Proposed Rules. Notice of proposed rulemaking (NPRM)

41,449 words·~188 min read·/register/2006/03/07/06-2139

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BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24072; Directorate Identifier 2006-NM-016-AD] RIN 2120-AA64 Airworthiness Directives; Empresa Brasileira de Aeronautica S.A. (EMBRAER) EMB-120( ) Airplane Models in Operation AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for all Empresa Brasileira de Aeronautica S.A. (EMBRAER) EMB-120( ) airplane models in operation. This proposed AD would require replacing the de-icing system ejector flow control valves with new, improved control valves having hermetically sealed switches; and rewiring applicable connectors. This proposed AD results from a fuel system review conducted by the manufacturer. We are proposing this AD to prevent a potential source of ignition near a fuel tank, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. DATES: We must receive comments on this proposed AD by April 6, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • Fax:

(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Empresa Brasileira de Aeronautica S.A. (EMBRAER), P.O. Box 343—CEP 12.225, Sao Jose dos Campos—SP, Brazil, for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Dan Rodina, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone

(425)227-2125; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2006-24072; Directorate Identifier 2006-NM-016-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* , or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion The FAA has examined the underlying safety issues involved in fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (67 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83). Among other actions, SFAR 88 requires certain type design ( *i.e.* , type certificate

(TC)and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews. In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: single failures, single failures in combination with another latent condition(s), and in-service failure experience. For all four criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action. We have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. The Departmento de Aviacao Civil (DAC), which is the airworthiness authority for Brazil, notified us that an unsafe condition may exist on all Empresa Brasileira de Aeronautica S.A. (EMBRAER) EMB-120( ) airplane models in operation. The DAC advises that a fuel system review conducted by the manufacturer revealed that unsealed switches are present in the de-icing system control valves. This condition, if not corrected, could result in a potential source of ignition near a fuel tank, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. Relevant Service Information EMBRAER has issued Service Bulletin 120-30-0034, Revision 01, dated September 22, 2004. The service bulletin describes procedures for replacing the de-icing system ejector flow control valves with new, improved control valves having hermetically sealed switches; and rewiring applicable connectors. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The DAC mandated the service information and issued Brazilian airworthiness directive 2005-12-02, dated January 19, 2006, to ensure the continued airworthiness of these airplanes in Brazil. FAA's Determination and Requirements of the Proposed AD These airplane models are manufactured in Brazil and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DAC has kept the FAA informed of the situation described above. We have examined the DAC's findings, evaluated all pertinent information, and determined that we need to issue an AD for airplanes of this type design that are certificated for operation in the United States. Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously. Costs of Compliance This proposed AD would affect about 180 airplanes of U.S. registry. The proposed actions would take about 8 work hours per airplane, at an average labor rate of $65 per work hour. Required parts would cost about $2,431 per airplane. Based on these figures, the estimated cost of the proposed AD for U.S. operators is $531,180, or $2,951 per airplane. Authority for This Rulemaking 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. Regulatory Findings We have 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 that the 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); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Empresa Brasileira de Aeronautica S.A. (EMBRAER):** Docket No. FAA-2006-24072; Directorate Identifier 2006-NM-016-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by April 6, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to all EMBRAER Model EMB-120( ) airplane models in operation, certificated in any category. Unsafe Condition

(d)This AD results from a fuel system review conducted by the manufacturer. We are issuing this AD to prevent a potential source of ignition near a fuel tank, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Valve Replacement

(f)Within 5,000 flight hours after the effective date of this AD, replace the de-icing system ejector flow control valves, part number (P/N) 3D2376-06, with new, improved flow control valves having hermetically sealed switches, P/N 3D2376-07; and rewire the applicable connectors; in accordance with the Accomplishment Instructions of EMBRAER Service Bulletin 120-30-0034, Revision 01, dated September 22, 2004. Previously Accomplished Actions

(g)Actions accomplished before the effective date of this AD in accordance with EMBRAER Service Bulletin 120-30-0034, dated October 30, 2003, are considered acceptable for compliance with the corresponding actions of this AD. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(i)Brazilian airworthiness directive 2005-12-02, dated January 19, 2006, also addresses the subject of this AD. Issued in Renton, Washington, on February 23, 2006. Michael J. Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-3216 Filed 3-6-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24084; Directorate Identifier 2006-NM-017-AD] RIN 2120-AA64 Airworthiness Directives; Raytheon Model Hawker 800XP Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for certain Raytheon Model Hawker 800XP airplanes. This proposed AD would require inspecting certain bus bars in the DA-A panel to ensure that the bus bars match the panel configuration and clearance is adequate between the bus bars and adjacent components, and performing corrective action if necessary. This proposed AD results from two reports of inadequate clearance between the bus bars in the DA-A panel. We are proposing this AD to prevent insufficient electrical isolation for the electrical bus configuration and inability of the flightcrew to isolate the bus bars in an emergency situation involving a dual generator failure, which could result in extra loads on the main ship batteries and consequent loss of power to the main essential bus. DATES: We must receive comments on this proposed AD by April 21, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • Fax:

(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Raytheon Aircraft Company, Department 62, P.O. Box 85, Wichita, Kansas, 67201-0085, for the service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Philip Petty, Aerospace Engineer, Electrical Systems and Avionics, ACE-119W, FAA, Wichita Aircraft Certification Office, 1801 Airport Road, room 100, Mid-Continent Airport, Wichita, Kansas 67209; telephone

(316)946-4139; fax

(316)946-4107. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2006-24084; Directorate Identifier 2006-NM-017-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* , or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We have received two reports of inadequate clearance between the bus bars in the DA-A panel on Raytheon Model Hawker 800XP airplanes. This condition, if not corrected, could result in insufficient electrical isolation for the electrical bus configuration and inability of the flightcrew to isolate the bus bars in an emergency situation involving a dual generator failure, which could result in extra loads on the main ship batteries and consequent loss of power to the main essential bus. Relevant Service Information We have reviewed Raytheon Service Bulletin SB 24-3745, Revision 1, dated September 2005. The service bulletin describes procedures for inspecting certain bus bars in the DA-A panel to ensure that the bus bars match the panel configuration and clearance is adequate between the bus bars and adjacent components, and performing corrective action if necessary. For any bus bar that does not match the panel configuration, or if inadequate clearance exists, the corrective action includes removing the applicable bus bar(s), straightening the bus bar(s) and lug(s) if necessary, and reconfiguring the bus bars to match the configuration shown in Figure 1 of the service bulletin. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed under Difference Between Proposed AD and Service Bulletin. Difference Between Proposed AD and Service Bulletin Although the Accomplishment Instructions of the service bulletin referenced in this proposed AD specify to submit certain information to the manufacturer, this proposed AD does not include that requirement. Clarification of Service Bulletin Note The service bulletin includes a note in the Accomplishment Instructions to inform operators to contact Raytheon “should any difficulty be encountered” in accomplishing the service bulletin. We have included Note 2 in this proposed AD to clarify that any deviation from the instructions provided in the service bulletin must be approved as an alternative method of compliance under paragraph (i)(1) of this proposed AD. Costs of Compliance There are about 164 airplanes of the affected design in the worldwide fleet. This proposed AD would affect about 123 airplanes of U.S. registry. The proposed inspection would take about 1 work hour per airplane, at an average labor rate of $65 per work hour. Based on these figures, the estimated cost of the proposed inspection for U.S. operators is $7,995, or $65 per airplane. Authority for This Rulemaking 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. Regulatory Findings We have 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 that the 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); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Raytheon Aircraft Company** : Docket No. FAA-2006-24084; Directorate Identifier 2006-NM-017-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by April 21, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to Raytheon Model Hawker 800XP airplanes, certificated in any category; serial numbers 258541, 258556, 258567 through 258609 inclusive, 258611 through 258628 inclusive, 258630 through 258684 inclusive, and 258686 through 258728 inclusive. Unsafe Condition

(d)This AD results from two reports of inadequate clearance between the bus bars in the DA-A panel. We are issuing this AD to prevent insufficient electrical isolation for the electrical bus configuration and inability of the flightcrew to isolate the bus bars in an emergency situation involving a dual generator failure, which could result in extra loads on the main ship batteries and consequent loss of power to the main essential bus. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Inspection/Corrective Action

(f)Within 30 days after the effective date of this AD: Do a detailed inspection of the four bus bars in the DA-A panel to ensure that the bus bars match the panel configuration and clearance is adequate between the bus bars and adjacent components, by doing all the actions in accordance with the Accomplishment Instructions of Raytheon Service Bulletin SB 24-3745, Revision 1, dated September 2005. Accomplish any applicable corrective action before further flight in accordance with the service bulletin. Note 1: For the purposes of this AD, a detailed inspection is defined as: “An intensive visual examination of a specific structural area, system, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at intensity deemed appropriate by the inspector. Inspection aids such as mirror, magnifying lenses, etc., may be used. Surface cleaning and elaborate access procedures may be required.” Note 2: A note in the Accomplishment Instructions of the Raytheon service bulletin instructs operators to contact Raytheon if any difficulty is encountered in accomplishing the service bulletin. However, any deviation from the instructions provided in the service bulletin must be approved as an alternative method of compliance

(AMOC)under paragraph (i)(1) of this AD. Inspections Accomplished According to Previous Issue of Service Bulletin

(g)Inspections accomplished before the effective date of this AD according to Raytheon Service Bulletin SB 24-3745, dated September 2005, are considered acceptable for compliance with the inspections specified in paragraph

(f)of this AD. No Reporting Requirement

(h)Although the Accomplishment Instructions of Raytheon Service Bulletin SB 24-3745, Revision 1, dated September 2005, specify submitting certain information to the manufacturer, this AD does not include that requirement. Alternative Methods of Compliance (AMOCs) (i)(1) The Manager, Wichita Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Issued in Renton, Washington, on February 27, 2006. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-3219 Filed 3-6-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24073; Directorate Identifier 2002-NM-272-AD] RIN 2120-AA64 Airworthiness Directives; Boeing Model 727-200 Series Airplanes Equipped With a No. 3 Cargo Door AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to supersede an existing airworthiness directive

(AD)that applies to certain Boeing Model 727-200 series airplanes. The existing AD currently requires initial and repetitive inspections for cracks in the forward frame of the No. 3 cargo door cutout; and corrective actions, if necessary. The existing AD also provides for an optional structural modification, which terminates the repetitive inspections. This proposed AD would reduce the compliance time for the initial inspections and add an optional method of inspection for both the initial and repetitive inspections. This proposed AD would also add initial and repetitive inspections of an additional area and repair if necessary. Additionally, this proposed AD would clarify that the previously optional structural modification is now required by other rulemaking. This proposed AD results from additional reports of cracking in the forward frame of the No. 3 cargo door cutout. We are proposing this AD to detect and correct cracking of the forward frame and fuselage skin of the No. 3 cargo door cutout, which could result in failure of the frame and skin, and consequent rapid decompression of the airplane. DATES: We must receive comments on this proposed AD by April 21, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • Fax:

(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this proposed AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. FOR FURTHER INFORMATION CONTACT: Daniel F. Kutz, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone

(425)917-6456; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Include the docket number “Docket No. FAA-2006-24073; Directorate Identifier 2002-NM-272-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or may visit *http://dms.dot.gov* . Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* , or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion On August 10, 1987, we issued AD 86-17-05 R1, amendment 39-5714 (52 FR 32534, August 28, 1987), for certain Boeing Model 727-200 series airplanes. AD 86-17-05 R1 requires initial and repetitive visual inspections of the forward frame of the No. 3 cargo door cutout for cracks, and repair of any crack detected. That AD also provides for optional structural modification of uncracked frames, which terminates the repetitive inspections. Actions Since Existing AD Was Issued Since we issued AD 86-17-05 R1, we have received reports indicating that the frame of the No. 3 cargo door cutout was severed on two Model 727-200 series airplanes. Both airplanes had accumulated approximately 24,500 total flight cycles ( *i.e.* , approximately 4,800 flight cycles fewer than the threshold specified in AD 86-17-05 R1 for the initial inspection of the frame.) We have determined that this damage was a result of fatigue cracking. Cracking of the forward frame of the No. 3 cargo door cutout, if not corrected, can result in failure of the forward frame of the No. 3 cargo door cutout and consequent rapid decompression of the airplane. Other Relevant Rulemaking Also since the issuance of AD 86-17-05 R1, we issued AD 90-06-09, amendment 39-6488 (55 FR 8370, March 7, 1990), for certain Boeing Model 727 series airplanes. That AD requires certain structural modifications including a frame reinforcement preventative modification of the forward frame of the No. 3 cargo door cutout. Boeing Alert Service Bulletin 727-53A0169, Revision 1, dated March 28, 1986; Revision 2, dated May 23, 1986; Revision 3, dated June 11, 1987; and Revision 4, dated January 21, 1989; are referenced in Boeing Document D6-54860, Revision C, dated December 11, 1989 (which is referenced as the appropriate source of service information for accomplishing the structural modifications in AD 90-06-09) as acceptable sources of service information for accomplishing the frame reinforcement preventative modification of the forward frame of the No. 3 cargo door cutout. Doing the frame reinforcement preventative modification of the forward frame of the No. 3 cargo door cutout, as required by paragraph A. of AD 90-06-09, terminates the repetitive inspections required by this proposed AD. Relevant Service Information We have reviewed Boeing Service Bulletins 727-53A0169, Revision 5, dated November 2, 1989; and Revision 6, dated September 28, 2002. The service bulletins describe procedures for an initial penetrant or visual inspection of the forward and aft sides of the forward frame of the No. 3 cargo door cutout, including a portion of the exterior skin, frame web, and inner flanges, to find cracking; and related investigative and corrective actions, if necessary. The related investigative actions include performing repetitive inspecting if no crack is found and following repair of any crack that is found. The corrective actions include contacting Boeing for repair instructions for any crack found in the skin and certain cracks found in the frame; replacing any cracked segment of the frame with a new or serviceable segment, or repairing any crack found in the frame and reporting certain information to Boeing following the repair; and inspections for repairs made previously. The service bulletin also describes procedures for a frame reinforcement preventative modification of the forward frame of the No. 3 cargo door cutout that would eliminate the need for the repetitive inspections. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD The unsafe condition described previously is likely to exist or develop on other airplanes of the same type design. We are proposing to supersede AD 86-17-05 R1. This proposed AD would continue to require initial and repetitive inspections to find cracking in the forward frame of the No. 3 cargo door cutout; and corrective actions, if necessary. This proposed AD would reduce the compliance time for the initial inspections and add an optional method of inspection for both the initial and repetitive inspections. This proposed AD would also add an initial and repetitive inspections of an additional inspection area, and repair if necessary. Additionally, this proposed AD would clarify that the previously optional structural modification is now required by other rulemaking. This proposed AD would also require you to use the service information described previously to perform these actions, except as discussed under “Differences Between the Proposed AD and Service Information.” Differences Between the Proposed AD and Service Information The service bulletin specifies that you may contact the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways: • Using a method that we approve; or • Using data that meet the certification basis of the airplane, and that have been approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization whom we have authorized to make those findings. Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002, only specifies a “visual inspection” (in addition to the penetrant inspection) for cracking of the forward frame of the No. 3 cargo door cutout. We have determined that the procedures for this inspection in the service bulletin should be described as a “detailed inspection.” We have included Note 1 in this AD to define this type of inspection. Additionally, the service bulletin describes procedures for accomplishing a structural modification that would terminate the repetitive inspections also described in that service bulletin. The service bulletin recommends accomplishing the structural modification prior to an airplane accumulating 60,000 total flight cycles. We have determined that this proposed AD should not contain a requirement for that terminating structural modification, because we have previously issued AD 90-06-09, which currently requires that structural modification for the affected airplanes. Although the Accomplishment Instructions of the service bulletin describe procedures for submitting inspection findings to Boeing, we are not requiring that action in this proposed AD. Clarification of Items Referenced in the Service Bulletin Paragraph 3.B.7.c. of the Accomplishment Instructions and Step 1 of Figure 2 of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002, refer to “Detail 1” and “Detail 2.” However, in the drawing portion of Figure 2, those details are labeled “Detail A” and Detail “B.” Therefore, when instructed to refer to Detail 1 of Figure 2, operators should refer to Detail A; when instructed to refer to Detail 2 of Figure 2, operators should refer to Detail B. We have learned that Boeing intends to publish an information notice to inform operators of this issue. Changes to Existing AD This proposed AD would retain the requirements of AD 86-17-05 R1 (including the requirements of AD 86-17-05). Since AD 86-17-05 R1 was issued, the AD format has been revised, and certain paragraphs have been rearranged. As a result, the corresponding paragraph identifiers have changed in this proposed AD, as listed in the following table: Revised Paragraph Identifiers Requirement in AD 86-17-05 R1 Corresponding requirement in this proposed AD Paragraph A Paragraph (f). Paragraph B Paragraph (g). Paragraph C Paragraph (h). Paragraph D Paragraph (n). We have removed all references to “later FAA-approved revisions of the applicable service bulletin” in the “Requirements of AD 86-17-05 R1 With Reduced Threshold and New Optional Inspection Method,” to be consistent with FAA policy. We cannot use the phrase, “or later FAA-approved revisions,” in ADs because it violates Office of the Federal Register regulations for approving materials that are incorporated by reference. However, in paragraph

(m)of this proposed AD, we are giving operators credit for actions done before the effective date of this AD in accordance with Revision 2, dated May 23, 1986; Revision 3, dated June 11, 1987; Revision 4, dated January 21, 1988; and Revision 5, dated November 2, 1989, of Boeing Service Bulletin 727-53A0169. We may decide to approve later revisions of the service bulletin as an alternative method of compliance with this proposed AD, as provided by paragraph

(p)of this proposed AD. We have also changed the term “landings” in the “Requirements of AD 86-17-05 R1 With Reduced Threshold and New Optional Inspection Method,” to “flight cycles” to be consistent with the new requirements of this proposed AD. This change has no effect on the compliance times specified in the “Requirements of AD 86-17-05 R1 With Reduced Threshold and New Optional Inspection Method.” Costs of Compliance There are about 269 airplanes of the affected design in the worldwide fleet. The new requirements of this AD add no additional economic burden. The current costs for U.S. operators to comply with this proposed AD are repeated for the convenience of affected operators, as follows: Estimated Costs Action Work hours Average labor rate per hour Parts cost Cost per airplane Number of U.S.-registered airplanes Fleet cost Inspections (required by AD 86-17-05 R1), per inspection cycle 6 $65 None $390, per inspection cycle 166 $64,740, per inspection cycle. Authority for This Rulemaking 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. Regulatory Findings We have 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 that the 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); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by removing amendment 39-5714 (52 FR 32534, August 28, 1987) and adding the following new airworthiness directive (AD): **Boeing:** Docket No. FAA-2006-24073; Directorate Identifier 2002-NM-272-AD. Comments Due Date

(a)The Federal Aviation Administration must receive comments on this AD action by April 21, 2006. Affected ADs

(b)This AD supersedes AD 86-17-05 R1. Applicability

(c)This AD applies to Boeing Model 727-200 series airplanes, certificated in any category, equipped with a No. 3 cargo door, as identified in Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986. Unsafe Condition

(d)This AD results from additional reports of cracking in the forward frame of the No. 3 cargo door cutout. We are issuing this AD to detect and correct cracking of the forward frame and fuselage skin of the No. 3 cargo door cutout, which could result in failure of the frame and consequent rapid decompression of the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Requirements of AD 86-17-05 RL With Reduced Threshold and New Optional Inspection Method Inspections

(f)At the earlier of the times specified in paragraphs (f)(1) and (f)(2) of this AD: Do a penetrant or detailed inspection of the forward frame of the No. 3 cargo door cutout for cracking, in accordance with paragraph C. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986. After the effective date of this AD, the penetrant or detailed inspection must be done in accordance with paragraph 3.B.3. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. If any cracking is found, repair in accordance with paragraph

(h)or

(l)of this AD, as applicable. Repeat the inspection at intervals not to exceed 2,200 flight cycles, until the preventative modification specified in paragraph

(n)of this AD is done.

(1)Within the next 300 flight cycles after September 3, 1987 (the effective date of AD 86-17-05 R1), or prior to accumulating 29,000 total flight cycles, whichever occurs later, unless accomplished within the last 1,900 flight cycles.

(2)Prior to accumulating 18,000 total flight cycles, or within 2,200 flight cycles after the effective date of this AD, whichever occurs later.

(g)At the earlier of the times specified in paragraphs (g)(1) and (g)(2) of this AD: Do a detailed inspection of the forward frame of the No. 3 cargo door cutout for cracking, in accordance with paragraphs D. and E. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986. After the effective date of this AD, the detailed inspection must be done in accordance with paragraphs 3.B.4. and 3.B.5. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. If any cracking is found, repair in accordance with paragraph

(h)or

(l)of this AD, as applicable. Repeat the inspection at intervals not to exceed 2,200 flight cycles, until the preventative modification specified in paragraph

(n)of this AD is done.

(1)Within the next 300 flight cycles after September 3, 1987, or prior to accumulating 35,000 total flight cycles, whichever occurs later, unless accomplished within the last 1,900 flight cycles.

(2)Prior to accumulating 18,000 total flight cycles, or within 2,200 flight cycles after the effective date of this AD, whichever occurs later. Repair

(h)Before further flight, repair any crack in the forward frame of the No. 3 cargo door cutout found before the effective date of this AD during any inspection required by paragraph

(f)or

(g)of this AD, in accordance with paragraph G. of the Accomplishment Instructions in Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986. Repeat the inspections specified in paragraphs

(f)and

(g)of this AD at intervals not to exceed 2,200 flight cycles, for all areas of the forward frame not covered by the repair, in accordance with the Accomplishment Instructions of paragraphs C., D., and E. of Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986. New Requirements of This AD Inspection of Repairs of the Frame Done Before the Effective Date of the AD

(i)For any repair to the forward frame of the No. 3 cargo door cutout done, as required by paragraph

(h)of this AD, before the effective date of this AD: Within 18,000 flight cycles following the repair, or 2,200 flight cycles after the effective date of this AD, whichever occurs later, do a detailed inspection of the repair for cracking in accordance with the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. Thereafter, repeat the inspection at intervals not to exceed 2,200 flight cycles, until the preventative modification specified in paragraph

(n)of this AD is done. Note 1: For the purposes of this AD, a detailed inspection is: “An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirror, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.” New Inspections of Skin Surrounding the Frame

(j)Prior to the accumulation of 18,000 total flight cycles, or within 2,200 flight cycles after the effective date of this AD, whichever occurs later: Do a penetrant or detailed inspection for cracking of the fuselage skin of the No. 3 cargo door cutout between stringers S-24 and S-27, in accordance with paragraph 3.B.3. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. Repeat the inspection at intervals not to exceed 2,200 flight cycles, until the preventative modification specified in paragraph

(n)of this AD is done. Repair of Cracked Skin

(k)If any crack is found in the fuselage skin during any inspection required by paragraph

(j)of this AD: Before further flight, repair the crack using a method approved in accordance with the procedures specified in paragraph

(p)of this AD. Repair of Cracked Frames and Post-Repair Inspections

(l)If, after the effective date of this AD, any crack is found in the forward frame of the No. 3 cargo door cutout during any inspection required by paragraph (f), (g), or

(i)of this AD: Before further flight, do the actions specified in paragraph (l)(1), (l)(2), or (l)(3) of this AD, as applicable. Inspect the repair within 18,000 flight cycles following the repair, in accordance with paragraphs 3.B.4. and 3.B.5. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. Thereafter, repeat the inspections at intervals not to exceed 2,200 flight cycles, until the preventative modification specified in paragraph

(n)of this AD is done.

(1)If cracks have not severed the inner flange, do an interim repair using a method approved in accordance with the procedures specified in paragraph

(p)of this AD.

(2)Repair the crack in accordance with paragraph 3.B.7.b. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002.

(3)Replace the cracked segment of the frame with a new or serviceable component and install the frame reinforcement preventative modification, in accordance with paragraph 3.B.7.c. of the Accomplishment Instructions of Boeing Service Bulletin 727-53A0169, Revision 6, dated September 28, 2002. This action terminates the requirements of this AD. Repairs Done According to Previous Issues of the Service Bulletin

(m)Inspections and repairs done before the effective date of this AD in accordance with Boeing Service Bulletin 727-53A0169, Revision 2, dated May 23, 1986; Revision 3, dated June 11, 1987; Revision 4, dated January 21, 1988; and Revision 5, dated November 2, 1989, are acceptable for compliance with the corresponding requirements of paragraphs (h), (k), and

(l)of this AD, as applicable. Terminating Modification Required by AD 90-06-09

(n)At the same time as the applicable inspections provided in paragraphs (f), (g), (i), and

(j)of this AD are accomplished, doing the frame reinforcement preventative modification required by paragraph A. of AD 90-06-09 or the frame reinforcement preventative modification specified in Figure 2 of Boeing Service Bulletins 727-53A0169, Revision 5, dated November 2, 1989; and Revision 6, dated September 28, 2002; terminates the requirements of this AD. Paragraph A. of AD 90-06-09 references Boeing Document D6-54860, Revision C, dated December 11, 1989, “Aging Airplane Structural Modification Program—Model 727” as the appropriate source of service information for accomplishing the frame reinforcement preventative modification (along with numerous other structural modifications required by paragraph A. of AD 90-06-09). Information Submission

(o)Although the service bulletins referenced in this AD specify to submit certain information to the manufacturer, this AD does not include that requirement. Alternative Methods of Compliance (AMOCs)

(1)The Manager, Seattle ACO, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(3)An AMOC that provides an acceptable level of safety may be used for any repair required by this AD, if it is approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization who has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

(4)An AMOC approved previously in accordance with AD 86-17-05 R1, is approved as an AMOC with the corresponding requirements and provisions of this AD. Issued in Renton, Washington, on February 23, 2006. Michael J. Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-3221 Filed 3-6-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24075; Directorate Identifier 2005-NM-235-AD] RIN 2120-AA64 Airworthiness Directives; Saab Model SAAB-Fairchild SF340A (SAAB/SF340A) and SAAB 340B Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for certain Saab Model SAAB-Fairchild SF340A (SAAB/SF340A) and SAAB 340B airplanes. This proposed AD would require a one-time inspection to see if a faulty uplock axle for the shock strut of the main landing gear

(MLG)is installed, and replacing the uplock axle with a new uplock axle if necessary. This proposed AD results from a report of a cracked uplock axle caused by hydrogen embrittlement during the manufacturing process. We are proposing this AD to prevent failure of the uplock mechanism, which, combined with a loss of hydraulic pressure, could result in an uncommanded extension of the MLG. DATES: We must receive comments on this proposed AD by April 6, 2006. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • DOT Docket Web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • Government-wide rulemaking Web site: Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • Mail: Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • Fax:

(202)493-2251. • Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Saab Aircraft AB, SAAB Aircraft Product Support, S-581.88, Linköping, Sweden, for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Dan Rodina, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone

(425)227-2125; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2006-24075; Directorate Identifier 2005-NM-235-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion The Luftfartsstyrelsen (LFS), which is the airworthiness authority for Sweden, notified us that an unsafe condition may exist on certain Saab Model SAAB-Fairchild SF340A (SAAB/SF340A) and SAAB 340B airplanes. The LFS advises that a cracked uplock axle for the shock strut of the main landing gear

(MLG)has been found. The crack was caused by hydrogen embrittlement during the manufacturing process. The LFS further advises that all uplock axles produced in the same batch must be removed from service and scrapped. A cracked uplock axle, combined with a loss of hydraulic pressure, if not corrected, could result in an uncommanded extension of the MLG. Relevant Service Information Saab has issued Saab Service Bulletin 340-32-132, dated November 3, 2005. The service bulletin describes procedures for inspecting the shock strut of the MLG to see if an uplock axle with an affected serial number is installed, and replacing the uplock axle with a new uplock axle if necessary. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. The LFS mandated the service information and issued Swedish airworthiness directive 1-199, dated November 9, 2005, to ensure the continued airworthiness of these airplanes in Sweden. The Saab service bulletin refers to APPH Service Bulletins AIR83022-32-31, Revision 1; and AIR83064-32-11, Revision 1; both dated October 2005; as additional sources of service information for identifying uplock axles with affected serial numbers, and replacing the axles if necessary. The APPH service bulletins are attached to the Saab service bulletin. FAA's Determination and Requirements of the Proposed AD These airplane models are manufactured in Sweden and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the LFS has kept the FAA informed of the situation described above. We have examined the LFS's findings, evaluated all pertinent information, and determined that we need to issue an AD for airplanes of this type design that are certificated for operation in the United States. Therefore, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously. Costs of Compliance This proposed AD would affect about 248 airplanes of U.S. registry. The proposed inspection would take about 1 work hour per airplane, at an average labor rate of $65 per work hour. Based on these figures, the estimated cost of the proposed AD for U.S. operators is $16,120, or $65 per airplane. Authority for This Rulemaking 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. Regulatory Findings We have 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 that the 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); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 Amended 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Saab Aircraft AB:** Docket No. FAA-2006-24075; Directorate Identifier 2005-NM-235-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by April 6, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to SAAB Model SAAB-Fairchild SF340A (SAAB/SF340A) and SAAB 340B airplanes, certificated in any category; serial numbers SAAB SF340A -004 through -159 inclusive, and SAAB 340B -160 through -459 inclusive. Unsafe Condition

(d)This AD results from a report of a cracked uplock axle of the main landing gear

(MLG)shock strut, caused by hydrogen embrittlement during the manufacturing process. We are proposing this AD to prevent failure of the uplock mechanism, which, combined with a loss of hydraulic pressure, could result in an uncommanded extension of the MLG. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Inspection To Determine Part Number

(f)Within 6 months after the effective date of this AD, inspect the uplock axle of the MLG shock strut to determine whether an affected serial number (S/N) is installed. A review of airplane maintenance records is acceptable in lieu of this inspection if the S/N of the uplock axle can be conclusively determined from that review. Do the inspection in accordance with the Accomplishment Instructions of Saab Service Bulletin 340-32-132, dated November 3, 2005. Note 1: The Saab service bulletin refers to APPH Service Bulletins AIR83022-32-31, Revision 1; and AIR83064-32-11, Revision 1; both dated October 2005; as additional sources of service information for identifying uplock axles with affected serial numbers, and replacing the axles if necessary. The APPH service bulletins are attached to the Saab service bulletin. Corrective Action

(g)Before further flight after accomplishing the inspection required by paragraph

(f)of this AD: Replace with a new uplock axle any uplock axle with an affected S/N identified by the inspection in paragraph

(f)of this AD. Do all actions in accordance with the Accomplishment Instructions of Saab Service Bulletin 340-32-132, dated November 3, 2005. Parts Installation

(h)As of the effective date of this AD, no person may install an uplock axle on any airplane if it has an affected S/N identified in accordance with paragraph

(f)of this AD. No Reporting Requirement

(i)Although the Accomplishment Instructions of Saab Service Bulletin 340-32-132, dated November 3, 2005, specify to send a report with the serial number of replaced uplock axles to APPH Ltd., this AD does not include that requirement. Alternative Methods of Compliance (AMOCs) (j)(1) The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(k)Swedish airworthiness directive 1-199, dated November 9, 2005, also addresses the subject of this AD. Issued in Renton, Washington, on February 22, 2006. Michael J. Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-3227 Filed 3-6-06; 8:45 am] BILLING CODE 4910-13-P SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 270 [Release No. IC-27255; File No. S7-06-06; File No. 4-512] RIN 3235-AJ51 Mutual Fund Redemption Fees AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: The Securities and Exchange Commission (“Commission” or “SEC”) is proposing amendments to the redemption fee rule we recently adopted. The rule, among other things, requires most open-end investment companies (“funds”) to enter into agreements with intermediaries, such as broker-dealers, that hold shares on behalf of other investors in so called “omnibus accounts.” These agreements must provide funds access to information about transactions in these accounts to enable the funds to enforce restrictions on market timing and similar abusive transactions. The Commission is proposing to amend the rule to clarify the operation of the rule and reduce the number of intermediaries with which funds must negotiate information-sharing agreements. The amendments are designed to address issues that came to our attention after we had adopted the rule, and are designed to reduce the costs to funds (and fund shareholders) while still achieving the goals of the rulemaking. DATES: Comments must be received on or before April 10, 2006. ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/proposed.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number S7-06-06 on the subject line; or • Use the Federal eRulemaking Portal ( *http://www.regulations.gov* ). Follow the instructions for submitting comments. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number S7-06-06. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/proposed.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: Thoreau Bartmann, Staff Attorney, or C. Hunter Jones, Assistant Director, Office of Regulatory Policy,

(202)551-6792, Division of Investment Management, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-5041. SUPPLEMENTARY INFORMATION: The Commission today is proposing amendments to rule 22c-2 1 under the Investment Company Act of 1940 2 (the “Investment Company Act” or the “Act”). 3 1 17 CFR 270.22c-2. 2 15 U.S.C. 80a. 3 Unless otherwise noted, all references to statutory sections are to the Investment Company Act, and all references to “rule 22c-2” or any paragraph of the rule will be to 17 CFR 270.22c-2. Table of Contents I. Background II. Discussion A. Small Intermediaries B. Intermediary Chains C. Effect of Lacking an Agreement III. Compliance Date IV. Current Industry Efforts Regarding Shareholder Information V. Ongoing Monitoring of Implementation VI. Cost-Benefit Analysis VII. Consideration of Promotion of Efficiency, Competition, and Capital Formation VIII. Paperwork Reduction Act IX. Initial Regulatory Flexibility Analysis X. Statutory Authority Text of Rule I. Background On March 11, 2005, the Commission adopted rule 22c-2 under the Investment Company Act. 4 We adopted the rule to help address abuses associated with short-term trading of fund shares. Rule 22c-2 provides that if a fund redeems its shares within seven days, 5 its board must consider whether to impose a fee of up to two percent of the value of shares redeemed shortly after their purchase (“redemption fee”). 6 The rule also requires such a fund to enter into agreements with its intermediaries that provide fund management the ability to identify investors whose trading violates fund restrictions on short-term trading. 7 4 *See* Mutual Fund Redemption Fees, Investment Company Act Release No. 26782 (Mar. 11, 2005) [70 FR 13328 (Mar. 18, 2005)] (“Adopting Release”). 5 Because the large majority of funds redeem shares within seven days of purchase, the practical effect of rule 22c-2, and these proposed amendments, would be to require most funds to comply with the rule's requirements. Therefore, throughout this Release we may describe funds as being “required to comply” with a provision of the rule, when the actual requirement only applies if a fund redeems its shares within seven days. A fund that does not redeem its shares within seven days would not be required to comply with those provisions of rule 22c-2. 6 Rule 22c-2(a)(1). Under the rule, the board of directors must either

(i)approve a fee of up to 2% of the value of shares redeemed, or

(ii)determine that the imposition of a fee is not necessary or appropriate. *Id* . 7 Under the rule, the fund (or its principal underwriter) must enter into a written agreement with each of its financial intermediaries under which the intermediary agrees to

(i)provide, at the fund's request, identity and transaction information about shareholders who hold their shares through an account with the intermediary, and

(ii)execute instructions from the fund to restrict or prohibit future purchases or exchanges. The fund must keep a copy of each written agreement for six years. Rule 22c-2(a)(2),(3). When we adopted rule 22c-2 last March, we asked for additional comment on

(i)whether the rule should include uniform standards for redemption fees, 8 and

(ii)any problems with the rule that might arise during the course of implementation. 9 We received over 100 comment letters in response to the request for comment. 10 Commenters expressed various views on the need for uniform standards, but a number of commenters also raised concerns with the basic requirements of the rule. 8 *See* Adopting Release, *supra* note 4, at Section II.C. As we noted when we adopted the rule, “[a]lthough we received comment on these [uniform standards] issues during the initial comment period, those comments were offered in the context of a mandatory redemption fee” rather than in the context of the voluntary approach that we adopted. *See id* . 9 *See id* . 10 Comment letters on the 2004 proposal and the 2005 adoption are available in File No. S7-11-04, which is accessible at *http://www.sec.gov/rules/proposed/s71104.shtml.* References to comment letters are to letters in that file. In their letters in response to the rule's adoption, commenters representing fund managers and other market participants stated that implementing the rule would be more costly than we had anticipated, and requested that we address certain interpretive issues that arose in connection with the implementation of the rule. 11 The amendments we are proposing today address concerns and questions regarding rule 22c-2 that commenters have brought to our attention. These amendments are designed to reduce the costs of complying with the rule and clarify its application in certain circumstances. 12 11 For example, a number of commenters in their 2005 letters objected to the definition of “financial intermediary” and to the requirement that funds enter into agreements with these intermediaries to receive transaction information upon request. *See, e.g.* , Comment Letters of OppenheimerFunds, Inc. (May 9, 2005), T. Rowe Price Associates, Inc. (May 24, 2005), and the Vanguard Group (June 1, 2005). 12 We received a number of comments from insurance companies and other market participants that sell variable insurance products. Many of these commenters were concerned that rule 22c-2 could expose insurance companies to increased liability. These commenters stated that variable insurance product contracts typically include clauses that specify the maximum charges and fees that an insurance company can assess against an annuity holder. We do not believe that redemption fees charged pursuant to rule 22c-2 should be interpreted to cause insurance companies to breach their contracts with annuity holders. Redemption fees are not fees that the insurance companies are themselves imposing pursuant to the contract between the insurance company and its customer. Instead, the *funds* underlying the separate accounts will impose any redemption fees that are charged. *See Miller* v. *Nationwide Life Ins. Co.* , 2003 WL 22466236 (E.D. La.) (Oct. 29, 2003), *aff'd on other grounds* , 391 F.3d 698 (5th Cir. 2004). We also received comments on whether we should provide for a uniform redemption fee applicable to those funds whose directors determined to impose a redemption fee. While most commenters asserted that funds and intermediaries would likely achieve certain benefits or cost savings if the Commission mandated uniform redemption fee standards, 13 others disagreed, asserting that the best way to serve funds, intermediaries, and investors was by allowing each fund to adopt redemption fee policies that best fit its particular circumstances. 14 Among the commenters who argued that uniform standards would benefit market participants, no consensus emerged as to what those uniforms standards should be, if they were adopted. We are taking the commenters' views under advisement, but are not proposing uniform redemption fee standards at this time. 13 Comment Letter of Flexible Plan Investments Ltd., at 2 (May 9, 2005) (“[O]ne of the most complicating factors caused by redemption fees is the lack of uniformity in their calculation and imposition * * * When intermediaries and advisors are dealing with many platforms and fund families, sorting out the requirements of each is a tremendous burden on the industry, adding costs that are simply passed on to investors.”); Comment Letter of Horton, Lantz & Low at 1 (May 24, 2005) (“[T]he lack of uniformity may result in increased costs associated with our retirement plan. Such higher costs could arise through higher plan administration costs * * * or higher mutual fund expenses.”). 14 *See* Comment Letter of the Vanguard Group at 6 (June 1, 2005) (“[M]andatory redemption fee standards are not appropriate or necessary in the context of a voluntary fee. We believe that standardization under these circumstances would create significant disincentives to the adoption of redemption fees that might otherwise benefit a fund.”). II. Discussion The amendments to rule 22c-2 we are proposing today

(i)limit the types of intermediaries with which funds must negotiate information-sharing agreements,

(ii)address the rule's application when there are chains of intermediaries, and

(iii)clarify the effect of a fund's failure to obtain an agreement with any of its intermediaries. A. Small Intermediaries Rule 22c-2 prohibits a fund from redeeming shares within seven days unless, among other things, the fund enters into written agreements with its financial intermediaries (such as broker-dealers and retirement plan administrators) 15 that hold shares on behalf of other investors. 16 Under those agreements, the intermediaries must agree to provide, at the fund's request, the shareholder identity ( *i.e.* , taxpayer identification number) and transaction information, 17 and carry out instructions from the fund to restrict or prohibit further purchases or exchanges by a shareholder (as identified by the fund) that has engaged in trading that violates the fund's market timing policies. 18 We designed this provision to enable funds to obtain the information that they need to monitor short-term trading in omnibus accounts and enforce their market timing policies. 19 15 “Financial intermediary” is defined in rule 22c-2(c)(1) as:

(i)Any broker, dealer, bank, or other entity that holds securities of record issued by the fund, in nominee name;

(ii)a unit investment trust or fund that invests in the fund in reliance on section 12(d)(1)(E) of the Act (15 U.S.C. 80a-12(d)(1)(E)); and

(iii)in the case of a participant-directed employee benefit plan that owns the securities issued by the fund, a retirement plan's administrator under section 3(16)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(A)) or any entity that maintains the plan's participant records. 16 Rule 22c-2(a)(2). Some commenters expressed concern about the ability of financial intermediaries to provide information to funds, in light of applicable privacy laws. *See,* *e.g.* , 15 U.S.C. 6801-09, 6821-27 (privacy provisions of Gramm-Leach-Bliley Act); Regulation S-P, 17 CFR part 248 (Commission rules implementing privacy provisions for funds, broker-dealers, and registered investment advisers). Under those laws, financial institutions such as funds, broker-dealers, and banks must provide a notice describing the institution's privacy policies and an opportunity for consumers to opt out of the sharing of information with nonaffiliated third parties. These privacy laws also contain important exceptions to the notice and opt-out requirements. Under the Commission's privacy rules, for example, these requirements do not apply to the disclosure of information that is “necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes,” which includes a disclosure that is “[r]equired, or is a usual, appropriate, or acceptable method * * * [t]o carry out the transaction or the product or service business of which the transaction is a part * * *” 17 CFR 248.14(a), (b)(2). *See also* 17 CFR 248.15(a)(7)(i) (notice and opt-out requirements not applicable to disclosure of information to comply with law). Financial privacy rules that are substantially identical to these rules apply to financial intermediaries other than broker-dealers, and contain comparable exceptions. *See, e.g.* , 12 CFR part 40 (rules applicable to national banks, adopted by the Comptroller of the Currency). We believe that the disclosure of information under shareholder information agreements, and the fund's request and receipt of information under those agreements, are covered by these exceptions. We also note that financial institutions often state in their privacy policy notices that the institution makes “disclosures to other nonaffiliated third parties as permitted by law.” *See* 17 CFR 248.6(b). Therefore we believe it will not be necessary for intermediaries such as broker-dealers and banks to provide new privacy notices or opt-out opportunities to their customers, in order to comply with rule 22c-2, both as adopted and as we propose to amend it. 17 One commenter expressed concern that the contract provision of rule 22c-2, requiring that agreements with intermediaries mandate the disclosure of shareholder information at the fund's request, conflicts with Commission rules governing proxy solicitations. *See* Comment Letter of the American Bankers Association (June 6, 2005). The Commission's proxy solicitation rules are set forth in Regulation 14A under the Exchange Act, 17 CFR 240.14A. The proxy rules govern the disclosure of information in the context of proxy solicitations. They do not prohibit banks, broker-dealers and other intermediaries from complying with agreements entered into pursuant to rule 22c-2. 18 *See* proposed rule 22c-2(c)(5) (defining “shareholder information agreement,” which is discussed further below in Section II.B). 19 As we noted when we adopted rule 22c-2 in 2005, a fund that receives shareholder information for a purpose permitted by the privacy rules under the exceptions to consumer notice and opt out requirements may not disclose that information for other purposes, such as marketing. *See* Adopting Release, *supra* note 4, at n.47 (“Our privacy rule prevents a fund that receives this [shareholder] information from using the information for its own marketing purposes, unless permitted under the intermediary's privacy policies. *See* 17 CFR 248.11(a) and 248.15(a)(7).”). Many fund commenters expressed concern that the requirement would necessitate reviewing a large number of their shareholder accounts in order to determine which shareholders meet the definition of “financial intermediary.” 20 They noted that because the definition encompasses any entity that holds securities in nominee name for other investors, it would therefore include, for example, a small business retirement plan that holds mutual fund shares on behalf of only a few employees. These commenters emphasized that the task of identifying these intermediaries, as well as negotiating agreements with them, will be costly and burdensome. The effect of the rule with respect to these small intermediaries was an unintended consequence of the rule, which we did not foresee when we modified the definition of ‘financial intermediary' in response to the concerns that commenters raised with us. 20 *See, e.g.* , Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). At the suggestion of several commenters, we broadened the definition of “financial intermediary” in the final rule. We propose to revise rule 22c-2 to exclude from the definition of “financial intermediary” any intermediary that the fund treats as an individual investor for purposes of the fund's policies intended to eliminate or reduce dilution of the value of fund shares. 21 These types of policies include restrictions on frequent purchases and redemptions, as well as a fund's redemption fee program. 22 As a result, if a fund, for example, applies a redemption fee or exchange limits to transactions by a retirement *plan* (an intermediary) rather than to the purchases and redemptions of the *employees* in the plan, then the plan would not be considered a “financial intermediary” under the rule, and the fund would not be required to enter into an agreement with that plan. 23 21 Proposed rule 22c-2(c)(1)(iv). 22 The rule excepts a fund from the requirement to enter into written agreements if, among other things, the fund “affirmatively permits short-term trading of its securities.” *See* rule 22c-2(b)(3). 23 Proposed rule 22c-2(c)(1)(iv) would exclude from the definition of “financial intermediary” any person the fund treats as an individual for purposes of the fund's policies on eliminating or reducing dilution in the value of fund shares. If a fund has not established such policies and thus determined which persons it treats as individuals, this exclusion would not apply, and the fund would need to identify those shareholder accounts that are “financial intermediaries.” Our proposed approach, which was suggested by several commenters, 24 has advantages over the rule as initially adopted, while still achieving the goals of the initial rulemaking. First, when a fund places restrictions on transactions at the intermediary level (rather than the individual shareholder level), the fund is unlikely to need data about frequent trading by individual shareholders, because abusive short-term trading by the shareholders holding through the omnibus account would ordinarily trigger application of those policies to the intermediary's trades. 25 Therefore, transparency regarding underlying shareholder transactions executed through these accounts is unnecessary to achieve the goals of the rule. Second, our proposed approach would substantially eliminate the need for funds to devote resources to identifying intermediaries, because the funds will have already identified the relevant intermediaries in the course of administering their policies on short-term trading. 24 *See, e.g.* , Comment Letter of the Securities Industry Association (May 9, 2005). 25 Individual transactions ( *e.g.* , by plan beneficiaries) in omnibus accounts ( *e.g.* , self-directed defined contribution plans) trigger corresponding transactions by the omnibus accounts with funds in which the plan invests on behalf of plan beneficiaries. In other words, when a plan participant allocates an investment to Fund A, the plan must buy an equivalent number of shares of Fund A. If the plan has not identified itself to the fund as an intermediary (so that a fund will not apply its redemption fee or market timing policies to plan transactions) even harmless transactions by a number of participants (as well as market timing transactions) will cause the plan to effect transactions with the fund that will trigger application of a fund's redemption fee or market timing policies to the plan. Plans that do not identify themselves as intermediaries will likely either have very few participants and/or restrict their transactions so that transactions by participants do not trigger application of a redemption fee or violate fund market timing policies. We request comment on this proposed amendment to the definition of financial intermediary. • Should additional entities be excluded or included as financial intermediaries? Should funds be required to enter into agreements with any other types of entities? Should the definition of financial intermediary be revised in any other way to further the purposes of the rule or to reduce the cost of its implementation in a manner consistent with these purposes? 26 Should the rule contain additional (or different) exclusions? 26 *See, e.g.* , rule 17Ad-20 under the Securities Exchange Act of 1934 [17 CFR 240.17Ad-20] (defining “securities intermediary” as a registered “clearing agency * * * or a person, including a bank, broker, or dealer, that in the ordinary course of its business maintains securities accounts for others in its capacity as such.”). • Is the proposed approach of allowing funds to determine which entities are financial intermediaries practical? Will this result in funds being more (or less) likely to impose redemption fees and restrictions on inappropriate short-term trading? Would the revised definition of financial intermediary create an incentive for funds to modify their market timing or redemption fee policies to treat more shareholders as individual investors? • What are the costs to funds and financial intermediaries of the requirement to enter into agreements? How many new agreements will funds need to enter into with their intermediaries after the proposed revisions? How much will it cost to enter into a new agreement or modify an existing agreement to accommodate the requirement of rule 22c-2? Are there any other costs related to the agreement requirement? • Should the definition of “shareholder” be revised? 27 For example, the definition excludes funds that rely on section 12(d)(1)(G) of the Act in order to invest in other funds in the same fund complex. 28 The Commission has proposed new rule 12d1-2 which, if adopted as proposed, would expand the ability of funds to rely on section 12(d)(1)(G). In light of this proposal, should the definition include these types of funds as shareholders ( *i.e.* , should the exclusion be deleted)? 29 Should the definition provide for different circumstances in which these types of funds will not be considered shareholders? For example, should the definition be revised to limit the exclusion to funds that rely on section 12(d)(1)(G), but that do not rely on rule 12d1-2 (if adopted)? 27 *See* rule 22c-2(c)(4). 28 *See* Adopting Release, *supra* note 4, at n.55. 29 *See* Fund of Funds Investments, Investment Company Act Release No. 26198 (Oct. 1, 2003) [68 FR 58226 (Oct. 8, 2003)] (proposing rule 12d1-2). B. Intermediary Chains In some cases, a brokerage firm may hold its shares of a mutual fund not only on behalf of individual investors, but also on behalf of other intermediaries, such as pension plans or other broker-dealers. 30 Fund commenters said that they were uncertain how rule 22c-2 applied to these arrangements, and expressed concern how, as a practical matter, a fund could obtain shareholder information through multiple layers of intermediaries. 31 They pointed out that the rule did not specify, in such a “chain of intermediaries,” how the written agreement requirement would apply to any second tier (or additional tiers) of financial intermediaries. Two of these commenters recommended that the Commission revise the rule to limit the written agreement requirement to those entities that trade directly with the fund. 32 Two other commenters recommended that the rule mandate that a fund's contract with its intermediaries require them to provide information to the fund, and also require that those intermediaries contract with *other* intermediaries to agree to provide information to the fund, through chains of agreements. 33 30 One commenter questioned whether, in the context of insurance company separate accounts, a holder of a variable annuity contract is a “shareholder” of a mutual fund in which the insurance company separate account invests. See Comment Letter of American General Life Insurance Co. at 12 (May 9, 2005) (submitted on behalf of the company and certain affiliated companies). The term “shareholder” does encompass these investors. *See* rule 22c-2(c)(4) (defining “shareholder” to include, among others, “a holder of interests in a fund or unit investment trust that has invested in the fund in reliance on section 12(d)(1)(E) of the Act”). We also noted, when we adopted rule 22c-2, that the term “shareholder” includes, among others, “a holder of interests in * * * an insurance company separate account organized as a unit investment trust.” Adopting Release, *supra* note 4, at n.55. Insurance company separate accounts are susceptible to many of the same short-term trading abuses as mutual funds, and the investor protection goals of rule 22c-2 apply equally to them as well. *See* In the Matter of Millennium Partners, L.P., Investment Advisers Act Release No. 2453, Administrative Proceeding File No. 3-12116 (Dec. 1, 2005) (ordering fees and penalties of $180 million and finding that Millennium Partners had, among other things, engaged in market timing trading through variable annuity contracts, employing a number of deceptive practices to avoid detection as a market timer). 31 *See, e.g.* , Comment Letter of T. Rowe Price Associates, Inc. (May 24, 2005). 32 *See id.* ; Comment Letter of the ICI (May 9, 2005). 33 *See* Comment Letter of American Society of Pension Professionals & Actuaries (May 9, 2005); Comment Letter of Charles Schwab & Co., Inc. (May 9, 2005). In light of these comments, we propose to revise the rule to provide that a fund must enter into a written agreement only with those financial intermediaries that submit orders to purchase or redeem shares directly to the fund, its principal underwriter or transfer agent, or a registered clearing agency 34 (“first-tier intermediaries”). 35 We are proposing to define this written agreement as a “shareholder information agreement.” 36 The proposed rule would include transfer agents and registered clearing agencies among the entities that may enter into shareholder information agreements with financial intermediaries on behalf of funds. 37 In practice, it is often the transfer agent that may have preexisting agreements with a fund's financial intermediaries, and to avoid potentially duplicative agreements or inefficiencies in the process, we propose to permit transfer agents to enter into agreements on behalf of the funds that they serve. 38 34 Currently, the National Securities Clearing Corporation (“NSCC”) is the only registered clearing agency for funds. A “clearing agency” is a person that acts as an intermediary in making payments or deliveries (or both) in connection with transactions in securities, or that provides facilities for comparing data with respect to the terms of securities transactions to reduce the number of settlements or the allocation of securities settlement responsibilities. *See* 15 U.S.C. 78c(a)(23)(A). A clearing agency is a self-regulatory organization, and its rules of operation are subject to approval by the appropriate federal regulatory agency. *See* 15 U.S.C. 78c(a)(26), 78s(b). 35 Proposed amendment to rule 22c-2(a)(2). We understand that retirement plan administrators and other persons that maintain the plan's participant records typically submit transactions in fund shares to the fund or to its transfer agent, principal underwriter, or to a registered clearing agency. The rule we adopted last spring specifically includes these administrators and recordkeepers within the definition of a “financial intermediary.” *See* rule 22c-2(c)(1)(iii). 36 Proposed rule 22c-2(c)(5). The agreement may be part of another contract or agreement, such as a distribution agreement. 37 If a transfer agent or clearing agency enters into an agreement on behalf of the fund, the agreement must require the financial intermediary to provide the requested information to the fund upon the fund's request, as provided in the definition of shareholder information agreement. 38 We have also included registered clearing agencies as an entity that may enter into agreements on behalf of funds. This amendment could allow funds and intermediaries to utilize the registered clearing agency as a central agreement repository, if such an arrangement is feasible. The shareholder information agreement must obligate the first-tier intermediary to provide, promptly upon the fund's request, identification and transaction information for any shareholder accounts held directly with the first-tier intermediary. 39 If the first-tier intermediary maintains a shareholder account for another financial intermediary, the shareholder information agreement must obligate the first-tier intermediary to use its best efforts to identify, upon request by the fund, those accountholders who are themselves intermediaries, and obtain and forward (or have forwarded) the underlying shareholder identity and transaction information from those intermediaries farther down the chain ( *i.e.* , second-or third-tier intermediaries, or “indirect intermediaries”). If an intermediary that holds an account with a first-tier intermediary refuses to honor the request, the agreement must obligate the first-tier intermediary to prohibit, upon the fund's request, an indirect intermediary from purchasing additional shares of the fund through the first-tier intermediary. 39 As discussed further below, if a fund does not enter into a shareholder information agreement with an intermediary, it must restrict future purchases of fund shares by the intermediary. *See infra* Section II.C. These proposed rule amendments are designed to enable funds to request the information they need to enforce their market timing and redemption fee policies, while reducing the costs of complying with the rule. 40 The rule therefore relies upon the initiative of the fund to determine whether to request that first-tier intermediaries identify and collect information from specific indirect intermediaries, and to request that an indirect intermediary be restricted from further trading in fund shares due to its failure to provide requested information on shareholder transactions. We believe that this targeted approach would allow a fund to collect and analyze the most relevant information from intermediaries and enable it to efficiently and effectively enforce its short-term trading policies. This approach is also designed to permit a fund to look through multiple levels of intermediaries to reach relevant information about trading by ultimate shareholders. 41 These proposed amendments do not require first-tier intermediaries to enter into formalized information-sharing agreements with indirect intermediaries, although they would not prohibit any such agreements. 40 A number of intermediaries have already developed or are developing systems that will allow for transmission of this information. For example, Charles Schwab & Co. has developed a system that allows fund companies to view and download information regarding the identity and transaction history of accountholders that trade through Schwab. Julie Segal, *Schwab Makes Omnibus Data Available to Fund Companies* , Fund Action (Dec. 2, 2005). *See also* Tom Leswing, *SunGard Creating Redemption Fee Rule Service* , Ignites (Sept. 30, 2005) (discussing SunGard's development of a similar system allowing funds to impose redemption fees and access underlying shareholder identity and transaction information through omnibus accounts). We also understand that the NSCC is developing enhancements to its Fund/SERV order processing and clearing systems that should allow members to request and transmit shareholder identity and transaction information. 41 We anticipate that intermediaries may use a variety of arrangements with indirect intermediaries to ensure that the requested information is provided to the fund, ranging from formalized contracts to informal communications in response to a specific fund inquiry. We request comment on how we propose to address chains of intermediaries. • Would the proposed amendments result in funds receiving enough information from intermediaries to effectively address inappropriate short-term trading? Should the shareholder information agreement include any other requirements? • Should the rule require that the agreement between the fund and each first-tier intermediary include a provision requiring first-tier intermediaries to enter into explicit agreements with all of their indirect intermediaries, or will the arrangements envisioned by the proposed rule be sufficient? Should the rule require funds to collect information from indirect intermediaries instead of having the shareholder information agreement require first-tier intermediaries to assume this role? Do the proposed amendments strike the proper balance of duties and costs between funds and intermediaries? • Is there another approach that we should take in addressing the chains of intermediaries issue? For example, should the rule require that first-tier intermediaries collect information only from second-tier intermediaries, without addressing the need for further information from more distant intermediaries? Would this approach allow investors to mask short-term trading activity by acting though multiple layers of intermediaries? • What steps are funds and intermediaries already taking to share information? Are there systems in place (or in development) that could be used to reduce the costs of collecting and sharing this information? • What are the costs of collecting shareholder information from intermediaries? How often do funds anticipate requesting shareholder information from intermediaries? How much would it cost to establish and maintain systems to collect and transmit the shareholder information between funds and intermediaries? What would it cost for first-tier intermediaries to ensure that funds receive the shareholder information from indirect intermediaries and restrict indirect intermediaries' trading upon the fund's request? • Under the proposed amendments, a fund could enter into a shareholder information agreement through its principal underwriter, transfer agent, or registered clearing agency. Should the rule include any other types of entities? C. Effect of Lacking an Agreement Some commenters questioned the effect under the rule of a fund's failure (or inability) to obtain agreements with *all* of its intermediaries. 42 The rule could be interpreted to mean that in such a circumstance, the fund would be precluded from redeeming the shares of any of its shareholders within seven days of purchase. 43 In order to prevent a fund's lack of agreements with certain intermediaries from affecting the redeemability of shares that investors own through other intermediaries, we propose to revise the rule to provide that, if a fund does not have an agreement with a particular intermediary, the fund must thereafter prohibit the intermediary from purchasing, on behalf of itself or other persons, securities issued by the fund. 44 We intend this change to focus the remedy (prohibition of future purchases) on the particular intermediary that fails to execute an agreement with the fund. 42 *See, e.g,.* Comment Letter of T. Rowe Price Associates, Inc. (May 24, 2005). 43 Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). 44 Proposed rule 22c-2(a)(2)(ii). We request comment on the proposed amendment clarifying the effect of a fund's lacking a shareholder information agreement with a financial intermediary. • Instead of restricting any further *purchases* by a financial intermediary that does not have an agreement with a fund, would precluding an intermediary without an agreement from *redeeming* purchased shares within seven days serve the purposes of the rulemaking? Would this alternative preclusion on redemption within seven days effectively encourage intermediaries to enter into agreements with funds? Would this alternative of precluding redemption within seven days by intermediaries without agreements impose hardships on shareholders in financial emergencies, or implicate other shareholder redemption issues? • Is there another approach available to us that would further the goals of this rulemaking? III. Compliance Date When the Commission adopted rule 22c-2 in March 2005, we established a compliance date of October 16, 2006. Commenters pointed out that they would need significant time to revise agreements with intermediaries and change their systems to accommodate the transmission and receipt of trading information. That compliance date remains in effect, although we may revise or extend that compliance date if and when we adopt the amendments we are proposing today. We request comment on whether additional time would be needed to comply with the amendments. IV. Current Industry Efforts Regarding Shareholder Information We understand that representatives of mutual funds, transfer agents, and broker-dealers are currently engaged in an effort, in order to implement the information-sharing provisions of rule 22c-2, to develop standardized contractual terms and information exchange protocols. 45 We support the work of the representatives in developing these standards, and urge others involved with the distribution of mutual fund shares to become involved in this effort. We direct our staff to provide appropriate assistance. 45 *See* Comment Letter of the Securities Industry Association (May 9, 2005) (noting that the SIA has been “exploring with ICI the possible development of prototype contractual terms and approved methodologies for transmission of fund transactions data between intermediaries and funds”). V. Ongoing Monitoring As discussed above, this release addresses only certain technical issues that have arisen to date. We intend, however, to monitor implementation of the rule, and accordingly we are interested in hearing on an ongoing basis from funds with experience complying with the rule, and other interested parties, about any further implementation issues or developments. In this regard, we encourage fund shareholders, funds and other interested parties to submit feedback as they develop experience with the rule. For example, we understand that the industry is developing a number of initiatives to streamline the flow of shareholder data between funds and intermediaries. If those initiatives are implemented, we would be interested in knowing whether they have assisted funds in complying with the rule. We also would be interested in hearing feedback with respect to issues such as the following: • How have the required board findings with respect to the necessity and propriety of a redemption fee worked in practice? • How has the rule affected the use of redemption fees by funds? • How has the rule affected the level of redemption fees and the percentage of funds imposing redemption fees? • How has the rule affected the length of redemption periods? • Has the rule resulted in any unexpected benefits or adverse consequences for fund shareholders? Feedback may be provided to the Commission by any of the following methods: Electronic Submissions • Use the Commission's Internet submission form at *http://www.sec.gov/rules/proposed.shtml* ; or • Send an e-mail to *rule-comment@sec.gov* . Please include File Number 4-512 on the subject line. Paper Submissions • Send paper submissions in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number 4-512. This file number should be included on the subject line if e-mail is used. To help us process and review your submissions more efficiently, please use only one method. The Commission will post all submissions on the Commission's Internet Web site ( *http://www.sec.gov/rules/proposed.shtml* ). Submissions are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549. All submissions received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. VI. Cost-Benefit Analysis The Commission is sensitive to the costs and benefits imposed by its rules. As discussed above, the amendments we are proposing today would

(i)limit the types of persons with which funds must negotiate agreements,

(ii)address the rule's application to chains of intermediaries, and

(iii)clarify the effect of a fund's failure to obtain an agreement with any of its intermediaries. These proposed amendments are designed to respond to concerns that commenters identified during the course of implementing rule 22c-2. We believe that the changes would result in substantial cost savings to funds, financial intermediaries, and investors, and provide clarification of the rule's requirements. A. Benefits We anticipate that funds, financial intermediaries, and investors will benefit from the proposed amendments to rule 22c-2. As discussed more fully in the Adopting Release we issued in 2005, rule 22c-2 is designed to allow a fund to deter, and to provide the fund and its shareholders reimbursement for the costs of, short-term trading in fund shares. 46 The general benefits of rule 22c-2 therefore include the deterrence of short-term trading, in which short-term traders cause the fund to incur expenses that are ultimately borne by the long-term shareholders in a fund. Short-term trading can disrupt funds' stated portfolio management strategies, increase funds' transaction costs, require the maintenance of elevated cash positions (thereby reducing funds' returns), and dilute the value of fund shares held by long-term shareholders. One benefit of discouraging short-term trading is to increase the confidence of long-term investors in the capital markets as a whole, and in funds in particular. Rule 22c-2 is also designed to foster greater cooperation between funds and their intermediaries, and may result in improved communication and transparency of information between them. 46 *See* Adopting Release, *supra* note 4, at Section IV.A. Rule 22c-2 explicitly allows funds to adopt redemption fees of up to two percent as a means of recouping costs associated with short-term trading in fund shares. If a fund's board adopts a redemption fee, the resulting revenues will be returned to the fund and its investors. The revenue that funds and investors receive from redemption fees reimburses long-term shareholders for some, if not all, of the costs caused by short-term traders. Many of the costs associated with rule 22c-2 discussed below are incidental to this purpose of better enabling funds to collect redemption fees from short-term traders in order to reimburse investors for any dilution of the fund. In many cases, the revenue received from redemption fee proceeds may be enough to allow funds to recoup both the direct and indirect costs associated with short-term trading. For example, based on conversations with fund representatives, we understand that one large fund complex collected approximately $34 million in redemption fee revenue in 2004. Funds that choose not to adopt redemption fees would not collect these fees, but would continue to realize the other benefits discussed below. The amendments to rule 22c-2 that we are proposing today will likely result in additional benefits to funds, financial intermediaries, and investors. As discussed in the previous sections of this Release, some commenters argued that the rule's definition of “financial intermediary” was too broad because it would have required funds to identify and enter into agreements with a number of intermediaries that may not pose a significant short-term trading risk to funds, and may have imposed unnecessary costs to market participants. 47 For example, one large fund complex asserted that, under the rule as adopted, identifying their “financial intermediaries” could cost that fund complex $8.5 million or more. 48 As discussed above, our proposed amendments would modify the definition of financial intermediary to exclude entities that a fund treats as an individual investor for purposes of the fund's policies on market timing or frequent trading. We believe that these amendments would reduce the burden on funds of identifying those entities that might have qualified as financial intermediaries under the rule as adopted, because a fund should already know which entities it treats as intermediaries for purposes of its policies on market timing or frequent trading. As further discussed in Section VIII below, for purposes of the Paperwork Reduction Act we have estimated that, if these amendments are adopted, identifying the intermediaries with which a fund complex must enter into agreements may take the average fund complex a total of 250 hours of a service representative's time, at a cost of $40 per hour, 49 for a total burden to all funds of 225,000 hours, at a total cost of $9 million. These amendments would likely provide a significant benefit because they should reduce the costs associated with the intermediary identification process. 47 Comment Letter of the ICI at 3 (May 9, 2005). The ICI stated in its comment letter that, under the rule as adopted last March, three large fund complexes alone would have to evaluate 6.5 million accounts that are “not in the name of a natural person and thus could be held as an intermediary for purposes of the rule” and might have to enter into agreements with a significant portion of those accounts that are held in nominee name. *Id* . at 3. The ICI noted that many of these accounts are likely associated with small retirement plans, small businesses, trusts, bank nominees and other entities that are unlike typical financial intermediaries such as broker-dealers. It added that funds typically do not have agreements with such small entities, other than agreements incidental to the opening of an account. 48 This estimate is based on telephone conversations with representatives of that fund complex. 49 *See infra* note 69. By enabling funds to forego the cost of entering into agreements with omnibus accountholders that they treat as individual investors, we anticipate that the large majority of small omnibus accountholders would now fall outside the shareholder information agreement provisions of the rule. This would likely result in significant cost and time savings to funds and financial intermediaries through reduction of the expenses associated with these agreements. The reduction of these costs also may benefit fund investors and fund advisers, to the extent that these costs would have been passed on to them. We estimate that this would significantly reduce the burden on many entities that would otherwise qualify as intermediaries under the rule, since the excluded entities would no longer need to enter into shareholder information-sharing agreements, or develop and maintain systems to provide the relevant information to funds. Commenters were also concerned that the rule as adopted might have required funds to enter into agreements with intermediaries that hold fund shares in the name of other intermediaries (a “chain of intermediaries”), potentially resulting in a fund having to enter into agreements with intermediaries with which it may not have a direct relationship ( *i.e.* , indirect intermediaries). 50 The proposed amendments would further clarify and define the operation of the rule with respect to intermediaries that invest through other intermediaries. As proposed, the amendments to rule 22c-2 would define the term “shareholder information agreement,” and provide that funds need only enter into shareholder information agreements with intermediaries that directly submit orders to the fund, its principal underwriter, transfer agent, or to a registered clearing agency. Accordingly, funds would not need to enter into agreements with indirect intermediaries and may incur lower systems development costs related to the collection of underlying shareholder information, thereby reducing the costs of compliance. 50 *See* Comment Letter of T. Rowe Price Associates, Inc. at 2 (May 24, 2005); Comment Letter of OppenheimerFunds, Inc. at 3 (May 9, 2005). Under the proposed amendments, a first-tier intermediary, in its agreement with the fund, must agree, upon further request by the fund, to:

(i)Provide the fund with the underlying shareholder identification and transaction information of any other intermediary that trades through the first-tier intermediary ( *i.e.* , indirect intermediary); or

(ii)prohibit the indirect intermediary from purchasing, on behalf of itself or others, securities issued by the fund. This approach is designed to preserve the investor protection goals of the rule by ensuring that funds have the ability to identify short-term traders that may attempt to evade the reach of the rule by trading through chains of financial intermediaries. We considered not requiring the collection of shareholder information from indirect intermediaries at all, but are concerned that providing such an exemption might encourage abusive short-term traders to conduct their activities through another intermediary in order to avoid detection by the fund. By defining minimum standards for what must be included in these shareholder information agreements, we have attempted to balance the need for funds to acquire shareholder information from indirect intermediaries who trade in fund shares, with practical concerns regarding the difficulty that funds might face in identifying these intermediaries and entering into agreements with them. Because the intermediary that trades directly with the fund already has a relationship with second-tier intermediaries, (and is likely to have a closer relationship than the fund to any intermediary that is farther down the “chain”) the first-tier intermediary appears to be in the best position to arrange for the provision of information to the fund regarding the transactions of shareholders trading through its indirect intermediaries. By providing a definition of the term “shareholder information agreement,” the amended rule would more clearly explain the balance of duties and obligations between funds and financial intermediaries. Because first-tier intermediaries may already have access to the shareholder transaction and identification information of their indirect intermediaries, they will likely be able to provide this information to funds at a minimal cost, especially compared to the significant costs that funds would incur if they were required to collect the same information from indirect intermediaries themselves. Although first-tier intermediaries may incur some costs in collecting and gathering this information from indirect intermediaries, there is a benefit in having the entity that has the easiest access to the relevant information have the responsibility for arranging for its delivery to funds. As discussed in the previous sections, these proposed amendments clarify the result if a fund lacks an agreement with a particular intermediary. In such a situation, the fund may continue to redeem securities within seven calendar days, but it must prohibit that financial intermediary from purchasing fund shares, on behalf of itself or any other person. Some commenters had stated that the rule, as adopted in 2005, could be interpreted to require a different approach to these situations. 51 The proposed amendments would provide the benefit of certainty regarding the duties of funds and financial intermediaries under the rule, and clarity concerning the intent of the Commission, without imposing additional costs. 51 *See* Comment Letter of the ICI at 4 (May 9, 2005). B. Costs Many commenters expressed concerns about the costs of rule 22c-2 as we adopted it in 2005. As discussed above, we anticipate that the proposed amendments would allow funds, financial intermediaries, and investors to incur significantly reduced costs under the rule as we propose to amend it, compared to the rule as it was originally adopted. Although these proposed amendments would reduce many of the costs of the rule, they should nonetheless maintain the investor protections afforded by the rule. The primary result of these proposed amendments would be to reduce the number of financial intermediaries with which funds must enter into shareholder information agreements. This should reduce costs to all participants by allowing funds to enter into shareholder information agreements only with those intermediaries that hold omnibus accounts that are most likely to trade fund shares frequently. The rule's investor protections will be maintained because funds will continue to monitor the short-term trading activity of the rest of the fund's omnibus accounts as if they were individual investors in the fund, according to the fund's policies on short-term trading. A number of costs are associated with the shareholder information agreement provision of the rule, both as adopted and as we propose to revise it. These costs are incurred by both funds and financial intermediaries, and include:

(i)Identifying those accounts that qualify as financial intermediaries;

(ii)modifying existing agreements with intermediaries to cover the shareholder collection requirements of the rule or, if no agreement exists, entering into a new agreement;

(iii)developing systems that assemble and transmit shareholder information between funds and intermediaries; and

(iv)maintaining and monitoring the systems and the shareholder information collected on an ongoing basis. The specific costs incurred by each fund and financial intermediary may vary widely. Among other factors, these costs will vary based upon the size of each entity, the number of accounts handled, the number of shareholder agreements that must be modified or entered into, the size and complexity of the systems developed to handle the information, whether or not a fund determines that it needs a redemption fee, whether the fund has policies on the intermediaries it treats as individual investors, and the specific policies on short-term trading that a fund has adopted. The proposed amendments would reduce the number of entities that would be considered financial intermediaries under the rule. Commenters raised concerns about the costs of identifying which accountholders are financial intermediaries, but did not identify specific costs related to this review. 52 In any event, the costs related to this review would be greatly reduced under the rule as we propose to revise it, because we expect that a fund will generally already have identified those accountholders that it does not treat as an individual investor for purposes of its restrictions on short-term trading. As discussed above in the benefits section, for purposes of the Paperwork Reduction Act, we have estimated that completion of this identification process will cost all funds a total of approximately $9 million. 52 As discussed above, the ICI noted that, between just three large fund complexes, 6.5 million accounts may need to be reviewed, and estimated that the total number of accounts which would be evaluated by all funds could be in the “tens of millions.” Comment Letter of the ICI at 3 (May 9, 2005). OppenheimerFunds noted that, although it has more than 7.5 million shareholder accounts in its records, 137,000 or fewer of those accounts may qualify as financial intermediaries under the rule as adopted last spring. *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005). Neither commenter estimated the costs of performing this review. We received a few comments regarding the number of accounts maintained by funds that qualify as financial intermediaries. 53 Commenters indicated that revising the rule in the manner that we are proposing today would significantly reduce the costs of entering into or modifying these agreements, as well as the costs of developing, maintaining and monitoring the systems that will collect the shareholder information related to these agreements for funds. 54 Omnibus accountholders that previously would have qualified as financial intermediaries are also likely to realize substantial savings under the amended rule. When an omnibus accountholder is treated as an individual investor (or does not trade directly with the fund), such an omnibus account will no longer be treated as a financial intermediary and will not incur the costs of entering into or modifying agreements with that fund. There will also no longer be the start-up and ongoing costs of developing and maintaining shareholder information-sharing systems for those accountholders. 53 OppenheimerFunds estimated that it has 137,000 omnibus accounts that might qualify as financial intermediaries, USAA Investment Management Company stated that it has “thousands” of these accounts, and T. Rowe Price estimated 1.3 million accounts that are not registered as natural persons. *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005); Comment Letter of USAA Investment Management Company at 2 (May 9, 2005); Comment Letter of T. Rowe Price Associates, Inc. at 2 (May 24, 2005). 54 *See* Comment Letter of USAA Investment Management Company at 2 (May 9, 2005); Comment Letter of the ICI at 3 (May 9, 2005). We received a few comments regarding the costs of modifying or entering into shareholder information agreements. The only commenter that gave specific numbers indicated that it would take approximately four hours to modify and/or enter into, follow-up on, and maintain an agreement on its systems for each account identified as a financial intermediary. 55 The same commenter indicated that it may have as many as 137,000 accounts that might qualify as financial intermediaries under the rule as adopted. We anticipate that if we adopt the proposed revisions, the large majority of the omnibus accountholders that would have qualified as financial intermediaries under the rule as adopted, would instead be treated as individual investors by funds, and therefore no new agreements would be required. Based on conversations with fund representatives, we anticipate that in most cases complying with the amended rule will require a very limited number of new agreements between funds and intermediaries (in many cases virtually no new agreements would be required). We understand that the number of existing agreements that funds have with their intermediaries can vary greatly, from less than 10 agreements for a small direct-sold fund, to more than 3000 for a very large fund sold through various channels. Although funds will still need to modify the existing agreements that they have with their intermediaries ( *i.e.* , distribution agreements), we believe that these proposed revisions would greatly reduce or eliminate the need for most funds to identify and negotiate new agreements. Funds are also likely to incur lower costs when modifying existing agreements than when entering into new agreements, and the actual hours required to modify an existing agreement thus may be significantly less than the four hour figure suggested by the commenter. 56 Accordingly, under the cost estimates provided by this commenter, the cost reduction that may result if the proposed amendments were adopted for a fund complex in a similar position as the commenter could be 536,000 hours. 57 55 *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005). 56 *See* Section VIII below for a discussion, in the context of the Paperwork Reduction Act, of some of the estimated costs of the shareholder information agreement and information-sharing system development and operations aspects of the rule as we propose to amend it. 57 *See* Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). This estimate is based on the following calculations: 137,000 potential accounts times 4 hours per account equals 548,000 potential hours. However, the proposed amendments might eliminate the burden of reviewing and modifying those 137,000 potential accounts, and could limit the burden to a far reduced number, perhaps 3000 agreements for a very large fund. (3000 agreements to be modified times 4 hours equals 12,000 hours.) Instead of potentially incurring 548,000 hours complying with the agreement portion of the rule, a similar fund might incur 12,000 hours in modifying its existing agreements, for a savings of 536,000 hours. (548,000 potential hours minus 12,000 hours equals 536,000 hours saved). Based on further information that our staff has obtained, for purposes of the Paperwork Reduction Act as discussed below, we have estimated that it will cost all funds and financial intermediaries a total of approximately $53,550,000 to enter into and/or modify the agreements required under the amended rule. 58 This represents a significant cost reduction from the most recent estimates provided to us in response to the rule's adoption. 59 58 *See infra* Section VIII. 59 However, this revised estimate is an increase over the amount we estimated in the Adopting Release ($3,353,279) for funds and intermediaries to enter into information-sharing agreements. *See* Adopting Release, *supra* note 4, at n.108. In response to our request for comment on any aspect of the rule's implementation, we received new information and updated estimates that noted that the cost of entering into agreements for funds and intermediaries would be significantly higher than the estimate included in the Adopting Release. After reviewing the comments we received in response to the Adopting Release, as well as other information received from fund representatives, we now estimate that on average, a fund complex might incur $250,000 or more in expenses related to entering into or modifying the agreements required under the rule as adopted. With approximately 900 fund complexes currently operating, we now estimate that the agreement portion of the rule as adopted could potentially cost all funds a total of approximately $225,000,000. Despite the increase in estimated costs for entering into agreements that we have included here over the cost estimates included in the Adopting Release, we anticipate that the proposed amendments would reduce the costs of the agreement portion of the rule as adopted by approximately $171,450,000 ($225,000,000 (updated cost estimate) minus $53,550,000 (cost estimate after proposed amendments) equals $171,450,000 (total potential cost reduction)). There will also be some costs related to the amendments we are proposing to make in the context of chains of intermediaries. By clearly defining the duties that a fund's agreement must impose on intermediaries in the “chain of intermediaries” context, the proposed rule amendments may result in first-tier intermediaries incurring some costs that might otherwise have been borne by funds. These may include costs related to negotiating agreements (if necessary) with indirect intermediaries, processing requests from funds to investigate accounts, costs related to collecting and providing the underlying shareholder information to funds from the indirect intermediaries and restricting further trading by indirect intermediaries if the fund requests it. We believe that first-tier intermediaries are in a better position than funds to fulfill these obligations. Unlike funds, first-tier intermediaries have a direct relationship with second-tier intermediaries (and may be in a better position than funds to collect information from other indirect intermediaries), and will thus be able to identify, communicate with, and collect information from these indirect intermediaries at a lower cost than if funds were to conduct such activities. First-tier intermediaries are also in a better position than funds to identify and gather shareholder information from more distant indirect intermediaries because of their relationships with second-tier intermediaries. As further discussed in connection with the Paperwork Reduction Act, we have estimated that the costs of entering into arrangements between first-tier and more indirect intermediaries would be approximately $63 million. 60 We anticipate that intermediaries will generally use the same systems that they use to provide the required underlying shareholder identity and transaction information directly to funds to process the information that first-tier intermediaries will forward (or have forwarded) to funds from indirect intermediaries, thus resulting in significant cost efficiencies. 60 *See infra* Section VIII. Funds and intermediaries may also incur some costs related to drafting or revising terms for the agreements required by rule 22c-2. We have been informed that industry representatives are working together to develop a uniform set of model terms, and anticipate that such model terms may significantly reduce the costs related to developing individualized agreement terms for each fund and intermediary. As further discussed in Section VIII, for purposes of the Paperwork Reduction Act, we estimate that a typical fund complex will incur a total of 5 hours of legal time at $300 per hour in drafting these agreement terms, for a total of 4500 hours for all 900 fund complexes at a total cost of $1,350,000. We understand that several service providers are developing systems to accommodate the transmission and receipt of transaction information between funds and intermediaries pursuant to contracts negotiated to comply with rule 22c-2. 61 At least one of these organizations is revising the infrastructure that it already has in place, in order to facilitate the communication of fund trades and other “back office” information between funds and financial intermediaries, including the information required under the rule. Based on information from industry representatives, we understand that, with the exception of some smaller to mid-sized funds and intermediaries, the large majority of funds and intermediaries currently use the organization's existing infrastructure to process fund trades. In addition, some funds and intermediaries may develop their own competing or complementary information-sharing systems. 61 *See supra* note 40. As further described in connection with the Paperwork Reduction Act, we estimate that all funds will incur a total of approximately $47,500,000 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and receive the required identity and transaction information from intermediaries, and a total of $21,515,000 each year thereafter in operation costs related to the transmission and receipt of the information. 62 We further estimate that financial intermediaries may incur $227,500,000 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and transmit the required identity and transaction information to funds and from other intermediaries, and a total of $140,000,000 each year thereafter in operation costs related to the transmission and receipt of the information. 62 *See infra* Section VIII. For the reasons discussed above, we anticipate that the proposed amendments would not create additional costs beyond the rule as adopted. In fact, we anticipate that the amendments may significantly reduce costs to most market participants. 63 63 *See infra* note 105. C. Request for Comments We request comment on the potential costs and benefits of the proposed amendments to rule 22c-2. We encourage commenters to identify, discuss, analyze, and supply relevant data regarding any additional costs and benefits. For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, 64 we also request information regarding the potential impact of the proposals on the U.S. economy on an annual basis. 64 Pub. L. 104-121, Title II, 110 Stat. 857 (1996). VII. Consideration of Promotion of Efficiency, Competition and Capital Formation Section 2(c) of the Investment Company Act requires the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is necessary or appropriate in the public interest, to consider whether the action will promote efficiency, competition, and capital formation. As discussed in the Cost-Benefit Analysis above, the proposed amendments to rule 22c-2 are designed to reduce the burdens of the rule as adopted, while maintaining its investor protections. Funds would no longer be required to incur the expense of modifying or entering into agreements with omnibus accounts that they already effectively monitor by treating as individual investors, and would not need to enter into agreements with intermediaries that do not trade directly with the fund. The proposed amendments would promote efficiency in the capital markets by enabling funds to focus their short-term trading deterrence efforts on those omnibus accounts that could be used to disguise this type of trading. The amendments would also promote efficiency by reducing the number of omnibus accountholders that would otherwise incur the expenses of entering into agreements, and of establishing and maintaining systems for collecting and sharing shareholder information. We do not anticipate that the proposed amendments would harm competition. They would apply to all market participants and, as discussed in the Cost-Benefit Analysis above, serve to reduce cost burdens for large funds as well as small funds. 65 Some commenters expressed concern that the rule as adopted may disproportionately burden small intermediaries, and thus hinder competition. We anticipate that under the proposed amendments, most omnibus accounts that are treated by the fund as individual investors would be small intermediaries. By excluding these small intermediaries from the rule's requirements, the amendments would serve to alleviate potential anti-competitive effects on small intermediaries. 65 *See supra* Section IV. Even if the proposed amendments are adopted, the competitive pressure of marketing funds, especially smaller funds, coupled with the costs of imposing redemption fees in omnibus accounts, may deter some funds from imposing redemption fees. Intermediaries may use their market power to prevent funds from applying the fees, or provide incentives for fund groups to waive fees. However, by reducing the costs of imposing redemption fees for both funds and intermediaries, we believe that any such anti-competitive effects will likely be reduced. We anticipate that the proposed amendments will indirectly foster capital formation by continuing to bolster investor confidence, because the rule is designed to permit funds to deter, and recoup the costs of, abusive short-term trading. To the extent that the rule enhances investor confidence in funds, investors are more likely to make assets available through intermediaries for investment in the capital markets. The proposed amendments may also foster capital formation by reducing the costs of the rule for funds and intermediaries. We request comments on whether the proposed rule amendments, if adopted, would promote efficiency, competition, and capital formation. Will the proposed amendments or their resulting costs materially affect the efficiency, competition, and capital formation of funds and other businesses? Comments will be considered by the Commission in satisfying its responsibilities under section 2(c) of the Investment Company Act. Commenters are requested to provide empirical data and other factual support for their views to the extent possible. VIII. Paperwork Reduction Act As discussed in the release in which we adopted rule 22c-2, 66 the rule includes “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995. 67 The Commission is submitting the proposed collections of information to the Office of Management and Budget (“OMB”) for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The title for the collection of information requirements associated with the rule is “Rule 22c-2 under the Investment Company Act of 1940, Redemption fees for redeemable securities.” An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. 66 *See* Adopting Release, *supra* note 4, at Section VI. 67 44 U.S.C. 3501-3520. The proposed amendments would reduce the burdens associated with the collections of information required by the rule, and would not create new collections of information. The proposed amendments should reduce the number of entities affected by the rule as adopted. We are therefore proposing to revise our previous burden estimates under the Paperwork Reduction Act to reflect

(i)new cost and time burden information that we have received from market participants, and

(ii)the revised number of entities that would be affected by the amended rule. This revised Paperwork Reduction Act section contains a number of new cost and hour estimates that are significantly altered from the estimates made in the Adopting Release. Some of these estimates are based on different methods, and different sources, from those in the Adopting Release. Therefore there is not a strict comparability between the estimates here and those made in the Adopting Release. These cost estimates, hourly rate estimates, and the methodology used to make these proposed estimates are based on comments we received in response to the Adopting Release, and on information received from funds, intermediaries, and other market participants during conversations conducted while preparing these proposed amendments. We request comment on any aspect of our staff's estimates regarding the costs of complying with the rule as we propose to amend it. The amendments we are proposing to rule 22c-2 include two distinct “collections of information” for purposes of the Paperwork Reduction Act. The first is related to shareholder information agreements, including the costs and time related to identifying the relevant intermediaries, drafting the agreements, negotiating new agreements or modifying existing ones, and maintaining the agreements in an easily accessible place. The second is related to the costs and time related to developing, maintaining, and operating the systems to collect, transmit, and receive the information required under the shareholder information agreements. 68 68 This second collection of information does not include potential costs or time that funds or intermediaries might choose to incur in analyzing or using the provided information. Both collections of information are mandatory for funds that choose to redeem shares within seven days of purchase. These funds will use the information collected to ensure that shareholders comply with the fund's policies on abusive short-term trading of fund shares. There is a six year recordkeeping retention requirement for the shareholder information agreements required under the rule. A. Shareholder Information Agreements The Commission staff anticipates that most shareholder information agreements will be entered into at the fund complex level, and estimates that there are approximately 900 fund complexes. The Commission staff understands that the number of intermediaries that hold fund shares can vary for each fund complex, from less than 10 for some fund complexes to more than 3000 for others. Based on conversations with fund and financial intermediary representatives, our staff estimates that, on average, under the revised definition of financial intermediary, each fund complex would have approximately 300 financial intermediaries. Industry representatives have informed us that funds would already know and have previously identified the majority of their intermediaries. Therefore funds should expend a limited amount of time and costs related to the identification of such intermediaries. Our staff estimates that identifying the intermediaries with which a fund complex must enter into agreements may take the average fund complex 250 hours of a service representative's time at a cost of $40 per hour, 69 for a total of 225,000 hours at a cost of $9,000,000. 70 Our staff estimates that for a fund complex to prepare the model agreement, or provisions modifying a preexisting agreement, between the fund and the intermediaries, it will require a total of 5 hours of legal time at $300 per hour, for a total of 4500 hours 71 at a total cost of $1,350,000. 69 The title and hourly cost of the person performing the intermediary identification and entering into agreements may vary depending on the fund or financial intermediary. This $40 per hour cost is an average estimate for the hourly cost of employing the person doing the relevant work, derived from conversations with industry representatives. 70 This estimate is based on the following calculations: 250 hours times 900 fund complexes equals 225,000 hours, and 225,000 hours times $40 equals $9,000,000. 71 This estimate is based on the following calculation: 5 hours times 900 fund complexes equals 4500 hours of legal time. The Commission staff estimates that for a fund complex to enter into or modify a shareholder information agreement with each existing intermediary, it would require a total one-time expenditure of approximately 2.5 hours of fund time and 1.5 hours of intermediary time for each agreement, for a total of 4 hours expended per agreement. 72 Therefore, for an average fund complex to enter into shareholder agreements, the fund complex and its intermediaries may expend approximately 1200 hours at a cost of $48,000, 73 and all fund complexes and intermediaries may incur a total one-time burden of 1,080,000 hours at a cost of $43,200,000. 74 The Commission staff understands that there are efforts under way (including an industry task force devoted to the project) to produce standardized shareholder information-sharing model agreements and terms. If fruitful, these efforts may reduce the costs associated with the agreement provision of the rule for both funds and intermediaries. 75 Finally, the Commission staff does not anticipate that funds or intermediaries will incur any new costs in maintaining these agreements in an easily accessible place, because such maintenance is already done as a matter of course. 72 The 4 hour figure represents time incurred by both the fund and the financial intermediary for each agreement. The Commission staff estimates that this 4 hour figure is comprised of approximately 2.5 hours of a fund service representative's time at $40 per hour and 1.5 hours of an intermediary representative's time at $40 per hour. 73 This estimate is based on the following calculations: 4 hours times 300 intermediaries equals 1200 hours; and 1200 hours times $40 dollars per hour equals $48,000. 74 This estimate is based on the following calculations: 1200 hours times 900 fund complexes equals 1,080,000 hours; and 1,080,000 hours times $40 per hour equals $43,200,000. 75 *See* Tom Leswing, *Redemption Rule Fuels Demand For New Standards* , Ignites (Oct. 26 2005). The staff therefore estimates that, for purposes of the Paperwork Reduction Act, the shareholder information agreement provision of the rule as proposed to be revised would require a total of 1,309,500 hours at a total cost of $53,550,000. 76 76 This estimate is based on the following calculation: 4,500 hours of legal drafting time plus 1,080,000 hours of agreement negotiating time plus 225,000 hours of intermediary identification time equals 1,309,500 total hours; and $43,200,000 plus $1,350,000 plus $9,000,000 equals $53,550,000. B. Information-Sharing Some funds and intermediaries would incur the system development costs discussed in this section, but many would not because they already process all of their trades on a fully disclosed basis, use a third party administrator to handle their back office work, 77 or already have systems in place that allow intermediaries to transmit the shareholder identity and transaction information to funds. Other funds and intermediaries may have special circumstances that could increase the costs they may face in developing and operating systems to comply with the rule. The estimates below represent the Commission staff's understanding of the average costs that might be encountered by a typical fund complex or intermediary in complying with the information-sharing aspect of the rule as proposed to be amended. 77 Third party administrators maintain accounts for many other intermediaries, and therefore incur the costs to develop a single system. 1. Funds The Commission staff understands that various organizations have developed, or are in the process of developing, enhancements to their systems that will allow funds and intermediaries to share the information required by the rule without developing or maintaining systems of their own. 78 Our staff anticipates that most funds and intermediaries will use these systems, and will generally make minor changes to their back office systems to comply with the rule requirements and to match their systems to those of the service providers. Our staff estimates that most funds could adapt their in-house systems to utilize these service providers' systems at a one-time cost of approximately $10,000 or less. 79 In general, our staff understands that fees averaging 25 cents for every 100 account transactions requested may be charged when funds request information from intermediaries, and in response, intermediaries transmit the information back to funds. 78 These service providers systems include the NSCC's Fund/SERV system, as well as other systems being developed by a number of other providers such as SunGard and Charles Schwab. *See supra* note 40. 79 We expect that, in many cases, upgrades to fund transfer agents' as well as fund complex's systems will take place, and the transfer agents' costs will be charged back to the fund complex. These system development and operation costs include our staff's estimates of the potential charges by transfer agents, but do not include potential charges by intermediaries for providing the information. As an example of the cost of using these services, if a fund complex requests information for 100,000 transactions each week, then it would incur costs of $250 each week, or $13,000 a year. 80 Our staff estimates that approximately 475 fund complexes would use these systems (including substantially all of the largest, and most of the medium-sized, fund families). If all of these complexes use these service providers' systems at the rate described above, they would incur a one-time system development cost of $4,750,000 81 and an annual system use cost of approximately $6,175,000. 82 Those 475 fund complexes may also incur system development costs related to the processing of information under the rule on trades that they receive through other channels than these service providers' systems, which we estimate to cost approximately $50,000 per fund complex, and $20,000 annually, for a total of $23,750,000 83 in system development costs and $9,500,000 annually. 84 Our staff estimates that the total system development cost for these 475 fund complexes that are likely to use these existing systems is $28,500,000 with annual operation costs of $15,675,000. 85 80 This estimate is based on the following calculations: 100,000 transaction requests times one quarter of a cent (the charge is 25 cents per 100 transactions requested, or one quarter of a cent per transaction) equals $250; and $250 times 52 weeks equals $13,000. 81 This estimate is based on the following calculation: 475 fund complexes times $10,000 (one-time system update costs) equals $4,750,000. 82 This estimate is based on the following calculation: 475 fund complexes times $13,000 (annual costs) equals $6,175,000. 83 This estimate is based on the following calculation: 475 fund complexes times $50,000 system development cost per fund complex equals $23,750,000. 84 This estimate is based on the following calculation: 475 fund complexes times $20,000 annual costs per fund complex equals $9,500,000. 85 This estimate is based on the following calculations: $23,750,000 plus $4,750,000 (one-time system development costs) equals $28,500,000 total start-up costs for fund complexes utilizing existing systems; and $6,175,000 plus $9,500,000 equals $15,675,000 in annual costs. There are approximately 900 fund complexes currently operating, of which approximately 475 may use these existing systems, leaving approximately 425 fund complexes possibly needing to develop specific systems to meet their own particular needs. Our staff understands that approximately 75 percent of those fund complexes (or 319 complexes) are small to medium-sized direct-sold funds that have a very limited number of intermediaries. Our staff anticipates that those 319 fund complexes would incur minimal system development costs to comply with the information-sharing provisions of the rule, due to the limited number of intermediaries with which they interact. Our staff estimates that system development costs for handling information under the rule for those 319 fund complexes will be approximately $25,000 each, with annual operation costs of approximately $10,000, for a total system development cost of $7,975,000 86 and an annual operations cost of $3,190,000. 87 86 This estimate is based on the following calculations: 319 funds times $25,000 equals $7,975,000. 87 This estimate is based on the following calculations: 319 funds times $10,000 equals $3,190,000. The remaining approximately 106 fund complexes may face additional complexities or special circumstances in developing their systems. Our staff estimates that the start-up costs for those fund complexes will be approximately $100,000 per fund complex and the annual costs for handling the information will be approximately $25,000, for a total start-up cost of $10,600,000 and an annual cost of $2,650,000 for these fund complexes. 88 88 This estimate is based on the following calculations: 106 funds times $100,000 equals $10,600,00; and 106 funds times $25,000 equals $2,650,000. For purposes of the Paperwork Reduction Act, our staff therefore estimates that the information-sharing provisions of the rule as proposed to be amended would cost all fund complexes a total of approximately $47,075,000 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and receive the required identity and transaction information from intermediaries, and a total of $21,515,000 each year thereafter in operation costs related to the transmission and receipt of the information. 89 89 This estimate is based on the following calculations: $28,500,000 ( funds' that use service providers start-up costs) plus $7,975,000 (direct-traded funds' start-up costs) plus $10,600,000 (other funds' start-up costs) equals $47,075,000 system development costs; and $15,675,000 (funds' that use service providers start-up costs) plus $3,190,000 (direct-traded funds' annual costs) plus $2,650,000 (other funds' annual costs) equals $21,515,000 annual funds' costs. 2. Intermediaries The Commission staff estimates that there are approximately 7000 intermediaries that may provide information pursuant to the information-sharing provisions of rule 22c-2. 90 Of those 7000 intermediaries, our staff anticipates that approximately 350 of these intermediaries are likely to primarily use the existing systems that are in place or under development. 91 The staff understands that these approximately 350 intermediaries include several major “clearing brokers” and third-party administrators that aggregate trades and handle the back-end work for thousands of other smaller broker-dealers and intermediaries, thereby likely providing access to these service providers' information-sharing systems to a significant majority of all intermediaries in the marketplace. Our staff estimates that these approximately 350 intermediaries would provide access to systems that will allow for the transmission of information required by the rule and other processing for the transactions of approximately 80 percent of the 7000 intermediaries (5600 intermediaries) effected by the rule, leaving 1400 intermediaries that do not in some way utilize these systems, and that may need to develop their own systems. 92 90 This 7000 number is a rounded estimate, based on the number of intermediaries that may be affected by the rule as we propose to revise it. It consists of the following: 2203 broker-dealers classified as specialists in fund shares, 196 insurance companies sponsoring registered separate accounts organized as unit investment trusts, approximately 2400 banks that sell funds or variable annuities (the number of banks is likely over inclusive as it may include a number of banks that do not sell registered variable annuities or funds and/or banks that do their business through a registered broker-dealer on the same premises), and approximately 2000 retirement plans, third-party administrators, and other intermediaries (this number may be either over or under inclusive, as under the rule as we propose to revise it, the actual number of intermediaries that funds have is dependent on the precise application of varying fund policies on short-term trading). 91 *See supra* note 40. 92 This number is based on the following calculation: 7000 total intermediaries times 20% (the percentage of intermediaries do not use these service providers systems or use the services of the those 350 intermediaries that do) equals 1400 intermediaries that do not use these service providers' systems. Our staff understands that in general, the providers who have developed or are developing these information sharing systems charge the fund, and not the intermediary for providing these systems to transmit shareholder identity and transaction information, or else include access to such systems as a complementary part of their other processing systems, and do not charge additional fees to intermediaries for its utilization. These intermediaries may be required to develop systems to ensure that they are able to transmit the records to these service providers in a standardized format. 93 Our staff estimates that it may cost each of these 350 intermediaries approximately $200,000 to update its systems to record and transmit shareholder identity and transaction records to these service providers, and an additional $100,000 each year to operate their own systems for communicating with the service providers, for a total start-up cost of $70,000,000, and an annual cost of $35,000,000. 94 We understand that these approximately 350 intermediaries may also have to upgrade their systems to handle rule 22c-2 information on trades that do not go through the service providers' systems. Our staff estimates that it will cost each of those 350 intermediaries 95 an additional $250,000 96 to update their systems, and $100,000 annually to process rule 22c-2 information through non service provider networks, for a total cost of $87,500,000 in system development costs and $35,000,000 in annual costs to process data through non service provider networks. Our staff therefore estimates that these approximately 350 intermediaries will incur a total of approximately $157,500,000 in start-up costs and $70,000,000 in annual costs associated with the information-sharing provisions of the rule. 97 93 Our staff anticipates that in most cases, first-tier intermediaries will use the same or slightly modified systems that they have developed to identify and transmit shareholder identity and transaction information to funds when collecting and transmitting this information from indirect intermediaries. Therefore, we have also included the costs of developing and operating systems to collect information from indirect intermediaries and providing the information to funds in these estimates. 94 This estimate is based on the following calculation: 350 broker-dealer times $200,000 (start-up costs) equals $70,000,000; and 350 broker-dealer times $100,000 (start-up costs and annual costs) equals $35,000,000. 95 The estimate includes higher costs for these 350 intermediaries in developing systems to handle non service provider information than for remaining intermediaries to handle the same data due to our staff's understanding that, in general, these 350 intermediaries that utilize the service provider's networks represent the largest intermediaries in the marketplace, and will face the highest costs in complying with the rule. 96 Many of the costs that intermediaries incur in developing and operating systems to handle this information may be recouped from fund complexes through a variety of methods. However, it is unclear what recoupment might take place, and therefore the cost estimates for funds and intermediaries are made here prior to any potential recoupment. 97 This estimate is based on the following calculations: $70,000,000 (intermediary start-up costs for processing information through service providers) plus $87,500,000 (intermediary start-up costs for handling information through other channels) equals $157,500,000; and $35,000,000 (intermediary annual costs for processing information through service providers) plus $35,000,000 (intermediary annual costs for handling information through other channels) equals $70,000,000. The fund complexes and intermediaries that do not use these service providers' systems to process their trades would have to either develop their own systems to share information under the rule or engage some other third-party administrator to process the information. Our staff estimates that approximately 1400 intermediaries will not utilize these service provider systems to process this information, and estimates that each of these intermediaries will incur $50,000 in system development costs and $50,000 in annual costs in complying with the rule, for a total of $70,000,000 in development costs and $70,000,000 in annual costs for those intermediaries. 98 We understand that there is a task force that is in the process of developing industry standards for transmitting information under the rule between market participants that do not use these service provider systems. 99 This is likely to reduce costs to both funds and intermediaries. 98 This estimate is based on the following calculation: 1400 intermediaries times $50,000 (development costs) equals $70,000,000; and 1400 intermediaries times $50,000 (annual costs) equals $70,000,000. 99 *See* Tom Leswing, *Redemption Rule Fuels Demand For New Standards,* Ignites (Oct. 26 2005). Our staff estimates that the information-sharing provisions of the rule will cost all intermediaries a total of approximately $227,500,000 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and transmit the required identity and transaction information to funds and from other intermediaries, and a total of $140,000,000 each year thereafter in operation costs related to the transmission and receipt of the information. 100 100 This estimate is based on the following calculations: $157,500,000 (intermediaries that use service providers' start-up costs) plus $70,000,000 (other intermediaries' start-up costs) equals $227,500,000 in total intermediary start-up costs; and $70,000,000 (intermediaries that use service providers annual costs) plus $70,000,000 (other intermediaries' annual costs) equals $140,000,000 in annual costs. Although the rule does not require first-tier intermediaries to enter into an agreement with their indirect intermediaries to share the indirect intermediaries' underlying shareholder data to funds upon a fund's request, we anticipate that in many cases intermediaries will nonetheless enter into such agreements, or at least enter into informal arrangements and design methods by which to collect the shareholder information. Our staff estimates that each of the 7000 intermediaries potentially affected by the rule will spend approximately 150 hours of service representatives' time at $40 per hour, and 10 hours of legal counsel time at $300 per hour, for a total of 1,050,000 hours of service representatives' time at a cost of $42,000,000, and 70,000 hours of in-house legal time at a cost of $21,000,000 to design and enter into these arrangements with other intermediaries. 101 The Commission staff therefore estimates that intermediaries will expend a total of approximately 1,120,000 hours at a cost of $63,000,000 to enter into arrangements to ensure the proper transmittal of information to funds through chains of intermediaries. 102 101 This estimate is based on the following calculations: 7000 intermediaries times 150 service representative hours at $40 per hour equals 1,050,000 hours at a cost of $42,000,000; and 7000 intermediaries times 10 hours of in-house legal time at $300 per hour equals 70,000 hours at a cost of $21,000,000. 102 This estimate is based on the following calculations: 1,050,000 service representative hours at $42,000,000 plus 70,000 in-house counsel hours at $21,000,000 equals 1,120,000 hours at $63,000,000. C. Total Costs and Hours Incurred For purposes of the Paperwork Reduction Act, our staff estimates that the amended rule would have a total collection of information cost in the first year to both funds and intermediaries of $274,575,000 in one-time start-up costs, and annual operation costs of $161,515,000. 103 Our staff estimates that the weighted average annual cost of the rule to funds and intermediaries for each of the first three years would be $253,040,000. 104 The total hours expended by both funds and intermediaries in complying with the amended rule would be a one-time expenditure of 2,429,500 hours at a total internal cost of $116,550,000. 105 We anticipate that there will be a total of approximately 7900 106 respondents, with approximately 3,510,000 total responses in the first year, and 3,240,000 annual responses each year thereafter. 107 103 This estimate is based on the following calculation: $47,075,000 (fund start-up costs) plus $227,500,000 (intermediary start-up costs) equals $274,575,000 in total start-up costs; and $21,515,000 (fund annual costs) plus $140,000,000 (intermediary annual costs) equals $161,515,000 in total annual costs. 104 This estimate is based on the following calculation: $274,575,000 in total start-up costs plus $484,545,000 (3 years at $161,515,000 in total annual costs) equals $759,120,000 in total costs over a three year period. $759,545,000 divided by three years, equals a weighted average cost of $253,040,000 per year. 105 This estimate is based on the following calculations: 1,309,500 hours at a cost of $53,550,000 in agreement time plus 1,120,000 hours at a cost of $63,000,000 in chain of intermediary arrangement time equals 2,429,500 hours at a cost of $116,550,000. For purposes of the Paperwork Reduction Act, the Adopting Release included an estimate of the total start up costs to funds and financial intermediaries in complying with the collection of information aspect of the rule of approximately $1,111,500,000. We estimate that if the proposed amendments are adopted, for purposes of the Paperwork Reduction Act, funds and intermediaries would incur the reduced amount of $274,575,000 in start-up costs, for a potential cost reduction of approximately $836,925,000. In the Adopting Release we also estimated that the ongoing annual costs would be $390,556,800. We estimate that if the proposed amendments are adopted, for purposes of the Paperwork Reduction Act, funds and intermediaries would incur the reduced amount of $161,515,000 in total annual costs, for a potential ongoing annual cost reduction of approximately $229,041,800. 106 This estimate is based on the following calculation: 7000 intermediaries plus 900 fund complexes equals 7900 respondents. 107 This estimate is based on the following calculation: 900 fund complexes with an average of 300 intermediaries each, equals 270,000 one time responses for the shareholder information portion of the collection (900 funds times 300 intermediaries equals 270,000). Assuming that each fund requests information from each of its intermediaries once each month, the total number of annual responses would be 3,240,000 (270,000 fund intermediaries times 12 months equals 3,240,000 annual responses). Therefore, in the first year, there would be 3,510,000 total responses (3,240,000 monthly responses plus the 270,000 initial responses required for the agreements) and 3,240,000 annual responses thereafter. D. Request for Comments We request comment on whether these estimates are reasonable. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments in order to:

(i)Evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility;

(ii)evaluate the accuracy of the Commission's estimate of the burden of the proposed collections of information;

(iii)determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and

(iv)minimize the burden of the collections of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology. Persons wishing to submit comments on the collection of information requirements of the proposed amendments should direct them to the Office of Management and Budget, Attention Desk Officer of the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Room 10102, New Executive Office Building, Washington, DC 20503, and should send a copy to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-0609 with reference to File No. S7-06-06. OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication of this Release; therefore a comment to OMB is best assured of having its full effect if OMB receives it within 30 days after publication of this Release. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-06-06, and be submitted to the Securities and Exchange Commission, Records Management, Office of Filings and Information Services. IX. Initial Regulatory Flexibility Analysis This Initial Regulatory Flexibility Analysis (“IRFA”) has been prepared in accordance with 5 U.S.C. 603. It relates to amendments to rule 22c-2 under the Investment Company Act, which we are proposing in this Release. A. Reasons for the Proposed Action Rule 22c-2 allows funds to recover some, if not all, of the direct and indirect ( *e.g.* , market impact and opportunity) costs incurred when shareholders engage in short-term trading of the fund's shares, and to deter this short-term trading. As discussed more fully in Sections I and II of this Release, the proposed amendments to rule 22c-2 are necessary to clarify any potentially misleading interpretations of the rule, to enable funds and intermediaries to reduce costs associated with entering into agreements under the rule, and to enable funds to focus their short-term trading deterrence efforts on the entities most likely to violate fund policies. The proposed amendments would also set forth the limitations on transactions between a fund and an intermediary with whom the fund does not have an agreement. B. Objectives of the Proposed Action As discussed more fully in Sections I and II of this Release, the objective of the proposed rule amendments is to ensure that the investor protections of rule 22c-2 are fully maintained, while reducing costs to all participants, and addressing certain issues with the rule as adopted. C. Legal Basis As indicated in Section X of this Release, these amendments to rule 22c-2 are proposed pursuant to the authority set forth in sections 6(c), 22(c) and 38(a) of the Investment Company Act. 108 108 15 U.S.C. 80a-6(c), 80a-22(c) and 80a-37(a). D. Small Entities Subject to the Proposed Rule and Amendments A small business or small organization (collectively, “small entity”) for purposes of the Regulatory Flexibility Act is a fund that, together with other funds in the same group of related investment companies, has net assets of $50 million or less as of the end of its most recent fiscal year. 109 Of approximately 3,925 funds (2,700 registered open-end investment companies and 825 registered unit investment trusts), approximately 163 are small entities. 110 A broker-dealer is considered a small entity if its total capital is less than $500,000, and it is not affiliated with a broker-dealer that has $500,000 or more in total capital. 111 Of approximately 7,000 registered broker-dealers, approximately 880 are small entities. 109 17 CFR 270.0-10. 110 Some or all of these entities may contain multiple series or portfolios. If a registered investment company is a small entity, the portfolios or series it contains are also small entities. 111 17 CFR 240.0-10. As discussed above, rule 22c-2 provides funds and their boards with the ability to impose a redemption fee designed to reimburse the fund for the direct and indirect costs incurred as a result of short-term trading strategies, such as market timing. The proposed amendments are designed to maintain these investor protections while reducing costs to market participants and clarifying the Commission's intent as to the proper interpretation of the rule. While we expect that the rule and these proposed amendments would require some funds and intermediaries to develop or upgrade software or other technological systems to enforce certain market timing policies, or make trading information available in omnibus accounts, the amendments we are proposing today are specifically designed to reduce the costs incurred by small entities. In particular, we anticipate that the changes we propose to make to the definition of financial intermediary would significantly reduce the number of small intermediaries that funds must enter into agreements with, and reduce the burden of complying with the rule for small funds and small intermediaries. We request that commenters address the costs of complying with these amendments, including specific data on costs when available and a description of the likely technologies that may be used. E. Reporting, Recordkeeping, and Other Compliance Requirements The proposed amendments do not introduce any new mandatory reporting requirements. Rule 22c-2 already contains a mandatory recordkeeping requirement for funds that redeem shares within seven days of purchase. The fund must retain a copy of the written agreement between the fund and financial intermediary under which the intermediary agrees to provide the required shareholder information in omnibus accounts. 112 The proposed amendments reduce the number of small entities that would otherwise be subject to this recordkeeping requirement. 112 Rule 22c-2(a)(3). F. Duplicative, Overlapping, or Conflicting Federal Rules The Commission has not identified any federal rules that duplicate, overlap, or conflict with the proposed rule amendments. G. Significant Alternatives The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities. Alternatives in this category would include:

(i)Establishing different compliance or reporting standards that take into account the resources available to small entities;

(ii)clarifying, consolidating, or simplifying the compliance requirements under the rule for small entities;

(iii)using performance rather than design standards; and

(iv)exempting small entities from coverage of the rule, or any part of the rule. The Commission does not presently believe that these proposed amendments would require the establishment of special compliance requirements or timetables for small entities. These proposed amendments are specifically designed to reduce any unnecessary burdens on all funds (including small funds) and on small intermediaries. To establish special compliance requirements or timetables for small entities may in fact disadvantage small entities by encouraging larger market participants to focus primarily on the needs of larger entities when establishing the information-sharing systems envisioned by the rule and these proposed amendments, and possibly ignoring the needs of smaller entities. Nevertheless, we request comment as to whether establishing special timetables or compliance requirements would benefit small entities, while accomplishing the goals of the rulemaking. Would it benefit small entities to have additional time to comply with these amendments? Should we further revise the rule to reduce the compliance requirements for small entities? Are there other compliance requirement alternatives? With respect to further clarifying, consolidating, or simplifying the compliance requirements of the rule, using performance rather than design standards, and exempting small entities from coverage of these proposed amendments or any part of the rule, we believe such additional changes would be impracticable. These proposed amendments would in effect except a large number of smaller entities from the scope of the rule, by revising the definition of financial intermediary. We have designed these proposed amendments to reduce the cost and compliance burden on small entities to the greatest extent practicable while still maintaining the investor protections of the rule as adopted. Small entities are as vulnerable to the problems uncovered in recent enforcement actions and settlements as large entities. Therefore, shareholders of small entities are equally in need of protection from short-term traders. We believe that the rule and these proposed amendments will enable funds to more effectively discourage short-term trading of all fund shares, including those held in omnibus accounts. Further excepting small entities from coverage of the rule or any part of the rule could compromise the effectiveness of the rule. We anticipate that the proposed amendments would alleviate much of the burden imposed by the rule on small entities, and result in a more cost effective system for discouraging short-term trading for all entities. Alternatives that we considered but are not proposing included, among others,

(i)fully exempting all small entities from complying with the information-sharing aspect of the rule,

(ii)not requiring that the information-sharing agreement obligate first-tier intermediaries to assist in providing information from indirect intermediaries to funds, and

(iii)extending the compliance date for small entities. In light of the above discussion, we request comment on whether it is feasible or necessary to make additional or different accommodations for small entities for compliance with the proposed rule amendments. Should the proposed rule amendments be further altered in order to ease the regulatory burden on small entities, without sacrificing its effectiveness? Are there additional alternatives that we have not considered? H. Solicitation of Comments The Commission encourages the submission of comments with respect to any aspect of this IRFA. Comment is specifically requested on the number of small entities that would be affected by the proposed rule, and the likely impact of the proposals on small entities. Commenters are asked to describe the nature of any impact and provide empirical data supporting its extent. These comments will be considered in connection with any adoption of the proposed rule and amendments, and will be reflected in the Final Regulatory Flexibility Analysis. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/proposed.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number S7-06-06 on the subject line; or • Use the Federal eRulemaking Portal ( *http://www.regulations.gov* ). Follow the instructions for submitting comments. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303. All submissions should refer to File Number S7-06-06. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/proposed.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549. X. Statutory Authority The Commission is proposing amendments to rule 22c-2 pursuant to the authority set forth in sections 6(c), 22(c) and 38(a) of the Investment Company Act [15 U.S.C. 80a-6(c), 80a-22(c) and 80a-37(a)]. List of Subjects in 17 CFR Part 270 Investment companies, Reporting and recordkeeping requirements, Securities. Text of Proposed Rule For reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows: PART 270—RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940 1. The authority citation for part 270 continues to read in part as follows: Authority: 15 U.S.C. 80a-1 *et seq.* , 80a-34(d), 80a-37, and 80a-39, unless otherwise noted. 2. Section 270.22c-2 is revised to read as follows: § 270.22c-2 Redemption fees for redeemable securities.

(a)*Redemption fee.* It is unlawful for any fund issuing redeemable securities, its principal underwriter, or any dealer in such securities, to redeem a redeemable security issued by the fund within seven calendar days after the security was purchased, unless it complies with the following requirements:

(1)*Board determination.* The fund's board of directors, including a majority of directors who are not interested persons of the fund, must either:

(i)Approve a redemption fee, in an amount (but no more than two percent of the value of shares redeemed) and on shares redeemed within a time period (but no less than seven calendar days), that in its judgment is necessary or appropriate to recoup for the fund the costs it may incur as a result of those redemptions or to otherwise eliminate or reduce so far as practicable any dilution of the value of the outstanding securities issued by the fund, the proceeds of which fee will be retained by the fund; or

(ii)Determine that imposition of a redemption fee is either not necessary or not appropriate.

(2)*Shareholder information.* With respect to each financial intermediary that submits orders to purchase or redeem shares directly to the fund, its principal underwriter or transfer agent, or to a registered clearing agency, the fund (or on the fund's behalf, the principal underwriter, transfer agent, or registered clearing agency), must either:

(i)Enter into a shareholder information agreement with the financial intermediary; or

(ii)Prohibit the financial intermediary from purchasing, on behalf of itself or other persons, securities issued by the fund.

(3)*Recordkeeping.* The fund must maintain a copy of the written agreement under paragraph (a)(2)(i) of this section that is in effect, or at any time within the past six years was in effect, in an easily accessible place.

(b)*Excepted funds.* The requirements of paragraph

(a)of this section do not apply to the following funds, unless they elect to impose a redemption fee pursuant to paragraph (a)(1) of this section:

(1)Money market funds;

(2)Any fund that issues securities that are listed on a national securities exchange; and

(3)Any fund that affirmatively permits short-term trading of its securities, if its prospectus clearly and prominently discloses that the fund permits short-term trading of its securities and that such trading may result in additional costs for the fund.

(c)*Definitions.* For the purposes of this section:

(1)*Financial intermediary* means:

(i)Any broker, dealer, bank, or other person that holds securities issued by the fund, in nominee name;

(ii)A unit investment trust or fund that invests in the fund in reliance on section 12(d)(1)(E) of the Act (15 U.S.C. 80a-12(d)(1)(E)); and

(iii)In the case of a participant-directed employee benefit plan that owns the securities issued by the fund, a retirement plan's administrator under section 3(16)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(A)) or any person that maintains the plan's participant records.

(iv)*Financial intermediary* does not include any person that the fund treats as an individual investor with respect to the fund's policies established for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund.

(2)*Fund* means an open-end management investment company that is registered or required to register under section 8 of the Act (15 U.S.C. 80a-8), and includes a separate series of such an investment company.

(3)*Money market fund* means an open-end management investment company that is registered under the Act and is regulated as a money market fund under § 270.2a-7.

(4)*Shareholder* includes a beneficial owner of securities held in nominee name, a participant in a participant-directed employee benefit plan, and a holder of interests in a fund or unit investment trust that has invested in the fund in reliance on section 12(d)(1)(E) of the Act. A shareholder does not include a fund investing pursuant to section 12(d)(1)(G) of the Act (15 U.S.C. 80a-12(d)(1)(G)), a trust established pursuant to section 529 of the Internal Revenue Code (26 U.S.C. 529), or a holder of an interest in such a trust.

(5)*Shareholder information agreement* means a written agreement under which a financial intermediary agrees to:

(i)Provide, promptly upon request by a fund, the Taxpayer Identification Number of all shareholders who have purchased, redeemed, transferred, or exchanged fund shares held through an account with the financial intermediary, and the amount and dates of such shareholder purchases, redemptions, transfers, and exchanges;

(ii)Execute any instructions from the fund to restrict or prohibit further purchases or exchanges of fund shares by a shareholder who has been identified by the fund as having engaged in transactions of fund shares (directly or indirectly through the intermediary's account) that violate policies established by the fund for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund; and

(iii)Use best efforts to determine, promptly upon the request of the fund, whether any other person that holds fund shares through the financial intermediary is itself a financial intermediary (“indirect intermediary”) and, upon further request by the fund,

(A)Provide (or arrange to have provided) the identification and transaction information set forth in paragraph (c)(5)(i) of this section regarding shareholders who hold an account with an indirect intermediary; or

(B)Restrict or prohibit the indirect intermediary from purchasing, on behalf of itself or other persons, securities issued by the fund. Dated: February 28, 2006. By the Commission. Nancy M. Morris, Secretary. [FR Doc. E6-3164 Filed 3-6-06; 8:45 am] BILLING CODE 8010-01-P POSTAL SERVICE 39 CFR Part 111 New Preparation for Periodicals Flats in Mixed Area Distribution Center Bundles and Sacks AGENCY: Postal Service. ACTION: Proposed rule. SUMMARY: The Postal Service currently allows Periodicals mailers to prepare two types of mixed area distribution center

(ADC)bundles and sacks, including a new type of optional mixed ADC bundle and sack that improves service for Periodicals without adding processing costs. We are proposing to make this optional separation a requirement beginning July 6, 2006. DATES: We must receive comments on our proposed standards on or before April 6, 2006. ADDRESSES: Mail or deliver written comments to the Manager, Mailing Standards, U.S. Postal Service, 475 L'Enfant Plaza SW., Room 3436, Washington DC 20260-3436. You may inspect and photocopy all written comments between 9 a.m. and 4 p.m., Monday through Friday, at USPS Headquarters Library, 475 L'Enfant Plaza SW., 11th Floor North, Washington DC 20260. FOR FURTHER INFORMATION CONTACT: Donald Lagasse, 202-268-7269. SUPPLEMENTARY INFORMATION: On October 27, 2005, the Postal Service provided Periodicals mailers an option to separate their residual mail prepared in mixed area distribution center

(ADC)bundles and sacks and to create a new type of mixed ADC bundle and sack. We offered this option because it improves service for some Periodicals without adding processing costs. The new separation allows us to integrate Periodicals flats into the First-Class mailstream for Periodicals addressed to destinations within the First-Class Mail surface transportation reach of the office of entry. Under the new preparation, mailers separate some mixed ADC mail according to the destination ZIP Codes in new labeling list L201. Pieces prepared according to L201 are processed with First-Class Mail by the entry office. The remaining mixed ADC mail destined for ZIP Codes farther from the office of entry is sent to one of the 34 origin facilities designated in labeling list L009 for consolidated processing. To fully benefit from this new preparation, Periodicals mailers should begin preparing Periodicals mail under these standards as soon as possible. Having all mixed ADC mail prepared uniformly allows us to establish a consistent network and operating procedure for handling this mail across our processing facilities. Processing some Periodicals mail with the existing outgoing First-Class Mail at approximately 330 locations will have little impact on the operations at these offices but will relieve the 34 locations currently processing this consolidated volume of a significant amount of work. Finally, splitting the mixed ADC mail currently prepared in one or more sacks into two separations will have minimal or, in some cases, no impact on the number of containers that are prepared in Periodicals mailings. Although we are exempt from the notice and comment requirements of the Administrative Procedure Act [5 U.S.C. of 553(b), (c)] regarding proposed rulemaking by 39 U.S.C. 410(a), we invite 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. List of Subjects in 39 CFR Part 111 Postal Service. Accordingly, 39 CFR part 111 is proposed to be amended as follows: PART 111—[AMENDED] 1. The authority citation for 39 CFR part 111 continues to read as follows: Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001-3011, 3201-3219, 3403-3406, 3621, 3626, 5001. 2. Amend *Mailing Standards of the United States Postal Service,* Domestic Mail Manual

(DMM)as follows: 705 Advanced Preparation and Special Postage Payment Systems 9.0 Preparation for Cotraying and Cosacking Bundles of Automation and Presorted Flats 9.2 Periodicals 9.2.5 Sack Preparation and Labeling [ *Revise the bundle labeling requirements in item f for origin mixed ADC mail.* ] f. *Origin mixed ADC.* Required for any remaining pieces for destinations in L201, Column C, of the origin ZIP Code in Column A. There is no minimum for the number of pieces in the sack, but bundles of fewer than six pieces at 5- digit, 3-digit, and ADC bundle levels are not permitted. 1. Line 1: Use L201, Column C. 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS WKG W FCM.” 9.2.6 Optional Tray Preparation—Flat-Size Pieces a. ADC * * * [ *Revise item a2 to match the CIN code.* ] 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS,” followed by “ADC,” followed by “BC/NBC.” c. Mixed ADC * * * [ *Revise item c2 to match the CIN code.* ] 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS,” followed by “BC/NBC WKG.” 10.0 Preparation for Merged Containerization of Bundles of Flats Using City State Product 10.1 Periodicals 10.1.4 Sack Preparation and Labeling [ *Revise the preparation requirements in item h for origin mixed ADC mail.* ] h. *3-digit through mixed ADC sacks.* Any 5-digit scheme and 5-digit bundles remaining after preparing sacks under 10.1.4a through 10.1.4g, and all 3-digit scheme, 3-digit, ADC, origin mixed ADC, and mixed ADC bundles must be sacked and labeled according to the applicable requirements under 9.2 for cosacking of automation rate and presorted rate bundles, except if there are no automation rate pieces in the mailing job, sack and label under 707.22.6, or, if there are no presorted rate bundles in the mailing job, sack and label under 707.25.3. 11.0 Preparation of Cobundled Automation Rate and Presorted Rate Flats 11.2 Periodicals 11.2.2 Bundle Preparation [ *Revise the bundling requirements in item g for origin mixed ADC mail.* ] g. *Origin mixed ADC,* required; no minimum; for any remaining pieces for destinations of the origin ZIP Code in L201, Column C, of the origin ZIP Code in Column A; tan Label X or OEL. 707 Periodicals 22.0 Preparation of Presorted Periodicals 22.2 Bundle Preparation [ *Revise the bundle labeling requirements in item e for origin mixed ADC mail.* ] e. *Origin mixed ADC,* required; no minimum; for any remaining pieces for destinations in L201, Column C, of the origin ZIP Code in Column A; tan label X or OEL. 22.6 Sack Preparation—Flat-Size Pieces and Irregular Parcels [ *Revise the sacking requirements in item f for origin mixed ADC mail.* ] f. *Origin mixed ADC,* required; no minimum; for any remaining bundles for destinations in L201, Column C, of the origin ZIP Code in Column A. 1. Line 1: Use L201, Column C. 2. Line 2: “PER” or “NEWS” as applicable, followed by “FLTS” or “IRREG” as applicable, followed by “WKG W FCM.” 25.0 Preparation of Flat-Size Automation Periodicals 25.2 Bundling and Labeling [ *Revise the bundling and labeling requirements in item f for origin mixed ADC mail.* ] f. *Origin mixed ADC,* required; no minimum; for any remaining pieces for destinations in L201, Column C, of the origin ZIP Code in Column A; tan label X or OEL. 25.3 Sacking and Labeling [ *Revise the sacking and labeling requirements in item g for origin mixed ADC mail.* ] g. *Origin mixed ADC,* required; no minimum; for any remaining pieces for destinations in L201, Column C, of the origin ZIP Code in Column A; labeling: 1. Line 1: Use L201, Column C. 2. Line 2: “PER FLTS WKG W FCM” or “NEWS FLTS WKG W FCM,” as applicable. We will publish an appropriate amendment to 39 CFR 111 to reflect these changes if our proposal is adopted. Neva R. Watson, Attorney, Legislative. [FR Doc. E6-3143 Filed 3-6-06; 8:45 am] BILLING CODE 7710-12-P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 Endangered and Threatened Wildlife and Plants; 12-Month Finding on a Petition To List Agave eggersiana and Solanum conocarpum as Endangered AGENCY: Fish and Wildlife Service, Interior. ACTION: Notice of 12-month petition finding. SUMMARY: We, the Fish and Wildlife Service (Service), announce a 12-month finding on a petition to list the plants *Agave eggersiana* (no common name) and *Solanum conocarpum* (marrón bacora) as endangered under the Endangered Species Act of 1973, as amended (Act). After reviewing the best available scientific and commercial information, we find that listing *A. eggersiana* and *S. conocarpum* is not warranted at this time. However, we will continue to seek new information on the biology of these species as well as potential threats. We also ask the public to submit to us any new information that becomes available concerning the status of, or threats to, *A. eggersiana* and *S. conocarpum* . This information will help us monitor the status of these species. If additional data become available, we may reassess the need for listing. DATES: The finding announced in this document was made on February 22, 2006. ADDRESSES: The complete file for this finding is available for inspection, by appointment, during normal business hours at the Boquerón Ecological Services Field Office, U.S. Fish and Wildlife Service, Road 301, Km. 5.1 in Boquerón, Puerto Rico. Please submit any new information, materials, comments, or questions concerning these species or this finding to the above address or P.O. Box 491, Boquerón, Puerto Rico 00622. FOR FURTHER INFORMATION CONTACT: Dr. Jorge E. Saliva, Wildlife Biologist, Boquerón Field Office, at the address above (787-851-7297, ext. 224). SUPPLEMENTARY INFORMATION: Background Section 4(b)(3)(B) of the Act (16 U.S.C. 1531 *et seq.* ) requires that, for any petition to revise the List of Endangered and Threatened Wildlife and Plants that contains substantial scientific and commercial information that listing may be warranted, we make a finding within 12 months of the date of receipt of the petition. The finding must be that the petitioned action is

(a)Not warranted;

(b)warranted; or

(c)warranted, but that the immediate proposal of a regulation implementing the petitioned action is precluded by other pending proposals to determine whether any species is threatened or endangered, and expeditious progress is being made to add or remove qualified species from the List of Endangered and Threatened Wildlife and Plants. Section 4(b)(3)(C) of the Act requires that a petition for which the requested action is found to be warranted but precluded be treated as though resubmitted on the date of such finding (that is, requiring a subsequent finding to be made within 12 months). Each subsequent 12-month finding will be published in the **Federal Register** . On November 21, 1996, we received a petition from the U.S. Virgin Islands Department of Planning and Natural Resources

(DPNR)requesting that we list two species of plants in the U.S. Virgin Islands as endangered: *Agave eggersiana* and *Solanum conocarpum* . We published our finding that the petition to list *A. eggersiana* and *S. conocarpum* presented substantial information indicating that the requested action may be warranted in the **Federal Register** on November 16, 1998 (63 FR 63659) and initiated a status review on these two plants. On September 1, 2004, a lawsuit was filed against the Department of the Interior and the Service by the Center for Biological Diversity challenging our alleged failure to publish a 12-month finding ( *Center for Biological Diversity* v. *Gale Norton et al.* , Civil Action No. 1:04-CV-2553 CAP) (N.D. Ga.). In a Stipulated Settlement Agreement, signed April 27, 2005, we agreed to submit our 12-month finding to the **Federal Register** by February 28, 2006. Biology and Distribution Agave eggersiana *Agave eggersiana* (no common name) is a flowering plant of the family Agavaceae (century plant family) known only from the island of St. Croix in the U.S. Virgin Islands. Two other species occur naturally in the Virgin Islands, *A. missionum* (corita) and *A. sisalana* (sisal), neither of which are endemic to St. Croix. *A. eggersiana* was originally described in 1913 by Trelease from material collected on St. Croix, and it is distinguished from other members of the Agavaceae family by its acaulescent (without an evident leafy stem), non-suckering growth habit (does not reproduce vegetatively by forming offshoots around its base), and fleshy, nearly straight leaves with small marginal prickles (1.00 millimeter

(mm)(0.04 inches (in)) long) that are nearly straight (Britton and Wilson 1923; Proctor and Acevedo-Rodríguez 2005). Its flowers are deep yellow, 5 to 6 centimeters

(cm)(1.95 to 2.34 in) long. Fruits are unknown; after flowering, the panicles (inflorescence) produce numerous small vegetative bulbs, from which the species can be propagated (Proctor and Acevedo-Rodríguez 2005). There is no information available on the biology, ecology, and phenology of *A. eggersiana* . *A. eggersiana* was originally collected in 1913 by Trelease on St. Croix (type location) (Britton and Wilson 1923; Acevedo-Rodríguez 1996; Proctor and Acevedo-Rodríguez 2005). Britton and Wilson

(1923)reported the species from hillsides and plains in the eastern dry districts of St. Croix but did not provide population estimates. Information provided in the petition letter (B. Kojis and R. Boulon, DPNR, pers. comm. 1996) specified that the species was last observed growing in the wild around 1984 to 1986 on St. Croix. In a subsequent letter, DPNR stated that the species “may be extinct” but that “descendants from original plants may exist to the north of Great Pond near the original site of camp Arawak” (D. Plaskett, DPNR, pers. comm. 2003). However, no information was provided to clarify whether or not field surveys had been conducted in the area to search for the original plants. Furthermore, neither letter provided any scientific literature citations or systematic survey information in support of the possibility of extinction or, rather, extirpation from the wild. Proctor and Acevedo-Rodríguez

(2005)provided a general description of the species and state that the species “now appears to be extinct in the wild.” However, no citations or survey information were provided. The Service is uncertain about the original source that reported the extirpation of this species from the wild and has not confirmed that any systematic surveys for this species have been conducted. Therefore, we believe that at present, the status of this species in the wild is unknown. All currently known occurrences of *A. eggersiana* are plants that were cultivated. Britton and Wilson

(1923)noted that *A. eggersiana* has been in cultivation on St. Croix and St. Thomas as an ornamental plant since the early 20th century. The 1996 petition letter reported the existence of several small populations of *A. eggersiana* established on St. Croix through propagation efforts conducted by local horticulturists and botanical gardens. They mentioned that propagated plants were distributed to private individuals for planting as an effort to prevent extinction of this species. However, no information was provided regarding the origin of propagated materials. D. Plaskett (pers. comm. 2003) stated that cultivated plants “have been established” and specified one privately owned residential location. We know of other cultivated specimens on the airport grounds in St. Croix, the University of Virgin Islands in St. Thomas (Acevedo-Rodríguez, Smithsonian Institution, pers. comm. 2005), and at botanical gardens in the United States, such as Fairchild Tropical Garden in Miami, Florida. In summary, both the historic and present status of *A. eggersiana* are unknown; all known plant individuals are cultivars; systematic surveys for the species are lacking; no information is available on the species biology, ecology, and phenology; and no genetic studies have been conducted to determine if there is genetic variability among known individuals. *Solanum conocarpum* *Solanum conocarpum* (marrón bacora) is a dry forest shrub of the Solanaceae, or tomato, family that may attain 3 m (9.8 ft) in height. Its leaves are from 3.5 to 7 cm (0.62 to 1.5 in) wide, oblong-elliptic or oblanceolate (broader at the distal third than the middle), coriaceous (leathery texture), glabrous (not hairy), and have a yellowish midvein. The flowers are usually paired in nearly sessile (not stalked) lateral or terminal cymes (flat-topped flower cluster). The corolla consists of five separate petals that are light violet, greenish at the base, and about 2 cm (0.78 in) wide. The fruit, a berry, is ovoid-conical (teardrop shaped), 2 to 3 cm (0.78 to 1.2 in) long, and turns from green with white striations to golden yellow when ripe (Acevedo-Rodríguez 1996). Little is known about the reproductive biology of this species (Ray and Stanford 2003). Ongoing propagation efforts (such as Ray 2005) will likely provide additional information. Although in the petition letter B. Kojis and R. Boulon (pers. comm. 1996) suggested that *S. conocarpum* might be functionally dioecious (having male and female flowers on different plants), P. Acevedo-Rodríguez (pers. comm. 2002) contradicted this possibility. He believes that the species is not dioecious and documented flowers and fruits in one wild individual he discovered in the White Cliff area (although it was the only individual on that side of the island). Ray and Stanford

(2003)documented that the seeds have thin coats and are therefore unlikely to be represented in the soil seed bank. Ray

(2005)reported ample fruit and seed production in the wild. Although no seedling recruitment was observed in the wild by Ray and Stanford

(2003)and J. Saliva (USFWS, pers. observation (obs.) 2004), Ray

(2005)reported that a few seedlings were observed in the wild population located in Estate Concordia. *S. conocarpum* was originally known from a type specimen collected by L.C. Richard at Coral Bay, St. John (U.S. Virgin Islands), in 1787 (Acevedo-Rodríguez 1996). Although no population estimates are available for the type locality, P. Acevedo-Rodríguez (pers. comm. 2002) reported that the species seemed to be locally common at the beginning of the 19th century. The species was rediscovered in 1992 by P. Acevedo-Rodríguez on the island of St. John (Ray and Stanford 2003). B. Kojis and R. Boulon (pers. comm. 1996) mentioned that only two individuals were known growing in the wild on St. John: One individual on Virgin Islands National Park

(VINP)land, and the other growing on private land. These two localities are consistent with the localities reported by Acevedo-Rodríguez (1996; pers. comm. 2002), who described the habitat as dry, deciduous forest. Acevedo-Rodríguez

(1996)referenced the possibility of the species being present on St. Thomas and mentioned a collection of a sterile specimen from Virgin Gorda (British Virgin Islands (BVI)). Information provided by the B. Kojis and R. Boulon (pers. comm. 1996), however, reported the collection of a sterile specimen from Tortola, BVI. P. Acevedo-Rodríguez (pers. comm. 2002) clarified that his collection of the sterile specimen was from Virgin Gorda, but he believes that the specimen belongs to a different species, *Cestrum laurifolium* , and not *S. conocarpum* . However, no surveys have been conducted in St. Thomas or the BVI to determine if this species is present. On St. John, Ray and Stanford

(2003)reported five mature individuals from a total of six individuals in two locations within VINP (Europa Bay and Reef Bay Valley) and two locations on private land (Base Hill and Sabbat Point). Ray

(2005)reported two additional locations (Estate Concordia and Johnson, Friis, and John's Folly Bays) and estimates close to 200 individuals in the wild. The largest population of *S. conocarpum* is near Nanny Point in Estate Concordia (J. Saliva, pers. obs. 2004). This population consists of approximately 184 plants that had been distributed across three contiguous parcels of privately owned land. Recently, one of the private property owners donated a portion of his property with a significant number of plants to the VINP (R. Boulon, NPS, pers. comm. 2006). The next largest wild population consists of 33 plants located on private land above Johnson, Friis, and John's Folly Bays' catchments. Several efforts have been conducted to propagate *S. conocarpum* in the last decade. B. Kojis and R. Boulon (pers. comm. 1996) reported that a local horticulturist, E. Gibney, was able to propagate the species by cuttings (asexually) collected from the two individuals known from the wild and to get them to reproduce sexually by dusting the flowers. They further report that the “many” seedlings produced “appear to grow vigorously.” This information was corroborated by P. Acevedo-Rodríguez (pers. comm. 2002). He reported that Gibney has successfully reproduced this species and distributed specimens to various places in the Virgin Islands. He reported planted individuals (cultivars) in the Campus of the University of Virgin Islands in St. Thomas, which are sexually reproducing; a few more in the St. George Botanical Garden in St. Croix; and a few plants in Tortola, Cannel Bay Hotel on St. John, New York Botanical Garden, National Botanical Garden in Dominican Republic, and Puerto Rico Botanical Garden. He has performed germination tests and found 100 percent viability. Ray and Stanford

(2003)developed an implementation plan to conduct shadehouse propagation and reintroduce seedlings within the VINP on St. John. This project is in progress. R. Boulon (pers. comm. 2004) reported that Dr. Ray planted approximately 128 individuals in the park. Ray

(2005)started a propagation project from cuttings (cloning) to augment populations of *S. conocarpum* in a private property on St. John. More than 300 cuttings were produced. Rooted cuttings will be planted during the 2006 rainy season (April to May). P. Acevedo-Rodríguez (pers. comm. 2002), believes that both *A. eggersiana* and *S. conocarpum* have either small populations or may be nearly extinct. However, he believes this is not due to the current threat of development, but rather past land use history on the islands of St. Croix and St. John. From the 1700s through the late 1800s, 95 percent or more of these islands suffered intensive and extensive deforestation. St. Croix was colonized in the mid-to late-1600s and sugar cane was the principal product through the late 19th century. St. John was colonized in the early 1700s and divided into estates that principally cultivated sugar cane and cotton on most of the island (Woodbury and Weaver 1987). Acevedo-Rodríguez

(1996)believed that the first 130 years of colonization had been “particularly harsh” on the natural resources of St. John. However, Woodbury and Weaver

(1987)report that many of the estates were abandoned by the late 19th century and that common trees and shrubs regenerated, resulting in most of the island being covered by secondary forest at the time of their report. Approximately three-quarters of St. John is under the administration of the VINP, which was established in 1956 (Woodbury and Weaver 1987). Previous Federal Actions We identified *A. eggersiana* as a category 2 candidate species in the Notice of Review published in the **Federal Register** on September 30, 1993 (58 FR 51144). Before 1996, a category 2 species was one for which the Service had information that proposing as endangered or threatened may be appropriate but for which sufficient information was not currently available to support a proposed rule. Designation of category 2 species was discontinued in the February 28, 1996, Notice of Review (61 FR 7596). This notice redefined candidates to include only species for which we have information needed to propose them for listing. We previously considered *S. conocarpum* as a category 1 candidate species in the Notices of Review published on September 27, 1985 (50 FR 39526) and February 21, 1990 (55 FR 6184). Category 1 candidate species were species for which the Service had information to support a proposed rule to list them as endangered or threatened. We reclassified *S. conocarpum* to a category 2 candidate species in the Notice of Review published on September 30, 1993 (58 FR 51144), due to a lack of available information on the species' distribution and abundance. Summary of Factors Affecting the Species Section 4 of the Act, and implementing regulations at 50 CFR part 424, set forth procedures for adding species to the Federal List of Endangered and Threatened Wildlife and Plants. In making this finding, information regarding the status and threats to these species in relation to the five factors provided in section 4(a)(1) of the Act is summarized below. Listing determinations are made solely on the best scientific and commercial data available, taking into account any efforts being made by any State, private citizen, corporation, or foreign nation to protect the species. We have examined each of the five listing factors under the Act for their application to *A. eggersiana* and *S. conocarpum* as follows: Factor A: The Present or Threatened Destruction, Modification, or Curtailment of the Species' Habitat or Range *Agave eggersiana:* *A. eggersiana* is endemic to the island of St. Croix. Its status in the wild is uncertain, and all known individuals are cultivars planted as ornaments in several areas and facilities in St. Croix and St. Thomas (Proctor and Acevedo-Rodríguez 2005; P. Acevedo-Rodríguez, pers. comm. 2005; D. Plaskett, pers. comm. 2003; B. Kojis and R. Boulon, pers. comm. 1996; Britton and Wilson 1923). Acevedo-Rodríguez (pers. comm. 2002) believes that past land use history, as opposed to the current threat of development, is the likely cause of *A. eggersiana's* apparent small population numbers. We believe that there is not sufficient information to evaluate the extent and imminence of threats and cannot conclude that *A. eggersiana* is threatened or endangered due to the destruction and curtailment of its habitat or range. To our knowledge, no systematic surveys for the species have ever been conducted to determine its true status. *Solanum conocarpum:* The presence of *S. conocarpum* in the wild has been confirmed only on the island of St. John. When the species was petitioned for listing in 1996, only two individuals were known to exist in the wild (B. Kojis and R. Boulon, pers. comm. 1996). Acevedo-Rodríguez

(1996)suggests that as a result of destruction of more than 90 percent of the natural vegetation in St. John, primarily due to cultivation in the first 130 years of colonization, some of the native and endemic plant species have become extinct or nearly extinct. For *S. conocarpum* specifically, P. Acevedo-Rodríguez, (pers. comm. 2002) believes that past land use history, as opposed to the current threat of development, was the likely cause of the species' apparent small population numbers. Furthermore, much of the island regenerated to varying degrees, including secondary successional forest (Woodbury and Weaver 1987; Acevedo-Rodríguez 1996). At present, the species is known from almost 200 wild individuals in six locations. Of the six locations, three are on privately owned land, two are within VINP, and one occurs on both private and VINP land. At the site of the largest number of plants (Estate Concordia/VINP-area), the Service has been working with a private landowner and VINP to implement conservation measures for the species, to protect in perpetuity around 80 percent of the known population, and to expand the current propagation efforts to double existing population in the wild (400 to 500 individuals). Additionally, a portion of the private property where a large number of the plants in this area are found was recently donated to the VINP (R. Boulon, pers. comm. 2006). We do not have evidence suggesting that remaining localities under private ownership where *S. conocarpum* is found are under threat of development. VINP manages for sensitive species, including *S. conocarpum* , within the park. VINP is currently working with the Service and an adjacent landowner in the development of conservation measures and recently accepted the donation of a portion of the private land into VINP ownership (R. Boulon, pers. comm. 2006). Additionally, VINP has a General Management Plan

(GMP)that is in place and being implemented. One purpose of the GMP is to establish strategies and approaches to achieve and maintain desired conditions for the park's cultural and natural resources, including protecting native plants like *S. conocarpum* and their habitats. While residential and tourism development may impact this species, we do not have information suggesting that these threats are occurring or are imminent. Furthermore, we do not know if the species now occurs on St. Thomas or the BVI. Therefore, we do not have sufficient information to conclude that *S. conocarpum* is either threatened or endangered due to the destruction and curtailment of its habitat or range. Factor B: Overutilization for Commercial, Recreational, Scientific, or Educational Purposes The information available on the species does not suggest that overutilization for commercial, recreational, scientific, or educational purposes has contributed to the current status of either *A. eggersiana* or *S. conocarpum* or that any such activities are threats to these species. Factor C: Disease or Predation There have been no systematic studies to identify parasites or disease in these species. Therefore, the role of parasites or disease of *A. eggersiana* and *S. conocarpum* is unknown. Feral pigs uproot juvenile plants and destroy the root system of other species of *Agave* on Mona Island, apparently to feed on or obtain moisture from the roots (J. Saliva, pers. obs. 1983, 1996). Theoretically, should *A. eggersiana* be reintroduced in the wild, it is possible that feral pigs could cause similar impacts, particularly to young plants. Feral donkeys, pigs, and goats could directly and indirectly affect populations of *S. conocarpum* by uprooting and eating seedlings, destabilizing slopes, and dispersing exotic plant species, thus preventing or reducing sustainability of populations of *S. conocarpum* ; however, the extent of such threats to the species is “speculative” (NPS 2003) and “imprecise” (NPS 2004). VINP is implementing reduction plans to control the populations of nonnative feral pigs, goats, and sheep within VINP (NPS 2003, 2004). Feral pig populations in VINP are low, and reduction efforts have been targeted to problem areas (NPS unpublished report. 2006). VINP believes some goats were removed from the park even before the reduction plan commenced, and that removal efforts by VINP were successful at two locations where there have been no reports of goats returning and vegetative growth has increased (NPS unpublished report 2006). Although vegetation trampling by donkeys has been observed at the Estate Concordia population of *S. conocarpum* (M. Carper, property owner, and J. Saliva, pers. obs., 2004), we do not have evidence to conclude that trampling has or would result in mortality of *S. conocarpum* . No seedlings have been reported under mature *S. conocarpum* shrubs. Other than gravity, its fruit dispersal agent is unknown. Where shrub densities are high, hermit crabs have been observed feeding on the fruit (Ray 2005). Fruit and seed production in the largest known wild population of * S. conocarpum * is reported as “ample” (Ray 2005). While hermit crabs consume fallen fruit in large quantities (Ray 2005), we do not know if the crabs act as seed predators (for example, by crushing seed embryos as they feed) and are partly responsible for the low seedling recruitment at this location. At this time, there is no evidence that donkeys, pigs, or goats constitute a specific threat to *A. eggersiana* or *S. conocarpum* by feeding on young or adult, wild or reintroduced, individuals of these species. The effects of consumption of *S. conocarpum* fruits by hermit crabs are uncertain. Therefore, we believe that there is no substantial evidence indicating that either *A. eggersiana* or *S. conocarpum* is threatened or endangered due to disease or predation. Factor D: The Inadequacy of Existing Regulatory Mechanisms The Territory of the U.S. Virgin Islands currently considers *A. eggersiana* and *S. conocarpum* to be endangered under the Virgin Islands Indigenous and Endangered Species Act (V.I. Code, Title 12, Chapter 2), and has amended an existing regulation (Bill No. 18-0403) to protect endangered and threatened wildlife and plants by prohibiting the take, injury, or possession of indigenous plants. The available information on the species does not suggest that inadequacy of current regulatory mechanisms has contributed to the current status of either *A. eggersiana* or *S. conocarpum* or that such mechanisms are current threats to these species. Factor E: Other Natural or Manmade Factors Affecting the Continued Existence of the Species It appears that *A. eggersiana* may be extremely rare and its survival may be dependent on captive propagation and reintroduction. *A. eggersiana* is only found on the island of St. Croix, and it was last observed growing in the wild in the mid-1980s. Horticulturist M. Hays of the St. Georges Botanical Garden herbarium on St. Croix has propagated the species and distributed specimens to the public in the hope of “saving the species from extinction” (B. Kojis and R. Boulon, pers. comm.1996). The status of the species in the wild is uncertain, and its apparent limited abundance and distribution are likely the result of past land use history. However, as systematic surveys of suitable habitat for this species have never been conducted to our knowledge, we do not have enough information to determine the true status of this species in wild and therefore cannot conclude that the species is threatened or endangered due to other natural or manmade factors. *S. conocarpum* is currently known from six locations on St. John. It is possible that the species may occur in St. Thomas or the BVI, or at other locations in St. John. However, no surveys have ever been conducted to our knowledge to determine if the species is present elsewhere. Using the best available scientific and commercial information, we are unable to determine that the small population size constitutes a threat or that it would render the species likely to become endangered or extinct in the near future. In the Caribbean, native plant species, particularly endemic species with limited distribution, may be vulnerable to natural or manmade events, such as hurricanes and human-induced fires. Fire is not a natural component of subtropical dry forest in Puerto Rico and the Virgin Islands. Thus, most species found in this type of forest are not fire-adapted. However, there is no information in the literature indicating that hurricanes or fires have affected the known populations of *S. conocarpum* . Furthermore, the VINP has a fire prevention plan which includes the protection of native species, including *S. conocarpum* . We do not have sufficient information to conclude that this species is threatened or endangered due to other natural or manmade factors. Finding We have carefully assessed the best scientific and commercial information available regarding threats faced by *Agave eggersiana* and *Solanum conocarpum* . We reviewed the petition, available published and unpublished scientific and commercial information, and consulted with recognized plant experts (including those most familiar with the species), and Territorial and other Federal resource agencies. We did not receive additional information from interested parties during the public comment period on our 90-day finding. For us to make a “warranted” finding, the species must, at a minimum, meet the definition of a threatened species. In accordance with section 3(19) of the Act, a threatened species is one which is likely to become endangered within the foreseeable future throughout all or a significant portion of its range. Based on all the information we have gathered and reviewed, we found no evidence that either *A. eggersiana* or *S. conocarpum* are threatened or endangered by overutilization for commercial, recreational, or educational purposes, nor by inadequacies in the existing regulatory mechanisms. We also have no data to show that destruction or curtailment of the species' habitat or range, disease or predation, or other natural or manmade factors threaten *A. eggersiana* or *S. conocarpum* . After reviewing the best available scientific and commercial information, we believe that we do not have sufficient information to determine the true status of either *Agave eggersiana* or *Solanum conocarpum* in the wild and cannot determine if either species meets the definition of threatened or endangered due to one or more of the five listing factors because we do not have sufficient evidence of which threats, if any, are operating on these species. We will continue to monitor the status of these species and their habitats, and will accept additional information and comments at any time from all concerned governmental agencies, the scientific community, industry, and any other interested parties concerning this finding. This information will help us monitor and encourage beneficial measures for *A. eggersiana* and *S. conocarpum* . References Cited A complete list of all references cited herein is available upon request from the Field Supervisor, Boquerón Field Office (see ADDRESSES section). Author The primary author of this document is the Boquerón Field Office (see ADDRESSES section). Authority The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 *et seq.* ). Dated: February 22, 2006. Marshall P. Jones, Jr., Acting Director, U.S. Fish and Wildlife Service. [FR Doc. E6-3095 Filed 3-6-06; 8:45 am] BILLING CODE 4310-55-P 71 44 Tuesday, March 7, 2006 Notices DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service [Docket No. APHIS-2006-0022] Availability of Environmental Assessment for a Proposed Field Trial of Genetically Engineered Bahiagrass AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Notice of availability and request for comments. SUMMARY: We are advising the public that an environmental assessment has been prepared for a proposed field trial using two transgenic grass lines. The trial consists of Argentine bahiagrass plants that are genetically engineered to express resistance to the herbicide glufosinate and resistance to the antibiotic kanamycin. Each of 4 sets of 12 genetically engineered bahiagrass plants will be encircled with a ring of several untransformed cultivars of bahiagrass. The purpose of the field trial is to study the likelihood of hybrid formation as a result of pollen movement from the transgenic plants to the nontransgenic plants. Data gained from this field experiment will also be used to evaluate current confinement practices for this species of transgenic grass. The environmental assessment is available to the public for review and comment. DATES: We will consider all comments that we receive on or before April 6, 2006. ADDRESSES: You may submit comments by either of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov* and, in the “Search for Open Regulations” box, select “Animal and Plant Health Inspection Service” from the agency drop-down menu, then click on “Submit.” In the Docket ID column, select APHIS-2006-0022 to submit or view public comments and to view supporting and related materials available electronically. After the close of the comment period, the docket can be viewed using the “Advanced Search” function in Regulations.gov. • *Postal Mail/Commercial Delivery:* Please send four copies of your comment (an original and three copies) to Docket No. APHIS-2006-0022, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. APHIS-2006-0022. *Reading Room:* You may read the environmental assessment and any comments that we receive in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call

(202)690-2817 before coming. *Other Information:* Additional information about APHIS and its programs is available on the Internet at *http://www.aphis.usda.gov.* FOR FURTHER INFORMATION CONTACT: Dr. Patricia Beetham, Biotechnology Regulatory Services, APHIS, 4700 River Road Unit 147, Riverdale, MD 20737-1236;

(301)734-0664. To obtain copies of the environmental assessment, contact Ms. Ingrid Berlanger at

(301)734-4885; e-mail: *Ingrid.E.Berlanger@aphis.usda.gov.* SUPPLEMENTARY INFORMATION: The regulations in 7 CFR part 340, “Introduction of Organisms and Products Altered or Produced Through Genetic Engineering Which Are Plant Pests or Which There Is Reason to Believe Are Plant Pests,” regulate, among other things, the introduction (importation, interstate movement, or release into the environment) of organisms and products altered or produced through genetic engineering that are plant pests or that there is reason to believe are plant pests. Such genetically engineered organisms and products are considered “regulated articles.” A permit must be obtained or a notification acknowledged before a regulated article may be introduced. The regulations set forth the permit application requirements and the notification procedures for the importation, interstate movement, or release into the environment of a regulated article. On October 21, 2005, the Animal and Plant Health Inspection Service (APHIS) received a permit application (APHIS No. 05-294-02r) from the University of Florida in Marianna, FL, for a field trial using lines of transgenic Argentine bahiagrass. Permit application 05-294-02r describes two transgenic lines of Argentine bahiagrass, *Paspalum notatum* Flugge cv. Argentine: • Line ‘B9' has been genetically engineered to express the phosphinothricin acetyl transferase

(bar)gene from *Streptomyces hygroscopicus,* which confers resistance to glufosinate herbicides. Expression of this gene is controlled by the polyubiquitin ( *ubi* ) promoter, *ubi* 5′ flanking region and the *ubi* first intron sequences from *Zea mays* , and the 35S 3′ region from Cauliflower Mosaic Virus (CaMV). • In addition to the gene sequences above, line ‘P' has also been genetically engineered to express the neomycin phosphotransferase gene (nptII) from *Escherichia coli,* which confers resistance to the antibiotic kanamycin. Expression of this gene is controlled by the enhanced 35S promoter from CaMV, heat shock protein 70 (HSP70) intron from *Zea mays,* and the 35S 3′ region from CaMV. Constructs were inserted into the recipient organisms by microprojectile bombardment. The subject transgenic grasses are considered regulated articles under the regulations in 7 CFR part 340 because they were created using donor sequences from plant pests. The purpose of this proposed introduction is for research on transgenic bahiagrass plants, particularly to investigate the frequency of cross-hybridization between transgenic Argentine bahiagrass with different bahiagrass cultivars under field conditions. Additionally, the data gathered during this study will be used to assess the confined status of this field release and refine the confinement conditions necessary for future releases of this grass species. To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts and plant pest risk associated with the proposed release of these transgenic grasses, an environmental assessment

(EA)has been prepared. The EA was prepared in accordance with:

(1)The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 *et seq.* ),

(2)regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508),

(3)USDA regulations implementing NEPA (7 CFR part 1b), and

(4)APHIS' NEPA Implementing Procedures (7 CFR part 372). Copies of the EA are available from the individual listed under FOR FURTHER INFORMATION CONTACT . Authority: 7 U.S.C. 7701-7772 and 7781-7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.3. Done in Washington, DC, this 1st day of March 2006. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6-3166 Filed 3-6-06; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service [Docket No. APHIS-2006-0003] Horse Protection; Public Meeting in Springfield, MO AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Notice of public meeting. SUMMARY: We are advising the public that the Animal and Plant Health Inspection Service's Animal Care program will host a meeting to present current information on the enforcement of the Horse Protection Act

(HPA)and provide a forum for horse industry members and other interested persons to comment on the Horse Protection Program, development of the HPA Operating Plan for 2007 and beyond, and other Horse Protection matters. This notice provides the meeting's agenda, location, and date. DATES: The meeting will be held from 1 p.m. to 5 p.m. on March 13, 2006. Registration will take place from 12:30 p.m. to 1 p.m. ADDRESSES: The meeting will be held at the University Plaza Hotel and Convention Center, 333 South John Q Hammons Parkway, Springfield, MO 65806. FOR FURTHER INFORMATION CONTACT: Mr. Darby G. Holladay, APHIS Legislative and Public Affairs, 4700 River Road Unit 51, Riverdale, MD 20737;

(301)734-3265. SUPPLEMENTARY INFORMATION: The Animal and Plant Health Inspection Service (APHIS), Animal Care, is announcing a meeting to discuss the enforcement of the Horse Protection Act (HPA). This meeting is designed to provide a forum for information dissemination on current initiatives by Animal Care. Further, this meeting will provide the opportunity for industry members and other interested parties to provide suggestions for the HPA Operating Plan for 2007 and beyond and comments on other Horse Protection Program matters during the listening session period on the agenda. Each speaker will indicate at registration their intention to address the Deputy Administrator during the listening session and will be allotted a set amount of time. Additional meetings of this type are tentatively scheduled to occur on the following dates and times: April 19, 2006, in Dallas, TX; May 17, 2006, in Somerset, KY; June 12, 2006, in Pomona, CA; and September 11, 2006, in Chattanooga, TN. These meetings will be announced in future **Federal Register** notices. The meeting will, with the exception of possible minor modifications, follow the agenda below: 12:30 p.m. to 1 p.m.—Registration. 1 p.m. to 1:15 p.m.—Welcome and Overview. 1:15 p.m. to 3 p.m.—Horse Protection Program Update. 3 p.m. to 4:45 p.m.—Listening Session. 4:45 p.m. to 5 p.m.—Remarks and Closing. Meeting notices, copies of the Horse Protection Act, HPA regulations, the HPA Operating Plan for 2004-2006, and other relevant documents are available on the Animal Care Web site at *http://www.aphis.usda.gov/ac/hpainfo.html.* Please note that this meeting is being held to provide for the exchange of information on the enforcement of the Horse Protection Act and is not an opportunity to submit formal comments on proposed rules or other regulatory initiatives. Written comments will be accepted and should be mailed to: USDA, APHIS, Animal Care, 4700 River Road Unit 84, Riverdale, MD 20737. Done in Washington, DC, this 2nd day of March 2006. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6-3169 Filed 3-6-06; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Food and Nutrition Service Agency Information Collection Activities: Proposed Collection; Comment Request—FNS-543, National Hunger Clearinghouse Database Form AGENCY: Food and Nutrition Service, USDA. ACTION: Notice. SUMMARY: In accordance with the Paperwork Reduction Act of 1995 the Food and Nutrition Service

(FNS)invites the general public and other public agencies to comment on this information collection on which FNS intends to request approval from the Office of Management and Budget (OMB). DATES: Comments on this notice must be received by May 8, 2006. ADDRESSES: Comments are invited on:

(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information has practical utility;

(b)the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions that were used;

(c)ways to enhance the quality, utility, and clarity of the information to be collected;

(d)ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Pam Phillips, Director, Consumer and Community Affairs, Office of Communications and Governmental Affairs, Food and Nutrition Service, U.S. Department of Agriculture, 3101 Park Center Drive, Room 912, Alexandria, VA 22302. All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record. FOR FURTHER INFORMATION CONTACT: Pam Phillips,

(703)305-2298. Copies of this information collection can be obtained from Gregory Walton at the address listed above. SUPPLEMENTARY INFORMATION: *Title:* National Hunger Clearinghouse Database Form. *OMB Number:* 0584-0474. *Form Number:* FNS-543. *Expiration Date:* 7/31/2006. *Type of Request:* Extension of a currently approved information collection. *Abstract:* Section 26(d) of the Richard B. Russell National School Lunch Act (42 U.S.C. 1769g(d)), which was added to the Act by section 123 of Public Law 103-448 on November 2, 1994, mandated that FNS enter into a four-year contract with a non-governmental organization to establish and maintain an information clearinghouse (named “USDA National Hunger Clearinghouse” or “Clearinghouse”) for groups that assist low-income individuals or communities regarding nutrition assistance programs or other assistance. Section 26(d) was amended by section 112 of Public Law 105-336 on October 31, 1998 to extend funding for the Clearinghouse (now called “National Hunger Clearinghouse” or “Clearinghouse”) through fiscal year 2003. This Act was amended by section 128 of Public Law 108-265 on June 30, 2004, and provided increased funding for the Clearinghouse. FNS awarded this contract to the national hunger advocacy organization World Hunger Year

(WHY)of New York, NY. The Clearinghouse includes a database of non-governmental, grassroots programs that work in the areas of hunger and nutrition, as well as a mailing list of relevant local governmental agencies. Under the original contract, Clearinghouse staff established the database by reviewing relevant programs of organizations contained in several existing mailing lists. Program and mailing information about organizations culled from these lists were collected and entered into the database once each contract year (years one through four of the original contract and year one and two of the existing contract) through a series of electronically-processed survey questionnaires sent through the United States Postal Service. Clearinghouse staff followed up by phone or facsimile to ensure the highest possible return rate on the questionnaires. Surveys could also be completed on the World Wide Web. Returned surveys were scanned and data entered into the database. Survey questionnaires will continue to be sent out in the current contract. For this information collection, the following information was determined: *Estimate of the Burden:* Public reporting burden for this collection of information is estimated to average five minutes for the survey (the survey includes one two-page instrument). *Respondents:* The respondents are non-governmental organizations that have grassroots food and nutrition programs. *Estimated Number of Respondents:* 1,750. *Estimated Number of Responses per Respondent:* One response per respondent. *Estimated Total Annual Burden:* 146 hours. Dated: February 28, 2006. Roberto Salazar, Administrator. [FR Doc. E6-3159 Filed 3-6-06; 8:45 am] BILLING CODE 3410-30-P DEPARTMENT OF AGRICULTURE Rural Business-Cooperative Service Maximum Dollar Amount on Awards Under the Rural Economic Development Loan and Grant Program for Fiscal Year 2006 AGENCY: Rural Business-Cooperative Service, USDA. ACTION: Notice. SUMMARY: The Rural Business-Cooperative Service hereby announces the maximum dollar amount on loan and grant awards under the Rural Economic Development Loan and Grant (REDLG) program for fiscal year

(FY)2006. The maximum dollar award on zero-interest loans for FY 2006 is $740,000. The maximum dollar award on grants for FY 2006 is $300,000. The maximum loan and grant awards stated in this notice are effective for loans and grants made during the fiscal year beginning October 1, 2005, and ending September 30, 2006. REDLG loans and grants are available to any electric or telecommunications cooperative eligible to receive guaranteed or direct loans under the Rural Electrification Act, and does not have any delinquent debt with the Federal Government that has not been resolved pursuant to 31 CFR 285.13. REDLG loans and grants are to assist in developing rural areas from an economic standpoint. FOR FURTHER INFORMATION CONTACT: Todd S. Hubbell, Loan Specialist, Rural Business-Cooperative Service, USDA, STOP 3225, Room 6866, 1400 Independence Avenue, SW., Washington, DC 20250-3225. Telephone:

(202)690-2516, Fax:

(202)720-2213. ADDRESSES: For further information, entities wishing to apply for assistance should contact a Rural Development State Office to receive further information and copies of the application package. A list of Rural Development State Offices follows: District of Columbia Rural Business-Cooperative Service, USDA, Specialty Lenders Division, 1400 Independence Avenue, SW., STOP 3225, Room 6867, Washington, DC 20250-3225.

(202)720-1400. Alabama USDA Rural Development State Office, Sterling Centre, Suite 601, 4121 Carmichael Road, Montgomery, AL 36106-3683.

(334)279-3400/TTD

(334)279-3495. Alaska USDA Rural Development State Office, 800 West Evergreen, Suite 201, Palmer, AK 99645-6539.

(907)761-7705/TDD

(907)761-8905. Arizona USDA Rural Development State Office, 230 N. First Avenue, Suite 206, Phoenix, AZ 85003-1706.

(602)280-8700/TTD

(602)280-8705. Arkansas USDA Rural Development State Office, 700 West Capitol Avenue, Room 3416, Little Rock, AR 72201-3225.

(501)301-3200/TTD

(501)301-3279. California USDA Rural Development State Office, 430 G Street, Agency 4169, Davis, CA 95616-4169.

(530)792-5800/TTD

(530)792-5848. Colorado USDA Rural Development State Office, 655 Parfet Street, Room E-100, Lakewood, CO 80215.

(720)544-2903/TDD

(720)544-2976. Delaware-Maryland USDA Rural Development State Office, 1221 College Park Drive, Suite 200, Dover, DE 19904.

(302)857-3580/TDD

(302)857-3585. Florida/Virgin Islands USDA Rural Development State Office, 4440 NW 25th Place, P.O. Box 147010, Gainesville, FL 32614-7010.

(352)338-3400/TDD

(352)338-3450. Georgia USDA Rural Development State Office, Stephens Federal Building, 355 E. Hancock Avenue, Athens, GA 30601-2768.

(706)546-2162/TDD

(706)546-2034. Hawaii USDA Rural Development State Office, Federal Building, Room 311, 154 Waianuenue Avenue, Hilo, HI 96720.

(808)933-8380/TDD

(808)933-8321. Idaho USDA Rural Development State Office, 9173 West Barnes Dr., Suite A1, Boise, ID 83709.

(208)378-5600/TDD

(208)378-5644. Illinois USDA Rural Development State Office, 2118 West Park Court, Suite A, Champaign, IL 61821.

(217)403-6200/TDD

(217)403-6240. Indiana USDA Rural Development State Office, 5975 Lakeside Boulevard, Indianapolis, IN 46278.

(317)290-3100/TDD

(317)290-3340. Iowa USDA Rural Development State Office, Federal Building, Room 873, 210 Walnut Street, Des Moines, IA 50309-2196.

(515)284-4663/TDD

(515)284-4858. Kansas USDA Rural Development State Office, 1303 SW First American Place, Suite 100, Topeka, KS 66604-4040.

(785)271-2700/TDD

(785)271-2767. Kentucky USDA Rural Development State Office, 771 Corporate Drive, Suite 200, Lexington, KY 40503.

(859)224-7300/TDD

(859)224-7422. Louisiana USDA Rural Development State Office, 3727 Government Street, Alexandria, LA 71302.

(318)473-7920/TDD

(318)473-7655. Maine USDA Rural Development State Office, 967 Illinois Avenue, Suite 4, P.O. Box 405, Bangor, ME 04402-0405.

(207)990-9160/TTD

(207)942-7331. Massachusetts/Rhode Island/Connecticut USDA Rural Development State Office, 451 West Street, Suite 2, Amherst, MA 01002-2999.

(413)253-4300/TDD

(413)253-4318. Michigan USDA Rural Development State Office, 3001 Coolidge Road, Suite 200, East Lansing, MI 48823.

(517)324-5100/TDD

(517)337-6795. Minnesota USDA Rural Development State Office, 410 AgriBank Building, 375 Jackson Street, St. Paul, MN 55101-1853.

(651)602-7800/TDD

(651)602-3799. Mississippi USDA Rural Development State Office, Federal Building, Suite 831, 100 West Capitol Street, Jackson, MS 39269.

(601)965-4316/TDD

(601)965-5850. Missouri USDA Rural Development State Office, 601 Business Loop 70 West, Parkade Center, Suite 235, Columbia, MO 65203.

(573)876-0976/TDD

(573)876-9480. Montana USDA Rural Development State Office, 900 Technology Blvd., Unit 1, Suite B, P. O. Box 850, Bozeman, MT 59771.

(406)585-2580/TDD

(406)585-2562. Nebraska USDA Rural Development State Office, Federal Building, Room 152, 100 Centennial Mall North, Lincoln, NE 68508.

(402)437-5551/TDD

(402)437-5093. Nevada USDA Rural Development State Office, 1390 South Curry Street, Carson City, NV 89703-9910.

(775)887-1222/TDD

(775)885-0633. New Jersey USDA Rural Development State Office, 5th Floor North, Suite 500, 8000 Midlantic Drive, Mt. Laurel, NJ 08054.

(856)787-7700/ TDD

(856)787-7784. New Mexico USDA Rural Development State Office, 6200 Jefferson Street NE, Room 255, Albuquerque, NM 87109.

(505)761-4950/ TDD

(505)761-4938. New York USDA Rural Development State Office, The Galleries of Syracuse, 441 South Salina Street, Suite 357, Syracuse, NY 13202-2541.

(315)477-6400/TDD

(315)477-477-6447. North Carolina USDA Rural Development State Office, 4405 Bland Road, Suite 260, Raleigh, NC 27609.

(919)873-2000/TDD

(919)873-2003. North Dakota USDA Rural Development State Office, Federal Building, Room 208, 220 East Rosser Avenue, P. O. Box 1737, Bismarck, ND 58502-1737.

(701)530-2037/TDD

(701)530-2113. Ohio USDA Rural Development State Office, Federal Building, Room 507, 200 North High Street, Columbus, OH 43215-2418.

(614)255-2500/TDD

(614)255-2554. Oklahoma USDA Rural Development State Office, 100 USDA, Suite 108, Stillwater, OK 74074-2654.

(405)742-1000/TDD

(405)742-1007. Oregon USDA Rural Development State Office, 101 SW Main Street, Suite 1410, Portland, OR 97204-3222.

(503)414-3300/TDD

(503)414-3387. Pennsylvania USDA Rural Development State Office, One Credit Union Place, Suite 330, Harrisburg, PA 17110-2996.

(717)237-2299/TDD

(717)237-2261. Puerto Rico USDA Rural Development State Office, 654 Munoz Rivera Avenue, IBM Building, Suite 601, San Juan, Puerto Rico 00918-6106.

(787)766-5095/TDD

(787)766-5332. South Carolina USDA Rural Development State Office, Strom Thurmond Federal Building, 1835 Assembly Street, Room 1007, Columbia, SC 29201.

(803)765-5163/TDD

(803)765-5697. South Dakota USDA Rural Development State Office, Federal Building, Room 210, 200 4th Street, SW., Huron, SD 57350.

(605)352-1100/TDD

(605)352-1147. Tennessee USDA Rural Development State Office, 3322 West End Avenue, Suite 300, Nashville, TN 37203-1084.

(615)783-1300. Texas USDA Rural Development State Office, Federal Building, Suite 102, 101 South Main Street, Temple, TX 76501.

(254)742-9700/TDD

(254)742-9712. Utah USDA Rural Development State Office, Wallace F. Bennett Federal Building, 125 South State Street, Room 4311, Salt Lake City, UT 84138.

(801)524-4320/TDD

(801)524-3309. Vermont/New Hampshire USDA Rural Development State Office, City Center, 3rd Floor, 89 Main Street, Montpelier, VT 05602.

(802)828-6000/TDD

(802)223-6365. Virginia USDA Rural Development State Office, Culpeper Building, Suite 238, 1606 Santa Rosa Road, Richmond, VA 23229.

(804)287-1550/ TDD

(804)287-1753. Washington USDA Rural Development State Office, 1835 Black Lake Boulevard, SW., Suite B, Olympia, WA 98512-5715.

(360)704-7740. West Virginia USDA Rural Development State Office, Federal Building, 75 High Street, Room 320, Morgantown, WV 26505-7500.

(304)284-4860/TDD

(304)284-4836. Wisconsin USDA Rural Development State Office, 4949 Kirschling Court, Stevens Point, WI 54481.

(715)345-7600/TDD

(715)345-7614. Wyoming USDA Rural Development State Office, 100 East B Street, Federal Building, Room 1005, P.O. Box 11005, Casper, WY 82602-5006.

(307)261-6300/TDD

(307)233-6733. SUPPLEMENTARY INFORMATION: The maximum loan and grant awards are determined in accordance with 7 CFR 1703.28. The maximum loan and grant awards are calculated as 3.0 percent of the projected program levels, rounded to the nearest $10,000; however, as specified in 7 CFR 1703.28(b), regardless of the projected total amount that will be available, the maximum size may not be lower than $200,000. The projected program level during FY 2006 for zero-interest loans is $24,752,479, and the projected program level for grants is $10,000,000. Applying the specified 3.0 percent to the program level for loans, rounded to the nearest $10,000, results in the maximum loan award of $740,000. Applying the specified 3.0 percent to the program level for grants results in an amount higher than $200,000. Therefore, the maximum grant award for FY 2006 will be $300,000. This notice will be amended should funding in excess of projected levels be received. Nondiscrimination Statement The U.S. Department of Agriculture

(USDA)prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at

(202)720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW., Washington, DC 20250-9410 or call

(800)795-3272 (voice), or

(202)720-6382 (TDD). USDA is an equal opportunity provider, employer, and lender. Dated: February 23, 2006. Jackie J. Gleason, Acting Administrator, Rural Business-Cooperative Service. [FR Doc. E6-3157 Filed 3-6-06; 8:45 am] BILLING CODE 3410-XY-P DEPARTMENT OF AGRICULTURE Rural Utilities Service Announcement of Grant Application Deadlines and Funding Levels AGENCY: Rural Utilities Service, USDA. ACTION: Notice of funding availability and solicitation of applications. SUMMARY: USDA Rural Development administers rural utilities programs through the Rural Utilities Service. USDA Rural Development announces additional Fiscal Year

(FY)2006 funding available through its Technical Assistance and Training Grant Program (TAT). An additional $500,000 in emergency funding will be made available, pursuant to the Secretary's determination of extreme need, to conduct Water Resource Studies in the states affected by hurricanes Katrina, Rita, and/or Wilma (Florida, Alabama, Mississippi, Louisiana, and Texas). DATES: You may submit completed applications for the Water Resource Studies grant(s) from the date of announcement to 30 days after this announcement appears in the **Federal Register** . ADDRESSES: You may obtain application guides and materials for the Water Resource Studies grants the following ways: • The Internet at USDA Rural Development Web site: *http://www.usda.gov/rus/water/.* • You may also request application guides and materials by contacting the USDA Rural Development, WEP at

(202)720-9586. You may submit: • Completed paper applications for Water Resource Studies grants to the USDA Rural Development, U.S. Department of Agriculture, 1400 Independence Avenue, SW., Room 2233, STOP 1570, Washington, DC 20250-1570. Applications should be marked “Attention: Assistant Administrator, Water and Environmental Programs.” • Electronic grant applications at *http://www.grants.gov/* (Grants.gov), following the instructions you find on that Web site. FOR FURTHER INFORMATION CONTACT: Anita O'Brien, Loan Specialist, Water Program Division, USDA Rural Development, telephone:

(202)690-3789, fax:

(202)690-0649. SUPPLEMENTARY INFORMATION: Overview *Federal Agency:* Rural Utilities Service. *Funding Opportunity Title:* Water Resource Studies Grants. *Announcement Type:* Funding Level Announcement and Solicitation of Applications. *Authority:* 7 U.S.C. 1926(a)(14); Pub.L. 109-97, 119 Stat. 2120. *Catalog of Federal Domestic Assistance

(CFDA)Number:* 10.761. *Dates:* You may submit completed application for a TAT grant from the date of announcement to 30 days after this announcement appears in the **Federal Register** . *Reminder of competitive grant application deadline:* Applications must be mailed, shipped or submitted electronically through Grants.gov no later than 30 days after this announcement appears in the Federal Register to be eligible for funding. Items in Supplementary Information I. Funding Opportunity: Brief introduction to the Water Resource Studies Grants; II. Award Information: Available funds, maximum amounts; III. Eligibility Information: Who is eligible, what kinds of projects are eligible, what criteria determine basic eligibility; IV. Application and Submission Information: Where to get application materials; what constitutes a completed application; how and where to submit applications; deadlines; and, items that are eligible; V. Application Review Information: Considerations and preferences; scoring criteria; review standards; and selection information; VI. Award Administration Information: Award notice information and award recipient reporting requirements; VII. Agency Contacts: Web, phone, fax, email, and contact name. I. Funding Opportunity Drinking water systems are basic and vital to both health and economic development. Hurricanes Katrina, Rita, and Wilma severely damaged water systems in the states of Florida, Alabama, Mississippi, Louisiana, and Texas. Without dependable water supply, rural communities in these states will not attract families and businesses to return and invest in the hurricane damaged communities. USDA Rural Development supports the sound development of rural communities and the growth of our economy without endangering the environment. It provides financial and technical assistance to help communities bring safe drinking water and sanitary, environmentally sound waste disposal facilities to rural Americans in greatest need. The additional funding for Water Resource Studies will allow rural communities to better plan and secure dependable water supplies for rebuilding their community's health and economic development. Qualified private non-profit organizations may apply to receive a grant to conduct Water Resource Studies to evaluate sources of dependable water supplies for communities in the hurricane affected states. II. Award Information *Available funds:* $500,000 is available for Water Resource Study grants in FY 2006. III. Eligibility Information A. What are the basic eligibility requirements for applying? The applying entity (Applicant) must: 1. Be a private, non-profit organization that has tax-exempt status from the United States Internal Revenue Service (IRS); 2. Be legally established and located within one of the following: a. A state within the United States. b. The District of Columbia. c. The Commonwealth of Puerto Rico. d. Insular possession of the United States. 3. Have the legal capacity and authority to carry out the grant purpose; 4. Have no delinquent debt to the Federal Government or no outstanding judgments to repay Federal debt. B. What are the basic eligibility requirements for a project? The project must be a Water Resource Study that will evaluate and recommend sources of dependable water supply that can be developed and used by rural communities in one or more of the hurricane affected states of Florida, Alabama, Mississippi, Louisiana, and Texas. IV. Application and Submission Information A. Where to get application Information The grant application guide, copies of necessary forms and samples, and the Technical Assistance Grants regulation (7 CFR 1775) are available from these sources: • The Internet: *http://www.usda.gov/rus/water/,* • *http://www.grants.gov.* or, • For paper copies of these materials: call

(202)720-9586. 1. You may file an application in either paper or electronic format. Whether you file a paper or an electronic application, you will need a Dun and Bradstreet (D&B) Data Universal Numbering System

(DUNS)number. You must provide your DUNS number on the SF-424, “Application for Federal Assistance.” To verify that your organization has a DUNS number or to receive one at no cost, call the dedicated toll-free request line at 1-866-705-5711 or access the Web site *http://www.dunandbradstreet.com.* You will need the following information when requesting a DUNS number: a. Legal Name of the Applicant; b. Headquarters name and address of the Applicant; c. The names under which the Applicant is doing business (e.g. dba) or any other name(s) by which the Applicant is commonly recognized; d. Physical address of the Applicant; e. Mailing address (if separate from headquarters and/or physical address of the Applicant); f. Telephone number; g. Contact name and title; h. Number of employees at the physical location. 2. Send or deliver paper applications via the U.S. Postal Service

(USPS)or courier delivery services to the USDA Rural Development receipt point set forth below. Applications will not be accepted by fax or e-mail. For paper applications mail or ensure delivery of an original paper application (no stamped, photocopied, or initialed signatures) and two copies by the deadline date to the following address: Assistant Administrator—Water and Environmental Programs, USDA Rural Development, 1400 Independence Avenue, SW., STOP 1548, Room 5145 South, Washington, DC 20250-1548. The application and any materials sent with it become Federal records by law and cannot be returned to you. 3. For electronic applications, you must file an electronic application at the Web site: *http://www.grants.gov.* You must be registered with Grants.gov before you can submit a grant application. If you have not used Grants.gov before, you will need to register with the Central Contractor Registry

(CCR)and the Credential Provider. You will need a DUNS number to accomplish such registration and later access any of the services. The CCR registers your organization, maintains your organizational information and allows Grants.gov to use it to verify your identity. You may register with CCR by calling the CCR Assistance Center at 1-888-227-2423 or you may register online at: *http://www.ccr.gov.* The Credential Provider gives you or your representative a username and password, as part of the Federal Government's e-Authentication to ensure a secure transaction. You will need the username and password when you register with Grants.gov or use Grants.gov to submit your application. You must register with the Central Provider through Grants.gov: *https://apply.grants.gov/OrcRegister.* The registration processes may take several business days to complete. Follow the instructions at Grants.gov for registering and submitting an electronic application. Original signatures on electronically submitted documents may be requested at a later date. B. What constitutes a completed application? 1. To be considered for assistance, you must be an eligible entity and must submit a complete application by the deadline date. You must consult the cost principles and general administrative requirements for grants pertaining to their organizational type in order to prepare the budget and complete other parts of the application. You also must demonstrate compliance (or intent to comply), through certification or other means, with a number of public policy requirements. 2. Applicants must complete and submit the following forms to apply for a Water Resource Study grant:

(a)Standard Form 424, “Application for Federal Assistance.”

(b)Standard Form 424A, “Budget Information—Non-Construction Programs.”

(c)Standard Form 424B, “Assurances—Non-Construction Programs.”

(d)Standard Form LLL, “Disclosure of Lobbying Activity.”

(e)Form RD 400-1, “Equal Opportunity Agreement.”

(f)Form RD 400-4, “Assurance Agreement (Under Title VI, Civil Rights Act of 1964). 3. The project proposal should outline the project in sufficient detail to provide a reader with a complete understanding of how the proposed Water Resource Study will address the water supply needs of the study area. The proposal should contain: a. A brief project overview. Explain the purpose of the project, how it relates to USDA Rural Development purposes, how the Applicant will carry out the project, what the project will produce, and who will direct it. b. A statement describing the necessity of the project. Describe why the project is necessary. Describe how eligible rural communities will benefit from the study. Describe the service area. Address water needs of rural communities within the study area. c. A statement of the study goals.. The statement should clearly describe the goals and be concrete and specific enough to be quantitative or observable. They should also be feasible and relate to the purpose of the proposed Water Resource Study. d. A project evaluation which must describe how the results will be evaluated, consistent with the study's objectives. e. The following supplementary materials must be submitted:

(i)Evidence that the Applicant is legally recognized under state and Federal law. Satisfactory documentation includes, but is not limited to, certificates from the Secretary of State, or copies of state statutes or laws under which the Applicant was established. Letters from the IRS awarding tax-exempt status are not considered adequate evidence.

(ii)A certified list of directors and officers with their respective terms.

(iii)Evidence of tax exempt status from the Internal Revenue Service.

(iv)Disclosure of debarment and suspension information required in accordance with 7 CFR 3017.335, if it applies. The section heading is “What information must I provide before entering into a covered transaction with the Department of Agriculture?” It is part of the Department of Agriculture's rules on Government-wide Debarment and Suspension. (v). Identification of all of the Applicant's known workplaces including the actual address of buildings location within buildings; or other sites where work under the award takes place. Workplace identification is required under the drug-free workplace requirements in accordance with 7 CFR 3021.230. The section heading is “How and when must I identify workplaces?” It is part of the Department of Agriculture's rules on Government-wide Requirements for Drug-Free Workplace (Financial Assistance).

(vi)The most recent audit of the Applicant. V. Application Review Information A. Within 30 days of receiving the application, USDA Rural Development will acknowledge receipt by letter to the Applicant. The application will be reviewed for completeness to determine if it contains all of the items required. If the application is incomplete or ineligible, it will be returned to the Applicant with an explanation. B. A review team, composed of at least two members, will evaluate all applications and proposals. They will make overall recommendations based on factors such as eligibility, application completeness, and conformity to application requirements. They will score the applications based on criteria in the next section. C. All applications that are complete and eligible will be ranked competitively based on the following scoring criteria Scoring criteria Points 1. Degree of expertise Up to 30 points. 2. Percentage of Applicant's contributions Up to 20 points. 3. Needs Assessment: Extent that problems/issues are clearly defined and supported by data Up to 15 points. 4. Goals/Objectives: Goals/objectives are clearly defined, are tied to need, and are measurable Up to 15 points. 5. Extent to which the work plan clearly articulates a well thought-out approach to accomplishing objectives; and clearly defines those served by the study Up to 50 points. 6. Description of the service area, particularly the demographics of the rural communities being served (population and Median Household Income of the communities) Up to 15 points. 7. Extent to which the evaluation methods are specific to the program, clearly defined, measurable, with the expected project outcomes Up to 20 points. 8. Administrator's discretion Up to 15 points. VI. Award Administration Information A. USDA Rural Development will rank all qualifying applications by their final score. Applications will be selected for funding based on the highest scores and the availability of funding for the Water Resource Studies grants. Each applicant will be notified in writing of the score its application receives. B. In making a decision regarding an application, USDA Rural Development may determine that an application is: 1. Eligible and selected for funding, 2. Eligible but offered fewer funds than requested, 3. Eligible but not selected for funding, or 4. Ineligible for the grant. C. In accordance with 7 CFR part 1900, subpart B, the Applicant generally has the right to appeal adverse decisions. Some adverse decisions cannot be appealed. For example, if the Applicant is denied funding due to a lack of funds available for the grant program, this decision cannot be appealed. However, the Applicant may make a request to the National Appeals Division

(NAD)to review the accuracy of our finding that the decision cannot be appealed. The appeal must be in writing and filed at the appropriate Regional Office, which can be found at *http://www.nad.usda.gov/offices.htm* or by calling

(703)305-1166. D. Applicants selected for funding (Grantees) will complete a grant agreement, which outlines the terms and conditions of the grant award. E. Grantees will be reimbursed as follows: 1. SF-270, “Request for Advance or Reimbursement,” will be completed by the Grantee and submitted to either the State or National Office not more frequently than monthly. 2. Upon receipt of a properly completed SF-270, payment will ordinarily be made within 30 days. 3. Grantees are encouraged to use women- and minority-owned banks (a bank which is owned at least 50 percent by women or minority group members) for the deposit and disbursement of funds. F. Any change in the scope of the project, budget adjustments of more than 10 percent of the total budget, or any other significant change in the project must be reported to and approved by the appropriate USDA Rural Development official by written amendment to the grant agreement. Any change not approved may be cause for termination of the grant. G. Project reporting. 1. Grantees shall constantly monitor performance to ensure that time schedules are being met, projected work is being accomplished within the established time periods, and other performance objectives are being achieved. 2. SF-269, “Financial Status Report (short form),” and a project performance activity report will be required of all grantees on a quarterly basis, due 30 days after the end of each quarter. 3. A final project performance report will be required with the last SF-269, due 90 days after the end of the last quarter in which the project is completed. The final report may serve as the last quarterly report. 4. All multi-state Grantees are to submit an original of each report to the National Office. Grantees serving only one State are to submit an original of each report to the State Office. The project performance reports should detail, preferably in a narrative format, activities that have transpired for the specific time period. H. The Grantee will provide an audit report or financial statement(s) as follows: 1. Grantees expending $500,000 or more Federal funds per fiscal year will submit an audit conducted in accordance with OMB Circular A-133. The audit will be submitted within 9 months after the end of the Grantee's fiscal year. Additional audits may be required if the project period covers more than one fiscal year. 2. Grantees expending less than $500,000 will provide annual financial statements covering the grant period, consisting of the Grantee's statement of income and expense and balance sheet signed by an appropriate official of the Grantee. Financial statements will be submitted within 90 days after the Grantee's fiscal year. VII. Agency Contacts A. Web site: *http://www.usda.gov/rus/water.* The USDA Rural Development's Web site maintains up-to-date resources and contact information for the Technical Assistance Grants program. B. Phone:

(202)720-9586. C. Fax:

(202)690-0649. D. E-mail: *anita.obrien@wdc.usda.gov.* E. Main point of contact: Anita O'Brien, Loan Specialist, Water and Environmental Programs, Water Programs Division, USDA Rural Development. Dated: February 24, 2006. James M. Andrew, Administrator, Rural Utilities Service. [FR Doc. E6-3170 Filed 3-6-06; 8:45 am] BILLING CODE 3410-15-P DEPARTMENT OF COMMERCE Bureau of the Census Census Advisory Committee of Professional Associations AGENCY: Bureau of the Census, Department of Commerce. ACTION: Notice of Renewal. SUMMARY: The U.S. Bureau of the Census (Census Bureau) is giving notice that the charter for the Census Advisory Committee of Professional Associations has been renewed. FOR FURTHER INFORMATION CONTACT: Committee Liaison Officer Jeri Green, Chief, Census Advisory Committee Office, U.S. Census Bureau, Room 3627, Federal Building 3, Washington, DC 20233. Her telephone number is 301-763-2075, TDD 301-457-2540. SUPPLEMENTARY INFORMATION: In accordance with the provisions of the Federal Advisory Committee Act, Title 5, United States Code, Appendix 2, and the General Services Administration

(GSA)rule on Federal Advisory Committee Management, Title 41, Code of Federal Regulations, Part 101-6, and after consultation with GSA, the Secretary of Commerce has determined that the renewal of the Census Advisory Committee of Professional Associations is in the public interest in connection with the performance of duties imposed by law on the Department of Commerce. The Committee was established in January 1973 to obtain expertise relating to major programs, such as the decennial census of population and housing, the agriculture and economic censuses, current demographic and economic statistics programs, survey research, and marketing analysis. Meeting the standards set forth in Executive Order 12838, in that its charter is of compelling national interest and that other methods of obtaining public participation have been considered, the Committee was rechartered in March 2002 and again in February 2004. The Committee will consist of a Chair and 35 other members with a substantial interest in the conduct and outcome of the Census Bureau's economic, demographic, decennial census, statistical research, and marketing programs. The Committee includes representatives from academia, private enterprise, professional associations, and nonprofit organizations, which are further diversified by business type, geographic area, and other variables. The Committee will function solely as an advisory body and in compliance with provisions of the Federal Advisory Committee Act. Copies of the revised charter will be filed with the appropriate Committees of the Congress and with the Library of Congress. Dated: March 1, 2006. Charles Louis Kincannon, Director, Bureau of the Census. [FR Doc. E6-3158 Filed 3-6-06; 8:45 am] BILLING CODE 3510-07-P DEPARTMENT OF COMMERCE International Trade Administration (C-533-844, C-500-819) Certain Lined Paper Products From India and Indonesia: Alignment of First Countervailing Duty Determination With Antidumping Duty Determination AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: March 7, 2006. FOR FURTHER INFORMATION CONTACT: Maura Jeffords or Robert Copyak (India), and David Layton or David Neubacher (Indonesia) AD/CVD Operations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone

(202)482-3146 or

(202)482-2209, and

(202)482-0371 or

(202)482-5823, respectively. Background On February 6, 2006, we completed the preliminary affirmative countervailing duty determinations pertaining to certain lined paper products from India and Indonesia. See Notice of Preliminary Affirmative Countervailing Duty Determination and Preliminary Negative Critical Circumstances: Certain Lined Paper from India, 73 FR 7916 (February 15, 2006); and Notice of Preliminary Affirmative Countervailing Duty Determination and Preliminary Negative Critical Circumstances, Certain Lined Paper from Indonesia, 71 FR 7524 (February 13, 2006). On February 17, 2006, the petitions submitted a letter requesting alignment of the final determination in these investigations with the final determination in the respective companion antidumping investigations. Therefore, in accordance with section 705(a)(1) the Tariff Act of 1930, as amended (the Act), we are aligning the final determination in these investigations with the final determinations in the antidumping duty investigations of lined paper products from India and Indonesia. This notice is issued and published pursuant to section 705(a)(1) of the Act. Dated: February 28, 2006. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. 06-2139 Filed 3-6-06; 8:45 am]

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