This proposal is issued under Marketing Agreement and Order No. 930, both as amended (7 CFR part 930), regulating the handling of tart cherries produced in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. Under the order provisions now in effect, final free and restricted percentages may be established for tart cherries handled during the crop year. This proposed rule would establish final free and restricted percentages for tart cherries for the 2011-12 crop year, beginning July 1, 2011, through June 30, 2012.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule invites comments on the establishment of final free and restricted percentages for the 2011-12 crop year. This action would establish the proportion of tart cherries from the 2011 crop which may be handled in commercial outlets at 88 percent free and 12 percent restricted. These percentages should stabilize marketing conditions by adjusting supply to meet market demand and help improve grower returns. The action was recommended by the Board at a meeting on September 15, 2011.

Section 930.51(a) of the order provides authority to regulate volume by designating free and restricted percentages for any tart cherries acquired by handlers in a given crop year. Section 930.50 prescribes procedures for computing an optimum supply based on sales history and for calculating these free and restricted percentages. Free percentage volume may be shipped to any market, while restricted percentage volume must be held by handlers in a primary or secondary reserve, or be diverted or used for exempt purposes as prescribed in §§ 930.159 and 930.162 of the regulations. These activities include, in part, the development of new products, sales into new markets, the development of export markets, and charitable contributions.

Under § 930.52, only those districts with an annual average production of at least six million pounds are subject to regulation and any district producing a crop which is less than 50 percent of its annual average is exempt. The regulated districts for the 2011-2012 crop year would be: District 1—Northern Michigan; District 2—Central Michigan; District 3—Southern Michigan; District 4—New York; District 7—Utah; and District 8—Washington. Districts 5, 6, and 9 (Oregon, Pennsylvania, and Wisconsin, respectively) would not be regulated for the 2011-12 season.

Demand for tart cherries and tart cherry products tends to be relatively stable from year to year. Conversely, annual tart cherry production can vary greatly. In addition, tart cherries are processed and can be stored and carried over from crop year to crop year, further impacting supply. As a result, supply and demand for tart cherries are rarely in balance.

Because demand for tart cherries is inelastic, total sales volume is not very responsive to changes in price. However, prices are very sensitive to changes in supply. As such, an oversupply of cherries would have a sharp negative effect on prices, driving down grower returns. The Board, aware of this economic relationship, focuses on using the volume control provisions in the order to balance supply and demand to stabilize industry returns.

Pursuant to § 930.50 of the order, the Board meets on or about July 1 to review sales data, inventory data, current crop forecasts and market conditions for the upcoming season and, if necessary, to recommend preliminary free and restricted percentages if anticipated supply would exceed demand. After harvest is complete, but no later than September 15, the Board meets again to update their calculations using actual production data, consider any necessary adjustments to the preliminary percentages, and determine if final free and restricted percentages should be recommended to the Secretary.

To assist in this process, the Board uses an optimum supply formula (OSF), a series of mathematical calculations using sales history, inventory, and production data to determine whether there is a surplus, and if so, how much volume should be restricted to maintain optimum supply. The optimum supply represents the desirable volume of tart cherries that should be available for sale in the coming crop year. Optimum supply is defined as the average free sales of the prior three years plus desirable carry-out inventory. Desirable carry-out is the amount of fruit needed by the industry to be carried into the succeeding crop year to meet marketing demand until the new crop is available. Desirable carry-out is set by the Board after considering market circumstances and needs. This figure can range from zero to a maximum of 20 million pounds.

To determine whether the industry would be in an oversupply situation for the coming year, the Board compares the optimum supply figure and the total anticipated supply for the coming year. Anticipated supply includes any inventory available at the beginning of the season (carry-in) and the current year's estimated production. The carry-in figure is subtracted from the optimum supply to determine the volume of cherries that would need to be produced in the current year to provide what is needed to meet the optimum supply. If estimated production is less than the optimum supply minus carry-in, the Board is required to establish a free percentage of 100 percent and a restricted percentage of zero. If production is greater than the optimum supply minus carry-in, the difference is considered surplus. To calculate the restricted percentage, this surplus tonnage is divided by the sum of production in the regulated districts.

The Board met on June 23, 2011, and computed an optimum supply of 174 million pounds for the 2011-12 crop year, using the free sales for the three previous seasons and setting the desirable carry-out at zero. The Board then subtracted the estimated carry-in of 57 million pounds from the optimum supply to calculate the production needed from the 2011-12 crop to meet optimum supply. This number, 117 million pounds, was subtracted from USDA's estimated 2011-12 production of 266 million pounds to calculate a surplus of 149 million pounds of tart cherries. The surplus was then divided by the expected production in the regulated districts (253 million pounds) to reach a preliminary restricted percentage of 59 percent for the 2011-12 crop year.

In discussing the results of the OSF calculations, members were in agreement that a restriction was necessary in order to avoid oversupplying the market. However, there was discussion that a 59 percent restriction may be too restrictive considering current market conditions. Board members recognized that the previous season, inventory had been tight, requiring two releases from reserves to meet sales needs. Further, it was stated that exports would likely remain strong in the coming season due to poor production in Europe. Consequently, the Board concluded market conditions justified making an economic adjustment, and the Board voted to add 30 million pounds to free supply, reducing the calculated surplus from 149 million pounds to 119 million pounds.

In addition, USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. Accordingly, § 930.50(g) of the order specifies that in years when restricted percentages are established, the Board shall make available tonnage equivalent to an additional 10 percent of the average sales of the prior three years for market expansion (market growth factor). The Board complied with this requirement by adding 17 million pounds (174 million times 10 percent) to the free supply, further reducing the surplus to 102 million pounds. After these two adjustments, the preliminary restricted percentage was recalculated as 40 percent, as outlined in the following table:

The Board met again September 15, 2011, to consider establishing final volume regulation percentages for the 2011-12 season. The final percentages are based on the Board's reported production figures and the supply and demand information available in September. The actual production for the 2011-12 season was 231 million pounds, 35 million pounds below USDA's June estimate. Concerned about having an adequate volume of cherries in the free market with actual production below the estimate, the Board voted to make a further adjustment of 40 million pounds in addition to the June adjustment. Using the actual production numbers, and accounting for the two adjustments, as well as the market growth factor, the restricted percentage was recalculated.

The Board used the same carry-in figure used in June of 57 million pounds, and subtracted it from the optimum supply of 174 million pounds, calculating the 2011-12 production volume required to meet the optimum supply of 117 million pounds. The 117 million pounds was subtracted from the actual production of 231 million pounds, resulting in a surplus of 114 million pounds of tart cherries. The surplus was then reduced by subtracting the two economic adjustments of 30 million pounds and 40 million pounds, and the market growth factor of 17 million pounds, resulting in an adjusted surplus of 27 million pounds. This surplus was then divided by the actual production in the regulated districts (218 million pounds) to calculate a restricted percentage of 12 percent with a corresponding free percentage of 88 percent for the 2011-12 crop year, as outlined in the following table:

The primary purpose of setting restricted percentages is an attempt to bring supply and demand into balance. If the primary market is oversupplied with cherries, grower prices decline substantially. Restricted percentages have benefited grower returns and helped stabilize the market as compared to those seasons prior to the implementation of the order. The Board believes the available information indicates that a restricted percentage should be established for the 2011-12 crop year to avoid oversupplying the market with tart cherries. Consequently, based on its discussion of this issue and the result of the above calculations, the Board recommended final percentages of 88 percent free and 12 percent restricted by a vote of 13 in favor and 4 against.

Of the four Board members who opposed the recommendation, one believed regulation was unnecessary for the current crop year, while the other three believed the recommended percentages were not restrictive enough. The member who believed the regulation was too restrictive cited strong sales in the previous season and moderate production volume for this crop year. In its discussion regarding the establishment of a restricted percentage for the 2011-12 crop year, the Board did recognize the strong sales in the previous season, as well as the fact that actual production had come in below the production estimate. In response, the Board voted to make two adjustments to make additional volume available. However, the majority of Board members still held that market conditions warranted some level of restriction. Further, the Board could meet and recommend the release of additional volume during the crop year, if warranted.

One of those who opposed the recommendation as not being restrictive enough stated that making the two adjustments and increasing the free volume this season could result in large inventories carrying over into the next season, which would require increased restrictions and dampen prices. Another stated that strong demand might not be sustained in the coming year and making additional fruit available at the onset of the season was premature and could result in an oversupply of the market. One opponent also stated that rather than making adjustments now, the Board could vote to release a portion of reserves later in the season to provide more fruit if necessary. However, most Board members believed that making more fruit available to the market was warranted. Board members cited the two releases from the previous season, sales volume from last year, and the smaller than anticipated crop in support of making more free tonnage available. It was also argued that increasing the volume of cherries available at the onset of the season could facilitate additional sales.

After reviewing the available data, and considering the concerns expressed, the majority of the Board determined that a 12 percent restriction would meet sales needs without oversupplying the market. Thus, the Board recommended establishing final percentages of 88 percent free and 12 percent restricted.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 40 handlers of tart cherries who are subject to regulation under the marketing order and approximately 600 producers of tart cherries in the regulated area. Small agricultural service firms have been defined by the Small Business Administration (SBA) as those having annual receipts of less than $7,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

According to the National Agricultural Statistics Service, and Board data, the average annual grower price for tart cherries during the 2010-11 season was $0.221 per pound, and total shipments were around 270 million pounds. Therefore, average receipts for tart cherry producers were around $99,000, well below the SBA threshold for small producers. In 2010, The Food Institute estimated an f.o.b. price of $0.84 per pound for frozen tart cherries, which make up the majority of processed tart cherries. Using this data, average annual handler receipts were about $5.7 million, also below the SBA threshold for small agricultural service firms. Assuming a normal distribution, the majority of producers and handlers of tart cherries may be classified as small entities.

The tart cherry industry in the United States is characterized by wide annual fluctuations in production. According to the National Agricultural Statistics Service, tart cherry production in 2007 was 253 million pounds, 214 million pounds in 2008, 359 million pounds in 2009, and in 2010, production was 190 million pounds. Because of these fluctuations, the supply and demand for tart cherries are rarely in equilibrium.

Demand for tart cherries is inelastic, meaning changes in price have a minimal effect on total sales volume. However, prices are very sensitive to changes in supply, and grower prices vary widely in response to the large swings in annual supply, with prices ranging from a low of 7.3 cents in 1987 to a high of 46.4 cents in 1991.

Because of this relationship between supply and price, oversupplying the market with tart cherries would have a sharp negative effect on prices, driving down grower returns. The Board, aware of this economic relationship, focuses on using the volume control authority in the order in an effort to balance supply and demand in order to stabilize industry returns. This authority allows the industry to set free and restricted percentages as a way to bring supply and demand into balance. Free percentage cherries can be marketed by handlers to any outlet, while restricted percentage volume must be held by handlers in reserve, be diverted or used for exempted purposes.

This proposal would establish final free and restricted percentages for the 2011-12 crop year under the order for tart cherries. This action would control the supply of tart cherries by establishing percentages of 88 percent free and 12 percent restricted for the 2011-12 crop year. These percentages should stabilize marketing conditions by adjusting supply to meet market demand and help improve grower returns. The action would regulate tart cherries handled in Michigan, New York, Utah, and Washington. The authority for this action is provided for in §§ 930.51(a) and 930.52 of the order. The Board recommended this action at a meeting on September 15, 2011.

As mentioned earlier, the USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. The quantity available under this rule is 110 percent of the quantity shipped in the prior three years.

This action would result in some fruit being diverted from the primary domestic markets. However, there are secondary uses available for restricted fruit, including the development of new products, sales into new markets, the development of export markets, and being placed in reserve. While these alternatives may provide different levels of return than the sales to primary markets, they play an important role for the industry. The areas of new products, new markets, and the development of export markets utilize restricted fruit to develop and expand the market for tart cherries. Last season, these areas accounted for more than 50 million pounds in sales.

Placing tart cherries into reserves is a key part of balancing supply and demand. Although the industry must bear the costs of handling and storage for fruit in reserve, reserves warehouse supplies in large crop years in order to supplement supplies in short crop years. The reserves allow the industry to mitigate the impact of oversupply in large crop years, while allowing the industry to maintain and supply markets in years where production falls below demand. Further, the costs for storage, interest, and handling of the cherries are more than offset by the increase in price when moving from a large crop to a short crop year.

In addition, this action would be less restrictive than in previous seasons and would be the lowest restricted percentage since 2008. At this level of restriction, nearly all restricted fruit should be utilized by the end of the crop year. Consequently, it is not anticipated that this action would unduly burden growers or handlers.

While this action could result in some additional costs to the industry, these costs are more than outweighed by the benefits. The purpose of setting restricted percentages is to attempt to bring supply and demand into balance. If the primary market (domestic) is oversupplied with cherries, grower prices decline substantially. Without volume control, the primary market would likely be oversupplied, resulting in lower grower prices.

The three districts in Michigan, along with the districts in Utah, New York, and Washington are the restricted areas for this crop year with a combined total production of 218.4 million pounds. A 12 percent restriction means 192.2 million pounds would be available to be shipped to primary markets from these four states. The 192.2 million pounds from the restricted districts, the 12.2 million pounds from the unrestricted districts (Oregon, Pennsylvania, and Wisconsin), and the 57 million pound carry-in inventory would make a total of 261.4 million pounds available as free tonnage for the primary markets.

To assess the impact that volume control has on the prices growers receive for their product, an econometric model has been developed. Based on the model, the use of volume control would have a positive impact on grower returns for this crop year. With volume control, grower prices are estimated to be approximately $0.06 per pound higher, and total grower revenue from processed cherries is estimated to be $6.2 million higher than without restrictions. The without-restrictions scenario assumes that all tart cherries produced would be delivered to processors for payments.

Prior to the implementation of the order, grower price often did not come close to covering the cost of production. For the 2011-12 crop year, yield is estimated at approximately 6,470 pounds per acre. At this level of yield, the cost of production is estimated to be $0.33 per pound (costs were estimated by representatives of Michigan State University).

In addition, absent volume control, the industry could start to build large amounts of unwanted inventories. These inventories would have a depressing effect on grower prices. The econometric model shows for every 1 million-pound increase in carry-in inventories, a decrease in grower prices of $0.0037 per pound occurs.

Retail demand is assumed to be highly inelastic which indicates that changes in price do not result in significant changes in the quantity demanded. Consumer prices largely do not reflect fluctuations in cherry supplies. Therefore, this action should have little or no effect on consumer prices and should not result in a reduction in retail sales.

The free and restricted percentages established by this rule would provide the market with optimum supply and apply uniformly to all regulated handlers in the industry, regardless of size. As the restriction represents a percentage of a handler's volume, the costs, when applicable, are proportionate and should not place an extra burden on small entities as compared to large entities.

The stabilizing effects of this action would benefit all handlers by helping them maintain and expand markets, despite seasonal supply fluctuations. Likewise, price stability positively impacts all growers and handlers by allowing them to better anticipate the revenues their tart cherries would generate. Growers and handlers, regardless of size, would benefit from the stabilizing effects of this restriction.

One alternative to this action considered was to not regulate the volume of the 2011-12 crop. However, Board members believed that although sales have been strong, there is enough of a surplus to necessitate restricting a portion of the crop to keep prices stable.

Another alternative considered was setting the carry-out value at 10 or 20 million pounds in the OSF. Board members indicated that such a change would require further consideration by the Board, and did not receive sufficient support.

The Board also considered differing levels of adjustments under the OSF when considering supply. The alternative adjustments were deemed to be either too small to address industry needs, or so large that members were concerned with creating an oversupply. Therefore, these alternatives were rejected.

In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0177, Tart cherries Grown in the States of MI, NY, PA, OR, UT, WA, and WI. No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

This action would not impose any additional reporting or recordkeeping requirements on either small or large tart cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule.

In addition, the Board's meeting was widely publicized throughout the tart cherry industry and all interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the September 15, 2011, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: www.ams.usda.gov/MarketingOrdersSmallBusinessGuide . Any questions about the compliance guide should be sent to Laurel May at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 30-day comment period is provided to allow interested persons to respond to this proposal. Thirty days is deemed appropriate because this rule would need to be in place as soon as possible since handlers are already shipping tart cherries from the 2011-12 crop. All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 930 is proposed to be amended as follows:

The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect.

Section 11 of the Act provides that nothing in the Act may be construed to preempt or supersede any other program relating to beef promotion organized and operated under the laws of the United States or any State. There are no administrative proceedings that must be exhausted prior to any judicial challenge to the provisions of this rule.

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic effect of this action on small entities and has determined that this proposed rule will not have a significant economic impact on a substantial number of small entities. The purpose of RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly burdened.

In the February 2011 publication of “Farms, Land in Farms, and Livestock Operations,” the U.S. Department of Agriculture's (USDA) National Agricultural Statistics Service (NASS) estimates that in 2010 the number of operations in the United States with cattle totaled approximately 935,000. The majority of these operations that are subject to the Order may be classified as small entities.

The proposed rule imposes no new burden on the industry. It merely expands the contracting authority within the Order to permit a greater number of organizations to perform work on behalf of the BPOC. These organizations in general represent the operations that are subject to the Order.

The Order is authorized by the Act of 1985 [7 U.S.C. 2901-2918]. The Act was passed as part of the 1985 Farm Bill [Pub. L. 99-198]. The program became effective on July 18, 1986, when the Order was issued [51 FR 26132]. Assessments began on October 1, 1986.

Section 5(6) of the Act provides that the BPOC, to insure coordination and efficient use of funds, shall enter into contracts or agreements for implementing any activities which it has approved to be carried out, with established national nonprofit industry-governed organizations including the Federation of State Beef Councils. This language has the effect of requiring the BPOC to contract with organizations, which qualify as established national non-profit industry-governed organizations. The Act does not define “national non-profit industry governed organization.”

Currently, section 1260.113 of the Order defines “established national non-profit industry-governed organizations” as organizations which: (a) Are non-profit organizations pursuant to sections 501(c)(3), (5) or (6) of the Internal Revenue Code (26 U.S.C. 501(c)(3), (5), and (6)); (b) are governed by a board of directors representing the cattle or beef industry on a national basis; and (c) were active and ongoing before enactment of the Act. This proposed rule would amend section 1260.113 of the Order by replacing the existing language under paragraph (c), “were active and ongoing before the enactment of the Act” with “have been active and ongoing for at least two years.”

The Act, enacted on December 23, 1985, directed the Secretary of Agriculture (Secretary) to accept proposals from any certified organization or interested person. The Department published an invitation to submit proposals in the Federal Register on February 14, 1986 [51 FR 5543]. USDA received an industry proposal that it published in a proposal rule on March 14, 1986 [51 FR 8980]. This proposed rule included a definition of “established national non-profit industry governed organizations” that read: “`Established National Non-profit Industry Governed Organizations' means any organization which: (a) are non-profit organizations pursuant to sections 501(c)(3), (5) or (6) of the Internal Revenue Code, 26 U.S.C. 501(c)(3), (5) and (6); (b) are governed by a board of directors representing the cattle or beef industry on a national basis whose Board is composed of a majority of producers; and (c) was active and ongoing before enactment of the Act.”

The final rule that issued the Order was published on July 18, 1986 [51 FR 26132]. The definition for “established national non-profit industry governed organizations” was modified by deletion of the requirement that the board of directors of such organizations be composed of a majority of producers. This modification was made based on comments to the proposed rule that said the previous definition was too restrictive.

At the time of the passage of the Act and the promulgation of the Order, a limited number of industry-governed organizations existed with the requisite knowledge, skills, and experience related to the marketing of beef and beef products. The proponents of the Beef Checkoff wished to utilize and coordinate with those organizations already conducting activities similar to those envisioned under the Act and to enhance coordination and the efficient use of funds among beef promotion entities, and to enhance accountability to producers.

This proposed rule would amend the definition of “Established National Non-profit Industry Governed Organizations” to permit the BPOC to contract with a growing number of organizations possessing the requisite experience, skills and information related to the marketing of beef and beef products that exist today while still requiring a minimum level of organizational experience so as not to encourage the unnecessary proliferation of inexperienced organizations desiring to contract with the BPOC. USDA believes that a minimum level of experience within an organization is beneficial. To achieve both goals, this proposal would amend § 1260.113 “Established national non-profit industry-governed organizations” by replacing the existing language under paragraph (c) to read “have been active or ongoing for at least two years.”

In 2006, the National Cattlemen's Beef Association (NCBA) and the American Farm Bureau initiated the Industry-Wide Beef Checkoff Taskforce (Taskforce) to review, study, and recommend enhancements to the Beef Checkoff program for the purpose of strengthening the Beef Checkoff Program for the common good of the beef industry. The Taskforce included producer and industry representatives and representatives from national organizations, while USDA took on an advisory role during meetings. The Taskforce issued a report in September 2006, which included a recommendation to eliminate section 1260.113(c) in order to make the Beef Checkoff more inclusive. USDA believes that permitting a greater number of organizations to contract with the BPOC could bring new perspectives to the contracting process.

In February 2008 at the Cattle Industry Annual Convention, leaders of the Cattlemen's Beef Board (Board) asked AMS officials if the Board could conduct a program review. The industry officials believed that it would be in the best interest of the Beef Checkoff Program to conduct a review of the operations to determine if there are any changes that need to or could be made in program operations, the Act, or Order that would facilitate a more effective Beef Checkoff Program. Included in the Board's subsequent January 2009 recommendations to AMS was a recommendation for a statutory amendment intended to result in an expansion of the contracting authority to organizations created after the 1986 enactment of the Act.

Finally, a meeting was held in Minneapolis, Minnesota, on September 27, 2011, attended by many industry stakeholders and co-hosted by the U.S. Cattlemen's Association and the National Farmers Union as requested by the Secretary. The goal of the meeting was to bring more broad-based producer support to the Beef Checkoff program through a discussion of issues regarding Beef Checkoff administration and to provide the Secretary with recommendations that would enhance support for the Beef Checkoff. Many major Beef Checkoff industry stakeholders attended, including the American National Cattlewomen, American Veal Association, Livestock Marketing Association, NCBA, National Livestock Producers Association, and Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF). Representatives from the AMS also attended the meeting, as did the Chief Executive Officer and Producer Chairman of the Board.

As a result of that meeting, the Secretary received a joint letter signed by most of the organizations in attendance. The letter requested that USDA amend Beef Checkoff regulations to expand the contracting authority as authorized under the Act and Order by permitting organizations that are active and ongoing for at least two years to contract with the BPOC.

A greater number of beef industry organizations exist now than did at the time the Order was issued. The Beef Checkoff Program could benefit from the perspectives and skills of some of these organizations that are ineligible solely because they were formed after the enactment of the Act. For several years, the beef industry has been recommending expanding the eligibility of organizations to contract with the BPOC in order to enhance the Beef Checkoff Program. Amending the Order would allow the BPOC to contract with organizations possessing the requisite experience, skills and information related to the marketing of beef and beef products, as is intended under the Act.

A 60-day comment period is provided to allow interested persons to respond to this proposal. Sixty days is deemed appropriate to facilitate the orderly and thoughtful consideration of this proposal.

For the reasons set forth in the preamble, it is proposed that 7 CFR part 1260 be amended as follows:

On December 28, 2011, The DOE published a NOPR in the Federal Register (76 FR 81408) to revise existing regulations covering contractor legal management requirements and make conforming amendments to the DEAR. The NOPR requested public comment from interested parties regarding the proposed revisions by February 27, 2012. DOE has determined that reopening the comment period to allow additional time for interested parties to submit comments is appropriate. Therefore, DOE is reopening the comment period until March 16, 2012 to provide interested parties additional time to prepare and submit comments. Accordingly, DOE will consider any comments received by March 16, 2012 to be timely submitted.

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2012-0060; Directorate Identifier 2012-NE-02-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

We have received reports of 3rd and 4th stage vane fractures in the LPT of certain PW4000-94″ and PW4000-100″ turbofan engines. These fractures caused an uncontained engine failure, an LPT case puncture, and multiple in flight shutdowns. We have identified four primary root causes for LPT vane failures:

1. Inadequate retention of the vane in the case due to dimensional tolerances which causes 3rd stage vane liberations. This AD requires dimensional inspections of the 3rd stage vanes at their retention points and case at LPT assembly after overhaul.

2. Non-uniform airfoil fillet radii found on vanes produced prior to 2005 which causes 4th stage vane fractures. This AD removes these vanes, identified by the casting identifier, from service at the next LPT overhaul.

3. Multiple strip-and-recoat repairs of the 4th stage vanes which degrade the structural integrity of the vanes and cause 4th stage vane fractures. This AD removes from service 4th stage vanes with multiple strip-and-recoat repairs. This AD also prohibits approving for return to service any 4th stage vane with more than one strip-and-recoat repair.

4. Aerodynamic excitation of the vanes which causes 4th stage vane fractures. The excitation is attributed to the rotor assembly methods for the upstream rotor stages. This AD requires reassembling the 2nd stage HPT blades at the next HPT overhaul and the 3rd stage LPT blades at the next LPT overhaul, using the latest assembly technique.

The actions proposed in this AD are intended to address each of the root causes identified above. This condition, if not corrected, could result in 3rd and 4th stage vane fractures in the LPT, which could damage the LPT rotor and lead to an uncontained engine failure and damage to the airplane.

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

This proposed AD would require dimensional inspections of 3rd stage vanes and the rear turbine case. This AD also requires inspection of 4th stage vanes at the next LPT overhaul and removal of vanes with non-conforming airfoil fillet radii and vanes with more than one strip and recoat repair. This AD also requires disassembly and reassembly of the 2nd stage HPT rotor and 3rd stage LPT rotor at the next HPT and LPT overhauls.

We estimate that this proposed AD affects 807 engines installed on airplanes of U.S. registry. We estimate that it would take 2 work-hours per engine to perform the LPT 3rd stage vane cluster assembly and rear turbine case inspections. The average labor rate is $85 per work-hour. We expect that approximately 1,870 LPT 4th stage vane cluster assemblies will be found with the non-conforming casting identification. Replacement parts cost about $4,854. We estimate that limiting 4th stage vanes to one strip-and-recoat repair will remove 1/3 of the useful part life expectancy of the vanes on 323 engines at a prorated cost of $71,000 per engine. We do not associate any additional costs with reassembling 2nd stage HPT blades and 3rd stage LPT blades using the latest procedures as this is done at overhaul. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $32,147,170.

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, 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.

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 send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-12-0218; Directorate Identifier 2012-CE-003-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

We received reports of installation of oversized clamps on fuel vapor return and/or fuel vent lines in the outboard sections of the left and right wings on Hawker Beechcraft Corporation Models 58 and G58 airplanes. This condition, if not corrected, could result in leakage of fuel or vapor in areas where electrical wiring and other potential ignition sources are present, which could lead to an inflight fire.

We reviewed Hawker Beechcraft Mandatory Service Bulletin No. SB 28-4039, Revision 1, dated October 2011. The service bulletin describes procedures for inspecting for oversized or deformed fuel hose clamps and replacing as necessary.

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

This proposed AD would require accomplishing the actions specified in the service information described previously.

We estimate that this proposed AD affects 244 airplanes of U.S. registry.

We estimate the following costs to comply with this proposed AD:

We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these replacements:

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, 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.

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

Interested persons are invited to comment on this rule 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-2011-1367; Airspace Docket No. 11-ASO-41) and be submitted in triplicate to the Docket Management System (see ADDRESSES section for address and phone number). You may also submit comments through the Internet at http://www.regulations.gov.

Persons 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 No. FAA-2011-1367; Airspace Docket No. 11-ASO-41.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. 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 from and comments submitted through http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov/airports_airtraffic/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the 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 350, 1701 Columbia Avenue, College Park, Georgia 30337.

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

The FAA is considering an amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 to amend Class E airspace extending upward from 700 feet above the surface to support new standard instrument approach procedures developed at Tullahoma Regional Airport/Wm Northern Field, Tullahoma, TN. Airspace reconfiguration is necessary due to the closing of the Arnold Air Force Base, and for continued safety and management of IFR operations within the Tullahoma, TN airspace area. The geographic coordinates for Tullahoma Regional Airport/Wm Northern Field also would be adjusted to coincide with the FAAs aeronautical database.

Class E airspace designations are published in Paragraph 6005 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 E airspace designation listed in this document will be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This proposed rulemaking is promulgated under the authority described in subtitle VII, part, A, subpart I, section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This proposed regulation is within the scope of that authority as it would amend Class E airspace in the Tullahoma, TN area.

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:

On July 1, 2011, a NPRM was published in the Federal Register establishing Class E airspace at Wilkes-Barre, PA, to accommodate new standard instrument approach procedures for Wilkes-Barre/Wyoming Valley Airport, Wilkes-Barre, PA (76 FR 38585). Subsequent to publication the FAA found that Class E airspace extending upward from 700 feet above the surface currently exists for Wilkes-Barre, PA, with the primary airport being Wilkes-Barre/Scranton International Airport. To avoid confusion this proposed rule is being withdrawn and another rulemaking will be forthcoming adding Wilkes-Barre/Wyoming Valley Airport to the current city designator, Wilkes-Barre, PA.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” paragraph 311a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment

Accordingly, pursuant to the authority delegated to me, the Notice of Proposed Rulemaking, as published in the Federal Register of July, 1, 2011 (76 FR 38585) (FR Doc. 2011-16664), is hereby withdrawn.

On April 21, 2011, the Commission issued a Notice of Proposed Rulemaking (NOPR) in the above-referenced proceeding  1 proposing to require the Commission-certified Electric Reliability Organization to make available to Commission staff, on an ongoing basis, access to complete electronic tagging data used to schedule the transmission of electric power in wholesale markets. Initial comments on this NOPR were due on June 29, 2011. The Commission is providing interested parties with an opportunity to file reply comments on the NOPR. These reply comments may also address whether the Commission should require entities that create e-Tags or distribute them for approval to provide the Commission with viewing rights to the e-Tags.

By this notice, reply comments should be filed on or before March 26, 2012.

Due to the exceptional growth of various species of cacti, including the giant saguaro cactus, and because of outstanding scientific interest, Saguaro National Park was initially reserved as a National Monument on March 1, 1933 (Presidential Proclamation No. 2032, 47 Stat. 2557).

In 1961, Presidential Proclamation No. 3439 (76 Stat. 1437) enlarged the boundaries of the Saguaro National Monument to include certain lands within the Tucson Mountains containing a remarkable display of relatively undisturbed lower Sonoran desert vegetation, including a spectacular saguaro stand.

In October 1976, Public Law 94-567 (90 Stat. 2692) designated parts of Saguaro National Monument as a wilderness area, known as the Saguaro Wilderness.

On June 19, 1991, Congress passed Public Law 102-61 that included the “Saguaro National Monument Expansion Act of 1991” (105 Stat. 303) to authorize the addition of approximately 3,540 acres to the Rincon unit of Saguaro National Monument in order to protect, preserve, and interpret the monument's resources, and to provide for education and benefit to the public.

Under the Saguaro National Park Establishment Act of 1994 (16 U.S.C. 410zz), Saguaro National Monument was renamed Saguaro National Park.

The Park is an important national resource visited by approximately 700,000 people annually. It encompasses/includes approximately 91,450 acres, 71,400 acres of which are designated as wilderness. The Park has two Districts—the Rincon Mountain District east of Tucson and the Tucson Mountain District west of Tucson. Both are within Pima County, Arizona, and are separated by the city of Tucson. The Park protects a superb example of the Sonoran Desert ecosystem, featuring exceptional stands of Saguaro cacti. The Saguaro is the tallest cactus in the United States, and is recognized worldwide as an icon of the American Southwest.

The Hope Camp Trail is a 2.8 mile long hiking and equestrian trail that originates at the Loma Alta Trailhead and travels east through the southwestern portion of the Park's Rincon Mountain District to the Arizona State Trust Lands boundary beyond Hope Camp. The trail generally traverses relatively even terrain and rolling hills, and is lined with a variety and abundance of desert trees and shrubs. The trail is not within proposed, recommended, or designated wilderness.

Prior to NPS acquisition in the mid 1990s, the land was part of a privately-owned ranch, and the trail route was a graded dirt road used to support ranching operations. The former owner also allowed the route to be used for recreational purposes, including hiking, equestrian and bicycle use. Shortly after acquiring the land, NPS closed the route to motor vehicles and bicycles. The trail is currently open to hiker and equestrian use only. Although closed to vehicular traffic, the route remains approximately 14 feet wide, allowing adequate room for two-way passage of diverse user groups.

The Park's General Management Plan/Environmental Impact Statement (GMP) was completed in 2008. The GMP may be viewed online at http://parkplanning.nps.gov/sagu .

The purposes of the GMP are as follows:

○ Best protect Park resources;

○ Provide quality visitor uses and experiences; and

○ Manage visitor uses, and what kinds of facilities, if any, to develop in/near the Park.

The GMP identifies six different management zones, which are specific descriptions of desired conditions for Park resources and visitor experiences in different areas of the Park. As identified in the GMP, the Hope Camp Trail lies within the Natural Zone. Under the GMP, activities within the Natural Zone would include hiking, horseback riding, running, bicycling, and viewing flora and fauna. The zone is available for day use only, and visitors are required to stay on trails. The GMP provides that bicycling opportunities will be explored along the Hope Camp Trail.

In November 2005, the Park initiated the development of a Comprehensive Trails Management Plan/Environmental Assessment (Plan/EA) for the Park. Internal scoping occurred with Park staff, planning professionals from the NPS Intermountain Support Office, along with representatives from the U.S. Forest Service and the Sonoran Institute. External scoping included mailing and distribution of three separate newsletters, four public open house meetings and a 60-day public comment period. As a result of this process, four alternatives for the Park's Rincon Mountain District (including a no action alternative) were identified for public comments. Two alternatives called for conversion of the Hope Camp Trail into a multi-use trail, to include the use of mountain bicycles, and two alternatives kept the trail open to hikers and equestrians only. During the public comment period on the draft Plan/EA, the NPS considered 253 pieces of correspondence, containing a total of 638 comments on the draft Plan/EA alternatives.

The objectives of the Plan/EA are to:

• Prevent impairment and unacceptable impacts on natural and cultural resources.

• Provide reasonable access to the trails network and trailheads.

• Eliminate unnecessary and parallel/duplicate trails.

• Ensure that the resulting trails network is safe and maintainable.

• Provide for a clearly designated trail system.

• Provide for a variety of trail experiences.

The Plan/EA was completed in 2009. The selected alternative and the Finding of No Significant Impact (FONSI), signed by the NPS Intermountain Regional Director on July 31, 2009, calls for the conversion of the Hope Camp Trail to a multi-use trail, including bicycling. The Plan/EA and FONSI may be viewed online at http://www.nps.gov/sagu/parkmgmt/trails.

A 2003 rulemaking authorized bicycle use on the 2.5 mile Cactus Forest Trail that bisects the paved, 8-mile-long Cactus Forest Loop Drive in the Rincon Mountain District of the Park. This rule does not address the Cactus Forest Trail, which remains open to bicycle use, as well as hiker and equestrian use. This bicycle trail has recently been used to introduce underserved youth to the Park and the NPS via mountain bike and educational fieldtrips as part of the “Trips for Kids” program. Currently, this is the only trail in the Park open to bicycle use.

This proposed rule would designate as a bicycle route and open to bicycle use, the approximate 2.8 mile Hope Camp Trail, from the Loma Alta Trailhead east to the Arizona State Trust Lands boundary, approximately .2 miles beyond Hope Camp. Park staff, volunteer organizations, and local interest groups would monitor and mitigate the environmental impacts of mountain bike use on the Hope Camp Trail to ensure that the trail is maintained in good condition and that issues of concern are immediately brought to the attention of Park management.

This document is not a significant rule and the Office of Management and Budget has not reviewed this rule under Executive Order 12866.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. This is an agency specific rule, supported by the Pima County (AZ) Parks and Recreation Department.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients.

(4) This rule does not raise novel legal or policy issues. This rule implements 36 CFR 4.30 which requires the promulgation of special regulations for the designation of bicycle routes outside of developed areas and special use zones.

The Department of the Interior certifies that this document would not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601 et seq. ). This certification is based on information contained in the report titled, “Cost-Benefit and Regulatory Flexibility Analyses for Designating Bicycle Trails in Saguaro National Park” that is available for review at http://www.nps.gov/sagu/parkmgmt/trails.

This rule is not a major rule under 5 U.S.C. 804(2), the SBREFA. This rule:

a. Does not have an annual effect on the economy of $100 million or more.

b. Would not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

There are no businesses in the surrounding area economically dependent on bicycle use of this trail. The park does not have any bicycle rental concessioners and current users are predominantly individuals engaged in recreational activities.

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531 et seq. ) is not required.

Under the criteria in Executive Order 12630, this rule does not have significant takings implications. A taking implications assessment is not required because this rule will not deny any private property owner of beneficial uses of their land, nor will it significantly reduce their land's value. No taking of personal property will occur as a result of this rule.

Under the criteria in Executive Order 13132, this rule does not have sufficient federalism implications to warrant the preparation of a Federalism summary impact statement. A Federalism summary impact statement is not required.

This rule complies with the requirements of Executive Order 12988. Specifically this rule:

(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

Under the criteria in Executive Order 13175, we have evaluated this rule and determined that it has no potential effects on federally recognized Indian tribes. Affiliated Native American tribes were contacted by letters sent in December 2008 to solicit any interests or concerns with the proposed action. No responses were received by the Park.

This rule does not contain information collection requirements, and a submission under the PRA is not required.

We have prepared an environmental assessment and have determined that this rule will not have a significant effect on the quality of the human environment under the NEPA of 1969. The Plan/EA for the Park and FONSI that included an evaluation of bicycling on the Hope Camp Trail may be viewed online at http://www.nps.gov/sagu/parkmgmt/trails .

This rule is not a significant energy action under the definition in Executive Order 13211. A statement of Energy Effects is not required.

We are required by Executive Orders 12866 and 12988 and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in the “ ADDRESSES ” section. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that you find unclear, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

The primary authors of this regulation are Robert Love, Chief Ranger, Saguaro National Park, Darla Sidles, Superintendent, Saguaro National Park, John Calhoun and A.J. North, NPS Regulations Program, Washington, DC.

It is the policy of NPS, whenever practicable, to afford the public an opportunity to participate in the rulemaking process. Accordingly, interested parties may submit written comments, suggestions, or objections regarding this proposed rule to the addresses noted at the beginning of this rule.

Before including your address, phone number, email address, or other personal identifying information in your comments, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

In consideration of the foregoing, the NPS proposes to amend 36 CFR Part 7 as set forth below:

The Postal Service's proposed rule includes the basis for discontinuing use of POSTNET barcodes and allowing only Intelligent Mail® barcodes (IMb TM ) for automation price eligibility purposes. The Postal Service understands that many mailers currently use POSTNET barcodes and we are committed to providing information to and working with individual mailers and software providers to ensure that the use of an Intelligent Mail barcode is achievable for all mailing customers. This proposed rule also contains the proposed revisions to the DMM to implement the changes.

For the past several years, both USPS® and the mailing industry have used the Intelligent Mail barcode to gain information about letters and flats as they move from induction to delivery. Postal customers use this information for numerous purposes: to anticipate store traffic, to coordinate sales and marketing efforts, and to design better “just in time” inventory and fulfillment systems. USPS also uses this information for multiple purposes: to fulfill regulatory commitments, to manage staffing and workload, and to improve service. We are proposing that the use of the IMb would be required for all automation letters, including Business Reply Mail® letters that qualify for Qualified Business Reply Mail prices and Permit Reply Mail letters, and automation flats by January 2013.

We propose to revise DMM 202.5.0 to require barcode clear zones on all letters and cards claiming an automation letter price or automation carrier route letter price, and to require all machinable letters to have barcode clear zones. Reserving a barcode clear zone in the bottom right of the mailpiece allows for postal equipment to print and read barcode routing information in cases where no customer-applied address block barcode is present, or is unreadable. It reduces processing costs by increasing barcode recognition rates, keeping mail on automation equipment, and ensures mailpiece visibility. Standards for background and print reflectance (in DMM 708.4.4) are also needed to ensure readability of barcodes in the clear zone.

Currently, the POSTNET barcode is an available option to satisfy the parcel barcode requirement for Standard Mail® parcels. We propose to eliminate the use of the POSTNET barcode on parcels, unless it is printed in the address block. eVS® parcels would not be allowed to bear POSTNET barcodes in any location.

We encourage customers to comment on the proposed changes. This proposed rule provides the opportunity for mailers to make adjustments to their operations before the effective date.

Although we are exempt from the notice and comment requirements of the Administrative Procedure Act [5 U.S.C 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:

For additional information see the direct final rule which is published in the Rules Section of this Federal Register. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period on this document. Any parties interested in commenting on this document should do so at this time.

Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

Regional haze is visibility impairment that is produced by a multitude of sources and activities which are located across a broad geographic area and emit fine particles (PM 2.5 ) (e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust) and their precursors (e.g., SO 2 , nitrogen oxides (NO X ), and in some cases, ammonia (NH 3 ) and volatile organic compounds (VOCs)). Fine particle precursors react in the atmosphere to form PM 2.5 (e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust), which also impair visibility by scattering and absorbing light. Visibility impairment reduces the clarity, color, and visible distance that one can see. PM 2.5 also can cause serious health effects and mortality in humans and contributes to environmental effects such as acid deposition and eutrophication. 1

Data from the existing visibility monitoring network, the “Interagency Monitoring of Protected Visual Environments” (IMPROVE) monitoring network, show that visibility impairment caused by air pollution occurs virtually all the time at most national park and wilderness areas. The average visual range  2 in many Class I areas (i.e., national parks and memorial parks, wilderness areas, and international parks meeting certain size criteria) in the western United States is 100-150 kilometers, or about one-half to two-thirds of the visual range that would exist without anthropogenic air pollution. 64 FR 35714, 35715 (July 1, 1999). In most of the eastern Class I areas of the United States, the average visual range is less than 30 kilometers, or about one-fifth of the visual range that would exist under estimated natural conditions. Id.

In section 169A of the 1977 Amendments to the CAA, Congress created a program for protecting visibility in the nation's national parks and wilderness areas. This section of the CAA establishes as a national goal the “prevention of any future, and the remedying of any existing, impairment of visibility in mandatory Class I Federal areas  3 which impairment results from manmade air pollution.” CAA § 169A(a)(1). The terms “impairment of visibility” and “visibility impairment” are defined in the Act to include a reduction in visual range and atmospheric discoloration. CAA § 169A(g)(6). In 1980, we promulgated regulations to address visibility impairment in Class I areas that is “reasonably attributable” to a single source or small group of sources, i.e., “reasonably attributable visibility impairment” (RAVI). 45 FR 80084 (December 2, 1980). These regulations represented the first phase in addressing visibility impairment. We deferred action on regional haze that emanates from a variety of sources until monitoring, modeling and scientific knowledge about the relationships between pollutants and visibility impairment were improved.

Congress added section 169B to the CAA in 1990 to address haze issues, and we promulgated regulations addressing regional haze in 1999. 64 FR 35714 (July 1, 1999), codified at 40 CFR part 51, subpart P. The regional haze rule (RHR) revised the existing visibility regulations to integrate into the regulations provisions addressing RH impairment and established a comprehensive visibility protection program for Class I areas. The requirements for regional haze, found at 40 CFR 51.308 and 51.309, are included in our visibility protection regulations at 40 CFR 51.300-309. Some of the main elements of the regional haze requirements are summarized in section II. The requirement to submit a regional haze SIP applies to all 50 States, the District of Columbia and the Virgin Islands. States were required to submit the first implementation plan addressing visibility impairment no later than December 17, 2007. 40 CFR 51.308(b).

Successful implementation of the regional haze program will require long-term regional coordination among States, tribal governments and various Federal agencies. As noted above, pollution affecting the air quality in Class I areas can be transported over long distances, even hundreds of kilometers. Therefore, to address effectively the problem of visibility impairment in Class I areas, States need to develop strategies in coordination with one another, taking into account the effect of emissions from one jurisdiction on the air quality in another.

Because the pollutants that lead to haze can originate from sources located across broad geographic areas, we have encouraged the States and tribes across the United States to address visibility impairment from a regional perspective. Five regional planning organizations (RPOs) were developed to address regional haze and related issues. The RPOs first evaluated technical information to better understand how their States and tribes impact Class I areas across the country, and then pursued the development of regional strategies to reduce emissions of PM and other pollutants that cause haze.

The State of Nebraska participated in the planning efforts of the Central Regional Air Planning Association (CENRAP), which is affiliated with the Central States Air Resource Agencies (CENSARA). CENRAP is an organization of States, tribes, Federal agencies and other interested parties that identifies visibility issues and develops strategies to address them. CENRAP is one of the five RPOs across the U.S. and includes the States and tribal areas of Nebraska, Kansas, Oklahoma, Texas, Minnesota, Iowa, Missouri, Arkansas, and Louisiana. States were also required by 40 CFR 51.308(i) to coordinate with FLMs during the development of the State's strategies to address haze. FLMs include the U.S. Fish and Wildlife Service, the U.S. Forest Service, and the National Park Service.

The following is a summary and basic explanation of the regulations covered under the RHR. See 40 CFR 51.308 for a complete listing of the regulations under which this SIP was evaluated.

CAA sections 110(l) and 110(a)(2) require revisions to a SIP to be adopted by a State after reasonable notice and public hearing. EPA has promulgated specific procedural requirements for SIP revisions in 40 CFR Part 51, subpart F. These requirements include publication of notices by prominent advertisement in the relevant geographic area of a public hearing on proposed revisions, at least a 30-day public comment period, and the opportunity for a public hearing, and that the State, in accordance with its laws, submit the revision to the EPA for approval. Specific information on Nebraska's rulemaking, regional haze SIP development and public information process is included in Chapter 3, and Appendix 3, of the State of Nebraska regional haze SIP, which is included in the docket of this proposed rulemaking.

Regional haze SIPs must assure reasonable progress towards the national goal of achieving natural visibility conditions in Class I areas. Section 169A of the CAA and our implementing regulations require States to establish long-term strategies for making reasonable progress toward meeting this goal. Implementation plans must also give specific attention to certain stationary sources that were in existence on August 7, 1977, but were not in operation before August 7, 1962, and require these sources, where appropriate, to install BART controls for the purpose of eliminating or reducing visibility impairment. The specific regional haze SIP requirements are discussed in further detail below.

The RHR establishes the deciview (dv) as the principal metric for measuring visibility. See 70 FR 39104. This visibility metric expresses uniform changes in the degree of haze in terms of common increments across the entire range of visibility conditions, from pristine to extremely hazy conditions. Visibility expressed in deciviews is determined by using air quality measurements to estimate light extinction and then transforming the value of light extinction using a logarithmic function. The deciview is a more useful measure for tracking progress in improving visibility than light extinction itself because each deciview change is an equal incremental change in visibility perceived by the human eye. Most people can detect a change in visibility of one deciview. 4

The deciview is used in expressing Reasonable Progress Goals (RPGs) (which are interim visibility goals towards meeting the national visibility goal), defining baseline, current, and natural conditions, and tracking changes in visibility. The regional haze SIPs must contain measures that ensure “reasonable progress” toward the national goal of preventing and remedying visibility impairment in Class I areas caused by anthropogenic air pollution by reducing anthropogenic emissions that cause haze. The national goal is a return to natural conditions, i.e., anthropogenic sources of air pollution would no longer impair visibility in Class I areas.

To track changes in visibility over time at each of the 156 Class I areas covered by the visibility program (40 CFR 81.401-437), and as part of the process for determining reasonable progress, States must calculate the degree of existing visibility impairment at each Class I area at the time of each regional haze SIP submittal and periodically review progress every five years midway through each 10-year implementation period. To do this, the RHR requires States to determine the degree of impairment (in deciviews) for the average of the 20 percent least impaired (“best”) and 20 percent most impaired (“worst”) visibility days over a specified time period at each of their Class I areas. In addition, States must also develop an estimate of natural visibility conditions for the purpose of comparing progress toward the national goal. Natural visibility is determined by estimating the natural concentrations of pollutants that cause visibility impairment and then calculating total light extinction based on those estimates. We have provided guidance to States regarding how to calculate baseline, natural and current visibility conditions. 5

For the first regional haze SIPs that were due by December 17, 2007, “baseline visibility conditions” were the starting points for assessing “current” visibility impairment. Baseline visibility conditions represent the degree of visibility impairment for the 20 percent least impaired days and 20 percent most impaired days for each calendar year from 2000 to 2004. Using monitoring data for 2000 through 2004, States are required to calculate the average degree of visibility impairment for each Class I area, based on the average of annual values over the five-year period. The comparison of initial baseline visibility conditions to natural visibility conditions indicates the amount of improvement necessary to attain natural visibility, while the future comparison of baseline conditions to the then current conditions will indicate the amount of progress made. In general, the 2000-2004 baseline period is considered the time from which improvement in visibility is measured.

The vehicle for ensuring continuing progress towards achieving the natural visibility goal is the submission of a series of regional haze SIPs from the States that establish two RPGs (i.e., two distinct goals, one for the “best” and one for the “worst” days) for every Class I area for each (approximately) 10-year implementation period. See 70 FR 3915; see also 64 FR 35714. The RHR does not mandate specific milestones or rates of progress, but instead calls for States to establish goals that provide for “reasonable progress” toward achieving natural (i.e., “background”) visibility conditions. In setting RPGs, States must provide for an improvement in visibility for the most impaired days over the (approximately) 10-year period of the SIP, and ensure no degradation in visibility for the least impaired days over the same period. Id.

States have significant discretion in establishing RPGs, but are required to consider the following factors established in section 169A of the CAA and in our RHR at 40 CFR 51.308(d)(1)(i)(A): (1) The costs of compliance; (2) the time necessary for compliance; (3) the energy and non-air quality environmental impacts of compliance; and (4) the remaining useful life of any potentially affected sources. States must demonstrate in their SIPs how these factors are considered when selecting the RPGs for the best and worst days for each applicable Class I area. States have considerable flexibility in how they take these factors into consideration, as noted in our reasonable progress guidance. 6 In setting the RPGs, States must also consider the rate of progress needed to reach natural visibility conditions by 2064 (referred to hereafter as the “uniform rate of progress” or the “glidepath”) and the emission reduction measures needed to achieve that rate of progress over the 10-year period of the SIP. Uniform progress towards achievement of natural conditions by the year 2064 represents a rate of progress, which States are to use for analytical comparison to the amount of progress they expect to achieve. In setting RPGs, each State with one or more Class I areas (“Class I State”) must also consult with potentially “contributing States,” i.e., other nearby States with emission sources that may be affecting visibility impairment at the Class I State's areas. 40 CFR 51.308(d)(1)(iv).

States without Class I areas are required to submit regional haze SIPs to address their contribution to visibility impairment. As per the previous discussion in this proposed rulemaking, the ability of the long range transport of pollutants to affect visibility conditions in areas makes it imperative that each State evaluate how emissions from within its borders affect visibility impairment in Class I areas in other States.

Section 169A of the CAA directs States to evaluate the use of retrofit controls at certain larger, often uncontrolled, older stationary sources with the potential to emit greater than 250 tons or more of any pollutant in order to address visibility impacts from these sources. Specifically, section 169A(b)(2)(A) of the Act requires States to revise their SIPs to contain such measures as may be necessary to make reasonable progress towards the natural visibility goal, including a requirement that certain categories of existing major stationary sources  7 built between 1962 and 1977 procure, install, and operate the “best available retrofit technology” as determined by the State or us in the case of a plan promulgated under section 110(c) of the CAA. Under the RHR, States are directed to conduct BART determinations for such “BART-eligible” sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Rather than requiring source-specific BART controls, States also have the flexibility to adopt an emissions trading program or other alternative program as long as the alternative provides greater reasonable progress towards improving visibility than BART.

We promulgated regulations addressing regional haze in 1999, 64 FR 35714 (July 1, 1999), codified at 40 CFR part 51, subpart P. 8 These regulations require all States to submit implementation plans that, among other measures, contain either emission limits representing BART for certain sources constructed between 1962 and 1977, or alternative measures that provide for greater reasonable progress than BART. 40 CFR 51.308(e).

On July 6, 2005, we published the Guidelines for BART Determinations Under the Regional Haze Rule at Appendix Y to 40 CFR Part 51 (“BART Guidelines”) to assist States in determining which of their sources should be subject to the BART requirements and in determining appropriate emission limits for each applicable source. 70 FR 39104. In making a BART determination for a fossil fuel-fired electric generating plant with a total generating capacity in excess of 750 megawatts, a State must use the approach set forth in the BART Guidelines. A State is encouraged, but not required, to follow the BART Guidelines in making BART determinations for other types of sources.

The process of establishing BART emission limitations can be logically broken down into three steps: first, States identify those sources which meet the definition of “BART-eligible source” set forth in 40 CFR 51.301; 9 second, States determine whether such sources “emits any air pollutant which may reasonably be anticipated to cause or contribute to any impairment of visibility in any such area” (a source which fits this description is “subject to BART,”) and; third, for each source subject to BART, States then identify the appropriate type and the level of control for reducing emissions.

States must address all visibility-impairing pollutants emitted by a source in the BART determination process. The most significant visibility impairing pollutants are SO 2 , NO X , and PM. States should use their best judgment in determining whether volatile organic compounds (VOC) or ammonia compounds impair visibility in Class I areas.

Under the BART Guidelines, States may select an exemption threshold value for their BART modeling, below which a BART-eligible source would not be expected to cause or contribute to visibility impairment in any Class I area. The State must document this exemption threshold value in the SIP and must state the basis for its selection of that value. Any source with emissions that model above the threshold value would be subject to a BART determination review. The BART Guidelines acknowledge varying circumstances affecting different Class I areas. States should consider the number of emission sources affecting the Class I areas at issue and the magnitude of the individual sources' impacts. Any exemption threshold set by the State should not be higher than 0.5 dv (70 FR 39161).

In their SIPs, States must identify potential BART sources, described as “BART-eligible sources” in the RHR, and document their BART control determination analyses. The term “BART-eligible source” used in the BART Guidelines means the collection of individual emission units at a facility that together comprises the BART-eligible source. In making BART determinations, section 169A(g)(2) of the CAA requires that States consider the following factors: (1) The costs of compliance; (2) the energy and non-air quality environmental impacts of compliance; (3) any existing pollution control technology in use at the source; (4) the remaining useful life of the source; and (5) the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. States are free to determine the weight and significance to be assigned to each factor. See 40 CFR 51.308(e)(1)(ii).

A regional haze SIP must include source-specific BART emission limits and compliance schedules for each source subject to BART. Once a State has made its BART determination, the BART controls must be installed and in operation as expeditiously as practicable, but no later than five years after the date of our approval of the regional haze SIP. See CAA section 169(g)(4) and 40 CFR 51.308(e)(1)(iv). In addition to what is required by the RHR, general SIP requirements mandate that the SIP must also include all regulatory requirements related to monitoring, recordkeeping, and reporting for the BART controls on the source. See CAA section 110(a).

As noted above, the RHR allows States to implement an alternative program in lieu of BART so long as the alternative program can be demonstrated to achieve greater reasonable progress toward the national visibility goal than would BART. Under regulations issued in 2005 revising the regional haze program, EPA made just such a demonstration for the Clean Air Interstate Rule (CAIR). See 70 FR 39104 (July 6, 2005). EPA's regulations provide that States participating in the CAIR cap-and trade program under 40 CFR Part 96 pursuant to an EPA-approved CAIR SIP or which remain subject to the CAIR FIP in 40 CFR Part 97 need not require affected BART-eligible electric generating units (EGUs) to install, operate, and maintain BART for emissions of SO 2 and NO X. See 40 CFR 51.308(e)(4). Because CAIR did not address direct emissions of PM, States were still required to conduct a BART analysis for PM emissions from EGUs subject to BART for that pollutant. Challenges to CAIR, however, resulted in the remand of the rule to EPA. See North Carolina v. EPA, 550 F.3d 1176 (DC Cir. 2008). EPA issued a new rule in 2011 to address the interstate transport of NO X and SO 2 in the eastern United States. See 76 FR 48208 (August 8, 2011) (“the Transport Rule,” also known as the Cross-State Air Pollution Rule). On December 30, 2011, EPA proposed to find that the trading programs in the Transport Rule would achieve greater reasonable progress towards the national goal than would BART in the States in which the Transport Rule applies. 76 FR 82219. Based on this proposed finding, EPA also proposed to revise the RHR to allow States to substitute participation in the trading programs under the Transport Rule for source-specific BART. EPA has not taken final action on that rule. Also on December 30, 2011, the Circuit Court of Appeals for the District of Columbia issued an order addressing the status of the Transport Rule and CAIR in response to motions filed by numerous parties seeking a stay of the Transport Rule pending judicial review. In that order, the DC Circuit stayed the Transport Rule pending the court's resolutions of the petitions for review of that rule in EME Homer Generation, L.P. v. EPA (No. 11-1302 and consolidated cases). The court also indicated that EPA is expected to continue to administer the CAIR in the interim until the court rules on the petitions for review of the Transport Rule.

Consistent with the requirement in section 169A(b) of the CAA that States include in their regional haze SIP a ten to fifteen year strategy for making reasonable progress, section 51.308(d)(3) of the RHR requires that States include a LTS in their regional haze SIPs. The LTS is the compilation of all control measures a State will use during the implementation period of the specific SIP submittal to meet any applicable RPGs. The LTS must include “enforceable emissions limitations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals” for all Class I areas within, or affected by emissions from, the State. 40 CFR 51.308(d)(3).

When a State's emissions are reasonably anticipated to cause or contribute to visibility impairment in a Class I area located in another State, the RHR requires the impacted State to coordinate with the contributing States in order to develop coordinated emissions management strategies. 40 CFR 51.308(d)(3)(i). In such cases, the contributing State must demonstrate that it has included in its SIP all measures necessary to obtain its share of the emission reductions needed to meet the RPGs for the Class I area. The RPOs have provided forums for significant interstate consultation, but additional consultations between States may be required to sufficiently address interstate visibility issues. This is especially true where two States belong to different RPOs.

States should consider all types of anthropogenic sources of visibility impairment in developing their LTS, including stationary, minor, mobile, and area sources. At a minimum, States must describe how each of the following seven factors listed below are taken into account in developing their LTS: (1) Emission reductions due to ongoing air pollution control programs; (2) measures to mitigate the impacts of construction activities; (3) emissions limitations and schedules for compliance to achieve the RPG; (4) source retirement and replacement schedules; (5) smoke management techniques for agricultural and forestry management purposes including plans as currently exist within the State for these purposes; (6) enforceability of emissions limitations and control measures; (7) the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the LTS. 40 CFR 51.308(d)(3)(v).

As part of the RHR, EPA revised 40 CFR 51.306(c), regarding the LTS for RAVI, to require that the RAVI plan must provide for a periodic review and SIP revision not less frequently than every three years until the date of submission of the State's first plan addressing regional haze visibility impairment in accordance with 40 CFR 51.308(b) and (c). The State must revise its plan to provide for review and revision of a coordinated LTS for addressing RAVI and regional haze on or before this date. It must also submit the first such coordinated LTS with its first regional haze SIP. Future coordinated LTSs, and periodic progress reports evaluating progress toward RPGs, must be submitted consistent with the schedule for SIP submission and periodic progress reports set forth in 40 CFR 51.308(f) and 51.308(g), respectively. The periodic review of a State's LTS must be submitted to EPA as a SIP revision and report on both regional haze and RAVI impairment.

Section 51.308(d)(4) of the RHR includes the requirement for a monitoring strategy for measuring, characterizing, and reporting of visibility impairment that is representative of all Class I areas within the State. The strategy must be coordinated with the monitoring strategy required in section 51.305 for RAVI. Compliance with this requirement may be met through “participation” in the Interagency Monitoring of Protected Visual Environments (IMPROVE) network, i.e., review and use of monitoring data from the network. The monitoring strategy is due with the first regional haze SIP, and it must be reviewed every five (5) years. The monitoring strategy must also provide for additional monitoring sites if the IMPROVE network is not sufficient to determine whether RPGs will be met.

The SIP must also provide for the following:

• Procedures for using monitoring data and other information in a State with mandatory Class I areas to determine the contribution of emissions from within the State to haze visibility impairment at Class I areas both within and outside the State;

• For a State with no mandatory Class I areas, procedures for using monitoring data and other information to determine the contribution of emissions from within the State to regional haze visibility impairment at Class I areas in other States;

• Reporting of all visibility monitoring data to the Administrator at least annually for each Class I area in the State, and where possible, in electronic format;

• Developing a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area. The inventory must include emissions for a baseline year, emissions for the most recent year for which data are available, and estimates of future projected emissions, along with a commitment to update the inventory periodically; and

• Other elements, including reporting, recordkeeping, and other measures necessary to assess and report on visibility.

The RHR requires control strategies to cover an initial implementation period extending to the year 2018, with a comprehensive reassessment and revision of those strategies, as appropriate, every ten years thereafter. Periodic SIP revisions must meet the core requirements of section 51.308(d) with the exception of BART. The requirement to evaluate sources for BART applies only to the first regional haze SIP. Facilities subject to BART must continue to comply with the BART provisions of section 51.308(e), as noted above. Periodic SIP revisions will assure that the statutory requirement of reasonable progress will continue to be met.

The RHR requires that States consult with other States and FLMs before adopting and submitting their SIPs. 40 CFR 51.308(i). States must provide FLMs an opportunity for consultation, in person and at least sixty days prior to holding any public hearing on the SIP. This consultation must include the opportunity for the FLMs to discuss their assessment of impairment of visibility in any Class I area and to offer recommendations on the development of the RPGs and on the development and implementation of strategies to address visibility impairment. Further, a State must include in its SIP a description of how it addressed any comments provided by the FLMs. Finally, a SIP must provide procedures for continuing consultation between the State and FLMs regarding the State's visibility protection program, including development and review of SIP revisions, five-year progress reports, and the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas.

The State of Nebraska submitted a regional haze SIP revision to EPA on July 13, 2011 for approval into the Nebraska SIP. The following is an evaluation of that submission. See the Technical Support Document (TSD) for this proposal for a more comprehensive technical analysis.

EPA is proposing to find that the State of Nebraska has met the requirements of the CAA which require that the State adopt a SIP after reasonable notice and public hearing. EPA also believes that the State has met the specific procedural requirements for SIP revisions promulgated at 40 CFR part 51, subpart F and appendix V. The State met these requirements by publishing notices of the public hearing, an opportunity for a public hearing, and at least a thirty-day public comment period by prominent advertisement, and Nebraska, in accordance with its laws, submitted the revisions on July 13, 2011, to EPA for approval. Specific information on Nebraska's rulemaking, regional haze SIP development and public information process is included in Chapter 3, and Appendix 3, of the State of Nebraska's regional haze SIP, which is included in the docket of this proposed rulemaking.

Although there are no Class I areas within the State of Nebraska, the State is still required to identify those Class I areas which may be affected by emissions from Nebraska sources. Nebraska participated in the planning efforts of CENRAP, an RPO including nine States—Nebraska, Iowa, Oklahoma, Texas, Minnesota, Iowa, Missouri, Arkansas, and Louisiana. CENRAP and its contractors provided air quality modeling to the States to help them determine whether sources located within the State can be reasonably expected to cause or contribute to visibility impairment in Class I areas. The modeling conducted relied on baseline year (2002) and future planning year (2018) emissions inventories that were prepared with participation from each of the CENRAP States. The modeling was based on PM Source Apportionment Technology (PSAT) for the Comprehensive Air Quality Model with extensions (CAMx) photochemical model.

According to the PSAT modeling, contributions from Nebraska sources for the worst 20 percent days were highest at the South Dakota Class I areas. For the 2002 baseline year, Nebraska sources were projected to contribute 7.81 percent of visibility impairment at Badlands, and 7 percent at Wind Cave. In 2018, the projected contribution was reduced to 5.89 percent and 5.24 percent, respectively. However, it is critical to note that the 2018 projections were developed assuming presumptive levels of SO 2 control on Nebraska BART sources, which ultimately the State did not require. For that reason, it is likely that Nebraska sources will have a somewhat larger contribution to 2018 visibility impairment than what the modeling predicted.

Nebraska's contribution to all other Class I areas was considerably less, and in no case greater than 1.9 percent in 2002 according to the PSAT modeling. 10

States that host Class I areas are required to estimate the baseline, natural and current visibility conditions of those Class I areas. Nebraska does not host a Class I area, therefore, it is not required to estimate these metrics.

The RHR requires States and tribes to establish a RPG for each Class I area within the State. Nebraska does not have a Class I area within the State and therefore is not required to establish a RPG. States hosting Class I areas are required to establish RPGs, and to make assessments regarding whether emission reductions are needed from sources in Nebraska in order to meet their RPG. Specific State goals and Nebraska's effect on meeting them are described in further detail in the LTS consultation section, below.

States must submit a long-term strategy that addresses regional haze visibility impairment for each Class I area within it and for each Class I area located outside it which may be affected by emissions from it. The long-term strategy must include enforceable emissions limitations, compliance schedules, and other measures as necessary to achieve the reasonable progress goals established by States having Class I areas.

Nebraska's LTS for the first implementation period addresses the emissions reductions from Federal, State, and local controls that take effect in the State from the end of the baseline period until 2018. As described elsewhere in this notice, the changes in point, area, and mobile source emissions over the first implementation period (through 2018) were taken into account by CENRAP and the State in developing the emission inventory for 2018. Specifically, Nebraska considered the following Federal and State control measures when developing its LTS:

• CAIR. Although the State of Nebraska was not included in the CAIR rulemaking, the rule was a major component in the underlying assumptions used to determine source apportionment because of the reductions expected in neighboring States.

• Federal mobile source standards

• Tier 2 vehicle standards and low sulfur fuel requirements

• Locomotive and marine engine standards

• Small spark-ignition engine standards

• National Emission Standards for Hazardous Air Pollutants (NESHAP) Maximum Achievable Control Technology (MACT) standards

• Nebraska's Prevention of Significant Deterioration (PSD) construction permitting program. Nebraska notes that the visibility protection provisions of PSD found at 40 CFR 52.21(o) have been incorporated into Title 129—Nebraska Air Quality Regulations at Chapter 19. Section 40 CFR 52.21(p) requires notification and consultation with FLMs of Class I areas which may be affected by emissions from a new source; these requirements under have been incorporated by reference into Title 129 in Chapter 19.

Nebraska has fugitive dust regulations in Nebraska Title 129—Chapter 32, which includes a provision applicable to construction activities. The rule requires the use of reasonable measures such as paving, cleaning, application of water, planting and maintenance of ground cover, and/or application of dust-free surfactants to prevent dust from becoming airborne such that it remains visible beyond the property boundary. Nebraska estimates that construction activities are not expected to cause a significant impact to visibility, and did not require any additional measures to mitigate the impacts of construction activities for purposes of visibility improvement.

Nebraska also has regulations that address smoke management for agricultural and forestry management burns. Title 129—Chapter 30 is a ban on open burning with some direct exceptions that include agriculture operations, parks management, and fires set for training purposes. Other types of exceptions are subject to approval by the NDEQ and the local fire authority. For purposes of forestry or land management, such burning is allowed provided it is conducted by a limited set of organizations approved by NDEQ. Nebraska contends that, based on the minimal impacts on nearby Class I areas from burning, a more stringent smoke management plan is not needed for purposes of visibility protection at this time.

The above programs are fully enforceable, provide for the mitigation of new source impacts through new source permitting programs, and reflect appropriate consideration of current programs and prospective changes in emissions. Enforceability of Nebraska's BART control measures are more fully described below in section III.F.

Where Nebraska has emissions that are reasonably anticipated to contribute to visibility impairment in any Class I area located in another State or States, it must consult with the other State(s) in order to develop coordinated emission management strategies. If Nebraska causes or contributes to impairment in a Class I area, it must demonstrate that it has included in its SIP all measures necessary to obtain its share of the emission reductions needed to meet the progress goal for the area.

As mentioned previously, Nebraska participated in the CENRAP planning process, which provided the primary venue for State consultation and coordination on emission management strategies. Nebraska also asserts that it notified the States of South Dakota, Oklahoma, Missouri and Colorado while its draft BART permits were open for public comment, proposing only control for NO X at the three BART units in the State. It should be noted that although Nebraska participated as a member State in CENRAP, the greatest impacts from Nebraska sources occur in a Western Regional Area Partnership (WRAP) State—South Dakota.

Nebraska asserts that sources in the State have a “minimal” visibility impact on all Class I areas, and points out in its SIP that no State asked Nebraska for specific emission reductions in order to meet its RPGs. We disagree with the characterization of Nebraska's contribution as minimal, as source-specific CALPUFF modeling shows a significant visibility impact from GGS on the South Dakota Class I areas. 11 12

Furthermore, we note that South Dakota's reasonable progress goals, which are proposed for approval by EPA at the time of this writing, achieve less visibility improvement than the uniform rate of progress for the first implementation period. The reasonable progress goals for the 20 percent worst days fall short of the uniform rate of progress by 1.28 dv for Badlands and 1.34 dv at Wind Cave. 13 The modeling used to estimate achievement of these goals assumed that the presumptive level of SO 2 BART controls would be installed on Nebraska sources. Nebraska did not go on to require BART-level controls, therefore, South Dakota may be even further away from meeting its RPGs than what the modeling predicted. As described in detail in section III. F. d. of this notice, we propose to disapprove Nebraska's SO 2 BART determination for GGS. We also propose to disapprove Nebraska's LTS insofar as it relied on this deficient BART determination. These issues are addressed through reliance on the Transport Rule as an alternative to BART for SO 2 emissions from the GGS units.

In comment letters dated January 21, 2011, and June 23, 2009, the Colorado Department of Public Health and Environment (CDPHE) notes that according to source-specific CALPUFF modeling, GGS has an impact of greater than one deciview on Rocky Mountain National Park (RMNP). CDPHE questioned why Nebraska would propose no SO 2 controls for such a large power plant, and requested that Nebraska take another look at the cost assumptions made for Flue Gas Desulfurization (FGD) controls. They express that $2,700 per ton for control of SO 2 is reasonable, and that the cost is likely even lower.

CDPHE commented that it understands Nebraska's concerns about water availability in western Nebraska, as the State of Colorado is also in an arid region. They state that all large EGUs in Colorado have installed (or are in the process of installing) FGD controls to reduce SO 2 emissions.

CDPHE goes on to note that the most recent WRAP modeling, which used the CMAQ model, predicts that RMNP is far short of its uniform rate of progress. CDPHE asked that Nebraska reconsider SO 2 controls at GGS under the RHR to help Colorado make progress at RMNP.

Nebraska denies this request in their SIP on the basis that WRAP's modeling did not distinguish Nebraska's impact from the other CENRAP States. Nebraska makes the argument that a wind rose from RMNP indicates that the wind pattern is rarely from the direction of Nebraska.

We share Colorado's concerns about the SO 2 BART determination for GGS, and as described above, we are proposing to disapprove this deficient BART determination and Nebraska's LTS insofar as the State relied on it to meet the LTS requirements. We propose that these issues will be addressed through reliance on the Transport Rule as an alternative to BART for SO 2 emissions from the GGS units.

Boundary Waters, Voyageurs, Seney, and Isle Royale are referred to as the Northern Midwest Class I areas. As identified in the document, “Reasonable Progress for Class I Areas in the Northern Midwest—Factor Analysis,”  14 the Lake Michigan Air Directors Consortium (LADCO) identified the following States contributing to Class I area visibility impairment in the LADCO region: Michigan, Minnesota, and Wisconsin, as well as surrounding States, such as the Dakotas, Iowa, Missouri, Illinois, and Indiana. Nebraska does not significantly contribute to visibility impairment at the Minnesota Class I areas according to PSAT modeling. Through RPO consultation, Minnesota determined that no additional emissions reductions from Nebraska sources were needed to meet Class I area visibility improvement goals at this point in time. EPA believes that this satisfies the requirement for consultation between these States.

As identified in the document titled, “Oklahoma`s Wichita Mountains Wilderness Area Regional Haze Planning,”  15 Oklahoma identified Nebraska in its area of influence for NO X . Nebraska was initially invited to participate in the Oklahoma consultation process. Nebraska states that it provided copies of the draft BART permits to the State of Oklahoma while on public notice, which only proposed NO X controls on OPPD and NPPD. Oklahoma did not provide any comment, or request additional controls for the initial planning period. EPA believes that the consultation requirement between these States has been satisfied.

Caney Creek, Upper Buffalo, Hercules Glades, and Mingo are referred to as the central Class I areas. As identified in the document, “Central Class I Areas Consultation Plan,”  16 CENRAP identified Nebraska in the area of influence for NO X at the central Class I areas. The central States determined whether a State was a major contributor based on an analysis of four approaches: trajectories, areas of influence, PSAT, and Q/d. If a State was found to be a major contributor in at least 3 of the 4 approaches, the central States concluded it was appropriate to include that State as a major contributor. Nebraska was found to be a contributor based upon the area of influence only, therefore it was excluded as a major contributing State to visibility impairment in Class I areas in Missouri and Arkansas. EPA believes that Nebraska's consultation requirement with these States was satisfied.

States must submit an implementation plan containing emission limitations representing BART and schedules for compliance with BART for each BART-eligible source that may reasonably be anticipated to cause or contribute to any impairment of visibility in any Class I area.

States must identify all BART-eligible sources in their SIP. Sources are subject to BART if: One or more emissions units at the facility belong to one of the twenty-six BART source categories  17 ; the unit did not operate before August 7, 1962, but was in existence on August 7, 1977; and the unit has the potential to emit 250 tons per year or more of any visibility-impairing pollutant, which Nebraska determined to be SO 2, NO X , and PM.

The BART Guidelines direct States to exercise judgment in deciding whether VOCs and ammonia (NH 3 ) impair visibility in their Class I area(s). 70 FR 391160. CENRAP performed analyses which demonstrated that anthropogenic emissions of VOC and NH 3 do not significantly impair visibility in the CENRAP region. Therefore, Nebraska did not consider NH 3 among visibility-impairing pollutants and did not further evaluate NH 3 and VOC emissions sources for potential controls under BART or reasonable progress.

Nebraska used its database to identify facilities with emission units in one or more of the twenty six BART categories. Nebraska then conducted a survey to identify units within these source categories with potential emissions of 250 tons per year or more for any visibility-impairing pollutant from any unit that was in existence on August 7, 1977, and began operation after August 7, 1962. The sources identified by Nebraska are listed in Table 1. More detailed information regarding each facility's BART-eligible units may be found in Appendix 10.2 of the SIP.

EPA proposes to find that Nebraska adequately identified all BART-eligible sources within the State.

Nebraska then screened out some BART-eligible sources from being subject to BART on the basis that they do not cause or contribute to visibility impairment in a Class I area. Nebraska selected a contribution threshold of 0.5 deciviews based on the 98th percentile of daily modeled visibility impact over an annual period because it is consistent with the Guidelines, no BART-eligible sources are near Class I areas, and there are no significant clusters of BART-eligible sources in the State. Nebraska required the owner of each BART-eligible source to conduct dispersion modeling using the CALPUFF model and submit the results to Nebraska. 18 The CALPUFF modeling protocol is included in Appendix 10.3 of the SIP.

Nebraska identified eight sources with impacts less than 0.5 deciviews, and were therefore determined not to be BART-subject: Beatrice Nitrogen Plant; Ash Grove Cement; Don Henry Power Center; Lon D. Wright Power Plant; CW Burdick Generating Station; North Denver Station; NPPD Sheldon Station; and OPPD North Omaha Station.

Two facilities had impacts greater than 0.5 deciviews, and were therefore determined to be BART-subject: OPPD NCS Station Unit 1 and NPPD GGS Units 1 and 2. EPA proposes to find that Nebraska adequately determined which sources in the State were subject to BART.

Nebraska used source-specific CALPUFF modeling to examine the relative contribution of PM, NO X , and SO 2 emissions to visibility impairment.

For NCS Unit 1, direct PM emissions only accounted for 0.32 percent of impairment in the most impaired year, 2001, at the closest Class I area, Hercules Glades. Nebraska concluded that direct PM emissions from NCS do not significantly contribute to visibility impairment, and therefore, a full five factor BART analysis for PM was not needed.

For GGS Units 1 and 2, direct PM emissions only accounted for 0.69 percent of impairment on the most impaired year, 2003, at the closest Class I area, Badlands. Nebraska concluded that direct PM emissions from GGS do not significantly contribute to visibility impairment, and therefore, a full five factor BART analysis for PM was not needed.

EPA agrees with these conclusions.

Nebraska and EPA have reached different conclusions as to whether NCS Unit 1 is located at a power plant with a generating capacity in excess of 750 megawatts (MW), or not. If NCS falls within this category of sources, then the BART Guidelines must be followed in determining BART limits and the presumptive limits in the Guidelines would apply. See CAA section 169A(b). In September 2008, Nebraska asked EPA for clarification on whether recently permitted units, such as NCS Unit 2, should be included in the total plant capacity for purposes of applying presumptive BART. In a response dated November 7, 2008, we indicated it is reasonable to interpret the RHR to mean that if the plant capacity is greater than 750 MW at the time the BART determination is made by the State (i.e., at the time the State places the BART determination on public notice), then the power plant is a facility “having a total generating capacity in excess of 750 [MW]” and any unit at the plant greater than 200 MW is subject to presumptive BART.

The groundbreaking for construction of NCS Unit 2 was September 13, 2005. Nebraska put the NCS Unit 1 BART permit on public notice on December 12, 2008. Unit 2 was operational on May 1, 2009. 19 Nebraska concluded that because NCS Unit 2 was not operational at the time of the BART determination for Unit 1, its capacity did not count towards the 750 MW threshold, and therefore, it was not mandatory for Nebraska to follow 40 CFR 51 Appendix Y in making the BART determination.

We concede that there is some question as to whether the NCS Unit 1 is a presumptive unit, requiring use of the BART Guidelines, or not. Regardless, Nebraska did proceed through a basic step-wise analysis of the costs and visibility impacts of available controls.

NCS Unit 1 has existing overfire air (OFA), so in determining BART for NO X at NCS unit 1, Nebraska considered low NO X burners (LNB) and selective catalytic reduction (SCR). Selective non-catalytic reduction (SNCR) was determined to be technically infeasible due to high furnace exit temperatures. The cost effectiveness of LNB/OFA at a rate of 0.23 lbs/MMBtu was $166 per ton; the cost effectiveness of LNB/OFA plus SCR at a rate of 0.08 lbs/MMBtu was $2,611 per ton.

NCS Unit 1 impacts Hercules Glades in Missouri and Wichita Mountains in Oklahoma an average of 0.65 dv and 0.46 dv, respectively. 20 Installing LNB with OFA offers an average improvement of 0.22 dv at Hercules Glades and 0.12 dv at Wichita Mountains. The addition of SCR would provide an additional 0.17 dv of improvement at Hercules Glades, 21 but because of the high incremental cost of $8,203 per ton and the level of visibility improvement, it was not chosen as BART. Nebraska determined BART for NO X at NCS unit 1 to be LNB with OFA at a rate of 0.23 lbs/MMBtu. EPA agrees that the State's determination is reasonable given the relatively insignificant additional visibility improvement associated with SCR for the additional cost.

For SO 2 control at NCS, Nebraska evaluated both dry and wet FGD. Nebraska concluded that dry FGD (spray dryer absorber (SDA)) has lower capital and operating costs than wet FGD and can achieve a similar control efficiency; it thus focused its cost analysis on dry FGD. We note that Nebraska did not evaluate Dry Sorbent Injection (DSI) as a potential SO 2 control for NCS Unit 1. Since DSI can generally achieve the same control efficiency as FGD, we believe that the State has appropriately evaluated the level of controls in its analysis.

The costs per ton for dry FGD were reasonable both at a rate of 0.15 lbs/MMBtu ($1,759 per ton) and 0.10 lbs/MMBtu ($1,636 per ton). 22 The visibility improvement at Hercules Glades from dry FGD was 0.25 dv and 0.44 dv  23 , respectively. The visibility improvement of adding FGD at a rate of 0.15 lb/MMBtu to the LNB/OFA system required as BART for NO X is 0.25 dv. 24 Nebraska determined that the minimal visibility improvement from installation of FGD at NCS Unit 1 did not warrant the additional cost ($34,770,000 or $1,759 per ton); therefore, no SO 2 controls were proposed as BART for NCS Unit 1. EPA agrees that the State's determination is not unreasonable given the minimal additional visibility improvement.

Nebraska evaluated LNB with OFA and SCR for NO X control at GGS. In 2006, NPPD installed LNB and OFA at Unit 1, but since this was after the 2001-2003 baseline modeling period, it was still evaluated in the BART analysis. SNCR was determined to be technically infeasible due to high furnace exit temperatures. LNB with OFA (at a rate of 0.23 lbs/MMBtu) had a cost effectiveness of $198 per ton, and LNB with OFA and SCR (at a rate of 0.08 lbs/MMBtu) had a cost effectiveness of $2,297 per ton.

GGS affects six Class I areas greater than 0.5 dv on average: Badlands and Wind Cave in South Dakota; Wichita Mountains in Oklahoma; Rocky Mountain in Colorado; and Hercules Glades and Mingo in Missouri. GGS has a cumulative baseline impact on these six Class I areas of 8.86 dv.

LNB plus OFA offers an improvement at Badlands (the closest and most affected Class I area) of 0.66 dv, and 1.94 dv cumulatively. The addition of SCR offers an incremental improvement of 0.49 dv at Badlands, and 1.27 dv cumulatively. Nebraska concluded that based on the relatively low incremental visibility improvement of adding SCR to the LNB/OFA system for the additional cost ($5,445 incremental cost per ton), requiring SCR as BART was not warranted. NO X BART for GGS was determined to be the installation of LNB/OFA with an emission limitation of 0.23 lbs NO X /MMBtu, averaged across the two units. EPA agrees that the State's NO X BART determination for GGS is reasonable.

Nebraska evaluated wet and dry FGD and Dry Sorbent Injection (DSI) for SO 2 controls at GGS. All control options were evaluated at the presumptive rate of 0.15 lbs/MMBtu. The cost effectiveness for dry and wet FGD was nearly identical at $2,726 per ton and $2,724 per ton, respectively; the cost effectiveness of DSI was $2,058 per ton. All of these controls were determined by Nebraska to be reasonable on a cost per ton basis.

The visibility improvement from these controls operated at a rate of 0.15 lbs/MMBtu is significant: an average of 0.86 dv from DSI, and an average of 0.78 dv from FGD at Badlands. The cumulative improvement is even greater; FGD control would offer an improvement of 3.17 dv across the six Class I areas that GGS affects. Nebraska only provided visibility information for DSI at Badlands; therefore, the cumulative benefit of DSI is unknown.

Nebraska raises water use of wet and dry FGD as a significant non-air environmental impact. In its SIP, Nebraska presents a description of the over-appropriation of water resources in the western part of Nebraska, where GGS is located. The State described that this over-appropriation means that any new use of groundwater requires an offset in water consumption in the same area. To do this, NPPD would have to purchase the groundwater rights from surrounding landowners. Nebraska did not include the cost of obtaining these groundwater rights in the original BART analysis costs; however, in the narrative portion of the SIP, Nebraska describes both the costs of obtaining groundwater, and the loss of agricultural revenue due to taking land out of agricultural production. Nebraska concludes that the cost of obtaining water to operate wet FGD would add approximately 8.6 percent to the cost of controls. If these costs were added into the BART analysis, it would only increase the cost of control by $234 per ton. This brings the cost per ton to $2,958, which EPA believes is still a reasonable cost of control over both units. 25

In the SIP, Nebraska says that it used a $40,000,000/yr/dv threshold for determining what would be considered a reasonable investment for visibility improvement. They concluded that the costs of FGD control were reasonable on a cost per ton basis, but not on a dollars per deciview basis. Furthermore, Nebraska sees the water consumption of FGD controls as significant, and concludes that because of this unique situation, FGD controls are unreasonable for GGS Units 1 and 2. Nebraska concludes that BART is no SO 2 controls at GGS.

EPA disagrees with this conclusion. Using Nebraska's analysis, we agree that the cost per ton for FGD control is reasonable, and Nebraska's analysis shows significant visibility improvement, both at Badlands and on a cumulative basis. We also believe that Nebraska inappropriately ruled out DSI. Costs for the control are reasonable at $2,058 per ton and visibility improvement at Badlands is significant at 0.86 dv. Furthermore, DSI does not consume as much water as does FGD.

Finally, even though the cost of FGD controls is reasonable, we believe that the costs of FGD control are overestimated. This is described in detail in the TSD to this notice. EPA conducted an independent review of the cost information presented by Nebraska in its BART analysis for dry scrubbers. We found several errors and deviations from EPA's Cost Control Manual. 26 Cost categories in which we found significant errors or deviations include: Engineering Procurement and Construction; Bond Fees; Escalation; Contingency; Allowance for Funds Used During Construction; Capital Recovery Factor; and Operation and Maintenance.

We also found that Nebraska incorrectly calculated the SO 2 emission rates. On page 15 of its BART analysis, NPPD calculates its SO 2 emission baseline based on applying a 24-hour maximum emission rate of 0.749 lbs/MMBtu (2001-2003) to a maximum heat input of 15,175.5 MMBtu/hr, based on a 100 percent capacity factor. This results in an emissions baseline of 49,785 tons/year. 27 We believe this calculation does not appropriately represent GGS's SO 2 emission baseline, and is in fact too high. We have downloaded emissions data for GGS from our Clean Air Markets Web site, 28 and using the same emissions data from the three year averaging period of 2001-2003, we have calculated the three year average annual SO 2 emissions for units 1 and 2 of the GGS to be 0.565 lbs/MMBtu. 29 Reducing this to a controlled SO 2 emissions level of 0.15 lbs/MMBtu results in a control efficiency of approximately 73.5 percent. Applying this level of control to our adjusted GGS SO 2 emission baseline of 31,513 tons/year would reduce it to 8,366 tons/yr, resulting in a reduction of 23,147 tons of SO 2 annually. Applying the same approximate 80 percent level of reduction GGS assumes to our adjusted GGS SO 2 emission baseline of 31,513 tons/yr would reduce it to 6,311 tons/yr, resulting in a reduction of 25,202 tons of SO 2 annually. 30

However, dry scrubbers are capable of much greater control efficiencies than the 80 percent level that GGS assumes. 31 Therefore, for the purpose of calculating the cost effectiveness of dry scrubbers at the GGS, we also analyzed an SO 2 emission limit of 0.06 lbs/MMBtu, which results in a scrubber efficiency of approximately 89.4%. Applying this level of control to our adjusted GGS baseline of 31,513 tons/yr would reduce it to 3,347 tons/yr, resulting in a reduction of 28,166 tons of SO 2 annually. Table 2 summarizes EPA's adjustments to the Nebraska cost estimates for dry FGD control at GGS.

In summary, we believe that Nebraska's cost analysis includes errors and deviations from EPA's Cost Control Manual that results in the overestimation of the costs of FGD controls. In addition, the State did not do a full evaluation of the potential visibility benefits from levels of control that FGD is capable of achieving. We believe that the cost per ton of SO 2 controls ranging from $1,972 (our analysis) to $2,958 (Nebraska's analysis, plus water) is reasonable, and that the visibility benefits, whether considered just at Badlands or cumulatively, are significant. Finally, we believe that the State improperly rejected DSI as a potential BART control. Therefore, EPA proposes to disapprove Nebraska's BART determination for SO 2 controls at GGS.

Each source subject to BART must install and operate BART as expeditiously as practicable, but in no event later than five years after approval of the SIP revision; and include monitoring, recordkeeping and reporting requirements to ensure the BART limits are enforceable. Nebraska chose to incorporate BART requirements into PSD permits issued pursuant to Title 129 of the Nebraska Air Quality Regulations, Chapter 19. These limits will be incorporated into the facility's Title V permits after SIP approval. The permits require that the limits be met within five years of approval of Nebraska's regional haze SIP. The limits must be met on a thirty-day rolling average basis at all times, including periods of startup, shutdown and malfunction. The permits require the use of a NO X continuous emission monitoring system (CEMS) on each unit to demonstrate compliance with the BART NO X limits. Each CEMS is required to be operated and certified in accordance with 40 CFR Part 75. Recordkeeping and reporting is also required to be in accordance with 40 CFR Part 75. The PSD permits were submitted to the EPA for SIP approval as part of the State's RH SIP submittal. The PSD permits are enforceable by the State, and by EPA. We have reviewed these requirements and propose to find them adequate as they relate to the BART limits we are proposing to approve.

Table 3 is a summary of the BART determinations made by Nebraska and EPA's proposed action on those determinations.

As discussed above, we propose to disapprove Nebraska's BART determination for GGS. In addition, as discussed in section III.E. (Long Term Strategy), we propose to disapprove Nebraska's LTS insofar as it relied on the deficient BART determination for SO 2 at GGS. To address the deficiencies identified in these proposed disapprovals, we are also proposing a FIP.

The RHR allows for use of an alternative program in lieu of BART so long as the alternative program can be demonstrated to achieve greater reasonable progress toward the national visibility goal than would BART. On December 30, 2011, EPA proposed to find that the trading programs in the Transport Rule would achieve greater reasonable progress towards the national goal than would BART in the States in which the Transport Rule applies, including Nebraska. 76 FR 82219. EPA also proposed to revise the RHR to allow States to meet the requirements of an alternative program in lieu of BART by participation in the trading programs under the Transport Rule. EPA has not taken final action on that rule.

We are proposing a partial FIP, relying on the Transport Rule as an alternative to BART for SO 2 emissions from the GGS units. This limited FIP would satisfy the SO 2 BART requirement for these units and remedy the deficiency in Nebraska's LTS.

We noted that on December 30, 2011, the D.C. Circuit Court issued an order addressing the status of the Transport Rule and CAIR in response to motions filed by numerous parties seeking a stay of the Transport Rule pending judicial review. In that order, the D.C. Circuit Court stayed the Transport Rule pending the court's resolutions of the petitions for review of that rule in EME Homer Generation, L.P. v. EPA (No. 11-1302 and consolidated cases). The court also indicated that EPA is expected to continue to administer the CAIR in the interim until the court rules on the petitions for review of the Transport Rule. Under the Regional Haze Rule, an alternative to BART does not need to be fully implemented until 2018. As that is well after we expect the stay to be lifted, EPA believes it may still rely on the Transport Rule as an alternative to BART. Further, our proposed action would not impact the implementation of the Transport Rule or otherwise interfere with the stay.

EPA's visibility regulations direct States to coordinate their RAVI LTS and monitoring provisions with those for regional haze. Under EPA's RAVI regulations, the RAVI portion of a State SIP must address any integral vistas identified by FLMs pursuant to 40 CFR 51.304. An integral vista is defined in 40 CFR 51.301 as a “view perceived from within the mandatory Class I Federal area of a specific landmark or panorama located outside the boundary of the mandatory Class I Federal area.” Visibility in any Class I area includes any integral vista associated with that area. As mentioned previously, Nebraska does not have any Class I areas and the FLMs have not certified any integral vistas affected by emissions from Nebraska sources, therefore, the Nebraska regional haze SIP submittal is not required to address the two requirements regarding coordination of the regional haze SIP with the RAVI LTS and monitoring provisions.

Because it does not host a Class I area, Nebraska is not required to develop a monitoring strategy for measuring, characterizing, and reporting regional haze impairment that is representative of Class I areas within the State. However, the State is required to establish procedures by which monitoring data and other information is used to determine the contribution of emissions from within the State to regional haze impairment at Class I areas outside of the State.

Compliance with this requirement is met by participation in the IMPROVE network. 32 Nebraska installed one IMPROVE protocol sampler at Nebraska National Forest County near Halsey, Nebraska in the central part of the State, and another at Crescent Lake National Wild Life Refuge in the panhandle of the State. A third IMPROVE Protocol sampler in Nebraska is operated independently in Thurston County, by the Omaha Tribe of Nebraska; however, EPA notes that this monitor is no longer operating.

EPA believes the State's commitment to utilize data from these sites, or any other EPA-approved monitoring network location, to characterize and model conditions within the State and to compare visibility conditions in the State to visibility impairment at Class I areas hosted by other States, and proposes that Nebraska has satisfied the monitoring requirements of 40 CFR 51.308(d)(4).

States are required to develop a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area. The inventory must include emissions for a baseline year, emissions for the most recent year with available data, and future projected emissions.

As mentioned previously, Nebraska worked with CENRAP and its contractors to develop statewide emission inventories for 2002 and 2018. Detailed methodologies are documented in appendices 8.3 and 9.1 of the SIP. The 2018 emissions inventory was developed by projecting 2002 emissions and applying reductions expected from Federal and State regulations affecting the emissions of the visibility-impairing pollutants NO X , PM, SO 2 , and VOCs. The 2002 emissions were grown to year 2018 primarily using the Economic Growth Analysis System (EGAS6), MOBILE 6.2 vehicle emission modeling software, and the Integrated Planning Model (IPM) version 2.93 for EGUs. The 2018 emissions for EGUs were based on simulations of the IPM that took into the account the effects of CAIR on emissions.

At the time modeling was conducted, BART decisions had not been made by many States, including Oklahoma and Nebraska. Presumptive levels of BART control were assumed in projections of 2018 emissions. The 2018 Nebraska inventory was then updated to account for Nebraska's BART decisions, specifically, no SO 2 controls on the two BART-subject EGUs in the State.

EPA believes the 2002 and 2018 statewide emissions inventories and the State's method for developing the 2018 emissions inventory for Nebraska meets the requirements of the RHR. Nebraska has also committed to update inventory periodically, therefore, we propose that Nebraska has met the requirements of 40 CFR 51.308(d)(4)(v).

States are required to provide the FLMs an opportunity for consultation, in person and at least sixty days prior to holding any public hearing on the SIP (or its revision). Consultations should include the opportunity for the FLMs to discuss their assessment of impairment of visibility in any Class I area; and recommendations on the development of the RPG and on the development and implementation of strategies to address visibility impairment.

Nebraska provided several opportunities for the FLMs to comment on Nebraska's regional haze plan. Nebraska asserts that it sent the draft BART permits for NPPD and OPPD to the FLMs in mid-2008, and again prior to public notice. Nebraska provided the FLMs with a draft of the Nebraska regional haze SIP on November 16, 2010, and received formal comments from the National Park Service (NPS), the US Fish and Wildlife Service (USFWS), and the US Forest Service (USFS) in January 2011.

In developing any SIP (or plan revision), States must include a description of how it addressed any comments provided by the FLMs. The FLM comments and Nebraska's responses are provided in appendix 3 of the SIP, and are summarized in the TSD for this rulemaking.

The main FLM comments centered on concerns that the modeling done by the RPOs assumed a presumptive level of control on Nebraska BART sources, but Nebraska did not go on to require that level of control, and in fact, required no control for SO 2 .

The FLMs also commented that DSI should be evaluated for SO 2 control and SNCR for NO X control at NCS Unit 1; they disagree with Nebraska's decision to not require FGD and SCR, as both controls have a reasonable cost. They strongly disagree with the BART determinations for GGS, pointing out that the visibility impact of these units is significant at more than just the closest Class I area (Badlands), and question several aspects of the cost estimation, such as escalation, contingencies, allowance for funds during construction, overestimation of direct annual costs.

The USFWS did some interagency consultation regarding water availability as a reason not to require FGD controls. The USFWS Air Branch asked the USFWS's Nebraska Field Office to review Nebraska's draft regional haze SIP and comment on the merits of the arguments on water and endangered species protection. While the Nebraska Field Office agrees that Nebraska's arguments have some merit, they say that the information provided by Nebraska represents a worst-case scenario, and concludes that the water availability concerns do not automatically negate the opportunity to make improvements in air quality.

Finally, regional haze SIPs must provide procedures for continuing consultation between the State and FLMs on the implementation of 40 CFR 51.308, including development and review of SIP revisions and five-year progress reports, and on the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas. Nebraska has committed to continuing to coordinate and consult with the FLMs during the development of future progress reports and plan revisions, as well as during the implementation of programs having the potential to contribute to visibility impairment in the mandatory Class I Federal areas. We propose that Nebraska has satisfied the FLM consultation requirements of 40 CFR 51.308(i).

Nebraska acknowledged the requirement under 40 CFR 51.308(f)-(h) to submit periodic progress reports and regional haze SIP revisions, with the first report due by July 31, 2018, and revisions due every ten years thereafter. Nebraska committed to meeting this requirement.

Nebraska also acknowledged the requirement to submit periodic reports evaluating progress towards the reasonable progress goals established for each mandatory Class I area. Nebraska committed to complete the first five-year progress report by December 31, 2016. The report will evaluate the progress made towards the reasonable progress goal for each mandatory Class I area located outside Nebraska, which may be affected by emissions from within Nebraska. Using the findings of this first report, Nebraska committed to determining whether the adequacy of the plan is sufficient and taking appropriate action to revise the SIP as needed. We propose to find that Nebraska has satisfied the requirements to submit periodic SIP revisions and progress reports as required by 40 CFR 51.308(f)-(h).

We propose to partially approve and partially disapprove Nebraska's regional haze SIP submitted on July 13, 2011. We propose to disapprove the SO 2 BART determinations for Units 1 and 2 of GGS because they do not comply with our regulations and guidance. We are also proposing to disapprove Nebraska's long-term strategy insofar as it relied on the deficient SO 2 BART determination at GGS. We propose a FIP relying on the Transport Rule as an alternative to BART for SO 2 emissions from GGS to address these issues.

We propose to approve all other portions of the Nebraska RH SIP. We note that all controls required as part of Nebraska's BART determinations, not included as part of our proposed FIP, must be operational within five years from the effective date of our final rule.

This proposed action is not a “significant regulatory action” under the terms of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993), and is therefore not subject to review under the Executive Order.

This proposed action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, Under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., OMB must approve all “collections of information” by EPA. The Act defines “collection of information” as a requirement for “answers to * * * identical reporting or recordkeeping requirements imposed on ten or more persons * * *.” 44 U.S.C. 3502(3)(A). The Paperwork Reduction Act does not apply to this action.

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

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

After considering the economic impacts of this proposed action on small entities, I certify that this proposed action will not have a significant economic impact on a substantial number of small entities. The proposed partial approval of the SIP, if finalized, merely approves State law as meeting Federal requirements and imposes no additional requirements beyond those imposed by State law. Moreover, due to the nature of the Federal-State relationship under the CAA, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of State action. The CAA forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

Under sections 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more (adjusted to inflation). Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the approval action proposed does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action proposes to approve pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely approves State rules implementing a Federal standard, and does not impose any new mandates on State or local governments. Thus, Executive Order 13132 does not apply to this action. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicits comment on this proposed rule from State and local officials.

Executive Order 13175 (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This proposed rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments. Thus, Executive Order 13175 does not apply to this rule. EPA specifically solicits additional comment on this proposed rule from tribal officials.

Executive Order 13045 (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be economically significant as defined under Executive Order 12866; and (2) concerns an environmental health or safety risk that we have reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.

This action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical. The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

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

We have determined that this proposed rule, if finalized, will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it proposes to approve State-adopted emission limits for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. This proposed rule does not impose any new mandates, because EGUs in Nebraska are subject to the requirements of the Transport Rule independently of this proposed action. See 76 FR 82219, for an analysis of the implications of Executive Order 12898 in relation to EPA's proposed rule, “Regional Haze: Revisions to Provisions Governing Alternatives to Source-Specific Best Available Retrofit Technology (BART) Determinations, Limited SIP Disapprovals, and Federal Implementation Plans” (December 30, 2011).

Title 40, chapter I, of the Code of Federal Regulations is proposed to be amended as follows:

This is a synopsis of the Commission's Further Notice of Proposed Rulemaking (FNPRM) in WC Docket Nos. 11-42, 03-109, 12-23, and CC Docket No. 96-45; FCC 12-11, adopted January 31, 2012 and released February 6, 2012. There was also a companion document released with this item. The complete text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is also available on the Commission's Web site at http://www.fcc.gov.

Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.

Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

1. In this Order, we comprehensively reform and begin to modernize the Universal Service Fund's Lifeline program (Lifeline or the program). Building on recommendations from the Federal-State Joint Board on Universal Service (Joint Board), proposals in the National Broadband Plan, input from the Government Accountability Office (GAO), and comments received in response to the Commission's March Notice of Proposed Rulemaking, the reforms adopted in this Order substantially strengthen protections against waste, fraud, and abuse; improve program administration and accountability; improve enrollment and consumer disclosures; initiate modernization of the program for broadband; and constrain the growth of the program in order to reduce the burden on all who contribute to the Universal Service Fund (USF or the Fund). We take these significant actions, while ensuring that eligible low-income consumers who do not have the means to pay for telephone service can maintain their current voice service through the Lifeline program and those who are not currently connected to the network will have the opportunity to benefit from the numerous opportunities and security that telephone service affords.

2. This Order is another step in the Commission's ongoing efforts to overhaul all USF programs to promote the availability of modern networks and the capability of all American consumers to access and use those networks. Consistent with previous efforts, we act here to eliminate waste and inefficiency, increase accountability, and transition the Fund from supporting standalone telephone service to broadband. In June 2011, the Commission adopted the Duplicative Program Payments Order, 76 FR 38040, June 29, 2011, which made clear that an eligible consumer may only receive one Lifeline-supported service, established procedures to detect and de-enroll subscribers receiving duplicative Lifeline-supported services, and directed the Universal Service Administrative Company (USAC) to implement a process to detect and eliminate duplicative Lifeline support—a process now completed in 12 states and expanding to other states in the near future. Building on those efforts, the unprecedented reforms adopted in today's Order could save the Fund up to an estimated $2 billion over the next three years, keeping money in the pockets of American consumers that otherwise would have been wasted on duplicative benefits, subsidies for ineligible consumers, or fraudulent misuse of Lifeline funds.

3. These savings will reduce growth in the Fund, while providing telephone service to consumers who remain disconnected from the voice networks of the twentieth century. Moreover, by using a fraction of the savings from eliminating waste and abuse in the program to create a broadband pilot program, we explore how Lifeline can best be used to help low-income consumers access the networks of the twenty-first century by closing the broadband adoption gap. This Order complements the recent USF/ICC Transformation Order, 76 FR 76623, December 8, 2011, which reoriented intercarrier compensation and the high-cost fund toward increasing the availability of broadband networks, as well as the recently launched “Connect to Compete” private-sector initiative to increase access to affordable broadband service for low-income consumers.

4. To make the program more accountable, the Order establishes clear goals and measures and establishes national eligibility criteria to allow low-income consumers to qualify for Lifeline based on either income or participation in certain government benefit programs. The Order adopts rules for Lifeline enrollment, including enhanced initial and annual certification requirements, and confirms the program's one-per-household requirement. The Order simplifies Lifeline reimbursement and makes it more transparent. The Commission adopts a number of reforms to eliminate waste, fraud and abuse in the program, including creating a National Lifeline Accountability Database to prevent multiple carriers from receiving support for the same subscribers; phasing out toll limitation service support; eliminating Link Up support except for recipients on Tribal lands that are served by eligible telecommunications carriers (ETCs) that participate in the high-cost program; reducing the number of ineligible subscribers in the program; and imposing independent audit requirements on carriers receiving more than $5 million in annual support. These reforms are estimated to save the Fund up to $2 billion over the next three years. As part of these reforms, we establish a savings target of $200 million in 2012 versus the program's status quo path in the absence of reform, create a mechanism for ensuring that target is met, and put the Commission in a position to determine the appropriate budget for Lifeline in early 2013 after monitoring the impact of today's fundamental overhaul of the program and addressing key issues in the FNPRM, including the appropriate monthly per-line support for the program. Using savings from the reforms, the Order establishes a Broadband Adoption Pilot Program to test and determine how Lifeline can best be used to increase broadband adoption among Lifeline-eligible consumers. We also establish an interim base of uniform support amount of $9.25 per month for non-Tribal subscribers to simplify program administration.

5. We conclude that establishing a fully automated means for verifying consumers' initial and ongoing Lifeline eligibility from governmental data sources would both improve the accuracy of eligibility determinations and ensure that only eligible consumers receive Lifeline benefits, and reduce burdens on consumers as well as ETCs. We conclude that it is important to speed-up adoption of a widespread, automated means of verifying program eligibility. We therefore direct the Bureau and USAC to take all necessary actions so that, as soon as possible and no later than the end of 2013, there will be an automated menas to determine Lifeline eligibility for, at a minimum, the three most common programs through which consumers qualify for Lifeline. To ensure that the Commission has sufficient information to implement such a solution, we seek focused comment on issues in a FNPRM. The Commission directs the Bureau to reach out to the relevant federal agencies (e.g., HHS and Agriculture) and their state counterparts to determine whether and to what extent program eligibility information can be shared among agencies.

6. To support broadband adoption, the FNPRM seeks comment on dedicating a certain amount of USF funding for four years to support formal digital literacy training for consumers at libraries and schools across the United States. The Commission also seeks comment on its statutory authority to use USF funds for this purpose.

7. The FNPRM proposes that only ETCs who provide Lifeline directly to subscribers will be eligible to receive reimbursement from the Fund. Moreover, the FNPRM proposes that the entity with the relationship with the end-user be required to populate the duplicates database with the necessary subscriber information. As an alternative to the foregoing proposals, the FNPRM proposes forbearing from the incumbent LECs' resale obligation under section 251(c)(4).

8. The FNPRM seeks comment on number of issues, including whether to continue with a flat-rate of reimbursement, and if, so, whether the current interim $9.25 per line support amount should be made permanent. The FNRPM also seeks comment on and information for a demand estimation study to determine the effect of different support amounts on demand for the program.

9. The FNPRM seeks comment on whether to adopt a rule permitting eligible residents of Tribal lands to apply their allotted Tribal Lands discount amount to more than one supported service per household ( e.g., a household would be permitted to “split” their Lifeline discount between a wireline and a mobile phone service or between two mobile services and receive a discount off of the cost of each service). The FNPRM seeks comment on how such a rule could be administered, including ways to prevent waste, fraud, and abuse if this rule is adopted. In addition, the FNPRM seeks comment on whether the Link Up program for residents of Tribal lands is currently implemented effectively, or whether the program should be altered or eliminated given the recent reforms in high-cost support, including establishment of the Tribal Mobility Fund.

10. The FNPRM seeks comment on whether to include the Supplemental Nutrition Assistance Program for Women, Infants and Children, administered by the Department of Agriculture, as a program conferring Lifeline eligibility upon participants.

11. The FNPRM seeks comment on measures that would enable veterans who lack any income (and therefore cannot document whether their income is below the income-based program threshold) but are not otherwise enrolled in a qualifying program, to demonstrate eligibility for Lifeline. The FNPRM asks whether additional measures should be implemented to ensure program access while limiting waste, fraud and abuse in situations where an eligible veteran has no documentation of income.

12. The FNPRM seeks comment on whether to require ETCs to permit subscribers to apply their Lifeline discount to any bundle that includes a voice component. The FNPRM also seeks comment on whether there should be any limitations on this requirement ( e.g., should ETCs be obligated to offer a Lifeline discount on all of their service plans, including premium plans and packages that contain services other than voice and broadband, such as video).

13. The FNPRM seeks further comment on whether the Commission should consider any additional requirements for a carrer to receive support if that carrier does not own network assets or meet the requirements of section 214(e)(1)(A). Specifically, the FNPRM seeks comment on whether the Commission should amend its rules to clarify the term “combination of its own facilities” with respect to the facilities a carrier must own and use to provide USF supported services. The FNPRM also asks for comment on whether there should be a minimum combination of facilities that the carrier should own and use in order to qualify as a facilities-based ETC under section 254(e)(1)(A).

14. The FNPRM seeks comment on whether incumbent LECs can choose whether to participate in the Lifeline program. In addition, the FNPRM seeks comment on whether the program should move to a voucher-based system.

15. The FNRPM proposes to amend the current three year record retention requirement to a ten year requirement.

16. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.

Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington, DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

17. The Further Notice of Proposed Rulemaking ( FNPRM ) contains proposed new information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The proposed requirements will be submitted to the Office of Management and Budget (OMB). The Commission, as part of its continuing effort to reduce paperwork burdens, invites the OMB, general public, and other Federal agencies to comment on the information collection requirements contained in this document, as required by PRA. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, we seek specific comment on how we might “further reduce the information collection burden for small business concerns with fewer than 25 employees.

18. As Required by the Regulatory Flexibility Act if 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this Further Notice of Proposed Rulemaking ( FNPRM ). Written comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the FNPRM. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register .

19. The FNPRM seeks comment on a variety of issues relating to the comprehensive reform and modernization of the Universal Service Fund's Lifeline program. As discussed in the Order accompanying the FNPRM, the Commission believes that such reform will strengthen protections against waste, fraud, and abuse; improve program administration and accountability; improve enrollment and consumer disclosures; modernize the program for broadband; and constrain the growth of the program. In proposing these reforms, the Commission seeks comment on various reporting, recordkeeping, and other compliance requirements that may apply to all carriers, including small entities. We seek comment on any costs and burdens on small entities associated with the proposed rules, including data quantifying the extent of those costs or burdens.

20. This FNPRM is one of a series of rulemaking proceedings designed to implement the National Broadband Plan's (NBP) vision of improving and modernizing the universal service programs. In this FNPRM, we propose and seek comment on comprehensive reforms to the universal service low-income support mechanism.

21. Specifically, we propose and seek comment on the following eight reforms and modernizations that may be implemented in funding year 2012 (July 1, 2012-June 30, 2013).

22. In the FNPRM, we recommend the creation of a centralized database for online certification and verification on Lifeline consumers' eligibility to participate in the low-income program. In the FNPRM, we seek comment on the methods of creating the database including whether, how, and with what information ETCs should populate the eligibility database.

23. Additionally, we seek comment on establishing a digital literacy training program, and specifically, we seek comment on what entities are best suited to provide such training ( i.e., schools and libraries), including ETCs.

24. As part of the effort to reduce waste, fraud, and abuse in the program, the Commission proposes to allow only ETCs with a direct relationship with the end-user Lifeline subscriber to seek reimbursement from the Fund. In addition we propose that the ETC with the direct relationship with the end-user be responsible for populating the duplicates database. How would this proposal affect entities economically? We seek comment on the matter. We seek comment on procedures that should be implemented to ensure that Lifeline wholesalers are not seeking Fund reimbursement for resold Lifeline offerings including self-certification, record keeping, and audit requirements. We also seek comment on which ETC, the wholesaler or the reseller, should be responsible for complying with the other certification and verification requirements in the Order. Compliance with the proposed rule would require current Lifeline resellers who are not designated ETCs to either (1) obtain ETC designation or (2) purchase Lifeline for resale at wholesale rates and be prevented from seeking Fund reimbursement. As an alternative, we seek comment on whether the Commission should forbear, on its own motion, on incumbent LECs' obligation to resell Lifeline services. In addition, we seek comment on how, if at all, incumbent LECs would be required to amend tariffs to separate the amount of the Lifeline subsidy from the wholesale price of the underlying Lifeline service being resold. We seek further comment on how the proposed rule would impact existing contractual relationships between incumbent LECs and Lifeline resellers.

25. In the Order, we establish an interim amount of $9.25 per month for Lifeline reimbursement. In the FNPRM, we seek comment on whether the interim reimbursement amount of $9.25 is appropriate and should be made permanent. We also seek comment on how to best determine a flat rate of reimbursement. In furtherance of that, we seek comment on the best method of obtaining the necessary information to perform a demand estimation study. Finally, we seek comment on whether the discount should be reduced over time as voice becomes a secondary application compared to broadband service.

26. In the FNPRM, we seek comment on whether to adopt a rule permitting eligible residents of Tribal lands to apply their allotted Tribal Lands discount amount to more than one supported service per household ( e.g., a household would be permitted to “split” their Lifeline discount between a wireline and a mobile phone service and receive a discount off of the cost of each service). The Commission seeks comment on how such a rule could be administered and how to prevent waste, fraud, and abuse if this rule is adopted.

27. The Commission seeks comment in the FNPRM on whether to include three additional programs in its eligibility criteria: the Supplemental Nutrition Assistance Program for Women, Infants and Children, administered by the Department of Agriculture; the Veterans Benefits Administration-Veterans Health Administration Special Outreach and Benefits Assistance program; and the Healthcare for Homeless Veterans program.

28. The Commission seeks comment regarding mandatory application of the Lifeline discount to bundled service offerings. Specifically, we seek comment on whether to require ETCs to permit subscribers to apply their Lifeline discount to any bundle that includes a voice component and whether there should be any limitations on this requirement. We ask whether there should be limitations on this potential requirement, should such a rule be adopted. Should ETCs be obligated to offer a Lifeline discount on all of their service plans, including premium plans and packages that contain services other than voice and broadband? We also seek comment on various implementation issues regarding any such rule (i.e., would Lifeline subscribers face loss of voice service based on their inability to pay the entirety of a bundled service bill; can carriers limit Lifeline consumers' use of premium services).

29. Finally, we propose to update our rules to extend the retention period for Lifeline documentation, including subscriber-specific eligibility documentation, from three years to at least ten years, because the current requirements are inadequate for purposes of litigation under the False Claims Act.

30. The Further Notice of Proposed Rulemaking, including publication of proposed rules, is authorized under sections 1, 2, 4(i)-(j), 201(b), 254, 257, 303(r), and 503 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 254, 257, 303(r), 503, and 1302.

31. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). Nationwide, there are a total of approximately 29.6 million small businesses, according to the SBA. A “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 2002, there were approximately 1.6 million small organizations. The term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” Census Bureau data for 2002 indicate that there were 87,525 local governmental jurisdictions in the United States. We estimate that, of this total, 84,377 entities were “small governmental jurisdictions.” Thus, we estimate that most governmental jurisdictions are small.

32. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1,000 or more. According to Commission data, 1,307 carriers reported that they were incumbent local exchange service providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees. Consequently, the Commission estimates that most providers of local exchange service are small entities that may be affected by the rules and policies proposed in the Notice. Thus under this category and the associated small business size standard, the majority of these incumbent local exchange service providers can be considered small providers.

33. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers can be considered small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. In addition, 72 carriers have reported that they are Other Local Service Providers. Seventy of which have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules adopted pursuant to the Notice.

34. Interexchange Carriers. Neither the Commission nor the SBA has developed a small business size standard specifically for providers of interexchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Interexchange carriers can be considered small entities. According to Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of these 359 companies, an estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 employees. Consequently, the Commission estimates that the majority of interexchange service providers are small entities that may be affected by rules adopted pursuant to the Notice.

35. Operator Service Providers (OSPs). Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede 2002 Census data, show that there were 3,188 firms in this category that operated for the entire year. Of the total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these interexchange carriers can be considered small entities. According to Commission data, 33 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer employees and 2 have more than 1,500 employees. Consequently, the Commission estimates that the majority of OSPs are small entities that may be affected by our proposed action.

36. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000. Thus under this category and the associated small business size standard, the majority of these local resellers can be considered small entities. According to Commission data, 213 carriers have reported that they are engaged in the provision of local resale services. Of these, an estimated 211 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of local resellers are small entities that may be affected by rules adopted pursuant to the Notice.

37. Toll Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000. Thus under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of these, an estimated 857 have 1,500 or fewer employees and 24 have more than 1,500 employees. Consequently, the Commission estimates that the majority of toll resellers are small entities that may be affected by our action.

38. Pre-paid Calling Card Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for pre-paid calling card providers. The appropriate size standard under SBA rules is for the category Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2007 show that 1,523 firms provided resale services during that year. Of that number, 1,522 operated with fewer than 1,000 employees and one operated with more than 1,000. Thus under this category and the associated small business size standard, the majority of these pre-paid calling card providers can be considered small entities. According to Commission data, 193 carriers have reported that they are engaged in the provision of pre-paid calling cards. Of these, an estimated all 193 have 1,500 or fewer employees and none have more than 1,500 employees. Consequently, the Commission estimates that the majority of pre-paid calling card providers are small entities that may be affected by rules adopted pursuant to the Notice.

39. Below, for those services subject to auctions, the Commission notes that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.

40. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category. Prior to that time, such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless Telecommunications.” Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For the category of Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that operated that year. Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. Similarly, according to Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service (PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Consequently, the Commission estimates that approximately half or more of these firms can be considered small. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

41. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions. The Commission auctioned geographic area licenses in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25, 1997, seven bidders won 31 licenses that qualified as very small business entities, and one bidder won one license that qualified as a small business entity.

42. Satellite Telecommunications Providers. Two economic census categories address the satellite industry. The first category has a small business size standard of $15 million or less in average annual receipts, under SBA rules. The second has a size standard of $25 million or less in annual receipts.

43. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.” Census Bureau data for 2007 show that 512 Satellite Telecommunications firms that operated for that entire year. Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to $24,999,999. Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.

44. The second category, i.e. “All Other Telecommunications” comprises “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.” For this category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year. Of this total, 2,347 firms had annual receipts of under $25 million and 12 firms had annual receipts of $25 million to $49,999,999. Consequently, the Commission estimates that the majority of All Other Telecommunications firms are small entities that might be affected by our action.

45. Common Carrier Paging. The SBA considers paging to be a wireless telecommunications service and classifies it under the industry classification Wireless Telecommunications Carriers (except satellite). Under that classification, the applicable size standard is that a business is small if it has 1,500 or fewer employees. For the general category of Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that operated that year. Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small. The 2007 census also contains data for the specific category of “Paging” “that is classified under the seven-number North American Industry Classification System (NAICS) code 5172101. According to Commission data, 291 carriers have reported that they are engaged in Paging or Messaging Service. Of these, an estimated 289 have 1,500 or fewer employees, and 2 have more than 1,500 employees. Consequently, the Commission estimates that the majority of paging providers are small entities that may be affected by our action. In addition, in the Paging Third Report and Order, the Commission developed a small business size standard for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a “very small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these small business size standards. An auction of Metropolitan Economic Area licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies claiming small business status won.

46. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to the 2008 Trends Report, 434 carriers reported that they were engaged in wireless telephony. Of these, an estimated 222 have 1,500 or fewer employees and 212 have more than 1,500 employees. We have estimated that 222 of these are small under the SBA small business size standard.

47. The 2007 Economic Census places these firms, whose services might include voice over Internet protocol (VoIP), in either of two categories, depending on whether the service is provided over the provider's own telecommunications facilities ( e.g., cable and DSL ISPs), or over client-supplied telecommunications connections ( e.g., dial-up ISPs). The former are within the category of Wired Telecommunications Carriers, which has an SBA small business size standard of 1,500 or fewer employees. The latter are within the category of All Other Telecommunications, which has a size standard of annual receipts of $25 million or less. The most current Census Bureau data for all such firms, however, are the 2002 data for the previous census category called Internet Service Providers. That category had a small business size standard of $21 million or less in annual receipts, which was revised in late 2005 to $23 million. The 2002 data show that there were 2,529 such firms that operated for the entire year. Of those, 2,437 firms had annual receipts of under $10 million, and an additional 47 firms had receipts of between $10 million and $24,999,999. Consequently, we estimate that the majority of ISP firms are small entities.

48. Tribal Lands Lifeline Support. If we permit eligible residents of Tribal lands to apply their allotted Tribal Lands discount amount to more than one supported service per household, postpaid carriers may need to update their billing systems to reflect that more than one supported service may be received per Tribal household. Additionally, several carriers currently allow consumers to apply their Lifeline discount to the purchase of family shared calling plans, and, if such a rule were adopted, a similar billing functionality could be used by postpaid carriers serving eligible residents of Tribal lands. The Commission is continuing to evaluate the potential costs and benefits of this proposal and will take the steps necessary to mitigate the costs to small businesses.

49. Mandatory Application of Lifeline Discount to Bundled Service Offerings. The FNPRM seeks comment on whether to require ETCs to permit subscribers to apply their Lifeline discount to any bundle that includes a voice component. The FNPRM also seeks comment on whether there should be any limitations on this requirement ( e.g., should ETCs be obligated to offer a Lifeline discount on all of their service plans, including premium plans and packages that contain services other than voice and broadband, such as video). While we do not anticipate that these proposals will have an impact on small businesses at this time, we recognize that small entities may incur costs due to a need to update their internal systems to comply with the rule.

50. Record Retention Requirements. The Commission proposes to amend § 54.417 of the Commission's rules to extend the retention period for Lifeline documentation, including subscriber-specific eligibility documentation, from three years to at least ten years. ETCs will continue to maintain documentation of consumer eligibility for at least ten years and for as long as the consumer receives Lifeline service from that ETC, even if that period extends beyond ten years. The amended recordkeeping requirement will continue to apply equally to all ETCs, all of whom are currently required to maintain Lifeline documentation, including subscriber-specific eligibility documentation, for at least three years.

51. Eligibility database. For the period prior to the implementation of a national eligibility database, in the FNPRM we consider the alternative of having third-party administrators, as opposed to the ETCs, be responsible for verifying Lifeline consumers' eligibility in the program. Accordingly, we seek comment on how to minimize or mitigate extra costs to the Fund caused by the selection of third-party administrators.

52. Limitations on the Resale of Lifeline-Supported Services. As part of the effort to reduce waste, fraud, and abuse in the program, the Commission proposes to allow only ETCs with a direct relationship with the end-user Lifeline subscriber to seek reimbursement from the Fund. To the extent that a reseller who is not an ETC is receiving support from the Fund, there could be an economic impact should this change be adopted, but the Commission believes that the need to protect the Fund from abuse outweighs any concerns with existing carriers raising concerns with the economic impact of the proposed rule. Furthermore, if there is an economic impact from this proposal, we seek comment on how to minimize the burdens of such a requirement on small entities. Accordingly, we seek comment on the potential economic impact of these requirements.

53. None.

54. It is further ordered that, pursuant to the authority contained in sections 1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, and 403 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152, 154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, 1302, and §§ 1.1 and 1.421 of the Commission's rules, 47 CFR 1.1, 1.421, this Further Notice of Proposed Rulemaking is adopted.

55. It is further ordered that, pursuant to applicable procedures set forth in §§ 1.415 and 1.419 of the Commission's Rules, 47 CFR 1.415, 1.419, interested parties may file comments on the Further Notice of Proposed Rulemaking April 2, 2012, and reply comments on or before May 1, 2012.

56. It is further ordered that the Commission shall send a copy of this Further Notice of Proposed Rulemaking to Congress and to the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

57. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 54 to read as follows: