)(1) and §§ 158.140(a)(2)and(3) creates an ambiguity that may cause confusion, we believe it should be corrected.

On page 74923, in two subsections regarding adjustments to incurred claims (§§ 158.140(b)(2) and (4))we are also replacing the words “may” and “can” with the word “must” to indicate that such adjustments are mandatory. This misuse of “may” and “can” was inadvertent and should be corrected.

We correct an inadvertent omission in § 158.140(b)(5)(i) on page 74924, regarding the choice by affiliated issuers who offer blended rates to choose whether to make an adjustment to each affiliate's incurred claims and activities to improve health care quality to reflect the experience of the issuer with respect to the employer as a whole. We inadvertently omitted the requirement that if an issuer makes this choice, it must apply it for a minimum of 3 MLR reporting years. This correction is necessary in order to implement this option accurately.

We are also correcting an inadvertent discrepancy between the NAIC model regulation and the interim final rule regarding the treatment of fraud recovery expenses. We are, first, deleting the phrase “other than fraud detection/recovery expenses up to the amount recovered that reduces incurred claims” from § 158.150(c)(8) of the interim final rule on page 74925, because in the NAIC model regulation this language does not apply to expenses that improve health care quality. We are then amending § 158.140(b)(2) of the interim final rule, on page 74923, to add language from the NAIC model regulation regarding fraud recovery expenses. This changes how the fraud recovery amounts in question are labeled. The correction has no substantive effect on the medical loss ratio calculation. We are also amending the preamble to reflect this correction, by deleting two sentences from page 74874 and by changing two phrases on page 74876, and by deleting a parenthetical on page 74875.

On page 74925, we are also redesignating § 158.161 as § 158.162 and revising the section heading from “Reporting of Federal and State licensing and regulatory fees” to “Reporting of Federal and State taxes.” On page 74926, we are also revising subparagraph (b)(1)(vii)(B) of this newly redesignated section, to add language that we inadvertently omitted. In addition, we are adding a new § 158.161 to replace text that had been unintentionally deleted, but referenced in the preamble.

We are adding the words “or non-credible” after “partially credible” in § 158.231(c)(2) on page 74928, which were inadvertently omitted. Adding these words is consistent with other sections of the regulation and is consistent with the preamble section on page 74882 regarding this subject.

Finally, we are correcting several typographical errors that appear in Table 2 to § 158.232 and in the preamble regarding Table 2, on pages 74928 and 74882 respectively.

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a rule take effect in accordance with § 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, we can waive this notice and comment procedure if the Secretary finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice.

Section 553(d) of the APA (5 U.S.C. 553(d)) ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in the Federal Register . This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued.

This document merely corrects typographical and technical errors made in the MLR interim final rule with request for comments published in the Federal Register on December 1, 2010 (FR Doc. 2010-29596) under the Patient Protection and Affordable Care Act, which will be effective on January 1, 2011. The corrections contained in this document are consistent with and do not make substantive changes to the policies adopted in the MLR interim final rule with request for comments. The preamble to the MLR interim final rule with request for comments correctly refers to and discusses the substance of the sections affected by this technical correction and the table of contents correctly refers to the section headings that are the subject of this technical correction. Therefore, we find for good cause that it is unnecessary and would be contrary to the public interest to undertake further notice and comment procedures to incorporate these corrections.

For the same reasons, we are also waiving the 30-day delay in effective date for these corrections. We believe that it is in the public interest to ensure that the Interim Final Rule setting forth Health Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements accurately states our policies as of the date they take effect. Therefore, we find that delaying the effective date of these corrections beyond the effective date of the MLR interim final rule with request for comments would be contrary to the public interest. In doing so, we find good cause to waive the 30-day delay in the effective date.

In 75 FR 74864, FR Doc 2010-29596, published December 1, 2010, make the following corrections:

1. On page 74867, second column, first full paragraph, line 3, the citation 2718(b)(A)(ii) is corrected to read “2718(b)(1)(A)(ii)”.

2. On page 74871, third column, first paragraph, line 20, the term “citizens” is corrected to read “non-U.S. citizens”.

3. On page 74874, first column, second full paragraph, line 22 through the second column, line 2, after the phrase “conversion policies.”, the second full paragraph is corrected by deleting the two sentences beginning with the phrase “Incurred claims” and ending with the phrase “quality improving activities”, without inserting any additional language.

4. On page 74875, third column, last partial paragraph, lines 2 and 3, after the phrase “(3) Fraud Prevention activities” at line 1, the last partial paragraph is corrected by deleting “(beyond the scope of those activities which recover incurred claims),” without inserting any additional language.

5. On page 74876—

a. In the third column—

(1) In the first partial paragraph, lines 9-15 are corrected by deleting the phrase “and fraud recovery activities up to the amount of fraudulent claims recovered”, without inserting any additional language.

(2) In the first full paragraph, line 11, the phrase “a quality improving activity” is corrected to read “an adjustment to claims”.

6. On page 74882, Table 2, the term “$0” in the first line of the “Deductible” column on the left side of Table 2 is corrected to read “<$2,500”.

This is a summary of the Commission's Report and Order, adopted December 1, 2010, and released December 3, 2010. These amendments are necessary to reflect that Channel 272A at Homer, Louisiana, and Channel 260A at Fountain Green, Utah are no longer reserved for NCE use. The full text of this Commission decision is available for inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or http://www.BCPIWEB.com. The Commission will not send a copy of the Report & Order in this proceeding pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A), because the adopted rules are rules of particular applicability.

The snapper-grouper fishery off the southern Atlantic States is managed under the FMP. The FMP was prepared by the Council and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

On September 22, 2010, NMFS published a notice of availability of Amendment 17B and requested public comment (75 FR 57734). On October 10, 2010, NMFS published a proposed rule for Amendment 17B and requested public comment (75 FR 62488). NMFS approved Amendment 17B on December 21, 2010. This final rule for Amendment 17B implements ACLs and AMs for eight snapper-grouper species undergoing overfishing. The rationale for the measures contained in Amendment 17B is provided in the amendment and in the preamble to the proposed rule and is not repeated here.

A total of 175 comments were received on Amendment 17B and the proposed rule, including comments from individuals, State and Federal agencies, environmental organizations, and fishing associations. NMFS received 25 comments of general support and 48 individual comments in general opposition of Amendment 17B, 31 of which specifically oppose the deepwater closure for six deepwater snapper-grouper species. Included in the letters of opposition was a minority report submitted by the five members of the Council who voted against the final approval of Amendment 17B. NMFS also received 85 identical postcards opposing implementation of Amendment 17B, and 8 comments that did not support or oppose Amendment 17B but contained remarks on specific actions contained in the amendment. Additionally, 5 comments were received from environmental organizations, one of which was endorsed by two of the organizations, and one which was endorsed by 30,794 individuals. One State and one Federal agency submitted comments on Amendment 17B, and 2 comments were unrelated to actions contained in Amendment 17B. Of the 175 comments received, 22 contained remarks on the potential economic impacts of Amendment 17B. Specific comments related to the actions contained in the amendment and the rule as well as NMFS'S respective responses, are summarized below.

Comment 1: Several commenters suggested the prohibition on harvest and possession of six deepwater snapper-grouper species beyond 240 feet (73 m) is not necessary, and reductions in incidental harvest of speckled hind and warsaw grouper could be achieved through: (1) A temporary prohibition on commercial harvest and sale of speckled hind and warsaw grouper; (2) responsible fishing methods such as venting fish; (3) a temporary deepwater closure; or (4) seasonal closures.

Response: Commercial sale of speckled hind and warsaw grouper is currently prohibited. NMFS previously considered a Council-approved measure to use venting tools for snapper-grouper species to reduce bycatch mortality caused by barotrauma (injuries sustained in response to the sudden pressure change when brought to the surface from depth), in Amendment 16 to the FMP. The measure requiring the use of venting tools was disapproved based on data indicating the benefits of venting are not clear for all species, and venting could potentially cause harm in some cases if excluded unnecessarily or improperly. NMFS determined that additional guidance is needed to identify species that would benefit from venting to ensure the maximum benefit is provided to these species. If future research on the use of venting tools, and/or any other barotrauma mitigation methods, indicate speckled hind or warsaw grouper would benefit from the required use of such tools or techniques, the Council has the option to consider the issue again in a future amendment.

Implementing the deepwater snapper-grouper closure for any period of time less than year-round could result in incidental harvest and bycatch mortality of speckled hind and warsaw grouper, and could negatively impact efforts to protect South Atlantic speckled hind and warsaw grouper. At its December 2010 meeting, the Council requested a regulatory amendment be prepared to examine new information related to the prohibition on harvest and possession of the six deepwater snapper-grouper species beyond 240 ft (73 m). The regulatory amendment would re-evaluate the deepwater snapper-grouper closure and the new information, and determine if there are more effective measures to reduce bycatch mortality of speckled hind and warsaw grouper. Additionally, a new benchmark stock assessment for speckled hind and warsaw grouper is scheduled to be conducted in 2013. If the results of this new stock assessment indicate some modification to the management measures implemented through Amendment 17B is needed, the Council would make such adjustments as appropriate.

Comment 2: Several commenters stated the prohibition on all bottom fishing beyond 240 ft (73 m) is draconian in nature, and too expansive to protect only two rarely captured snapper-grouper species.

Response: The deepwater snapper-grouper closure proposed in Amendment 17B would not prohibit all bottom fishing beyond 240 ft (73 m). The closure would prohibit the harvest and possession of six snapper-grouper species that co-occur with specked hind and warsaw grouper including, snowy grouper, blueline tilefish, yellowedge grouper, misty grouper, queen snapper, and silk snapper.

Both speckled hind and warsaw grouper are undergoing overfishing, and the extent to which they are overfished is unknown. These species are extremely vulnerable to overfishing because they are slow growing, long-lived, and change sex from female to male with increasing size and age. These species are not often targeted due to the current bag limits (one of each per vessel per trip), but when they are caught they are likely to suffer release mortality. The incidental catch of speckled hind and warsaw grouper, particularly in deep water where release mortality is high, may be responsible for the continued overfishing of these species. Therefore, the Council determined that a prohibition on the harvest and possession of speckled hind and warsaw grouper, along with their co-occurring species caught in 240 ft (73 m) and greater, was an appropriate action to reduce bycatch mortality of speckled hind and warsaw grouper in depths where depth-related release mortality is very high. Like gag, speckled hind and warsaw grouper are slow growing, long lived, and have similar life histories. Therefore, speckled hind and warsaw grouper may be expected to have similar depth-related bycatch mortality rates to gag. If depth-related mortality of speckled hind and warsaw grouper is similar to gag, release mortality at depths of 240 ft (73 m) would be expected to be greater than 70 percent. The deepwater closure is expected to provide protection to the largest, most fecund fish and help ensure a natural sex ratio into the future. According to the Amendment 17B biological impacts analysis, prohibiting all harvest of deepwater snapper-grouper species beyond 240 ft (73 m) would also protect spawning aggregations.

Comment 3: One commenter stated that NMFS should concentrate efforts on managing other overexploited species such as mutton snapper and yellowtail snapper.

Response: Mutton snapper and yellowtail snapper are among the 73 species in this FMP. Recent assessments indicate that mutton snapper and yellowtail snapper are not overfished and are not experiencing overfishing. The Reauthorized Magnuson-Stevens Act requires that ACLs and AMs be specified for all species undergoing overfishing in 2010 and species not undergoing overfishing in 2011. Speckled hind and warsaw grouper are both undergoing overfishing according to the 2009 Report to Congress on the Status of U.S. Fisheries (and in all previous such Reports to Congress). Therefore, NMFS is required to establish ACLs at levels to end and prevent overfishing of speckled hind and warsaw grouper, along with management measures to limit harvest levels to the ACL. In the case of speckled hind and warsaw grouper, the ACL is zero, and the deep water closure is intended to reduce depth-related bycatch mortality to reduce the probability that overfishing will occur. The Council is currently developing a Comprehensive ACL Amendment, which would specify ACLs and AMs for mutton snapper and yellowtail snapper.

Comment 4: One commenter stated the cumulative impact of the recent regulations approved through Amendment 17A to the FMP and the regulations contained in this final rule are overly complex for commercial and for-hire fishermen to abide by.

Response: The Magnuson-Stevens Act, as reauthorized in 2006, mandates the Council and NMFS establish ACLs and AMs for species undergoing overfishing by 2010. Section 303(a)(15) of the Magnuson-Stevens Act states, in relevant part, that any FMP which is prepared by any Council “shall establish a mechanism for specifying annual catch limits in the plan * * * implementing regulations, or annual specifications, at a level such that overfishing does not occur in the fishery, including measures to ensure accountability.” Therefore, in order to meet these mandates, several recent regulatory changes have been made in the snapper-grouper fishery. NMFS strives to minimize complexity in its regulations, but must meet statutory mandates such as the requirements for ACLs and AMs.

Comment 5: Several commenters stated the data upon which the prohibition on the harvest and possession of the six deepwater snapper-grouper species beyond 240 ft (73 m) is based is out of date, insufficient, and/or incorrect, and is not the best available science. One commenter inquired if the data used to inform the deepwater closure action was subject to an independent review. Additionally, two commenters cite the recently published Federal Register notice that denies a petition to list warsaw grouper as threatened or endangered under the Endangered Species Act (ESA) as based on a lack of substantial scientific or commercial information, and implied that the speckled hind and warsaw grouper management measures in Amendment 17B are not based on adequate scientific information.

Response: The intent of the action to prohibit the harvest of six deepwater species is to reduce bycatch mortality of speckled hind and warsaw grouper. Speckled hind and warsaw grouper are undergoing overfishing, and therefore, action must be taken to ensure overfishing is ended and does not occur. The Southeast Fisheries Science Center (SEFSC) certified, in a memorandum dated May 19, 2010, that Amendment 17B is based upon the best available scientific information. At its December 2010 meeting, the Council requested that a regulatory amendment be prepared to examine new information related to the prohibition on the harvest and possession of the six deepwater snapper-grouper species. The regulatory amendment would evaluate the new information and the deepwater snapper-grouper closure and determine if there are more effective measures to reduce bycatch mortality of speckled hind and warsaw grouper.

The petition to list speckled hind and warsaw grouper as endangered or threatened was denied by NMFS under the ESA because “the petition does not present substantial scientific or commercial information indicating the petition action may be warranted” (75 FR 59690, September 28, 2010). This means that warsaw grouper was not determined to be endangered ( i.e., is in danger of extinction throughout all or a significant portion of its range) or threatened ( i.e., is likely to become endangered within the foreseeable future throughout all or a significant portion of its range). The negative finding on the ESA petition does not necessarily mean that inadequate scientific information was used in Amendment 17B. Under the Magnuson-Stevens Act, NMFS must use the best scientific information available when establishing management measures, including ACLs and AMs.

Comment 6: Several commenters are concerned that the prohibition on harvest and possession of six deepwater snapper-grouper species beyond a depth of 240 ft (73 m) will lead to increased incidences of release mortality.

Response: Prohibiting the harvest and possession of species that are most often caught with speckled hind and warsaw grouper in deeper waters would reduce the incentive to target those co-occurring species. As a result, a reduction in depth-related bycatch mortality of speckled hind and warsaw grouper is expected.

Comment 7: Several commenters feel the deepwater closure in Amendment 17B should only apply to the commercial sector.

Response: In the northern portion of the Council's area of jurisdiction, fisheries and fishery components in depths greater than 240 ft (73 m) are primarily prosecuted by the commercial sector. However, the Council chose to include the recreational sector in the prohibition on harvest and possession of snowy grouper, blueline tilefish, yellowedge grouper, misty grouper, queen snapper, and silk snapper beyond 240 ft (73 m) because recreational fishing in deeper waters is common in the southern area of the Council's jurisdiction i.e., southeast Florida and the Florida Keys, the 240-ft (73-m) depth contour is close to shore. Because deep water is much more accessible to recreational fishermen off southern Florida, recreational fishermen are more likely to incidentally capture speckled hind and warsaw grouper in depths where these fish are more likely to die as a result of barotrauma-related injuries.

Comment 8: One commenter stated the lack of warsaw grouper landings data was due to fishermen misidentifying warsaw grouper as snowy grouper.

Response: It is unlikely warsaw grouper landings are significantly underreported due to misidentification with snowy grouper. Snowy grouper and warsaw grouper do share some common physical characteristics, however, these species also have several distinguishing characteristics that make it possible to easily identify both species. When fishermen submit species landings information to NMFS, identification accuracy is not expected to be 100 percent, and this is taken into consideration when conducting stock assessments.

Comment 9: One commenter asked how NMFS will determine when the speckled hind and warsaw grouper stocks are rebuilt, if fishing for them is prohibited.

Response: The overfished status of speckled hind and warsaw grouper is unknown. Therefore, a rebuilding plan is not required. The deepwater closure is intended to reduce depth-related bycatch mortality to help end overfishing of speckled hind and warsaw grouper. Prohibiting harvest of one or more species in a certain area does not prevent the collection of scientific information on those species. The SEFSC conducts fishery-independent studies and surveys to measure the overall abundance of fish stocks in the South Atlantic. In Amendment 17A to the FMP, the Council required implementation of a fishery-independent monitoring program. This program would continue the long-term data set that already exists for snapper-grouper species from sampling programs such as the Southeast Monitoring Assessment and Prediction program, and the Marine Resources Monitoring Assessment and Prediction program in the South Atlantic, which monitor fish stocks in depths shallower and deeper than 240 ft (73 m), and these programs should continue to provide information on warsaw grouper and speckled hind.

Fishery-dependent data may also be collected during a period when certain species may not be landed. These data may be collected through the Cooperative Research Program (CRP), which is a competitive Federal assistance program that funds projects seeking to increase and improve the working relationship between researchers from NMFS, State fishery agencies, universities, and fishermen. The intent of the CRP in the Southeast Region is to utilize the collective experience of fishermen and scientists to advise fishery managers of best fishery management practices based on fishing experience and sound scientific research procedures. Other fishery-dependent data collection sources include the Marine Recreational Fisheries Statistical Survey (MRFSS) (now part of the Marine Recreational Information Program (MRIP)), commercial logbooks, headboat logbooks, observer data, the Trip Interview Program, and dealer reported landings.

Comment 10: After the Council voted to approve Amendment 17B for Secretarial review, the five members of the Council who voted against the final approval of Amendment 17B submitted a minority report to NMFS, dated March 23, 2010. This report is endorsed by one fishing organization and one State agency. The minority report outlines the dissenting Council members' opposition to the deepwater closure for the six co-occurring snapper-grouper species. Specifically, these Council members oppose the inclusion of blueline tilefish in the list of snapper-grouper species prohibited beyond 240 ft (73 m). The report states the deepwater closure was based on inadequate assessments, does not include rebuilding plans for speckled hind and warsaw grouper, and does not consider and properly analyze the impacts of the prohibition on the sale of bag limit-caught snapper-grouper. The report also notes a lack of data on the range where speckled hind and warsaw grouper are found, particularly off the coast of North Carolina. The report mentions that the species most commonly caught with speckled hind are vermilion snapper, red grouper, and scamp, which are not deepwater species. The minority report suggests that other alternatives besides the deep water closure should have been considered by the Council, including allowing fishing for species other than speckled hind and warsaw grouper on various well-known ship wrecks or other potential sites and closing only a percentage of the most productive bottom habitat. The minority report also lists fish stocks that have been successfully rebuilt or are currently rebuilding without the utilization of large area closures for fishery management, namely Atlantic king and Spanish mackerel, greater amberjack, and golden tilefish.

Response: Speckled hind and warsaw grouper have not undergone a recent stock assessment. However, the 2009 Report to Congress on the Status of U.S. Fisheries states that both speckled hind and warsaw grouper are undergoing overfishing and their overfished status is unknown. The stock status determination for these two species included in the Report to Congress is the best scientific information available for speckled hind and warsaw grouper. Therefore, NMFS is required to establish ACLs for these species at levels that can end, as well as prevent, overfishing and implement management measures to limit harvest levels of these species to the ACL. Since the overfished status of speckled hind and warsaw grouper is currently unknown, rebuilding plans are not required at this time. To address overfishing of speckled hind and warsaw grouper, the Council's Scientific and Statistical Committee (SSC) recommended an Acceptable Biological Catch (ABC) of zero for both species based on landed catch, rather than total removals. Subsequent to the SSC ABC recommendation, the Council specified an ACL of zero for speckled hind and warsaw grouper.

Speckled hind and warsaw grouper are extremely vulnerable to overfishing because they are slow growing, long-lived, change sex from female to male with increasing size and age, and occur in deep water where release mortality is very high. The prohibition on the harvest and possession of six deepwater snapper-grouper species, including blueline tilefish, that co-occur with speckled hind and warsaw grouper is expected to reduce the incidental take of speckled hind and warsaw grouper in water depths where survival of released fish is low. Of the six species for which harvest and possession would be prohibited beyond 240 ft (73 m), commercial and recreational landings are highest for blueline tilefish and snowy grouper, which are often caught together in the same location and during the same trip. Speckled hind and warsaw grouper can be incidentally caught while blueline tilefish and other deepwater species are being targeted. This incidental catch, if allowed to continue, may contribute to the continued overfishing of speckled hind and warsaw grouper. Furthermore, recent snowy grouper regulations resulted in effort shifts from snowy grouper to blueline tilefish, which could increase the probability of snowy grouper bycatch after the 100-lb (45-kg) trip limit or quota for snowy grouper is met, in addition to a potential for increased bycatch of speckled hind and warsaw grouper. If blueline tilefish were eliminated from the list of prohibited deepwater species, incidental take of speckled hind and warsaw grouper could persist in that portion of the snapper-grouper fishery; therefore, the Council determined it would be prudent to retain blueline tilefish in the list of prohibited species beyond a depth of 240 ft (73 m).

The minority report includes an examination of trip ticket information from vessels fishing for blueline tilefish north of Cape Hatteras, North Carolina, which suggests blueline tilefish can be captured without resultant incidental catch of speckled hind and warsaw grouper. At its December 2010 meeting, the Council considered this new information, and voted to request the preparation of a regulatory amendment to examine the new information and to determine if there are more effective management measures that could be implemented to reduce the depth-related bycatch mortality of speckled hind and warsaw grouper.

The Magnuson-Stevens Act requires the establishment of ACLs and AMs. In the comments and responses section of the final rule implementing the National Standard 1 Guidelines, NMFS states, “ACLs must be implemented using the best data and information available * * * NMFS believes that Councils must implement the best ACLs possible with the existing data” (74 FR 3178, January 16, 2009). As required by the Magnuson-Stevens Act, the Council has developed ACLs and AMs for speckled hind and warsaw grouper using the best scientific information available during the amendment development process.

The minority report points out that the species most commonly caught with speckled hind are vermilion snapper, red grouper, and scamp, none of which are deepwater species. Juvenile speckled hind and warsaw grouper are found in depths less than 240 ft (73 m) and are often caught with species such as vermilion snapper, red grouper, scamp, and others. However, the Council chose not to prohibit catch in shallower water because it is likely that some portion of released speckled hind and warsaw grouper would survive the trauma of capture. Like gag, speckled hind and warsaw grouper are slow growing, long lived, and have similar life histories. Therefore, they may be expected to have similar bycatch mortality rates to gag. If release mortality rates of speckled hind and warsaw grouper are similar to those published for gag, release mortality at depths greater than 240 ft (73 m) would be expected to be greater than 70 percent. Based on this assumption, the Council determined the most effective method of reducing the incidence of bycatch related mortality in deepwater was to prohibit the harvest and possession of the species that co-occur with speckled hind and warsaw grouper beyond 240 ft (73 m).

During the development process for Amendment 17B, alternatives such as allowing fishing for species other than speckled hind and warsaw grouper on various well-known ship wrecks or other potential sites, and closing only a percentage of the most productive bottom habitat, were not proposed by Council members and thus were not included in the document for analysis. The approval and implementation of the prohibition on harvest and possession of six deepwater snapper-grouper species beyond 240 ft (73 m) does not preclude the Council from proposing future action to modify this prohibition if scientific information indicates it is appropriate to do so. Re-addressing the deepwater closure will be accomplished through a regulatory amendment proposed by the Council at its December 2010 meeting.

The minority report states the impact of the prohibition on bag-limit sales of snapper-grouper implemented through Amendment 15B to the FMP was not properly analyzed in Amendment 17B because the impact of sales from only snapper-grouper fishermen with Federal permits was not determined. The impacts of the bag limit sale prohibition were analyzed and documented by NMFS in the supporting documentation for Amendment 15B, including the National Environmental Policy Act document, the Regulatory Impact Review, and the Regulatory Flexibility Analysis. The analysis conducted for Amendment 15B to the FMP used State trip ticket data because at the time the analysis was conducted, fishermen that did not possess a Federal permit for snapper-grouper could still sell their bag limit caught fish. The analysis conducted for Amendment 17B, however, did not use trip ticket data and used only Federal logbook data, because at that time the prohibition on bag limit sales had been implemented. As such, the relevant economic analysis does not include bag limit sales information and was conducted correctly.

Different actions are needed to end overfishing of species depending on their life history and habitat requirements. Snapper-grouper species such as speckled hind and warsaw grouper are long-lived and slow growing and require more stringent management measures, such as area closures, to end overfishing. King mackerel and Spanish mackerel are not as long lived nor do they suffer the high release mortality rates of speckled hind and warsaw grouper. Therefore, management measures that would be needed to end overfishing of mackerel species may not be as onerous as those that would be needed for long-lived species found in deep water.

Golden tilefish has never been determined to be overfished and it will not be known if actions taken to end overfishing of golden tilefish were successful until the stock is assessed again in 2011. Greater amberjack have never been determined to be overfished or experienced overfishing.

Comment 11: One commenter questioned why co-occurring species deeper than 240 ft (73 m) would be prohibited to protect speckled hind and warsaw grouper when these species are not frequently caught in these depths. The species most commonly caught along with speckled hind are vermilion snapper, red grouper, and scamp, none of which are considered by the Council to be deepwater species. Since speckled hind predominately live inshore of 40 fathoms and warsaw grouper are common inside of 100 ft (31 m), at least off the Florida coast, NMFS should consider closing the entire EEZ.

Response: The Council is aware that speckled hind and warsaw grouper are currently not commonly caught by fishermen and that the inshore shelf edge in 160 ft (49 m) is the area where juveniles are most abundant. However, adults of these species do occur in deep water where release mortality is extremely high and are incidentally captured when fishermen target co-occurring species. Therefore, the Council determined that prohibiting the harvest of species that co-occur with warsaw grouper and speckled hind in water deeper than 240 ft (73 m) could help reduce bycatch mortality, particularly as population biomass increases and more adults occur in deeper water. Speckled hind and warsaw grouper occur in shallower water as juveniles with vermilion snapper and others. This is their zone of greatest abundance where some level of survival of released fish would be expected to occur. Therefore, the Council did not feel it was necessary to close the harvest of co-occurring species in depths less than 240 ft (73 m). As noted previously, speckled hind and warsaw grouper share similar biological characteristics to gag. Therefore, if depth related bycatch is similar to gag, in depths greater than 240 ft (73 m), release mortality would be expected to be greater than 70 percent. By prohibiting the harvest and possession of co-occurring species, in addition to prohibiting all harvest and possession of speckled hind and warsaw grouper, fishing mortality of speckled hind and warsaw grouper is expected to decrease and protection would be provided to adult fish with the greatest spawning potential.

Comment 12: One commenter feels the deepwater closure will result in an effort shift to the black sea bass, gray triggerfish, and vermilion snapper components of the snapper-grouper fishery, and lead to more out-of-state fishing by southern vessels in waters off North Carolina.

Response: Effort shifts resulting from the deepwater closure are difficult to predict. Negative biological impacts of effort shifts may be mitigated by ACLs and AMs in Amendment 17B and the Comprehensive ACL Amendment, which are designed to prevent the ACL from being exceeded or correct for ACL overages should they occur. However, negative social and economic effects could result from ACLs being met more quickly due to effort shifts.

The commercial sector for vermilion snapper is currently managed under a quota split into two seasons, and this amendment will specify the same split season for commercial ACLs, as well as specify a recreational ACL. Additionally, trip limits for vermilion snapper are being considered by the Council in Regulatory Amendment 9 to the FMP. Therefore, effort shift into the vermilion snapper portion of the fishery is unlikely to have negative biological impacts on vermilion snapper because the commercial harvest and sale of vermilion snapper would be prohibited when the ACLs are projected to be met.

The Council is developing Amendment 18A to the FMP, which includes actions to: Limit the number of black sea bass pots allowed per vessel; limit the number of participants in the black sea bass component of the snapper-grouper fishery; and require that pots be returned to port at the completion of a fishing trip. If approved, these controls should limit effort shift into the black sea bass component of the snapper-grouper fishery, minimizing the occurrence of black sea bass pot “ghost fishing” on snapper-grouper species, as well as interactions with protected species.

Gray triggerfish are included within the 20 snapper-grouper aggregate bag limit for the recreational sector, and there is a 12-inch (30.5-cm) total length size limit in Federal waters off the east coast of Florida for the commercial and recreational sectors. The Comprehensive ACL Amendment, currently under development, would establish an ACL for gray triggerfish. This ACL would be associated with an AM intended to maintain harvest at or below the specified ACL. Therefore, if the Comprehensive ACL Amendment is implemented, a mechanism for controlling harvest of gray triggerfish would be established and could mitigate effort shifts that may result from actions contained in Amendment 17B. The deepwater closure could result in some amount of permanent and/or temporary effort shifting, however, the number of vessels that may or may not shift effort to other fisheries in response to the deepwater area closure cannot be predicted.

Comment 13: One commenter states the Council discussion concerning warsaw grouper and speckled hind was inadequate considering the scope of the deepwater closure being implemented through Amendment 17B.

Response: The Council discussed management measures for speckled hind and warsaw grouper beginning in June 2008. Since that time, the Council has met seven times and discussed actions in Amendment 17B before taking final action to approve the amendment. At its December 2010 meeting, the Council requested a regulatory amendment be prepared to examine new information related to the prohibition on harvest and possession of the six deepwater snapper-grouper species and evaluate the new information to determine if the deepwater closure in certain areas of the South Atlantic is still necessary.

Comment 14: One commenter states that the Amendment 17B cumulative impacts assessment of the role of the marine protected areas (MPAs) implemented through Amendment 14 to the FMP is inaccurate, and the ancillary impacts of the Oculina Experimental Closed Area for speckled hind and warsaw grouper were not mentioned in Amendment 17B.

Response: The effective date of the eight MPAs implemented through Amendment 14 to the FMP was February 13, 2009. Because these MPAs have been in place for a short period of time, little is known about their potential to positively impact snapper-grouper species beyond the basic protections afforded to habitats in these MPAs, and subsequent benefits realized by local fish populations. It is expected that the MPAs may help, to some extent, to protect a portion of the population (including spawning aggregations) and habitat of long-lived, slow growing, deepwater snapper-grouper species (speckled hind, snowy grouper, warsaw grouper, yellowedge grouper, misty grouper, golden tilefish, and blueline tilefish) from directed fishing pressure to achieve a more natural sex ratio, age, and size structure within the MPAs. Because the snapper-grouper species most affected by the MPAs and the Oculina closed area are long-lived, quantifiable biological benefits may not be measureable in the short-term. However, future studies are expected to analyze the affects of the MPAs and the Oculina closure on snapper-grouper species. Over time, continued research will provide further insight on the ecological benefits of conservation areas.

Comment 15: One commenter states that snowy grouper is the main driver for deepwater snapper-grouper fishing and past regulations to reduce snowy grouper harvest have not been considered in Amendment 17B as they relate to effort-reduction in the deepwater portion of the snapper-grouper fishery.

Response: Effort reductions resulting from previously implemented snowy grouper regulations were taken into account when analyzing the biological and socioeconomic impacts of the deepwater closure. As required under NEPA, Amendment 17B analyzes the impacts of the status quo alternative for each action, including the action to prohibit the harvest and possession of six deepwater species beyond 240 ft (73 m). The baseline condition used in the status quo (no action) analysis for the action to prohibit the harvest and possession of six deepwater species beyond 240 ft (73 m) included the snowy grouper harvest restrictions implemented through Amendment 13C to the FMP. These restrictions included a recreational bag limit for snowy grouper of one per person per day, a commercial trip limit of 100 lb (45 kg) gutted weight, and a reduced commercial quota of 84,000 lb (38,102 kg) gutted weight. Amendment 15A to the FMP specified an ABC for snowy grouper that is consistent with the rebuilding plan for the species.

Comment 16: One commenter is opposed to reducing the recreational ACL for snowy grouper to 523 fish, and favors allowing existing regulations to rebuild the stock.

Response: The Magnuson-Stevens Act requires that ACLs and AMs be specified in 2010 for species undergoing overfishing. The Council chose to base the ACL for snowy grouper on the current total allowable catch (TAC). The Council also chose to specify sector ACLs for snowy grouper rather than one ACL for the commercial and recreational sectors. The Council determined the recreational sector ACL to be 523 fish, based on landings data from 2005-2008. Because this ACL is quite small, and recreational landings data is associated with a high degree of uncertainty, the AM will compare a 3-year running average of recreational landings to the recreational ACL. The AMs established for snowy grouper are intended to maintain harvest levels at or below the specified ACLs.

Comment 17: One commenter recommended additional inshore seasonal closures in the Florida Keys area to help rebuild overfished stocks.

Response: The Florida Keys area has an extensive network of marine sanctuaries, where fishing is limited or prohibited, and there is the offshore East Hump MPA, which was established in Amendment 14 to the FMP. The Council has not requested consideration of inshore area closures in the Florida Keys to address overfishing of the species addressed in Amendment 17B.

Comment 18: Several commenters state that aggregating the gag, black grouper, and red grouper ACLs, and the associated AMs is not an appropriate method for managing these stocks. One commenter emphasizes the fact that black grouper is no longer considered to be undergoing overfishing or overfished, further justifying not including it in the aggregate ACL. One commenter recommended developing a catch share program for these species in order to ensure all commercial sector participants are given the opportunity to harvest them.

Response: Amendment 16 established a commercial AM for red grouper and black grouper through a prohibition on the harvest of all shallow-water snapper-grouper species that would be effective when the commercial ACL for gag (a biologically similar species) is projected to be met each year. Because black grouper and red grouper had not been recently assessed at the time Amendment 17B was developed, and the Council was aware that a new stock assessment for both species was forthcoming, the Council chose to establish an aggregate ACL that includes gag, red grouper, and black grouper, based on expected catch resulting from management measures implemented through Amendment 16 to the FMP.

The red grouper and black grouper Southeast Data, Assessment, and Review (SEDAR) stock assessment (SEDAR 19) was completed in 2010, after Amendment 17B had been submitted to NMFS for Secretarial review. The assessment indicated black grouper is not overfished and is not undergoing overfishing, and red grouper is overfished and undergoing overfishing. Therefore, a new FMP amendment is currently under development to establish a rebuilding plan and assign an individual ACL and AM for red grouper. The black grouper stock assessment was not completed until after Amendment 17B was submitted to the Secretary for review. Black grouper ACLs and AMs have been retained in Amendment 17B, however, the Council will immediately consider whether adjustments to ACLs and AMs are needed in light of the new assessment. The Comprehensive ACL Amendment, which is also under development by the Council, would consider a new ACL and AM for black grouper, as well as species groups for many different snapper-grouper species that could include gag, red grouper, and black grouper.

Comment 19: Several commenters state they have witnessed the progressive decline in deepwater snapper-grouper species over many years, and support measures to end overfishing and rebuild deepwater snapper-grouper stocks.

Response: NMFS agrees that effective management strategies must be utilized to rebuild stocks that are overfished to sustainable levels and prevent future overfishing from occurring. Actions have been taken through previous amendments to address overfishing of black sea bass, vermilion snapper, gag, red grouper, black grouper, snowy grouper, speckled hind, warsaw grouper, red snapper, and golden tilefish. It is the intent of the Council and NMFS to employ a system of ACLs and AMs to achieve these goals.

Comment 20: One commenter feels the restrictions on vermilion snapper are too restrictive and have fostered a derby fishery, and suggests a trip limit be implemented for vermilion snapper. Another commenter recommended the implementation of a system of trip limits, also known as the “Fisherman's Plan,” as a means of maintaining harvest levels of vermilion snapper below the specified ACLs.

Response: Regulatory Amendment 9 to the FMP includes an action to specify trip limits for vermilion snapper. It is the Council's intent to alleviate the derby nature of the vermilion snapper component of the snapper-grouper fishery by implementing a trip limit as soon as possible. Additionally, Amendment 21 to the FMP, which is in the early stages of the development process, includes an action to establish a catch share program for vermilion snapper. Establishing a catch share program would eliminate the derby-style fishery, and would promote safety at sea.

Comment 21: One commenter feels Amendment 17B would not reduce harvest enough to end overfishing of the subject stocks, and recommends reducing all the ACLs contained in Amendment 17B by 66 percent.

Response: The best scientific information available supports the recently implemented harvest reductions in previous amendments and the ACLs contained in Amendment 17B. Actions have been taken in previous amendments to address overfishing of most species addressed in Amendment 17B. A reduction of the current ACLs by 66 percent is not supported by the best available scientific information, and could result in unnecessary adverse socioeconomic impacts on the fishing community. Therefore additional harvest restrictions beyond those in Amendment 17B are not necessary to end overfishing of the species addressed in Amendment 17B as required by the Magnuson-Stevens Act. Amendment 17B specifies ACLs and AMs for speckled hind, warsaw grouper, snowy grouper, black sea bass, vermilion snapper, black grouper, red grouper, gag, and golden tilefish to end overfishing and help ensure that overfishing does not occur in the future.

Comment 22: One commenter stated the impacts of anthropogenic pollutants such as sunscreens, pharmaceuticals, and cruise ships could have an effect on snapper-grouper reproductive fitness.

Response: The direct impacts of anthropogenic toxins introduced into the marine environment have been studied in recent years, but their impacts on snapper-grouper species are not quantifiable at this time. Ongoing research in the field is likely to continue as human impacts on the environment increase. Several studies show a correlation between pharmaceutical waste and subsequent lowered reproductive fitness in marine organisms. The extent to which chemical waste impacts snapper- grouper species in the South Atlantic is unknown, and may be more difficult to measure in deepwater species, which do not spend the majority of their live cycles in close proximity to known pollution sources.

The Environmental Protection Agency (EPA) has participated in several surveys to assess the impacts of cruise ship discharge of food waste, gray water, bilge water, and ballast water on the marine environment, including a survey conducted in August 2001 to estimate the dilution of cruise ship discharges into receiving waters. Another survey, conducted in Skagway Harbor, Alaska, in July 2008, estimated the near-field dilution of treated sewage/gray water discharges from docked cruise ships. The EPA also prepared a Cruise Ship Discharge Assessment Report (Assessment Report), which examines waste streams generated by cruise ships. The report is available at: http://water.epa.gov/polwaste/vwd/cruise_ship_disch_assess_report.cfm. Despite these and other ongoing studies, the direct impact of cruise ship waste discharge on snapper-grouper species in the South Atlantic is not known at this time.

Comment 23: One commenter suggests requiring permits and logbooks on all vessels in all sectors of the snapper-grouper fishery.

Response: Logbooks and snapper-grouper permits are required for participants in the commercial snapper-grouper fishery. Permits are also required for all participants in the for-hire sector of the snapper-grouper fishery, and logbooks are required on headboats if selected by NMFS. Amendment 15B, which became effective in December 2009, requires any vessel fishing for snapper-grouper in the South Atlantic EEZ, if selected by NMFS, to maintain and submit fishing records; and requires any vessel that fishes in the EEZ, if selected by NMFS, to carry an observer and install an electronic logbook (ELB) and/or video monitoring equipment provided by NMFS. The reporting and record-keeping requirements contained in Amendment 15B only include selected vessels because these requirements are cost prohibitive if applied to every fisher in the South Atlantic at this time.

Comment 24: One commenter stated that a prohibition on all longline fishing would end overfishing of golden tilefish.

Response: Golden tilefish are primarily harvested using bottom longline gear. Actions were taken in Amendment 13C to end the overfishing of golden tilefish, which included a reduction in the quota to 295,000 lb (133,810 kg) gutted weight. Therefore, eliminating the longline harvest for golden tilefish could have unnecessary negative economic and social effects. The effectiveness of management measures in ending overfishing for golden tilefish will be determined in an assessment scheduled for 2011. Amendment 17B established ACLs and AMs to help ensure golden tilefish overfishing does not occur.

Currently, for the snapper-grouper fishery, the use of bottom longline fishing gear is limited by species and area. A vessel that has on board a valid Federal commercial permit for South Atlantic snapper-grouper, excluding wreckfish, that fishes in the EEZ on a trip with a longline on board, may possess only snowy grouper, warsaw grouper, yellowedge grouper, misty grouper, golden tilefish, blueline tilefish, and sand tilefish. Additionally, under the FMP, a longline may not be used to fish in the EEZ for South Atlantic snapper-grouper south of 27°10′ N. latitude (due east of the entrance to St. Lucie Inlet, FL); or north of 27°10′ N. latitude where the charted depth is less than 50 fathoms (91.4 m), as shown on the latest edition of the largest scale NOAA chart of the location. Under the FMP, a person aboard a vessel with a longline on board that fishes on a trip in the South Atlantic EEZ south of 27°10′ N. latitude, or north of 27°10′ N. latitude where the charted depth is less than 50 fathoms (91.4 m), is limited on that trip to the bag limit for South Atlantic snapper-grouper for which a bag limit is specified, and to zero for all other South Atlantic snapper-grouper.

Additionally, Amendment 18A to the FMP is addressing potential effort control mechanisms for the golden tilefish component of the snapper-grouper fishery, including an endorsement for hook-and-line and longline gear. Therefore, Amendment 18A may mitigate, to some extent, any effort shift into the golden tilefish component of the snapper-grouper fishery.

Comment 25: Three commenters felt the golden tilefish allocation of 97-percent commercial and 3-percent recreational is unfair and allocates too much of the total ACL to the commercial sector.

Response: The sector allocations for golden tilefish were chosen based on long-term and short-term landings histories. The preferred allocation of 97 percent for the commercial sector and 3 percent for the recreational sector is representative of past and current harvest levels for both sectors and thus would cause the least disruption to the economic and social environments. The Council considered an alternative that would allocate half of the ACL to the commercial sector and half to the recreational sector, but rejected this alternative because it would result in the largest deviation from the short and long-term landings trend for the two sectors. It was concluded that the preferred allocation is fair and equitable based on the best scientific information available.

Comment 26: Two commenters suggested that the Federal government buy out those fishermen who are ready to leave the fishery because of overly burdensome regulations. One commenter suggested the U.S. Department of Commerce develop a fisheries disaster assistance program for commercial and for-hire fishermen affected by recently implemented regulations.

Response: The Council discussed the establishment of a buy-out program for commercial snapper-grouper fishermen in Georgia during the development process for Amendment 17A to the FMP, which was drafted concurrently with Amendment 17B. A buy-out program for the commercial sector would require a great deal of planning, time, funds, and acceptance from fishery participants. Because of these limiting factors and the need to end overfishing immediately as required by the Magnuson-Stevens Act, a buy-out program was not pursued by the Council or NMFS during the development of Amendment 17B.

The Magnuson-Stevens Act states the Secretary may establish a regional economic transition program to provide immediate disaster relief assistance upon the request and concurrence with the Governors of the affected States. Neither the Secretary nor NMFS has received a request from any of the four affected States' governors for disaster relief. Therefore, a disaster relief program for the snapper-grouper fishery has not been considered.

Comment 27: Several commenters feel the economic impact analysis for actions contained in Amendment 17B is either absent or inadequately represents the true impacts expected from the implementation of Amendment 17B.

Response: Amendment 17B contains a complete economic impact analysis of all actions and alternatives considered by the Council in Amendment 17B. Additionally, Amendment 17B contains a social impact analysis of all the alternatives considered by the Council. Furthermore, in compliance with Magnuson-Stevens Act, Amendment 17B contains a Regulatory Impact Review, an initial Regulatory Flexibility Analysis, a Fishery Impact Statement, and a Social Impact Assessment. These economic and social analyses utilize recent landings, trip ticket, logbook, permit, and financial data for the commercial and recreational sectors. As such, the subject analyses have been determined to represent an accurate and complete economic picture of potential impacts that may result from the implementation of Amendment 17B.

Comment 28: Three commenters feel Amendment 17B contained several deficiencies, including: the absence of overfishing limits (OFLs) for six species, the absence of ABCs for five species, the lack of an ABC control rule, failing to account for management uncertainty in the ACLs, and failing to include discard mortality in the ACLs (most notably for speckled hind and warsaw grouper). One commenter states that Amendment 17B establishes ACLs and management measures that are unlikely to end overfishing for golden tilefish, black sea bass, and snowy grouper. Additionally, one commenter states that Amendment 17B should include an ACL performance standard, and re-evaluation of the ACLs and AMs that would be triggered if the catch exceeds the ACL more often than once in a given period of time.

Response:

OFL: The Magnuson-Stevens Act National Standard 1 Guidelines give the Councils flexibility to use either the maximum fishing mortality threshold (MFMT) or the overfishing limit (OFL) to determine if overfishing is occurring. The National Standard 1 Guidelines state, “The OFL is an annual level of catch that corresponds directly to the MFMT, and is the best estimate of the catch level above which overfishing is occurring.” Furthermore, in June 2008, the SSC stated that for species assessed through SEDAR, OFL is equal to the yield at MFMT. Golden tilefish, snowy grouper, black sea bass, vermilion snapper, red grouper, and black grouper have been assessed through SEDAR and, therefore, have estimates of MFMT. The numerical estimates of MFMT for black grouper and red grouper will be provided in the Comprehensive ACL Amendment and Amendment 24, respectively.

The SSC was unable to provide recommendations of the OFL for speckled hind and warsaw grouper at its June 2008 meeting, based on current data, and, therefore, specified OFL as “unknown.” The SSC encountered similar problems when attempting to specify OFLs for species at its April 2010 meeting. Discussion at the April 2010 meeting focused on what the SSC was responsible for providing to the Council under National Standard 1 Guidelines. To explain its reasoning and judgment, the April 2010 SSC report states, “It became clear that recommending an ABC was the main goal, and providing this recommended value without an estimate of OFL was acceptable in situations where only catch series data were available.”

ABC: At its December 2008 meeting, the SSC considered the guidance given in the proposed Magnuson-Stevens Act National Standard 1 Guidelines and rescinded all estimates of ABC from its June 2008 meeting (except for an ABC of zero for speckled hind and warsaw grouper based on landed catch). At its December 2008 meeting, the SSC also recommended that the ABC levels for snowy grouper, black sea bass, and red snapper be set consistent with the rebuilding plans for those species until they can be further amended using more updated scientific information. The SSC reaffirmed, at its April 2010 meeting, that “For overfished stocks and stock complexes, a rebuilding ABC must be set to reflect the annual catch that is consistent with the schedule of fishing mortality rates in the rebuilding plan.” At its June 2009 meeting, the SSC recommended ABCs for gag and vermilion snapper based on a P* analysis, which is being used as the Council's preferred ABC control rule for assessed species that are not experiencing overfishing in the Comprehensive ACL Amendment.

The SSC did not provide an ABC value for golden tilefish because of the age of the assessment and because of the lack of a current estimate of abundance. Golden tilefish will be assessed by SEDAR in 2011. The ABC control rule being used in the Comprehensive ACL Amendment will be applied to golden tilefish to obtain an ABC value when the assessment and amendment are completed in 2011. The SSC did not provide an ABC value for black grouper and red grouper because assessments were ongoing for those species when Amendment 17B was being developed by the Council, and since the SEDAR assessments have now been completed, OFLs, ABCs, and ACLs will be specified in the Comprehensive ACL Amendment and Amendment 24 for black grouper and red grouper, respectively.

ABC Control Rule: For overfished stocks and stock complexes, the SSC has indicated that the ABC must be set to reflect the annual catch that is consistent with the schedule of fishing mortality rates in the rebuilding plan. Amendment 17B did not specify ABC control rules for assessed species that were not overfished or for data poor species because these control rules were under development by the SSC. The SSC met in March and June of 2009 to determine ABC control rules for data rich species, and met in April and August of 2010 to identify the protocol for determining the ABC for data poor species. A final version of the SSC's recommendation of an ABC control rule for assessed species was provided to the Council at its March 2010 meeting, after the Council had voted to submit Amendment 17B for Secretarial review. The SSC has not completed its recommendations for ABC control rules for non-assessed species. ABC control rules for assessed and data poor species will be included in the Comprehensive ACL Amendment.

The SSC recommended and the Council chose an ACL of zero for speckled hind and warsaw grouper based on landings only. Choosing an ACL based on total mortality rather than landed catch would require the SEFSC to monitor discarded speckled hind and warsaw grouper in the commercial and recreational sectors. The Council's SSC expressed concerns about monitoring discards when discussing ACLs for speckled hind and warsaw grouper at its March 2009 meeting. The SSC was not only concerned about the accuracy of discard data as currently collected from the recreational and commercial sector but also the possibility that some members of the fishing community might under-report discarded fish if they believed further restrictions might be imposed if levels of dead discards became elevated. Therefore, due to concern about monitoring discards, the SSC recommended an acceptable biological catch equal to zero for speckled hind and warsaw grouper based on landed catch only.

Management Measures: Action is being taken in Amendment 17B to reduce discards of speckled hind and warsaw grouper by prohibiting the take of co-occurring species in depths greater than 240 ft (73 m). Rather than retain and monitor speckled hind and warsaw grouper discards, the intent of the area closure is to reduce bycatch in an area where release mortality is expected to be very high. The relationship between depth and mortality has not been specified for speckled hind and warsaw grouper. However, as previously discussed, speckled hind and warsaw grouper share similar biological characteristics to gag; therefore, if depth related release mortality of speckled hind and warsaw grouper is similar to gag, release mortality would be expected to be approximately 70 percent in depths of 240 ft (73 m).

Actions were taken to end overfishing of golden tilefish, snowy grouper, and black sea bass in Amendment 13C to the FMP. It will not be known if the measures were successful in ending overfishing until new assessments are conducted for these species. New benchmark assessments will be conducted for golden tilefish and black sea bass in 2011, and snowy grouper will be assessed in 2013. Amendment 17B specifies ACLs and AMs for speckled hind, warsaw grouper, snowy grouper, gag, vermilion snapper, black sea bass, golden tilefish, black grouper, and red grouper, to ensure overfishing of these species does not occur.

The National Standard 1 Guidelines states that “if catch exceeds the ACL for a given stock or stock complex more than once in the last 4 years, the system of ACLs and AMs should be re-evaluated, and modified if necessary, to improve its performance and effectiveness.” Amendment 17B follows this guidance for performance measures with an action to update the framework procedure to allow for adjustments to OFL, ABC, and ACL based on SEDAR reports or other new information. Under the updated framework procedure, the SSC would examine the social and economic impact analyses for a specific allocation, ACL, ACT, AM, quota, bag limit, or other fishing restriction. If it is determined by the Council and its SSC that the management measures in place are not constraining catch to a target level, adjustments could be made through a future regulatory amendment.

Comment 29: One commenter stated Amendment 17B does not adequately demonstrate that speckled hind and warsaw grouper are undergoing overfishing.

Response: According to the most recent Report to Congress on the Status of U.S. Fisheries, warsaw grouper and speckled hind are undergoing overfishing and have been identified as experiencing overfishing every year since the Report was initiated in 1997. Status determinations in the Report to Congress on the Status of U.S. Stocks are generally made during a formal review of a scientific stock assessment using the best available scientific information and status determination criteria specified in a fishery management plan. However, many resources can be used to make status determinations, including final peer-reviewed documents such as Stock Assessment Review Committee reports and recommendations of each Council's Scientific and Statistical Committee. The Council and NMFS are mandated to end overfishing by the Reauthorized Magnuson-Stevens Act, and to specify ACLs and AMs for species undergoing overfishing and to implement management measures to ensure overfishing does not continue to occur. New SEDAR benchmark assessments for speckled hind and warsaw grouper are scheduled for 2012 or 2013.

Comment 30: Three commenters felt the Finding of No Significant Impact (FONSI) for Amendment 17B erroneously concluded that there are no significant impacts as a result of this amendment. One commenter requests that an environmental impact statement (EIS) be prepared for Amendment 17B.

Response: An environmental assessment (EA) was conducted for Amendment 17B, instead of an EIS, because most of the ACLs and AMs implemented through this final rule are based on previously implemented quotas and allocations, and the deepwater closure was concluded to result in a low to moderate level of socioeconomic impact to the snapper-grouper fishery. The deepwater closure is expected to primarily affect commercial fishermen who target blueline tilefish off North Carolina, and commercial and recreational fishermen in areas of the Florida Keys where the 240-ft (73-m) depth boundary is close to shore.

The significance of an action under NEPA is determined by considering the action's context and intensity. In the case of the deepwater area closure, the impacts are not considered significant because select groups of snapper-grouper fishery participants are expected to be impacted, and those impacts are anticipated to be low to moderate relative to the entire snapper-grouper fishery. For the entire South Atlantic, the prohibition on harvest and possession of six deepwater snapper-grouper species beyond a depth of 240 ft (73 m) is expected to reduce annual overall net operating revenues in the commercial snapper-grouper fishery by about $292,000, or by 3.3 percent. For the State of North Carolina alone, the action is expected to reduce net operating revenue in the commercial sector by approximately 7 percent. As such, the FONSI appropriately concludes the actions in Amendment 17B are not expected to result in significant impacts on the human environment; and therefore, an EIS was not prepared.

Comment 31: Several commenters stated that the amendment would have severe economic impacts on commercial and recreational fishing opportunities and operations, including their support industries and local communities. Many comments especially singled out the ban on fishing for, retaining, and possessing of six deepwater species in waters beyond 240 ft (73 m) deep as a major factor that would put many people out of work.

Response: The economic analysis of the actions and alternatives considered concluded that, with the exception of the no action alternatives, practically all management measure alternatives would result in restricted fishing opportunities and short-term adverse economic effects on fishers, support industries, and associated communities. However, it is imperative that we take some action to protect species undergoing overfishing. The actions adopted are expected to be those which best achieve the Council's objectives while minimizing, to the extent practicable, the adverse economic and social effects on fishing participants and associated communities.

Comment 32: One commenter stated that no consideration was made of potential differences in economic impacts based on differences in fishing practices and economic activities along the coast.

Response: The economic analysis evaluated the effects of the various measures in Amendment 17B on vessels by gear type used and geographic area in the South Atlantic. Thus, the analysis addressed, to the extent possible using available data, the differential economic effects of the alternatives based on gear type and geographic location.

Comment 33: One commenter stated that once the Council and NMFS decided what the economic impacts are, public comments would not count at all.

Response: The Council and NMFS have taken multiple steps to solicit comments from the public through meetings, public hearings, and dissemination of written materials on the various issues considered in the amendment. The law, as well as the policies of the Council and NMFS, requires consideration of public comments as an integral part of the regulatory process even after the economic analysis is completed. However, economic impacts are not the only factor the Council and NMFS must take into account.

Comment 34: Two commenters noted that the 97 percent commercial and 3 percent recreational allocation of golden tilefish neglects the contribution of the recreational sector into the local economy.

Response: The commercial/recreational allocation for golden tilefish took into account the past and present landing records of both the commercial and recreational sectors. The economic effects of the various allocation measures were evaluated independently and in conjunction with the other alternatives in the amendment. The economic analysis concluded that the allocation ratio was not expected to introduce severe dislocations of commercial and recreational fishing activities.

Comment 35: One commenter mentioned the lack of analysis of the cumulative economic impacts of the amendment.

Response: The economic analysis evaluated the cumulative effects of past and present regulatory measures affecting the snapper-grouper recreational and commercial sectors. Both quantitative and qualitative discussions of cumulative economic effects were presented.

Comment 36: One commenter remarked that serious attention to socioeconomic aspects of fisheries management is grossly overlooked as real science.

Response: NMFS has always recognized the important role of social science in fisheries management, as specifically required by the Magnuson-Stevens Act, Regulatory Flexibility Act, and Executive Order 12866. Although the overriding objective of Amendment 17B has been to protect or rebuild the subject snapper-grouper species, the socioeconomic effects of the various alternatives were evaluated and considered in the choice of preferred alternatives.

The Regional Administrator, Southeast Region, NMFS has determined that Amendment 17B is necessary for the conservation and management of South Atlantic snapper-grouper and is consistent with the Magnuson-Stevens Act, and other applicable laws.

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

NMFS prepared a FRFA, as required by section 604 of the Regulatory Flexibility Act. The FRFA describes the economic impact this final rule is expected to have on small entities. A description of the action, why it is being considered, and the objectives of, and legal basis for, this action are contained at the beginning of this section in the preamble and in the SUMMARY section of the preamble. A copy of this analysis is available from the NMFS ( see ADDRESSES ). The FRFA follows.

No public comments specific to the IRFA were received. However, 22 of the 175 comments contained statements regarding the economic effects of the amendment, and they are addressed in comments/responses section, specifically comments/responses number 31 through 36.

NMFS agrees with the Council's choice of preferred alternatives as those which would be expected to best achieve the Council's objectives while minimizing, to the extent practicable, the adverse effects on fishers, support industries, and associated communities.

No changes to the proposed rule were made in response to public comments.

The final rule introduces several changes to the management of the South Atlantic snapper-grouper fishery. This rule establishes an ACL of zero for speckled hind and warsaw grouper, and this prohibits the harvest and possession of speckled hind and warsaw grouper. The rule prohibits fishing for and possession of snowy grouper, blueline tilefish, yellowedge grouper, warsaw grouper, speckled hind, misty grouper, queen snapper, and silk snapper beyond a depth of 240 ft (73 m).

This rule establishes a 97-percent commercial and 3-percent recreational allocation of golden tilefish. This rule establishes a commercial ACL (quota) for golden tilefish of 282,819 lb (128,284 kg) gutted weight and a recreational ACL of 1,578 fish based on the chosen allocation for golden tilefish. The commercial AM for golden tilefish prohibits the harvest, possession, purchase, and sale of golden tilefish after the quota is met or projected to be met. The recreational AM is specified as follows: If the ACL is exceeded, the Regional Administrator (RA) shall publish a notice to reduce the length of the following fishing season by the amount necessary to ensure landings do not exceed the sector ACL in the following fishing year. The recreational ACL would be compared to recreational landings using only 2010 landings for 2010, an average of 2010 and 2011 landings for 2011, and a 3-year average of landings for 2012 and beyond.

This rule establishes a recreational daily bag limit of one snowy grouper per vessel, with a recreational ACL of 523 fish and a recreational AM specified as follows: If the ACL is exceeded, the RA shall publish a notice to reduce the length of the following fishing season by the amount necessary to ensure landings do not exceed the sector ACL in the following fishing year. The recreational ACL would be compared to recreational landings using only 2010 landings for 2010, an average of 2010 and 2011 landings for 2011, and a 3-year average of landings for 2012 and beyond.

This rule establishes an aggregate ACL (quota) for gag, black grouper, and red grouper of 662,403 lb (300,461 kg) gutted weight (commercial) and 648,663 lb (294,229 kg) gutted weight (recreational), but retains the commercial ACL (quota) for gag or 352,940 lb (160,091 kg) gutted weight and recreational ACL for gag of 340,060 lb (154,249 kg) gutted weight. This rule prohibits the commercial possession of shallow-water groupers (gag, black grouper, red grouper, scamp, red hind, yellowmouth grouper, tiger grouper, yellowfin grouper, graysby, and coney) when the gag ACL (currently at 352,940 lb (160,091 kg) gutted weight) or the aggregate gag, black grouper, and red grouper ACL is met or projected to be met. This rule implements recreational AMs for black grouper, black sea bass, gag, red grouper, and vermilion snapper as follows: If a species is overfished and the sector ACL is met or projected to be met, prohibit the harvest and retention of the species or species group. If the ACL is exceeded, independent of stock status, the RA shall publish a notice to reduce the sector ACL in the following fishing season by the amount of the overage. The recreational ACL would be compared to recreational landings using only 2010 landings for 2010, an average of 2010 and 2011 landings for 2011, and a 3-year running average of landings for 2012 and beyond.

Finally, this rule updates the framework procedure for specification of Total Allowable Catch (TAC) for the FMP to incorporate ACLs, ACTs, and AMs. Such modifications are based upon new scientific information indicating such modifications are prudent.

The Magnuson-Stevens Act provides the statutory basis for the final rule.

No duplicative, overlapping, or conflicting Federal rules have been identified. The final rule does not alter existing reporting, recordkeeping, or other compliance requirements.

The final rule is expected to directly affect commercial fishers and for-hire operators. The SBA has established size criteria for all major industry sectors in the U.S. including commercial fish harvesters and for-hire operations. A business involved in fish harvesting is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $4.0 million (NAICS code 114111, finfish fishing) for all its affiliated operations worldwide. For for-hire vessels, the other qualifiers apply and the annual receipts threshold is $7.0 million (NAICS code 713990, recreational industries).

From 2003-2007, an average of 944 vessels per year was permitted to operate in the commercial sector of the snapper-grouper fishery. Of these vessels, 749 held transferable permits and 195 held non-transferable permits. As of December 17, 2010, there are 604 vessels with transferable permits and 138 vessels with non-transferable permits. On average, 890 vessels landed 6.43 million lb (2.92 million kg) of snapper-grouper species and 1.95 million lb (0.88 million kg) of other species on snapper-grouper trips. Total dockside revenues from snapper-grouper species stood at $13.81 million and at $2.30 million from other species. Considering revenues from both snapper-grouper and other species, the revenues per vessel were approximately $18,101. An average of 27 vessels per year harvested more than 50,000 lb (22,680 million kg) of snapper-grouper species per year, generating dockside revenues of at least $107,500, at an average price of $2.15 (2007 dollars) per pound. Commercial vessels that operate in the snapper-grouper fishery may also operate in other fisheries, the revenues of which cannot be determined with available data and are not reflected in these totals.

Although a vessel that possesses a commercial snapper-grouper permit can harvest any snapper-grouper species, not all permitted vessels or vessels that landed snapper-grouper landed all of the major species in this amendment. The following average number of vessels landed the subject species in 2003-2007: 292 vessels landed gag, 253 vessels landed vermilion snapper, 32 vessels landed speckled hind, 64 vessels landed golden tilefish, 160 vessels landed snowy grouper, 323 vessels landed black grouper, 237 vessels landed black sea bass, and 402 vessels landed red grouper. Combining revenues from snapper-grouper and other species on the same trip, the average revenue per vessel for vessels landing the subject species were $20,551 for gag, $28,454 for vermilion snapper, $6,250 for speckled hind, $17,266 for golden tilefish, $7,186 for black grouper, $19,034 for black sea bass, and $17,164 for red grouper.

Based on revenue information, all commercial vessels that would be affected by the final action are considered to be small entities.

For the period 2003-2007, an average of 1,635 vessels were permitted to operate in the snapper-grouper for-hire sector, of which 82 are estimated to have operated as headboats and 1,553 as charter boats. As of December 17, 2010, there are 1,474 permitted for-hire vessels. The for-hire fleet is comprised of charterboats, which charge a fee on a vessel basis, and headboats, which charge a fee on an individual angler (head) basis. Within the total number of vessels, 227 also possessed a commercial snapper-grouper permit and would be included in the summary information provided on the commercial sector. The charterboat annual average gross revenue is estimated to range from approximately $62,000-$84,000 for Florida vessels, $73,000-$89,000 for North Carolina vessels, $68,000-$83,000 for Georgia vessels, and $32,000-$39,000 for South Carolina vessels. For headboats, the appropriate estimates are $170,000-$362,000 for Florida vessels, and $149,000-$317,000 for vessels in the other States.

Based on average revenue figures, all for-hire operations that would be affected by the final action are considered to be small entities.

Some fleet activity ( i.e., multiple vessels owned by a single entity) may exist in both the commercial and for-hire snapper-grouper sectors, but the extent of such is unknown and all vessels are treated as independent entities in this analysis.

The measure to establish an ACL of zero for speckled hind and warsaw grouper, together with the ban on fishing for deepwater species co-occurring with these two species beyond 240 ft (73 m), is expected to reduce net operating revenues of commercial vessels by about $292,000. This measure is also expected to reduce net operating revenues of for-hire vessels by less than $102,000.

Establishing a 97 percent commercial and 3 percent recreational allocation of golden tilefish would maintain the long-term and short-term proportional landings history of the commercial and recreational sectors, with possible small short-term changes (depending on the ACL) in net operating revenues of both commercial and for-hire vessels. At this allocation ratio, the corresponding commercial ACL (quota) would be 282,819 lb (128,284 kg) gutted weight and the recreational allocation would be 1,578 fish (8,747 lb (3,968 kg) gutted weight). The golden tilefish commercial quota in combination with the AM of closing the fishery after the quota is met is expected to reduce net operating revenues of vessels with snapper-grouper commercial permits by about $8,000. The recreational allocation is expected to result in net revenue reductions of for-hire snapper-grouper vessels by about $7,000. It is worth noting, however, that the reduction in net operating revenues of for-hire vessels is not immediate because the recreational AM would shorten only the subsequent year's fishing season and only when recreational landings over a number of years (except for 2010) exceed the ACL.

Establishing a daily bag limit of one snowy grouper per vessel is expected to reduce net operating revenues of for-hire snapper-grouper vessels by about $7,000. This reduction in net operating revenues would not be immediate because the recreational AM would shorten only the subsequent year's fishing season and only when recreational landings over a number of years (except for 2010) exceed the ACL.

The combined measures of retaining the commercial ACL for gag of 352,940 lb (160,091 kg) gutted weight, to establish an aggregate commercial ACL for gag, red grouper, and black grouper of 662,403 lb (300,461 kg) gutted weight, and to close the fishery when the gag ACL or the aggregate ACL is reached is expected to reduce net operating revenues of commercial vessels by about $103,000. For the recreational component of the snapper-grouper fishery, the combined measures of retaining the recreational ACL for gag of 340,060 lb (154,249 kg) gutted weight and establishing an aggregate recreational ACL for gag, red grouper, and black grouper of 648,663 lb (294,229 kg) gutted weight are not expected to affect the net operating revenues of for-hire snapper-grouper vessels because these are the expected landings from implementation of previous amendments, notably Amendment 16 to the FMP. There is a possibility that the recreational AM of prohibiting the harvest and retention of an overfished species when the sector ACL is met or projected to be met would have negative impacts on for-hire snapper-grouper vessels fishing for black sea bass. Under this AM, for-hire snapper-grouper vessels as a whole could potentially lose about $860,000 in net revenues. This reduction is likely to be an overestimate for at least two reasons. First, the method used in estimating the economic effects on the recreational sector likely overestimated the number of headboat angler trips affected by the measure. Second, the trend of recreational black sea bass landings has been downward due to the implementation of more restrictive measures provided in previous amendments. Therefore, using average landings over the period 2005-2008 inflated the landings when compared to the ACL.

Updating the framework procedure for specification of TAC has no direct effects on the net operating revenues of commercial and for-hire snapper-grouper vessels.

Five alternatives, including the final action, were considered for establishing an ACL for speckled hind and warsaw grouper. The first alternative to the final action, the no action alternative, would not conform to the requirements of the Magnuson-Stevens Act, as reauthorized in 2006, to establish an ACL for the subject species. The second alternative to the final action would establish an ACL of zero for speckled hind and warsaw grouper but would not close any areas to fishing for deepwater species that co-occur with these two species. Although this alternative would have smaller negative economic effects on small entities than the final action, it would not be sufficient to end overfishing of speckled hind and warsaw grouper due to discard mortality from fishing for other co-occurring deepwater species. The third alternative to the final action is the same as the final action, except that the fishing prohibition for other co-occurring deepwater species would apply to all depths. In this case, this alternative would result in greater negative economic effects on small entities than the final action. The fourth alternative to the final action is similar to the final action, except that the prohibition on fishing for other co-occurring deepwater species would be beyond 300 ft (92 m). With smaller closed areas, this alternative would result in slightly smaller negative economic effects on small entities. On the other hand, the protection this alternative provides for adult speckled hind and warsaw grouper would be less than that of the final action. The possibility of continued overfishing for the subject species may still occur under this alternative.

Four alternatives, including the final action, were considered for the golden tilefish allocation. The first alternative to the final action, the no action alternative, would not establish a commercial and recreational allocation for golden tilefish. Without a defined sector allocation, it would be difficult to define sector ACLs and to take corrective actions should the sector ACLs or overall ACL be exceeded. This would weaken the ability of fishery managers to effectively manage the stock. The second alternative to the final action would establish a 96-percent commercial and 4-percent recreational allocation. This allocation is very close to that provided under the final action, and thus its economic effects would only minimally differ from those of the final action. This alternative uses only the most current landings records (2006-2008) while the final action uses both the long-run (1986-2008) and short-run (2006-2008) landings history. The third alternative to the final action would establish a 50-percent commercial and 50-percent recreational allocation. This alternative would create significant disruptions to the commercial sector operations, and thus would impose relatively large costs to this sector. The recreational sector would stand to gain from this allocation, but whether or not the gains to the recreational sector would outweigh losses to the commercial sector cannot be determined. At least in the short-term and given the current bag limit of one fish per person per day, benefits to the recreational sector would be relatively small and would not compensate for the losses in the commercial sector. Thus, the expected net economic effects of this alternative in the short-term would be negative.

Five alternatives, including the final action, were considered for the golden tilefish ACL and AM. The first alternative to the final action, the no action alternative, would retain the current ACL (quota) for the commercial sector based on F MSY and would not establish an ACL for the recreational sector. The current AM would close all fishing for golden tilefish once the commercial quota is reached. This alternative would not add any more fishery restrictions and economic losses to the fishery participants, but it would be less conservative than the final action in rebuilding the stock as to potentially lengthen the recovery of the stock beyond the specified rebuilding period. In addition, it would provide less flexibility in implementing sector-specific AMs. The second alternative to the final action would establish a single commercial and recreational ACL which would combine the commercial ACL at the F OY level and the recreational allowable harvest at the OY level. The AM would prohibit commercial and recreational harvest when the ACL is projected to be met. This alternative would result in approximately the same economic losses to the commercial sector as the final action. There is some potential for this alternative to result in smaller economic losses to the recreational sector than the final action, especially if only the commercial landings were effectively monitored because then the recreational fishing season would remain open longer. But to the extent that the AM under this alternative would be imposed in-season while that of the final action would become effective only in subsequent years, the economic effects of this alternative over time could very well exceed those of the final action. The third alternative to the final action would establish a recreational AM of one golden tilefish per vessel per day when the single ACL (sum of the commercial ACL at the F OY level and recreational harvest at the OY level) is met or projected to be met. This alternative offers potential for smaller economic losses to the recreational sector than the final action by maintaining a year-round recreational fishing season although at a very limited bag limit. However, because this alternative requires an in-season adjustment in lieu of subsequent-year adjustments, as under the final action, the resulting economic losses over time due to this alternative could exceed those of the final action. The fourth alternative to the final action would establish a commercial and recreational ACL based on the yield at F OY for the commercial fishery. The AM for both sectors would be to prohibit harvest, possession, and retention of golden tilefish when commercial landings exceed the ACL. This alternative would have the same economic effects on the commercial sector as the final action, but losses to the recreational sector would likely exceed those of the final action.

Four alternatives, including the final action, were considered for establishing a snowy grouper ACL and AM. The first alternative, the no action alternative, to the final action would retain the commercial ACL (quota) of 82,900 lb (37,603 kg) gutted weight as the ACL based on the current TAC of 87,254 lb (39,578 kg) gutted weight; would retain the commercial AM which is to prohibit harvest, possession, and retention of snowy grouper when the quota is met or projected to be met; would maintain the recreational ACL of 523 fish; and, would not implement a recreational AM. This alternative would not add any restrictions to either the commercial or recreational sector. The absence of an AM for the recreational sector would make it difficult to implement sector-specific adjustments. The second alternative to the final action would establish a single commercial/recreational ACL based on the current TAC of 87,254 lb (39,578 kg) gutted weight, and the AM for both sectors would be a closure of the fishery when the ACL is met or projected to be met. This alternative may result in slightly better economic effects on the commercial sector than the final action or the no action alternative, but this slight advantage of the commercial sector would come at the expense of the recreational sector. In effect, this alternative would have slightly larger short-term economic losses on the recreational sector than the final action. In addition, this alternative would not allow for sector-specific adjustments should ACL overages occur. The third alternative to the final action would establish a recreational AM of one fish per vessel per day when the commercial quota is met or projected to be met. The commercial AM would be a fishery closure when the quota is met. This alternative would have similar economic effects for the commercial sector as the no action alternative and slightly lower short-term negative effects on the recreational sector than the final action. However, unlike the final action, this alternative could result in overages in the recreational sector without a possible compensating adjustment in succeeding years, thereby potentially resulting in less protection to the stock.

Five alternatives, two of which comprise the final action, were considered for the black grouper, black sea bass, gag, red grouper, and vermilion snapper ACL, AM, and ACT. The alternative for establishing commercial and recreational ACLs consisted of two sub-alternatives, one of which is the final action. The ACT alternative for the recreational sector consisted of three sub-alternatives, none of which were selected as the final action. The AM alternative for the recreational sector consisted of three sub-alternatives, one of which is the final action. The first alternative to the final action, the no action alternative, would retain the commercial and recreational ACLs (quotas) for black sea bass, gag, and vermilion snapper and would not establish commercial and recreational ACLs for black grouper and red grouper. This alternative would not comply with the requirements of the Magnuson-Stevens Act, as reauthorized in 2006. The second alternative to the final action for commercial and recreational ACLs would establish black grouper commercial and recreational ACLs of 86,886 lb (39,411 kg) gutted weight and 31,863 lb (14,453 kg) gutted weight, respectively. It would also establish red grouper commercial and recreational ACLs of 221,577 lb (100,505 kg) gutted weight and 276,740 lb (125,527 kg) gutted weight, respectively. This alternative would have similar biological effects as the final action. However, it could result in slightly worse economic effects as the final action because it would allow less flexibility for small entities in adjusting their fishing operations with respect to gag, black grouper, and red grouper. The third alternative to the final action for the recreational AM consisted of two sub-alternatives. The first sub-alternative would require the RA to reduce the length of the following fishing year if the ACL were exceeded in the current year. Although this alternative would provide less negative effects in the short-term, it would provide less biological benefits than the final action, particularly with respect to overfished species, so as to delay further the generation of economic benefits from the fishery. The second sub-alternative would close the fishery if the sector ACT were exceeded for an overfished species or species group and would require the RA to reduce the sector ACT the following year. By not selecting any ACT, this alternative would not be a viable alternative. If ACTs were selected, this alternative would likely result in larger short-term economic losses than the final alternative.

Two alternatives, including the final action, were considered for updating the framework procedure for specification of TAC in the FMP to incorporate ACLs, ACTs, and AMs. The only alternative to the final action, the no action alternative, would delay the implementation or modification of ACLs, ACTs, and AMs when new scientific information becomes available because this would require the FMP amendment process which would incur more administrative costs than the final action.

Regulations governing the summer flounder fishery are found at 50 CFR part 648. The regulations require annual specification of a commercial quota that is apportioned among the coastal states from North Carolina through Maine. The process to set the annual commercial quota and the percent allocated to each state are described in § 648.100.

The final rule implementing Amendment 5 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan, which was published on December 17, 1993 (58 FR 65936), provided a mechanism for summer flounder quota to be transferred from one state to another. Two or more states, under mutual agreement and with the concurrence of the Administrator, Northeast Region, NMFS (Regional Administrator), can transfer or combine summer flounder commercial quota under § 648.100(d). The Regional Administrator is required to consider the criteria set forth in § 648.100(d)(3) in the evaluation of requests for quota transfers or combinations.

North Carolina has agreed to transfer 11,815 lb (5,359 kg) of its 2010 commercial quota to Virginia. This transfer was prompted by summer flounder landings of two North Carolina vessels that were granted safe harbor in Virginia due to mechanical problems on November 19, 2010, and December 6, 2010. In addition, Maine has agreed to transfer 6,000 lb (2,722 kg) of its 2010 commercial quota to Rhode Island. The Regional Administrator has determined that the criteria set forth in § 648.100(d)(3) have been met. The revised summer flounder quotas for calendar year 2010 are: North Carolina, 3,358,231 lb (1,523,268 kg); Virginia, 2,922,226 lb (1,325,499 kg); Maine, 126 lb (57 kg); and Rhode Island, 2,025,915 lb (918,940 kg).

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

Regulations governing the Atlantic bluefish fishery are found at 50 CFR part 648. The regulations require annual specification of a commercial quota that is apportioned among the coastal States from Florida through Maine. The process to set the annual commercial quota and the percent allocated to each State is described in § 648.160.

Two or more States, under mutual agreement and with the concurrence of the Administrator, Northeast Region, NMFS (Regional Administrator), can transfer or combine bluefish commercial quota under § 648.160(f). The Regional Administrator is required to consider the criteria set forth in § 648.160(f)(1) in the evaluation of requests for quota transfers or combinations.

Virginia has agreed to transfer 250,000 lb (113,398 kg) of its 2010 commercial quota to North Carolina. The Regional Administrator has determined that the criteria set forth in § 648.160(f)(1) have been met. The revised bluefish quotas for calendar year 2010 are: Virginia, 963,280 lb (436,937 kg); and North Carolina, 3,524,441 lb (1,528,860 kg).

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

Background

In this emergency action, NMFS is implementing interim measures for the Pacific coast groundfish fisheries beginning in January, 2011. The interim measures include: interim reductions to the 2010 harvest level for sablefish; issuance of quota pounds (QP) for IFQ species; revisions to the calculation for the Pacific halibut trawl bycatch mortality limit; and adjustment of the trawl Rockfish Conservation Areas (RCAs) and landing allowances for non-IFQ species and Pacific whiting. These interim measures are necessary due to a delay in the finalization of the 2011-2012 harvest specifications and management measures, and are needed to meet the scheduled implementation of the trawl rationalization program in January 2011. These measures are intended to manage the early part of the 2011 groundfish fishery in a manner that prevents any conservation concerns until the 2011-2012 harvest specifications and management measures are implemented, currently anticipated in April 2011, and to accommodate the transition to a rationalized trawl fishery. For more background on the trawl rationalization program, see the preamble to the June 10, 2010, proposed rule (75 FR 32994), the August 31, 2010, proposed rule (75 FR 53380), the October 1, 2010, final rule (74 FR 60868), and the December 15, 2010, final rule (75 FR 78344).

The 2011-2012 harvest specifications and management measures final rule was scheduled to publish late in 2010 so that the trawl rationalization program and the 2011-2012 harvest specifications and management measures (2011-2012 specifications) would be implemented simultaneously. However, the 2011-2012 specifications, including several pieces necessary to sustainably manage the entire fishery and to begin the rationalized trawl fishery, have been delayed and will not be in place for the start of the 2011 groundfish fisheries. As a result of this delay, the harvest specifications and management measures that were implemented during 2010 will remain in place for the start of 2011, until NMFS takes action through a rulemaking to revise them. This may be problematic in some instances, as discussed below. Therefore, NMFS is taking action in this interim, emergency rulemaking to revise some harvest specifications and management measures.

Because the 2011-2012 harvest specifications and management measures rulemaking is delayed, if NMFS does not take any action, the harvest specifications and management measures that were implemented during 2010 will remain in place in 2011 until they are revised through a subsequent rulemaking. If the 2010 harvest specifications are allowed to remain in place and if catch early in 2011 is too high, both the biological resource and communities may be subject to overfishing and early fishery closure, respectively. This concern is highest for species that are caught by fisheries early in the year and where there may be limited ability to manage the fishery inseason to reduce catch later in the year. NMFS raised these issues to the Pacific Fishery Management Council at its November 2-9, 2010 meeting in Costa Mesa, California, and received recommendations from the Council regarding this interim rule to address these concerns.

The proposed rule for the 2011-2012 Biennial Harvest Specifications and Management Measures; Amendment 16-5; and Amendment 23 published on November 3, 2010 (75 FR 67810). As part of that rulemaking, in August 2010, the Council published a draft Environmental Impact Statement for Proposed Harvest Specifications and Management Measures for the 2011-2012 Pacific Coast Groundfish Fishery (DEIS), which included a range of 2011-2012 harvest levels. When the proposed 2011 harvest levels are compared with the levels that were in place for 2010, there are many species of groundfish for which the proposed 2011 harvest levels are lower than those that were in place for 2010. However, for many of those species, there is a low level of concern that starting the year with the same harvest specifications as those in place for 2010 would result in a conservation issues.

Therefore, in this action, NMFS is making no changes to the 2010 harvest levels for species other than sablefish north of 36° N. lat. ( i.e., the 2010 harvest levels will remain in place at the start of the 2011 fishing year, except for sablefish north of 36° N. lat.). For sablefish, NMFS proposed harvest levels for 2011 based on the best available scientific information and management policy, as described in detail in the November 3, 2010 proposed rule for the 2011-2012 harvest specifications and management measures (75 FR 67810). In this action, NMFS is reducing the sablefish harvest level for the area north of 36° N. lat. consistent with the proposed harvest specifications for 2011, from 6,471 mt to 5,515 mt for the start of 2011. This interim measure is necessary to prevent conservation concerns with issuance of trawl fishery QP. Also, this interim reduction to the harvest level will allow NMFS to calculate the fixed gear primary sablefish fishery tier limits for 2011 at a level that will reduce concerns for overfishing, and will allow NMFS to take routine inseason actions to control catch of sablefish in the limited entry fixed gear and open access daily trip limit fisheries in early 2011, if necessary.

As a result of the delay in implementing 2011-2012 harvest specifications and management measures rulemaking, NMFS must determine what value to base the issuance of QP to quota share (QS) accounts. The shorebased trawl allocation for IFQ species is used to calculate how many QP to issue to QS accounts at the start of the fishing year (QS percent for a species multiplied by the shorebased trawl allocation equals QP for that species). NMFS calculated what the shorebased trawl allocation would be under the 2010 OYs and what it would be under Council-recommended amounts for 2011. To avoid the risk of over-issuing QP, which would then require reductions in April when the 2011 harvest specifications become finalized, NMFS is adopting the lower of these calculated amounts in this rule. These shorebased trawl allocations announced in this interim rule may be revised once the 2011 harvest specifications are finalized, and QP will be adjusted as appropriate.

NMFS determined the shorebased trawl allocations for IFQ species based on either the 2010 OY or proposed 2011 annual catch limits (ACLs) by taking the following steps. As specified at § 660.55(b), the OY (or ACL) was reduced by a specific amount for: the Pacific Coast treaty Indian Tribal harvest; projected scientific research catch of all groundfish species; estimates of fishing mortality in non-groundfish fisheries; and, as necessary, set-asides for EFPs. In order to retain the greatest flexibility when the final 2011 harvest specifications become available, NMFS used the larger of these amounts from 2010 and 2011, which resulted in a greater deduction from the OY (or ACL), and thus a more conservative amount for the calculation of the allocations. The remaining amount of available harvest after these deductions are made is called the fishery harvest guideline, which is then further divided into allocations for groundfish trawl (shorebased and at-sea) and non-trawl (limited entry fixed gear, open access, and recreational) fisheries. For most species, this was done according to the allocation percentages specified at § 660.55(c); however, IFQ species not listed in the table at § 660.55(c) are allocated between the trawl and nontrawl fisheries through the biennial harvest specifications process. Due to the delay of final 2011 harvest specifications and management measures, NMFS calculated the trawl allocation for species not listed in the table at § 660.55(c) by using either the proposed trawl allocation (in metric tons) from the proposed 2011 harvest specifications and management measures (75 FR 67810, November 3, 2010) or a proportional amount of the 2010 OY. The trawl allocation is further subdivided among the trawl sectors (mothership (MS), catcher/processor (C/P), and shorebased trawl (or IFQ)). The resulting shorebased trawl allocation (mt) is then used to calculate individual QPs. NMFS calculated the shorebased trawl allocation under both the 2010 OYs and under proposed 2011 ACLs, and is adopting the lower of the two for each IFQ species on an interim basis, so that quota pounds may be issued for the start of the 2011 fishery.

In some cases, NMFS is adopting a more conservative shorebased trawl allocation based upon current regulations, recommendations provided by the Council at its November 2010 meeting, or to provide NMFS flexibility in order to be consistent with the court order when the 2011 harvest specifications are finalized. In particular, this rule adopts a shorebased trawl allocation for Pacific whiting based on the lower end of the range of potential ACLs analyzed in the DEIS for the 2011 harvest specifications, consistent with current regulations at § 660.140(d)(1)(ii)(B)(2). This rule also adopts an interim shorebased trawl allocation for calculation of yelloweye rockfish QP based on the Council's November 2010 recommendation that the shorebased trawl allocation be set at 0.3 mt, as opposed to the 0.6 mt allocation that was recommended in June 2010 under a proposed 2011 yelloweye rockfish ACL of 20 mt. NMFS also applied the Council's November 2010 recommended increased set asides in the calculation of yellowtail rockfish QP. NMFS declined to apply the Council's November 2010 recommendation to temporarily suspend the petrale sole trawl/non-trawl split, because doing so would result in a larger issuance of petrale sole QP. This rule also adopts a shorebased trawl allocation for calculation of cowcod QP based on a more conservative harvest level of 3 mt, to provide flexibility in order to be consistent within the April 22, 2010 court order in NRDC v. Locke, Case 3:01-cv-00421-JLI, when the 2011 harvest specifications are finalized.

NMFS is adopting the lower shorebased trawl allocations in this rule in order to avoid the risk of over-issuing QP; these shorebased trawl allocations may change once the 2011 harvest specifications are finalized. NMFS will recalculate QP for IFQ species, other than Pacific halibut, once final 2011 harvest specifications are put in place, and will make adjustments in QS accounts as appropriate. If the final 2011 harvest specifications are greater than those used for the issuance of QP in this interim rule for the start of the fishing year, NMFS will issue additional QP later in 2011 for the difference.

Under the trawl rationalization program, individual bycatch quota (IBQ) pounds for Pacific halibut north of 40°10′ N. lat. are issued based on a calculation where a QS permit owner's IBQ (expressed as a percent) is multiplied by the trawl mortality bycatch limit for halibut after any set-asides have been deducted. As specified in current regulations at § 660.55(m), the FMP sets a trawl mortality bycatch limit for legal and sublegal halibut at 15 percent of the Area 2A constant exploitation yield (CEY) for legal size halibut, not to exceed 130,000 pounds for the first four years of trawl rationalization and not to exceed 100,000 pounds starting in the fifth year. This total bycatch limit may be adjusted downward or upward through the biennial specifications and management measures process. Part of the overall total catch limit is a set-aside of 10 mt of Pacific halibut to accommodate bycatch in the at-sea Pacific whiting fishery and in the shoreside trawl fishery south of 40°10′ N. lat. (estimated to be approximately 5 mt each). The intent of the Council for this approach was to reduce halibut mortality that has been observed in recent years in the trawl fishery by approximately 50 percent.

At the November 2010 Council meeting, the Council and NMFS received the most recent total mortality information from the Northwest Fishery Science Center (NWFSC), in a report titled “Pacific Halibut Bycatch in the U.S. West Coast Groundfish Fishery from 2002 through 2009”, published in October 2010. This report indicated that the proportion of sublegal sized halibut (under 32 inches) to legal sized halibut (length 32 inches and over) was higher than the Council had realized when the IBQ pound provisions were adopted. The method of calculating halibut IBQ pounds specified in current regulations at § 660.55(m), which was developed prior to the October 2010 NWFSC report, would result in issuance of fewer individual bycatch quota pounds than the target set by the Council, and could create a chokehold species that would threaten successful implementation of the rationalization program.

The calculation of the trawl mortality bycatch limit, as specified at § 660.55(m) and in the FMP, would include both legal (length 32 inches and over) and sublegal (under 32 inches) halibut. At its November 2010 Council meeting, the Council discussed an alternate approach for calculation of the total trawl mortality bycatch limit, which includes legal-sized halibut only and is greater than 15 percent of the 2010 total CEY of Pacific halibut. This approach more closely reflects the Council's intent of a 50-percent reduction in halibut mortality.

Consistent with the Council's recommendation at its November 2010 meeting, NMFS is revising §§ 660.55(m) and 660.140(d)(1)(ii)(C) in this rule to modify the calculation of the trawl mortality bycatch limit so that it is based on “130,000 pounds of legal sized halibut, net weight.” Because halibut IBQ pounds are expressed in round weight, this limit, expressed in net weight, is converted to round weight by dividing by 0.75 (a conversion factor used by the International Pacific Halibut Commission (IPHC)), resulting in 173,333 pounds. In addition, because halibut IBQ pounds cover both legal and sublegal sized halibut, the calculation is further divided by 0.62 to determine the total number of both legal and sublegal sized halibut, in round pounds. The conversion factor of 0.62 to convert legal sized halibut into both legal and sublegal sized halibut is based on the Council's November 2010 recommendation, which was derived from the October 2011 NWFSC report. The resulting 2011 trawl bycatch mortality limit is 279,570 pounds. In order to calculate IBQ pounds, this amount is reduced by the 10 mt (22,046 pounds) set aside to accommodate bycatch in the at-sea Pacific whiting fishery and in the shoreside trawl fishery south of 40°10′ N. lat. NMFS will issue Pacific halibut IBQ pounds to QS permit owners based on their halibut IBQ percent multiplied by 257,524 pounds.

Because the 2011-2012 harvest specifications and management measures rulemaking is delayed, if NMFS does not take any action, the harvest specifications and management measures that were in place and implemented during 2010 will remain in place in 2011 until they are revised through rulemaking. Also, the trawl rationalization program is scheduled to begin in January 2011. Because of this circumstance, management measures for the 2010 limited entry trawl fishery, which would have been amended for the 2011-2012 biennium, will remain in place. However, some of these measures are not appropriate for managing a rationalized fishery. In particular, trip limits would remain in place for the limited entry trawl fishery, including trip limits for IFQ species. Also, the trawl RCA boundaries that were in place in 2010 would be repeated for 2011, and those also may not be appropriate for a fishery that is operating under the trawl rationalization program. NMFS requested guidance from the Council on what the appropriate trip limits for non-IFQ species might be and what the appropriate RCA boundaries might be for the rationalized trawl fishery at its November 2010 meeting.

In June 2010, the Council recommended landing allowances for non-IFQ species and Pacific whiting (outside the primary whiting season) for implementation in the 2011-2012 harvest specifications and management measures, with the intent that they would be implemented with similar timing of the trawl rationalization program, in January 2011. However, with the delay in implementation of the 2011 harvest specifications and management measures, the Council, at its November 2010 meeting, re-considered appropriate landing allowances for non-IFQ species and whiting and RCA boundaries to be implemented via interim emergency rule for the start of the 2011 fishery.

The Council's Groundfish Management Team considered whether the landing allowances for non-IFQ species and whiting that were adopted by the Council in June 2010 would still be appropriate for the start of 2011, given the most recent fishery information and a NWFSC report on total groundfish mortality from 2009 fisheries that was released in November 2010. Considering the most recent fishery information, the landing allowances that were recommended by the Council in June 2010 were deemed appropriate by the Council and were recommended for implementation for the interim period until the 2011-2012 harvest specification and management measures are finalized later in 2011. The Council did, however, consider changes to the longnose skate landing allowances for the beginning of 2011, but did not recommend changes, based on the reasons described below.

The 2009 total mortality report indicated that the total mortality of longnose skate exceeded the 2009 OY of 1,349 mt by 106 mt, or 8 percent. 2009 was the first year that longnose skate was managed with a species-specific harvest specification and was therefore required to be sorted by species for catch accounting against the OY. Until 2009, the best available catch information indicated that catch of longnose skate was only about 800 mt per year. The trip limit that the Council recommended in June 2010 for longnose skate, a non-IFQ species, for 2011 was “Not limited,” based on the information on catch and discards that was available at the time, which indicated that a trip limit was unnecessary with a proposed harvest level of 1,349 mt. In 2009, only about 800 mt of longnose skate were landed, so much of the additional mortality was from discarding, bringing the total mortality above the 2009 OY. Trip limits, or landing allowances have a limited ability to control total mortality; they directly affect the amount of fish that may be landed, and may have indirect effects on whether vessels will target a species if the trip limit is low. However, with much of the mortality of longnose skate coming from discards at sea, trip limits may be less effective at keeping total mortality of longnose skate below the OY. Additional analysis of available observer data may provide additional information on the management measures that may be necessary to keep total mortality of longnose skate within the harvest specifications; however there was not sufficient time between receiving the 2009 total mortality report in November 2010 to develop and implement those measures in this interim emergency rulemaking. The total mortality of longnose skate in 2009 was well below the ABC (only 48 percent of the ABC), therefore the risk of overfishing in 2011 if no action were taken is very low. Therefore, the Council recommended keeping an interim landing allowance for longnose skate at “Not limited” for the start of 2011 and continuing analysis of potential management measures for longnose skate that can be implemented inseason during 2011 to keep the total mortality within the 2011 harvest specifications.

The Council also considered adjustments to the boundaries of the trawl RCA for the start of 2011. In June 2010, the Council recommended that the trawl RCA boundaries that were scheduled for the 2010 calendar year, as of June 2010, be in place for 2011 as well. The Council considered extending the seaward boundary of the trawl RCA seaward to close some deeper areas where darkblotched rockfish are encountered, given concerns with higher than anticipated darkblotched rockfish mortality in 2010. However, given the personal accountability features offered by a rationalized fishery, the Council did not recommend additional restrictions for the trawl RCA implemented by this rule.

No changes to management measures are being made for non-trawl commercial fisheries or recreational fisheries; however, the titles for the trip limit tables that are not otherwise revised by this interim rule are re-titled to reflect their ongoing effectiveness.

Therefore, the Council recommended and NMFS is implementing changes to the trip limits and RCA boundaries in Table 1 (North) and Table 1 (South) to subpart D. These changes will establish landing allowances for non-IFQ species and Pacific whiting outside the primary season and will adjust the trawl RCA boundaries. NMFS is also implementing changes to §§ 660.60 and 660.130 to remove obsolete language about trip limits in the trawl fishery, which are being removed for IFQ species in this interim rule. NMFS acknowledges that some obsolete language regarding trip limits, crossover provisions, and varying trip limits based on the gear type that is used will remain in regulations. NMFS intends to issue a follow-up rulemaking that will remove or revise outdated language that is outside of the scope of this interim rule. Also, NMFS is implementing revisions to the titles of Tables 2 (North) and 2 (South) to Part 660, subpart E and to Tables 3 (North) and 3 (South) to Part 660, subpart F, to reflect the ongoing effectiveness of the trip limits contained therein.

These interim measures are issued under the authority of, and are consistent with section 305(c)(1) of, the Magnuson-Stevens Fishery Conservation and Management Act and regulations at 50 CFR part 660, subparts C through G (the groundfish regulations implementing the FMP).

The Assistant Administrator Fisheries, NOAA (AA) finds good cause under 5 U.S.C. 553(b)(B) to waive the requirement for prior notice and opportunity for public comment, as such procedures are impracticable and contrary to the public interest.

In June 2010, the Council recommended, and NMFS is working to implement, specifications and management measures for the 2011-2012 biennium. Given the complexity of the biennial specifications and management measures, the need for adequate NEPA-related documents and public review periods, and competing workloads, NMFS did not have enough time to implement a final rule by January 1, 2011. In light of the delay in availability of the 2011-2012 harvest specifications and management measures rulemaking, the interim measures set out in this rule are necessary to implement the trawl rationalization program in January 2011 without causing risk of overfishing or the need for potentially severe restrictions to fishery management measures later in the year to prevent the final harvest specifications or allocations for 2011 from being exceeded.

It is in the public interest to reduce the harvest level for sablefish for the beginning of 2011. Failure to implement an interim harvest level reduction by January 1, 2011 would prevent NMFS from having the ability to take routine inseason action, if necessary, to keep projected mortality below the sablefish harvest level during the interim period (between January 1, 2011 and when the final 2011 harvest specifications are implemented) and would risk premature closure of fisheries that are important to coastal communities, which would fail to meet the objectives of the Pacific Coast Groundfish FMP to allow for year round fishing opportunities to provide community stability. This is contradictory to one of the goals of the FMP to keep year round fishing opportunities for target stocks.

It is also in the public interest to issue QP for IFQ species as described in this interim emergency rule by January 1, 2011. For some species for which the final 2011 harvest level may be lower than in 2010, without this rule, the rationalized trawl fishery would receive total QP that could: (1) Preclude fishing for such species in other non-trawl sectors ( e.g. , sablefish); or (2) exceed the final 2011 harvest specifications when they are implemented later in the year ( e.g. , petrale sole). Failure to implement interim QP for IFQ species would keep harvest levels for the trawl fishery in place that are not based on the best available data and would risk premature closure of fisheries that are important to coastal communities, which would fail to meet the objectives of the Pacific Coast Groundfish FMP to allow for year round fishing opportunities to provide community stability.

It is also in the public interest to revise the calculation method for Pacific halibut IBQ pounds. New information was received by the Council at its November 2010 meeting indicating that the proportion of sublegal sized halibut to legal sized halibut in bycatch of the limited entry trawl fishery was higher than the Council had realized when the IBQ pound provisions were adopted. There was not sufficient time after that meeting to draft this document and undergo proposed and final rulemaking before these actions need to be in effect. It would be contrary to the public interest to wait to implement these changes until after public notice and comment, because making this regulatory change quickly allows additional harvest in fisheries that are important to coastal communities. Failure to implement an interim calculation method for Pacific halibut IBQ would keep regulations in place that are not based on the best available data and could lead to early closures of the fishery because such regulations would result in issuance of fewer IBQ pounds than the target set by the Council. Premature closure of fisheries that are important to coastal communities would fail to meet the objectives of the Pacific Coast Groundfish FMP to allow for year round fishing opportunities to provide community stability.

It is also in the public interest to adjust RCAs and landing allowances for non-IFQ species. RCAs are important to facilitate rebuilding of overfished species. Failure to adjust interim trawl RCAs would keep regulations in place that are not based on the best available data, as they were not specifically developed for use in a rationalized trawl fishery. This would be contrary to the public interest and with the Pacific Coast Groundfish FMP to rebuild overfished species while allowing for harvest opportunities to support local communities. Failure to remove trip limits for IFQ species would cause duplicative regulations, where vessels would be fishing for their QP for IFQ species and would then also be restricted by trip limits. This would be very confusing to the regulated public. Removal of trip limits for IFQ species relieves an unnecessary restriction and allows flexibility for vessels fishing IFQ species.

For the same reasons, NMFS finds good cause to waive the 30-day delay in effectiveness pursuant to 5 U.S.C. 553(d)(3), so that this final rule may become effective on January 1, 2011.

Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are inapplicable. Therefore, a regulatory flexibility analysis is not required and has not been prepared.

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

A Regulatory Impact Review was completed and is available upon request from the NMFS, Northwest Region ( see ADDRESSES ).

NMFS issued Biological Opinions under the Endangered Species Act (ESA) on August 10, 1990, November 26, 1991, August 28, 1992, September 27, 1993, May 14, 1996, and December 15, 1999 pertaining to the effects of the Pacific Coast groundfish FMP fisheries on Chinook salmon (Puget Sound, Snake River spring/summer, Snake River fall, upper Columbia River spring, lower Columbia River, upper Willamette River, Sacramento River winter, Central Valley spring, California coastal), coho salmon (Central California coastal, southern Oregon/northern California coastal), chum salmon (Hood Canal summer, Columbia River), sockeye salmon (Snake River, Ozette Lake), and steelhead (upper, middle and lower Columbia River, Snake River Basin, upper Willamette River, central California coast, California Central Valley, south/central California, northern California, southern California). These biological opinions have concluded that implementation of the FMP for the Pacific Coast groundfish fishery was not expected to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS, or result in the destruction or adverse modification of critical habitat.

NMFS reinitiated a formal section 7 consultation under the ESA in 2005 for both the Pacific whiting midwater trawl fishery and the groundfish bottom trawl fishery. The December 19, 1999, Biological Opinion had defined an 11,000 Chinook incidental take threshold for the Pacific whiting fishery. During the 2005 Pacific whiting season, the 11,000 fish Chinook incidental take threshold was exceeded, triggering reinitiation. Also in 2005, new data from the West Coast Groundfish Observer Program became available, allowing NMFS to complete an analysis of salmon take in the bottom trawl fishery.

NMFS prepared a Supplemental Biological Opinion dated March 11, 2006, which addressed salmon take in both the Pacific whiting midwater trawl and groundfish bottom trawl fisheries. In its 2006 Supplemental Biological Opinion, NMFS concluded that catch rates of salmon in the 2005 whiting fishery were consistent with expectations considered during prior consultations. Chinook bycatch has averaged about 7,300 fish over the last 15 years and has only occasionally exceeded the reinitiation trigger of 11,000 fish.

Since 1999, annual Chinook bycatch has averaged about 8,450 fish. The Chinook ESUs most likely affected by the whiting fishery has generally improved in status since the 1999 section 7 consultation. Although these species remain at risk, as indicated by their ESA listing, NMFS concluded that the higher observed bycatch in 2005 does not require a reconsideration of its prior “no jeopardy” conclusion with respect to the fishery. For the groundfish bottom trawl fishery, NMFS concluded that incidental take in the groundfish fisheries is within the overall limits articulated in the Incidental Take Statement of the 1999 Biological Opinion. The groundfish bottom trawl limit from that opinion was 9,000 fish annually. NMFS will continue to monitor and collect data to analyze take levels. NMFS also reaffirmed its prior determination that implementation of the Groundfish FMP is not likely to jeopardize the continued existence of any of the affected ESUs.

Lower Columbia River coho (70 FR 37160, June 28, 2005) were recently listed and Oregon Coastal coho (73 FR 7816, February 11, 2008) were recently relisted as threatened under the ESA. The 1999 biological opinion concluded that the bycatch of salmonids in the Pacific whiting fishery were almost entirely Chinook salmon, with little or no bycatch of coho, chum, sockeye, and steelhead.

The Southern Distinct Population Segment (DPS) of green sturgeon was listed as threatened under the ESA (71 FR 17757, April 7, 2006). The southern DPS of Pacific eulachon was listed as threatened on March 18, 2010, under the ESA (75 FR 13012). NMFS has reinitiated consultation on the fishery, including impacts on green sturgeon, eulachon, marine mammals, and turtles. After reviewing the available information, NMFS has concluded that, consistent with Sections 7(a)(2) and 7(d) of the ESA, the proposed action would not jeopardize any listed species, would not adversely modify any designated critical habitat, and would not result in any irreversible or irretrievable commitment of resources that would have the effect of foreclosing the formulation or implementation of any reasonable and prudent alternative measures.