The U.S. Office of Personnel Management is amending subpart C of part 293 of title 5, Code of Federal Regulations (Personnel Records) to clarify agency responsibilities concerning Official Personnel Folders (OPFs) of current and former Federal employees in the civil service.

Generally, OPM and the other agencies share responsibility for personnel management in the Executive Branch. OPM functions as a government-wide regulator of personnel management. Agencies, on the other hand, are required to maintain and establish their own personnel office within their agency, and the head of each agency, in accordance with applicable statutes, Executive orders and rules, is responsible for personnel management in their agency. The OPF is a critical tool for personnel management. An OPF is a file containing records reflecting an employee's appointment, employment history and benefits information. OPFs contain long-term records that serve to protect the legal and financial rights of the Government and the employee. Pursuant to Executive Order 12107 (December 28, 1978), OPFs are designated as records of OPM, and the President has delegated authority to the Director of OPM to regulate the establishment, maintenance, and transfer of OPFs.

Although OPFs are designated as records of OPM, agencies have significant responsibilities related to OPFs. OPM regulations require agencies to establish OPFs for most employees. OPM's regulations also specify the content of the OPF, which each agency must maintain. Moreover, agencies are generally required to retain the OPF of a separated employee for 30 working days after separation and to transfer that OPF thereafter to the National Personnel Records Center (NPRC). Further, if an employee's OPF is lost or destroyed, the current (or former) employing agency must reconstruct the OPF.

The transfer of an OPF from the NPRC can be the result of an agency initially submitting the OPF to the NPRC improperly, an activity such as amending or correcting the OPF of a current or former employee, the rehiring of a former Federal employee, or a need to produce the document for litigation. The return of the OPF to the NPRC produces a subsequent and additional transfer expense.

The purpose of this rule is to clarify the roles and responsibilities of OPM and other agencies with respect to OPFs by articulating, delineating, and differentiating the responsibilities of OPM as regulator of OPFs and the responsibilities of other agencies, who have a variety of reasons to use OPFs in connection with the appointment and employment of Federal employees. To clarify these roles and responsibilities, this rule makes the following changes to subpart C of 5 CFR part 293:

• In § 293.301, inserting language excluding agencies from the application of subpart C when they are exempt from OPM recordkeeping requirements by statute, regulation, or formal agreement with OPM. Further, inserting a sentence stating that OPM's Guide to Personnel Recordkeeping will list the excluded agencies. These changes clarify which agencies are or are not bound by subpart C.

• In § 293.303, amending the heading from “Ownership of the folder” to “The roles of the Office, agencies, and custodians” and revising and clarifying the text of the section. These changes clarify the intent of the section.

• In § 293.303, removing the phrase “under the jurisdiction and control of'” to eliminate confusion about the meaning of this clause. Also, adding the phrase “each former employee” to recognize that this section also covers OPFs of former employees. The remaining language has been designated paragraph (a).

• In § 293.303, adding paragraph (b) to clarify the role and responsibilities of OPM; paragraph (c) to clarify the roles and responsibilities of agencies, generally; paragraph (d)(1) to establish the definition of the term “custodian” for purposes of this section; and paragraphs (d)(2) through (d)(5) to establish the roles and responsibilities of custodians.

• In § 293.303. adding paragraph (e) to clarify that agencies and custodians will carry out their roles and responsibilities for OPFs pursuant to this subpart and OPM's Guide to Personnel Recordkeeping.

• In § 293.307, adding paragraphs (c) and (d) to specify that agencies are responsible for costs associated with transferring OPFs to and from the NPRC.

OPM published its proposed rule with request for comments on January 19, 2010. 75 FR 2821 (Jan. 19, 2010). OPM received comments from two individuals, four different components of the Department of Defense, and two other Federal agencies, including the NPRC. Below is a summary of the comments received, which is followed by OPM's responses.

Two commenters opposed the amendment to 5 CFR 293.307, which adds paragraphs (c) and (d) to clarify the OPF-related costs for which agencies are responsible, because the commenters believe these provisions will shift the cost of storing OPFs with NARA to other agencies.

OPM believes these commenters misconstrued the rule. Nothing in this rule shifts the cost of storing OPFs with NARA from OPM to other agencies. Under the rule, OPM remains responsible for the cost of storing OPFs. In addition, OPM remains responsible under the Privacy Act for all costs associated with responding to a former employee's request for a review or a copy of her or his OPF, and under the Freedom of Information Act for responses to third party (public) requests for information from OPFs (although, as noted below, OPM may seek reimbursement from such third-party requesters). The change made by the rule is that transfer of custody for storage of OPFs is now predicated on OPFs being accepted for storage by NARA.

Another commenter requested that the rule specify the NARA actual costs that OPM will be responsible for and those that will be the responsibility of the other agencies for storage, transfers, references, interfile, and disposition (destruction or accessioning into the Archives of the United States) of OPFs.

As clarified by the rule, agencies will be responsible for the costs associated with transferring OPFs to NPRC, requesting OPFs from NPRC, and for any other service initiated by an agency. OPM will be responsible for the storage charges of OPFs that have been accepted by the NPRC and placed into storage, and for all charges associated with responding to requests from former employees and the public under the Privacy Act and Freedom of Information Act (subject to possible reimbursement from such third-party requesters). OPM will be charged in the same manner as other agencies for the OPFs of its own current and former employees.

OPM has chosen not to specify in the rule the actual costs charged by the NPRC for services because such costs will be established pursuant to the NPRC's revolving fund authority. OPM has an interagency agreement with the NPRC that specifies the services provided to OPM and the corresponding costs. This interagency agreement is regularly updated.

A commenter stated that this rule would allow OPM to charge another agency for costs associated with a request by a former employee for a copy of the employee's OPF or a request for OPF information by a member of the public.

OPM may well seek to recover the costs of some of these requests from third-party requesters (pursuant to FOIA, for example), but whether or not OPM undertakes that sort of cost-recovery, this rule is not intended to enable OPM to shift the costs of such third-party requests to another agency and will not effectuate such a cost-shifting. Once an OPF has been accepted by the NPRC, OPM becomes the custodian until and unless another agency requests the OPF. OPM will not charge agencies for the costs associated with responding to requests from former Federal employees or members of the public for records currently stored at the NPRC.

A commenter stated that the rule would allow OPM to charge other agencies that are requesting OPF information.

OPM believes that the commenter has slightly confused requesting information from an OPF and requesting the actual OPF. Currently, the NPRC does not charge for OPF information. For requests from agencies to the NPRC for an actual OPF, however, the NPRC charges a handling fee associated with transferring the file to and receiving it from an agency. Fees charged by the NPRC associated with handling OPFs as part of transferring OPFs will now be the responsibility of the agencies under this rule.

Several commenters expressed concern that the amended rule may be construed to include electronic OPFs (eOPFs). One commenter mentioned that the migration to eOPF was required by 2012 and recommended that OPM not implement the changes to this rule until that time to alleviate any financial impact on agencies. Another commenter stated that the OPM's Enterprise Human Resource Integration (EHRI) had already factored NPRC transactions into maintenance costs for eOPFs. Three commenters recommended that the rule specify it applies only to paper OPFs and/or include a statement excluding eOPFs.

OPM agrees that a distinction should be made between the roles and responsibilities for paper OPFs and eOPFs. OPM has added language to § 293.303 to distinguish between paper OPFs and eOPFs. OPM acknowledges that it has already factored NPRC transactions into maintenance costs for eOPFs with respect to EHRI.

A commenter wanted to know what data calls were issued to collect information in preparation for this regulation and which specific agencies provided feedback to OPM in this process. The same commenter wanted OPM to provide the cost studies, statistical analysis, and raw data used to justify the rule and the human capital cost increase to implement and track agency transactions.

OPM did not call for data from other agencies or conduct cost studies and statistical analysis in preparing this rule. The purpose of the rule is to correct a misunderstanding of the roles and responsibilities of OPM and the other agencies with respect to the transfer of OPFs to NPRC. This misunderstanding has resulted in agencies avoiding part of the cost of administering their own responsibilities with respect to OPFs. The commenter appears to misconstrue the rule as simply seeking a more beneficial cost arrangement for OPM; instead, the purpose is to differentiate the activities that are properly considered functions of agency human resources offices and thus ensure that an agency that initiates the transfer of an OPF assumes the costs associated with that action (just as that agency bears the costs associated with establishing and maintaining OPFs for its appointees and employees).

A commenter asked that OPM address how this rule will affect Employee Medical Folders (EMFs) and Employee Performance Files (EPFs).

EMFs contain information determined by an agency's medical staff to be occupational medical records, which can follow the employee from agency to agency or be sent to NPRC if the employee separates from Federal service. The rule for disposition of EMFs, 5 CFR 293.510, which is not amended by this rule, instructs agencies to follow the same procedures established for disposition of OPFs, 5 CFR 293.307. Because this rule amends 5 CFR 293.307 to clarify that agencies are responsible for the costs associated with the transfer of OPFs to NPRC, the same requirements will apply to transferring EMFs to NPRC. As for EPFs, there is no separate cost associated with transferring EPFs because any information transferred is contained in the OPF as part of the left (temporary) side of the OPF (See 5 CFR 293.402 and 5 CFR 293.404).

Three commentators suggested that this rule might cause other agencies to amend their records management policies in order to charge agencies for use of their records.

OPM is not in a position to predict what other agencies might do in terms of their own records management policies in response to this rule or to comment on the position other agencies adopt or may adopt regarding records for which they are the custodian but that are not maintained in the OPF.

One commenter stated that the existing title of § 293.303, “Ownership of the Folder,” is not confusing and, therefore, need not be changed.

OPM disagrees with the commenter. In OPM's experience, the use of the word “ownership” in the title of § 293.303 has resulted in disagreements over the meaning and scope of the word. In particular, it has created ambiguity in delineating the responsibilities of OPM and the other agencies with regard to the cost of transferring OPFs to and from the NPRC. The new title for § 293.303, “The roles and responsibilities of the Office, agencies, and custodians,” provides a clearer statement of the purpose of the section and its new content.

Four commenters submitted comments about adding a definition of the term “custodian” to § 293.102. Two commenters sought general clarification about the definition. A commenter contended that the definition was beyond OPM's authority under Executive Order 12107 and inconsistent with prior use of the term in OPM's Guide to Personnel Recordkeeping. Another commenter wanted the definition to be revised in order to make clear that the NPRC, although in physical possession of OPFs, is not responsible for the cost associated with the maintenance and disposition of the OPF once it arrives at NPRC.

Rather than amending § 293.102, the definitions section for all of 5 CFR part 293, OPM has decided to include the definition solely in the regulations for OPFs by amending § 293.303. In this rule, § 293.303 replaces the “jurisdiction and control” language that was introduced in 1954 by Executive Order 10561 (September 13, 1954) and included in Civil Service Commission regulations implementing that order (19 FR 6899 (October 28, 1954)), with the concept of custodian in order to more clearly articulate the responsibilities of OPM and the other agencies. Although Executive Order 10561 was revoked by Executive Order 12107 (December 28, 1978), OPM continued to use the “jurisdiction and control” language that was borrowed from it. The notion of jurisdiction and control has led to confusion about the delineation of responsibilities and costs associated with carrying out those responsibilities.

The purpose of this concept was to recognize that although other agencies are often in possession of the OPFs, the authority for the establishment, maintenance and transfer of them resides with OPM. The same purpose is reflected in this rule's revision in § 293.303 by creating paragraph (a), which keeps much of the original language from the section but eliminates the phrase “jurisdiction and control.” Further, this rule revises § 293.303 by introducing several additional paragraphs that define the term custodian and specify the responsibilities of OPM, agencies, and custodians pertaining to establishing, maintaining, and transferring OPFs.

Executive Order 12107 grants OPM authority to promulgate regulations pertaining to the establishment, maintenance, and transfer of OPFs. Defining a term to be used by OPM within those regulations is consistent with this authority. Moreover, regulating the activities and responsibilities of agencies in physical possession of OPFs is inherently part of the maintenance and transfer of OPFs.

OPM does not agree that the definition of custodian contained in this rule is inconsistent with OPM's use of the term in the Guide to Personnel Recordkeeping. However, to the extent that an inconsistency arises, the definition of custodian in this rule is controlling for purpose of implementing these regulations. The Guide to Personnel Recordkeeping will be revised to resolve any inconsistency that comes to OPM's attention.

Instead of revising the definition of custodian to ensure that the NPRC is not responsible for costs associated with the maintenance and disposition of OPFs once they arrive at NPRC, OPM has added paragraph (d)(5) to § 293.303 to clarify that OPM is the custodian once the NPRC approves the transfer of an OPF from an agency.

Three commenters noted that the proposed definition of custodian seemed to indicate that agencies no longer have responsibility for the cost of transferring OPFs to NPRC after an individual separates from Federal service because an agency is the legal custodian of an employee's OPF during the period of the employee's employment at that agency. The argument was that because agencies are required to hold the folders for a minimum of 30 days after an employee separates, and because the agency is responsible only during the period of employment, the agency is not responsible for transfer costs.

OPM agrees that an agency is the custodian during the period of an employee's employment. An agency remains the custodian, however, even after an employee separates, while it performs its personnel management responsibilities, which typically take 30 days. Agencies complete actions such as resignation, termination, or retirement after an employee separates from the losing agency. In addition, in the case of some actions outlined in Chapter 7 of the Guide to Personnel Recordkeeping, the OPF may remain in the possession of an agency for longer than 30 days. In order to accomplish these vital actions; ensure the accuracy, completeness, necessity, timeliness, and relevance of the actions; and ensure the fairness of decisions involving the subject of the OPF, as required by 5 U.S.C. 552a(e)(1), the folder remains in the physical possession of the agency for some time after separation. To clarify when an agency is no longer the custodian of an OPF, the rule amends § 293.303 by adding paragraphs (d)(4) and (d)(5).

Three commenters suggested that the rule would result in an augmentation of OPM's appropriation because OPM receives appropriated funds for reimbursing the NPRC for costs associated with OPFs.

Although OPFs are designated as records of OPM, some of the administrative expenses associated with OPFs flow logically from each agency's requirements of maintaining its own workforce, including compliance with OPM's regulations. Indeed, having OPFs is part and parcel of having employees. Each agency is responsible for its own personnel management, and establishing, maintaining, and transferring OPFs are necessary functions of each agency's personnel office. This includes remedying OPFs submitted improperly, as well as amending or correcting OPFs of current and former employees, rehiring former Federal employees, and utilizing OPFs in litigation. Therefore, each agency's general operating appropriation is available to reimburse the NPRC for expenses related to these functions. At the same time, OPM's appropriation is available for expenses necessary to carry out OPM's Governmentwide functions regarding OPFs, such as storage of OPFs and servicing OPFs that have been transferred and accepted by the NPRC. OPM is also responsible for expenses related to its own employees' OPFs.

Prior to Fiscal Year (FY) 2000, NARA financed the activities of the NPRC related to OPFs out of its own general operating appropriation. During this period, the NPRC paid the costs of transferring, storing, and providing other services associated with OPFs out of an appropriation to NPRC for this purpose. OPM did not reimburse the NPRC for costs associated with OPFs. (And agencies were—and still are—responsible for costs associated with establishing and maintaining OPFs for their employees).

Beginning with FY 2000, however, Congress changed the financing of the NPRC activities by establishing the Records Center Revolving Fund (Fund) and authorizing the NPRC to credit the Fund with fees charged to other agencies (Pub. L. 106-58, 113 Stat. 430, 460-61 (Sept. 29, 1999), codified at 44 U.S.C. 2901 note).

Currently, each agency incurs the cost of establishing OPFs for its own employees as a necessary expense of maintaining its workforce. Similarly, each agency has incurred costs associated with maintaining OPFs for its own employees. Agencies do not seek, or receive, reimbursement from OPM for these costs. Rather, agencies understand that they are required by regulation to perform these tasks and incur costs associated with fulfilling their responsibilities as employing agencies. However, because of the confusion created by the title of § 293.303, “Ownership of the Folder,” and its mention of “jurisdiction and control” of OPFs, the costs of transferring OPFs to and from the NPRC have been avoided by the other agencies. By specifically providing that the costs associated with transferring OPFs are the responsibility of the transferring agencies, OPM has now eliminated this confusion.

This rule reflects OPM's position that services the NPRC provides to agencies transferring OPFs to the NPRC are not services that benefit OPM, but rather are services that allow agencies to fulfill their responsibilities as employers (and under OPM's regulations). Similarly, the services the NPRC provides to agencies initiating requests for OPFs from the NPRC are also services that benefit agencies, not OPM. Although OPM has incurred these costs since FY 2000, it would not be appropriate to continue such an arrangement now that the roles and responsibilities of OPM and the other agencies have been clarified.

A commenter stated that the implementation of this rule would have a negative impact on the NPRC's billing and business practices because it will have to initiate agreements with each agency for billing and services and it may be necessary to charge OPM by folder rather than by cubic foot.

OPM appreciates the concern for the potential impact this rule may have for the NPRC. However, OPM does not control the NPRC's billing and business practices, or how it will adjust to this rule. As noted previously, this rule is being adopted in order to rectify the ambiguity of which responsibilities are OPM's and which are responsibilities of the other agencies. Resolving this ambiguity ultimately should help the NPRC determine the appropriate billing and business practices to adopt and implement.

While OPM was preparing the rule for publication and in discussions with the NPRC about the interagency agreement that governs the operating relationship between the NPRC and OPM, the NPRC brought to OPM's attention the potential for § 293.301, the applicability provision for subpart C (OPF regulations), to be read more broadly than OPM intended.

Section 293.301 states that the OPF regulations apply to “each executive department and independent establishment of the Federal Government, each corporation wholly owned or controlled by the United States, and with respect to positions subject to civil service rules and regulations, the legislative and judicial branches of the Federal Government.” Prior to 1985, § 293.301 included a clause that exempted agencies from the OPF regulations if they were “specifically excluded from [OPM] recordkeeping requirements by statute, Office regulation or formal agreement between the Office and the agency” (5 CFR 293.301 (1985)).

However, the exclusionary language was subsequently removed from § 293.301. On October 19, 1982, OPM issued a notice in the Federal Register proposing to amend part 293 in order to move the guidelines on accessing OPFs from 5 CFR part 294 to 5 CFR part 293 (See 47 FR 46513 (Oct. 19, 1982)). As part of this proposed amendment, for reasons not stated, OPM amended § 293.301 by removing the clause exempting agencies specifically excluded from OPM's recordkeeping requirements. The rule became final on January 24, 1985, with no mention in the final notice of why the exclusionary language was removed (See 50 FR 3307 (Jan. 24, 1985)).

Removal of the exclusionary language was probably due to the fact that § 293.101(b) of 5 CFR 293, subpart A (Basic Policies on Maintenance of Personnel Records) contains similar language that may have been considered applicable to subpart C. Section 293.101(b) makes the basic policies on maintenance of personnel records applicable “to any department or independent establishment in the Executive Branch of the Federal Government * * * except those specifically excluded from Office recordkeeping requirements by statute, Office regulation, or formal agreement between the Office and that agency.” However, as stated in § 293.101(b), it applies only to subpart A, not subpart C. Therefore, the exclusionary language of § 293.101(b), as written, does not affect § 293.301. The current language of § 293.301 appears to apply to agencies regardless of whether they are subject to OPM's basic policies on maintenance of personnel records.

At any rate, in practice, OPM has continued to consider agencies that are specifically excluded from OPM recordkeeping requirements by statute, regulation or formal agreements between OPM and other agencies ( i.e., exempt from subpart A) as exempt from OPM's OPF regulations ( i.e., exempt from subpart C). This practice is reflected in Chapter 2, Section 2-A of OPM's Guide to Personnel Recordkeeping, which is entitled “Employment Systems Outside the Office of Personnel Management's Recordkeeping Authority.”

After consulting with the NPRC, OPM has addressed the potential to read § 293.301 more broadly then intended by reinserting the original, pre-1985 exclusionary language at the end of the current § 293.301. Moreover, OPM has added an additional sentence following this language that identifies OPM's Guide to Personnel Recordkeeping as the document where excluded agencies will be listed, which will allow for more efficient updates and revisions, rather than listing the agencies in the rule.

A commenter requested the rule have an established effective date that is far enough in the future to allow agencies' human resource offices and the NPRC to prepare for the changes made by this rule.

The proposed rule was published on January 19, 2010. Since that time, personnel offices have been on notice of the impending changes made by this rule and the NPRC has implemented a system that will permit it to bill individual agencies for the costs they incur. OPM is confident that agencies and the NPRC are capable of meeting the requirements of this rule. Therefore, the effective date of these changes will be 30 days from the date of publication of this rule in the Federal Register .

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they would apply only to Federal agencies and employees.

The Office of Management and Budget has reviewed this rule in accordance with E.O. 13563 and 12866.

Accordingly, OPM amends 5 CFR part 293, subpart C as follows:

On April 9, 2010, the U.S. Office of Personnel Management (OPM) issued proposed regulations at 75 FR 18133 to implement the decision in Fathauer v. United States, 566 F.3d 1352 (Fed. Cir. 2009), in which the court determined that part-time employees are covered under the Sunday premium pay statute at 5 U.S.C. 5546(a).

Under the Fathauer decision, the United States Court of Appeals for the Federal Circuit held that the definition of “employee” in 5 U.S.C. 5546(a) is unambiguous under the plain language of the statute and concluded that part-time employees are covered under the Sunday premium pay statute at 5 U.S.C. 5546(a). Consequently, we have revised the Sunday premium pay regulations to provide that part-time employees are entitled to premium pay for Sunday work.

OPM issued a compensation policy memorandum (CPM-2009-21, December 8, 2009) to inform departments and agencies of the Fathauer decision and to provide guidance for processing administrative claims for back pay. The guidance covers General Schedule and other employees covered by 5 U.S.C. 5546(a) and 5 CFR 550.171(a) and prevailing rate employees (wage grade employees) covered by 5 U.S.C. 5544(a) and 5 CFR 532.509. Based on the Fathauer decision, eligible part-time employees are entitled to Sunday premium pay under 5 U.S.C. 5546(a), effective as of May 26, 2009.

OPM's final regulations amend §§ 550.103 and 550.171(a) to remove references to “full-time” employee, which eliminate the restriction on the payment of Sunday premium pay to full-time employees only. The final regulations clarify, in accordance with the Fathauer decision, that part-time employees who are regularly scheduled to perform work on a Sunday are entitled to Sunday premium pay for the non-overtime hours worked. However, intermittent employees will continue to be excluded from earning Sunday premium pay because of the nature of their appointment and irregular work schedule. Sunday premium pay may be paid only to full-time and part-time employees who have Sundays as part of their non-overtime regularly scheduled tour of duty.

OPM applied the reasoning in the Fathauer decision to determine that part-time prevailing rate employees are covered under the Sunday premium pay provisions of 5 U.S.C. 5544(a) (also effective as of May 26, 2009). While OPM's regulation at § 532.509 does not reference either part-time or full-time employees, we are making a clarifying amendment to this section. Currently § 532.509 states that a wage employee whose regular work schedule includes an 8-hour period of service which is not overtime work, a part of which is on Sunday, is entitled to additional pay under the provisions of 5 U.S.C. 5544. We are amending § 532.509 to clarify that a wage employee is entitled to Sunday pay for a period of service, a part of which is on Sunday, of up to 8 hours. This clarification is based on a Comptroller General opinion (46 Comp. Gen. 337 (1966)), that the period of service entitling an employee to Sunday premium pay may be less than 8 hours.

The 60-day comment period for the proposed regulations ended on June 8, 2010. We received five comments in response to the proposed regulations, one from a national union organization and four from individual commenters. As explained below, OPM is adopting the proposed regulations as final regulations without further changes.

Two of the commenters questioned the use of Sunday premium pay and questioned the cost to taxpayers. These two comments are beyond the scope of this regulation. Sunday premium pay is authorized by statute. We are merely altering the Sunday premium pay regulations to ensure part-time employees are not excluded from receiving this entitlement pursuant to the statute at 5 U.S.C. 5546(a), consistent with a decision of the United States Court of Appeals for the Federal Circuit.

The union organization supported the proposed rules, but expressed concern that agencies may not notify employees in a timely manner of their right to file administrative pay claims. The union urged OPM to take more aggressive action by requiring agencies to advise part-time employees promptly of their right to file claims. While agencies are responsible for notifying their employees regarding actions that affect them, OPM took a proactive role in advising agencies in CPM 2009-21 that they should inform employees of the holding by the Court of Appeals in order to give notice to potential claimants. OPM provided thorough guidance in its memorandum and advised on the effective date of the decision and the time limitations for back pay claims permitted by the Barring Act of 1940, and noted that agencies could use the memorandum to inform employees of the Fathauer decision. OPM also provided notification to employees through its Web site and list server, published the proposed Sunday premium pay rule changes in the Federal Register as official notice to the public, and required agencies to post a notice of the rule change in a prominent place for employees to view.

The union organization also believes that OPM should issue regulations directing agencies to pay employees Sunday premium pay retroactive to May 26, 2009, without the need to file an administrative claim. It asserts that no administrative claim is necessary, which it believes would be consistent with the approach OPM used in issuing regulations to implement agency reimbursement provisions of Title II of the Notification and Federal Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act). However, Title II of the No FEAR Act contains provisions for agency reimbursement of the Judgment Fund for payment made to employees because of violations of antidiscrimination and whistleblower protection laws, and/or retaliation claims arising from the assertion of rights under those laws. Unlike the compensation claims process, the No FEAR reimbursement rules are not subject to the provisions of the Barring Act or the Back Pay Act of 1966 (as amended) and apply specifically to one Government agency reimbursing another. Therefore, the administrative claims process is the appropriate means for employees to recover any unpaid Sunday premium pay owed them as a result of the Fathauer decision.

One commenter thought OPM diverged from the analysis of the Fathauer decision by limiting Sunday premium pay only to full-time and part-time employees in which Sundays are part of their regularly scheduled tour of duty. The commenter asserted that the proposed regulations do not reflect the Court of Appeals conclusions regarding the definition of “employee,” ( i.e., generally, “those who work for pay”), and “full-time and part-time” workers do not encompass all types of employees who should be eligible to earn Sunday premium pay. The commenter also stated that the statutory requirement in which an employee performs work during a “regularly scheduled” period of service is unduly restrictive.

Another commenter also recommended that intermittent employees should receive Sunday premium pay. The individual reasoned that since intermittent employees may earn overtime pay under 5 U.S.C. 5542(a), they should also be permitted to earn Sunday premium pay. The commenter further noted that Sunday work imposes an inconvenience on all employees, and referred to the Court of Appeals conclusion regarding the definition of an “employee.”

OPM disagrees with the commenters' recommendations. Employees, within the meaning of 5 U.S.C. 5546(a), are entitled to Sunday premium pay when they work a “regularly scheduled” 8 hour period of service which is not overtime work, a part of which falls on Sunday. OPM, by regulation, has defined “intermittent employment” as “employment without a regularly scheduled tour of duty.” (See 5 CFR 340.401(b)). Accordingly, employees who are correctly classified as intermittent employees may not receive Sunday premium pay because, by definition, they do not perform regularly scheduled work.

The Office of Management and Budget has reviewed this rule in accordance with E.O. 13563 and 12866.

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will apply only to Federal agencies and employees.

Accordingly, OPM amends 5 CFR parts 532 and 550 as follows:

OPM has published a notice in the Federal Register at 76 FR 32242 (June 3, 2011) to revise the normal cost percentages under the Federal Employees' Retirement System (FERS) Act of 1986, Public Law 99-335, 100 Stat. 514, as amended, based on economic assumptions, new demographic factors and mortality assumptions adopted by the Board of Actuaries of the Civil Service Retirement System. By statute under 5 U.S.C. 8461(i), the demographic factors, economic and mortality assumptions require corresponding changes in factors used to produce actuarially equivalent benefits when required by the FERS Act.

Section 843.309 of title 5, Code of Federal Regulations, regulates the payment of the basic employee death benefit. Under 5 U.S.C. 8442(b), the basic employee death benefit may be paid as a lump sum or as an equivalent benefit in 36 installments. These rules amend 5 CFR 843.309(b)(2) to conform the factor used to convert the lump sum to 36-installment payments with the revised economic assumptions.

Section 843.311 of title 5, Code of Federal Regulations, regulates the benefits for the survivors of separated employees under 5 U.S.C. 8442(c). This section provides a choice of benefits for eligible current and former spouses. If the current or former spouse is the person entitled to the unexpended balance under the order of precedence under 5 U.S.C. 8424, he or she may elect to receive the unexpended balance instead of an annuity.

Alternatively, an eligible current or former spouse may elect to receive an annuity commencing on the day after the employee's death or on the deceased separated employee's 62nd birthday. If the annuity commences on the deceased separated employee's 62nd birthday, the annuity will equal 50 percent of the annuity that the separated employee would have received had he or she attained age 62. If the current or former spouse elects the earlier commencing date, the annuity is reduced using the factors in Appendix A to subpart C of part 843 to make the annuity actuarially equivalent to the present value of the annuity that the spouse or former spouse would have received if the annuity had commenced on the retiree's 62nd birthday. These rules amend that appendix to conform to the revised economic assumptions.

Under section 553(b)(B) and (d)(3) of title 5, United States Code, I find that good reason exists for waiving the general notice of proposed rulemaking and for making these amendments effective in less than 30 days. The amendments made by this rule are statutorily mandated as a result of changes in economic assumptions that were published on June 3, 2011. Providing a comment period on the result of mathematical computations resulting from the changed economic assumptions is unnecessary and, to the extent that it would delay benefit payments, is contrary to the public interest.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order (E.O.) 12866, as amended by E.O. 13258 and E.O. 13422.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because the regulation will only affect retirement payments to surviving current and former spouses of former employees and Members who separated from Federal service with title to a deferred annuity.

For the reasons stated in the preamble, the Office of Personnel Management amends 5 CFR part 843 as follows:

Background

The Asian longhorned beetle (ALB, Anoplophora glabripennis ), an insect native to China and Korea is a destructive pest of hardwood trees. It attacks many healthy hardwood trees, including maple, horse chestnut, birch, poplar, willow, and elm. In addition, nursery stock, logs, green lumber, firewood, stumps, roots, branches, and wood debris of half an inch or more in diameter are subject to infestation. Immature beetles bore into tree trunks and branches of a host tree, causing heavy sap flow from wounds and sawdust accumulation at the tree base, eventually killing the tree. They feed on, and over-winter in, the interiors of trees. Adult beetles emerge in the spring and summer months from round holes approximately three-eighths of an inch in diameter (about the size of a dime) that they bore through branches and trunks of trees. After emerging, adult beetles feed for 10 to 15 days and then mate. Adult females then lay eggs in oviposition sites that they make on the branches of trees. A new generation of ALB is produced each year. If this pest moves into the hardwood forests of the United States, the nursery, maple syrup, and forest product industries could experience severe economic losses. In addition, urban and forest ALB infestations will result in environmental damage, aesthetic deterioration, and a reduction of public enjoyment of recreational spaces.

The regulations in 7 CFR 301.51-1 through 301.51-9 restrict the interstate movement of regulated articles from quarantined areas to prevent the artificial spread of ALB to noninfested areas of the United States. Surveys conducted in Massachusetts by inspectors of the Animal and Plant Health Inspection Service (APHIS) have revealed that infestations of ALB have occurred outside the existing quarantined area in Worcester County, and in areas in Suffolk and Norfolk Counties. Officials of the U.S. Department of Agriculture and officials of State, county, and city agencies in Massachusetts are conducting intensive survey and eradication programs in the infested areas. The State of Massachusetts has quarantined the infested areas and is restricting the intrastate movement of regulated articles from the quarantined areas to prevent the further spread of ALB within the State. However, Federal regulations are necessary to restrict the interstate movement of regulated articles from the quarantined area to prevent the spread of ALB to other States and other countries.

The regulations in § 301.51-3(a) provide that the Administrator of APHIS will list as a quarantined area each State, or each portion of a State in which ALB has been found by an inspector, where the Administrator has reason to believe that ALB is present, or where the Administrator considers regulation necessary because of its inseparability for quarantine enforcement purposes from localities where ALB has been found. Less than an entire State will be quarantined only if (1) the Administrator determines that the State has adopted and is enforcing restrictions on the intrastate movement of regulated articles that are equivalent to those imposed by the regulations on the interstate movement of regulated articles and (2) the designation of less than an entire State as a quarantined area will be adequate to prevent the artificial spread of ALB. In accordance with these criteria and the recent ALB findings described above, we are amending the list of quarantined areas in § 301.51-3(c) to expand the quarantined area in Worcester County and to include portions of Suffolk and Norfolk Counties. With these changes to the quarantined areas, the total square mileage of the quarantined areas in Worcester County is 98 square miles, with 22 square miles added in this expansion of the quarantined area; in Suffolk and Norfolk Counties, the total square mileage of the quarantined area is 10 square miles. These updated quarantined areas are described in the regulatory text at the end of this document.

Section 301.51-2 of the regulations designates certain items as regulated articles. Regulated articles may not be moved interstate from quarantined areas except in accordance with the conditions specified in §§ 301.51-4 through 301.51-9 of the regulations. Regulated articles listed in § 301.51-2(a) have included green lumber and other material living, dead, cut, or fallen, inclusive of nursery stock, logs, stumps, roots, branches, and debris of half an inch or more in diameter of the following genera: Acer (maple), Aesculus (horse chestnut), Albizia (mimosa), Betula (birch), Celtis (hackberry), Cercidiphyllum (katsura), Fraxinus (ash), Platanus (sycamore), Populus (poplar), Salix (willow), Sorbus (mountain ash), and Ulmus (elm). This list of genera was based on scientific literature provided by government officials, scientists, and government and individual researchers from China as well as survey information collected in the United States since the time of discovery of the pest.

Based on additional survey experience and research, we are amending the list of regulated articles by adding Koelreuteria spp. (golden rain tree). This action is necessary because studies conducted in China by APHIS scientists have found ALB completing a full life cycle in trees of this genus in the environment.

This rulemaking is necessary on an emergency basis to prevent the artificial spread of ALB to noninfested areas of the United States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the Federal Register .

We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the Federal Register . The document will include a discussion of any comments we receive and any amendments we are making to the rule.

This interim rule is subject to Executive Order 12866. However, for this action, the Office of Management and Budget has waived its review under Executive Order 12866.

We have prepared an economic analysis for this action. The action identifies nurseries; site developers, excavators, or construction companies; tree service companies or landscapers; firewood dealers; municipal departments; and facilities having grounds-keeping staffs, such as schools, golf courses, and apartment complexes as the small entities most likely to be affected by this action and considers the costs associated with complying with the inspection and other requirements imposed by the regulations on the interstate movement of regulated articles from quarantined areas. Based on the information presented in the analysis, we expect that affected entities would not experience any additional compliance costs as a result of this rule because a State-imposed quarantine is already in place that applies the same movement restrictions and inspection requirements. We invite comment on our economic analysis, which is posted with this interim rule on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov) and may be obtained from the person listed under FOR FURTHER INFORMATION CONTACT .

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

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

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

Accordingly, we are amending 7 CFR part 301 as follows:

Background

European larch canker (ELC), Lachnellula willkommi (Dasycypha), is a serious plant disease caused by a fungus that can kill mature and immature species of the genus Larix (larch) and Pseudolarix (Golden larch). In parts of Europe, ELC has eliminated the European larch as a plantation species. ELC was first discovered in the United States in Massachusetts in 1927. It was declared eradicated in 1965, but in 1984, infestations were found in portions of Maine.

Under the regulations in “Subpart-European Larch Canker” (7 CFR 301.91 through 301.91-9, referred to below as the regulations), the Animal and Plant Health Inspection Service (APHIS) restricts the interstate movement of certain regulated articles from regulated areas to prevent the spread of ELC. These regulations, which were established in May 1984, list parts of several counties in Maine as regulated areas. Articles regulated under the subpart include logs, pulpwood, branches, twigs, plants, and scion and other propagative material of Larix or Pseudolarix spp., except seeds. Such articles may be moved interstate from regulated areas only under certificates, limited permits, or compliance agreements. The regulations also include provisions for the issuance of certificates and limited permits, and requirements for compliance agreements, as well as for assembly and inspection of regulated articles.

Maine has State-imposed ELC quarantine requirements that mirror APHIS' requirements. Each year, the Maine Forest Service conducts survey activities in and around the regulated areas. Since APHIS established the ELC regulations, Maine's survey data have revealed additional instances of ELC in native forested areas in previously uninfested townships within the regulated area. The State of Maine has confirmed the establishment of an intrastate quarantine for the townships of Beddington, Boothbay, South Bristol, T24 Middle Division Bingham's Penobscot Purchase, and T25 Middle Division Bingham's Penobscot Purchase. These townships have been quarantined either because they have been found to be infested with ELC or because they provide a buffer area between infested and uninfested townships.

In this interim rule, we are adding the above-named townships to our list of ELC-regulated areas in § 301.91-3. This action is necessary to prevent the human-assisted dissemination of ELC, thus safeguarding the Nation's forests, landscapes, and natural resources from this highly destructive pathogen.

Because our list of areas regulated for ELC in § 301.91-3 has not been revised in a number of years, certain additional changes are needed to make it current. We are revising the names of some of the listed jurisdictions to reflect current naming conventions, including the use of abbreviations, for townships in Maine. These naming conventions are also used elsewhere in our regulations, e.g., in the list of areas in Maine regulated for gypsy moth under § 301.45-3. We are also correcting some misspellings in the regulations of the names of townships regulated for ELC. These changes and corrections are intended to prevent any misidentification of, or confusion about, ELC-regulated areas.

This rulemaking is necessary on an emergency basis to prevent the human- assisted spread of ELC to noninfested areas. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the Federal Register .

We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the Federal Register . The document will include a discussion of any comments we receive and any amendments we are making to the rule.

This interim rule is subject to Executive Order 12866. However, for this action, the Office of Management and Budget has waived its review under Executive Order 12866.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities.

Maine has expanded its intrastate ELC quarantine to include the townships of Beddington, Boothbay, South Bristol, T24 Middle Division Bingham's Penobscot Purchase, and T25 Middle Division Bingham's Penobscot Purchase. This interim rule amends our domestic ELC quarantine regulations to include additional those areas in Maine and to correct some misidentifications of previously listed regulated areas.

The only small entities in the newly federally regulated townships that may be affected are forestry operations. The number of these operations in the 5 townships has ranged between 8 and 18 over the past 5 years. It is estimated that the annual value of harvested larch sold from the newly quarantined areas averages about $375. Any potential impact of the rule is further minimized by the opportunity for forestry operations to enter into compliance agreements with lumber mills to process larch from quarantined areas.

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

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

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

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

Accordingly, we are amending 7 CFR part 301 as follows:

Background

The regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-51, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests that are new to or not widely distributed within the United States.

On June 1, 2010, we published in the Federal Register (75 FR 30303-30305, Docket No. APHIS-2010-0002) a proposal  1 to amend the regulations in § 319.56-40 by allowing, under certain conditions, the importation of commercial shipments of peppers from Panama into the United States without treatment. We also proposed to add two additional pests to the list of pests for which inspection is required: Bacterial wilt and tomato severe leaf curl virus. Finally, we proposed removing two pests from the list of pests for which peppers from Central America must be inspected: The banana moth ( Opogona sacchari ) and tomato yellow mosaic virus.

We solicited comments concerning our proposal for 60 days ending August 2, 2010. We received five comments by that date. They were from producers, representatives of State and foreign governments, and private individuals. The issues raised in those comments are discussed below by topic.

Section 319.56-40 requires the national plant protection organizations (NPPOs) of Central American countries exporting peppers to the United States to inspect growing sites or greenhouses for certain pests prior to harvest. We proposed to add Panama to the list of countries eligible to export peppers under these conditions. Among the pests listed in § 319.56-40 are the weevil Faustinus ovatipennis, bacterial wilt, Andean potato mottle virus, Lantana mealybug, Passionvine mealybug, and the rust fungus Puccinia pampeana.

One commenter pointed out that there was no record of the presence of any of these pests in Panama; therefore, the NPPO of Panama should not be required to inspect for them.

Because the pest risk assessment (PRA) completed in relation to the importation of peppers from certain Central American countries was a regional PRA, the pest list includes those 12 pests of quarantine significance present in Central America, including Costa Rica, El Salvador, Guatemala, Honduras, Panama, and Nicaragua. We recognize that not all of the pests listed in the regulations may be present in each of those countries. The systems approach for the importation of peppers from each country includes the submission of a bilateral workplan to the Animal and Plant Health Inspection Service (APHIS) by the NPPO of each exporting country. That workplan will include the specific pests of concern for which inspection will be required as listed by country in the PRA. In this final rule, we are amending paragraphs (a)(2), (b)(3)(v), and (c)(3)(v) of the regulations, which provide for the pre-harvest inspections, to reflect this process.

One of the pests of concern listed in § 319.56-40 is pea leafminer ( Liriomyza huidobrensis ). A commenter suggested that this pest is of particular concern for purposes of potential infestation and detection for several reasons: Larvae in this family are typically not identified beyond the family level, thus leaving them indistinguishable from other pests in this family during early stages of development; the 1.6 mm screening required to be placed across all openings in the pest-exclusionary greenhouses might not be sufficiently small to exclude the insect; and the pea leafminer's early larval stages and associated mines are relatively small, therefore making their potential detection via inspection at origin and destination problematic.

For those varieties of peppers that are listed in the regulations and imported from areas in which Mediterranean fruit fly (Medfly, Ceratitis capitata ) and/or Mexican fruit fly (Mexfly, Anastrepha ludens ) are considered to exist, production sites must consist of pest-exclusionary greenhouses, which must have double self-closing doors and have all other openings and vents covered with 1.6 mm (or less) screening. The screening requirements listed in the regulations are intended only to provide protection from infestation by Medfly or Mexfly. However, the other mitigation measures established in the systems approach provide protection against a number of pests, including pea leafminer. Those measures include pre-harvest inspection, shipping procedures, and port-of-entry inspection, which provide an appropriate cumulative level of protection.

In reference to the commenter's concern about the difficulty of detecting the presence of pea leafminer based on visual inspection, we are confident that pre-harvest inspections coupled with port-of-entry inspections will prove effective. In addition, pea leafminer infestations principally occur in the leaves and not the fruit of the pepper plant, reducing the risk that imported peppers will be infested with pea leafminer. Finally, the systems approach was established in 2004 to allow for the importation of peppers from Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Based on our experience inspecting for pea leafminer in shipments of peppers from those countries, we are confident that we will continue to successfully prevent the entry of any infested shipments.

The regulations require that pepper production sites and shipments be inspected prior to harvest by the NPPO for pests of concern. One commenter wanted to know what sort of training the inspectors in Panama were required to undergo.

APHIS has audited Panama's export program, including its inspector training, and has found it is sufficient to meet the conditions set forth in the systems approach in § 319.56-40. In addition, it should be noted that peppers from Panama will be inspected at the port of entry into the United States, providing a check on the efficacy of the inspection in Panama as well as another layer of phytosanitary protection.

Another commenter opposed the proposal, stating that, since sampling for inspection purposes will not be conducted on all of the peppers in each given shipment, the associated risk of pest entry into the United States is too great.

We disagree. The rate at which sampling is conducted has been determined to detect a 1 to 2 percent level of infestation with a 95 percent rate of confidence. Further, inspection of samples of peppers is only one element of the established systems approach. We are confident that the systems approach in § 319.56-40 will effectively mitigate the risk associated with peppers imported from Panama.

One commenter asked what specific measures would be enacted to ensure that the phytosanitary requirements for shipments of peppers from Panama would be properly monitored and met.

For those areas where Medfly or Mexfly are considered to exist, the systems approach provides that APHIS will maintain oversight of the program by participating in the approval and monitoring of production sites and by reviewing the trapping records that must be maintained for each site. For shipments of peppers from those areas that are free of Medfly or Mexfly, port-of-entry inspections will be conducted. If, through trapping records, site visits, or port-of-entry inspections, we find that any of the required mitigation measures are not being properly administered, we will suspend shipments from the offending sites.

Another commenter observed that the measures established as elements of the systems approach were not individually preventative. An additional commenter stated that APHIS should not allow any commodities to enter the United States without treatment.

Under a systems approach, a set of phytosanitary conditions, at least two of which have an independent effect in mitigating the pest risk associated with the movement of commodities, is specified. Accordingly, each individual measure assigned under a systems approach is designed to work in concert with at least one other element of the systems approach to achieve the appropriate level of phytosanitary security. We are confident that the systems approach in § 319.56-40 will effectively mitigate the risk associated with peppers imported from Panama, as it has for peppers from Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

One commenter, from the Florida Department of Agriculture and Consumer Services, Division of Plant Industry, stated that U.S. stakeholders from those areas potentially affected by any pest or disease outbreak from imported commodities should be invited to participate in site visits prior to the proposal of any rulemakings such as the one finalized by this document.

APHIS is committed to a transparent process and an inclusive role for stakeholders in our risk analysis process. To that end, we are currently considering ways to facilitate further stakeholder involvement, including site visits, during the initial stages of the development of PRAs. However, since this comment relates to the structure of APHIS's overall risk analysis process, and not to the importation of peppers from Panama, it is outside the scope of the current rulemaking.

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

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

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available on the Regulations.gov Web site (see footnote 1 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .

Panama exported an average of about 20 metric tons (MT) of peppers to the United States annually from 1998 to 2001. The United States has not imported peppers from Panama since 2001. In the economic analysis, we model three levels of pepper exports to the United States from Panama, of increasing magnitude: (i) 20 MT; (ii) the maximum annual quantity exported by Panama to all countries in the most recent years it had export data (29 MT); and (iii) 10 times the maximum quantity exported (290 MT). The largest assumed level of U.S. imports is less than 0.02 percent of average annual U.S. consumption. Even when assuming the largest import quantity and no displacement of imports from other countries, the welfare loss for U.S. small-entity producers would be equivalent to less than 0.05 percent of their average revenue. U.S. producers of peppers are predominantly small. Other small entities that could be affected by the rule include fresh pepper importers.

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

This final rule allows peppers to be imported into the United States from Panama. State and local laws and regulations regarding peppers imported under this rule will be preempted while the fruit is in foreign commerce. Fresh fruits and vegetables are generally imported for immediate distribution and sale to the consuming public, and remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. No retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule.

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

Accordingly, we are amending 7 CFR part 319 as follows:

Background

The regulations in 9 CFR part 93 (referred to below as the regulations) prohibit or restrict the importation of certain animals into the United States to prevent the introduction of communicable diseases of livestock and poultry. “Subpart C—Horses,” §§ 93.300 through 93.326, pertains to the importation of horses into the United States. Sections 93.301 and 93.304 of the regulations contain specific provisions for the importation of horses from regions affected with contagious equine metritis (CEM), which is a highly contagious venereal disease of horses and other equines caused by an infection with the bacterium Taylorella equigenitalis.

On March 25, 2011, we published an interim rule in the Federal Register (76 FR 16683-16686, Docket No. APHIS-2008-0112) to amend the regulations regarding the importation of horses from countries affected with CEM by incorporating an additional certification requirement for imported horses 731 days of age or less and adding new testing protocols for test mares and imported stallions and mares more than 731 days of age. The provisions of the interim rule became effective upon publication.

On May 31, 2011, we published a document in the Federal Register (76 FR 31220-31221, Docket No. APHIS-2008-0112) to delay the enforcement of the interim rule until July 25, 2011. This action was taken after a request was made by affected entities to allow them additional time to adjust their operation procedures.

Based on comments received following the March 2011 interim rule, we are considering two changes to the interim rule. The interim rule required that three sets of cultures from imported stallions be collected for the detection of the CEM organism, with negative results obtained from at least two sets prior to test breeding. However, based on the comments received, we are considering amending the requirement so that only one set of cultures would be collected from an imported stallion with negative results prior to test breeding. The purpose of culturing a stallion prior to test breeding is to reduce the risk of infecting a test mare. Therefore, test breeding should not take place until negative culture results have been reported. Under the regulations, a stallion may be released from CEM quarantine only if all cultures and tests of specimens from the mares used for test breeding are negative for CEM and all cultures performed on specimens taken from the stallion are negative for CEM.

The interim rule also required that three sets of cultures be collected from imported mares and test mares with an additional culture sample taken from either the distal cervix or the endometrium. Based on the comments received, we are considering replacing that requirement with a provision that would require a culture to be collected from the distal cervix or the endometrium on the third set of cultures only.

We are reopening the comment period for 15 days to allow additional public comment on the March 2011 interim rule, and we particularly welcome comments on the modifications we are considering to those requirements described above.

Based on our review of the comments received to date, we consider it advisable to delay the enforcement of the interim rule until further notice. This additional time will allow APHIS to consider all comments and make adjustments to the interim rule that may be necessary in order to successfully implement it.

Accordingly, enforcement of the interim rule amending 9 CFR part 93, published at 76 FR 16683-16686 on March 25, 2011, and delayed until July 25, 2011, in a document published at 76 FR 31220-31221 on May 31, 2011, is delayed until further notice.

The regulations in 9 CFR chapter I, subchapter J (parts 160 through 162, referred to below as the regulations), govern the accreditation of veterinarians and the suspension and revocation of such accreditation. These regulations are the foundation for the National Veterinary Accreditation Program (NVAP). Accredited veterinarians are approved by the Administrator of the Animal and Plant Health Inspection Service (APHIS), U.S. Department of Agriculture, to perform certain regulatory tasks to control and prevent the spread of animal diseases throughout the United States and internationally.

On December 9, 2009 (74 FR 64998-65013, Docket No. APHIS-2006-0093), we published a final rule in the Federal Register that amended the regulations to establish two accreditation categories in place of the former single category, to add requirements for supplemental training and renewal of accreditation, and to offer program certifications. The final rule was effective February 1, 2010, a date intended to give us time to prepare to implement the new regulations, which affect about 71,000 veterinarians who are currently accredited.

Section 161.3 of the final rule contained the requirements for supplemental training and renewal of accreditation. Because accredited veterinarians have not previously been required to renew their accreditation or complete supplemental training, we established in paragraph (d) of § 161.3 a process allowing currently accredited veterinarians to determine whether they wished to continue to participate in the NVAP.

Paragraph (d) of § 161.3 states that veterinarians who are accredited as of February 1, 2010, may continue to perform accredited duties between February 1, 2010, and the date of their first renewal. In accordance with paragraph (d), APHIS provided notice for 3 months to accredited veterinarians who were accredited as of February 1, 2010, to notify them that they must elect to participate in the NVAP as a Category I or Category II veterinarian. Paragraph (d) requires veterinarians to elect to continue to participate within 3 months of the end of the notification period, or their accredited status will expire.

Paragraph (d) of § 161.3 goes on to state that when APHIS receives notice from an accredited veterinarian that he or she elects to participate, APHIS will notify the accredited veterinarian of his or her date for first renewal. The accredited veterinarian must then complete all the training requirements for renewal, as described in § 161.3, by his or her first renewal date. The notification of the first renewal date was thus intended to be the means by which APHIS notifies an accredited veterinarian that we have received notice that he or she has elected to participate and can thus continue performing accredited duties.

In a notice published in the Federal Register and effective on September 28, 2010 (75 FR 59605-59606, Docket No. APHIS-2006-0093), we announced that currently accredited veterinarians may continue to perform accredited duties until further notice, even if they have not received a date for their first accreditation renewal from APHIS. We stated that we would also allow currently accredited veterinarians to continue to elect to participate in the NVAP. We took this action because logistical difficulties had prevented us from processing the elections to participate of all the currently accredited veterinarians (over 50,000) who elected to participate. We stated that, when we are closer to reaching the goal of processing those elections, we would publish another document in the Federal Register that would amend § 161.3(d) to indicate the date by which veterinarians must elect to continue to participate in the NVAP.

We have determined that setting a deadline of October 1, 2011, will allow adequate time for currently accredited veterinarians to elect to continue participating, if they wish to do so, and for us to process the elections to participate that we have received to this point and any further elections to participate that may be submitted by that date. Accordingly, this document amends § 161.3(d) to indicate that currently accredited veterinarians must elect to participate by October 1, 2011.

A Web seminar on the revisions to the NVAP and how to elect to participate is available at mms://ocbmtcwmp.usda.gov/content/aphis/aphis21.wmv.

Accordingly, we are amending 9 CFR part 161 as follows:

We are adopting amendments to Rules 12h-3, 12h-6, and 15d-22  1 and Form 15  2 under the Securities Exchange Act of 1934 (“Exchange Act”). 3

Section 942(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”)  4 eliminated the automatic suspension of the duty to file under Section 15(d)  5 of the Exchange Act for asset-backed securities (“ABS”) issuers and granted the Commission the authority to issue rules providing for the suspension or termination of such duty. We proposed amendments on January 6, 2011 to provide for the suspension of reporting obligations for ABS issuers under certain circumstances and to revise our rules in light of the amendment of Exchange Act Section 15(d). 6 In this release, we are adopting the rule amendments with some changes to reflect comments we received on the proposed amendments.

Exchange Act Section 15(d) generally requires an issuer with a registration statement that has become effective pursuant to the Securities Act of 1933  7 (“Securities Act”) to file ongoing Exchange Act reports with the Commission. Prior to enactment of the Act, Exchange Act Section 15(d) provided that for issuers without a class of securities registered under the Exchange Act the duty to file ongoing reports is automatically suspended as to any fiscal year, other than the fiscal year within which the registration statement for the securities became effective, if the securities of each class to which the registration statement relates are held of record by less than 300 persons. As a result, the reporting obligations of ABS issuers, 8 other than those with master trust structures, 9 were generally suspended after the ABS issuer filed one annual report on Form 10-K because the number of record holders was below, often significantly below, the 300 record holder threshold. 10

The Act removed any class of ABS from the automatic suspension provided in Exchange Act Section 15(d) by inserting the phrase, “other than any class of asset-backed securities.” Consequently, ABS issuers no longer automatically suspend reporting under Exchange Act Section 15(d). Instead, the Act granted the Commission authority to “provide for the suspension or termination of the duty to file under this subsection for any class of asset-backed security, on such terms and conditions and for such period or periods as the Commission deems necessary or appropriate in the public interest or for the protection of investors.”  11

We proposed new Exchange Act Rule 15d-22(b) to provide for suspension of the reporting obligations for a given class of ABS pursuant to Exchange Act Section 15(d) under certain limited circumstances. In addition, we proposed to update Exchange Act Rule 15d-22 to indicate when annual and other reports need to be filed and when starting and suspension dates are determined with respect to a takedown.

We received seven comment letters in response to the proposed amendments. 12 These letters came from four professional associations, a law firm, an individual and an institutional investor. We have reviewed and considered all of the comments that we received on the proposed amendments. Most commentators supported the Commission's goal of providing full and transparent disclosure to investors in ABS. Comments on the proposal were mixed. Two commentators supported the proposed standard without revisions. 13 Other commentators suggested revisions to the proposed standard, which are described below. 14 Further, two commentators recommended permitting commercial mortgage-backed securities to suspend reporting after one year. 15 The adopted rules reflect changes made in response to comments. We explain our revisions with respect to each proposed rule amendment in more detail throughout this release.

As indicated above, Exchange Act Section 15(d), as amended by the Act, establishes an ongoing reporting obligation for each class of ABS for which an issuer has filed a registration statement that has become effective pursuant to the Securities Act. Exchange Act Section 15(d) also grants the Commission authority to provide for the suspension or termination of the duty to file. We are adopting amendments with changes made in response to comments to provide limited relief from these reporting obligations in a manner that we believe is appropriate in the public interest and consistent with the protection of investors. In addition, we are adopting rule and form amendments, substantially as proposed, to update our rules relating to ABS takedowns under a shelf registration statement.

In the Proposing Release, we proposed amended Exchange Act Rule 15d-22(b) to provide for suspension of the reporting obligations for a given class of ABS pursuant to Exchange Act Section 15(d) under certain limited circumstances. 16 As revised by the Act, Exchange Act Section 15(d) no longer provides for the automatic suspension of the duty to file periodic and other reports for issuers of a class of ABS. Without action by the Commission, ABS issuers that have filed a registration statement that has become effective pursuant to the Securities Act or that have conducted a takedown off of a shelf registration statement, would be obligated to continue to file such reports for the life of the security.

In the Proposing Release, we noted that post-issuance reporting of information by an ABS issuer provides investors and the market with transparency regarding many aspects of the ongoing performance of the securities and the servicer in complying with servicing criteria and that such transparency is valuable in evaluating transaction performance and making ongoing investment decisions. We also indicated our belief that the benefits of ongoing reporting to investors and the market where there are only affiliated holders of the ABS are limited and would not justify the burden of reporting by those issuers. Consequently, we proposed amended Exchange Act Rule 15d-22(b), which would provide that the reporting obligation regarding any class of ABS is suspended for any fiscal year, other than the fiscal year within which the registration statement became effective, if, at the beginning of the fiscal year there are no longer any securities of such class held by non-affiliates of the depositor that were sold in the registered transaction. We also proposed to amend Form 15 to add a checkbox for ABS issuers to indicate that they are relying on proposed Exchange Act Rule 15d-22(b) to suspend their reporting obligation alerting the market and the Commission of the change in reporting status.

Commentators generally supported an amendment that would provide for the suspension of the reporting obligation for ABS. 17 The commentators expressed varying levels of support for the Commission's proposed Exchange Act Rule 15d-22(b):

• Two commentators supported the proposal without changes;  18

• One commentator recommended a more stringent standard;  19

• One commentator expressed general support for the proposal subject to specific comments on the language of the proposal;  20

• One commentator suggested expanding the set of circumstances when ABS issuers may suspend reporting;  21 and

• Two commentators suggested allowing suspension for commercial mortgage-backed securities issuers after one year in keeping with the Section 15(d) standard as it existed prior to the adoption of Section 942(a) of the Act amending Exchange Act Section 15(d). 22

The proposed rule would have required an issuer to assess whether there were any securities held by non-affiliates of the depositor at the beginning of the fiscal year. One commentator recommended accelerating the timing of when an issuer may assess whether it may suspend reporting to enable an issuer to suspend reporting once there are no non-affiliated holders or in the alternative, monthly. 23 In addition, this commentator recommended that the Commission amend the proposed rule to clarify that, at such time as none of an issuer's registered ABS remain outstanding, the issuer may immediately cease ongoing Exchange Act reporting. 24 In contrast, some commentators supported the timing of the assessment, 25 and one commentator recommended requiring an issuer to re-assess its reporting obligation, including after suspension, every six months and further recommended including an anti-avoidance provision. 26

Some commentators recommended specific revisions to the proposed text of the rule. The proposed rule would have provided that the issuer may not suspend reporting in the “fiscal year within which the registration statement became effective.” One commentator recommended that the Commission revise the language to instead refer to the “fiscal year within which the takedown occurred” to provide additional clarity on the application of the rule as it relates to shelf offerings. 27 In addition, the proposed rule would provide for suspension of reporting obligations in any fiscal year when there “are no longer any securities of such class held by non-affiliates of the depositor.” Two commentators noted that ABS are often held of record by a custodian or broker on behalf of underlying beneficial owners and suggested that the test should look to the underlying beneficial owners of the securities. 28 In addition, one commentator recommended using the term “are not” rather than saying there “are no longer” any securities of such class held by non-affiliates of the depositor that were sold in the registered transaction to avoid any implication that the ABS must have been previously held by one or more non-affiliates. 29

After considering the comments, we are adopting amendments to our rules to provide for suspension of the reporting obligations for a given class of ABS pursuant to Exchange Act Section 15(d) as proposed with some changes as recommended by commentators. As adopted, Exchange Act Rule 15d-22(b) provides that the duty to file annual and other reports under Section 15(d) is suspended:

• As to any semi-annual fiscal period, if, at the beginning of the semi-annual fiscal period, other than a period in the fiscal year within which the registration statement became effective or, for shelf offerings, the takedown occurred, there are no ABS of such class that were sold in a registered transaction held by non-affiliates of the depositor and a certification on Form 15 has been filed;  30 or

• When there are no ABS of such class that were sold in a registered transaction still outstanding, immediately upon the filing with the Commission of a certification on Form 15 if the issuer has filed all required reports for the most recent three fiscal years. 31

In addition, the final rule amends Form 15 to add a checkbox for ABS issuers to indicate that they are relying on Exchange Act Rule 15d-22(b) to suspend their reporting obligation and adds two Notes to paragraph (b). Note 1 indicates that securities held of record by a broker, dealer, bank or nominee shall be considered as held by the separate accounts for which the securities are held. Note 2 includes an anti-avoidance provision, as described below.

In response to comments, Exchange Act Rule 15d-22(b) has been changed from the proposal in the following ways:

• The final rule provides for the timing of the suspension of the duty to file to be tested at the beginning of the semi-annual fiscal period rather than annually as proposed. The semi-annual assessment provided in the final rule requires an issuer to assess whether it is required to report more often than the proposed rule. The increased frequency of the required assessment seeks to alleviate concerns regarding reporting and information gaps that could occur with annual assessments by making it harder to evade the reporting requirements as well as reduce costs imposed by requiring reporting for the remainder of the year when the ABS are held solely by affiliates of the depositor. 32 We do not believe more frequent assessments to allow suspension are appropriate because if conducted more frequently, these assessments might result in an ABS issuer frequently changing its reporting status and thereby result in less continuity in its annual and other reports and the creation of disclosure gaps that could be detrimental to investors' ability to evaluate ABS performance and make ongoing investment decisions.

• The final rule provides that an issuer of ABS may not suspend reporting “in the fiscal year within which the registration statement became effective, or, for offerings conducted pursuant to § 230.415(a)(1)(vii) or § 230.415(a)(1)(x), the takedown for the offering occurred.” The language was revised in response to comments to provide additional clarity on the application of the rule as it relates to shelf offerings. 33

• The final rule uses the term “there are no asset-backed securities” rather than the proposed “there are no longer any asset-backed securities” to avoid any implication that the ABS must have been held by one or more non-affiliates. 34

• The final rule specifically provides for the immediate suspension upon filing of a Form 15 of the duty to file when there are no ABS of a class that were sold in a registered transaction still outstanding subject to conditions that are consistent with similar conditions in Exchange Act Rule 12h-3. 35 As requested, the final rule makes clear that an issuer may immediately suspend reporting when the securities have been retired or fully paid. In providing for immediate suspension in our rules, we have also added obligations that are consistent with similar conditions in Exchange Act Rule 12h-3 and may help reduce possible confusion or gaps in reporting that could occur with an immediate suspension of reporting.

• The final rule adds a Note to paragraph (b) of Exchange Act Rule 15d-22 clarifying that securities held of record by a broker, dealer, bank or nominee for any of them for the accounts of customers are considered held by the separate accounts for which they are held. Thus, if an investment bank is an ABS issuer and holds securities in its name for the benefit of other non-affiliated investors, it cannot suspend reporting. Conversely, if an unaffiliated bank or broker holds ABS for affiliates of the ABS issuer, the unaffiliated status of the broker or bank will not preclude suspension of reporting. 36

• The final rule adds a Note to paragraph (b) of Exchange Act Rule 15d-22(b) providing that an issuer may not suspend reporting if securities are acquired and resold by affiliates as part of a plan or scheme to evade the reporting obligations of Section 15(d). 37

The proposal and the final rules that we are adopting today sought to provide for the suspension of the reporting obligation for a given class of ABS under limited circumstances. Two commentators requested that commercial mortgage-backed securities issuers be permitted to suspend reporting based on the use of their industry reporting standards. 38 We are not adopting those recommendations because we believe that there are benefits to investors and the market of uniform disclosure standards provided by Regulation AB and public access to such uniform disclosure, and that such an approach is more consistent with Exchange Act Section 15(d), as amended by the Act. In addition, we are not adopting another commentator's recommendations to permit suspension of reporting for repackaging ABS where reference issuers stop reporting or to permit suspension where requested by a majority of holders. 39 We are not adopting the recommendation regarding repackaging transactions because the concentration of the significant obligor in the asset pool makes the information material. The need for the information about the underlying issuer in the reports for the ABS does not change due to a change in the reporting status of the underlying issuer. 40 In addition, we are not adopting the recommendation to permit suspension where requested by a majority of investors because any such suspension would limit the information available to investors and the marketplace for ABS with non-affiliated holders and could result in a reduction of the minority holders ability to sell and the price at which they may be able to sell their securities.

In light of the statutory changes to Exchange Act Section 15(d), we proposed to revise Exchange Act Rule 15d-22 to indicate when annual and other reports need to be filed and when starting and suspension dates are determined with respect to a takedown. We also proposed to amend Exchange Act Rule 12h-3(b)(1) to conform the rule to the language of amended Exchange Act Section 15(d) and to add a clarifying note.

We proposed to amend Exchange Act Rule 15d-22 to retain the approach relating to separate takedowns in current Exchange Act Rules 15d-22(a) and 15d-22(b) in a revised Exchange Act Rule 15d-22(a). Under the amendments we proposed, Exchange Act Rule 15d-22(a)(1) would provide that with respect to an offering of ABS sold off the shelf pursuant to Securities Act Rule 415(a)(1)(x), 41 the requirement to file annual and other reports pursuant to Exchange Act Section 15(d) regarding a class of securities commences upon the first bona fide sale in a takedown of securities under the registration statement. Under the amendments we proposed, Exchange Act Rule 15d-22(a)(2) would establish that the requirement to file annual and other reports pursuant to Exchange Act Section 15(d) regarding a class of securities is determined separately for each takedown of securities under the registration statement. Exchange Act Rule 15d-22(c) would remain substantially unchanged, except for minor revisions to reflect the amendments discussed above. Finally, under the amendments we proposed, Exchange Act Rule 12h-3(b)(1) would exclude ABS from the classes of securities eligible for suspension (tracking the language of the Exchange Act) and a note would be added to Exchange Act Rule 12h-3 to direct ABS issuers to Exchange Act Rule 15d-22 for the requirements regarding suspension of reporting for ABS.

Commentators expressed general support, and no commentators provided specific comment on these proposed revisions. 42

After further consideration, we are adopting the amendments to our rules relating to when annual and other reports need to be filed and when starting and suspension dates are determined with respect to a takedown substantially as proposed. 43 We are also adopting the changes to Exchange Act Rule 12h-3(b)(1) to conform the rule to the language of amended Exchange Act Section 15(d), and provide a clarifying note to Exchange Act Rule 12h-3(b)(1) as proposed. In addition to the changes to Exchange Act Rule 12h-3 that we proposed, we are adding a clarifying note to Exchange Act Rule 12h-6 directing foreign private issuers that are ABS issuers to Exchange Act Rule 15d-22 for the requirements regarding suspension of reporting of ABS.

Certain provisions of the disclosure rules and forms applicable to ABS issuers contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”). 44 The Commission published a notice requesting comment on the collection of information requirements in the Proposing Release for the amendments, and submitted these requirements to the Office of Management and Budget for review in accordance with the PRA. 45 An agency may not conduct or sponsor, and a person is not required to comply with, a collection of information unless it displays a currently valid control number. The titles for the affected collections of information are:

(1) “Form 10-K” (OMB Control No. 3235-0063);

(2) “Form 10-D” (OMB Control No. 3235-0604);

(3) “Form 8-K” (OMB Control No. 3235-0288); and

(4) “Form 15” (OMB Control No. 3235-0167).

Our PRA burden estimate for Form 10-K, Form 8-K and Form 15 is based on an average of the time and cost incurred by all types of public companies, not just ABS issuers, to prepare the collection of information. Form 10-D is a form that is only prepared and filed by ABS issuers. Form 10-D is filed within 15 days of each required distribution date on the ABS, as specified in the governing documents for such securities, containing periodic distribution and pool performance information.

Our PRA burden estimates for the collections of information are based on information that we receive on entities assigned to Standard Industrial Classification Code 6189, the code used by ABS issuers, as well as information from outside data sources. 46 In the Proposing Release, we based our estimates on an average of the data that we have available for years 2004 through 2009. In some cases, our estimates for the number of ABS issuers that file Form 10-D with the Commission are based on an average of the number of ABS offerings in 2006 through 2009. 47

In the Proposing Release we requested comment on the PRA analysis. No commentators responded to our request for comment on the PRA analysis. Subsequent to the enactment of the Act, the number of Forms 10-K, 8-K and 10-D filed by ABS issuers is expected to increase each year by the number of ABS registered offerings and the number of Forms 15 filed by ABS issuers is expected to decrease by a similar number.

The amendments provide for ABS issuers to suspend their reporting obligation under certain circumstances. While we expect that some issuers will be able to suspend their reporting obligations in the future as a result of the rules we adopt today, for purposes of the PRA, we estimated that the proposal will not affect our PRA estimates over the next three years. 48 We also estimated that the amendments to Exchange Act Rule 15d-22 relating to reporting and shelf registration and Exchange Act Rule 12h-3 to conform the rule to Exchange Act Section 15(d) will not affect our PRA estimates.

The amendments are generally consistent with our proposals, although the amendments do provide for semi-annual assessment, rather than an annual assessment, and provide for immediate suspension of reporting when there are no outstanding ABS. We do not believe that the changes from our proposal will affect our PRA estimates.

As indicated above, we do not estimate that the final rules will affect our PRA estimates over the next three years, however, as explained in further detail in the Proposing Release, the Act's amendment to Section 15(d) is expected to effect the number of periodic and current reports and Forms 15 filed by ABS issuers each year.

We are revising our estimates to reflect 2010 data regarding ABS filings. In the Proposing Release we based our estimates for the number of ABS issuers on an average of the data that we have available for years 2004 through 2009. The yearly average of ABS registered offerings with the Commission over the period from 2004 to 2009 was 958. The yearly average of ABS registered offerings with the Commission over the period from 2005 to 2010, a similar 6-year period, was 751. 49 As a result, for PRA purposes, we are updating our estimates of annual increases in Form 10-K filings to 751 filings, 50 in Form 10-D filings to 4,506 filings, 51 and in Form 8-K to 1,127 filings  52 and reducing the annual decrease in Form 15 filings to 751 filings. 53 In addition, consistent with our estimate in the Proposing Release that an average of six Form 10-D filings will be filed annually instead of ten Form 10-D filings, which forms the basis of the current PRA inventory for Form 10-D, we are reducing our current inventory of annual responses to Form 10-D to reflect the new annual estimate.

In summation, we estimate, for PRA purposes, increases of 90,120 total burden hours for Form 10-K (751 Forms 10-K times 120 burden hours per filing), 135,180 total burden hours for Form 10-D (4,506 Forms 10-D times 30 burden hours per filing), and 5,635 total burden hours for Form 8-K (1,127 Forms 8-K times 5 burden hours per filing), as well as a decrease of 1,127 total burden hours for Form 15 (751 Forms 15 times 1.5 burden hours per filing) as a result of the statutory changes to Exchange Act Section 15(d). 54 We allocate 75% of those hours (an increase of 67,590 hours for Form 10-K, 101,385 hours for Form 10-D, and 4,226 hours for Form 8-K) to internal burden and the remaining 25% to external costs using a rate of $400 per hour (an increase of $9,012,000 for Form 10-K, $13,518,000 for Form 10-D and $563,500 for Form 8-K). In addition, we estimate, for PRA purposes, a decrease in total burden hours due to a change in agency estimate of the number of annual Form 10-D filings of 120,000 (4,000 Form 10-D filings times 30 burden hours per filing). We allocate 75% of those hours to internal burden (a decrease of 90,000) and the remaining 25% to external costs using a rate of $400 per hour (a decrease of $12,000,000).

The table below illustrates the changes in annual compliance burden in the collection of information in hours and costs for existing reports for ABS issuers as a result of the statutory changes mandated by the Act as well as the reduction in the estimated number of Form 10-D filings described above.

Exchange Act Section 15(d) generally establishes an ongoing reporting obligation for issuers with a registration statement that has become effective pursuant to the Securities Act. Prior to enactment of the Act, Exchange Act Section 15(d) provided that for issuers without a class of securities registered under the Exchange Act the duty to file ongoing reports is automatically suspended as to any fiscal year, other than the fiscal year within which the registration statement for the securities became effective, if the securities of each class to which the registration statement relates are held of record by less than 300 persons. The Act amended Exchange Act Section 15(d) to eliminate the automatic suspension of the duty to file ongoing Exchange Act reports for ABS issuers and granted the Commission authority to issue rules providing for the suspension or termination of such duty. The Commission is exercising its authority under the Exchange Act, as amended by the Act, by amending Exchange Act Rules 12h-3, 12h-6 and 15d-22 to provide for the suspension of the duty to file for certain ABS issuers and reduce their compliance costs as discussed in this release. 55

The Commission is sensitive to the benefits and costs imposed by the rules it is amending. The discussion below focuses on the benefits and costs of the decisions made by the Commission in the exercise of its new exemptive authority provided by the Act, rather than the costs and benefits of the Act itself.

The amendments the Commission is adopting allow an issuer to suspend reporting under certain circumstances and update certain provisions relating to reporting obligations under a shelf registration statement. Providing for issuers to suspend reporting would provide the benefit of allowing those issuers that are now required by the Act to continue reporting to avoid the costs of preparing and filing annual and periodic reports with the Commission when only affiliates of the depositor hold any outstanding securities of the classes sold in registered transactions.

We believe that reporting of the ongoing performance of an ABS is useful to investors and the market by providing readily accessible information upon which investors may evaluate performance and make ongoing investment decisions. We also recognize, however, that there are circumstances where the costs do not justify the benefits of reporting to investors and the market. In adopting rules to provide for the suspension or termination of the duty to file for certain ABS issuers, we have sought to balance the value of the information to investors and the market with the burden on the issuers of preparing the reports. More specifically, we believe that when there are only affiliated holders of the ABS, those affiliates will generally be able to receive relevant information because of their relationship with the depositor. Therefore, we are adopting new Exchange Act Rule 15d-22(b) to provide for issuers to suspend their reporting obligation under Section 15(d), as to any semi-annual fiscal period, if, at the beginning of the semi-annual fiscal period, there are no longer ABS of the class that were sold in a registration statement held by non-affiliates of the depositor and a certification on Form 15 has been filed.

We originally proposed that ABS issuers assess annually whether non-affiliates hold the ABS sold in registered transactions. We recognize that there is a trade-off between allowing the assessment to take place too frequently or not frequently enough. If the assessment is conducted frequently, it might result in an ABS issuer changing its reporting status often with the effect of less continuity in its annual and other reports. Reporting gaps could be detrimental to investors' ability to evaluate ABS performance and make ongoing investment decisions. However, more frequent assessments will allow an ABS issuer to report less and cease reporting as soon as non-affiliates no longer hold its securities, thus reducing the issuer's reporting burden and associated costs. Less frequent assessment of whether only affiliates hold the registered ABS issued, might result in unnecessary continued reporting until the assessment is made, up to 12 months for an annual assessment. The new Exchange Act Rule 15d-22(b) allows for semi-annual assessment, which we believe appropriately balances these competing interests.

In revising Exchange Act Section 15(d), Congress exhibited an intent to increase the continued reporting by ABS issuers, but gave the Commission authority to place limitations on that reporting in the public interest. The Commission exercised this authority and is adopting amendments allowing ABS issuers to suspend their reporting obligation under certain limited conditions. Providing for the suspension of reporting limits the ability of market participants to access and review information for those ABS that suspend reporting. We believe that this cost is mitigated under these conditions, since affiliates will generally be able to receive relevant information because of their relationship with the depositor. Thus, only non-holders of a particular ABS are affected. Furthermore, the utility of the information to market participants is limited since ABS owned solely by affiliates generally have no public market.

We recognize that there are additional costs to assessing holders semi-annually and preparing ongoing disclosure for registered transactions relative to the costs of issuing in the private markets. An issuer's decision about whether to issue registered ABS may be affected by the threshold at which issuers may suspend their reporting obligations under Section 15(d). We solicited comments on whether an alternative suspension threshold might mitigate this effect or be more appropriate for other reasons. Although three commentators responded to our request with suggested alternatives, we are not adopting those alternatives, as discussed in Section II.A.3. above. No commentator provided us with data or analysis that would support an alternative threshold. Thus, we continue to believe that a threshold of zero non- affiliates is consistent with the Act and presents an appropriate balance between the value of the reported information to investors and the market, and the costs of preparing the reports.

Section 23(a) of the Exchange Act  56 requires the Commission, when making rules and regulations under the Exchange Act, to consider the impact a new rule would have on competition. Section 23(a)(2) prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. Section 3(f) of the Exchange Act  57 requires the Commission, when engaging in rulemaking that requires it to consider whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action would promote efficiency, competition, and capital formation. The discussion below focuses on the effects of the decisions made by the Commission in the exercise of its new exemptive authority provided by the Act, rather than the effects of the Act itself.

The Act amended Exchange Act Section 15(d) to eliminate the automatic suspension of the duty to file ongoing Exchange Act reports for ABS issuers and granted the Commission authority to issue rules providing for the suspension or termination of such duty. The Commission is exercising its authority under the Act by amending Exchange Act Rules 12h-3, 12h-6 and 15d-22 to provide for the suspension of the duty to file for certain ABS issuers and reduce their compliance costs as discussed in this release.

The amendments update the reporting requirements for takedowns from shelf registration in Exchange Act Rule 15d-22 and provide for the suspension of the duty to file for certain ABS issuers as discussed in this release. Providing for ABS issuers with only affiliated holders to suspend their duty to file decreases transparency regarding those issuers. The suspension of the duty to file reduces compliance costs for issuers, which could increase efficiency and facilitate capital formation.

An inability to suspend the duty to file may encourage some issuers to offer ABS privately or not to issue ABS at all, rather than registering those ABS and incurring the ongoing reporting costs. If issuers register fewer ABS, this would reduce liquidity, decrease transparency in the ABS market and decrease capital formation. The amendments provide for ABS issuers to suspend their duty to file when they have only affiliated investors remaining and provide issuers certainty regarding when they may suspend reporting, which may encourage some ABS issuers to register ABS and offer ABS in the public markets. These changes are intended to mitigate the aforementioned incentives to offer ABS privately or not to issue ABS at all.

The clarifications provided in Exchange Act Rule 15d-22, 12h-3, and 12h-6 may have a beneficial effect on the efficiency of managing ABS offerings, especially takedowns from ABS shelf registration, by providing issuers with a better understanding of their Exchange Act reporting obligations and facilitating compliance.

We do not believe the amendments will have an impact or burden on competition.

Under Section 605(b) of the Regulatory Flexibility Act, we certified that, when adopted, the proposals would not have a significant economic impact on a substantial number of small entities. We included the certification in Part IX of the Proposing Release, but received no comment.

We are adopting the amendments contained in this document under the authority set forth in Sections 3(b), 12, 13, 15, 23(a), and 36 of the Exchange Act.

For the reasons set out above, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:

The collection of information contained in these regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number (1545-2103). Responses to this collection of information are mandatory.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Section 179C was added to the Code by section 1323(a) of the Energy Policy Act of 2005, Public Law 109-58 (119 Stat. 594), to encourage the construction of new refineries and the expansion of existing refineries to enhance the nation's refinery capacity. Section 179C(a) allows a taxpayer to elect to deduct as an expense 50 percent of the cost of any qualified refinery property. The remaining 50 percent of the taxpayer's qualifying expenditures generally are recovered under section 168 and section 179B, if applicable. All costs properly capitalized into qualified refinery property are includable in the cost of the qualified refinery property.

As originally enacted, section 179C(c)(1)(B) required that qualified refinery property be placed in service by a taxpayer after August 8, 2005, and before January 1, 2012. Under section 179C(c)(1)(F) as originally enacted, (i) the construction of the property must have been subject to a written binding construction contract entered into before January 1, 2008, (ii) the property must have been placed in service before January 1, 2008, or (iii) in the case of self-constructed property, the construction of the property must have begun after June 14, 2005, and before January 1, 2008. Section 179C(d)(1) originally required that a qualified refinery be designed to serve the primary purpose of processing liquid fuel from crude oil or qualified fuels (as defined in section 45K(c)). Under section 179C(e) as originally enacted, qualified refinery property must have enabled the existing qualified refinery to increase total volume output (determined without regard to asphalt or lube oil) by 5 percent or more on an average daily basis or to process qualified fuels (as defined in section 45K(c)) at a rate that is equal to or greater than 25 percent of the total throughput of the qualified refinery on an average daily basis.

Section 209 of the Energy Improvement and Extension Act of 2008 (the “2008 Act”), Division B, Public Law 110-343 (122 Stat. 3765), amended section 179C in several respects. The 2008 Act extended the placed in service date of section 179C(c)(1)(B) to January 1, 2014. In addition, the 2008 Act amended section 179C(c)(1)(F) to provide that (i) the construction of the property must be subject to a written binding construction contract entered into before January 1, 2010, (ii) the property must be placed in service before January 1, 2010, or (iii) in the case of self-constructed property, the construction of the property must begin after June 14, 2005, and before January 1, 2010.

Effective for property placed in service after October 3, 2008, the 2008 Act amended the definition of “qualified refinery” under section 179C(d)(1) to include a refinery that is designed to serve the primary purpose of processing liquid fuel directly from shale or tar sands, and expanded the production capacity requirement of section 179C(e)(2) to include property that enables the existing qualified refinery to process shale or tar sands.

On July 9, 2008, the Treasury Department and the IRS published in the Federal Register temporary regulations (TD 9412), 73 FR 39230, and a notice of proposed rulemaking (REG-146895-05), 73 FR 39270, by cross-reference to temporary regulations. A public hearing was scheduled for November 20, 2008. The public hearing was cancelled on November 6, 2008 (73 FR 66001) because no written comments or requests to speak were received.

The temporary regulations and proposed regulations are hereby removed and the final regulations adopt the rules of the temporary and proposed regulations with certain revisions, described below, to reflect amendments to the statute made by the 2008 Act.

Section 1.179C-1T(b)(4) and § 1.179C-1T(b)(7)(i)(A) of the temporary regulations required that qualified refinery property be placed in service by the taxpayer after August 8, 2005, and before January 1, 2012. Section 1.179C-1(b)(4) and § 1.179C-1(b)(7)(i)(A) of the final regulations provide that the property must be placed in service after August 8, 2005, and before January 1, 2014.

Section 1.179C-1T(b)(7)(iii) of the temporary regulations provided that the manufacture, construction, or production of self-constructed property must begin before January 1, 2008. Under § 1.179C-1(b)(7)(iii) of the final regulations, the manufacture, construction, or production of self-constructed property must begin before January 1, 2010.

Under § 1.179C-1T(b)(7)(iii)(C) of the temporary regulations, a component of self-constructed property had to be acquired or self-constructed before January 1, 2008, in order to qualify as qualified refinery property. Section 1.179C-1(b)(7)(iii)(C) of the final regulations provides that the component must be acquired or self-constructed before January 1, 2010.

Section 1.179C-1T(b)(2)(i) of the temporary regulations provided that a qualified refinery is any refinery located in the United States that is designed to serve the primary purpose of processing crude oil or qualified fuels. The final regulations add new § 1.179C-1(b)(2)(i)(A) and new § 1.179C-1(b)(2)(i)(B). Section 1.179C-1(b)(2)(i)(A) of the final regulations provides that in the case of property placed in service after August 8, 2005, and on or before October 3, 2008, a qualified refinery is any refinery located in the United States that is designed to serve the primary purpose of processing liquid fuel from crude oil or qualified fuels. Section 1.179C-1(b)(2)(i)(B) of the final regulations provides that, in the case of property placed in service after October 3, 2008, and before January 1, 2014, a qualified refinery is any refinery located in the United States that is designed to serve the primary purpose of processing liquid fuel from crude oil, qualified fuels, or directly from shale or tar sands.

Section 1.179C-1T(b)(5)(i) of the temporary regulations generally provided that refinery property is considered to be qualified refinery property if (A) it enables the existing qualified refinery to increase the total volume output by at least 5 percent on an average daily basis; or (B) it enables the existing qualified refinery to increase the percentage of total throughput attributable to processing qualified fuels to a rate that is at least 25 percent of the total throughput on an average daily basis. The final regulations, in § 1.179C-1(b)(5)(i), modify this definition to provide generally that refinery property is considered to be qualified refinery property if (A) it enables the existing qualified refinery to increase the total volume output by at least 5 percent on an average daily basis; (B) in the case of property placed in service after August 8, 2005, and on or before October 3, 2008, it enables the existing qualified refinery to increase the percentage of total throughput attributable to processing qualified fuels to a rate that is at least 25 percent of the total throughput on an average daily basis; or (C) in the case of property placed in service after October 3, 2008, and before January 1, 2014, it enables the existing qualified refinery to increase the percentage of total throughput attributable to processing shale, tar sands, or qualified fuels to a rate that is at least 25 percent of total throughput on an average daily basis.

This section is applicable for taxable years ending on or after August 22, 2011. For taxable years ending before August 22, 2011, taxpayers may apply the proposed regulations published on July 9, 2008, or, in the alternative, may apply these final regulations.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866 as supplemented by Executive Order 13563. The collections of information in § 1.179-1(d)(2), (e)(2), and (f) are required by section 179C(b), (g), and (h), respectively, and, therefore, are not imposed by these regulations. Accordingly, they are not subject to the Regulatory Flexibility Act. Only the collection of information in § 1.179-1(d)(3), regarding the revocation of an election under section 179C(a), is imposed by these regulations. It is hereby certified that the collection of information contained in § 1.179-1(d)(3) of the regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that although most of the 12 taxpayers who potentially could or would make an election under section 179C(a) will be small entities, it is expected that few, if any, of those 12 taxpayers once having made the election will choose to revoke it. Therefore, the collection of information will not affect a substantial number of small entities. The information required to revoke an election under section 179C(a) consists entirely of a portion of the information required to make the election. Consequently, the economic burden for those taxpayers who choose to revoke the election is minimal in nature and the regulations do not impose any burden in addition to the burden associated with making the election. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 6) does not apply to these regulations.

The principal author of these regulations is Philip Tiegerman, Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

Accordingly 26, CFR parts 1 and 602 are amended as follows:

The collection of information contained in these final regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1899. The collection of information in these final regulations is in § 301.7502-1. This information is required in order for taxpayers to be able to establish the postmark date and prima facie evidence of delivery when using certified or registered mail.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number.

Books or records relating to a collection of information must be retained as long as their contents might become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. 6103.

This document contains regulations amending 26 CFR part 301 under section 7502 of the Internal Revenue Code (Code). Section 7502(a) first appeared as part of the recodification of the Code in 1954. Section 7502(a) is commonly known as the timely mailing/timely filing rule. Section 301.7502-1 of the Procedure and Administration Regulations provides rules for taxpayers to follow to qualify for favorable treatment under section 7502. There is a conflict among the Federal circuit courts of appeal as to whether the provisions in section 7502 provide the exclusive means to establish prima facie evidence of delivery of a document to the IRS or the United States Tax Court. Specifically, courts have reached differing conclusions regarding whether a taxpayer may raise a presumption of delivery of Federal tax documents to the IRS and the United States Tax Court only in situations in which the taxpayer uses registered or certified mail.

A notice of proposed rulemaking (REG-138176-02) was published in the Federal Register (69 FR 56377) on September 21, 2004. The proposed regulations clarified that, other than direct proof of actual delivery, the exclusive means to establish prima facie evidence of delivery of Federal tax documents to the IRS and the United States Tax Court is to prove the use of registered or certified mail. Under section 7502(f)(3), the IRS may extend to a service provided by a PDS a rule similar to the prima facie evidence of delivery rule applicable to certified and registered mail. Prior to the publication of the notice of proposed rulemaking, the IRS had not received any comments or suggestions for extending this rule, even though the IRS and the Treasury Department previously requested comments in a prior notice of proposed rulemaking under section 7502. See Federal Register , 64 FR 2606 (January 15, 1999). Because the IRS was clarifying what documentation it will accept as proof of delivery, additional comments were sought on this issue. Accordingly, in the notice of proposed rulemaking, the IRS and the Treasury Department encouraged the public to make comments regarding whether the prima facie evidence of delivery rule should be extended to a service provided by a PDS.

Eighteen written comments were received in response to the notice of proposed rulemaking. Three commenters requested a public hearing. A notice of public hearing on proposed rulemaking was published in the Federal Register (69 FR 68282) on November 24, 2004. A public hearing was held on January 11, 2005. Three commenters appeared at the public hearing and commented on the notice of proposed rulemaking.

All comments were considered and are available for public inspection upon request. After consideration of the written comments and the comments provided at the public hearing, the proposed regulations under section 7502 are adopted as revised by this Treasury Decision. The public comments, public hearing, and the revisions are discussed in this preamble.

Four commenters expressed concern that the proposed regulations limited the proof to satisfy the timely mailing/timely filing rule of section 7502(a) rather than the prima facie evidence of delivery rule of section 7502(c). These final regulations do not limit the use of U.S. Mail, other delivery options offered by the United States Postal Service (USPS), or a PDS for purposes of satisfying the timely mailing/timely filing rule of section 7502(a). Instead, these final regulations clarify the prima facie evidence of delivery rule of section 7502(c).

Seven commenters suggested that the proposed regulations provide that evidence of proper use of a service offered by a PDS should establish prima facie evidence of delivery of Federal tax documents to the IRS and the United States Tax Court. Seven commenters observed that PDSs offered services similar to certified and registered mail, and that the services offered by the PDSs were as reliable as registered mail and certified mail. Two commenters noted that PDSs generally provide a greater level of detail with respect to tracking and delivery information than certified and registered mail for purposes of establishing proof of delivery. Three commenters expressed concern that it is inconsistent to permit individuals to rely upon PDSs to satisfy the timely mailing/timely filing rule of section 7502(a), but not for section 7502(c). One commentator observed that section 7502(f)(3) requires that the Treasury Secretary and the IRS consider PDS alternatives as substitutes for certified and registered mail.

After considering comments received on the proposed regulations, these final regulations provide that the Treasury Department and IRS will issue guidance that will establish the criteria to be used to designate PDSs for purposes of the prima facie evidence of delivery rule. Cf. Notice 2004-83 (2004-2 CB 1030) (listing PDSs that the Secretary has designated pursuant to section 7502(f)(2)) (see § 601.601(d)(2)(ii)( b ) of this chapter); Rev. Proc. 97-19 (1997-1 CB 644) (providing the criteria to determine whether a PDS qualifies as a designated private delivery service under section 7502(f) and the procedures under which a PDS can apply to become a designated PDS) (see § 601.601(d)(2)(ii)( b ) of this chapter). Thus, these final regulations provide that, other than direct proof of actual delivery, proof of proper use of registered or certified mail (registered or certified mail sender's receipt), and proof of proper use of a PDS duly designated under criteria established by the IRS, are the sole means to establish prima facie evidence of delivery of documents that have a filing deadline prescribed by the internal revenue laws.

The existing regulations under section 7502 are being reorganized. Section 301.7502-1(e) will still be entitled “Delivery,” but will now focus on the requirement for actual delivery or the use of one of the means discussed above to establish a presumption of delivery. Former paragraph (e)(2) and the example in paragraph (e)(3) are moved to paragraph (b)(2) to consolidate the discussion of the effect of section 7502 on certain claims for refund.

Seven commenters suggested that the proposed regulations should permit additional services offered by the USPS to establish prima facie evidence of delivery of Federal tax documents to the IRS and the United States Tax Court. Commenters recommended that the following USPS services should be permitted to establish prima facie evidence of delivery: Priority Mail, Certificate of Mailing, Express Mail Receipt, Delivery Confirmation Receipt, and Signature Confirmation.

Section 7502 does not authorize the Treasury Department or the IRS to adopt a rule that would permit USPS services in addition to certified and registered mail to establish prima facie evidence of delivery. Congress has been clear when it intended to change section 7502 to allow proof of delivery by other means. In 1958, Congress amended section 7502 to provide the IRS with the authority to treat certified mail the same as registered mail. See Technical Amendments Act of 1958, Public Law No. 85-866 (72 Stat. 1606 (1958)). Congress also amended section 7502 to authorize the IRS to publish rules providing the extent to which a PDS is the equivalent of certified mail. See Taxpayer Bill of Rights 2, Public Law 104-168 (110 Stat. 1452 (1996)); Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105-206 (112 Stat. 685 (1998)). Similar legislation would be necessary to authorize the IRS to treat additional USPS services as prima facie evidence of delivery.

Two commenters expressed concern that certified and registered mail services are expensive and inconvenient in comparison to first class mail. These commenters suggested that regular first class mail should suffice to establish prima facie evidence of delivery. As described above, the prima facie evidence of delivery rule provides an exception to the actual delivery rule. Absent actual delivery, however, first class mail without additional services provides nothing, such as certified or registered mail receipt, to establish proof of delivery. Moreover, without legislative action, the Treasury Department and the IRS cannot adopt regulations extending the prima facie evidence of delivery rule to first class mail.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations.

It is hereby certified that the collection of information contained in this regulation will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. Although the collection of information in this Treasury decision affects a substantial number of small entities, the economic impact on these small entities is not substantial. If a small entity uses registered or certified mail to file a document with the IRS, the additional burden (filling out the appropriate United States Postal Service forms) over and above using regular mail is not substantial. Furthermore, the extra cost to use registered or certified mail is not substantial as certified mail costs only $2.80 and registered mail can be used for as little as $10.60. Finally, the added burden of retaining the certified or registered mail sender's receipt will be minimal as the receipt can be associated with the small entity's copy of the document that it filed with the IRS.

Pursuant to section 7805(f) of the Code, the proposed rule that preceded this Treasury decision was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

The principal author of these regulations is Steven L. Karon of the Office of the Associate Chief Counsel, Procedure and Administration.

Accordingly, 26 CFR part 301 is amended as follows:

Regulatory Information

On May 27, 2011, we published a notice of proposed rulemaking (NPRM) entitled Special Local Regulations; Sabine River, Orange, TX in the Federal Register (76 FR 103). We received no comments on the proposed rule. No public meeting was requested, and none was held.

This temporary special local regulation is necessary to ensure the safety of vessels and spectators from hazards associated with a powerboat race. Under the authority of 33 U.S.C. 1233, the Captain of the Port has determined that powerboat races in close proximity to watercraft and infrastructure pose significant risk to public safety and property. Establishing a special local regulation around the location of the race course will help ensure the safety of persons and property at these events and help minimize the risks associated with high speed powerboat races.

We received no comments and no changes have been made to the proposed rule.

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, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under that those Orders.

The Coast Guard has determined that this rule is not a significant regulatory action for the following reasons: (1) The rule will be enforced for ten hours each day for two days; (2) scheduled breaks will be provided to allow waiting vessels to transit safely through the affected area; and (3) persons and vessels may enter, transit through, anchor in, or remain within the regulated area if they obtain permission from the COTP or the designated representative; and (4) advance notification will be made to the maritime community via broadcast notice to mariners and Local Notice to Mariners (LNM).

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 would not have a significant economic impact on a substantial number of small entities.

This rule would not have a significant economic impact on a substantial number of small entities for the following reasons: (1) This rule will only be enforced from 8 a.m. until 6 p.m. each day that it is effective; (2) during non-enforcement hours all vessels will be allowed to transit through the safety zone without having to obtain permission from the Captain of the Port, Port Arthur or a designated representative; and (3) vessels will be allowed to pass through the zone with permission of the Coast Guard Patrol Commander during scheduled break periods between races and at other times when permitted by the Coast Guard Patrol Commander.

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

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

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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)(h), of the Instruction. This rule involves the establishment of a Special Local Regulation. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES .

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

The Canadian National Railway requested a temporary deviation for the Elgin Joliet and Eastern Railroad Drawbridge, across the Illinois Waterway, mile 290.1, at Joliet, Illinois to remain in the closed-to-navigation position for ten hours while repair work is done on the drawbridge. The Elgin Joliet and Eastern Railroad Drawbridge currently operates in accordance with 33 CFR 117.393(d), which states that the drawspan is normally maintained in the fully open to navigation position and the drawbridge is operated by remote operator located at the Elgin, Joliet & Eastern offices in East Joliet, Illinois.

There are no alternate routes for vessels transiting this section of the Illinois Waterway.

The Elgin Joliet and Eastern Railroad Drawbridge, in the closed-to-navigation position, provides a vertical clearance of 24.6 feet above normal pool. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received.

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

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, to http://www.regulations.gov and will include any personal information you have provided.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-0591), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online ( http://www.regulations.gov ), or by fax, mail or hand delivery, but please use only one of these means. If you submit a comment online via http://www.regulations.gov , it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand deliver, or mail your comment, it will be considered as having been received by the Coast Guard when it is received at the Docket Management Facility. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov , click on the “submit a comment” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-0591,” click “Search,” and then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change the rule based on your comments.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov , click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-0591” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc. ). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the Federal Register (73 FR 3316).

We do not now plan to hold a public meeting. But you may submit a request for one using one of the four methods specified under ADDRESSES . Please explain why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

The CSX Railroad Company has requested a change in the operation regulations for the CSX Railroad Vertical Lift Bridge, across the Anacostia River, mile 3.4, at Washington, DC. The change will replace the current eight hour advance notice requirement for a bridge opening to a 48 hour advance notice requirement for a bridge opening. The bridge is part of a rail line that is used for regular passenger service therefore, it is necessary that ample time is given to maintain an accurate schedule for trains and vessels for safe and efficient travel across and through the bridge.

The current operating schedule for the bridge is set out in 33 CFR 117.253(b). The regulation was established in August 2004 and allows the bridge to be operated from a remote location, the Benning Yard office. The draw of the bridge shall open on signal at all times for public vessels of the United States, state and local government vessels, commercial vessels and any vessels in an emergency involving danger to life or property. The draw shall open on signal between 9 a.m. and 12 p.m., and between 1 p.m. and 6 p.m. from May 15 through September 30; and between 6 p.m. and 7 p.m. from May 15 through September 30 if notice is given to the controller no later than 6 p.m. on the day for which the opening is requested. At all other times the bridge will open if at least 8 hours notice is given.

The vertical clearance of the bridge is 5 feet at Mean High Water in the closed position and 29 feet at Mean High Water in the open position. We are testing the potential operating regulation adjustment to discover any impacts to train traffic and water navigation as a result of the bridge opening request time adjustment. During the test deviation period a bridge opening count has been requested from the CSX Railroad Company. There are 21 train transits across this bridge every day. A review of the bridge operating logs shows two bridge openings have been requested in the past two years for vessels taller than five feet. The test period will go into effect immediately and will end 180 days from the effective date. The test deviation will be in effect simultaneously with a notice of proposed rulemaking which is also part of docket no. USCG-2011-0591, for the same operating regulation change.

Vessels that are able to pass under the bridge in the closed position may do so at any time. There are no alternate routes for vessels that cannot pass under the bridge in the closed position. The Coast Guard will inform waterway users through the Local and Broadcast Notices to Mariners. The bridge will be able to open for emergencies.

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

Regulatory Information

On December 22, 2009, we published an interim rule with request for comments in the Federal Register (74 FR 67974). No comments were received. No public hearing was requested and none was held.

The LDOTD requested that the operating regulation of the SR 433 Swing Span Bridge across Bonfouca Bayou, mile 7.0 at Slidell, Louisiana be changed in order to allow for signaled openings to begin later in the mornings and later in the evenings during the months of daylight savings time from March 1 through October 30 each year. LDOTD indicated that extending the morning requirement for a two-hour notice by one hour will not affect mariners passing through the bridge because few mariners do so in the morning.

Bridge tender logs indicate that most recreational vessels transit the bridge during spring, summer and fall months than during the winter months of November through February. The logs also show that most of the recreational boaters do not signal for an opening prior to 7 a.m.

In the interim rule we extended the time for the bridge to open on signal to 9 p.m., during the months of daylight savings time, thereby affording mariners the opportunity to extend their activities for the full period of daylight each day. We also delayed the beginning of the on signal openings to 7 a.m. so that the evening extension did not unduly burden the bridge owner by significantly increasing the length of time it is necessary to continuously man the bridge.

Prior to publishing the interim rule, 33 CFR 117.433 stated: The draw of the S433 Bridge, mile 7.0, at Slidell, shall open on signal, except that from 6 p.m. to 6 a.m. the draw shall open on signal if at least two hours notice is given. On Monday through Friday, except Federal holidays, the draw need not open for the passage of vessels from 7 a.m. to 8 a.m. and from 1:45 p.m. to 2:45 p.m.

This final rule replaces the interim rule and allows the bridge to open on signal, except that from March 1 through October 30, the regular boating season, the draw shall open on signal if at least two hours notice is given from 9 p.m. to 7 a.m. During the winter months of November 1 through February 28 or 29, the bridge will revert to the two-hour notice requirement from 6 p.m. to 6 a.m. To continue to accommodate rush hour vehicular traffic the bridge will continue to remain closed to navigation, Monday through Friday, except Federal holidays, from 7 a.m. to 8 a.m. and from 1:45 p.m. to 2:45 p.m.

The Coast Guard received no comments or requests for changes to the interim rule and the Coast Guard made no changes to the interim rule.

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, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation is unnecessary. The interim rule has been in effect since December 22, 2009 and no complaints or comments have been received by the Coast Guard from any waterway users.

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Coast Guard considers whether this final rule will have a significant economic impact on a substantial number of small entities. “Small entities” include (1) Small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and (2) governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this final 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 might be small entities: The owners or operators of vessels patronizing the marina just upstream of the bridge and owners or operators of small commercial fishing vessels. This rule extends by one hour the total duration of the on-demand bridge openings and changes the time of day for on-demand bridge openings from 6 a.m.-6 p.m. to 7 a.m.-9 p.m. Bridge logs indicate the morning delay will have minimal impact on bridge openings therefore this rule will not affect a substantial number of small entities and therefore will not have a substantial economic impact.

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

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

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

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

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

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

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might 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 guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (32)(e), of the Instruction.

Under figure 2-1, paragraph (32)(e), of the Instruction, an environmental analysis checklist and a categorical exclusion determination are not required for this rule.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, to http://www.regulations.gov and will include any personal information you have provided.

As this interim rule will be in effect before the end of the comment period, the Coast Guard will evaluate and revise this rule as necessary to address significant public comments. Alternatively, if the dredging project necessitating the interim rule is completed before April 1, 2014, and we receive no public comments that indicate a substantive need to revise the rule, we may allow it to expire on that date without further regulatory action.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-0727), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online (via http://www.regulations.gov ) or by fax, mail or hand delivery, but please use only one of these means. If you submit a comment online via http://www.regulations.gov, it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand delivery or mail your comment, it will be considered as having been received by the Coast Guard when it is received at the Docket Management Facility. We recommend that you include your name and a mailing address, an e-mail address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov, click on the “submit a comment” box, which will then become highlighted in blue. In the “Document Type” drop down menu select “Proposed Rule” and insert “USCG-2011-0727” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and will consider those comments before issuing a final rule.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-0727” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc. ). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the Federal Register (73 FR 3316).

We do not now plan to hold a public meeting within the meaning of the Administrative Procedure Act (APA), 5 U.S.C. 553. But you may submit a request for one using one of the four methods specified under ADDRESSES . Please explain why you believe such a public meeting would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register . The Coast Guard has held or participated in fourteen locally announced informal waterway user meetings where waterway closures and restrictions were discussed. We anticipate holding additional informal meetings, with opportunity for public questions or comments, during this project. We will provide written summaries of any such meetings in the docket.

The Coast Guard is issuing this interim rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the 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 immediate action is necessary to ensure the safety of the public in the vicinity of the drilling, dredging and blasting operations being conducted in the Arthur Kill. In November 2010, Northeast Dredging Company, the contractor, advised that the Arthur Kill Channel Deepening Project would require rolling two-week closures of the middle third of the Arthur Kill to conduct the drilling and blasting operations. The requested closure of the Arthur Kill would have shut down the Arthur Kill to all deep draft vessels in the area resulting in a long term disruption to cargo and oil terminal facilities operations. We advised the U.S. Army Corps of Engineers (USACE) and the contractor that the complete closure of the Arthur Kill for two-week periods during the course of the deepening project would negatively impact navigational safety on the waterway and that an alternative proposal that would keep the channel open to vessel traffic was necessary.

We participated in nine initial planning meetings with the USACE, harbor and docking pilots, tugboat operators, facility operators, and the contractors between January and April 2011. In early April 2011 the USACE, with the assistance of harbor and docking pilots, conducted simulator assessments of the drilling and blasting areas. These simulations studied the possibility of reducing the size of the drilling and blasting areas in order to maintain one-half of the channel open at all times for vessel transits. The results of the simulation allowed the USACE to determine that, although it was possible to conduct the channel deepening without completely closing the Arthur Kill, additional coordination meetings were necessary.

Five additional meetings were held between April and June 2011 to discuss the results of the navigation simulations. In June the USACE and the contractor presented a revised drilling, blasting and dredging plan, which called for reduction in the channel width during the deepening project. The drilling, blasting and dredging operations will render a portion of the Arthur Kill unavailable to vessel navigation and decrease the overall width of the navigable channel that is available to deep draft commercial vessels. The Coast Guard initially planned to control traffic under the auspices of the Vessel Traffic Service (VTS) New York, but as a result of the June 2011 meeting with the USACE, it was determined that a Regulated Navigation Area (RNA) would be necessary. The dynamic nature of the dredging process and multitude of drilling and blasting equipment associated with the project necessitates that all mariners comply with this RNA, as the drilling and blasting equipment configuration may change on a daily basis. Immediate action is needed to control vessels operating in the reduced waterway and protect the maritime public from the hazards associated with drilling, blasting and dredging operations on a constricted waterway. Publishing a NPRM and waiting 30 days for comment would be contrary to the public interest since immediate action is needed to restrict vessel traffic and protect the maritime public from the hazards associated with drilling, blasting and dredging operations.

For the same reasons, 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 .

Under the Ports and Waterways Safety Act, the Coast Guard has the authority to establish RNAs in defined water areas that are determined to have hazardous conditions and in which vessel traffic can be regulated in the interest of safety. See 33 U.S.C. 1231 and Department of Homeland Security Delegation No. 0170.1.

The purpose of this interim rule is to ensure the safe transit of vessels in the area and to protect all persons, vessels, and the marine environment during the ongoing channel deepening project.

The RNA encompasses all waters of the North of Shooters Island Reach, Elizabethport Reach, and Gulfport Reach in the Arthur Kill.

Drilling and blasting operations began in the Arthur Kill on Tuesday, August 2, 2011. The project consists of dredging, drilling and underwater blasting of bedrock in the Arthur Kill navigable channel. Dredging operations will encroach on portions of the navigable channel, require the relocation of lateral aids to navigation, and create a reduction in the width of the navigable channel.

This interim rule seeks to enhance navigational safety and marine environmental protection, and promote vessel movement by reducing the potential for collisions, groundings, and the loss of lives and property. This interim rule became effective with actual notice upon being signed by the District Commander; however the Coast Guard would like to receive comments before issuing a final rule.

Any violation of the RNA described herein is punishable by, among others, civil and criminal penalties, in rem liability against the offending vessel, and the initiation of suspension or revocation proceedings against Coast Guard-issued merchant-mariner credentials.

The Captain of the Port (COTP) New York will cause notice of enforcement, suspension of enforcement, or closure of the waterway to be made by all appropriate means to effect the widest distribution among the affected segments of the public. Such means of notification may include, but are not limited to, Broadcast Notice to Mariners and Local Notice to Mariners.

We developed this interim 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, as supplemented by Executive Order 13563, 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.

The economic impact of this rule will be severely limited for the following reasons: (1) The RNA does not prohibit vessels from transiting the area; (2) vessels will be allowed to safely transit without restrictions in areas where there are no dredges or drill barges operating; (3) vessels may be allowed to transit work areas where dredges and/or drill barges are operating unless blasting operations are underway; (4) delays resulting from blast operations are expected to last no longer than 15 minutes and occur twice daily; and (5) advance notification will be made to the maritime community via Local Notice to Mariners, Broadcast Notice to Mariners, and on the Internet at http://homeport.uscg.mil/newyork.

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 in a portion of the Arthur Kill from August 12, 2011 until the Arthur Kill Channel Deepening Project is completed.

This rule will not have a significant economic impact on a substantial number of small entities for the following reasons: although the regulated navigation area will apply to the entire width of the Arthur Kill, vessel traffic will be allowed to pass through the regulated area by coordinating with Vessel Traffic Service New York (VTSNY). Before the effective period, we will issue maritime advisories widely available to users of the waterway.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

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 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

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

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

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

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

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

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

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

This document amends 38 CFR parts 3 and 20 to clarify existing hearing practices and procedures before the AOJ and the Board. Specifically, VA is amending § 3.103(a) and (c) to clarify that the hearing procedures outlined in § 3.103 apply to hearings held before the AOJ and not to hearings held before the Board. VA is also amending § 20.706 to further clarify that Board Members presiding over a hearing on appeal are not bound by the hearing procedures in § 3.103(c) and must conduct hearings in accordance with part 20, subpart H, which contains provisions governing Board hearing practice and procedure. In Appendix A to part 20, VA is removing the cross references to § 3.103.

VA has determined these clarifying changes are necessary because of a recent decision by the United States Court of Appeals for Veterans Claims (Court) in Bryant v. Shinseki, 23 Vet. App. 488 (2010), that applied the provisions of § 3.103(c)(2) to a Board hearing. The Bryant Court held that the provisions of § 3.103(c)(2) require a “Board hearing officer” to “fully explain the issues still outstanding that are relevant and material to substantiating the claim” and to “suggest that a claimant submit evidence on an issue material to substantiating the claim when the record is missing any evidence on that issue or when the testimony at the hearing raises an issue for which there is no evidence in the record.” Id. at 496-97. The Court concluded with respect to one of the service connection claims on appeal that the Veteran had been prejudiced because the presiding “Board hearing officer” had not explained matters material to the outcome of the claim and had not suggested that the Veteran could secure evidence regarding a nexus between his current disability and service. Id. at 499. The Court found prejudice existed because evidence of a nexus was not of record at the time of the hearing and remained lacking at the time of the decision. Id.

In reaching its conclusions, the Court relied in part on its previous holding in Douglas v. Derwinski, 2 Vet. App. 435 (1992), which held that the provisions of § 3.103(c) applied to hearings before the Board. Bryant, 23 Vet. App. at 494 (citing Douglas, 2 Vet. App. at 442). At the time the Court decided Douglas, the Board's Rules of Practice provided that hearings on appeal could be held: “(a) [b]efore a section of the Board of Veterans' Appeals in Washington, DC[;] (b) * * * before a traveling section of the Board of Veterans' Appeals during regularly scheduled visits to [VA] facilities[;] [or] (c) [b]efore appropriate personnel in the [VA] regional or other office nearest the appellant's residence, acting as a hearing agency for the Board of Veterans' Appeals.” 38 CFR 19.160 (1991). Under the former rules, if an appellant chose to have a hearing before employees of the AOJ acting as a hearing agency for the Board, then he or she was not entitled to a subsequent hearing before a Board Member. See id.; see also Veterans Benefits Administration, M21-1 Adjudication Procedures Manual, § 18.17g (1991) (“A formal hearing on appeal at a regional office will be in lieu of such a hearing before the [Board], except in the unusual case in which a special appearance by the claimant before the [Board], or the special attention of an accredited organization's headquarters in Washington, DC, is requested by the appellant.”).

Not long after the Court decided Douglas, the Board amended its hearing regulations to terminate the practice of AOJ personnel holding appellate hearings on the Board's behalf. The final rulemaking noted that the Board was implementing these changes because it had decided “a clear demarcation should exist between the conduct of hearings by the Board and hearings conducted by [Veterans Benefits Administration] employees at regional offices.” 58 FR 27934, 27934 (May 12, 1993). As a result of this procedural modification, an appellant now has the opportunity to appear for a hearing with the AOJ at any time prior to when his or her appeal is certified to the Board. 38 CFR 3.103(a); Your Rights to Appeal Our Decision, VA Form 4107 (Sept. 2009). The appellant also has a right to appear at a separate hearing on appeal before a Board Member. 38 CFR 20.700(a); see VA Form 4107 (stating that a hearing before the AOJ is separate from any hearing an appellant may later request before the Board); see also Gambill v. Shinseki, 576 F.3d 1307, 1315, 1316 (Fed. Cir. 2009) (Bryson, J., concurring) (explaining that an appellant has a right to appear at hearings before the AOJ and the Board).

The 1993 regulatory changes reflected VA's intent to clearly distinguish hearings before AOJs from hearings before the Board, including the duties of the respective VA personnel conducting the hearing. As a result of these changes, it has become standard VA practice and procedure that hearings before AOJs are governed by § 3.103 and hearings before the Board are governed by relevant provisions in part 20. The Court's holding in Bryant brought to light that the pertinent regulations do not clearly reflect VA's intent. Therefore, VA has decided to make clarifying changes to §§ 3.103 and 20.706 to ensure that the distinction between the duties of AOJ hearing officers and Board Members (also known as Veterans Law Judges (VLJs), see § 19.2(b)) is clear on the face of the pertinent regulations and will not result in further confusion.

In part 3, VA is revising § 3.103(a) to clarify that the provisions governing hearings in § 3.103 only apply to hearings conducted before the AOJ and that the provisions in part 20 govern hearings before the Board. VA is also removing the following language from § 3.103(c)(1): “subject to the limitations described in § 20.1304 of this chapter with respect to hearings in claims which have been certified to the Board of Veterans Appeals for appellate review.” This language is not necessary since the revision to paragraph (a) clarifies that § 3.103 does not apply to Board hearings. VA is also revising paragraph (c)(1) to change references to “original determinative authority” to “VA office having original jurisdiction”. This language is consistent with other portions of § 3.103(c)(1).

In part 20, VA is amending § 20.706 to state that the conduct of hearings by presiding Board Members or VLJs is governed by subpart H of part 20 and that Board Members are not bound by the hearing provisions of § 3.103(c). In Appendix A, VA is removing two cross references to § 3.103 listed for §§ 20.1 and 20.1304 to ensure they do not cause any confusion regarding the correct applicability of § 3.103.

This document merely clarifies current procedures for obtaining and conducting a hearing on a claim for VA benefits before the VA agency of original jurisdiction or the Board. It does not create new procedure, and no substantive change is intended. Accordingly, this document is being published as a final rule pursuant to 5 U.S.C. 553(b)(A), which excepts procedural rules from the APA's notice-and-comment and delayed effective date requirements.

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

The initial and final regulatory flexibility analysis requirements of sections 603 and 604 of the Regulatory Flexibility Act, 5 U.S.C. 601-612, are not applicable to this rule because a notice of proposed rulemaking is not required for this rule. Even so, the Secretary of Veterans Affairs hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This rule will affect only individual VA beneficiaries and will not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB) unless OMB waives such review, as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action planned or taken by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof, or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

VA has examined the economic, interagency, legal, and policy implications of this rulemaking and has concluded that it is not a significant regulatory action under the Executive Order.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more (adjusted annually for inflation) in any given year. This rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance program numbers and titles for this rule are 64.100, Automobiles and Adaptive Equipment for Certain Disabled Veterans and Members of the Armed Forces; 64.101, Burial Expenses Allowance for Veterans; 64.102, Compensation for Service-Connected Deaths for Veterans' Dependents; 64.103, Life Insurance for Veterans; 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.105, Pension to Veterans Surviving Spouses, and Children; 64.106, Specially Adapted Housing for Disabled Veterans; 64.109, Veterans Compensation for Service-Connected Disability; 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death; 64.114, Veterans Housing—Guaranteed and Insured Loans; 64.115, Veterans Information and Assistance; 64.116, Vocational Rehabilitation for Disabled Veterans; 64.117, Survivors and Dependents Educational Assistance; 64.118, Veterans Housing—Direct Loans for Certain Disabled Veterans; 64.119, Veterans Housing—Manufactured Home Loans; 64.120, Post-Vietnam Era Veterans' Educational Assistance; 64.124, All-Volunteer Force Educational Assistance; 64.125, Vocational and Educational Counseling for Servicemembers and Veterans; 64.126, Native American Veteran Direct Loan Program; 64.127, Monthly Allowance for Children of Vietnam Veterans Born with Spina Bifida; and 64.128, Vocational Training and Rehabilitation for Vietnam Veterans' Children with Spina Bifida or Other Covered Birth Defects.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on August 16, 2011, for publication.

For the reasons set forth in the preamble, VA amends 38 CFR parts 3 and 20 as follows:

The HCHV program is authorized by 38 U.S.C. 2031, under which VA may provide outreach as well as “care, treatment, and rehabilitative services (directly or by contract in community-based treatment facilities, including halfway houses)” to “veterans suffering from serious mental illness, including veterans who are homeless.” One of VA's National priorities is a renewed effort to end homelessness for veterans. For this reason, we are establishing regulations that are consistent with the current administration of this program.

The primary mission of the HCHV program is to use outreach efforts to contact and engage veterans who are homeless and suffering from serious mental illness or a substance use disorder. Many of the veterans for whom the HCHV program is designed have not previously used VA medical services or been enrolled in the VA health care system.

Through the HCHV program, VA identifies homeless veterans with serious mental illness and/or substance use disorder, usually through medical intervention, and offers community-based care to those whose conditions are determined, clinically, to be managed sufficiently that the individuals can participate in such care. We have assisted homeless veterans with substance use disorders through this program because, based on our practical understanding and experience, the vast majority of homeless veterans have substance use disorders. Treating substance use as a mental disorder is consistent with the generally accepted “disease model” of alcoholism and drug addiction treatment, as well as the modern use of medical intervention to treat the condition. We believe that if a substance use disorder is a contributing cause of homelessness, then that disorder is serious; therefore, it is consistent to include such veterans in a program designed for “veterans suffering from serious mental illness, including veterans who are homeless.” 38 U.S.C. 2031(a).

Veterans who are identified and who choose to participate in this form of care as part of their treatment plan are then referred by VA to an appropriate non-VA community-based provider. In some cases, VA will continue to actively medically manage the veteran's condition, while in other cases a VA clinician may determine that a veteran can be sufficiently managed through utilization of non-medical resources, such as 12-step programs.

To provide the community-based care, the HCHV program contracts with non-VA community-based providers, such as halfway houses, to provide to these veterans housing and mental health and/or substance use disorder treatment. VA provides per diem payments to these non-VA community-based providers for the services provided to veterans. The services provided under these contracts are typically short-term, because during their stay veteran-participants are connected with other resources designed to provide longer-term housing. These contracts, and the per diem payment, are governed by the Federal Acquisition Regulations, and the VA supplements thereto contained in the Department of Veterans Affairs Acquisition Regulation, 48 CFR chapter 8. These are the rules that specifically govern requirements exclusive to VA contracting actions.

On December 20, 2010, we proposed to establish a new 38 CFR part 63 for the HCHV program because the program is unique and may be distinguished from therapeutic housing or other VA programs designed to end homelessness. 75 FR 79323. We included a 60-day comment period and invited interested persons to submit written comments on or before February 18, 2011. We received five comments from members of the public.

A commenter stated that she supported this rulemaking and that the HCHV “program has a solid foundation.” The commenter further stated that the program “should be successful in finding and helping these veterans in need.” We agree that this rulemaking will help VA better serve homeless veterans that have serious mental illness or substance use disorders.

Another commenter stated that we should minimize the paperwork burden on veterans by designing and implementing a single information technology program that agencies can use to share information about the veteran. Although we generally agree that technology increases the possibilities for reduced paperwork from veterans and increased information-sharing within the government, this comment is outside the scope of this rulemaking. The proposed rule addressed contracting with non-VA community-based providers to furnish services to certain homeless veterans while the comment addresses information sharing. We note that the only collection of information required by this rulemaking places obligations on the non-VA community based providers with whom VA would contract, not homeless veterans. Veterans will only have to meet the eligibility criteria in § 63.13(a).

The same commenter suggested that VA form “contract[s with] facilities that have multiple uses under one roof, providing shelters, social and health services * * *, and medical services” in a single facility, so that “the homeless veteran will only have to go to one facility to receive treatment and or live.” The commenter suggests that such a facility would eliminate the burden of travelling to different locations and repeating paperwork at each one.

Section 63.10(a) authorizes VA to “award per diem contracts to non-VA community-based providers who provide temporary residential assistance” and “who can provide the specific services” covered by the HCHV program regulations. In turn, § 63.15 identifies covered services as including therapeutic and rehabilitative services; structured group activities, such as group therapy and professional counseling; and residential room and board. Thus, the HCHV program offers veterans the opportunity to have many of their needs met at one particular facility; however, medical needs must be addressed at an appropriate medical facility. Moreover, rather than restrict the location of services to “one facility,” we encourage non-VA community-based providers to utilize community services because, based on our experience, we believe that the use of community resources is vital to the success of homelessness programs and in helping veterans return to the community as healthy, productive citizens. We also note that VA social workers and caseworkers work closely to place veterans in the HCHV program, providing assistance with any paperwork and/or logistical burdens.

Additionally, the rule clearly requires the contract facility to assist veterans in obtaining community resources and assistance, and applicants are scored based in part on proximity to public transportation and community interaction. Thus, we believe that this population of veterans is better served by organizations that encourage involvement in the community, rather than those that treat the population in a more institutionalized fashion by providing all services under one roof. We make no change based on the comment.

A commenter asked what happens to homeless veterans who do not meet the eligibility requirements for the HCHV program and recommended that the program be open to all homeless veterans.

The proposed rule addressed homeless veterans, who are seriously mentally ill and/or have substance use disorders, while the comment addresses other veterans who do not meet the eligibility criteria of the HCHV program. These criteria are prescribed by 38 U.S.C. 2031, which we interpret as authorizing VA authority to provide care to veterans who are both homeless and seriously mentally ill. Section 2031 does not authorize the broader program proposed by the commenter. We discuss this interpretation in greater detail in response to a later comment, and make no change based on this comment. However, we note that to the extent some homeless veterans will not be covered by this program because they are not seriously mentally ill, they will be eligible for a wide variety of VA programs designed to reduce or eradicate homelessness in our Nation's veteran population, many of which are not specifically targeted to veterans that have serious mental illness. These include housing support programs such as the Grant and Per Diem Program, the Department of Housing and Urban Development and VA Supported Housing program, and the Supportive Services for Veteran Families program.

A commenter requested that VA prescribe rules regarding assistance for covered veterans after they receive the prescribed 6 months of treatment and regarding veterans who are not rehabilitated by the 6-month course of treatment.

The proposed rule addressed VA's authority to contract with non-VA community-based providers in the administration of the HCHV program, which is designed to address the short-term, immediate needs of this veteran population, while, simultaneously, efforts are made to connect the population with resources that can provide assistance with permanent housing and other long-term needs that the HCHV program is not equipped to address.

VA anticipates that the vast majority of veterans who are the subject of a contract with a non-VA community based provider under this program will have transitioned to a longer term support structure at the end of the 6-month period prescribed by this rule. At that point, the veteran will likely still be receiving other VA benefits and services. It is possible that in some situations, VA will need additional time, beyond 6 months, to connect a veteran with a particularly challenging case to other services, whether provided by VA or not. In such a situation, the rule envisions the possibility of extending the contract period for “extraordinary circumstances” in § 63.10(c)(2). Therefore, we make no change based on this comment.

A commenter expressed concern that the proposed regulation “would enact a more restrictive interpretation regarding eligibility than Congress intended” under 38 U.S.C. 2031(a) because it requires a veteran to be both homeless and have a serious mental disorder. The commenter argues, using statutory interpretation and arguments based on the legislative history of section 2031, that (1) “a veteran's homeless condition is sufficient for assistance” without regard to the veteran having a serious mental illness; and (2) that the proposed rule would make the statutory homelessness requirement “surplusage.” The commenter cautions that if VA does not adopt their construction, a “costly adverse judicial determination” could result.

As the commenter points out, judicial review of an agency's construction of a statute it administers is governed by Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). To state the law very briefly, Chevron envisions a two-step analysis. If the statute is plain, and the intent of Congress is clear, that is the end of the matter. If, however, the statute is ambiguous on the point at issue, a reviewing court asks whether the agency's construction is reasonable.

We believe the statute is plain on this point. Section 2031(a) provides in pertinent part:

The statute clearly identifies homeless veterans as a subset of veterans who may be suffering from serious mental illness and therefore in need of medical care pursuant to 38 U.S.C. 1710. Under the plain language of the statute, Congress excluded homeless veterans who do not need medical care for a serious mental illness. Congress has authorized other programs to assist that segment of the homeless veteran population. The reference to section 1710 makes clear that programs authorized by section 2031 are for veterans suffering from serious mental illness only.

Even if the statute is ambiguous, our interpretation that it applies to veterans who are homeless and have a serious mental illness is consistent with Congress' intent. Congress initially enacted what is now section 2031 at 38 U.S.C. 1711. Veterans Health Programs Improvement Act of 1997, Public Law 105-114, Title II, § 202(a). This section was amended and renumbered without substantive change into current section 2031. Homeless Veterans Comprehensive Assistance Act of 2001, Public Law 107-95, § 5(b)(2). A separate House bill which preceded Public Law 105-114 contained language that is for all relevant purposes identical to current section 2031. H.R. 2206 § 2(a), 105th Cong. (1997).

The deliberations surrounding this prior bill clearly illuminate Congressional understanding of the language now found in section 2031. H. Rep. No. 105-293 (1997). Congress found there to be substantial “overlap and redundancy” among many prior VA statutory authorities “targeted primarily to providing psychiatric residential treatment to homeless, mentally ill veterans.” Id. at 10 (emphasis added). Congress therefore undertook to consolidate the authorities for three programs, including the contract halfway-house care program for veterans suffering from alcohol and drug dependence, the community-based residential care program for homeless chronically mentally ill veterans, and a program providing transitional therapeutic housing, into one statute. Id. at 12. Congress plainly intended current section 2031 to authorize psychiatric residential treatment to homeless veterans who are also mentally ill; all three authorities combined into current section 2031 dealt with treatment for veterans suffering from some kind of mental illness or otherwise requiring therapeutic residential treatment.

Furthermore, the legislative history presented in support of the comment is not persuasive. The commenter argues that Congress intended to reach veterans who are homeless without regard to their having a serious mental illness based on an interpretation of a prior version of the statute using definitions from 24 CFR 91.5, which are regulations promulgated by the Department of Housing and Urban Development (HUD), which is not charged with interpreting VA statutes. Thus, HUD's definitions are simply inapplicable.

Additionally, the commenter's argument, even taken at face value, would at most affect the proper understanding of the term “homeless” and would not on its own dictate the proper interpretation of section 2031. The commenter notes that former 38 U.S.C. 2001 indicates that 38 U.S.C. chapter 20 used to address “chronic homelessness,” which required as a criterion serious mental illness or some other kind of disability. The commenter argues this has been replaced with the more general term, “homeless.” Even if true, this analysis would only affect the proper understanding of the term “homeless,” implying that term does not necessarily include serious mental illness. However, under our interpretation of section 2031, serious mental illness is a freestanding criterion. Since serious mental illness is a separate requirement in the statute, we do not believe the commenter's argument affects our construction of the proper scope of this program. Our interpretation is reasonable because Congress could not have intended that homelessness alone indicates a severe mental illness requiring the kind of care authorized by sections 2031 and 1710. As the commenter points out, up to 20 percent of homeless veterans are homeless for reasons other than mental illness. This fact is irreconcilable with the idea that “homeless” is a subset, or type of, serious mental illness, which is the construction urged by the commenter. As for the comment that our rule would make homelessness surplusage, we must, again disagree. Pursuant to § 63.3(a)(1), eligibility is predicated on the veteran being homeless, and under § 63.10(a), contracts are authorized only to non-VA community-based providers who provide temporary residential assistance for homeless persons.

Finally, we note that the program as implemented by VA and described in this rule will reach most homeless veterans, up to 80 percent. As stated in the proposed rule, chronic homelessness is generally caused by substance abuse or serious mental illness. Congress determined for purposes of this program that VA should allocate some of its mental health care resources to target homelessness caused by serious mental illness. As described above, we do not interpret current law as authorizing VA to focus mental health care resources on those who are not mentally ill. Additionally, Congress has determined that veterans who are homeless for other reasons will qualify for other VA programs and services. See, e.g., 38 U.S.C. 2021-23, 2041-44. This reinforces our view that section 2031 is intended to reach seriously mentally ill homeless veterans because this population is not specifically identified elsewhere in 38 U.S.C. chapter 20.

The commenter also hypothesizes that the additional expenditure of resources that would be required by the commenter's interpretation of the law, expanding the program to cover homelessness regardless of mental illness, would be offset by savings in clinician time. The commenter argues that clinicians would not need to make any determination regarding mental illness if the program covered every homeless veteran. As we explain above, we do not interpret section 2031 to authorize VA to allocate its limited mental health care resources to veterans who are not mentally ill. Therefore, the question of whether or not the reduction in “billable time” realized by not determining whether a veteran is seriously mentally ill adds up to more or less than the cost of paying per diem on behalf of that veteran for up to 6 months is not relevant.

The commenters also cited the numbers of homeless veterans who are not eligible for the HCHV program. We make no change based on the commenter's request that we amend the rules “to include a specific reference to programs” that address homeless veterans who are not seriously mentally ill. We have identified several such programs in this notice, but it would be unwise to include a definitive statement in the rule since VA's list of programs targeted at this difficult problem is constantly evolving, and it would be a needless waste of resources to have to amend and update 38 CFR part 63 every time VA altered or added an unrelated program. Further, the purpose of this rulemaking is to prescribe rules that govern a specific program. It is not intended as a general notice regarding the various benefits and services that may be available to homeless veterans. VA uses outreach and other methods to advise veterans regarding the benefits that may be available to them.

Although we are not making any changes to the rule based on the comments, we do make one minor administrative change. We are inserting a comma after the word “training” in the first sentence of § 63.15(b)(1). This fixes a typographical error of omission in the proposed rule. We are not altering the substantive content of the paragraph by making this change.

VA appreciates the comments submitted in response to the proposed rule. Based on the rationale stated in the proposed rule and in this document, the proposed rule is adopted with the technical change noted above.

This final rule at § 63.15(e)(3) contains a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) that requires approval by the Office of Management and Budget (OMB). On December 20, 2010, in the proposed rule published in the Federal Register , we requested public comment on the new collection of information. We received no comments concerning the new collection of information. OMB has approved the information collection requirement for § 63.15(e)(3) as a revision to OMB Control Number 2900-0091.

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. The reason for this certification is that only a small portion of the business of health care providers, suppliers, or similar entities concerns VA beneficiaries. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a “significant regulatory action,” requiring review by OMB unless OMB waives such a review, as any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action planned or taken by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined not to be a significant regulatory action under Executive Order 12866.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any given year. This final rule would have no such effect on State, local, and Tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are: 64.007, Blind Rehabilitation Centers; 64.009, Veterans Medical Care Benefits; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on July 27, 2011, for publication.

For the reasons stated in the preamble, VA amends 38 CFR chapter I by adding part 63 to read as follows:

Amendment of 39 CFR part 912 is necessary to update the mailing address of the National Tort Center. This rule is a change in agency rules of procedure that does not substantially affect any rights or obligations of private parties. Therefore, it is appropriate for its adoption by the Postal Service to become effective immediately.

For the reasons set forth above, the Postal Service amends 39 CFR Part 912 as follows: