The NOP selected the topic for the draft guidance announced through this notice in response to a recommendation issued by the National Organic Standards Board (NOSB) in October 2010. On October 28, 2010, the NOSB finalized a recommendation requesting that the NOP clarify the requirements and limitations of 7 CFR 205.101(b) of the NOP regulations. 1 This section of the regulations addresses the conditions that a handling operation must meet in order to be excluded from the organic certification requirements of Part 205. The NOSB recommended that NOP issue guidance to clarify how these conditions apply to handlers of bulk, unpackaged organic products. The NOP is responding to this recommendation by issuing draft guidance to outline the types of handling operations that are or are not excluded from organic certification. The draft guidance proposes that brokers, traders or distributors of bulk, unpackaged organic commodities or livestock are not excluded from certification and, therefore, must be certified organic operations.

This draft guidance document is being issued in accordance with the Office of Management and Budget (OMB) Bulletin on Agency Good Guidance Practices (GGPs) (January 25, 2007, 72 FR 3432-3440).

The purpose of GGPs is to ensure that program guidance documents are developed with adequate public participation, are readily available to the public, and are not applied as binding requirements. The draft guidance, when finalized, will represent the NOP's current thinking on the topic. It does not create or confer any rights for, or on, any person and does not operate to bind the NOP or the public. Guidance documents are intended to provide a uniform method for operations to comply that can reduce the burden of developing their own methods and simplify audits and inspections. Alternative approaches that can demonstrate compliance with the Organic Foods Production Act (OFPA), as amended (7 U.S.C. 6501- 6522), and its implementing regulations are also acceptable. As with any alternative compliance approach, the NOP strongly encourages industry to discuss alternative approaches with the NOP before implementing them to avoid unnecessary or wasteful expenditures of resources and to ensure the proposed alternative approach complies with the Act and its implementing regulations.

Persons with access to Internet may obtain the draft guidance at either NOP's Web site at http://www.ams.usda.gov/nop or http://www.regulations.gov. Requests for hard copies of the draft guidance documents can be obtained by submitting a written request to the person listed in the ADDRESSES section of this Notice.

In June 2011, the Board issued ANPR I (76 FR 37030, June 24, 2011) requesting public comment on whether and how to modify its rule on investment and deposit activities to permit FCUs to enter derivatives transactions for the purpose of offsetting IRR. It now seeks additional information to assist in drafting a proposed rule for FCUs to independently engage in derivatives transactions ( i.e., without program oversight by a third-party provider).

ANPR I requested comment in five areas. Three areas asked for comments on NCUA's current pilot program and third-party programs in general. Only two areas concentrated on independent derivatives authority. As the Board focuses on developing requirements for such authority, it seeks additional information to help ensure that a rule granting independent derivatives authority is manageable for both participating FCUs and NCUA, while simultaneously protecting the credit union industry from undue risk.

Since the inception of the derivatives pilot program, very few FCUs have submitted applications seeking permission to independently engage in derivatives to offset IRR. In ANPR I, the Board sought comment on whether it should allow FCUs to independently engage in derivatives activities. Nearly all commenters who responded to this question supported independent derivatives authority for FCUs. As discussed more fully below, however, not all commenters agreed on the conditions under which the NCUA should grant such authority.

The Board is assessing the parameters under which NCUA may authorize FCUs to independently engage in derivatives activities, and invites comment on the issues raised in this ANPR. To facilitate consideration of the public's views, please address your comments to the specific questions, and organize and identify them by corresponding question number so that each question is addressed separately. To maximize the value of public input on each issue, it is also important that commenters provide and explain the reasons that support each of their opinions. There will be a further opportunity to comment on these issues should the Board issue a proposed rule.

The Board is considering eligibility requirements for FCUs seeking authority to independently enter into derivatives transactions. ANPR I asked several eligibility questions, including what criteria NCUA should consider in granting or denying a request for independent derivatives authority. As noted above, nearly all commenters who addressed the issue of independent derivatives authority supported it. Yet not all of these commenters agreed on the conditions under which NCUA should grant such authority.

Three commenters supported allowing FCUs to independently engage in derivatives activity without further comment. Ten commenters stated that NCUA should consider allowing FCUs to independently engage in derivatives activity, subject to ability to manage derivatives, expertise, and adequate controls, and so long as the activity is shown to offset IRR. Three commenters supported allowing independent derivatives authority for FCUs, but only after they have participated in a third-party program. Two commenters supported independent derivatives approval only if it is limited and qualified by high standards, although these commenters did not define “high standards.” Nine commenters discouraged the use of numerical criteria, such as asset size. Five commenters suggested that NCUA should consider experience, correlation testing, and modeling expertise. Ten commenters stated that FCUs applying to engage independently should comply with the current third-party pilot program standards.

The Board is considering eligibility requirements based on at least three factors, including need, financial condition, and ability to manage derivatives. First, an FCU would need to demonstrate relevant IRR exposure. One of the motivations behind the Board's consideration of expanded derivatives authority is to reduce potentially excessive IRR. The Board, therefore, believes that demonstrating a material exposure to IRR, and how an FCU can mitigate it through derivatives activity, is an appropriate requirement. Second, an FCU would be required to demonstrate a requisite level of financial performance, measured in part by its CAMEL rating and net worth classification. Third, an FCU would need to demonstrate an ability to effectively manage derivatives, including minimum experience requirements for FCU staff involved in the analysis and ongoing risk management of a derivatives book. The Board considers the second and third requirements to be appropriate given the complexity of, and inherent risks in, derivatives transactions.

The Board recognizes that FCUs generally have limited experience with derivatives. Only eight FCUs participated in existing derivatives pilot programs as of June 2011. Of these, six FCUs participated in third-party programs and only two FCUs were authorized to independently engage in derivatives transactions. Generally, most credit unions have an interest rate sensitivity exposure to rising rates, so the downward direction of market rates during the past five years may largely account for FCUs' moderated interest in derivatives. With NCUA and FCUs themselves increasingly concerned about the impact of future rising interest rates on credit unions' balance sheets, especially those with heavy concentrations of long-term, fixed-rate assets, the Board expects that more FCUs may wish to pursue derivatives as a way to manage IRR. Yet, given the complexity of even the most straightforward derivatives instruments, the Board believes that an FCU should independently engage in derivatives transactions only if FCU management and staff can demonstrate adequate derivatives experience. This position is consistent with the majority of commenters that responded to the independent derivatives authority questions in ANPR I.

The Board believes that what constitutes “adequate derivatives experience” will vary depending on the nature and complexity of an FCU's balance sheet. As noted in ANPR I, the Board is considering whether to limit the types of derivatives instruments that some FCUs may transact. If an FCU is limited to relatively simple, “plain vanilla” derivatives instruments such as interest rate swaps  2 and interest rate caps, 3 the Board believes that the FCU's staff should demonstrate at least three years of effective experience with derivatives, including the ability to evaluate key risk factors. A commensurate level of additional experience likely would be required for FCUs whose assets or liabilities exhibit more complex IRR characteristics.

If an FCU is seeking independent derivatives authority, the Board believes it is inappropriate for the FCU to rely exclusively on the derivatives experience of an outside party. Instead, the FCU would be required to demonstrate sufficient internal knowledge of derivatives, perhaps in an onsite review prior to the FCU receiving independent derivatives authority.

The Board believes that, when transacted properly, derivatives can be an effective tool for FCUs to use in IRR mitigation. The Board further believes that transacting derivatives for other purposes, such as speculation, could present unforeseen risks. Accordingly, the Board considers it appropriate to limit the types of derivatives that an FCU may transact to interest rate derivatives instruments that serve to mitigate IRR, namely interest rate swaps and interest rate caps.

Most credit unions with material IRR exposures use short-term liabilities to fund long-term fixed assets. FCUs can mitigate this type of IRR exposure by using interest rate swaps and interest rate caps. Interest rate swaps, particularly “pay-fixed/receive-floating” swaps in which one party pays a fixed rate of interest and receives a floating rate, can offset IRR resulting from cash flows received on fixed, long-term assets such as fixed-rate mortgage loans. Interest rate caps can offset IRR resulting from cash flows paid on liabilities that are either short term or associated with nonmaturity shares on which interest rates may vary by limiting the risk exposure to the capped rate. Other derivatives instruments, such as credit derivatives (e.g., credit default swaps), provide limited IRR mitigation value and potentially could be used for speculation. For these reasons, the Board believes that only interest rate derivatives instruments are appropriate for FCUs to use in managing IRR.

There are numerous risks inherent in any derivatives activity, including market risk and counterparty risk. The constant fluctuation of the mark-to-market value of a derivatives position represents the most significant market risk. Mark-to-market valuation requires the value of a derivatives instrument to be set at discrete points in time as prescribed by generally accepting accounting principles. This valuation represents the then-current market sales price for that instrument, which reflects any unrealized gain or loss for the FCU in the derivatives transaction.

The Board is considering whether to establish exposure limits as a way to guard against such volatility in the value of a derivatives portfolio. For example, if an FCU experiences mark-to-market losses in excess of a specified threshold, NCUA could limit the FCU's authority to transact derivatives. These limits may be based on the notional amount of a derivatives instrument or on its mark-to-market valuation. The Board notes that the third-party pilot program includes exposure limits that are based on the notional amount of the derivatives portfolio, expressed as a percentage of the credit union's net worth. Some commenters to ANPR I, however, have suggested that exposure limits should be based on mark-to-market valuation.

Another significant risk in derivatives activity is counterparty risk, also known as “default risk” or “credit risk.” Counterparty risk is the risk that losses will occur due to a counterparty's failure to fulfill its obligations under the derivatives contract. The Board believes that, to manage counterparty risk, an FCU should, on an ongoing basis, monitor counterparties and their creditworthiness, as well as the credit risk mitigation features inherent in the derivatives transaction ( e.g., margin requirements, daily valuations of collateral, and performance of third parties).

Consistent with the need to carefully monitor credit features, the Board believes that counterparty risk can be substantially mitigated through effective collateral management. In derivatives transactions, parties may be required to post collateral to secure their obligations under the derivatives contract. Posting collateral protects either party in a derivatives transaction from the risk of loss, which may occur for a number of reasons including counterparty default. The Board, therefore, believes it is appropriate for an FCU to include the following collateral management standards in the related derivatives contract:

• Bilateral collateral, in which both parties to a derivatives contract agree to post collateral to cover mark-to-market gains and losses.

• Tri-party custody, in which posted collateral is delivered to a third party acting as custodian.

• Zero thresholds, in which parties are required to post collateral at any level of loss over a minimum amount specified in the derivatives contract.

• Restricting the type of assets used as posted collateral to instruments permitted for investment by an FCU.

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

We propose to adopt a new AD for the Sikorsky Model S-61A, D, E, L, N, NM, R, and V helicopters with a fuel system 40 micron fuel filter element, part number (P/N) 52-0505-2 or 52-01064-1. This proposed AD would require replacing each forward and aft fuel system 40 micron fuel filter element with a 10 micron fuel filter element. This proposed AD was prompted by an NTSB review of in-service events involving Sikorsky S-61 model helicopters where engine performance degradation occurred. The review determined that contaminants larger than 10 microns entering the engine FCU can migrate to the internal servo valves and the pressuring regulating valve, causing them to malfunction. Malfunction of these valves can result in abnormal engine operation and loss of power. The NTSB conducted this review as a part of its investigation of an accident involving a Sikorsky S-61 model helicopter. During disassembly and examination of the FCUs in the accident helicopter, the NTSB found trace levels of contamination in each FCU, indicating the filters in the fuel supply system did not completely filter contaminants from the fuel. The NTSB stated that no evidence exists that contamination contributed to the accident, but concluded that using fuel system 10 micron fuel filters could reduce the risk of engine performance degradation occurring due to fuel contamination. This condition of particulate contamination in the FCU, if not corrected, could lead to malfunction of an internal valve, power loss at a critical phase of flight, and loss of control of the helicopter.

We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

We reviewed Sikorsky Alert Service Bulletin (ASB) No. 61B30-16, dated February 2, 2010 (ASB No. 61B30-16), which supersedes ASB No. 61B28-1, dated January 15, 2010 (ASB No. 61B28-1). ASB No. 61B28-1 specified replacing the forward and aft fuel system 40 micron fuel filter elements with 10 micron fuel filter elements at the next scheduled inspection or within 150 flight hours from the issuance of the ASB. ASB 61B30-16 retains the same instructions as ASB 61B28-1, but deletes the compliance time “at the next scheduled preventative maintenance inspection.” Also, ASB No. 61B30-16 was issued because ASB No. 61B28-1 was incorrectly numbered.

This proposed AD would require, within 150 hours time-in-service (TIS), replacing each forward and aft fuel system 40 micron fuel filter element with a 10 micron fuel filter element. Thereafter, operators would only be permitted to install a fuel system 10 micron fuel filter element when replacing the forward or aft fuel system fuel filter element. This proposed AD would also require re-identifying the fuel filter and the fuel control assembly.

ASB 61B30-16 specifies complying with the instructions within 150 flight hours from the issuance of the ASB, but this proposed AD requires complying with the instructions within 150 hours TIS from the effective date of the proposed AD.

We estimate that this proposed AD would affect 78 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. It would take approximately 4 work-hours to replace the fuel system fuel filters and re-identify the fuel tank fuel filter and fuel control assembly bracket. The average labor rate is $85 per work-hour and required parts will cost about $370 per helicopter. Based on these figures, we estimate the cost of the proposed AD on U.S. operators would be $710 per helicopter and the total cost of this AD on U.S. operators would be $55,380.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

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

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

This document proposes adopting a new AD for AAI aft crosstubes installed during production or based on STC SR01502AT on certain Bell and Agusta model helicopters. This proposal would require certain recurring visual, dimensional, and fluorescent penetrant inspections of each aft crosstube. If there is a crack, the AD would require, before further flight, replacing any cracked aft crosstube with an airworthy aft crosstube. This proposal would also require establishing a life limit for one of the affected part-numbered aft crosstubes (as the later part-numbered aft crosstube already has limits established) and creating a component history card or equivalent record for aft crosstube part number (P/N) 412-321-304. This proposal is prompted by three reports of failed aft crosstubes. This condition, if not corrected, could result in collapse of the landing gear, and subsequent loss of control of the helicopter.

We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed AAI Alert Service Bulletin No. AA-07109, dated April 3, 2008 (ASB), which specifies recurring inspections and maintenance of each aft crosstube, P/N 412-321-104, installed as an approved part by Bell during production, and P/N 412-321-304, installed under STC SR01052AT, on Bell Model 412, 412EP, and 412CF and Agusta Model AB412 and AB412EP helicopters. The ASB specifies establishing a high aft crosstube, P/N 412 321-304, “takeoff/landing” life limit of 20,000. Also, the ASB specifies that operators should follow helicopter towing instructions to prevent crosstube damage or failure as a result of ground handling or towing.

We have also reviewed Bell ASB 412-08-129, dated May 12, 2008, for Bell Model 412 and 412EP helicopters, serial numbers 33001 through 33213, 36001 and subsequent, with an aft crosstube P/N 412-321-104 installed. Bell issued its ASB “to achieve complete distribution of AA-07109 vendor bulletin to the current affected model distribution list.”

This proposed AD would require:

• Within 50 hours time-in-service (TIS), establishing a life limit of 20,000 takeoffs and landings for aft crosstube P/N 412 321 304; creating a component history card or equivalent record; and determining and recording the total number of takeoffs and landings for each aft crosstube.

• Within the next 450 takeoffs and landings, if an aft crosstube has reached 20,000 or more takeoffs and landings, replacing it with an airworthy aft crosstube.

• At specified intervals, preparing the aft crosstube inspection areas and inspecting each aft crosstube for a crack. If there are no cracks, thereafter at specified intervals, priming and cleaning the inspection area, and inspecting each aft crosstube for a crack. If there is a crack, before further flight, replacing the cracked aft crosstube with an airworthy aft crosstube.

• At specified intervals, determining the horizontal deflection of each aft crosstube from the centerline of the helicopter (BL 0.0) to the outside of the skid tubes. If the measured horizontal deflection exceeds aft crosstube limits, replacing the aft crosstube with an airworthy aft crosstube.

• At specified intervals, removing the aft crosstube assembly, removing paint and sealant, and fluorescent penetrant inspecting each aft crosstube for a crack. If there are no cracks, priming and painting the inspection area. If there is a crack, before further flight, replacing each cracked aft crosstube with an airworthy aft crosstube.

This proposed AD would revise the Airworthiness Limitations section of the applicable maintenance manuals or the Instructions for Continued Airworthiness (ICA) by establishing a new retirement life of 20,000 takeoffs and landings for aft crosstube P/N 412-321-304 by making pen and ink changes or inserting a copy of the AD into the maintenance manual or the ICAs.

We estimate that this proposed AD would affect 115 helicopters of U.S. Registry.

We also estimate that the proposed actions would take about:

• 1 hour to create a component history card or equivalent record and determine and record the number of accumulated takeoffs and landings for each affected aft crosstube;

• 3 hours to prepare the area for a visual inspection;

• 1/2 hour to do the repetitive visual inspections, assuming 14 repetitive visual inspections per year;

• 1 hour to do a dimensional inspection of the skid gear, assuming 3 inspections per year;

• 24 hours to prepare and fluorescent penetrant inspect the aft crosstube, assuming 2 inspections per year; and

• 10 hours to replace an aft crosstube, if necessary, assuming 3 aft crosstubes would be replaced.

The average labor rate is $85 per work hour. Required parts would cost about $9,315 per aft crosstube. Based on these figures, we estimate the total cost impact of the proposed AD on U.S. operators to be $636,545.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

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

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

We propose to adopt a new AD for the specified Bell model helicopters with an ASU Night Vision Lighting Imaging System installed per STC SR01383SE. This proposed AD is prompted by the finding that an unfiltered TOT indicator over-temperature warning light, when illuminated, created glare and reflections that could degrade the pilot's view while the pilot is using night vision goggles. This proposed AD would require determining the date of the STC installation, determining whether each helicopter has a TOT indicator unit with an internal over-temperature warning light. If an unfiltered TOT indicator over-temperature warning light is installed, this AD would require installing an NVIS filter. The proposed actions are intended to modify any unfiltered TOT indicator unit over-temperature warning light by installing a filter to prevent degradation of the pilot's vision while using night vision goggles and to prevent subsequent loss of control of the helicopter.

We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters with NVIS lighting installed per STC SR01383SE on or before April 6, 2011.

We reviewed ASU's Alert Service Bulletin No. ASU 206-2010-11-1, dated November 4, 2010 (ASB) for the Bell Helicopter Textron 206 series helicopters. The ASB states to visually inspect each helicopter to determine if the TOT indicator/gauge has an internal over-temperature warning light installed. If the over-temperature warning light is internal, the ASB specifies notifying ASU. ASU states it will immediately ship an NVIS filter, part number (P/N) ASU-TOTGAG-1.

This proposed AD would require, within 30 days or 50 hours time-in-service, whichever occurs first, determining the date of the STC installation. If the date is on or before April 6, 2011, or the date is undocumented, this AD would require determining if the TOT indicator unit has an internal over-temperature warning light. If the unit has an unfiltered internal over-temperature warning light, this AD would require installing an NVIS filter, P/N ASU-TOTGAG-1.

This proposed AD does not apply to helicopters modified by the STC after April 6, 2011, because a new design was approved for the STC on April 6, 2011, and contained instructions to install the NVIS over-temperature indicator light filter. This proposed AD does not require you to notify ASU.

We estimate that this proposed AD would affect 34 helicopters of U.S. registry. We estimate that operators may incur the following costs to comply with this AD: Determining the date, inspecting for an unfiltered, over-temperature TOT indicator light in the cockpit, and installing a filter would take about 1.8 work hours at $85 per hour. A filter would cost about $300. The total cost would be $15,402 assuming the filter would be installed on the entire fleet.

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction, and

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

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

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

Transport Canada (TC), which is the aviation authority for Canada, has issued AD CF-2010-32, dated September 30, 2010 (AD CF-2010-32), to correct an unsafe condition for the BHTC Model 427 helicopters, serial numbers (S/Ns) 56001 through 56084, and S/Ns 58001 and 58002. TC advises that a review of the tailboom attachment installation determined that the torque value of the bolts specified in the BHTC Model 427 Maintenance Manual and applied during manufacturing exceeded the torque range recommended for the bolts. They state that this situation, if not corrected, could lead to a bolt failure, detachment of the tailboom, and loss of control of the helicopter.

This helicopter model is manufactured in Canada and is type certificated for operation in the United States under the provisions of 14 CFR 21.29 and the applicable bilateral agreement. Pursuant to the bilateral agreement, TC has kept the FAA informed of the situation described above. We are issuing this AD because we evaluated all information provided by TC and determined the unsafe condition is likely to exist or develop on other helicopters of these same type designs.

BHTC has issued Alert Service Bulletin No. 427-10-31, dated March 1, 2010 (ASB), which specifies installing new attachment hardware with a reduced torque value. This ASB specifies determining the torque of the newly installed bolts and nuts every 1 to 5 flight hours until torque stabilizes at all locations, and thereafter at intervals not to exceed 300 flight hours. TC classified this ASB as mandatory and issued AD CF-2010-32 to ensure the continued airworthiness of these helicopters.

This proposed AD would require, within 150 hours time-in-service (TIS) or 90 days, whichever occurs first, the following actions:

• Remove the left upper bolt, washers, and nut. Install the new bolt, part number (P/N) NAS627-27; washers, P/N 140-007-29S25E6 and P/N NAS1149G0732P; and new nut, P/N 42FLW-720. Run the nut onto the threads of the mating bolt with a torque wrench and measure the existing tare. Any bolt and nut used must have a minimum tare of 14 inch/lbs. Torque the nut and coat the bolt head, nut, and washers with appropriate corrosion preventive compound to seal the joint. Repeat these actions at the three remaining bolt locations.

• After installation of the new attachment hardware, at intervals of no less than 1 hour TIS but not exceeding 5 hours TIS, determine the torque of each nut until torque stabilizes at each attachment location. Thereafter, determine the torque of each nut at intervals not to exceed 300 hours TIS.

The actions would be required to be accomplished by following specified portions of the service bulletin described previously.

The differences between this proposed AD and the TC AD are as follows:

• The TC AD applies to the BHTC Model 427 helicopter, serial numbers 58001 and 58002; however, this proposed AD is not applicable to the BHTC Model 427 helicopters with these serial numbers because they are not eligible for an FAA Certificate of Airworthiness.

We estimate that this proposed AD would affect 28 helicopters of U.S. registry. We estimate it would take about 2.0 work-hours per helicopter to replace the hardware, and 1.0 work-hour per helicopter to determine the recurring torque value at an average labor rate of $85 per work hour. Required parts would cost about $488 per helicopter. Based on these figures, we estimate for the first year the total cost per helicopter to be $913, and the total cost impact on U.S. operators to be $25,564. This estimated total cost assumes attachment hardware will be replaced on all affected helicopters, the torque will be considered stabilized after one torquing, and the recurring 300 hour TIS torque determination will be accomplished twice a year.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

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

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

This document proposes adopting a new AD for the specified Bell model helicopters. This proposal would require creating a component history card or equivalent record and begin counting and recording the number of accumulated landings for each crosstube. Also, this proposal would require installing “caution” decals regarding towing of a helicopter at or above 8,900 pounds. This proposal would also require confirming that the crosstube is within the horizontal deflection limits and replacing it if it is not. This proposal would also require a recurring FPI of each crosstube and upper center support for a crack, any corrosion, a nick, scratch, dent, or any other damage. This proposal would require repairing damaged crosstubes and upper center supports that are within acceptable limits, reworking crosstubes by bonding on abrasion strips, and replacing each unairworthy crosstube with an airworthy crosstube. The affected crosstubes are the older non-anodized configuration and have had a service history of corrosion problems. In response to reports of field failures, Bell has completed a load level survey, material coupon testing, and additional analysis of the crosstubes. The results indicate that fatigue damage can occur during towing and landing. This condition, if not corrected, could result in failure of a crosstube, collapse of the landing gear, and subsequent loss of control of the helicopter.

We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

We have reviewed Bell Helicopter Alert Service Bulletin No. 412-09-135, dated August 25, 2009 (ASB). The ASB specifies, within 6 months after receiving the ASB, for each affected crosstube, a recurring 12 month/2500 landing FPI, a recurring 12 month/2500 landing deflection check, and use of a towing retention kit per BHT-412-SI-58 Gross Weight Towing Kit Provisions and Puller Equipment for helicopters that weigh 8,900 pounds or higher.

This proposed AD would require compliance with specified portions of the manufacturer's service bulletin. It would require for each crosstube:

We estimate that this proposed AD would affect 115 helicopters of U.S. Registry.

We estimate that operators may incur the following costs in order to comply with this AD. It would take about 1 hour to create a component history card or equivalent record and begin to determine and record the number of accumulated landings; 0.5 hour to install caution decals on the pilot and co-pilot side of each helicopter; 0.5 hour to measure the horizontal deflection of each crosstube; 3 hours to inspect and prepare the area and do an FPI on each crosstube; 4 hours to rework a crosstube, assuming 5 will need to be reworked; and 2 hours to replace a crosstube, assuming 3 will need to be replaced. The average labor rate is $85 per work-hour and required parts for a replacement crosstube would cost about $9,315 per helicopter. Based on these figures, we estimate the total cost impact of the proposed AD on U.S. operators to be $79,030.

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

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

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

For the reasons discussed, I certify this proposed regulation :

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

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

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

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

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Comments Invited

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2011-1237 and Airspace Docket No. 08-AWA-5) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Nos. FAA-2011-1237 and Airspace Docket No. 08-AWA-5.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://www.regulations.gov.

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Eastern Service Center, Federal Aviation Administration, Room 210, 1701 Columbia Ave., College Park, GA 30337.

Persons interested in being placed on a mailing list for future NPRMs should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The primary purpose of Class B airspace is to reduce the potential for midair collisions in the airspace surrounding airports with high density air traffic operations by providing an area in which all aircraft are subject to certain operating rules and equipment requirements. FAA directives require Class B airspace areas to be designed to contain all instrument procedures and that air traffic controllers vector aircraft as appropriate to remain within Class B airspace after entry. Controllers must inform the aircraft when leaving and entering Class B airspace if it becomes necessary to extend the flight path outside Class B airspace for spacing. However, in the interest of safety, FAA policy dictates that such extensions be the exception rather than the rule.

On May 21, 1970, the FAA issued a final rule that established the Atlanta, GA, Terminal Control Area (TCA) with an effective date of June 25, 1970 (35 FR 7784). The TCA was modified several times during the 1970s to accommodate revised instrument procedures, the addition of a fourth parallel runway, and to ensure that the flight paths of large turbine-powered aircraft remain within the designated airspace. In 1993, as part of the Airspace Reclassification Final Rule (56 FR 65638), the term “terminal control area” was replaced by “Class B airspace area.”

A fifth parallel runway became operational at the Hartsfield-Jackson Atlanta International Airport (ATL) in May 2006, enabling the implementation of Simultaneous Triple ILS operations as well as triple departure procedures. The new procedures added additional traffic and complexity to the ATL air traffic operation and the FAA found that not all aircraft could be contained within Class B airspace due to the existing design. To address this situation, the FAA issued a final rule in October 2006 (71 FR 60419) that lowered the floor of the Atlanta Class B airspace area from 6,000 feet MSL to 5,000 feet MSL within two small areas (approximately 9 NM by 5 NM), one to the east and one to the west of the airport and between the 20 NM and 25 NM arcs of the Atlanta VORTAC. The rule, however, was an interim measure that didn't address all issues with the Class B design, and the FAA noted its intent to conduct a thorough review of the Atlanta Class B airspace design for possible future revisions. Except for the changes implemented in the 2006 rule, noted above, the configuration of the Atlanta Class B airspace area has remained largely unchanged since the 1970s.

Traffic at ATL has increased dramatically in the years since the airspace was originally designed. The airport has expanded from three parallel runways in the early 1980s to five parallel runways today. The operation has changed from a large contingent of propeller-driven aircraft to an almost all jet fleet today with a varied mix of aircraft types in the terminal area. The operational complexity at ATL also has increased dramatically with the addition of the fifth runway and the introduction of advanced navigation procedures (e.g., RNAV SIDs and STARs), which necessitates additional Class B airspace and more stringent procedures. In addition, there is a renewed safety emphasis on retaining all large turbine-powered aircraft within the Class B airspace to avoid mixing with other aircraft that are not in contact with ATC. The Atlanta operation has outgrown the 1970s airspace design and air traffic controllers often must vector aircraft on inefficient routes in an effort to keep them within Class B airspace. Keeping large jet aircraft within the existing Atlanta Class B airspace is not always possible. For example, arrivals are sometimes required to extend the downwind leg beyond the lateral limits of the existing Class B airspace before turning onto final due to traffic volume. On hot summer days, heavy aircraft on departure are sometimes unable to climb fast enough to stay above the rising floor of the Class B airspace.

A review of comments received in response to the informal airspace meetings (see below) revealed some confusion over the meaning or application of several terms that apply to published VFR routes. Frequently, the terms are incorrectly used interchangeably. Since the terms are used in this NPRM, the following information is provided to explain the purpose of each type of route.

A VFR Corridor is airspace through a Class B airspace area with defined vertical and lateral boundaries in which aircraft may operate without an ATC clearance or communication with ATC. The corridor is, in effect, a “tunnel” through Class B airspace. Due to heavy traffic volume and procedures necessary to manage the flow of traffic, it has not been possible to incorporate VFR corridors in Class B airspace areas in recent years.

A VFR Flyway is a general flight path not defined as a specific course for use by pilots in planning flights into, out of, through or near complex terminal airspace to avoid Class B airspace. An ATC clearance is not required to fly these routes. Where established, VFR flyways are depicted on the reverse side of the VFR Terminal Area Chart (TAC), commonly referred to as “Class B charts.” They are designed to assist pilots in planning flights under or around busy Class B airspace without actually entering Class B airspace.

A Class B airspace VFR transition route is a route depicted on a TAC to accommodate VFR traffic transiting through a specific Class B airspace area. The route includes a specific flight course and specific ATC-assigned altitudes. Pilots must obtain an ATC clearance prior to entering Class B airspace on the route.

See the Aeronautical Information Manual (AIM) for more information about these routes.

In October 2008, the FAA took action to form an Ad Hoc Committee to develop recommendations for the FAA to consider in designing a proposed modification to the Atlanta Class B airspace area. The Georgia Department of Transportation (GDOT) Aviation Programs Office headed the group, which consisted of representatives from airports that underlie the Atlanta Class B airspace area, national aviation organizations, and the ballooning and soaring communities. The Committee met three times between February 2009 and April 2009.

As announced in the Federal Register of December 4, 2009 (74 FR 63818), informal airspace meetings were held on February 22, 2010, in Kennesaw, GA; on February 25, 2010, in Covington, GA; on March 1, 2010, in Chamblee, GA; and on March 4, 2010, at Peachtree City Falcon Field, Peachtree City, GA. The purpose of the meetings was to provide airspace users an opportunity to present their views and suggestions regarding modifications to the Atlanta Class B airspace area.

As a starting point for discussions, a preliminary Class B design was presented to the Ad Hoc Committee for review. In general, the preliminary design consisted of lower Class B floors within a reduced radius of 30 NM from the ATL VORTAC as opposed to the current 35 NM radius. The preliminary design retained the extensions on the southwest and southeast corners as well as proposing new extensions on the northwest and northeast corners that extended out to a 40 NM radius in those areas. The Ad Hoc Committee submitted several recommendations to the FAA regarding the proposed modifications of the Atlanta Class B airspace area.

The Committee raised three concerns related to the proposed lower Class B airspace floors, particularly in the airspace directly underlying the final approach courses at ATL. First, the Committee believed there would be increased congestion at lower altitudes due to VFR traffic trying to avoid flying in the Class B airspace area and leaving less room for VFR aircraft to transition the airspace. The Committee recommended the FAA establish transition routes for north and southbound traffic to assist VFR aircraft navigating through the area and to mitigate congestion below the Class B floor.

The FAA understands the need for safe routes for VFR aircraft to transition through, around, and under the Class B airspace. The FAA originally considered proposing to lower the Class B floor in the airspace underlying the final approach courses at ATL from the current 3,500 feet MSL to 2,500 feet, which is the minimum vectoring altitude (MVA) in that area. Instead, the FAA proposed to set the floor at 3,000 feet because that altitude would contain all operations that are not currently being contained with the existing 3,500 foot floor. Aircraft executing a missed approach or a go-around from the southern-most runway are climbed to 3,000 feet. This altitude is needed to deconflict traffic with other aircraft at 4,000 feet. Aircraft at 3,000 feet routinely exit the existing Class B airspace, which conflicts with FAA procedures. The procedures cannot be changed due to the lack of available airspace to contain missed approaches.

The 3,000 foot Class B floor provides adequate airspace for aircraft to safely transition under the Class B airspace and still maintain the required terrain and obstruction clearance. The FAA intends to establish VFR Waypoints and Reporting Points to assist VFR pilot navigation. The new VFR waypoints would be located over areas that can be easily identified visually. The FAA also plans to establish VFR routes that can be used to circumnavigate the Class B airspace when necessary to avoid aircraft operating within the Class B airspace. However, these routes would also be useful as a predetermined route through the Class B airspace when operations permit. In addition to these new VFR waypoints, the FAA intends to establish RNAV T-Routes within Class B airspace for transitioning over the top of ATL. The T-routes would be part of the low altitude IFR enroute structure, but could also serve as VFR transition routes through the Class B for suitably equipped aircraft. Since the routes would enter Class B airspace, an ATC clearance would be required to use the T-routes. Typically, VFR aircraft could be assigned either 4,500 feet or 5,500 feet when transitioning along these routes. The new T-Routes would also make transitioning of IFR aircraft more safe and efficient. The VFR Flyway Planning Chart on the back of the Atlanta Terminal Area Chart would be updated to reflect the new routes and VFR waypoints. However, the FAA does not plan to establish a VFR Flyway or VFR corridor over the top of ATL because that airspace is too congested to accommodate such a flyway or corridor.

Second, the Committee was concerned that the lower floors would result in commercial airline traffic flying at lower altitudes in closer proximity to the satellite airports in the ATL area. Therefore, the Committee contended that lower floors could decrease the efficiency of the satellite airports and create IFR delays for arriving and departing traffic at the satellite airports.

The FAA looked at the Class B floors over the satellite airports. With the opening of the fifth runway at ATL, departure procedures had to be modified to reduce delays. One procedural modification was to separate the prop and turboprop traffic from traffic lanes used by faster jet aircraft. This resulted in more aircraft being turned north and south off of ATL. The routes that these aircraft take are already in existence and aircraft are already flying in the vicinity of Fulton county Airport-Brown Field (FTY) and Dekalb-Peachtree (PDK) airports, but below the floor of the existing Class B airspace. Lowering the floor of the Class B airspace over these airports would only ensure that this existing ATL departure traffic is contained within the Class B airspace as required by FAA directives. The change would not affect IFR traffic flows at either FTY or PDK. Also, the lower floor would not impose a lower initial altitude for aircraft departing these airports. Today, all aircraft departing all satellite airports are initially assigned 3,000 feet. Aircraft are then normally assigned 5,000 feet, or higher, upon initial contact with departure control. The assignment of higher altitudes is not dependent on the Class B airspace, but rather on the internal IFR airspace delegations within Atlanta TRACON (A80). This practice would not change because of the proposed modifications of the Class B airspace. There would be no expected increase in delays at satellite airports due to the lowering of the Class B floor.

Regarding satellite airport VFR traffic, it is true that lowering the floor of the Class B airspace may affect altitudes that VFR aircraft can initially climb to and still remain outside of the proposed Class B airspace. For example, aircraft departing southbound from Atlanta Regional Airport-Falcon Field (FFC), Newnan Coweta County (CCO), Clayton County-Tara Field (4A7) and Griffin-Spalding County (6A2) airports currently are able to climb to about 7,500 feet and still remain outside of the Class B airspace. Lowering the floor would have an impact VFR aircraft departing those airports in that they would have to remain below 6,000 feet or 5,000 feet until clear of the Class B airspace boundary, or request Class B service from A80. With today's Class B airspace configuration, large turbine-powered aircraft are allowed to mix with smaller aircraft departing the airports listed above. Containing large turbine-powered aircraft within Class B airspace, in compliance with FAA procedures, would increase safety in the area by minimizing the potential mixing of controlled and uncontrolled aircraft.

The Committee's third concern regarding the lower floors was the potential increase in noise complaints from surrounding communities. The FAA understands the concerns of the surrounding communities concerning noise and the effect of lowering the base of the Class B airspace. However, the Class B airspace changes under consideration are not associated with any changes of flight path or altitude. The FAA does not intend to change any existing instrument procedures in conjunction with the proposed Class B changes. As noted above, changes in the Class B airspace are being proposed purely to ensure that existing instrument procedures are contained within the designated Class B airspace. The FAA believes that the noise concerns result from the perception that aircraft would be flying lower if the Class B floor is lowered. Aircraft are already flying in those areas, and at those altitudes, utilizing current FAA procedures, but these aircraft are not presently contained within Class B airspace as required by FAA policy. This proposal is subject to an environmental analysis prior to any FAA final regulatory action.

The Committee recommended that the FAA establish visual references to mark the Class B boundaries to assist VFR aircraft that have limited navigation equipment. The FAA agrees and would establish VFR Reporting Points at key points around the Class B airspace area to aid in navigation through and around the area, if this rule is adopted.

The Committee recommended that the current 8,000 feet and 6,000 feet Class B airspace floors over PDK be retained, or kept as close to the current altitudes as possible, in order to maintain efficient operations at PDK.

Due to the opening of the fifth runway at ATL, departure procedures had to be modified to reduce delays, as described above. Aircraft are already flying in the vicinity of PDK airport. Lowering the floor of the Class B airspace over the satellite airports would only contain the existing ATL departure traffic within the Class B airspace; it would not affect IFR traffic flows at PDK.

The Committee also recommended that the Class B floor over Covington Municipal Airport (9A1) not be lowered from 8,000 feet to 4,000 feet as proposed, but that the airport be excluded (i.e., “cut out”) from the Class B airspace. After reviewing this recommendation, the FAA found that the airspace over 9A1 could be excluded without an adverse impact to the ATL operation. The proposed Class B airspace boundary has been revised so that 9A1 would be completely outside of Class B airspace.

In addition to the above recommendations, the Ad Hoc Committee report listed a number of other concerns about the preliminary design that were not directly tied to a recommendation. These concerns are discussed below.

The Committee stated that lower IFR departure altitudes could force faster aircraft to mix with slower aircraft.

The proposed design of the Class B would not result in lower IFR departure altitudes. IFR traffic flows would be the same with the proposed Class B airspace design as they are today. The initial departure altitude has been 3,000 feet for all satellite airports since the mid 1970s. After initial departure, aircraft are normally assigned 5,000 feet until they are clear of other traffic landing at ATL. IFR aircraft are not restricted by the Class B airspace, but rather by other IFR traffic. Once the conflicting traffic is clear, aircraft are routinely cleared to climb into/through the Atlanta Class B airspace. There remains the possibility of faster and slower aircraft mixing at low altitudes outside of the Class B airspace. This, however, is not new and is more a function of satellite airport proximity to the ATL airport than of the Class B airspace.

The Committee held that the FAA had not studied the effect of the proposed Class B design on VFR traffic flow.

There are two areas where VFR flights would be most affected by the proposed change in the Class B airspace. The first area is below the new proposed 5,000 foot MSL shelf north of ATL. In this area, pilots would have to choose between flying at a lower altitude, circumnavigating the area to the north, or requesting Class B service from A80. Likewise, the area that currently underlies the final approach courses for ATL is proposed to be lowered to 3,000 feet MSL. Again, pilots must choose between flying lower, circumnavigating the area, or requesting Class B service from A80 to transition the area. Large turbine powered aircraft are routinely operating in both of these areas. Class B airspace is necessary in these areas to ensure the highest level of safety possible in the Atlanta terminal area.

The Committee raised the issue of flight restrictions over the Atlanta Motor Speedway in Hampton, GA, during NASCAR races. The Committee believed that lowering the Class B floor from 8,000 feet to 6,000 feet in that area would cause compression of traffic when a race was in progress.

The flight restriction, currently described in FDC NOTAM number 9/5151, prohibits flight within a 3 NM radius of the track, up to and including 3,000 feet AGL, during the period from one hour before until one hour after the end of the event. While events subject to the restrictions of this NOTAM occur once a year at the Atlanta Motor Speedway, the restriction does not apply to other Speedway race events. Even when the restriction is in effect, the FAA does not believe that circumnavigating the area would be a significant impact to aircraft operating in the vicinity. As stated in the NOTAM, the restriction does not apply to aircraft authorized by, and in contact with, ATC for operational or safety of flight purposes. Furthermore, aircraft may operate in the restricted airspace to the extent necessary to arrive at or depart from an airport using standard air traffic control procedures.

The Committee stated that compressing aircraft lower to the ground as a result of lower Class B floors places aircraft closer to obstacles and terrain, which limits the time pilots have to respond to a mechanical emergency. Pilots must plan their flights to take these potential situations into account. Today, aircraft routinely operate at or below 2,400 feet while transitioning under the existing Class B airspace. This altitude is 600 feet below the floor of the proposed Class B airspace in some areas. This altitude has routinely provided safe obstacle and terrain clearance for aircraft transitioning under the Class B airspace.

Instead of lowering the Class B floor, one Committee member suggested that ATC should advise aircraft with poor climb performance that they are leaving the Class B airspace or publish a climb gradient that will allow aircraft to remain within the existing Class B airspace.

The need for lower Class B airspace floors to the north and to the south of ATL is based on the requirement to fully contain existing instrument procedures within Class B airspace. These procedures are not fully contained by today's Class B airspace configuration. Due to internal airspace delegations designed to segregate slower prop and turboprop traffic from turbojet traffic, prop and turboprop aircraft must fly at lower altitudes out to 20NM before they can initiate a climb. This allows enough room for turbojet aircraft to climb above the prop and turboprop aircraft. Additionally, merely advising the aircraft that they are leaving the Class B airspace is not an option. Retaining these aircraft within the Class B airspace is required by FAA policy and is a top safety issue. Since the existing airspace is inadequate, the Class B design needs to be modified.

The Committee wrote that the new proposed Class B extensions on the northwest and northeast corners (referred to by commenters as the “ears” or “wings”), as well as the existing southwest and southeast extensions, would be difficult to navigate around and that they are unnecessary. The FAA reevaluated this feature and concluded that all four “ears” can be deleted from the proposed design.

The Committee believed that the lower Class B floors could impact sailplane operations at the Monroe-Walton County Airport (D73) and the West Georgia Regional Airport-O. V. Gray Field (CTJ). It contended that the lower inbound traffic to ATL from the east and the west would infringe on airspace being used outside of the Class B airspace by sailplanes.

Arrival traffic to ATL does not typically fly in the vicinity of those airports. ATL inbounds are routed from the four corners, northeast, northwest, southeast, and southwest. These arrival corridors are well clear of the two airports and are not changing due to the proposed the Class B airspace modifications.

The Ad Hoc Committee report also included an alternative Class B design for FAA's consideration. In part, this design consisted of higher Class B floors than those proposed by the FAA, such as retaining the current 8,000 foot floor north and south of ATL. Also, a large portion of the Class B would have a 6,000 foot floor. A block of Class B airspace would be aligned along the extended centerlines, to the east and west of the airport, with a floor of 2,500 feet from 7 NM to 12 NM, and a base of 3,500 feet MSL from 12 NM out to 20 NM. Surrounding this section on all sides, the Class B floor would be 5,000 feet MSL. The 5,000 foot area would provide for westbound VFR traffic at 4,500 feet MSL north of the airport and eastbound VFR traffic at 3,500 feet MSL south of the airport.

The Committee's proposal would require changing ATC procedures to fit the proposed alternate airspace, instead of changing the airspace to fit the procedures. These procedures, adopted over many years, have proven to be the most efficient for handling the high volume of traffic serving ATL. The main points of the alternative design in the Committee's report are discussed below.

1. The FAA does not find that the 6,000 foot area would be adequate to contain all large turbine powered aircraft departing ATL. It does not allow enough room for departures to clear internal airspace boundaries that protect ATL jet departures from satellite airport departures. Additionally, on the southeast and southwest corners of the airspace, it does not allow ATL arrival aircraft to get low enough to feed the south final.

2. Raising the Class B airspace floor over the downtown area and the stadiums to 5,000 feet to allow traffic to overfly the FTY Class D airspace area and (when NOTAM 9/5151 is in effect) would be problematic. The current floor over the downtown area would not change in the FAA's proposed Class B design. The floor of the Class B airspace over the downtown area has been 3,500 feet since at least the mid-1970s and has provided adequate space for aircraft to transition that airspace. A 5,000-foot floor would not allow departures or missed approach aircraft to be contained within the Class B airspace.

3. The Committee contended that turboprop departures should not be turned until they can comply with the 5,000 foot floor. This is not operationally feasible because it would require the turboprops to be blended back in with the jets on departure and would greatly reduce departure capacity at ATL.

4. The Committee suggested that ATL missed approaches should be flown as departures unless an emergency exists. This alternative procedure would not allow ATC enough options. The rules that apply to missed approaches in a terminal environment, where multiple runways are being used simultaneously for arrivals and departures, are very complex. They require ATC to retain the maximum flexibility in the operation to ensure that we can effectively separate missed approach and unplanned go-arounds from departing aircraft. Sometimes, aircraft will be able to proceed outbound on the departure tracks. Other times aircraft must be turned immediately to avoid aircraft departing simultaneously from a parallel runway.

5. The Committee also contended that long, low, finals are not needed. Currently, aircraft are turned on to parallel finals at ATL between 3,500 feet and 7,000 feet MSL. FAA Order JO 7110.65 requires that aircraft being turned onto parallel finals be separated by 3 miles longitudinal or 1,000 feet vertical separation until they are established on final approach course. It is more efficient to turn the aircraft on final with vertical separation. Raising the altitude that aircraft are turned on to parallel finals would result in even longer finals and would require Class B extensions beyond 30NM. The FAA has been able to reduce the size of the proposed Class B on the east and west sides to less than 30 NM based on the existing procedures.

Over 150 comments were received in response to the informal airspace meetings. Two commenters wrote in support of the proposal, while the remaining comments opposed various aspects of the proposed Class B modifications.

One commenter contended that the proposed Class B changes are premature since ATL flights declined in 2009 and could continue to do so over the next decade due to the U.S. economic downturn. According to the commenter, the current Class B should be left in place and reviewed again in five or ten years.

While economic swings may happen periodically, the volume of traffic and passenger boardings at ATL remain extremely high. Passenger boardings at ATL declined by just over three percent from 2008 to 2009, but even so, boardings exceeded 42 million passengers (over eight times the threshold to qualify for Class B airspace). Calendar year 2010 data show a two percent rise in boardings from the previous year. Similarly, airport operations declined slightly from 2008 to 2009, but still totaled over 970,000 operations (more than three times the number to qualify for Class B airspace). The proposed airspace changes are necessary to ensure safety of flight. Nevertheless, the FAA would continue to periodically evaluate the airspace design and may propose changes in the future if circumstances dictate.

Some commenters suggested that the ATL Class B airspace should be set up like that in Seattle, WA, but aligned along ATL's east/west approaches and departures with fixes outbound so traffic is strung out over a larger area east- and west-bound. They contended that this alignment would leave the northern satellite airports free to expedite their arrivals/departures; while ATL missed approaches could fly straight out.

Each Class B airspace area design is individually tailored to fit the operational needs of the primary airport. Atlanta's airspace system could not be set up like Seattle due to the many differences between the two operations. West coast facilities are able to take advantage of the fact that the majority of the traffic arrives from the same direction (east) while Atlanta traffic arrives from all directions. The Seattle Class B design is influenced by high terrain to the east and northwest as well as special use airspace northwest and southwest of the area. Additionally, the Atlanta operation is much larger than Seattle, involving five runways versus three, and accommodating over three times the number of airport operations. Seattle's Class B configuration simply would not provide sufficient airspace to contain Atlanta's operations. Regarding missed approaches, ATL missed approach aircraft cannot always fly straight out because aircraft departing from other runways also occupy the same airspace. In the FAA's proposed design, the size of the Atlanta Class B would be reduced so that all Class B airspace beyond 30 NM would be eliminated.

One commenter wrote that the proposed “wings” in the four quadrants should be retained because eliminating the wings exposes arriving aircraft below 10,000 feet to transitory nonparticipating aircraft circumnavigating the Class B airspace.

The FAA has reevaluated the proposed Class B extensions. The existing and proposed “wings” extended beyond the 30 NM Class B lateral limit as provided in FAA Order JO 7400.2H. The vertical and lateral limits of the area are designed to contain all instrument procedures within Class B airspace. In this proposal, the outer limits of the proposed Class B have been reduced to a maximum of 30 NM from ATL to meet FAA policy and to address Ad Hoc Committee comments that the “wings” should be reduced or eliminated.

One commenter contended that aircraft will be unable to identify the lateral boundaries on the “45s” ( Note: the “45s” refers to those Class B boundary lines currently described by the ATL VORTAC 323°, 031°, 138° and 218° radials) because they would no longer be based on ATL VORTAC radials. In addition, the east and west Class B boundaries would be difficult to identify because they are defined by longitude lines rather than DME.

The FAA has found that, in the current Class B design, some of the boundaries that are defined by radials and DME are the same areas where aircraft are consistently leaving the Class B airspace. Due to the position of the ATL VORTAC, if radials were used to describe the proposed realigned “45s,” it would result in the designation of more Class B airspace than is needed to contain current operations. An increasing number of general and business aviation users are now RNAV or RNAV GPS equipped. Additionally, pilots may request vectors to remain clear of Class B airspace. The Ad Hoc Committee concurred with the use of GPS in defining certain area boundaries.

Many commenters were concerned about the perceived impacts of the proposed changes on VFR operations in the Atlanta terminal area. It was stated that the FAA did not fully determine the impact on VFR aircraft flying beneath the Class B airspace. In response, a new study was done, which found that, of the 7,123 flights observed in the vicinity of PDK, 141 were operating above 5,000 feet MSL. With almost 98% of the aircraft flying in that area already operating below 5,000 feet MSL, lowering the floor of Class B airspace to 5,000 feet MSL would not significantly impact VFR operations.

However, many commenters echoed concerns also raised by the Ad Hoc Committee that the lower Class B floors would cause the compression of VFR traffic beneath the Class B and/or require pilots to fly further to deviate around the Class B airspace. Commenters said that the changes could increase the potential for midair collisions, reduce the airspace available for avoiding Class D airspace areas and obstructions in the ATL terminal area, and leave pilots with less time and altitude to react to inflight emergency situations or locate a suitable emergency landing site.

The FAA acknowledges these concerns and recognizes that compression could occur for some VFR operations. However, with the existing Class B configuration, VFR aircraft that are not in communication with ATC are currently mixing with turbine-powered ATL traffic. The FAA weighed the impacts to VFR pilots flying lower or choosing to circumnavigate the Class B airspace against the safety of having large turbine-powered aircraft flying at altitudes that are not contained within Class B airspace. Considering the heavy concentration of operations by all types of aircraft in the Atlanta terminal area, we believe the operation of large turbine-powered aircraft outside the Class B airspace poses a greater safety risk. Lowering the floor of the Class B airspace increases safety by segregating large turbine-powered aircraft from aircraft that may not be in contact with ATC. As always, it is the pilot's prerogative and responsibility to evaluate these factors and determine the safest course of action for any given flight.

One commenter opposed the lowering of the Class B floor in the vicinity of PDK from 8,000 feet to 5,000 feet because it could cause compression of VFR aircraft given the fact that the PDK Class D airspace ceiling is 3,500 feet.

The existing Class B floor above PDK is 8,000 feet, while immediately to the east and south of PDK, the existing floor is 6,000 feet. Under the proposed Class B changes, the floor of Class B airspace above the southern half of the PDK Class D airspace would be 5,000 feet; to the northeast, the floor would be 6,000 feet; and to the northwest, the floor would be 7,000 feet. This would still give pilots room to navigate north of the PDK airport eastbound at 5,500 feet. It is true that the proposed change would eliminate the 5,500 foot VFR altitude over the southern half of the PDK Class D airspace. This may require the pilot to make a choice to fly eastbound below 3,000 feet AGL or to fly further north in order to fly above 3,000 feet AGL and below the Class B airspace.

Other commenters argued that the proposed 3,000 foot floor on the east and west sides of the area would make it more difficult for VFR aircraft to navigate around the city and get from north-to-south and vice versa. The commenters asked that more waypoint-driven VFR routes be developed around the city, and that a “corridor” used by A80 to route aircraft over ATL be publicized and added to the Sectional Chart and be made a more routine choice for VFR pilots.

Regarding the proposed 3,000 foot floor, the existing Class B floor in those areas is 3,500 feet MSL. Today, aircraft landing at ATL are intercepting the southern final approach course farther from the airport than needed to meet the present Class B separation criteria. During Triple ILS approaches, aircraft are required to maintain 1,000 feet vertical separation until established on the final approach courses. This mandates an aircraft final approach interception point that is two NM farther from the airport than would be required if the Class B floor was lowered to 3,000 feet. The proposed 3,000-foot floor would allow aircraft to be turned onto the final approach course closer to the airport which would increase efficiency, save fuel and reduce emissions. Additionally, lowering the floor to 3,000 feet would allow Visual Approaches to be conducted more often, which is the most efficient arrival operation at ATL. The proposed 3,000 foot floor would produce a safer airspace environment for aircraft arriving at the world's busiest airport. Flying VFR under the lowest floor of the Class B airspace always requires the pilot in command to evaluate traffic that may be flying overhead within the Class B as well as terrain, obstructions and emergency landing options and determine the best and safest course of action for the planned flight. Regarding waypoint-driven VFR routes, the Atlanta TAC would be revised to contain VFR flyways as well as GPS intersections/waypoints to assist VFR pilot navigation.

In regard to the comment about A80's “corridor” over the top of Atlanta, this is not the same thing as a “VFR corridor” as described in the Clarification of Terms section, above. The A80 Satellite Sectors are assigned airspace within the Class B that can be used to transition aircraft north and south. This airspace delegation is adjusted based on the operational runway configuration in use at ATL. It is a 6 NM wide north/south airspace area that overlies the approach side of the arrival runways. Its primary use is to route IFR aircraft departing airports north of VOR Federal airway V-18 that are filed to destinations south of the Atlanta area. It is also used when operationally advantageous to route some aircraft northbound that are landing at airports to the north and within A80's airspace. This small, high traffic density “corridor,” encompassing 5,000 to 6,000 feet, is used by air traffic controllers to efficiently flow and meter Atlanta satellite airport aircraft. Since the location of the “corridor” shifts based on the direction of operations at ATL, it would be impractical to publish the locations on aeronautical charts. Clearance into the area is based on traffic and the workload of the Satellite Controllers. It is intended for controller operational use. Pilots may request use of the “corridor” and controllers may approve the request when appropriate. VFR aircraft flying in this airspace are required to obtain a Class B clearance.

Several commenters said that the FAA should have considered establishing VFR corridors through the Class B airspace to offset the issue of flying beneath the lower Class B floors. The FAA considered a VFR corridor, however, since a VFR corridor permits flight through Class B airspace without an ATC clearance or radio communications requirements, the idea was not adopted due to the high volume of traffic, the amount of airspace required to create a useful corridor, and the potential effects on safety considering weather and missed approach procedures.

One commenter requested that the FAA establish “traffic dependent routes” that could be used to allow more direct routes to FTY and PDK when traffic, time and weather conditions permit. “Traffic dependent routes” are currently being discussed with A80 separately from this Class B proposal process. Class B airspace would have no effect on the implementation of “traffic dependent routes.”

One commenter noted a lack of IFR arrival routes into the satellite airports for use by smaller, but technically advanced, aircraft. Currently, the DIFFI ONE, JRAMS TWO (RNAV) and the TRBOW EIGHT Standard Terminal Arrivals (STARs) are in effect. These STARs were designed to facilitate all types of aircraft inbound from the south of Atlanta that have filed to airports north of Atlanta that are within A80's airspace. It is important to note that these STARs are also designed to keep aircraft that are not landing at the Atlanta Airport safely outside of the Atlanta base leg arrival traffic as well as Atlanta departing traffic.

Several commenters suggested that lowering the Class B floors would result in increased IFR departure delays from satellite airports such as FTY and PDK. The existence of Class B airspace has no impact on delays from these airports. The determining factors for delays are normally traffic volume and weather. No additional IFR aircraft would be introduced into the airspace over these airports, so the traffic that flows through the affected airspace is already there. Where aircraft fly today in that area is where they would fly if the new airspace is implemented. The only difference is that, if the new Class B is implemented, those aircraft would be contained within the Class B airspace. IFR aircraft departing from satellite airports would not be artificially held down due to a change in the floor of the Class B airspace. Any IFR delays experienced by the satellite airports should be of the same frequency and magnitude as those experienced today.

There is also a perception that IFR aircraft departing satellite airports are kept out of the Class B airspace. This is not the case. With the proposed Class B airspace, aircraft departing satellite airports would be worked within Class B airspace much more often. For example, a turbojet aircraft departing Runway 8 at FTY going eastbound is normally assigned 5,000 feet MSL shortly after takeoff. Today, that aircraft is outside Class B airspace. If the proposed Class B change is implemented, that same aircraft would still be assigned 5,000 feet but would be contained within Class B airspace.

A pilot who flies out of Gwinnett County Airport-Briscoe Field (LZU) (in comparing his current operations below the existing 6,000 foot floor, to the north of Atlanta) stated that if the Class B floor is lowered to 5,000 feet in that area, he could not legally fly VFR at 3,000 feet AGL. Aircraft operating below Class B airspace north of Atlanta may transition west bound at 4,500 feet MSL and eastbound at 3,500 feet MSL. These altitudes ensure that VFR aircraft are outside of Class B airspace and will remain above the FTY Class D airspace area. In this instance, there are at least three options for VFR aircraft:

1. Alter course to avoid the FTY, Dobbins ARB (MGE), DeKalb-Peachtree (PDK) and Cobb County-McCollum Field (RYY) Class D airspace areas at 3,500 MSL;

2. Ask for VFR Flight Following from A80. If VFR aircraft are receiving VFR Flight Following from A80, they can transit these Class D airspace areas without having to contact each individual control tower; or

3. Fly just north of an east/west line over PDK which will put VFR aircraft in an area where the lower limit of Class B is either 6,000 or 7,000 MSL. This airspace can be transited at 5,500 feet MSL while remaining outside the Class B and Class D airspace areas.

Another commenter said that extending the Class B airspace to LZU would require pilots on approach to Runway 7 to fly under the Class B shelf which could discourage access by light sport pilots and students. The commenter asked that the Class B boundary be moved farther from LZU to allow several miles for extended downwind. Since the existing Class B airspace extends out to 35 NM, today the LZU airport totally underlies a shelf of Class B airspace. With the proposed Class B design, LZU airport would be completely outside the Class B boundary. Aircraft approaching Runway 7 may still need to fly under a 6,000 foot Class B floor, but this floor is well above traffic pattern altitude and leaves plenty of room for aircraft to maneuver. The proposed design would be much less restrictive to LZU airport operations than the existing airspace.

One commenter believed that lowering the Class B floor would cause the existing VFR “corridors” to be within Class B airspace, thus defeating the purpose of the “corridors.” ATL does not have VFR corridors in either the current or proposed airspace design. The FAA believes that the commenter is referring, instead, to the charted VFR flyways depicted on the reverse side of the Atlanta VFR Terminal Area Chart. If the proposed airspace is implemented, these flyways will be amended based on the Class B changes. The FAA intends to develop additional flyways and to add GPS waypoints to the chart to assist pilots in navigating around the area. The FAA has no plans to develop a VFR corridor within the Atlanta Class B airspace area because the airspace is simply too congested.

Over 90 comments concerned impacts of the proposal on the communities around PDK airport, including: Increased noise and air pollution; lower property values and inability to sell homes; detrimental effect on local businesses; reduced tax revenues; and decreased quality of life. Noise complaints were a recurring issue because many commenters believed that lowering the floor of the Class B airspace would cause aircraft to fly lower over residential areas resulting in increased noise for their communities.

The FAA is not proposing to change existing air traffic procedures or flight paths, therefore, where aircraft fly today is where they would continue to fly if the proposed Class B changes are implemented. As stated previously, the reason for the proposed Class B change is to comply with agency policy to contain large turbine-powered aircraft arriving and departing ATL within Class B airspace on the routes they are currently flying. Therefore, the Class B changes should not cause an increase of over-flight noise from what residents are experiencing today.

Additionally, there is a perception that Hartsfield jets will begin flying lower over residential areas near PDK airport due to the lowering of the Class B floor. The FAA does not intend to change where aircraft fly today. ATL arrivals are operating in the area in question at 6,000 feet today and they will continue to operate at that altitude in the future. As previously discussed, the purpose of the proposed lowering of the Class B floor to 5,000 feet is to encompass ATL departures that are already operating in that area at 5,000 feet underneath the arrivals (but outside the confines of Class B airspace). ATL arrival flows could not be lowered from 6,000 feet to 5,000 feet without also lowering the departures down to 4,000 feet in order to be below the arrivals with proper separation. This would require the Class B floor to be even lower at 4,000 feet, but that is not being considered. Since arrivals and departures to both ATL and PDK will continue to operate at the same altitudes as they do today, none of the above impacts would result from the proposed Class B changes. In fact, the vast majority of noise being experienced by residents is caused by aircraft at or below 3,000 feet MSL when taking off from, or landing at, PDK. These aircraft will continue to fly at those altitudes regardless of any changes made to the Atlanta Class B airspace. The proposed Class B changes would have no effect, positive or negative, on noise generated by aircraft arriving or departing PDK. Therefore, lowering the floor of Class B airspace to 5,000 feet MSL would not have an appreciable effect on the amount of noise experienced by residents in the neighborhoods surrounding PDK.

Two commenters wrote that a new reliever airport should be constructed in the Atlanta area to support the growth of air travel and preclude the need for modifying the Class B airspace. This suggestion is outside the scope of this proposed rulemaking effort.

The FAA is proposing an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to modify the Atlanta Class B airspace area. This action (depicted on the attached chart) proposes to lower the floor of Class B airspace to ensure the containment of large turbine-powered aircraft, reduce the outer lateral dimensions of the area for more efficient airspace utilization, and update the Atlanta airport geographic position to reflect the current airport survey information. The Class B airspace ceiling would remain at 12,500 feet MSL. The proposed revisions of the Atlanta Class B airspace area are outlined below.

Area A. Area A is the surface area that extends from the ground up to 12,500 feet MSL. The FAA is not proposing any changes to Area A.

Area B. A revised Area B is proposed consisting of that airspace extending upward from 2,500 feet MSL east and west of the Atlanta airport. The revised Area B would combine two existing subareas, B and C. The existing area B consists of a small segment of airspace, east of the ATL airport that extends upward from 2,100 feet MSL between the 7 and 9-mile radii of the Atlanta VORTAC. The existing Area C includes that airspace extending upward from 2,500 feet MSL, east and west of Atlanta airport between the 7 and 12 NM radius of the Atlanta VORTAC. With this change, the existing 2,100-foot floor of Class B airspace would be eliminated.

Area C. Area C is redefined to include that airspace that extends upward from 3,000 feet MSL (as described above, the existing Area C extends upward from 2,500 feet MSL). The new Area C would lower the existing floor of Class B airspace from 3,500 feet MSL to 3,000 feet MSL. Currently, Area D includes the airspace extending upward from 3,500 feet MSL. With this proposal, most of the airspace now in Area D would be incorporated into the new Area C (with the lower 3,000-foot floor).

Area D. This area would still consist of that airspace extending upward from 3,500 feet MSL. However, it would be significantly reduced in size due to the modification of Area C, described above. The revised Area D would include only that airspace bounded on the south by a line 4 miles north of and parallel to the Runway 08L/26R localizer course, and on the north by a line 8 miles north of and parallel to the above mentioned localizer courses. The revised Area D would be bounded on the west by long. 84°51′38″ W., and on the east by long. 84°00′32″ W.

Area E. This area would continue to include the airspace extending upward from 4,000 feet MSL, but it would be modified incorporating a small segment of Class B airspace, south of ATL that currently extends upward from 6,000 feet MSL. In addition, Area E would incorporate the two segments, currently extending upward from 5,000 feet MSL that were added by the October 2006 rule as discussed in the Background section, above.

Area F. Area F consists of that airspace extending upward from 5,000 feet MSL. The area currently is composed of four small segments, one southwest of ATL, one southeast and the two segments east and west of ATL that were designated in the October 2006 rule. These four areas would be removed from Area F and incorporated into other subareas with lower floors. The modified Area F would be located north of ATL within the area bounded on the south by a line 8 miles north of and parallel to the Runway 08L/26R localizer courses, and on the north by a line 13.5 miles north of and parallel to the above mentioned localizer courses. On the east and west, Area F would be bounded approximately by the 30 NM radius of the Atlanta VORTAC. The effect of this change would be to lower the floor of Class B airspace from 6,000 feet MSL to 5,000 feet MSL in the described area.

Area G. Area G contains that airspace extending upward from 6,000 feet MSL. Currently, Area G consists of airspace north of ATL, which would largely be incorporated into the revised Area F. The revised Area G would consist of the airspace bounded approximately between the Atlanta VORTAC 30 NM radius on the south, and a line 12 miles south of and parallel to the Runway 10/28 localizer courses.

Area H. This area consists of two airspace segments that extend upward from 5,000 feet MSL, one located southwest and one located southeast of ATL. The Area H segments would be bounded on the north by a line 12 miles south of and parallel to the Runway 10/28 localizer courses and on the south by the 30 NM radius of the Atlanta VORTAC, excluding the airspace within Area G as described above.

Area I. Area I is redefined to consist of the airspace extending upward from 7,000 feet MSL north of ATL. The revised Area I would be bounded on the north side by the 30 NM radius of the Atlanta VORTAC; on the south by a line 13.5 NM north of and parallel to the Runway 08L/26R localizer courses; on the east by a line from lat. 33°52′25″ N., long. 84°19′08″ W. direct to lat. 34°04′20″ N., long. 84°09′24″ W.; and on the west by a line from lat 33°53′28″ N., long. 84°36′07″ W. This change would lower the floor of Class B airspace from 8,000 feet MSL to 7,000 feet MSL in the defined area.

Area J. Area J would be a new subarea to describe that airspace extending upward from 6,000 feet MSL in two segments, one northwest and one northeast, of ATL. One segment would abut the west side of Area I and the other segment would abut the east side of Area I. The two segments would abut the northern boundary of Area F, with the 30 NM radius of the Atlanta VORTAC defining their northern edges. Area J would lower part of the Class B airspace floor from 8,000 feet MSL to 6,000 feet MSL in the northwest and northeast sections of the area.

If the above proposed changes are implemented, all existing Class B airspace that lies outside the 30 NM radius of the Atlanta VORTAC would be eliminated. These changes are being proposed to ensure the containment of large turbine-powered aircraft within Class B airspace as required by FAA directives to enhance safety and the efficient management of air traffic in the Atlanta, GA terminal area.

The geographic coordinates in this proposal are stated in degrees, minutes and seconds based on North American Datum 83.

Class B airspace areas are published in paragraph 3000 of FAA Order 7400.9V, dated August 9, 2011, and effective September 15, 2011, which is incorporated by reference in 14 CFR 71.1. The Class B airspace area proposed in this document would be published subsequently in the Order.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. We have determined that there is no new information collection requirement associated with this final rule.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 directs that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule.

Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this proposed rule. The reasoning for this determination follows:

This action proposes to modify the Atlanta, GA, Class B airspace area to ensure the containment of aircraft within Class B airspace, reduce controller workload and enhance safety in the Atlanta, GA, terminal area. It lowers the Class B Airspace in some sections to encompass existing IFR traffic. Lowering the floor of the Class B airspace would increase safety by segregating large turbine-powered aircraft from aircraft that may not be in contact with ATC. It would also increase safety and reduce air traffic controller workload by reducing the number of radio communications that air traffic controllers must use to inform IFR aircraft when they are leaving and re-entering Class B airspace. This would reduce the amount of distraction that air traffic controllers face in issuing these communications and free radio time for more important control instructions. IFR traffic would not be rerouted as a result of this proposal.

The change may cause some VFR pilots to have to choose between flying lower, circumnavigating the area, or requesting Class B service from A80 to transition the area. This has the potential of increasing costs to VFR pilots if the alternative routes are longer, take more time and burn more fuel. The FAA believes, however, that there would be minimal impact to VFR aircraft operating where the Class B floor would be lowered. Where the floor would be lowered to 5,000 feet, an FAA sampling of VFR traffic found that 98 percent of 7123 VFR flights were already operating below 5,000 feet. Where the floor would be lowered to 3,000 feet, we believe there is sufficient airspace to allow safe flight below the Class B airspace. The minimum vectoring altitude (based in part on obstruction clearance) under most of the proposed 3,000-foot floor is 2,500 feet. VFR aircraft can and do fly safely at 2,000 feet under the existing Class B floor. Recognizing that some VFR aircraft may elect to circumnavigate instead of flying lower, it is only a short deviation in distance and time would be needed to place the aircraft beneath a higher Class B floor.

The FAA intends to take actions that would increase the alternatives available to VFR pilots. For instance, if this proposal is adopted, the FAA intends to establish VFR Waypoints and Reporting Points to assist VFR pilot navigation, and to establish VFR routes that can be used to circumnavigate the Class B airspace or used as a predetermined route through the Class B airspace when operations permit. In addition to these new VFR waypoints, the FAA would establish RNAV T-Routes within Class B airspace for transitioning over the top of ATL airports. These various alternatives should provide pilots with options that would assist them in navigating around or beneath the Class B and/or to request ATC clearance to cut through the Class B. The FAA believes that no more than a small percent of VFR traffic would choose to travel longer, less efficient or more costly routes because safe flight would still be possible beneath most of the Class B airspace, A80 would continue to provide VFR services to assist pilots in transiting the area, and only short course deviations would be needed if pilots decide to avoid the areas with lower Class B floors.

The FAA would have to update maps and charts to indicate the airspace modifications, but these documents are updated regularly. These modifications would be made within the normal updating process and therefore would not contribute to the cost of the rule since the updates would be as scheduled.

The proposed rule redefines Class B airspace boundaries to improve safety, would not require updating of materials outside the normal update cycle, would not require rerouting of IFR traffic, and is expected to possibly cause some VFR traffic to travel alternative routes which are not expected to be appreciably longer than with the current airspace design. The expected outcome would be a minimal impact with positive net benefits, and a regulatory evaluation was not prepared. The FAA requests comments with supporting justification about the FAA determination of minimal impact.

FAA has, therefore, determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

The proposed rule is expected to improve safety by redefining Class B airspace boundaries and would impose only minimal costs because it would not require rerouting of IFR traffic, could possibly cause some VFR traffic to travel alternative routes that are not expected to be appreciably longer than with the current airspace design, and would not require updating of materials outside the normal update cycle. Therefore, the expected outcome would be a minimal economic impact on small entities affected by this rulemaking action.

Therefore, the FAA certifies this proposed rule, if promulgated, would not have a significant impact on a substantial number of small entities. The FAA solicits comments regarding this determination. Specifically, the FAA requests comments on whether the proposed rule creates any specific compliance costs unique to small entities. Please provide detailed economic analysis to support any cost claims. The FAA also invites comments regarding other small entity concerns with respect to the proposed rule.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it would have only a domestic impact and therefore no affect on international trade

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $143.1 million in lieu of $100 million. This proposed rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” prior to any FAA final regulatory action.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

President Barack Obama issued Executive Order 13563 on January 18, 2011, titled “Improving Regulation and Regulatory Review.” The Executive Order directed all agencies, to “develop and submit” to the Office of Information and Regulatory Affairs plans under which agencies, “consistent with law and [their] resources and regulatory priorities,” will “periodically review [their] existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives.” The Executive Order states that one of the purposes of implementing a program to perform a “retrospective analysis of existing rules” is to withdraw regulations that are “outmoded, ineffective, insufficient, or excessively burdensome.”

In August 2011, the U.S. Department of Commerce issued its Plan for Retrospective Analysis of Existing Rules. < http://open.commerce.gov/news/2011/08/23/commerce-plan-retrospective-analysis-existing-rules >. Within the Department's Plan, International Trade Administration indicated that IA intended to withdraw two groups of regulations which it determined are obsolete.

The regulatory provisions titled “Imports of Cotton Woven Fabric,” codified at 15 CFR 336.1-336.5, are no longer relevant. They were implemented pursuant to the Tax Relief and Health Care Act of 2006, at Division C, Title IV, Section 406(b)(1) (Pub. L. 109-432) (codified in the Harmonized Tariff Schedule of the United States, per 19 U.S.C. 3004) (2006). The Tax Relief and Health Care Act of 2006 set forth tariff rate quotas for cotton woven fabric and the regulatory provisions at issue provide for the administration of allocations of those quotas by IA. The interim regulations were issued in 2007, and then adopted without change, with an effective date of July 10, 2008. Imports of Certain Cotton Shirting Fabric: Implementation of Tariff Rate Quota Established Under the Tax Relief and Health Care Act of 2006 (Interim Final Rule), 72 FR 40235 (July 24, 2007); Imports of Certain Cotton Shirting Fabric: Implementation of Tariff Rate Quota Established Under the Tax Relief and Health Care Act of 2006 (Final Rule), 73 FR 39585 (July 10, 2008). However, the tariff rate quota on cotton woven fabric expired on December 31, 2009. Accordingly, these regulations are obsolete and should be withdrawn.

The regulations pertaining to “Short Supply Procedures,” which are codified at 19 CFR 357.101-111, are also no longer relevant. These regulations were issued pursuant to Section 4(b) of the Steel Trade Liberalization Program Implementation Act (Pub. L. 101-221) (1989). Short Supply Procedures (Interim—Final Rules), 55 FR 1348 (Jan. 12, 1990). They pertain to voluntary restraints on certain steel imports from October 1, 1989 through March 31, 1992, and IA was tasked with making short supply determinations under these regulations. IA has determined that these regulations should also be withdrawn because they are obsolete, as the associated import restraints have not affected U.S. trade for over 19 years.

It has been determined that this proposed rule is not significant for purposes of Executive Order 12866 of September 30, 1993 ( “Regulatory Planning and Review” ) (58 FR 51734) (October 4, 1993). Neither set of regulations has an annual effect on the economy of $100 million or more, or adversely affects in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health, or safety. Id. at 51738.

This proposed rule contains no new collection of information subject to the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.

This proposed rule does not contain policies with federalism implications as that term is defined in section 1(a) of Executive Order 13132, dated August 4, 1999 (64 FR 43255) (August 10, 1999).

ITA has determined pursuant to 21 CFR 25.30 that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

Under the Regulatory Flexibility Act (as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996; 5 U.S.C. 601 et seq. ), whenever a Federal agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare, and make available for public comment, a regulatory flexibility analysis that describes the effect of the rule on small entities ( i.e., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of an agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. SBREFA amended the Regulatory Flexibility Act to require Federal agencies to provide a statement of the factual basis for certifying that a rule will not have a significant economic impact on a substantial number of small entities. The proposed rule would have no impact on small entities because both sets of regulations are obsolete and this rule simply makes a technical correction by withdrawing these obsolete regulations.

ITA is proposing that any final rule that may issue based upon this proposed rule become effective upon its publication in the Federal Register .

Parties are invited to comment on ITA's Proposed Withdrawal of Regulations Pertaining to Imports of Cotton Woven Fabric and Short Supply Procedures within April 3, 2012. All submitted comments must be public and submitted pursuant to the directions under the ADDRESSES heading. ITA will not accept comments accompanied by a request that part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. All comments responding to this notice will be a matter of public record and will be available for inspection at Import Administration's Central Records Unit (Room 7046 of the Herbert C. Hoover Building) and on the Department's Web site at http://www.trade.gov/ia/ .

The subject of the public hearing is the advanced notice of proposed rulemaking (REG-157714-06) that was published in the Federal Register on Tuesday, November 8, 2011 (76 FR 69172).

The rules of 26 CFR 601.601(a)(3) apply to the hearing. A period of 10 minutes is allotted to each person for presenting oral comments. After the deadline has passed, persons who have submitted written comments and wish to present oral comments at the hearing must submit an outline of the topics to be discussed and the amount of time to be devoted to each topic (a signed original and four copies) by June 18, 2012.

The IRS will prepare an agenda containing the schedule of speakers. Copies of the agenda will be made available free of charge at the hearing. Because of access restrictions, the IRS will not admit visitors beyond the immediate entrance area more than 30 minutes before the hearing. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this document.

The subject of the public hearing is the advanced notice of proposed rulemaking (REG-133223-08) that was published in the Federal Register on Tuesday, November 8, 2011 (76 FR 69188).

The rules of 26 CFR 601.601(a)(3) apply to the hearing. A period of 10 minutes is allotted to each person for presenting oral comments. After the deadline has passed, persons who have submitted written comments and wish to present oral comments at the hearing must submit an outline of the topics to be discussed and the amount of time to be devoted to each topic (a signed original and four copies) by June 18, 2012.

The IRS will prepare an agenda containing the schedule of speakers. Copies of the agenda will be made available free of charge at the hearing. Because of access restrictions, the IRS will not admit visitors beyond the immediate entrance area more than 30 minutes before the hearing. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this document.

The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). The collection of information in these proposed regulations is in § 1.401(a)(9)-6, A-17(a)(6) (disclosure that a contract is intended to be a qualifying longevity annuity contract) and § 1.6047-2 (an initial report must be prepared and an initial disclosure statement must be furnished to qualifying longevity annuity contract owners, and an annual statement must be provided to qualifying longevity annuity contract owners and their surviving spouses containing information required to be furnished to the IRS). The information in § 1.401(a)(9)-6, A-17(a)(6), is required in order to notify participants and beneficiaries, plan sponsors, and the IRS that the proposed regulations apply to a contract. The information in the annual statement in § 1.6047-2 is required in order to apply the dollar and percentage limitations in § 1.401(a)(9)-6, A-17(b) and § 1.408-8, Q&A-12(b) and to comply with other requirements of the proposed regulations, and the information in the initial report and disclosure statement in § 1.6047-2 is required in order for individuals to understand the features and limitations of a qualifying longevity annuity contract. The information would be used by plans and individuals to comply with the required minimum distribution rules.

Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP; Washington, DC 20224. Comments on the collection of information should be received by April 3, 2012. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed collection of information;

How the quality, utility, and clarity of the information to be collected may be enhanced;

How the burden of complying with the proposed collections of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of service to provide information.

Estimated total average annual recordkeeping burden: 35,661 hours.

Estimated average annual burden per response: 10 minutes.

Estimated number of responses: 213,966.

Estimated number of recordkeepers: 150.

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 assigned by the Office of Management and Budget.

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.

This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) under sections 401(a)(9), 403(b)(10), 408(a)(6), 408(b)(3), 408A(c)(5), and 6047(d) of the Code.

Section 401(a)(9) prescribes required minimum distribution rules for a qualified trust under section 401(a). In general, under these rules, distribution of each participant's entire interest must begin by the required beginning date. The required beginning date generally is April 1 of the calendar year following the later of (1) the calendar year in which the participant attains age 70 1/2 or (2) the calendar year in which the participant retires. However, the ability to delay distribution until the calendar year in which a participant retires does not apply in the case of a 5-percent owner or an IRA owner.

If the entire interest of the participant is not distributed by the required beginning date, section 401(a)(9)(A) provides that the entire interest of the participant must be distributed, beginning not later than the required beginning date, in accordance with regulations, over the life of the participant or lives of the participant and a designated beneficiary (or over a period not extending beyond the life expectancy of the participant or the life expectancy of the participant and a designated beneficiary). Section 401(a)(9)(B) prescribes required minimum distribution rules that apply after the death of the participant. Section 401(a)(9)(G) provides that any distribution required to satisfy the incidental death benefit requirement of section 401(a) is treated as a required minimum distribution.

Section 403(b) plans, IRAs described in section 408, and eligible deferred compensation plans under section 457(b) also are subject to the required minimum distribution rules of section 401(a)(9) pursuant to sections 408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2), respectively, and the regulations under those sections. However, pursuant to section 408A(c)(5), the minimum distribution and minimum distribution incidental benefit (MDIB) requirements do not apply to Roth IRAs during the life of the participant.

Section 408(i) provides that the trustee of an individual retirement account and the issuer of an endowment contract or an individual retirement annuity must make reports regarding such account, contract, or annuity to the Secretary and to the individuals for whom the account, contract, or annuity is maintained with respect to such matters as the Secretary may require. Pursuant to this provision, the IRS prescribes Form 5498 (IRA Contribution Information), which requires annual reporting with respect to an IRA, including a statement of the fair market value of the IRA as of the prior December 31. Section 6047(d) states that the Secretary shall by forms or regulations require that the employer maintaining, or the plan administrator of, a plan from which designated distributions (as defined in section 3405(e)(1)) may be made, and any person issuing any contract under which designated distributions may be made, make returns and reports regarding the plan or contract to the Secretary, to the participants and beneficiaries of the plan or contract, and to such other persons as the Secretary may by regulations prescribe. These sections also provide that the Secretary may, by forms or regulations, prescribe the manner and time for filing these reports. Section 6693 prescribes monetary penalties for failure to comply with section 408(i), and sections 6652 and 6704 prescribe monetary penalties for failure to comply with section 6047(d).

Section 1.401(a)(9)-6 of the Income Tax Regulations sets forth the minimum distribution rules that apply to a defined benefit plan and to annuity contracts under a defined contribution plan. Under § 1.401(a)(9)-6, A-12, if an annuity contract held under a defined contribution plan has not yet been annuitized, the interest of a participant or beneficiary under that contract is treated as an individual account for purposes of section 401(a)(9). Thus, the value of that contract is included in the account balance used to determine required minimum distributions from the participant's individual account.

If an annuity contract has been annuitized, the periodic annuity payments must be nonincreasing, subject to certain exceptions that are set forth in § 1.401(a)(9)-6, A-14. In addition, annuity payments must satisfy the MDIB requirement of section 401(a)(9)(G). Under § 1.401(a)(9)-6, A-2(b), if a participant's sole beneficiary, as of the annuity starting date, is his or her spouse and the distributions satisfy section 401(a)(9) without regard to the MDIB requirement, the distributions to the participant are deemed to satisfy the MDIB requirement. However, if distributions are in the form of a joint and survivor annuity for a participant and a non-spouse beneficiary, the MDIB requirement is not satisfied unless the periodic annuity payment payable to the survivor does not exceed an applicable percentage of the amount that is payable to the participant, with the applicable percentage to be determined using the table in § 1.401(a)(9)-6, A-2(c).

The regulations under sections 403(b)(10), 408(a)(6), 408(b)(3), 408A(c)(5), and 457(d)(2) prescribe how the required minimum distribution rules apply to other types of retirement plans and accounts. Section 1.403(b)-6(e)(1) provides that a section 403(b) contract must meet the requirements of section 401(a)(9). Section 1.403(b)-6(e)(2) provides, with certain exceptions, that the section 401(a)(9) required minimum distribution rules are applied to section 403(b) contracts in accordance with the provisions in § 1.408-8. Section 1.408-8, Q&A-1, provides, with certain modifications, that an IRA is subject to the rules of §§ 1.401(a)(9)-1 through 1.401(a)(9)-9. One such modification is set forth in § 1.408-8, Q&A-9, which prescribes a rule under which an IRA generally does not fail to satisfy section 401(a)(9) merely because the required minimum distribution with respect to the IRA is distributed instead from another IRA. Section 1.408A-6, Q&A-14(a), provides that no minimum distributions are required to be made from a Roth IRA during the life of the participant. Section 1.408A-6, Q&A-15, provides that a participant who is required to receive minimum distributions from his or her traditional IRA cannot choose to take the amount of the required minimum distributions from a Roth IRA. Section 1.457-6(d) provides that a section 457(b) eligible plan must meet the requirements of section 401(a)(9) and the regulations under that section.

On February 2, 2010, the Department of Labor, the IRS, and the Department of the Treasury issued a Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans in the Federal Register (75 FR 5253). That Request for Information included questions relating to how the required minimum distribution rules affect defined contribution plan sponsors' and participants' interest in the offering and use of lifetime income. In particular, the Request for Information asked whether there were changes to the rules that could or should be considered to encourage arrangements under which participants can purchase deferred annuities that begin at an advanced age (sometimes referred to as longevity annuities or longevity insurance).

A number of commentators identified the required minimum distribution rules as an impediment to the utilization of these types of annuities. One such impediment that they noted is the requirement that, prior to annuitization, the value of the annuity be included in the account balance that is used to determine required minimum distributions. This requirement raises the risk that, if the remainder of the account has been depleted, the participant would have to commence distributions from the annuity earlier than anticipated in order to satisfy the required minimum distribution rules. Some commentators stated that if the deferred annuity permits a participant to accelerate the commencement of benefits, then, in order to take that contingency into account, the premium would be higher for a given level of annuity income regardless of whether the participant actually commences benefits at an earlier date. Some commentators also noted that longevity annuities often do not provide a commutation benefit, cash surrender value, or other similar feature.

The Treasury Department and the IRS have concluded that there are substantial advantages to modifying the required minimum distribution rules in order to facilitate a participant's purchase of a deferred annuity that is scheduled to commence at an advanced age—such as age 80 or 85—using a portion of his or her account. Under the proposed amendments to these rules, prior to annuitization, the participant would be permitted to exclude the value of a longevity annuity contract that meets certain requirements from the account balance used to determine required minimum distributions. Thus, a participant would never need to commence distributions from the annuity contract before the advanced age in order to satisfy the required minimum distribution rules and, accordingly, the contract could be designed with a fixed annuity starting date at the advanced age (and would not need to provide an option to accelerate commencement of the annuity).

Purchasing longevity annuity contracts could help participants hedge the risk of drawing down their benefits too quickly and thereby outliving their retirement savings. This risk is of particular import because of the substantial, and unpredictable, possibility of living beyond one's life expectancy. Purchasing a longevity annuity contract would also help avoid the opposite concern that participants may live beneath their means in order to avoid outliving their retirement savings. If the longevity annuity provides a predictable stream of adequate income commencing at a fixed date in the future, the participant would still face the task of managing retirement income over that fixed period until the annuity commences, but that task generally is far less challenging than managing retirement income over an uncertain period.

The Treasury Department and the IRS have concluded that any special treatment under the required minimum distribution rules to facilitate the purchase of such a longevity annuity contract should be limited to a portion of a participant's account balance, such as 25 percent. A percentage limit is necessary in order to be consistent with section 401(a)(9)(A), which requires the entire interest of each participant to be distributed, beginning by the required beginning date, in accordance with regulations, over the life or life expectancy of the participant (or the participant and a designated beneficiary). The pattern of required minimum payments implemented in the existing regulations under section 401(a)(9) limits the extent to which tax-favored retirement savings can be used for purposes other than retirement income (such as transmitting accumulated wealth to a participant's heirs). Limiting the special treatment for a longevity annuity to those contracts purchased with no more than 25 percent of the account balance is consistent with the intent of section 401(a)(9)(A) because, for a typical participant who will need to draw down the entire account balance during the period prior to commencement of the annuity, the overall pattern of payments would not provide more deferral than would otherwise normally be available for lifetime payments under the section 401(a)(9)(A) rules.

However, because a participant is required to receive only required minimum distributions during the period before the annuity begins (and would not under these proposed regulations be required to draw down the entire remaining balance on an accelerated basis), the Treasury Department and the IRS have concluded that, in addition to the percentage limitation, the amount used to purchase an annuity for which the minimum distribution requirements would be eased should be subject to a dollar limitation, such as $100,000. This dollar limitation would be applied in order to constrain the extent to which the combination of payments from the account balance (determined by excluding the value of the annuity before the annuity commences) and later payments from the annuity contract might result in an overall pattern of payouts from the plan that permits undue deferral of distribution of the participant's entire interest.

Such a limit would still allow significant income to be provided beginning at age 85. For example, if at age 70 a participant used $100,000 of his or her account balance to purchase an annuity that will commence at age 85, the annuity could provide an annual income that is estimated to range between $26,000 and $42,000 (depending on the actuarial assumptions used by the issuer and the form of the annuity elected by the participant, such as whether the form elected is a straight life annuity or a joint and survivor annuity). These illustrations assume a three-percent interest rate, no pre-annuity-starting-date death benefit, use of the Annuity 2000 Mortality Table for males and females, 1 no indexation for inflation, and no load for expenses.

These amounts would be higher if the interest rate used by the issuer to determine the annuity amount were higher. For example, the $42,000 amount would be increased to approximately $50,000 if the annuity were purchased assuming a four-percent interest rate, rather than a three-percent rate.

In addition, a participant who purchases a contract before age 70 could obtain the same income with a lower premium or could obtain larger income with the same premium. For example, even assuming a three-percent interest rate, the $42,000 amount would be approximately $51,000 if the annuity were purchased at age 65 rather than age 70. Furthermore, a participant who purchases increments of annuities over his or her career could hedge the risk of interest-rate fluctuation by purchasing these increments in different interest rate environments and effectively averaging annuity purchase rates over time.

To facilitate compliance with the dollar and percentage limitations and other requirements that longevity annuity contracts must satisfy in order to qualify for the special treatment, certain disclosure and reporting requirements would apply for the issuers of these contracts. Because longevity annuities would not begin until contract owners reach an advanced age, annual statements would also serve as an important reminder to those owners (and persons assisting them with their financial affairs) of their right to receive the annuities.

These proposed regulations would modify the required minimum distribution rules in order to facilitate the purchase of deferred annuities that begin at an advanced age. The proposed regulations would apply to contracts that satisfy certain requirements, including the requirement that distributions commence not later than age 85. Prior to annuitization, the value of these contracts, referred to as “qualifying longevity annuity contracts” (QLACs), would be excluded from the account balance used to determine required minimum distributions.

The proposed regulations provide that, in order to constitute a QLAC, the amount of the premiums paid for the contract under the plan on a given date may not exceed the lesser of a dollar or a percentage limitation. The proposed regulations prescribe rules for applying these limitations to participants who purchase multiple contracts or make multiple premium payments for the same contract.

Under the dollar limitation, the amount of the premiums paid for a contract under the plan may not exceed $100,000. If, on or before the date of a premium payment, an employee has paid premiums for the same contract or for any other contract that is intended to be a QLAC and that is purchased for the employee under the plan or under any other plan, annuity or account, the $100,000 limit is reduced by the amount of those other premium payments. 2

Under the percentage limitation, the amount of the premiums paid for a contract under the plan may not exceed an amount equal to 25 percent of the employee's account balance on the date of payment. If, on or before the date of a premium payment, an employee has paid premiums for the same contract or for any other contract that is intended to be a QLAC and that is held or purchased for the employee under the plan, the maximum amount under the 25-percent limit is reduced by the amount of those other payments.

For purposes of determining whether premiums for a contract exceed the dollar or percentage limitation, unless the plan administrator has actual knowledge to the contrary, the plan administrator would generally be permitted to rely on an employee's representation of the amount of premiums paid on or before that date under any other contract that is intended to be a QLAC and that is purchased for an employee under any other plan, annuity, or account. However, this reliance is not available with respect to a plan, annuity, or account that is maintained by an employer (or an entity that is treated as a single employer with the employer under section 414(b), (c), (m), or (o)) with respect to purchases for an employee under any other plan, annuity, or account maintained by that employer.

If a premium for a contract causes the total premiums to exceed either the dollar or percentage limitation, the contract would fail to be a QLAC as of the date on which the excess premiums were paid. Thus, beginning on that date, the value of the contract would no longer be excluded from the account balance used to determine required minimum distributions.

For calendar years beginning on or after January 1, 2014, the dollar limitation would be adjusted at the same time and in the same manner as under section 415(d), except that (1) the base period would be the calendar year quarter beginning July 1, 2012, and (2) any increase that is not a multiple of $25,000 would be rounded to the next lowest multiple of $25,000. If a contract failed to be a QLAC immediately before an adjustment because the premiums exceeded the dollar limitation, an adjustment of the dollar limitation would not cause the contract to become a QLAC.

The proposed regulations provide that, in order to constitute a QLAC, the contract must provide that distributions under the contract commence not later than a specified annuity starting date set forth in the contract. The specified annuity starting date must be no later than the first day of the month coincident with or next following the employee's attainment of age 85. This age reflects the approximate life expectancy of an employee at retirement, and was recommended in a number of the comments received in response to the Request for Information. Any contract for which premiums are paid after the latest permissible specified annuity starting date would not be a QLAC, because such a contract could not require distributions to commence by that date.

The proposed regulations would permit a QLAC to allow a participant to elect an earlier annuity starting date than the specified annuity starting date. For example, if the specified annuity starting date under a contract were the date on which a participant attains age 85, the contract would not fail to be a QLAC solely because it allows the participant to commence distributions at an earlier date. On the other hand, these rules would not require a QLAC to provide an option to commence distributions before the specified annuity starting date, so that a QLAC could provide that distributions must commence only at the specified annuity starting date. For a given premium, such a contract could provide a substantially higher periodic annuity payment beginning on the specified annuity starting date than a contract with an acceleration option. Similarly, premiums could be lower for a given level of periodic annuity payment, leaving a larger portion of the remaining account balance for the participant to use for living expenses before the specified annuity starting date.

The proposed regulations provide that the maximum age may also be adjusted to reflect changes in mortality. The adjusted age (if any) would be prescribed by the Commissioner in revenue rulings, notices, or other guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)( b )). The Treasury Department and the IRS anticipate that such changes will not occur more frequently than the adjustment of the $100,000 limit described in subheading I.A. “Limitations on premiums.” If a contract failed to be a QLAC immediately before an adjustment because it failed to provide that distributions must commence by the requisite age, an adjustment of the age would not cause the contract to become a QLAC.

Under a QLAC, the only benefit permitted to be paid after the employee's death is a life annuity, payable to a designated beneficiary, that meets certain requirements. Thus, for example, a contract that provides a distribution form with a period certain or a refund of premiums in the case of an employee's death would not be a QLAC. These types of payments are inconsistent with the purpose of providing lifetime income to employees and their beneficiaries, as described in the Background section of this preamble. A contract that provides a given lifetime periodic annuity payment to an employee would be less expensive if it provided for a life annuity payable to a designated beneficiary upon the employee's death rather than additional features such as an optional single-sum death benefit. After paying a lower premium for such a life annuity, the employee would be able to retain a larger portion of his or her account, maximizing the employee's lifetime benefits, while also leaving larger death benefits for a beneficiary, from the remaining amount of the account.

The proposed regulations provide that if the sole beneficiary of an employee under the contract is the employee's surviving spouse, the only benefit permitted to be paid after the employee's death is a life annuity payable to the surviving spouse that does not exceed 100 percent of the annuity payment payable to the employee. The proposed regulations include a special exception that would allow a plan to comply with any applicable requirement to provide a qualified preretirement survivor annuity  3 (which would have an effect only if the employee has a substantially older spouse).

If the employee's surviving spouse is not the sole beneficiary under the contract, 4 the only benefit permitted to be paid after the employee's death is a life annuity payable to a designated beneficiary. In order to satisfy the MDIB requirements of section 401(a)(9)(G), the life annuity is not permitted to exceed an applicable percentage of the annuity payment payable to the employee. The applicable percentage is determined under one of two alternative tables, and the determination of which table applies depends on the different types of death benefits that are payable to the designated beneficiary.

Under the first alternative, the applicable percentage is the percentage described in the existing table in § 1.401(a)(9)-6, A-2(c). Because the existing applicable percentage table does not take into account the potential for a death benefit to be paid to the non-spouse designated beneficiary during the period between the required beginning date and the annuity starting date, this table is available only if, under the contract, no death benefits are payable to such a beneficiary if the employee dies before the specified annuity starting date. Furthermore, in order to address the possibility that an employee with a shortened life expectancy could accelerate the annuity starting date in order to avoid this rule, this table is available only if, under the contract, no benefits are payable in any case in which the employee selects an annuity starting date that is earlier than the specified annuity starting date under the contract and the employee dies less than 90 days after making that election, even if the employee's death occurs after his or her selected annuity starting date.

Under the second alternative, the applicable percentage is the percentage described in a new table set forth in the proposed regulations. The table is available for use when the contract provides a pre-annuity-starting-date death benefit to the non-spouse designated beneficiary. The table takes into account that a significant portion of the premium is used to provide death benefits to a designated beneficiary if death occurs during the deferral period between age 70 1/2 and age 85. In order to limit the portion of the premium that is used to provide death benefits to a designated beneficiary, use of the table is limited to contracts under which any non-spouse designated beneficiary must be irrevocably selected as of the required beginning date. Accordingly, the applicable percentages in the table are based on the expected longevity for the designated beneficiary, determined as of the employee's required beginning date.

The Treasury Department and the IRS considered whether to prescribe a special rule under which a QLAC could provide for a pre-annuity-starting-date death benefit to a non-spouse designated beneficiary and also allow the designated beneficiary to be changed at any time before the annuity starting date. However, in order to satisfy the MDIB requirements in such a case, the applicable percentages would need to be much smaller than the percentages set forth in the special table. This is because a larger portion of the cost of the contract would be allocable to death benefits if, after the required beginning date and before the annuity starting date, the participant were able to replace a designated beneficiary who has died (or to replace a designated beneficiary who has a short life expectancy with one who has a longer life expectancy). Comments are requested on whether the proposed regulations should be modified to permit alternative death benefits that would be subject to such lower applicable percentages.

If the employee dies before the specified annuity starting date under the contract, the date by which benefits must commence to the designated beneficiary depends on whether the beneficiary is the employee's surviving spouse. If the sole beneficiary under the contract is the employee's surviving spouse, the life annuity is not required to commence until the employee's specified annuity starting date under the contract (in lieu of the otherwise applicable rule that would require distributions to commence by the later of the end of the calendar year following the calendar year in which the employee died or the end of the calendar year in which the employee would have attained age 70 1/2 ). If the employee's sole beneficiary under the contract is not the surviving spouse, the life annuity payable to the designated beneficiary must commence by the last day of the calendar year immediately following the calendar year of the employee's death.

The proposed regulations include a rule for applying the limitations on amounts payable to a surviving spouse or a designated beneficiary in the event the employee dies before the annuity starting date. Under this rule, if the contract does not allow an employee to select an annuity starting date that is earlier than the date on which the annuity payable to the employee would have commenced under the contract if the employee had not died, the contract must nonetheless provide a way to determine the periodic annuity payments that would have been payable if payments to the employee had commenced immediately prior to the date on which benefit payments to the designated beneficiary commence.

Under the proposed regulations, a QLAC would not include a variable contract under section 817, equity-indexed contract, or similar contract, because the purpose of a QLAC is to provide a participant with a predictable stream of lifetime income. In addition, exposure to equity-based returns is available through control over the remaining portion of the account balance so that a participant can achieve adequate diversification.

The proposed regulations also provide that, in order to be a QLAC, the contract is not permitted to make available any commutation benefit, cash surrender value, or other similar feature. As in the case of the limitations on benefits payable after death, these limitations would allow an annuity contract to maximize the annuity payments that are made while a participant or beneficiary is alive. In addition, having a limited set of options available to purchasers would make these contracts more readily understandable and enhance purchasers' ability to compare products across providers. Ease of comparison will be particularly important to the extent that contracts provided under plans are priced on a unisex basis, while contracts offered under IRAs generally take gender into account in establishing premiums.

The proposed regulations provide that a contract is not a QLAC unless it states, when issued, that it is intended to be a “qualifying longevity annuity contract” or a “QLAC.” This rule would ensure that the issuer, participant, plan sponsor, and IRS know that the rules applicable to QLACs apply to this contract.

The proposed regulations provide that distributions under a QLAC must satisfy the generally applicable section 401(a)(9) requirements relating to annuities at § 1.401(a)(9)-6, other than the requirement that annuity payments commence on or before the employee's required beginning date. Thus, for example, the limitation on increasing payments under § 1.401(a)(9)-6, A-1(a), applies to the contract.

The proposed regulations provide that, in order to constitute a QLAC, the amount of the premiums paid for the contract under an IRA on a given date may not exceed $100,000. If, on or before the date of a premium payment, a participant has paid premiums for the same contract or for any other contract that is intended to be a QLAC and that is purchased for the participant under the IRA or under any other IRA, plan, or annuity, the $100,000 limit is reduced by the amount of those other premium payments.

The proposed regulations also provide that in order to constitute a QLAC, the amount of the premiums paid for the contract under an IRA on a given date generally may not exceed 25 percent of a participant's IRA account balances. Consistent with the rule under which a required minimum distribution from an IRA could be satisfied by a distribution from another IRA (applied separately to traditional IRAs and Roth IRAs), the proposed regulations would allow a QLAC that could be purchased under an IRA within these limitations to be purchased instead under another IRA. Specifically, the amount of the premiums paid for the contract under an IRA may not exceed an amount equal to 25 percent of the sum of the account balances (as of December 31 of the calendar year before the calendar year in which a premium is paid) of the IRAs (other than Roth IRAs) that an individual holds as the IRA owner. If, on or before the date of a premium payment, an individual has paid other premiums for the same contract or for any other contract that is intended to be a QLAC and that is held or purchased for the individual under his or her IRAs, the premium payment cannot exceed the amount determined to be 25 percent of the individual's IRA account balances, reduced by the amount of those other premiums.

The proposed regulations provide that, for purposes of both the dollar and percentage limitations, unless the trustee, custodian, or issuer of an IRA has actual knowledge to the contrary, the trustee, custodian, or issuer may rely on the IRA owner's representations of the amount of the premiums (other than the premiums paid under the IRA) and, for purposes of applying the percentage limitation, the amount of the individual's account balances (other than the account balance under the IRA).

Under the proposed regulations, an annuity purchased under a Roth IRA would not be treated as a QLAC. This is because a Roth IRA (unlike a designated Roth account under a plan, as described in section 402(A) is not subject to the section 401(a)(9)(A) requirement that the individual's benefits commence and be paid over the lives or life expectancy of the individual and a designated beneficiary (but, after the death of the individual, benefits must be paid under the same section 401(a)(9)(B) rules that apply to traditional IRAs). Because the rules of section 401(a)(9)(A) do not apply to a Roth IRA owner, a longevity annuity contract purchased using a portion of the individual's Roth IRA would not need to provide the right to accelerate payments in order to ensure compliance with those rules. Thus, there is no need to permit the value of a longevity annuity contract to be excluded from the account balance that is used to determine required minimum distributions during the life of a Roth IRA owner. Accordingly, the proposed regulations would not apply the rules regarding QLACs to Roth IRAs.

The proposed regulations would not preclude the use of assets in a Roth IRA to purchase a longevity annuity contract, nor would such a contract be subject to the same restrictions as a QLAC. For example, a longevity annuity contract purchased using assets of a Roth IRA could have an annuity starting date that is later than age 85 and offer features, such as a cash surrender right, that are not permitted under a QLAC. Although such a contract could not be excluded from the account balance used to determine required minimum distributions, this exclusion is not necessary because the required minimum distribution rules do not apply during the life of a Roth IRA owner.

In addition, the dollar and percentage limitations on premiums that apply to a QLAC would not take into account premiums paid for a contract that is purchased or held under a Roth IRA, even if the contract satisfies the requirements to be a QLAC. If a QLAC is purchased or held under a plan, annuity, contract, or traditional IRA that is later rolled over or converted to a Roth IRA, the QLAC would cease to be a QLAC (and would cease to be treated as intended to be a QLAC) after the date of the rollover or conversion. In that case, the premiums would then be disregarded in applying the dollar and percentage limitations to premiums paid for other contracts after the date of the rollover or conversion. 5

Comments are requested on whether the regulations should be modified to apply the QLAC rules to a Roth IRA or to reduce the availability of the section 401(a)(9) relief for purchases of QLACs by the amount of assets that the individual holds in a Roth IRA. Comments are also requested as to whether any special rules should apply where a QLAC is purchased using assets of a Roth IRA, such as special disclosure in order to minimize any potential confusion.

The proposed regulations apply the tax-qualified plan rules, instead of the IRA rules, to the purchase of a QLAC under a section 403(b) plan. For example, the 25-percent limitation on premiums would be separately determined for each section 403(b) plan in which an employee participates. The proposed regulations also provide that the tax-qualified plan rules relating to reliance on representations, rather than the IRA rules, apply to the purchase of a QLAC under a section 403(b) plan.

The proposed regulations provide that, if the sole beneficiary of an employee under a contract is the employee's surviving spouse and the employee dies before the annuity starting date under the contract, a life annuity that is payable to the surviving spouse after the employee's death is permitted to exceed the annuity that would have been payable to the employee to the extent necessary to satisfy the requirement to provide a qualified preretirement survivor annuity (as discussed for qualified plans under subheading I.C. “Benefits payable after death of the employee”). A section 403(b) plan may be subject to this requirement under ERISA, whereas IRAs are generally not subject to this requirement. See § 1.401(a)-20, Q&A-3(d), and § 1.403(b)-5(e).

Section 1.457-6(d) provides that an eligible section 457(b) plan must meet the requirements of section 401(a)(9) and the regulations under section 401(a)(9). Thus, these proposed regulations relating to the purchase of a QLAC under a tax-qualified defined contribution plan would automatically apply to an eligible section 457(b) plan. However, the rule relating to QLACs is limited to eligible governmental section 457(b) plans. Because section 457(b)(6) requires that an eligible section 457(b) plan that is not a governmental plan be unfunded, the purchase of an annuity contract under such a plan would be inconsistent with this requirement.

Although defined benefit plans are subject to the minimum required distribution rules, they offer annuities which provide longevity protection. Because this protection is therefore already available, these proposed regulations would not apply to defined benefit plans. 6

Under the proposed regulations, the issuer of a QLAC would be required to create a report containing the following information about the QLAC:

• A plain-language description of the dollar and percentage limitations on premiums;

• The annuity starting date under the contract, and, if applicable, a description of the employee's ability to elect to commence payments before the annuity starting date;

• The amount (or estimated amount) of the periodic annuity payment that is payable after the annuity starting date as a single life annuity (including, if an estimated amount, the assumed interest rate or rates used in making this determination), and a statement that there is no commutation benefit or right to surrender the contract in order to receive its cash value;

• A statement of any death benefit payable under the contract, including any differences between benefits payable if the employee dies before the annuity starting date and benefits payable if the employee dies on or after the annuity starting date;

• A description of the administrative procedures associated with an employee's elections under the contract, including deadlines, how to obtain forms, and where to file forms, and the identity and contact information of a person from whom the employee may obtain additional information about the contract; and

• Such other information that the Commissioner may require.

This report is not required to be filed with the Internal Revenue Service. Each issuer required to create a report would be required to furnish to the individual in whose name the contract has been purchased a statement containing the information in the report. This statement must be furnished prior to or at the time of purchase. In addition, in order to avoid duplicating state law disclosure requirements, the statement would not be required to include information that the issuer has already provided to the employee in order to satisfy any applicable state disclosure law. Comments are requested on whether the information listed is appropriate, and whether (and, if so, the extent to which) this list would duplicate disclosure requirements under existing state law. Comments are also requested on whether there is other information that should be included in the disclosure, such as the special tax attributes of a QLAC.

The proposed regulations prescribe annual reporting requirements under section 6047(d) which would require any person issuing any contract that states that it is intended to be a QLAC to file annual calendar-year reports and provide a statement to the individual in whose name the contract has been purchased regarding the status of the contract. The Commissioner will prescribe an applicable form and instructions for this purpose, which will contain the filing deadline and other information.

The report will be required to identify that the contract is intended to be a QLAC and to include, at a minimum, the following items of information:

• The name, address, and identifying number of the issuer of the contract, along with information on how to contact the issuer for more information about the contract;

• The name, address, and identifying number of the individual in whose name the contract has been purchased;

• If the contract was purchased under a plan, the name of the plan, the plan number, and the Employer Identification Number (EIN) of the plan sponsor;

• If payments have not yet commenced, the annuity starting date on which the annuity is scheduled to commence, the amount of the periodic annuity payable on that date, and whether that date may be accelerated; and

• The amount of each premium paid for the contract, along with the date of payment. 7

Each issuer required to file the report with respect to a contract would also be required to provide to the individual in whose name the contract has been purchased a statement containing the information that is required to be furnished in the report. This requirement may be satisfied by providing the individual with a copy of the required form, or in another form that contains the following language: “This information is being furnished to the Internal Revenue Service.” The statement is required to be furnished to the individual on or before January 31 following the calendar year for which the report is required.

An issuer that is subject to these annual reporting requirements must comply with the requirements for each calendar year beginning with the year in which premiums are first paid and ending with the earlier of the year in which the individual for whom the contract has been purchased attains age 85 (as adjusted in calendar years beginning on or after January 1, 2014) or dies. However, if the individual dies and the sole beneficiary under the contract is the individual's spouse (so that the spouse's annuity might not commence until the individual would have attained age 85), the annual reporting requirement continues until the year in which the distributions to the spouse commence.

The proposed regulations regarding disclosure and reporting will be effective upon publication in the Federal Register of the Treasury decision adopting these rules as final regulations. Otherwise, these regulations are proposed to be effective for contracts purchased on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register and for determining required minimum distributions for distribution calendar years beginning on or after January 1, 2013. Until regulations finalizing these proposed regulations are issued, taxpayers may not rely on the rules set forth in these proposed regulations (and the existing rules under section 401(a)(9) continue to apply).

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collection of information in these proposed regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that an insubstantial number of entities of any size will be impacted by the regulation. In addition, IRS and Treasury expect that any burden on small entities will be minimal because required disclosures are expected to take 10 minutes to prepare. In addition, the entities that will be impacted will be insurance companies, very few of which are small entities. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. Comments are requested on benefits payable to a non-spouse beneficiary (under the subheading “C. Benefits payable after death of the employee”), Roth IRAs (under the heading “II. IRAs”), and disclosure (under the heading “VI. Disclosure and annual reporting requirements”). Comments are also requested on whether an insurance product that provides guaranteed lifetime withdrawal benefits could constitute a QLAC, taking into account the rules precluding the use of a variable annuity and a commutation of benefits and the rules relating to the provision of benefits to a designated beneficiary after an employee's death (under which benefits can be paid only in the form of a life annuity). The IRS and the Treasury Department further request comments on all aspects of the proposed rules.

All comments will be available for public inspection and copying at www.regulations.gov or upon request. A public hearing has been scheduled for June 1, 2012, beginning at 1 p.m. in the Auditorium, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written or electronic comments by May 3, 2012, and an outline of topics to be discussed and the amount of time to be devoted to each topic (a signed original and eight (8) copies) by May 11, 2012. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

The principal authors of these regulations are Cathy Pastor and Jamie Dvoretzky, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

Section 401(a)(11) of the Internal Revenue Code (Code) provides that, in order for a defined benefit plan to qualify under section 401(a), and except as provided under section 417, in the case of a vested participant who does not die before the annuity starting date, the accrued benefit payable to such participant must be provided in the form of a qualified joint and survivor annuity. In the case of a vested participant who dies before the annuity starting date and who has a surviving spouse, a defined benefit plan must provide a qualified preretirement survivor annuity to the surviving spouse of such participant, except as provided under section 417.

Section 417(e)(1) provides that a plan may provide that the present value of a qualified joint and survivor annuity or a qualified preretirement survivor annuity will be immediately distributed if that present value does not exceed the amount that can be distributed without the participant's consent under section 411(a)(11). Section 417(e)(2) provides that, if the present value of the qualified joint and survivor annuity or the qualified preretirement survivor annuity exceeds the amount that can be distributed without the participant's consent under section 411(a)(11), then a plan may immediately distribute the present value of a qualified joint and survivor annuity or the qualified preretirement survivor annuity only if the participant and the spouse of the participant (or where the participant has died, the surviving spouse) consent in writing to the distribution.

Section 417(e)(3)(A) provides that the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate. 1

Section 417(e)(3)(B) of the Code, as amended by section 302 of the Pension Protection Act of 2006 (PPA ’06), Public Law 109-280, 120 Stat. 780 (2006), provides that the term “applicable mortality table” means a mortality table, modified as appropriate by the Secretary, based on the mortality table specified for the plan year under section 430(h)(3)(A) (without regard to section 430(h)(3)(C) or (3)(D)).

Section 417(e)(3)(C) of the Code, as amended by section 302 of PPA ’06, provides that the term “applicable interest rate” means the adjusted first, second, and third segment rates applied under rules similar to the rules of section 430(h)(2)(C) of the Code for the month before the date of the distribution or such other time as the Secretary may prescribe by regulations. Under section 417(e)(3)(D), these rates are to be determined using the average yields for a month, rather than the 24-month average used under section 430(h)(2)(D). Section 417(e)(3)(D) also provides special rules applicable for plan years beginning in 2008 through 2011 under which the applicable interest rate is based on a blend of the interest rates under section 417(e)(3)(C) and the previously applicable 30-year Treasury rate.

Section 411(a)(13) of the Code, as added by section 701(b) of PPA ’06, provides that an “applicable defined benefit plan” is not treated as failing to meet the requirements of section 417(e) with respect to accrued benefits derived from employer contributions solely because the present value of a participant's accrued benefit (or any portion thereof) may be, under the terms of the plan, equal to the amount expressed as the hypothetical account balance or as an accumulated percentage of such participant's final average compensation. Section 411(a)(13)(C) defines the term “applicable defined benefit plan” to mean a defined benefit plan under which the accrued benefit (or any portion thereof) is calculated as the balance of a hypothetical account maintained for the participant or as an accumulated percentage of the participant's final average compensation.

Section 1107(a)(2) of PPA '06 provides that a pension plan does not fail to meet the requirements of section 411(d)(6) by reason of a plan amendment to which section 1107 applies, except as provided by the Secretary of the Treasury. Section 1107 of PPA '06 applies to plan amendments made pursuant to the provisions of PPA '06 or regulations issued thereunder that are adopted no later than a specified date, generally the last day of the first plan year beginning on or after January 1, 2009.

Final regulations under section 417 relating to the qualified joint and survivor and qualified preretirement survivor annuity requirements were issued on August 22, 1988. The final regulations were amended on April 3, 1998, to reflect changes enacted by the Uruguay Round Agreements Act, Public Law 103-465 (GATT).

Section 1.417(e)-1(d)(1) provides that a defined benefit plan generally must provide that the present value of any accrued benefit and the amount of any distribution, including a single sum, must not be less than the amount calculated using the specified applicable interest rate and the specified applicable mortality table. The present value of any optional form of benefit cannot be less than the present value of the accrued benefit determined in accordance with the preceding sentence.

Section 1.417(e)-1(d)(6) provides an exception from the minimum present value requirements of section 417(e) and § 1.417(e)-1(d). This exception applies to the amount of a distribution paid in the form of an annual benefit that either does not decrease during the life of the participant (or, in the case of a qualified preretirement survivor annuity, the life of the participant's spouse), or that decreases during the life of the participant merely because of the death of the survivor annuitant (but only if the reduction is to a level not below 50 percent of the annual benefit payable before the death of such survivor annuitant) or the cessation or reduction of Social Security supplements or qualified disability benefits.

Notice 2007-81 2007-2 CB 899 (2007), (see § 601.601(d)(2)(ii)( b ) of this chapter) provides guidance on the corporate bond yield curve and the segment rates used under section 430, as well as the interest rates for determining minimum present values under section 417(e)(3), to implement changes to the funding rules and minimum present value requirements made in PPA '06.

Rev. Rul. 2007-67 2007-2 CB 1047 (2007), (see § 601.601(d)(2)(ii)( b ) of this chapter) provides that the applicable mortality table for a given year applies to distributions with annuity starting dates that occur during stability periods that begin during that calendar year. Under Rev. Rul. 2007-67, the applicable mortality table for 2008 was based on a fixed blend of 50 percent of the static male combined mortality rates and 50 percent of the static female combined mortality rates promulgated under § 1.430(h)(3)-1(c)(3) of the proposed regulations (which were later issued as final regulations). Rev. Rul. 2007-67 provides that updated section 417(e)(3) applicable mortality tables will be published for each calendar year in future guidance and, except as provided in that future guidance, will be determined from the section 430(h)(3)(A) tables on the same basis as the applicable mortality table for 2008. 2

Rev. Rul. 2007-67 provides that an amendment to determine the applicable interest rate under the section 417(e)(3) rules in effect for plan years beginning on or after January 1, 2008, will not violate section 411(d)(6) solely because of a reduction in accrued benefits or a reduction in the amount of any distribution with an annuity starting date occurring during a plan year beginning in 2008 or in a subsequent year if the cause of such reduction is the substitution of the modified segment rates for the 30-year Treasury rate for the same period. Additionally, Rev. Rul. 2007-67 provides that a plan amendment to incorporate by reference the applicable mortality table under section 417(e)(3) that is prescribed by Rev. Rul. 2007-67 and by subsequent guidance will not violate section 411(d)(6) solely because of a reduction in accrued benefits or a reduction in the amount of any distribution with an annuity starting date occurring during a plan year beginning in 2008 or in a subsequent year if the cause of such reduction is the substitution of the applicable section 417(e)(3) mortality table for the prior applicable mortality table under section 417(e)(3).

Rev. Rul. 2007-67 also provides guidance regarding the applicable interest rate used under section 417(e)(3) pursuant to the PPA ’06 changes. Pursuant to Rev. Rul. 2007-67, the rules of §§ 1.417(e)-1(d)(4) and 1.417(e)-1(d)(10)( ii ) regarding the time for determining the applicable interest rate continue to apply for plan years beginning on or after January 1, 2008, without regard to the change in the basis for determining the applicable interest rate.

The Worker, Retiree, and Employer Recovery Act of 2008, Public Law 109-280 (120 Stat. 780 (2008)), amended section 415(b)(2)(E)(v) to provide that the applicable mortality table under section 417(e)(3)(B) applies for purposes of adjusting a benefit or limitation pursuant to section 415(b)(2)(B), (C), or (D).

These proposed regulations would amend the current final regulations under section 417(e) to permit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity that is excepted from the minimum present value requirements of section 417(e)(3) pursuant to § 1.417(e)-1(d)(6) and partly in a more accelerated form. Where a defined benefit plan offers a single-sum distribution or other form of accelerated distribution as an optional form of benefit in addition to the required qualified joint and survivor annuity, many participants have been reluctant to elect lifetime payments to insure against unexpected longevity, choosing instead an accelerated distribution form in order to maximize their liquidity. However, participants who elect a single sum or other accelerated form of distribution may face a greater challenge in protecting themselves against the risk of outliving their retirement savings.

The IRS and the Treasury Department believe that many participants would be better served by having the opportunity to elect to receive a portion of their retirement benefits in annuity form (which provides financial protection against unexpected longevity) while receiving accelerated payments for the remainder of the benefit to provide increased liquidity during retirement. Under current regulations, both portions of such a distribution option are subject to the minimum present value requirements of section 417(e)(3).

The proposed regulations would provide an exception to this rule in the case of a plan with a bifurcated accrued benefit as defined in the proposed regulations. Under this exception, such a plan is permitted to provide that, if a participant selects two different distribution options with respect to separate portions of the bifurcated accrued benefit, then the two different distribution options are treated as two separate optional forms of benefit for purposes of applying the requirements of section 417(e)(3). Thus, if this rule applies to treat two separate distribution options selected with respect to separate portions of a bifurcated accrued benefit as two separate optional forms of benefit, and one of those separate optional forms of benefit is exempt from the requirement to use the section 417(e)(3) assumptions, then that exemption would apply to that separate optional form of benefit. In such a case, the plan would have to apply the section 417(e)(3) assumptions only to the separate optional form of benefit that is not so exempted (rather than apply those assumptions to the entire optional form of benefit).

The primary impact of this proposed change would be to make it simpler and easier for a plan to offer an optional form of benefit that is a combination of a single-sum payment and an annuity. Allowing a plan to apply a bifurcated approach would permit the plan to use the section 417(e)(3) assumptions for the single-sum portion of the optional form and its usual annuity equivalence factors for the annuity portion (rather than being required to make a special calculation of the annuity portion using the section 417(e)(3) assumptions). Not only would this be simpler administratively, it would also yield a more intuitive result.

One type of plan with a bifurcated accrued benefit that would be eligible for this treatment is a plan that provides for two separate portions of the accrued benefit that are determined without regard to any election of optional form of benefit and permits a participant to choose different forms of benefit with respect to each of those portions of the accrued benefit. An example of such a plan is a plan that has been amended to accrue benefits under a different plan formula, where a participant's benefit is the sum of the participant's accrued benefit for years of service before the amendment date, determined under the pre-amendment plan terms, plus the participant's accrued benefit for years of service after the amendment date, determined under the post-amendment plan terms, with no interaction between the two formulas, and the plan permits a participant to make separate elections of optional forms of benefit with respect to each of those portions of the accrued benefit.

A second type of plan with a bifurcated accrued benefit that would be eligible for this treatment is a plan that provides for a participant to apply different distribution elections to different portions of the accrued benefit so that the amount of the distribution, with respect to the distribution election applied to its respective portion of the accrued benefit, is the pro rata portion of the amount of the distribution that would be determined if that distribution election had been applied to the entire accrued benefit. An example of such a plan is a plan that provides both a single-sum option and a joint and survivor option for the entire benefit, but allows a participant to select an optional form which is 25 percent of the full lump sum and 75 percent of the full joint and survivor annuity.

A third type of plan with a bifurcated accrued benefit that would be eligible for this treatment is a plan that provides a single-sum distribution option with respect to only a portion of the benefit and provides a separate benefit election for the remainder of the distribution. In order to satisfy the requirements to be this type of plan with a bifurcated accrued benefit, the amount of the distribution that is not paid in a single sum must be no less than the amount that would be payable under the rules described in the prior paragraph had a single sum election been available with respect to the entire accrued benefit, where the single sum is determined as the present value of the accrued benefit payable at normal retirement age (or the immediate annuity if the participant is older than normal retirement age) determined using the applicable interest rates and the applicable mortality table. An example of such a plan is a plan that provides that a participant can elect to receive in a single sum an amount equal to the employee contributions, accumulated with interest, with the remainder of the accrued benefit paid under one of the annuity optional forms of benefit available under the plan in an amount sufficient to satisfy the requirements under the proposed regulations.

As previously discussed, the proposed regulations would make the bifurcation of benefits for purposes of section 417(e)(3) conditional on the existence of plan terms that explicitly provide that, if a participant selects two different distribution options with respect to separate portions of the bifurcated accrued benefit, then the two different distribution options are treated as two separate optional forms of benefit for purposes of applying the requirements of section 417(e)(3). To provide for such bifurcated treatment, a plan sponsor would be required to amend its plan to provide for use of the plan factors that generally apply to annuity distributions instead of the section 417(e)(3) assumptions in these circumstances. Any plan amendment must comply with the requirements of section 411(d)(6). See the discussion in this preamble under the heading “Effective/Applicability Date.”

The Treasury Department and the IRS recognize that additional modifications to the regulations under section 417(e)(3) are needed in light of the enactment of PPA `06. It is expected that additional proposed amendments to the regulations under section 417(e)(3) will be issued to reflect statutory changes and to make other clarifications.

These regulations are proposed to be effective on the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .

The changes under the proposed regulations are proposed to apply to distributions with annuity starting dates in plan years beginning after the publication date of final regulations. If the regulations are finalized as proposed and a plan that previously provided for a partial single-sum distribution together with a specified annuity distribution is amended to treat that distribution form as a bifurcated accrued benefit (and applies less favorable actuarial factors to the portion of the benefit that is not subject to section 417(e)(3)), then the plan must comply with the requirements of section 411(d)(6). This can be done by providing that, after the applicable amendment date under § 1.411(d)-3(g)(4), the amount of each portion of a distribution is not less than the amount that would have been payable under the plan provisions in effect before the amendment applied to the participant's accrued benefit as of the applicable amendment date.

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

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The Treasury Department and the IRS request comments on all aspects of these proposed regulations. In particular, the Treasury Department and the IRS request comments regarding whether the special rules in these proposed regulations regarding bifurcated accrued benefits should be extended to any types of benefits that are not covered by the rules in these proposed regulations. All comments will be available for public inspection or copying at www.regulations.gov or upon request. A public hearing has been scheduled for June 1, 2012, beginning at 10 a.m. in the Auditorium, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit written or electronic comments by May 3, 2012, and an outline of topics to be discussed and the amount of time to be devoted to each topic (a signed original and eight (8) copies) by May 11, 2012. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

The principal authors of these regulations are Peter J. Marks and Linda S.F. Marshall, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in the development of these regulations.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

The Attorney General is responsible for enforcing the provisions of the Gun Control Act of 1968 (“the Act”), 18 U.S.C. Chapter 44. He has delegated that responsibility to the Director of ATF, subject to the direction of the Attorney General and the Deputy Attorney General. 28 CFR 0.130(a). ATF has promulgated regulations that implement the provisions of the Act in 27 CFR Part 478.

The regulations in Subpart E of Part 478, sections 478.71-478.78, relate to proceedings involving federal firearms licenses, including the denial, suspension, or revocation of a license, or the imposition of a civil fine. In particular, § 478.71 provides that the Director of ATF may issue a notice of denial on ATF Form 4498 (Notice of Denial of Application for License) to an applicant for a license if he has reason to believe that the applicant is not qualified, under the provisions of § 478.47, to receive a license. The notice sets forth the matters of fact and law relied upon in determining that the application should be denied, and affords the applicant 15 days from the date of receipt of the notice in which to request a hearing to review the denial. If a request for a hearing is not filed within such time, the application is disapproved and a copy, so marked, is returned to the applicant.

Under § 478.72, an applicant who has been denied an original or renewal license may file a request with the Director of Industry Operations (DIO) for a hearing to review the denial of the application. On conclusion of the hearing and after consideration of all relevant facts and circumstances presented by the applicant or his representative, the Director (or his or her delegate) renders a decision confirming or reversing the denial of the application. If the decision is that the denial should stand, a certified copy of the Director's findings and conclusions are furnished to the applicant with a final notice of denial, ATF Form 4501 (now ATF Form 5300.13), Final Notice of Denial of Application or Revocation of Firearms License. In addition, a copy of the application, marked “Disapproved,” is furnished to the applicant. If the decision is that the license applied for should be issued, the applicant will be so notified, in writing, and the license will be issued.

Section 478.73 provides that whenever the Director has reason to believe that a firearms licensee has willfully violated any provision of the Act or part 478, a notice of revocation of the license (ATF Form 4500) may be issued. In addition, a notice of revocation, suspension, or imposition of a civil fine may be issued on ATF Form 4500 whenever the Director has reason to believe that a licensee has knowingly transferred a firearm to an unlicensed person and knowingly failed to comply with the requirements of 18 U.S.C. 922(t)(1), relating to a NICS (National Instant Criminal Background Check System) background check. Additionally, under 18 U.S.C. 924(p)(1)(A) and 922 (z), a notice of suspension or revocation of a license, or the imposition of a civil penalty, may be issued when a licensee sells, delivers, or transfers any handgun to any unlicensed person without providing a secure gun storage or safety device for the handgun.

As specified in § 478.74, a licensee who receives a notice of license suspension or revocation of a license, or imposition of a civil fine, may file a request for a hearing with the Director of Industry Operations. On conclusion of the hearing and after consideration of all the relevant information presented at the hearing, the Director renders a decision and prepares a brief summary of the findings and conclusions on which the decision was based. If the decision is that the license should be revoked or, in actions under 18 U.S.C. 922(t)(5) (or 924(p)), that the license should be revoked or suspended, or that a civil fine should be imposed, a certified copy of the summary is furnished to the licensee with the final notice of revocation, suspension, or imposition of a civil fine on ATF Form 4501. If the decision is that the license should not be revoked, or in actions under 18 U.S.C. 922(t)(5) (or 924(p)), that the license should not be revoked or suspended, and a civil fine should not be imposed, the licensee will be notified in writing.

Under § 478.76, a firearms licensee or an applicant for a firearms license may be represented at a hearing by an attorney, certified public accountant, or other person recognized to practice before ATF, provided certain requirements are met. The Director may be represented in hearing proceedings by an attorney in the Office of Chief Counsel or authorized Division Counsel. Pursuant to § 478.77, hearings concerning notification of license denials, suspensions, revocations, or the imposition of a civil fine must be held in a location convenient to the aggrieved party.

Currently, ATF has procedures regarding administrative hearings held as part of firearms license proceedings (see ATF 36N, 75 FR 48362, Aug. 10, 2010).

As indicated above, the regulations provide certain information regarding hearings relative to firearms license proceedings, e.g., who can request a hearing, where the hearing is held, and that the person requesting a hearing is entitled to representation. ATF believes that other aspects of the hearing process should be clarified in the regulations. For example, hearings are informal in nature and adherence to civil court rules and procedures is not required. In addition, persons who request a hearing have an opportunity at that time for the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment. These provisions are being incorporated into the proposed regulations.

The proposed regulations are intended to ensure that federal firearms licensees and applicants for a federal firearms license are familiar with the hearing process relative to the denial, suspension, or revocation of a firearms license, or imposition of a civil fine.

This proposed rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation. The Department of Justice has determined that this proposed rule is a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review, and accordingly this proposed rule has been reviewed by the Office of Management and Budget. However, this proposed rule will not have an annual effect on the economy of $100 million, nor will it 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. Accordingly, this proposed rule is not an “economically significant” rulemaking as defined by Executive Order 12866.

The proposed amendments merely clarify that an administrative hearing, pursuant to a firearms license proceeding, is held in an informal setting where a federal firearms licensee or an applicant for a federal firearms license will have the opportunity for the submission and consideration of facts, arguments, offers of settlement or proposals of adjustment for review and consideration by the Director of ATF.

This proposed regulation will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, the Attorney General has determined that this proposed regulation will not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This proposed regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

The Regulatory Flexibility Act (5 U.S.C. 605(b)) requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. The Attorney General has reviewed this proposed rule and, by approving it, certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed amendments merely clarify that an administrative hearing, pursuant to a firearms license proceeding, is held in an informal setting where a federal firearms licensee or an applicant for a federal firearms license will have the opportunity for the submission and consideration of facts, arguments, offers of settlement, or proposals of adjustment for consideration by the Director of ATF.

This proposed rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 804. This proposed rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

This proposed rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This proposed rule does not impose any new reporting or recordkeeping requirements under the Paperwork Reduction Act.

ATF is requesting comments on the proposed rule from all interested persons. ATF is also specifically requesting comments on the clarity of this proposed rule and how it may be made easier to understand.

All comments must reference this document docket number (ATF 32P), be legible, and include your name and mailing address. ATF will treat all comments as originals and will not acknowledge receipt of comments.

Comments received on or before the closing date will be carefully considered. Comments received after that date will be given the same consideration if it is practical to do so, but assurance of consideration cannot be given except as to comments received on or before the closing date.

Comments, whether submitted electronically or on paper, will be made available for public viewing at ATF, and on the Internet as part of the eRulemaking initiative, and are subject to the Freedom of Information Act. Commenters who do not want their name or other personal identifying information posted on the Internet should submit their comment by mail or facsimile, along with a separate cover sheet that contains their personal identifying information. Both the cover sheet and comment must reference this docket number. Information contained in the cover sheet will not be posted on the Internet. Any personal identifying information that appears within the comment will be posted on the Internet and will not be redacted by ATF.

Any material that the commenter considers to be inappropriate for disclosure to the public should not be included in the comment. Any person submitting a comment shall specifically designate that portion (if any) of his comments that contains material that is confidential under law (e.g., trade secrets, processes, etc.). Any portion of a comment that is confidential under law shall be set forth on pages separate from the balance of the comment and shall be prominently marked “confidential” at the top of each page. Confidential information will be included in the rulemaking record but will not be disclosed to the public. Any comments containing material that is not confidential under law may be disclosed to the public. In any event, the name of the person submitting a comment is not exempt from disclosure.

Comments may be submitted in any of three ways:

• Mail: Send written comments to the address listed in the ADDRESSES section of this document. Written comments must appear in a minimum 12-point size of type (.17 inches), include your mailing address, be signed, and may be of any length.

• Facsimile: You may submit comments by facsimile transmission to (202) 648-9741. Faxed comments must:

(1) Be legible and appear in a minimum 12-point size of type (.17 inches);

(2) Be on 8 1/2 ″ x 11″ paper;

(3) Contain a legible, written signature; and

(4) Be no more than five pages long. ATF will not accept faxed comments that exceed five pages.

• Federal eRulemaking Portal: To submit comments to ATF via the Federal eRulemaking portal, visit http://www.regulations.gov and follow the instructions for submitting comments.

Any interested person who desires an opportunity to comment orally at a public hearing should submit his or her request, in writing, to the Director of ATF within the 90-day comment period. The Director, however, reserves the right to determine, in light of all circumstances, whether a public hearing is necessary.

Copies of this proposed rule and the comments received will be available for public inspection by appointment during normal business hours at: ATF Reading Room, Room 1E-062, 99 New York Avenue NE., Washington, DC 20226; telephone: (202) 648-8740.

The author of this document is Deborah G. Szczenski; Enforcement Programs and Services; Bureau of Alcohol, Tobacco, Firearms, and Explosives.

Accordingly, for the reasons discussed in the preamble, 27 CFR Part 478 is proposed to be amended 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.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-1026), 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 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 email 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-2011-1026” in the “Keyword” box. Click “Search” 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 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 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-2011-1026” 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 on or before February 24, 2012, using one of the four methods specified under ADDRESSES . Please explain why you believe 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 legal basis for the proposed rule is 33 U.S.C. 1225, 1226, 1231, 1233; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; Public Law 107-295, 116 Stat. 2064; and Department of Homeland Security Delegation No. 0170.1, which collectively authorize the Coast Guard to define safety zones.

Many marine events are held annually on a recurring basis on or over the navigable waters within the Coast Guard Southeastern New England COTP Zone. These events include sailing regattas, powerboat races, rowboat races, parades, swim events, air shows, and fireworks displays. In the past, the Coast Guard has established special local regulations, regulated areas, and safety zones for these events on a case by case basis to ensure the protection of the maritime public and event participants from the hazards associated with these events. This proposed rule will consistently apprise the public in a timely manner through permanent publication in Title 33 of the Code of Federal Regulations. The Table in this proposed regulation lists each annual recurring event requiring a regulated area as administered by the Coast Guard.

By establishing permanent regulations for these events, the Coast Guard will eliminate the need to establish temporary rules for events that occur on an annual basis. Some of the events discussed below are duplicated in 33 CFR 100.112, 100.113, 100.114 and 100.116, which are citations that no longer meet the Coast Guard's intended purposes. While 33 CFR part 100 is designed for Regattas and Marine Parades, 33 CFR part 165 is for Regulated Navigation Areas and Limited Access Areas. The Coast Guard has identified a number of events in 33 CFR part 100 which would be more appropriately located in 33 CFR part 165. This rulemaking will amend local regulations for events already contained in 33 CFR part 100 both to update event information as well as to move fireworks displays to Section 165, a citation that better meets the Coast Guard's intended purpose of ensuring safety during these events.

This rulemaking will eliminate seven (7) extraneous and outdated marine events which have either been discontinued, or no longer require a special local regulation due to the absence of a viable marine hazard. Elimination of these seven events will prevent confusion amongst the public who may be led to believe that these events are still marine events recurring on an annual basis. Their removal will also promote regulatory efficiency by eliminating unnecessary local regulations which are no longer enforced.

In addition, the Coast Guard has promulgated safety zones or special local regulations in the past for 17 of the 24 events listed in the TABLE, and has not received public comments or concerns regarding the impact to waterway traffic from these annually recurring events. The seven (7) new annually recurring events now require local regulations in order to ensure the safety of both participants and spectators, as the marine events may pose unique hazards to waterways navigation and safety.

The Coast Guard does not anticipate any negative public comments regarding these seven new annually recurring marine events as these events have been held on an annual basis for several years now, in which local maritime enforcement assets have established “safety perimeters” around the events, similar to the proposed safety zones. The Coast Guard has promulgated safety zones or special local regulations for these areas in the past, and has not received public comments or concerns regarding the impact to waterway traffic from these annually recurring.

The Coast Guard proposes to remove sections 33 CFR 100.112, 100.113, 100.116, to revise section 33 CFR 100.114, and to add section 33 CFR 165.173. The proposed changes will remove seven outdated marine events and establish 24 permanent regulated areas. The proposed rule will apply to each recurring marine event listed in the attached Table in the Coast Guard Southeastern New England COTP Zone. The Table provides the event name, type, and approximate safety zone dimensions as well as approximate dates, times, and locations of the events. The specific times, dates, regulated areas and enforcement period for each event will be provided through the Local Notice to Mariners, Broadcast Notice to Mariners or through a Notice of Enforcement published in the Federal Register .

Three event sponsors of fireworks displays have requested the creation of safety zones which may be enforced 365 days a year. The purpose of these 365 day safety zones is to permit sponsors the flexibility to hold similar fireworks displays at the same location on different days and for different events without the need of creating temporary final rules. These three 365 day Safety Zones can be found in section 1.0 in the Table below.

The particular size of the safety zones established for each event will be reevaluated on an annual basis in accordance with Navigational and Vessel Inspection Circular (NVIC) 07-02, Marine Safety at Firework Displays, the National Fire Protection Association Standard 1123, Code for Fireworks Displays (100-foot distance per inch of diameter of the fireworks mortars), and other pertinent regulations and publications.

This proposed regulation would prevent vessels from transiting areas specifically designated as safety zones during the periods of enforcement to ensure the protection of the maritime public and event participants from the hazards associated with listed annual recurring events. Only event sponsors, designated participants, and official patrol vessels will be allowed to enter safety zones and special local regulation areas. Spectators and other vessels not registered as event participants may not enter the regulated areas without the permission of the COTP or the COTP's designated representative.

We developed this proposed 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 proposed 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.

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation is unnecessary. Although this regulation may have some impact on the public, the potential impact will be minimized for the following reasons: Vessels will only be restricted from safety zones for a short duration of time; vessels may transit in all portions of the affected waterway except for those areas covered by the proposed regulated areas, and vessels may enter or pass through the affected waterway with the permission of the COTP or the COTP's representative. The Coast Guard has promulgated safety zones or special local regulations in accordance with 33 CFR parts 100 and 165 for 17 of the proposed 24 event areas in the past and has not received notice of any negative impact caused by any of the safety zones or special local regulations. By establishing a permanent regulation containing all of these events, the Coast Guard will eliminate the need to establish individual temporary rules for each separate event that occurs on an annual basis, thereby limiting the costs of cumulative regulations.

Notifications will be made to the local maritime community through the Local Notice to Mariners well in advance of the events. If the event does not have a date listed, then the exact dates and times of the enforcement period will be announced through a Notice of Enforcement in the Federal Register . No new or additional restrictions will be imposed on vessel traffic.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed 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 proposed rule would not have a significant economic impact on a substantial number of small entities. This proposed rule would affect the following entities, some of which might be small entities: Owners or operators of vessels intending to transit, fish, or anchor in the areas where the listed annual recurring events are being held.

The proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons: Vessels will only be restricted from safety zones for a short duration of time; vessels may transit in portions of the affected waterway except for those areas covered by the proposed regulated areas; and vessels may enter or pass through the affected waterway with the permission of the COTP or the COTP's representative. The Coast Guard has promulgated safety zones or special local regulations in accordance with 33 CFR parts 100 and 165 for all event areas in the past and has not received notice of any negative impact caused by any of the safety zones or special local regulations; and notifications will be made to the local maritime community through the Local Notice to Mariners well in advance of the events. If the event does not have a date listed, then exact dates and times of the enforcement period will be announced through a Notice of Enforcement in the Federal Register . No new or additional restrictions would be imposed on vessel traffic.

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 want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed under FOR FURTHER INFORMATION CONTACT . The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would call 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 proposed 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 proposed rule would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

We have analyzed this proposed 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 made a preliminary determination that this action appears to be one of a category of actions which do not individually or cumulatively have a significant effect on the human environment.

A preliminary environmental analysis checklist supporting this determination is available in the docket where indicated under ADDRESSES . This proposed rule involves the establishment of safety zones for fireworks displays, swim events and other marine events. It appears that this action will qualify for Coast Guard Categorical Exclusions (34) (g) and (h), as described in figure 2-1 of the Commandant Instruction.

We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR parts 100 and 165 as follows:

Recent advances in technology allow distribution of Periodicals publications through various electronic media channels. According to the standards that govern the Periodicals class, all paid circulation for publications authorized in the General category, and all requested circulation for publications authorized in the Requestor category may be counted toward the publication's eligibility for Periodicals prices.

Efforts to identify the conditions that would allow electronic copies of Periodicals (e-pubs) to be counted with other distribution outside the mails have been ongoing for the past two years. During that time, the transition from traditional printed copies of Periodicals to electronic copies of the same publications has grown. Many factors contributed to this migration including the proliferation of electronic reading devices and the desire of subscribers to read news immediately upon publication.

The proposed effective date is September 30, 2012.

Although we are exempt from the notice and comment requirements of the Administrative Procedure Act [5 U.S.C. of 553(b), (c)] regarding proposed rulemaking by 39 U.S.C. 410(a), we invite public comments on the following proposed revisions to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1.

Accordingly, 39 CFR part 111 is proposed to be amended as follows:

Listening Session Registration: Individuals planning on participating in the Listening Session must register for the meeting at https://www3.gotomeeting.com/register/396514342 .

Web Dialogue Registration: Individuals planning on participating in the web dialogue discussions must join the community at http://CCRRetrospectiveReview.ideascale.com .

The web dialogue will be available from February 23, 2012, to March 9, 2012, for the public to share and post comments on the dialogue.

Special Accommodations: For information on access or accommodations for individuals with disabilities, please contact Adrienne Harris at (202) 250-8793 or by email at CCRRetrospectiveReview@epa.gov. Please allow at least five business days prior to the meeting to give EPA time to process your request.

Background: Consumer Confidence Reports are a key part of the public's right-to-know as established in the 1996 Amendments to the Safe Drinking Water Act (SDWA, section 1414(c)). The Consumer Confidence Report, or CCR, is an annual water quality report that a community water system is required by Federal regulations (63 FR 44511, August 19, 1998) to provide to its customers each year. Community water systems (CWSs) serving 10,000 or more persons are required to mail or otherwise directly deliver these reports. States may allow CWSs serving fewer than 10,000 persons to provide these reports by other means. The report lists the regulated contaminants found in the drinking water, as well as health effects information related to violations of the drinking water standards. More information on CCRs can be accessed on EPA's Web site at http://water.epa.gov/lawsregs/rulesregs/sdwa/ccr/index.cfm .

In August 2011, the Environmental Protection Agency (EPA) finalized its Improving Our Regulations: Final Plan for Periodic Retrospective Reviews of Existing Regulations in response to E.O. 13563. Since 1998, when the CCR rule was finalized, the communication of information and the speed with which information can be shared have greatly expanded, along with a corresponding increase in the diversity of communication tools. The EPA included the CCR rule in its retrospective review plan to explore ways to promote greater transparency and public participation in protecting the nation's drinking water. The agency's CCR retrospective review will look for opportunities to improve the effectiveness of communicating drinking water information to the public, while lowering the burden on water systems and States. One example suggested by water systems is to allow electronic delivery through email, thereby reducing mailing charges. As EPA evaluates alternative delivery options and other opportunities to improve communication with consumers, the agency will consider impacts on consumer burden, environmental justice, and State implementation. By improving communication, customers are better prepared to make informed decisions and the readership of CCRs also may increase.

On November 29, 2011, PHMSA issued a notice of proposed rulemaking (NPRM) that would make miscellaneous amendments to the pipeline safety regulations (76 FR 73570). On January 12, 2012, the Interstate Natural Gas Association of America requested an extension of the comment period for that NPRM. On January 20, 2012, the Committee on Pipe and Tube Imports Ad Hoc Large Diameter Line Pipe Producers Group Transportation Subcommittee also requested an extension of the comment period to further review a National Transportation Safety Board (NTSB) recommendation that would impact guidelines on the transportation of pipe. PHMSA believes that extension of the comment period is warranted based on the information provided in these requests. Therefore, PHMSA has extended the comment period from February 3, 2012 to March 6, 2012.

The National Transportation Safety Board has made a safety recommendation (P-01-02) to PHMSA that EFVs be installed in all new and renewed gas service lines, regardless of a customer's classification, when the operating conditions are compatible with readily available valves. In response to that recommendation, on November 25, 2011, PHMSA published in the Federal Register an ANPRM titled: “Pipeline Safety: Expanding the Use of Excess Flow Valves in Gas Distribution Systems to Applications Other Than Single-Family Residences” (76 FR 72666). The ANPRM sought public comment on several issues related to expanding the use of EFVs in gas distribution systems. PHMSA also sought comment from gas distribution system operators on their experiences using EFVs, particularly from a cost-benefit perspective.

On January 10, 2012, the American Gas Association (AGA) and the American Public Gas Associations (APGA) asked PHMSA to extend the ANPRM comment period by at least 30 days. AGA and APGA stated that the depth and scope of the ANPRM requires that stakeholders have substantially more time to respond. AGA and APGA further stated that the existence of two other significant PHMSA rulemakings open for comment and the recent passage of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (PL112-90), have imposed additional demands on their resources for analysis.

PHMSA has posed important questions in the ANPRM on the technical challenges and potential costs and benefits of expanding the use of EFV applications beyond single family residences. Expanded use of EFVs, if implemented, could impose significant cost on the pipeline industry. PHMSA needs thorough responses to the ANPRM to facilitate its consideration of these important and complex issues. Accordingly, PHMSA is granting the request filed by AGA and APGA and extending the comment period from February 18, 2012, to March 19, 2012.

Electronic Access

This rule is accessible via the Internet at the Office of the Federal Register Web site at http://www.access.gpo.gov/su_docs/aces/aces140.html. Background information and documents are available at the NMFS Northwest Region Web site at http://www.nwr.noaa.gov/Groundfish-Halibut/Groundfish-Fishery-Management/index.cfm and at the Council's Web site at http://www.pcouncil.org.

The Northern Pacific Halibut Act (Halibut Act) of 1982, 16 U.S.C. 773-773K, gives the Secretary of Commerce (Secretary) general responsibility for implementing the provisions of the Halibut Convention between the United States and Canada (Halibut Convention) (16 U.S.C. 773c). It requires the Secretary to adopt regulations as may be necessary to carry out the purposes and objectives of the Halibut Convention and the Halibut Act. Section 773c of the Halibut Act also authorizes the regional fishery management councils to develop regulations in addition to, but not in conflict with, regulations of the IPHC to govern the Pacific halibut catch in their corresponding U.S. Convention waters. Each year between 1988 and 1995, the Pacific Fishery Management Council (Pacific Council) developed a catch sharing plan in accordance with the Halibut Act to allocate the total allowable catch (TAC) of Pacific halibut between treaty Indian and non-treaty harvesters and among non-treaty commercial and sport fisheries in Area 2A.

In 1995, NMFS implemented the Pacific Council-recommended long-term Plan (60 FR 14651, March 20, 1995). In each of the intervening years between 1995 and the present, minor revisions to the Plan have been made to adjust for the changing needs of the fisheries. The Plan allocates 35 percent of the Area 2A Pacific halibut TAC to Washington treaty Indian tribes in Subarea 2A-1, and 65 percent of the Area 2A TAC to non-tribal fisheries.

The TAC allocation to non-tribal fisheries is divided into three shares, with the Washington sport fishery (north of the Columbia River) receiving 36.6 percent, the Oregon/California sport fishery receiving 31.7 percent, and the commercial fishery receiving 31.7 percent. The commercial fishery is further divided into a directed commercial fishery that is allocated 85 percent of the commercial allocation of Pacific halibut TAC, and an incidental catch in the salmon troll fishery that is allocated 15 percent of the commercial allocation. The directed commercial fishery in Area 2A is confined to southern Washington (south of 46°53.30″ N. lat.), Oregon, and California. North of 46°53.30″ N. lat. (Pt. Chehalis), the Plan allows for incidental halibut retention in the sablefish primary fishery when the overall Area 2A TAC is above 900,000 lb (408.2 mt). The Plan also divides the sport fisheries into six geographic subareas, each with separate allocations, seasons, and bag limits.

The Area 2A TAC will be set by the IPHC at its annual meeting on January 24-27, 2012, in Anchorage, AK. Following the annual meeting the IPHC will publish the final TAC on their Web site and produces a news release. Through this proposed rule, NMFS requests public comments on the Pacific Council's recommended modifications to the Plan and the resulting proposed domestic fishing regulations by February 21, 2012. This schedule will allow the public the opportunity to consider the final Area 2A TAC before submitting comments on the proposed rule. The States of Washington and Oregon will conduct public workshops shortly after the IPHC meeting to obtain input on the sport season dates. After the final Area 2A TAC is known and after NMFS reviews public comments and comments from the states, NMFS will issue a final rule for Areas 2A, 2C, 3A, 3B, 4A, 4B, 4C, 4D, and 4E. This final rule will also contain the IPHC regulations for the 2012 Pacific halibut fisheries. A 15-day public comment period is necessary to incorporate the final U.S. domestic regulations into the IPHC regulations in order to have the combined regulations in place as close to March 1 as possible. The regulations need to be in effect in early March because under the 2011 regulations most commercial fishing seasons started on March 12, although this date may need to be changed by the 2012 regulations to be consistent with the IPHC's decisions at its annual meeting in January. This proposed rule cannot be published earlier because the preliminary TAC amounts were announced at the IPHCs interim meeting on November 30 and December 1, 2011. The 2012 commercial season starting date(s) need to be published soon after the IPHC meeting in January 2012 to notify the public of that date so the industry can plan for the season.

Combining the IPHC regulations with the domestic regulations for Washington, Oregon, and California in the final rule is in the best interest of the public because it results in publication of all the halibut regulations in one Federal Register notice. Section 300.63(b)(1) of the current regulations provides that NMFS will publish the annual sport fishing regulations for Area 2A in the Federal Register , so this notification is where the fishermen get their information. This process reduces confusion for fishery participants because they only have to reference one document for all Pacific halibut regulations on the West Coast and in Alaska. Combining these regulations also eliminates errors that may occur from trying to separate the halibut regulations into two different rules. The separation could be confusing to the public because many of the IPHC regulations apply to all West Coast and Alaska Pacific halibut fisheries in the U.S. Therefore, if the regulations were split between two different rule making processes many U.S. fishermen would have to refer to two separate Federal Register documents for one fishery.

Preliminary estimates of the 2012 Area 2A TAC are higher than the 2011 TAC. The preliminary IPHC TAC recommendation for area 2A is 989,000 lb (448.6 mt), which results in a Washington sport allocation that is more than 214,110 lb (97.1 mt). According to the catch sharing plan, incidental halibut retention would be allowed in the primary directed sablefish fishery north of Point Chehalis, WA, in 2012 under the current preliminary IPHC TAC recommendation. While the preliminary TAC recommendation for area 2A may change following the IPHC annual meeting, it is not anticipated that the TAC will change enough to prohibit incidental halibut retention in the primary sablefish fishery. Landings restrictions will be recommended by the Council at one of its spring meetings and NMFS will publish the restrictions in the Federal Register .

Each year, the Washington Department of Fish and Wildlife (WDFW), Oregon Department of Fish and Wildlife (ODFW), and the tribes with treaty fishing rights for halibut consider whether changes to the Plan are needed or desired by their fishery participants. Fishery managers from the states hold public meetings before both the September and November Pacific Council meetings to get public input on revisions to the Plan. At the September 2011 Pacific Council meeting, WDFW and ODFW recommended changes to the Plan, while NMFS and the tribes did not recommend any changes to the Plan for the 2012 fishing season. Following the meeting, WDFW and ODFW again reviewed their proposals with the public and drafted their recommended revisions for review and recommendation by the Pacific Council.

At its November 2-7, 2011, meeting in Costa Mesa, CA, the Pacific Council considered the results of state-sponsored workshops on the proposed changes to the Plan, and made its final recommendations for modifications to the Plan. The following are the Council's proposed changes to the Plan:

1. Adjust the primary fishery schedule of the Washington South Coast subarea (section (f)(1)(ii)) to be open for the first 3 consecutive weeks Sunday and Tuesday and closed the following week. Previously, the fishery was open the last Sunday in the month. The goal of this change is to maintain the status quo opening date and to maintain the number of open days prior to the management closure at the end of the month.

2. Adjust the subarea quota split for the Columbia River subarea (section (f)(1)(iv)) between the early and late fishery from 70 percent for the early fishery and 30 percent for the late fishery to 80 percent for the early fishery and 20 percent to the late fishery. The goal of this change is to allocate the subarea quota to match recent year effort in the area and to maximize access to the overall quota. Since 2008, the late season fishery has harvested less than 20 percent of the subarea quota even though the allocation was 30 percent.

3. Set the Oregon TAC contribution to the subarea quota for the Columbia River subarea (section (f)(1)(iv)) equal the Washington contribution. The goal of this change is to better align Oregon's contribution to the subarea with the recent catches in Oregon.

4. Adjust the Oregon Central Coast subarea quota (section (f)(1)(v)) from 67 percent to 63 percent for the spring fishery and from 8 percent to 12 percent for the nearshore fishery and allow any remaining quota to be allocated from the spring fishery to either the summer fishery and/or the nearshore fishery. The goal of these changes is to provide as many fishing days as possible to the nearshore fishery and as many days as possible to the summer season when participation is at its highest. The summer fishery was open only two days in 2011.

The Council-proposed change in the Oregon contribution to the Columbia River subarea would result in a small portion of the overall Oregon/California quota being undistributed. The overall Oregon/California quota is separated into three components: (1) A contribution to the Columbia River (previously 5 percent or amount equal to the Washington contribution, whichever was greater); (2) a 92 percent allocation to the Oregon Central Coast subarea; and (3) a 3 percent allocation to the South of Humbug subarea. In past years the Oregon contribution was set at 5 percent because it was greater than the Washington contribution, meaning that all three allocations equaled 100 percent. This year, the Oregon contribution is set equal to the Washington contribution, which is an amount less than 5 percent of the overall Oregon/California allocation. This change results in a remainder of 2 percent undistributed quota. Therefore the sum of the contribution to the Columbia River subarea and the allocations to the Oregon Central Coast and South of Humbug subareas does not equal the overall Oregon/California quota. To remedy this situation NMFS is not proposing to make any allocation changes, but is proposing to allocate the remainder of the overall Oregon/California quota left after the Columbia River contribution is removed according to the Oregon/California subarea allocations specified in the Plan i.e., the remainder would be distributed 92 percent to the Central Coast subarea and 3 percent to the South of Humbug subarea.

NMFS is proposing to approve the Pacific Council recommendations and to implement the changes described above. A version of the Plan including these changes can be found at http://www.nwr.noaa.gov/Groundfish-Halibut/Pacific-Halibut/Index.cfm.

NMFS is proposing to make minor corrections the federal regulations at § 300.63 to make the halibut regulations regarding the sablefish primary fishery consistent with the groundfish regulations which define the sablefish primary fishery. These changes are minor corrections and do not represent a shift in policy regarding the sablefish primary fishery or the halibut fishery.

NMFS also proposes sport fishery management measures that are necessary to implement the Plan in 2012. The annual domestic management measures are published each year through a final rule. For the 2011 fishing season the final rule was published on March 16, 2011 (76 FR 14300), and the following section numbers refer to sections within that final rule. The final 2012 TAC for Area 2A will be determined by the IPHC at its annual meeting on January 24-27, 2012, in Anchorage, AK. Because the final 2012 TAC has not yet been determined, these proposed sport fishery management measures use the IPHC staff's preliminary 2012 Area 2A TAC recommendation of 989,000 lb (448.6 mt), which is higher than the 2011 TAC of 910,000 lb (412.7 mt). Where season dates are not indicated, those dates will be provided in the final rule, following determination of the 2012 TAC and consultation with the states and the public.

In Section 8 of the annual domestic management measures, “Fishing Periods,” paragraph (2)-(3) is proposed to read as follows and paragraph (6) is added to read as follows:

(1) * * *

(2) Each fishing period in the Area 2A directed fishery shall begin at 0800 hours and terminate at 1800 hours local time on ( insert season dates) unless the Commission specifies otherwise.

(3) Notwithstanding paragraph (2), and paragraph (7) of section 11, an incidental catch fishery is authorized during salmon troll seasons in Area 2A in accordance with regulations promulgated by NMFS. This fishery will occur between 1200 hours local time on (insert date) and 1200 hours local time on (insert season date).

(4) * * *

(5) * * *

(6) Notwithstanding paragraph (7) of section 11, an incidental catch fishery is authorized during the sablefish primary fishery in Area 2A in accordance with regulations promulgated by NMFS.

In section 26 of the annual domestic management measures, “Sport Fishing for Halibut,” paragraph 1(a)-(b) will be updated with 2012 total allowable catch limits in the final rule. In section 26 of the annual domestic management measures, “Sport Fishing for Halibut” paragraph (8) is proposed to read as follows:

(8) * * *

(a) The area in Puget Sound and the U.S. waters in the Strait of Juan de Fuca, east of a line extending from 48°17.30′ N. lat., 124°23.70′ W. long. north to 48°24.10′ N. lat., 124°23.70′ W. long., is not managed in-season relative to its quota. This area is managed by setting a season that is projected to result in a catch of 57,393 lb (26 mt).

(i) The fishing season in eastern Puget Sound (east of 123°49.50′ W. long., Low Point) is ( insert season dates), and the fishing season in western Puget Sound (west of 123°49.50′ W. long., Low Point) is ( insert season dates), 5 days a week (Thursday through Monday).

(ii) The daily bag limit is one halibut of any size per day per person.

(b) The quota for landings into ports in the area off the north Washington coast, west of the line described in paragraph (2)(a) of section 26 and north of the Queets River (47°31.70′ N. lat.), is 108,030 lb (49 mt).

(i) The fishing seasons are:

(A) Commencing on May 10 and continuing 2 days a week (Thursday and Saturday) until 108,030 lb (49 mt) are estimated to have been taken and the season is closed by the Commission or until May 31.

(B) If sufficient quota remains the fishery will reopen on June 7 in the entire north coast subarea, continuing 2 days per week (Thursday and Saturday) until there is not sufficient quota for another full day of fishing and the area is closed by the Commission. When there is insufficient quota remaining to reopen the entire north coast subarea for another day, then the nearshore areas described below will reopen for 2 days per week (Thursday and Saturday), until the overall quota of 108,030 lb (49 mt) is estimated to have been taken and the area is closed by the Commission, or until September 30, whichever is earlier. After May 31, any fishery opening will be announced on the NMFS hotline at (800) 662-9825. No halibut fishing will be allowed after May 31 unless the date is announced on the NMFS hotline. The nearshore areas for Washington's North Coast fishery are defined as follows:

( 1 ) WDFW Marine Catch Area 4B, which is all waters west of the Sekiu River mouth, as defined by a line extending from 48°17.30′ N. lat., 124°23.70′ W. long. north to 48°24.10′ N. lat., 124°23.70′ W. long., to the Bonilla-Tatoosh line, as defined by a line connecting the light on Tatoosh Island, WA, with the light on Bonilla Point on Vancouver Island, British Columbia (at 48°35.73′ N. lat., 124°43.00′ W. long.) south of the International Boundary between the U.S. and Canada (at 48°29.62′ N. lat., 124°43.55′ W. long.), and north of the point where that line intersects with the boundary of the U.S. territorial sea.

( 2 ) Shoreward of the recreational halibut 30-fm boundary line, a modified line approximating the 30-fm depth contour from the Bonilla-Tatoosh line south to the Queets River. The 30-fm depth contour is defined in groundfish regulations at 50 CFR 660.71(e).

(ii) The daily bag limit is one halibut of any size per day per person.

(iii) Recreational fishing for groundfish and halibut is prohibited within the North Coast Recreational Yelloweye Rockfish Conservation Area (YRCA). It is unlawful for recreational fishing vessels to take and retain, possess, or land halibut taken with recreational gear within the North Coast Recreational YRCA. A vessel fishing in the North Coast Recreational YRCA may not be in possession of any halibut. Recreational vessels may transit through the North Coast Recreational YRCA with or without halibut on board. The North Coast Recreational YRCA is a C-shaped area off the northern Washington coast intended to protect yelloweye rockfish. The North Coast Recreational YRCA is defined in groundfish regulations at § 660.70(a).

(c) The quota for landings into ports in the area between the Queets River, WA (47°31.70′ N. lat.) and Leadbetter Point, WA (46°38.17′ N. lat.), is 42,739 lb (19.3 mt).

(i) This subarea is divided between the all-waters fishery (the Washington South coast primary fishery), and the incidental nearshore fishery in the area from 47°31.70′ N. lat. south to 46°58.00′ N. lat. and east of a boundary line approximating the 30 fm depth contour. This area is defined by straight lines connecting all of the following points in the order stated as described by the following coordinates (the Washington South coast, northern nearshore area):

(1) 47°31.70′ N.lat, 124°37.03′ W. long;

(2) 47°25.67′ N. lat, 124°34.79′ W. long;

(3) 47°12.82′ N. lat, 124°29.12′ W. long;

(4) 46°58.00′ N. lat, 124°24.24′ W. long.

The south coast subarea quota will be allocated as follows: 40,739 lb (18.4 mt) for the primary fishery and 2,000 lb (0.9 mt) for the nearshore fishery. The primary fishery commences on May 6 and continues 2 days a week (Sunday and Tuesday) until May 22. If the primary quota is projected to be obtained sooner than expected the management closure may occur earlier. Beginning on June 3 the primary fishery will be open 2 days per week (Sunday and/or Tuesday) until the quota for the south coast subarea primary fishery is taken and the season is closed by the Commission, or until September 30, whichever is earlier. The fishing season in the nearshore area commences on May 6 and continues seven days per week. Subsequent to closure of the primary fishery the nearshore fishery is open seven days per week, until 42,739 lb (19.3 mt) is projected to be taken by the two fisheries combined and the fishery is closed by the Commission or September 30, whichever is earlier. If the fishery is closed prior to September 30, and there is insufficient quota remaining to reopen the northern nearshore area for another fishing day, then any remaining quota may be transferred in-season to another Washington coastal subarea by NMFS via an update to the recreational halibut hotline.

(ii) The daily bag limit is one halibut of any size per day per person.

(iii) Seaward of the boundary line approximating the 30-fm depth contour and during days open to the primary fishery, lingcod may be taken, retained and possessed when allowed by groundfish regulations at 50 CFR 660.360, Subpart G.

(iv) Recreational fishing for groundfish and halibut is prohibited within the South Coast Recreational YRCA and Westport Offshore YRCA. It is unlawful for recreational fishing vessels to take and retain, possess, or land halibut taken with recreational gear within the South Coast Recreational YRCA and Westport Offshore YRCA. A vessel fishing in the South Coast Recreational YRCA and/or Westport Offshore YRCA may not be in possession of any halibut. Recreational vessels may transit through the South Coast Recreational YRCA and Westport Offshore YRCA with or without halibut on board. The South Coast Recreational YRCA and Westport Offshore YRCA are areas off the southern Washington coast established to protect yelloweye rockfish. The South Coast Recreational YRCA is defined at 50 CFR § 660.70(d). The Westport Offshore YRCA is defined at 50 CFR § 660.70(e).

(d) The quota for landings into ports in the area between Leadbetter Point, WA (46°38.17′ N. lat.) and Cape Falcon, OR (45°46.00′ N. lat.), is 11,895 lb (5.3 mt).

(i) The fishing season commences on May 3, and continues 3 days a week (Thursday, Friday and, Saturday) until 9,516 lb (4.3 mt) are estimated to have been taken and the season is closed by the Commission or until July 15, whichever is earlier. The fishery will reopen on August 3 and continue 3 days a week (Friday through Sunday) until 2,379 lb (1.1 mt) have been taken and the season is closed by the Commission, or until September 30, whichever is earlier. Subsequent to this closure, if there is insufficient quota remaining in the Columbia River subarea for another fishing day, then any remaining quota may be transferred in-season to another Washington and/or Oregon subarea by NMFS via an update to the recreational halibut hotline. Any remaining quota would be transferred to each state in proportion to its contribution.

(ii) The daily bag limit is one halibut of any size per day per person.

(iii) Pacific Coast groundfish may not be taken and retained, possessed or landed, except sablefish and Pacific cod when allowed by Pacific Coast groundfish regulations, when halibut are on board the vessel.

(e) The quota for landings into ports in the area off Oregon between Cape Falcon (45°46.00′ N. lat.) and Humbug Mountain (42°40.50′ N. lat.), is 191,780 lb (86.9 mt).

(i) The fishing seasons are:

(A) The first season (the “inside 40-fm” fishery) commences May 1 and continues 7 days a week through October 31, in the area shoreward of a boundary line approximating the 40-fm (73-m) depth contour, or until the sub- quota for the central Oregon “inside 40-fm” fishery (23,014 lb (10.4 mt)) or any in-season revised subquota is estimated to have been taken and the season is closed by the Commission, whichever is earlier. The boundary line approximating the 40-fm (73-m) depth contour between 45°46.00′ N. lat. and 42°40.50′ N. lat. is defined at § 660.71(k).

(B) The second season (spring season), which is for the “all-depth” fishery, is open from May 10, 2012 to ( insert dates ). The projected catch for this season is 120,821 lb (54.8 mt). If sufficient unharvested catch remains for additional fishing days, the season will re-open. Depending on the amount of unharvested catch available, the potential season re-opening dates will be: ( Insert dates no later than July 31 ). If NMFS decides in-season to allow fishing on any of these re-opening dates, notice of the re-opening will be announced on the NMFS hotline (206) 526-6667 or (800) 662-9825. No halibut fishing will be allowed on the re-opening dates unless the date is announced on the NMFS hotline.

(C) If sufficient unharvested catch remains, the third season (summer season), which is for the “all-depth” fishery, will be open from August 3, 2012 to ( insert dates ) or until the combined spring season and summer season quotas in the area between Cape Falcon and Humbug Mountain, OR, totaling 168,766 lb (76.5 mt), are estimated to have been taken and the area is closed by the Commission, or October 31, whichever is earlier. NMFS will announce on the NMFS hotline in July whether the fishery will re-open for the summer season in August. No halibut fishing will be allowed in the summer season fishery unless the dates are announced on the NMFS hotline. Additional fishing days may be opened if sufficient quota remains after the last day of the first scheduled open period ( insert date following establishment of season dates. ) If, after this date, an amount greater than or equal to 60,000 lb (27.2 mt) remains in the combined all-depth and inside 40-fm (73-m) quota, the fishery may re-open every Friday and Saturday, beginning ( insert dates of next possible open period as established preseason ), and ending October 31. If after September 3, an amount greater than or equal to 30,000 lb (13.6 mt) remains in the combined all-depth and inside 40-fm (73-m) quota, and the fishery is not already open every Friday and Saturday, the fishery may re-open every Friday and Saturday, beginning September 7 and 8, and ending October 31. After September 3, the bag limit may be increased to two fish of any size per person, per day. NMFS will announce on the NMFS hotline whether the summer all-depth fishery will be open on such additional fishing days, what days the fishery will be open and what the bag limit is.

(ii) The daily bag limit is one halibut of any size per day per person, unless otherwise specified. NMFS will announce on the NMFS hotline any bag limit changes.

(iii) During days open to all-depth halibut fishing, no Pacific Coast groundfish may be taken and retained, possessed or landed, except sablefish and Pacific cod, when allowed by Pacific Coast groundfish regulations, if halibut are on board the vessel.

(iv) When the all-depth halibut fishery is closed and halibut fishing is permitted only shoreward of a boundary line approximating the 40-fm (73-m) depth contour, halibut possession and retention by vessels operating seaward of a boundary line approximating the 40-fm (73-m) depth contour is prohibited.

(v) Recreational fishing for groundfish and halibut is prohibited within the Stonewall Bank YRCA. It is unlawful for recreational fishing vessels to take and retain, possess, or land halibut taken with recreational gear within the Stonewall Bank YRCA. A vessel fishing in the Stonewall Bank YRCA may not possess any halibut. Recreational vessels may transit through the Stonewall Bank YRCA with or without halibut on board. The Stonewall Bank YRCA is an area off central Oregon, near Stonewall Bank, intended to protect yelloweye rockfish. The Stonewall Bank YRCA is defined at § 660.70(f).

(f) The area south of Humbug Mountain, Oregon (42°40.50′ N. lat.) and off the California coast is not managed in-season relative to its quota. This area is managed on a season that is projected to result in a catch of 6,056 lb (2.7 mt).

(i) The fishing season will commence on May 1 and continue 7 days a week until October 31.

(ii) The daily bag limit is one halibut of any size per day per person.

Regulations governing the U.S. fisheries for Pacific halibut are developed by the IPHC, the Pacific Fishery Management Council, the North Pacific Fishery Management Council (Council), and the Secretary of Commerce. Section 5 of the Northern Pacific Halibut Act of 1982 (Halibut Act, 16 U.S.C. 773c) provides the Secretary of Commerce with the general responsibility to carry out the Convention between Canada and the United States for the management of Pacific halibut, including the authority to adopt regulations as may be necessary to carry out the purposes and objectives of the Convention and Halibut Act. This proposed rule is consistent with the Secretary of Commerce's authority under the Halibut Act.

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

NMFS has prepared an RIR/IRFA on the proposed changes to the Plan and the annual domestic Area 2A halibut management measures. Copies of these documents are available from NMFS (see ADDRESSES ). NMFS prepared an IRFA that describes the economic impact this proposed rule, if adopted, would have on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in the SUMMARY section of the preamble. The IRFA is available from NMFS (see ADDRESSES ). A summary of the IRFA follows:

A fish-harvesting business is considered a “small” business by the Small Business Administration (SBA) if it has annual receipts not in excess of $4.0 million. For related fish-processing businesses, a small business is one that employs 500 or fewer persons. For wholesale businesses, a small business is one that employs not more than 100 people. For marinas and charter/party boats, a small business is one with annual receipts not in excess of $6.5 million. All of the businesses that would be affected by this action are considered small businesses under Small Business Administration guidance.

In 2011, 604 vessels were issued IPHC licenses to retain halibut. IPHC issues licenses for: The directed commercial fishery in Area 2A (147 licenses in 2011); incidental halibut caught in the salmon troll fishery (316 licenses in 2011); and the charterboat fleet (141 licenses in 2011). No vessel may participate in more than one of these three fisheries per year. Individual recreational anglers and private boats are the only sectors that are not required to have an IPHC license to retain halibut.

The IRFA analyzed the impacts of the changes to the Plan and regulations. For the 2012 fishing year the proposed changes to the Plan, which allocates the catch of Pacific halibut among users in Washington, Oregon and California, and the federal regulations, would:

1. Adjust the primary fishery schedule for the Washington Southcoast subarea (section (f)(1)(iii)) to be open for the first 3 consecutive weeks Sunday and Tuesday and closed the following week.

2. Adjust the subarea quota split for the Columbia River subarea (section (f)(1)(iv)) between the early and late fishery from 70 percent for the early fishery and 30 percent for the late fishery to 80 percent for the early fishery and 20 percent to the late fishery, and adjust the Oregon contribution to the subarea quota to equal the Washington contribution.

3. Adjust the Oregon Central Coast subarea quota (section (f)(1)(v)) from 67 percent to 63 percent for the spring fishery and from 8 percent to 12 percent for the nearshore fishery and allow remaining quota to be allocated from the spring fishery to either the summer fishery and/or the nearshore fishery.

The proposed changes to the Plan and regulations do not include any reporting or recordkeeping requirements. These changes will not duplicate, overlap or conflict with other laws or regulations. These changes to the Plan and annual domestic Area 2A halibut management measures are not expected to meet any of the RFA tests of having a “significant” economic impact on a “substantial number” of small entities because the changes will not affect overall allocations. They are designed to provide the best fishing opportunities within the overall TAC. Nonetheless, NMFS has prepared an IRFA. Through this proposed rule, NMFS requests comments on these conclusions.

Pursuant to Executive Order 13175, the Secretary recognizes the sovereign status and co-manager role of Indian tribes over shared Federal and tribal fishery resources. Section 302(b)(5) of the Magnuson-Stevens Fishery Conservation and Management Act establishes a seat on the Pacific Council for a representative of an Indian tribe with federally recognized fishing rights from California, Oregon, Washington, or Idaho.

The U.S. Government formally recognizes that the 13 Washington Tribes have treaty rights to fish for Pacific halibut. In general terms, the quantification of those rights is 50 percent of the harvestable surplus of Pacific halibut available in the tribes' usual and accustomed (U and A) fishing areas (described at 50 CFR 300.64). Each of the treaty tribes has the discretion to administer their fisheries and to establish their own policies to achieve program objectives. Accordingly, tribal allocations and regulations, including the proposed changes to the Plan, have been developed in consultation with the affected tribe(s) and, insofar as possible, with tribal consensus.

For the 2011 annual management measures and implementation of the catch sharing plan NMFS NWR initiated consultation on the halibut fishery under Section 7 of the ESA because of the listing of yelloweye, canary, and bocaccio rockfish of the Puget Sound/Georgia Basin. Area 2A partially overlaps with the Distinct Population Segments (DPSs) for listed rockfish. NMFS completed a 7(a)(2)/7(d) determination memo under the Endangered Species Act (ESA) finding that bycatch in the 2011 fishery was not likely to be a significant impact on listed species, that direct effects of the fishery (e.g. direct takes) were not likely to jeopardize the continued existence of any listed species, and that in no way did the 2011 fishery make an irreversible or irretrievable commitment of resources by the agency. At this time the consultation is not completed. Therefore for the 2012 fishery the determinations made under the ESA will be updated at the final rule stage.

For the reasons set out in the preamble, 50 CFR part 300 is proposed to be amended as follows: