Proposed Rules. Proposed rule

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BILLING CODE 3510-22-C 71 127 Monday, July 3, 2006 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 205 [Docket Number TM-06-04] RIN 0581-AC61 National Organic Program (NOP); Proposed Amendments to the National List of Allowed and Prohibited Substances (Crops and Livestock) AGENCY: Agricultural Marketing Service, USDA. ACTION: Proposed rule. SUMMARY: This proposed rule would amend the U.S. Department of Agriculture's

(USDA)National List of Allowed and Prohibited Substances (National List) regulations to reflect recommendations submitted to the Secretary of Agriculture (Secretary) by the National Organic Standards Board

(NOSB)on August 17, 2005. Consistent with the recommendations from the NOSB, this proposed rule would add two substances, along with any restrictive annotations, to the National List. DATES: Comments must be received by August 2, 2006. ADDRESSES: Interested persons may comment on this proposed rule using the following procedures: • *Mail:* Comments may be submitted by mail to: Bob Pooler, Agricultural Marketing Specialist, National Organic Program, USDA-AMS-TMP-NOP, 1400 Independence Ave., SW., Room 4008-So., Ag Stop 0268, Washington, DC 20250. • *E-mail:* Comments may be submitted via the internet to: *National.List@usda.gov* . • *Internet: http://www.regulations.gov* . • *Fax:* Comments may be submitted by fax to:

(202)205-7808. • Written comments on this proposed rule should be identified with the docket number TM-06-04. Commenters should identify the topic and section number of this proposed rule to which the comment refers. • Clearly indicate if you are for or against the proposed rule or some portion of it and your reason for it. Include recommended language changes as appropriate. • Include a copy of articles or other references that support your comments. Only relevant material should be submitted. It is our intention to have all comments to this proposed rule, whether submitted by mail, e-mail, or fax, available for viewing on the NOP homepage. Comments submitted in response to this proposed rule will also be available for viewing in person at USDA-AMS, Transportation and Marketing, Room 4008—South Building, 1400 Independence Ave., SW., Washington, DC, from 9 a.m. to 12 noon and from 1 p.m. to 4 p.m., Monday through Friday (except official Federal holidays). Persons wanting to visit the USDA South Building to view comments received in response to this proposed rule are requested to make an appointment in advance by calling

(202)720-3252. FOR FURTHER INFORMATION CONTACT: Bob Pooler, Agricultural Marketing Specialist, Telephone:

(202)720-3252; Fax:

(202)205-7808. SUPPLEMENTARY INFORMATION: I. Background On December 21, 2000, the Secretary established, within the NOP [7 CFR part 205], the National List regulations (§§ 205.600 through 205.607). The National List regulations identify synthetic substances and ingredients that are allowed and nonsynthetic (natural) substances and ingredients that are prohibited for use in organic production and handling. Under the authority of the Organic Foods Production Act of 1990 (OFPA), as amended, (7 U.S.C. 6501 *et seq.* ), the National List can be amended by the Secretary based on proposed amendments developed by the NOSB. Since established, the National List has been amended three times, October 31, 2003 (68 FR 61987), November 3, 2003 (68 FR 62215), and October 21, 2005 (70 FR 61217). Additionally, an amendment to the National List, proposed on September 16, 2005 (70 FR 54660), is currently pending. This proposed rule would amend the National List to reflect recommendations submitted to the Secretary by the NOSB on August 17, 2005. On August 17, 2005, the NOSB recommended that the Secretary add one substance to § 205.601 and one substance to § 205.603 of the National List regulations. II. Overview of Proposed Amendments The following provides an overview of the proposed amendments to designated sections of the National List regulations: This proposed rule would amend paragraph

(e)of § 205.601 of the National List regulations by adding the following substance: Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4). Sucrose octanoate esters

(SOE)were petitioned for use in organic crop production as an insecticide/miticide. SOE exist as an amber-colored liquid. The mixture of esters is manufactured from two biochemicals—sucrose (table sugar) and an octanoic acid ester (commonly found in plants and animals). Sucrose esters were isolated when researchers investigated the insecticidal properties of the leaf hairs on tobacco leaves. The active ingredient acts by dissolving the waxy protective coating (cuticle) of target pests, causing the insect or mite to dry out and die. Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), the EPA has registered SOE as a biochemical that targets mites and certain soft-bodied insects ( *e.g.* , aphids) at three distinct commercial sites: Food and non-food crops, including certain ornamentals; media for growing mushrooms; and adult honey bees ( *http://www.epa.gov/oppbppd1/biopesticides/ingredients/factsheets/factsheet_035300.htm* ). In assessing risks to human health, the EPA has concluded that no risks to humans are expected from the use of SOE as a pesticide active ingredient. SOE are not toxic to mammals, but in high concentrations, they are corrosive to the eye. To avoid irreversible eye damage, exposed workers are required to wear appropriate protective clothing. In assessing risks to the environment, the EPA determined that no risks to the environment are expected from the use of SOE in pesticide products because:

(a)The esters biodegrade rapidly and therefore do not persist in the environment,

(b)the esters are not toxic to mammals or other non-target organisms,

(c)organisms are already exposed because these sucrose esters are found in plants, and

(FDA)to ensure that the NOSB recommendation for the use of SOE in organic crop production would be consistent with Federal regulations governing the use of the substance. The EPA informed the NOP that the recommended use of SOE in organic crop production is consistent with EPA regulations. The FDA confirmed that the referenced sucrose octanoate ester product is appropriately licensed by the EPA for its use. Therefore, after consultation with the EPA and FDA concerning the NOSB's recommendation to permit the use of SOE in organic crop production, the Secretary is proposing to accept the NOSB's recommendation and amend § 205.601(e) of the National List by adding SOE as an insecticide as follows: Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4)—in accordance with approved labeling. This proposed rule would amend paragraph

(b)of § 205.603 of the National List regulations by adding the following substance: Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4). Sucrose octanote esters

(SOE)were petitioned for use in organic livestock production as an insecticide/miticide for honeybees. Sucrose octanoate esters exist as an amber-colored liquid. The mixture of esters is manufactured from two biochemicals-sucrose (table sugar) and an octanoic acid ester (commonly found in plants and animals). Sucrose esters were isolated when researchers investigated the insecticidal properties of the leaf hairs on tobacco leaves. The active ingredient acts by dissolving the waxy protective coating (cuticle) of target pests, causing the insect or mite to dry out and die. Under FIFRA, the EPA has registered SOE as a biochemical that targets mites and certain soft-bodied insects (e.g., aphids) at three distinct commercial sites: food and non-food crops, including certain ornamentals; media for growing mushrooms; and adult honey bees ( *http://www.epa.gov/oppbppd1/biopesticides/ingredients/factsheets/factsheet_035300.htm* ). In assessing risks to human health, the EPA has concluded that no risks to humans are expected from the use of SOE as a pesticide active ingredient. SOE are not toxic to mammals, but in high concentrations are corrosive to the eye. To avoid irreversible eye damage, exposed workers are required to wear appropriate protective clothing. In assessing risks to the environment, the EPA determined that no risks to the environment are expected from the use of SOE in pesticide products because:

(a)The esters biodegrade rapidly and therefore do not persist in the environment,

(b)the esters are not toxic to mammals or other non-target organisms,

(c)organisms are already exposed because these sucrose esters are found in plants, and

(d)the tiny amounts used in pesticide products are not expected to substantially increase the amount of these esters in the environment. At its August 17, 2005, meeting in Washington, DC, the NOSB recommended adding SOE to the National List for use in organic livestock production as an insecticide/miticide. In this open meeting, the NOSB evaluated SOE against the evaluation criteria of 7 U.S.C. 6517 and 6518 of the OFPA, received public comment, and concluded that SOE is consistent with the OFPA evaluation criteria. The NOP consulted with the EPA and FDA to ensure that the NOSB recommendation for the use of SOE in organic livestock production would be consistent with Federal regulations governing the use of the substance. The EPA informed the NOP that the recommended use of SOE in organic livestock production is consistent with EPA regulations. The FDA confirmed that the referenced sucrose octanoate ester product is appropriately licensed by the EPA for such use. Therefore, after consultation with the EPA and FDA concerning the NOSB's recommendation to permit the use of SOE in organic livestock production, the Secretary is proposing to accept the NOSB's recommendation and amend § 205.603(b) of the National List by adding SOE as an external parasiticide as follows: Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4)—in accordance with approved labeling. Recommendation Not Accepted Chitosan (Poly-D Glucosamine) (CAS #—9012-76-04). Chitosan was petitioned for use in organic crop production as an adhesive adjuvant to be used with fungicides approved for use under the NOP regulations. Chitosan is a polymer of glucosamine sugars, specifically glucosamine and N-acetyl-glucosamine. Its structure and composition are similar to both cellulose (i.e., the primary structural component of plant fiber) and chitin. Like chitin, chitosan is found naturally in the shells of all crustaceans and insects, as well as certain other organisms such as many fungi, algae, and yeast. Chitosan is a chemically stable, white to pale yellow powder or flake. It has a strong positive charge, which is the basis of its use as a “sticking” agent (i.e., an adhesive adjuvant). The positively charged molecules adhere to negatively charged pesticides and plant surfaces. In the petition for the use of chitosan, as an adjuvant, the proposed rate of application is 0.011 pounds of chitosan per 20 gallons of water; it is adequate to apply on 1 acre. Under the FIFRA, the EPA has registered chitosan as a biopesticide that is used primarily as a plant growth enhancer, and as a substance that boosts the ability of plants to defend against fungal infections, including early and late blight, downy and powdery mildew, and gray mold. The EPA has approved its use outdoors and indoors on many plants grown commercially and by consumers. Chitosan is normally sprayed on leaves of plants throughout growing season, with applications every one to two weeks as needed. In assessing risks to human health, the EPA has concluded that no risks to humans are expected when products containing chitosan are used according to label directions. In assessing risks to the environment, the EPA determined that no risks to the environment are expected because chitosan has not shown toxicity in mammals, it is abundant in nature, and it is used in tiny amounts. At its August 17, 2005, meeting in Washington, DC, the NOSB recommended adding chitosan to the National List for use in organic crop production as an insecticide, with the restriction that it only be used as an adjuvant. In this open meeting, the NOSB evaluated chitosan against the evaluation criteria of 7 U.S.C. 6517 and 6518 of the OFPA, received public comment, and concluded that chitosan is consistent with the OFPA evaluation criteria. The NOSB restricted the use of chitosan to an adjuvant only, due to the fact that chitosan could also be used as a plant defense booster and plant growth enhancer. As a plant growth enhancer, the mode of action is believed to be that chitosan is taken up by plant cells where it enters the cell nucleus and stimulates messenger ribonucleic acid and enzyme production. This action stimulates the plant to produce more lignin in the stems, resulting in stronger stems. However, as an adjuvant, the application rate of chitosan would be approximately 0.011 pounds per 20 gallons of water. At such a rate, chitosan would be unlikely to act as a defense booster and plant growth enhancer. It is also unlikely that it would create unacceptable changes in soil temperature, water availability, pH levels, nutrient availability, or salt concentration. The NOP consulted with the EPA concerning the NOSB's recommendation to include chitosan on the National List. The EPA informed the NOP that for the petitioned use of chitosan, as an adjuvant, the substance would not be considered an active ingredient, but an inert ingredient. The EPA further stated that, in addition to chitosan being registered as an active ingredient, it is also approved as an EPA List 4B inert ingredient. The NOP regulations, at § 205.601(m), permits the use of EPA List 4 inert ingredients with nonsynthetic substances or synthetic substances approved for use under the NOP regulations as an active pesticide ingredient. As a result, the NOP will not propose to specifically add chitosan to the National List as an adjuvant; it is already permitted for use at § 205.601(m) of the National List regulations. III. Related Documents One notice was published regarding the meeting of the NOSB and its deliberations on recommendations and substances petitioned for amending the National List. Substances and recommendations included in this proposed rule were announced for NOSB deliberation in **Federal Register** Notice 70 FR 43116, July 26, 2005. IV. Statutory and Regulatory Authority The OFPA, as amended (7 U.S.C. 6501 *et seq.* ), authorizes the Secretary to make amendments to the National List based on proposed amendments developed by the NOSB. Sections 6518(k)(2) and 6518(n) of OFPA authorize the NOSB to develop proposed amendments to the National List for submission to the Secretary and establish a petition process by which persons may petition the NOSB for the purpose of having substances evaluated for inclusion on or deletion from the National List. The National List petition process is implemented under § 205.607 of the NOP regulations. The current petition process (65 FR 43259) can be accessed through the NOP Web site at *http://www.ams.usda.gov/nop.* A. Executive Order 12866 This action has been determined not significant for purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget. B. Executive Order 12988 Executive Order 12988 instructs each executive agency to adhere to certain requirements in the development of new and revised regulations in order to avoid unduly burdening the court system. This proposed rule is not intended to have a retroactive effect. States and local jurisdictions are preempted under section 2115 of the OFPA (7 U.S.C. 6514) from creating programs of accreditation for private persons or State officials who want to become certifying agents of organic farms or handling operations. A governing State official would have to apply to USDA to be accredited as a certifying agent, as described in section 2115(b) of the OFPA (7 U.S.C. 6514(b)). States are also preempted under sections 2104 through 2108 of the OFPA (7 U.S.C. 6503 through 6507) from creating certification programs to certify organic farms or handling operations unless the State programs have been submitted to, and approved by, the Secretary as meeting the requirements of the OFPA. Pursuant to section 2108(b)(2) of the OFPA (7 U.S.C. 6507(b)(2)), a State organic certification program may contain additional requirements for the production and handling of organically produced agricultural products that are produced in the State and for the certification of organic farm and handling operations located within the State under certain circumstances. Such additional requirements must:

(a)Further the purposes of the OFPA,

(b)not be inconsistent with the OFPA,

(c)not be discriminatory toward agricultural commodities organically produced in other States, and

(d)not be effective until approved by the Secretary. Pursuant to section 2120(f) of the OFPA (7 U.S.C. 6519(f)), this proposed rule would not alter the authority of the Secretary under the Federal Meat Inspection Act (21 U.S.C. 601 *et seq.* ), the Poultry Products Inspections Act (21 U.S.C. 451 *et seq.* ), or the Egg Products Inspection Act (21 U.S.C. 1031 *et seq.* ), concerning meat, poultry, and egg products, nor any of the authorities of the Secretary of Health and Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C. 301 *et seq.* ), nor the authority of the Administrator of EPA under the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. 136 *et seq.* ). Section 2121 of the OFPA (7 U.S.C. 6520) provides for the Secretary to establish an expedited administrative appeals procedure under which persons may appeal an action of the Secretary, the applicable governing State official, or a certifying agent under this title that adversely affects such person or is inconsistent with the organic certification program established under this title. The OFPA also provides that the U.S. District Court for the district in which a person is located has jurisdiction to review the Secretary's decision. C. Regulatory Flexibility Act The Regulatory Flexibility Act

(RFA)(5 U.S.C. 601 *et seq.* ) requires agencies to consider the economic impact of each rule on small entities and evaluate alternatives that would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the market. The purpose is to fit regulatory actions to the scale of businesses subject to the action. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities. Pursuant to the requirements set forth in the RFA, the Agricultural Marketing Service

(AMS)performed an economic impact analysis on small entities in the final rule published in the **Federal Register** on December 21, 2000 (65 FR 80548). The AMS has also considered the economic impact of this action on small entities. The impact on entities affected by this proposed rule would not be significant. The effect of this proposed rule would be to allow the use of additional substances in agricultural production and handling. This action would relax the regulations published in the final rule and would provide small entities with more tools to use in day-to-day operations. The AMS concludes that the economic impact of this addition of allowed substances, if any, would be minimal and entirely beneficial to small agricultural service firms. Accordingly, USDA certifies that this rule will not have a significant economic impact on a substantial number of small entities. Small agricultural service firms, which include producers, handlers, and accredited certifying agents, have been defined by the Small Business Administration

(SBA)(13 CFR 121.201) as those having annual receipts of less than $6,500,000 and small agricultural producers are defined as those having annual receipts of less than $750,000. This proposed rule would have an impact on a substantial number of small entities. The U.S. organic industry at the end of 2001 included nearly 6,949 certified organic crop and livestock operations. These operations reported certified acreage totaling more than 2.09 million acres of organic farm production. Data on the numbers of certified organic handling operations (any operation that transforms raw product into processed products using organic ingredients) were not available at the time of survey in 2001; but they were estimated to be in the thousands. By the end of 2004, the number of certified organic crop, livestock, and handling operations totaled nearly 11,400 operations. Based on 2003 data, certified organic acreage increased to 2.2 million acres. U.S. sales of organic food and beverages have grown from $1 billion in 1990 to an estimated $12.2 billion in 2004. Organic food sales are projected to reach $14.5 billion for 2005; total U.S. organic sales, including nonfood uses, are expected to reach $15 billion in 2005. The organic industry is viewed as the fasting growing sector of agriculture, representing 2 percent of overall food and beverage sales. Since 1990, organic retail sales have historically demonstrated a growth rate between 20 to 24 percent each year. This growth rate is projected to decline and fall to a rate of 5 to 10 percent in the future. In addition, USDA has accredited 94 certifying agents who have applied to USDA to be accredited in order to provide certification services to producers and handlers. A complete list of names and addresses of accredited certifying agents may be found on the AMS NOP Web site, at *http://www.ams.usda.gov/nop.* AMS believes that most of these entities would be considered small entities under the criteria established by the SBA. D. Paperwork Reduction Act No additional collection or recordkeeping requirements are imposed on the public by this proposed rule. Accordingly, OMB clearance is not required by section 350(h) of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, *et seq.* , or OMB's implementing regulations at 5 CFR part 1320. AMS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. E. General Notice of Public Rulemaking This proposed rule reflects recommendations submitted to the Secretary by the NOSB. The 2 substances proposed to be added to the National List were based on petitions from the industry. The NOSB evaluated each petition using criteria in the OFPA. Because these substances are critical to organic production and handling operations, producers and handlers should be able to use them in their operations as soon as possible. A 30 day period for interested persons to comment on this rule is provided. List of Subjects in 7 CFR Part 205 Administrative practice and procedure, Agriculture, Animals, Archives and records, Imports, Labeling, Organically produced products, Plants, Reporting and recordkeeping requirements, Seals and insignia, Soil conservation. For the reasons set forth in the preamble, 7 CFR part 205, subpart G is proposed to be amended as follows: PART 205—NATIONAL ORGANIC PROGRAM 1. The authority citation for 7 CFR part 205 continues to read as follows: Authority: 7 U.S.C. 6501-6522. 2. In § 205.601 a new paragraph (e)(9) is added to read as follows: § 205.601 Synthetic substances allowed for use in organic crop production.

(e)* * *

(9)Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4)—in accordance with approved labeling. 3. In § 205.603 a new paragraph (b)(7) is added to read as follows: § 205.603 Synthetic substances allowed for use in organic livestock production.

(b)* * *

(7)Sucrose octanoate esters (CAS #s—42922-74-7; 58064-47-4)—in accordance with approved labeling. Dated: June 26, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E6-10393 Filed 6-30-06; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Commodity Credit Corporation 7 CFR Part 1421 RIN 0560-AH52 Storage Requirements for Grain Security for Marketing Assistance Loans AGENCY: Commodity Credit Corporation, USDA. ACTION: Proposed rule. SUMMARY: This rule proposes changes to the regulations governing the Marketing Assistance Loan Programs of the Commodity Credit Corporation

(CCC)that are authorized by the Farm Security and Rural Investment Act of 2002 (2002 Act). CCC is proposing to no longer require a Federally-licensed warehouse operator, or in a State with a warehouse licensing programs, a State-licensed warehouse operator to execute a CCC storage agreement. Nothing in this proposed rule will affect the administration of the United States Warehouse Act by USDA. DATES: Comments should be received on or before August 2, 2006. ADDRESSES: CCC invites interested persons to submit comments on this proposed rule and on the collection of information required to administer the affected regulations. Comments may be submitted by any of the following methods: • *E-Mail:* Send comments to: *kimberly.graham@wdc.usda.gov.* • *Fax:* Submit comments by facsimile transmission to:

(202)690-1536. • *Mail:* Send comments to: Director, Price Support Division, Farm Service Agency, United States Department of Agriculture (USDA), Room 4095-S, 1400 Independence Avenue, SW., Washington, DC 20250-0512. • *Hand Delivery or Courier:* Deliver comments to the above address. • *Federal Rulemaking Portal:* Go to *http://www.regulations.gov.* Follow the online instructions for submitting comments. All written comments will be available for public inspection at the above address during business hours from 8 a.m. to 5 p.m., Monday through Friday. FOR FURTHER INFORMATION CONTACT: Kimberly Graham; phone:

(202)720-9154; e-mail: *kimberly.graham@wdc.usda.gov* , or fax:

(202)690-1536. SUPPLEMENTARY INFORMATION: Background Since the enactment of the Agricultural Act of 1949, the major activity of CCC has been the administration and implementation of nonrecourse marketing assistance loans to producers of major agricultural commodities. Generally, Congress established loan rates for certain commodities, *e.g.* $1.95 per bushel for corn, for the 2004 through 2007 crop years. Under nonrecourse loan provisions, the producer may satisfy the loan obligation through forfeiture to CCC of the commodity pledged as collateral for the loan. Since 1949, the commodities pledged as collateral for these loans could be stored on the producer's farm or in approved warehouses. Historically, approved warehouses have been warehouse operators who entered into storage agreements with CCC that set forth terms and conditions regarding:

(1)Financial aspects of the warehouse;

(2)rates that are applicable to the storage of CCC owned inventory and CCC loan collateral;

(3)handling and delivery charges with respect to these commodities; and

(4)related storage issues. Most States, as well as the Department of Agriculture (USDA), have a warehouse licensing regime for the storage of agricultural commodities. In these States, generally, an entity must have a State or Federal license to engage in storing these commodities. These licensed entities issue warehouse receipts that evidence ownership of commingled commodities. In general, those non-licensed entities in States with licensing programs may not store agricultural commodities on behalf of producers but are free to purchase commodities from producers. Accordingly, in such States, commercial feed lots, ethanol plants, wool pools, and other entities that are the “end users” of the commodity are not licensed warehouses and, therefore, may not store commodities on behalf of producers. In those States that do not have such a licensing regime, warehouses must still follow State laws relating to bailment and storage. The State laws relating to bailment and storage may vary from State to State. As a result of the accumulation of large quantities of commodities forfeited under nonrecourse loans, in the mid-1980's Congress instituted a fundamental change to CCC loan programs when market prices are below the CCC loan rate. The change allows producers the opportunity to repay the nonrecourse loan at a price determined by CCC and to retain any difference between the amount of the loan value and the repayment value. Under these “marketing assistance loans (MAL),” the producer still has the option of forfeiting the loan collateral to CCC. MAL's accomplish two objectives. First, they provide producers with interim financing to continue farming operations without having to market their crop during a period of low market prices. Second, these loans facilitate the orderly marketing and distribution of commodities throughout the year. The three largest amounts of acreage planted to agricultural commodities for which marketing assistance loans are available are devoted to corn, soybeans and wheat. The following chart shows the estimated production of these commodities, as determined by the National Agricultural Statistics Service of USDA, and the quantity of such crops forfeited to CCC in the 2000 through 2004 crop years. With respect to the 2004 crop, the increase in forfeitures was attributable to the disruption in marketing channels caused by Hurricane Katrina. This hurricane occurred when a significant number of corn and soybean marketing assistance loans matured in the upper Midwest. The closing of the Mississippi River in the New Orleans area and damage to grain handling facilities in that area caused significant reductions in commodity prices. As a result, there was an abnormal increase in forfeitures to CCC; however, to mitigate this impact, CCC provided producers with farm-stored loans the opportunity to store these CCC-owned stocks on their farm for up to 60 days with the option of purchasing the commodity at a price CCC would use in completing a marketing loan transaction. Accordingly, while CCC took title to a larger quantity of 2004 crops compared to the previous two years, such stocks moved into commercial distribution as soon as was practicable in as normal a way as possible. Commodity year Production bil. bushels Forfeitures mil. bushels Percent of production forfeited Corn: 2000 9.915 26.596 0.2682 2001 9.502 0.017 0.0002 2002 8.966 1.892 0.0211 2003 10.089 1.037 0.0103 2004 11.807 24.382 0.2065 Soybeans: 2000 2.757 5.704 0.2069 2001 2.890 0.054 0.0019 2002 2.756 0.205 0.0074 2003 2.453 0.122 0.0050 2004 3.123 0.483 0.0154 Wheat: 2000 2.228 12.749 0.5722 2001 1.947 0.442 0.0227 2002 1.605 1.507 0.0939 2003 2.344 2.480 0.1058 2004 2.158 9.401 0.3247 CCC's ownership interest in these major commodities is insignificant. The percentage of other marketing loan commodities owned by CCC as a percentage of total production is similar to these commodities. When a comparison is made with the quantities of commodities forfeited to CCC as a percentage of the quantities pledged as collateral for such loans, CCC takes possession of less than 0.4 percent of the commodities pledged as collateral for marketing assistance loans. The amount of the monetary gain producers may obtain by repaying CCC marketing assistance loans at repayment rates below their loan rate can be substantial. Therefore, there is a significant incentive for a producer to obtain these loans solely for this benefit. However, both the producer and CCC incur costs in completion of the loan transaction due to costs associated with lien searches and lien filing fees as well as USDA personnel costs incurred in processing these loans. To reduce the costs associated with the delivery of this benefit, producers may simply request that a payment be made to them in an amount equal to what would be realized if the loan had been made and immediately repaid at the lower repayment rate. In return for the payment, referred to as a “loan deficiency payment (LDP)”, the producer agrees that the commodity for which the LDP was provided will not be pledged as collateral for a CCC marketing assistance loan. The LDP amount is equal to the established loan rate for the applicable loan commodity less the repayment rate multiplied by the eligible quantity of the commodity. With respect to commodities such as wheat, rice, feed grains, minor oilseeds, wool, mohair and pulse crops, section 1205 of the 2002 Act provides that these payments are made with respect to “producers on a farm that, although eligible to obtain a marketing assistance loan under section 1201 with respect to a loan commodity, agree to forgo obtaining the loan for the commodity in return for loan deficiency payments. * * *” A similar provision is set forth in section 1307 of the 2002 Act for producers of peanuts. With the advent of marketing assistance loans and LDP's in the mid-1980's, producers' use of these benefits has shifted substantially from the marketing loan option to the LDP option. The following chart sets forth the number of marketing assistance loans and LDP's approved by CCC as of March 31, 2006, for the 2003, 2004, and 2005 crops. Commodity year Warehouse loans Farm loan Loan deficiency payments Corn: 2003 3,465 47,933 99,617 2004 6,952 50,684 1,079,690 2005 4,594 34,031 1,155,137 Soybeans: 2003 3,256 18,538 7 2004 15,258 40,318 463,338 2005 14,239 39,587 86,170 Wheat: 2003 5,749 8,295 103,418 2004 5,440 9,569 55,725 2005 3,596 8,464 17,571 Generally, in those years in which market prices remain below the CCC loan rate, there is a significantly greater use made of LDP's than marketing assistance loans. However, as demonstrated by the issuance of only 7 loan deficiency payments with respect to the 2003 crop of soybeans, and the issuance of approximately 22,000 marketing assistance loans, producers still avail themselves of the loan program for financing purposes. The CCC storage payment with respect to peanuts and upland cotton pledged as collateral for marketing assistance loan programs encourages the use of such loans instead of loan deficiency payments; thus, the percentages of loan placements for these commodities are statistically larger than for other commodities. Similarly, the use of commodity certificates under section 166 of the Federal Agriculture Improvement and Reform Act of 1996, as amended, (the 1996 Act) also encourages the use of these loans in lieu of loan deficiency payments for several reasons, further skewing the distribution of these benefits. The use of these certificates by large marketing cooperatives facilitates the repayment of marketing assistance loans because the benefits attributable to the use of these certificates do not count against the statutory payment limitation provisions of the Food Security Act of 1985, as amended, which would otherwise limit:

(1)The amount of a gain that a producer would be able to receive through a marketing assistance loan; and

(2)the amount of loan deficiency payments that would be made to the producer. Thus, the number of warehouse-stored loans made with respect to upland cotton and rice is greater, and the use of loan deficiency payments less, than would otherwise be anticipated in the absence of section 166 of the 1996 Act. The manner in which agricultural commodities are marketed and used has changed substantially since the enactment of the Agricultural Act of 1949. Changes in commodity marketing and use have been driven in part by the dramatic consolidation in farm operations since the middle 1900's. Advances in agronomics and technology, including biotechnology, have allowed producers to significantly expand the sizes of their operations and benefit from crop specialization and economies of scale. Coincident to this have been structural changes in the livestock and poultry feeding sectors and the remarkable growth in ethanol production. These changes have pushed larger and larger quantities of agricultural commodities into commercial marketing channels and away from the primary on-farm uses of the early 1900's. Based on the U.S. Census of Agriculture, the number of U.S. farms dropped from 5.4 million in 1950 to 2.1 million in 2002. Much of the loss in farm numbers, however, occurred by the mid-1970's. The 1974 Census of Agriculture reported 2.3 million farms. Despite the slowing decline in farm numbers, the size of farm operations continues to grow. In 1974, there were 32,752 farms with 1,000 acres or more land. In 2002, there were 176,990 farms with 1,000 acres of more land. The number of farms with 2,000 acres or more increased more than 13 fold during this time, going from only 5,862 farms in 1974 to 77,970 farms in 2002. Accompanying this consolidation in farm numbers and growth in farm size has been a similarly dramatic consolidation in the livestock and poultry feeding sectors. Based on the U.S. Census of Agriculture, 3 out of every 4 farms had cattle and 1 out of every 2 farms had hogs in 1950. In 2002, only 1 in every 2 farms had cattle, and only 1 in every 25 had hogs. Numbers are just as dramatic for poultry. In 1950, 4 of every 5 farms had chickens or turkeys. In 2002, only 1 out of every 14 farms had chickens or turkeys. The consolidation of cattle, hog, and poultry feeding into fewer and larger capital intensive operations has shifted feed use away from the farms where grains and oilseeds are produced. This has left grain and oilseed producers increasingly reliant on commercial grain marketing channels as outlets for their production and sources of their revenue. These structural changes have had a significant impact on the amount of grain used on the farms where it is produced. During the 1949/50 marketing year just more than half of all grain and oilseed (wheat, corn, barley, oats, rye, sorghum, rice, and soybeans) production was consumed on the same farms where it was produced. Since then, while production of these commodities has increased more than three-fold, the amount used on the same farm where it was produced has dropped by more than one-third. The bulk of this decline in on-farm use reflects consolidation in livestock and poultry feeding and specialization in grain and oilseed farming. It also reflects the phenomenal expansion in fuel ethanol production which has grown from a negligible share of domestic corn use in the 1970's to more than 12 percent of domestic use during the 2004/05 marketing year. Less significant, but also affecting this decline in on-farm use has been the shift away from bin-run seed in the small grains and soybean sectors as commercial seed varieties have become ever more dominant. The decline in on-farm use has substantially increased the volume of grain moving through commercial marketing channels. In the early 1950's, 50 percent of all grain and oilseed production was sold commercially. In recent years, 90 percent of all grain and oilseed production has been sold commercially. As on-farm use has fallen since 1949/50, the volume that is marketed commercially has increased six-fold, twice the rate of increase in production. CCC nonrecourse loan provisions have been modified over the years to better reflect the needs of producers who must respond to these changes in commodity marketing and use. Particularly important in this regard has been the marketing assistance loan provisions that have given CCC tools like alternative marketing loan repayment rates and the LDP which have significantly reduced the quantity of loan collateral forfeited to CCC. With greater ability to minimize forfeitures, CCC inventories and quantities of grains and oilseeds otherwise controlled by CCC have dramatically declined since the 1980's. Producers who do not have storage facilities on their farms, and who desire to obtain a marketing assistance loan, may deliver the commodity to a CCC-approved warehouse and tender to CCC as collateral for a loan a warehouse receipt that reflects the quantity and quality of the commodity produced and delivered to such facility. Commodities delivered to other non-CCC-approved warehouses and to facilities that commingle the commodity with the commodities of other persons may not be tendered to CCC as loan collateral, except as provided in section 1201(c) of the 2002 Act. To be a CCC-approved warehouse the warehouse must enter into a CCC storage agreement and meet certain financial requirements. This agreement was required because, prior to authorization and use of marketing assistance loans, in some years, producers tendered to CCC over 75 percent of the annual production of some crops. If market prices remained below the CCC loan rate, the producers would forfeit the commodity to CCC. CCC required producers with warehouse-stored loans to store the loan collateral in CCC-approved warehouses to protect CCC's interest in the commodity by storing the commodity where CCC could readily assume ownership. CCC takes title from a warehouse according to its agreement upon maturity of the loan with no action needed on the part of the producer. The warehouse receipt is simply endorsed in blank to vest title in the holder, which is CCC. If a farm-stored loan was involved, CCC would direct the producer to deliver the commodity to a CCC-approved warehouse. Other statutes precluded the sale of CCC-owned commodities unless market prices reached certain levels, thus requiring CCC to own commodities for prolonged periods of time. Thus, CCC was dependent upon commercial warehouses for the storage of large quantities of grain, and, in the event of collateral forfeiture, the approved warehouse could continue to store the commodity for extended periods. CCC still requires the storage of its loan collateral only in CCC-approved warehouses regardless of its license status. Proposed Changes The first change proposed by this rule is that CCC will no longer require a Federally-licensed warehouse operator also to maintain a CCC storage agreement. With respect to warehouses licensed by USDA under the United States Warehouse Act, the conditions that a warehouse operator must meet for obtaining a Federal license exceed those that must be met for obtaining a CCC storage agreement. While the CCC storage agreement, unlike a Federal warehouse license, specifies storage rates that CCC will pay in the unlikely event the commodity is forfeited to CCC, CCC has maintained a policy since the late 1980's to move commodities it obtains as forfeitures into the market place as quickly as possible. Thus, minimal storage costs are incurred by CCC. Accordingly, CCC has determined that requiring a Federally-licensed warehouse operator to also maintain a CCC storage agreement provides no additional protection to CCC's interests as a lender in the administration of the marketing assistance loan programs and CCC will no longer require such warehouse operators to also maintain a storage agreement. CCC may, however, continue to utilize storage agreements in those instances where it is engaged in the long-term storage of commodities for use in CCC domestic and international feeding programs, i.e. wheat stored under the Bill Emerson Humanitarian Trust. Second, in a State with a warehouse licensing program, CCC will no longer require the use of a CCC storage agreement for a State-licensed warehouse. In such States, especially those with grain indemnity funds that provide cash payments to depositors in the event of the insolvency of the warehouse operator, CCC has adequate protection as a secured lender. There are redundant costs to the warehouse operator in meeting, and maintaining, compliance with both the State license and the CCC storage agreement. Even without the storage agreement CCC will still have clear title to the commodity in the event of the insolvency of the warehouse operator. If the loan is repaid, CCC has no interest at stake. Thus, for State-licensed warehouses, a CCC storage agreement will not be required, except possibly in the case of the long term storage of CCC-owned grain. A small number of States do not have warehouse licensing programs. In these States, warehouse operators must still comply with State laws pertaining to storage and bailment. CCC will not require these entities to execute a CCC storage agreement before a producer may obtain a marketing assistance loan with respect to commodities stored in such warehouse, but may require that the warehouse be approved in advance by CCC as a location where CCC loan collateral may be stored using the same general criteria currently used in the administration of CCC storage agreements. In making these determinations, CCC may require that the storing warehouse meet certain financial requirements and that the structure in which the commodity is stored meets conditions needed to protect CCC's interest in these States. A list of approved warehouses may be obtained from FSA State and county offices. These changes will allow producers to obtain warehouse-stored loans at all warehouses, both State and Federally-licensed, thus expanding the amount of storage available for use by producers who wish to obtain such loans. This is particularly beneficial since commercial warehouse capacity has declined over the past 15 years while the amount of commodities produced in that time has increased—9.4 billion bushels of commercial storage available in the United States in 1990, compared to 8.5 billion in 2005. Production of wheat, corn, soybeans, rice, grain sorghum, and barley during that same time increased from 13.9 billion bushels to 17.3 billion bushels. Marketing patterns have changed during this time, for example, many buyers have turned to a “timed-to-arrive” basis and do not maintain large stocks of commodities at their facilities. The proposed regulatory changes are intended to compliment these changing patterns. This proposed rule will have no impact on the administration of the U.S. Warehouse Act. Notice and Comment Section 1601(c) of the 2002 Act provides that the regulations needed to implement Title I of the 2002 Act, which include those involved here, may be promulgated without regard to the notice and comment provisions of 5 U.S.C. 553 or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 relating to notices of proposed rulemaking and public participation in rulemaking. Executive Order 12866 This rule is issued in conformance with Executive Order 12866, was determined to be not significant and has not been reviewed by the Office of Management Budget. Regulatory Flexibility Act It has been determined that the Regulatory Flexibility Act is not applicable to this rule because CCC is not required by 5 U.S.C. 533 or any other law to publish a notice of proposed rulemaking for the subject matter of this rule. Environmental Assessment The environmental impacts of this rule have been considered consistent with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 *et seq.* , the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA, 7 CFR part 799. FSA concluded that the rule requires no further environmental review because it is categorically excluded. No extraordinary circumstances or other unforeseeable factors exist which would require preparation of an environmental assessment or environmental impact statement. Executive Order 12988 This rule has been reviewed in accordance with Executive Order 12988. This rule will preempt State laws that are inconsistent with it. Before any legal action may be brought regarding a determination under this rule, the administrative appeal provisions set forth at 7 CFR parts 11 and 780 must be exhausted. Executive Order 12372 This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3014, subpart V, published at 48 FR 29115 (June 24, 1983). Unfunded Mandates Reform Act of 1995 The rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995

(UMRA)for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA. Paperwork Reduction Act Section 1601(c) of the 2002 Act provides that the promulgation of regulations and the administration of Title I of the 2002 Act shall be made without regard to chapter 5 of title 44 of the United States Code (the Paperwork Reduction Act). Accordingly, these regulations and the forms and other information collection activities needed to administer the program authorized by these regulations are not subject to review by OMB under the Paperwork Reduction Act. Executive Order 12612 This rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government. Government Paperwork Elimination Act CCC is committed to compliance with the Government Paperwork Elimination Act

(GPEA)and the Freedom to E-File Act, which require Government agencies in general and FSA in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The forms and other information collection activities required for participation in the program are available electronically through the USDA eForms Web site at *http://www.sc.egov.usda.gov* for downloading. The regulation is available at FSA's Price Support Division Internet site at *http://www.fsa.usda.gov/dafp/psd.* Applications may be submitted at the FSA county offices, by mail or by FAX. At this time, electronic submission is not available. Full development of electronic submission is underway. Federal Assistance Programs The title and number of the Federal assistance program found in the Catalog of Federal Domestic Assistance to which this final rule applies are: Commodity Loans and Loan Deficiency Payments, 10.051. List of Subjects in 7 CFR Part 1421 Agricultural commodities, Feed grains, Grains, Loan programs-agriculture, Oilseeds, Price support programs, Reporting and recordkeeping requirements. For the reasons set out in the preamble, 7 CFR part 1421 is amended as follows: PART 1421—GRAINS AND SIMILARLY HANDLED COMMODITIES—MARKETING ASSISTANCE LOANS AND LOAN DEFICIENCY PAYMENTS FOR THE 2002 THROUGH 2007 CROP YEARS 1. The authority citation for part 1421 continues to read as follows: Authority: 7 U.S.C. 7231-7237 and 7931 *et seq.* ; 15 U.S.C. 714b and 714c. Subpart A—General 2. Revise § 1421.13 to read as follows: § 1421.13 Special marketing assistance loans and loan deficiency payments.

(a)Commodities stored in an unapproved storage facility may be pledged as collateral for a marketing assistance loan if the producer:

(1)Makes request of the marketing assistance loan and obtains the commodity certificate to immediately exchange for the requested loan collateral at the same time at the county office that, under part 718 of this title, is responsible for administering the programs for the farm on which the commodity was produced.

(2)Submits the marketing assistance loan request and the commodity certificate exchange before or on the date of delivery to the unapproved facility.

(b)Eligible producers of hay and silage derived from an eligible loan commodity as provided in § 1421.5 are eligible to request hay and silage quantities for a loan deficiency payment in accordance with § 1421.200. Subpart B—Marketing Assistance Loans 3. Revise § 1421.103(c) to read as follows: § 1421.103 Approved storage. (c)(1) Approved warehouse storage consists of warehouses that are:

(i)If Federally-licensed, in compliance with 7 CFR part 735; or

(ii)If not Federally-licensed, in compliance with State laws and is a warehouse that issues a warehouse receipt that meets the criteria set forth in § 1421.107.

(2)CCC may, on a case-by-case basis, require a warehouse operator that is not Federally-or State-licensed to enter into an agreement with CCC that sets forth requirements to adequately protect CCC's security interest in commodities pledged as collateral for a loan in accordance with this part. 4. Remove §§ 1421.5551 through 1421.5559. Signed in Washington, DC, on June 16, 2006. Thomas B. Hofeller, Acting Executive Vice President, Commodity Credit Corporation. [FR Doc. E6-10368 Filed 6-30-06; 8:45 am] BILLING CODE 3410-05-P NUCLEAR REGULATORY COMMISSION 10 CFR Parts 20 and 32 RIN 3150-AH48 National Source Tracking of Sealed Sources: Extension of Comment Period AGENCY: Nuclear Regulatory Commission. ACTION: Proposed rule: Extension of comment period. SUMMARY: On June 13, 2006, the Nuclear Regulatory Commission

(NRC)published for public comment a proposal to change the basis for the national source tracking rule from the NRC's authority to promote the common defense and security to protection of the public health and safety. The comment period for this proposed rule was to have expired on July 3, 2006. Senator Hillary Rodham Clinton and Representative Edward Markey requested an extension to the comment period. The NRC has decided to extend the comment period for an additional 25 days. DATES: The comment period for the proposed rule published on June 13, 2006 (71 FR 34024), has been extended and now expires on July 28, 2006. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received before this date. ADDRESSES: You may submit comments by any one of the following methods. Please include the following number (RIN 3150-AH48) in the subject line of your comments. Comments on rulemakings submitted in writing or in electronic form will be made available to the public in their entirety on the NRC rulemaking Web site. Personal information will not be removed from your comments. *Mail comments to:* Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff. *E-mail comments to:* *SECY@nrc.gov.* If you do not receive a reply e-mail confirming that we have received your comments, contact us directly at

(301)415-1966. You may also submit comments via the NRC's rulemaking Web site at *http://ruleforum.llnl.gov.* Address questions about our rulemaking website to Carol Gallagher

(301)415-5905; e-mail *cag@nrc.gov.* Comments can also be submitted via the Federal Rulemaking Portal *http://www.regulations.gov.* *Hand deliver comments to:* 11555 Rockville Pike, Rockville, Maryland 20852, between 7:30 a.m. and 4:15 p.m. Federal workdays. (Telephone

(301)415-1966). *Fax comments to:* Secretary, U.S. Nuclear Regulatory Commission at

(301)415-1101. Publicly available documents related to this rulemaking may be examined and copied for a fee at the NRC's Public Document Room (PDR), Public File Area O1 F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland. Selected documents, including comments, can be viewed and downloaded electronically via the NRC rulemaking Web site at *http://ruleforum.llnl.gov.* Publicly available documents created or received at the NRC after November 1, 1999, are available electronically at the NRC's Electronic Reading Room at *http://www.nrc.gov/NRC/ADAMS/index.html.* From this site, the public can gain entry into the NRC's Agencywide Document Access and Management System (ADAMS), which provides text and image files of NRC's public documents. If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC Public Document Room

(PDR)Reference staff at 1-800-397-4209, 301-415-4737 or by e-mail to *pdr@nrc.gov.* FOR FURTHER INFORMATION CONTACT: Merri Horn, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone

(301)415-8126, e-mail, *mlh1@nrc.gov.* Dated at Rockville, Maryland, this 28th day of June, 2006. For the Nuclear Regulatory Commission. Annette Vietti Cook, Secretary of the Commission. [FR Doc. E6-10422 Filed 6-30-06; 8:45 am] BILLING CODE 7590-01-P DEPARTMENT OF THE TREASURY Office of Thrift Supervision 12 CFR Part 563 [No. 2006-24] RIN 1550-AC06 Subordinated Debt Securities and Mandatorily Redeemable Preferred Stock AGENCY: Office of Thrift Supervision, Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: A savings association must obtain OTS approval (or non-objection) before it may include subordinated debt securities or mandatorily redeemable preferred stock in supplementary (tier 2) capital. OTS rules at 12 CFR 563.81 set forth application and notice procedures, requirements that securities must meet in order to be included in supplementary capital, and conditions for OTS approval (or non-objection), and also address other matters. OTS is proposing to update this rule. The proposed rule would delete several unnecessary or outdated requirements and would conform certain provisions, such as maturity period requirements and purchaser restrictions, to the rules issued by the other federal banking agencies. In addition, the proposed rule would reconcile conflicting rules, add appropriate statutory cross-references, and rewrite the rule in plain language. DATES: Comments must be received on or before September 1, 2006. ADDRESSES: You may submit comments, identified by No. 2006-24, by any of the following methods: • Federal eRulemaking Portal: *http://www.regulations.gov.* Follow the instructions for submitting comments. • E-mail address: *regs.comments@ots.treas.gov.* Please include No. 2006-24 in the subject line of the message and include your name and telephone number in the message. • Fax:

(202)906-6518. • Mail: Regulation Comments, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, Attention: No. 2006-24. • Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: Regulation Comments, Chief Counsel's Office, Attention: No. 2006-24. *Instructions:* All submissions received must include the agency name and docket number for this rulemaking. All comments received will be posted without change to the OTS Internet Site at *http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1,* including any personal information provided. *Docket:* For access to the docket to read background documents or comments received, go to *http://www.ots.treas.gov/pagehtml.cfm?catNumber=67&an=1.* In addition, you may inspect comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment for access, call

(202)906-5922, send an e-mail to *public.info@ots.treas.gov,* or send a facsimile transmission to

(202)906-7755. (Prior notice identifying the materials you will be requesting will assist us in serving you.) We schedule appointments on business days between 10 a.m. and 4 p.m. In most cases, appointments will be available the next business day following the date we receive a request. FOR FURTHER INFORMATION CONTACT: David W. Riley, Senior Analyst,

(202)906-6669; Capital Policy, Karen Osterloh, Special Counsel,

(202)906-6639, Regulations and Legislation Division, or Gary Jeffers, Senior Attorney,

(202)906-6457, Business Transactions Division, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. SUPPLEMENTARY INFORMATION: I. Discussion A savings association must obtain OTS approval (or non-objection) before it may include subordinated debt securities or mandatorily redeemable preferred stock in supplementary (tier 2) capital. OTS rules at 12 CFR 563.81 set forth application and notice procedures, requirements that securities must meet in order to be included in supplementary capital, and conditions for OTS approval (or non-objection), and also address other matters. OTS is proposing to update this rule. The proposed rule would delete several unnecessary or outdated requirements and would conform certain provisions, such as maturity period requirements and purchaser restrictions, to the rules issued by the other federal banking agencies. In addition, the proposed rule would reconcile conflicting OTS rules, add appropriate statutory cross-references, and rewrite the rule in plain language. A section-by-section description of the proposed rule follows. Scope—Proposed § 563.81(a) Paragraph

(a)sets out the scope of the proposed rule. This new paragraph states that a savings association must comply with § 563.81 if it wishes to include covered securities in supplementary capital under 12 CFR 567.5(b). Paragraph

(a)also states that § 563.81 does not apply if a savings association does not intend to include covered securities in supplementary capital. OTS notes that a savings association that issues subordinated debt securities must comply with the general borrowing limitations at 12 CFR 563.80, whether or not the savings association intends to include the securities in supplementary capital. Application and Notice Procedures—Proposed § 563.81(b) OTS has substantially amended its application processing rules in the past years. As a result, 12 CFR part 516 contains various procedures that overlap and duplicate the application processing requirements set out in existing § 563.81. Proposed paragraph

(b)would streamline the rule by cross-referencing the application and notice filing procedures at part 516, subpart A. The proposed rule would also clarify that a savings association may file its application or notice before or after it issues covered securities, but may not include the covered securities in supplementary capital until OTS approves the application or does not object to the notice. The proposed rule includes a new provision at paragraph (b)(2). This provision reminds savings associations that they must comply with OTS securities offering rules at 12 CFR part 563g by filing an offering circular for a proposed issuance of covered securities, unless the offering qualifies for an exemption under that part. Securities Requirements—Proposed § 563.81(c) Proposed paragraph

(c)addresses the form of securities, maturity requirements, mandatory prepayment restrictions, and indenture agreements. *Form.* The existing rule contains various requirements regarding the form of covered securities. 1 Paragraph (c)(1) of the proposed rule would restate these requirements with certain modifications. Under the proposed rule, each certificate evidencing a covered security must: 1 12 CFR 563.81(d)(1). • Bear a legend indicating that the security is *not* a savings account or deposit, and is *not* insured by the United States or any agency or fund of the United States. • State that the security is subordinated on liquidation, as to principal, interest, and premium, to all claims against the savings association that have the same priority as savings accounts or a higher priority. • State that the security is not secured by the savings association's assets or the assets of any affiliate of the savings association. • State that the security is not eligible collateral for a loan by the savings association. • Restate certain statutory prohibitions. The existing rule requires covered securities to restate the prohibition on the payment of dividends or interest at 12 U.S.C. 1828(b) (prohibiting payments while an insured depository institution is in default on payment of its Federal Deposit Insurance Corporation

(FDIC)assessment). The proposed rule adds that subordinated debt securities must restate the prohibition on the payment of principal and interest at 12 U.S.C. 1831o(h) (prohibiting payments by a critically undercapitalized insured depository institution). 2 2 OTS notes that certain prepayments may be capital distributions that are subject to 12 CFR part 563, subpart E. • For subordinated debt securities, state (or refer to a document stating) the terms under which the savings association may prepay the obligation. • State (or refer to a document stating) that the savings association must obtain OTS approval before the voluntarily prepayment of principal on subordinated debt securities, the acceleration of payment of principal on subordinated debt securities, or the voluntarily redemption of mandatorily redeemable preferred stock (other than scheduled redemptions), if the savings association fails to meet certain capital tests before or after the repayment. The current rule refers to regulatory capital standards at 12 CFR part 567. The proposed rule adds that OTS approval is required if the savings association is undercapitalized, significantly undercapitalized, or critically undercapitalized under prompt corrective action standards (PCA standards) at 12 CFR part 565. The proposed rule would delete three provisions that are codified as form requirements in the existing rule. First, the proposed rule would delete various purchaser prohibitions. Under the existing rule, each certificate evidencing covered securities must state that the issuer is prohibited from selling the covered securities to another savings association or to a corporate affiliate of a savings association, without the prior written approval of OTS. The existing rule, however, permits an issuer to sell covered securities to its corporate affiliates, or to a diversified savings and loan holding company and its non-savings association affiliates. 3 3 12 CFR 563.81(d)(1)(i)(B). This restriction is restated in various forms in several other places in the existing rule. *See* 12 CFR 563.81(d)(1)(vi)(C), (d)(3)(ii), and (k)(3)(ii). The Federal Home Loan Bank Board (FHLBB), as the operating head of the Federal Savings and Loan Insurance Corporation (FSLIC), originally promulgated this provision. The purchaser restriction was primarily intended to protect FSLIC and was based on the view that no risk is transferred outside the group of institutions with FSLIC-insured accounts when the purchaser is another insured savings association or its affiliate. 4 OTS questions whether it is appropriate to continue to impose this requirement on covered securities. Neither FDIC, which is charged with the primary responsibility of protecting the Deposit Insurance Fund, nor the other federal banking agencies impose this requirement on other insured depository institutions that issue similar securities. Moreover, other existing OTS rules provide some protection. For example, OTS capital rules protect the Deposit Insurance Fund by requiring savings associations to deduct reciprocal holdings of depository institution capital instruments from total capital. 5 Accordingly, OTS proposes to delete the purchaser restriction. 6 4 50 FR 20550 (May 17, 1985). 5 12 CFR 567.5(c)(2)(i). The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), and FDIC have similar capital rules. *See* 12 CFR part 3, Appendix A, § 2(c)(6)(ii) (OCC); 12 CFR part 208, Appendix A, § II.B.(iii) and part 225, Appendix A, § II.B.(iii) (FRB); and 12 CFR part 325, Appendix A, § I.B.(4) (FDIC). 6 For similar reasons, OTS proposes to delete existing 12 CFR 563.81(d)(3)(i), which prohibits the sale of subordinated debt securities to a Federal Home Loan Bank or to FDIC. OTS also proposes to delete the existing requirement that all certificates evidencing subordinated debt must state that the savings association retains the right to prepay the subordinated debt, without premium or other penalty, during the 15 months immediately prior to the maturity date. 7 This requirement ensures that a savings association has the ability to repay early where, for example, the savings association is able to refinance the debt on more favorable terms. The requirement, however, also prevents a savings association from bargaining away its right to prepay in return for a lower interest rate or other favorable terms. In recent years, savings associations have frequently requested, and OTS has granted, waivers of this 15-month prepayment provision. As a result, OTS proposes to eliminate this provision as a requirement for subordinated debt issuances. 7 12 CFR 563.81(d)(1)(iii). Finally, the existing rule requires certificates evidencing subordinated debt to include certain provisions using language prescribed in the regulation. 8 Two of these provisions address various issues related to FDIC's obligations as receiver for the issuer. A third provision addresses the purchaser restrictions, which are discussed above. The proposed rule does not include prescribed language. Instead, OTS will prescribe language for certificates and related documents in its Application Processing Handbook. This will permit OTS to amend the required text promptly to reflect revised laws and regulations and other changed circumstances. OTS specifically requests comments on whether it should revise the current language when it is incorporated in the Application Processing Handbook. 8 12 CFR 563.81(d)(1)(vi). *Maturity requirements.* The proposed rule at § 563.81(c)(2) addresses maturity requirements. Under the existing OTS rule, a covered security must have an original period to maturity (or to required redemption) of at least seven years. In addition, OTS's rule prescribes a formula that limits the amount of required sinking fund payments, required prepayments, required purchase-fund payments, required reserve allocations, and required redemptions that may occur during the first six years that a covered security is outstanding. 9 By contrast, the other banking agencies' rules require that subordinated debt securities and mandatorily redeemable preferred stock must have a five-year original weighted average maturity to be included in Tier 2 capital. 10 9 12 CFR 563.81(d)(2). During the first six years that a covered security is outstanding, these items may not exceed the original principal amount or original redemption price of the covered securities multiplied by a specified fraction. The numerator of the fraction is the number of years elapsed since the issuance of the covered security. The denominator of the fraction is the number of years in the original period to maturity or required redemption. 10 OCC and FRB rules use the phrase “original weighted average maturity,” while FDIC rules use the phrase “original average maturity.” *See* 12 CFR 3.100(f)(1) (OCC); 12 CFR part 208, Appendix A, § II.A.2.d.(ii) and part 225, Appendix A, § II.A.2.d.(i) (FRB); and 12 CFR part 325, Appendix A, § I.A.2.(d) (FDIC). Depending upon the payment schedule applicable to a particular covered security and other factors, OTS's rules could require an original weighted average maturity that is shorter—or longer—than five years. Ultimately, however, OTS believes that the five-year original weighted average maturity requirement may be more flexible than its current rule because the five-year requirement does not impose a specific formula limiting the amount of permissible repayments, payments, and reserve allocations that may be made during the first six years that the covered security is outstanding. Accordingly, OTS proposes to change its rule to state that covered securities must have an original weighted average maturity (or period to required redemption) of at least five years. OTS notes that this change would conform this aspect of its capital rules to the capital rules of the other banking agencies and is consistent with section 303 of the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4803). Section 303 directs the agencies to work to make uniform regulations and guidelines implementing common statutory or supervisory policies, consistent with the principles of safety and soundness, statutory law and policy, and the public interest. *Mandatory prepayment of principal.* The proposed rule at § 563.81(c)(3) would restate the current rules regarding mandatory prepayment of subordinated debt. 11 Specifically, the proposed rule states that subordinated debt securities may not provide events of default or contain other provisions that could result in a mandatory prepayment of principal, other than events of default that: 11 12 CFR 563.81(b)(3). • Arise from the savings association's failure to make timely payment of interest or principal. • Arise from its failure to comply with reasonable financial, operating, and maintenance covenants of a type that are customarily included in indentures for publicly offered debt securities, • Relate to bankruptcy, insolvency, receivership, or similar events. As noted above, the proposed rule would continue to state that any acceleration of payment of principal on a subordinated debt security by a savings association that fails to meet certain capital requirements would be subject to OTS prior approval. All of the banking agencies allow for the mandatory prepayment or acceleration of principal upon events of default related to bankruptcy, insolvency, receivership, and similar events. 12 However, there is no uniform approach with respect to prepayment or acceleration upon other events of default. 13 OTS seeks public comment whether it should revise this provision. Commenters should address whether the rules issued by any other Federal banking agency more appropriately address events of default that may trigger mandatory prepayment or acceleration of principal. 12 12 CFR 250.166(b)(2) (FRB); and 12 CFR part 325, Appendix A, § I.A.2.(c)(2) and

(d)(FDIC). See Comptroller's Licensing Manual, Subordinated Debt (November 2003), pp 15-16. 13 12 CFR 250.166 (FRB); 12 CFR part 325, Appendix A, § I.A.2.(d) (FDIC); and 12 CFR part 3, Appendix A, § 2(b)(4) and Comptroller's Licensing Manual, Subordinated Debt (November 2003) (OCC). *Indenture requirements.* The current rule requires savings associations to use an indenture for subordinated debt securities. 14 OTS proposes to update the monetary thresholds in these indenture requirements to reflect statutory changes in the Trust Indenture Act of 1939 (TIA). 15 U.S.C. 77aaa *et seq.* 14 12 CFR 563.81(d)(4). In addition to these updates, OTS is seeking public comment on additional possible revisions to the indenture requirements. For example, the current rule requires a savings association to use an indenture for all subordinated debt security issuances. The TIA generally requires indentures for debt instruments, but does not require an indenture where the underlying securities are exempt from registration under the Securities Act of 1933 (Securities Act). 15 One such exemption is available for offerings made solely to accredited investors. 16 The Securities Act and the TIA exempt such offerings because accredited investors are considered to have sufficient financial and professional resources and sophistication to analyze the offering, make informed decisions, and defend and exercise their rights. 17 In recent years, OTS has waived the indenture requirement where subordinated debt securities are issued to accredited investors that are top-tier parent holding companies of the issuer (or subsidiaries of these holding companies), provided a paying agent agreement is in place. These waivers are conditioned upon the savings association's representation that it will provide OTS with a draft indenture before the debt holder sells or assigns any of the debt securities to an unaffiliated third party. In addition, the savings association must agree that the indenture will apply to all unaffiliated third party debt holders. OTS is considering exempting such issuances from the indenture requirements in the final rule and seeks comment on this possible change. Commenters are invited to address whether OTS should exempt offerings to accredited investors that are holding companies of the issuer (or their subsidiaries) from the indenture requirement, and whether it should also exempt offerings to unaffiliated accredited investors. 15 15 U.S.C. 77ddd. 16 15 U.S.C. 77d(6). 17 For example, “accredited investors” include such entities as: brokers or dealers registered under the Securities Exchange Act of 1934; insurance companies as defined in the Securities Act; investment companies registered under the Investment Company Act of 1940; certain employee benefit plans; directors, executive officers or general partners of the issuer; natural persons with income or net worth in excess of specified limits; and certain trusts with assets in access of specified limits. 17 CFR 230.501(a). *See* 15 U.S.C. 77(a)(15). OTS Review—Proposed § 563.81(d) Proposed paragraph (d)(1) states that OTS will review notices and applications under the application processing procedures at 12 CFR part 516, subpart E. In addition, proposed paragraph (d)(2) sets out the factors that OTS will consider in its review of a notice or application. These criteria are based on the existing rule with minor changes. 18 In reviewing notices and applications under this section, OTS will consider whether: 18 12 CFR 563.81(b). • The issuance of the covered securities is authorized under applicable laws and regulations, and is consistent with the savings association's charter and bylaws. • The savings association is at least adequately capitalized under the PCA standards and meets the regulatory capital requirements. The current rule refers only to the regulatory capital requirements at 12 CFR part 567. The proposed rule would add the reference to the PCA standards at 12 CFR part 565. • The savings association is or will be able to service the covered securities. • The covered securities are consistent with the requirements regarding the form of securities, limitations on terms, prepayment restrictions, use of an indenture, and other requirements imposed under the rule. • The covered securities and related transactions sufficiently transfer risk from the Deposit Insurance Fund. • OTS has no objection to the issuance based on the savings association's overall policies, condition, and operations. 19 19 The existing rule states that OTS shall establish non-exclusive guidelines identifying supervisory bases that may be used to object to the inclusion of covered securities in regulatory capital. 12 CFR 563.81(b)(2)(i). While OTS may establish such guidance in the future, the proposed rule does not require OTS to take this step. The existing rule states that issuances of covered securities are subject to seven standard conditions. OTS has decided to delete most of these conditions. OTS has determined that many of the standard conditions are unnecessary because they are stated elsewhere as proposed regulatory requirements. For example, reporting is addressed in proposed paragraph (g), 20 and amendments to covered securities following OTS review are addressed at new paragraph (e). 21 Other standard conditions would be deleted because they are contrary to current securities law or refer to obsolete OTS regulations. 22 20 12 CFR 563.81(k)(2) and (3). 21 12 CFR 563.81(k)(5) and (6). 22 12 CFR 563.81(k)(1) and (7). With these deletions, proposed 563.81(d)(3) would provide that OTS approval or nonobjection is conditioned upon no material changes to the information disclosed in the application or notice submitted to OTS. 23 The proposed rule would also expressly state that OTS may impose such additional requirements or conditions as may be necessary to protect purchasers, the savings association, OTS, or the Deposit Insurance Fund. 23 12 CFR 563.81(k)(4). Amendments—Proposed § 563.81(e) The proposed rule would resolve an inconsistency in the current rules regarding amendments to covered securities or related documents following OTS review. One provision appears to require a savings association to seek OTS approval or nonobjection only where an amendment would not conform to OTS regulations governing the form or content of the covered securities and related documents, or where the amended securities would not sufficiently transfer risk from the Deposit Insurance Fund. 24 The other provision requires a savings association to seek OTS approval or nonobjection for *all* amendments that occur after the conclusion of the OTS review. 25 OTS believes that it should have the opportunity to review all amendments to covered securities and related documents. Accordingly, the proposed rule requires OTS approval or nonobjection for all amendments after OTS review. 24 12 CFR 563.81(k)(5). 25 12 CFR 563.81(a). Sale of Covered Securities—Proposed § 563.81(f) The existing rule provides that a savings association must complete the sale of securities within one year of OTS approval or nonobjection and that OTS may extend this period upon a timely request. 26 Proposed paragraph

(f)restates this provision in plain language without substantive change. 26 12 CFR 563.81(g). Reports—Proposed § 563.81(g) The existing rule requires savings associations to submit various reports in connection with the sale of covered securities. 27 The proposed rule would restate and consolidate all reporting requirements in one provision. The proposed rule does not modify the substance of the reporting requirement. 27 These reporting requirements are contained in 12 CFR 563.81(h) and in the standard conditions at 12 CFR 563.81(k)(2) and (3). Obsolete Provisions In addition to the revisions discussed above, OTS proposes to delete certain obsolete provisions of the existing rules. These existing provisions include: • 12 CFR 563.81(b)(2)(i)(B), which refers to non-existent OTS regulations at 12 CFR 563.160 and 563.172. • 12 CFR 563.81(d) (introductory paragraph), which states that OTS may waive certain requirements. This provision duplicates (and conflicts with) OTS general waiver authority at 12 CFR 500.30(a). • 12 CFR 563.81(k)(7). This section conflicts with 12 CFR 563.76, which prohibits the sale of debt securities on the premises of a savings association. II. Solicitation of Comments Regarding the Use of Plain Language Section 722 of the Gramm-Leach-Bliley Act (12 U.S.C. 4809) requires Federal banking agencies to use “plain language” in all proposed and final rules published after January 1, 2000. OTS invites comments on how to make this proposed rule easier to understand. For example:

(1)Have we organized the material to suit your needs? If not, how could the material be better organized?

(2)Do we clearly state the requirements in the rule? If not, how could the rule be more clearly stated?

(3)Does the rule contain technical language or jargon that is not clear? If so, what language requires clarification?

(4)Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand? If so, what changes to the format would make the rule easier to understand? III. Executive Order 12866 The Director of OTS has determined that this proposed rule does not constitute a “significant regulatory action” for purposes of Executive Order 12866. IV. Unfunded Mandates Reform Act of 1995 Today's proposed rule merely revises an existing rule to delete unnecessary, outdated, and conflicting requirements, to add appropriate statutory cross-references, and to rewrite the rule in plain language. Accordingly, OTS has determined that the proposed rule will not result in expenditures by state, local, or tribal governments or by the private sector of $100 million or more and that a budgetary impact statement is not required under section 202 of the Unfunded Mandates Reform Act of 1995. VI. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act

(RFA)(5 U.S.C. 601), the Director certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. Today's proposed rule merely revises an existing rule to delete unnecessary, outdated, and conflicting requirements, to add appropriate statutory cross-references, and to rewrite the rule in plain language. VII. Paperwork Reduction Act of 1995 The information collection requirements in the existing OTS rules at 12 CFR 563.81 were previously approved under OMB control number 1550-00xx. The proposed rule would continue to incorporate these requirements and does not make any substantive changes that affect the overall burden of compliance. List of Subjects in 12 CFR Part 563 Accounting, Administrative practice and procedure, Advertising, Conflict of interest, Crime, Currency, Holding companies, Investments, Mortgages, Reporting and recordkeeping requirements, Savings associations, Securities, Surety bond. Accordingly, the Office of Thrift Supervision proposes to amend 12 CFR part 563 as set forth below: PART 563—SAVINGS ASSOCIATIONS—OPERATIONS 1. The authority citation for part 563 continues to read as follows: Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 1817, 1820, 1828, 1831o, 3806; 31 U.S.C. 5318; 42 U.S.C. 4106. 2. Revise § 563.81 to read as follows: § 563.81 Inclusion of subordinated debt securities and mandatorily redeemable preferred stock as supplementary capital.

(a)*Scope.* A savings association must comply with this section in order to include subordinated debt securities or mandatorily redeemable preferred stock (“covered securities”) in supplementary capital under 12 CFR 567.5(b). If a savings association does not include covered securities in supplementary capital, it is not required to comply with this section.

(b)*Application and notice procedures.*

(1)A savings association must file an application or notice under 12 CFR part 516, subpart A seeking OTS approval of, or nonobjection to, the inclusion of covered securities in supplementary capital. The savings association may file its application or notice before or after it issues covered securities, but may not include covered securities in supplementary capital until OTS approves the application or does not object to the notice.

(2)A savings association must also comply with the securities offering rules at 12 CFR part 563g by filing an offering circular for a proposed issuance of covered securities, unless the offering qualifies for an exemption under that part.

(c)*Securities requirements.* To be included in supplementary capital, covered securities must meet the following requirements:

(1)*Form.*

(i)Each certificate evidencing a covered security must:

(A)Bear the following legend on its face, in bold type: “This security is *not* a savings account or deposit and it is *not* insured by the United States or any agency or fund of the United States;”

(B)State that the security is subordinated on liquidation, as to principal, interest, and premium, to all claims against the savings association that have the same priority as savings accounts or a higher priority;

(C)State that the security is not secured by the savings association's assets or the assets of any affiliate of the savings association, as defined in 12 CFR 583.2;

(D)State that the security is not eligible collateral for a loan by the savings association;

(E)State the prohibition on the payment of dividends or interest at 12 U.S.C. 1828(b) and, in the case of subordinated debt securities, state the prohibition on the payment of principal and interest at 12 U.S.C. 1831o(h);

(F)For subordinated debt securities, state or refer to a document stating the terms under which the savings association may prepay the obligation; and

(G)State or refer to a document stating that the savings association must obtain OTS approval before the voluntarily prepayment of principal on subordinated debt securities, the acceleration of payment of principal on subordinated debt securities, or the voluntarily redemption of mandatorily redeemable preferred stock (other than scheduled redemptions), if the savings association is undercapitalized, significantly undercapitalized, or critically undercapitalized as described in § 565.4(b) of this chapter, fails to meet the regulatory capital requirements at 12 CFR part 567, or would fail to meet any of these standards following the payment.

(ii)A savings association must include such additional statements as OTS may prescribe for certificates, purchase agreements, indentures, and other related documents. OTS will prescribe the text of these additional statements in its Application Processing Handbook.

(2)*Maturity requirements.* Covered securities must have an original weighted average maturity or original weighted average period to required redemption of at least five years.

(3)*Mandatory prepayment.* Subordinated debt securities and related documents may not provide events of default or contain other provisions that could result in a mandatory prepayment of principal, other than events of default that:

(i)Arise from the savings association's failure to make timely payment of interest or principal;

(ii)Arise from its failure to comply with reasonable financial, operating, and maintenance covenants of a type that are customarily included in indentures for publicly offered debt securities; or

(iii)Relate to bankruptcy, insolvency, receivership, or similar events.

(4)*Indenture.* A savings association must use an indenture for subordinated debt securities. If the aggregate amount of subordinated debt securities that are publicly offered (excluding sales in a non-public offering as defined in 12 CFR 563g.4) and sold in any consecutive 12-month or 36-month period exceeds $5,000,000 or $10,000,000 respectively (or such lesser amount that the Securities and Exchange Commission shall establish by rule or regulation under 15 U.S.C. 77ddd), the indenture must provide for:

(i)The appointment of a trustee other than the savings association or an affiliate of the savings association (as defined at 12 CFR 583.2); and

(ii)Collective enforcement of the security holders' rights and remedies.

(d)*OTS review.*

(1)OTS will review notices and applications under 12 CFR part 516, subpart E.

(2)In reviewing notices and applications under this section, OTS will consider whether:

(i)The issuance of the covered securities is authorized under applicable laws and regulations and is consistent with the savings association's charter and bylaws.

(ii)The savings association is at least adequately capitalized under § 565.4(b) of this chapter and meets the regulatory capital requirements at § 567.2 of this chapter.

(iii)The savings association is or will be able to service the covered securities.

(iv)The covered securities are consistent with the requirements of this section.

(v)The covered securities and related transactions sufficiently transfer risk from the Deposit Insurance Fund.

(vi)OTS has no objection to the issuance based on the savings association's overall policies, condition, and operations.

(3)OTS approval or nonobjection is conditioned upon no material changes to the information disclosed in the application or notice submitted to OTS. OTS may impose such additional requirements or conditions as it may deem necessary to protect purchasers, the savings association, OTS, or the Deposit Insurance Fund.

(e)*Amendments.* If a savings association amends the covered securities or related documents following the completion of OTS review, it must obtain OTS approval or nonobjection under this section before it may include the amended securities in supplementary capital.

(f)*Sale of covered securities.* The savings association must complete the sale of covered securities within one year after OTS approval or nonobjection under this section. A savings association may request an extension of the offering period by filing a written request with OTS. The savings association must demonstrate good cause for the extension and file the request at least 30 days before the expiration of the offering period or any extension of the offering period.

(g)*Reports.* A savings association must file the following information with OTS within 30 days after the savings association completes the sale of covered securities includable as supplementary capital. If the savings association filed its application or notice following the completion of the sale, it must submit this information with its application or notice:

(1)A written report indicating the number of purchasers, the total dollar amount of securities sold, the net proceeds received by the savings association from the issuance, and the amount of covered securities, net of all expenses, to be included as supplementary capital;

(2)Three copies of an executed form of the securities and a copy of any related documents governing the issuance or administration of the securities; and

(3)A certification by the appropriate executive officer indicating that the savings association complied with all applicable laws and regulations in connection with the offering, issuance, and sale of the securities. Dated: June 26, 2006. By the Office of Thrift Supervision. John M. Reich, Director. [FR Doc. E6-10341 Filed 6-30-06; 8:45 am] BILLING CODE 6720-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-25232; Directorate Identifier 2006-NM-106-AD] RIN 2120-AA64 Airworthiness Directives; BAE Systems (Operations) Limited Model BAe 146 and Avro 146-RJ 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 BAE Systems (Operations) Limited Model BAe 146 and Avro 146-RJ airplanes. This proposed AD would require repetitive inspections of the wing top skin under the rib 0 joint strap, and related investigative and corrective actions if necessary. This proposed AD results from a report of a significant crack in the wing top skin under the rib 0 joint strap. We are proposing this AD to detect and correct corrosion and cracking in that area, which could result in reduced structural integrity of the wing. DATES: We must receive comments on this proposed AD by August 2, 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 British Aerospace Regional Aircraft American Support, 13850 Mclearen Road, Herndon, Virginia 20171, 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-2006-25232; Directorate Identifier 2006-NM-106-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 European Aviation Safety Agency

(EASA)notified us that an unsafe condition may exist on certain BAE Systems (Operations) Limited Model BAe 146 and Avro 146-RJ airplanes. The EASA advises that a significant crack in the wing top skin under the rib 0 joint strap was found during a scheduled inspection of adjacent structure. This cracking may also occur on other airplanes having top wing skins made from the same aluminum alloy as the top wing skin on the subject airplane. Cracking in this area, if not corrected, could result in reduced structural integrity of the wing. Relevant Service Information The manufacturer has issued BAE Systems (Operations) Limited Alert Inspection Service Bulletin

(ISB)ISB.57-a071, dated April 12, 2006. The ISB describes procedures for repetitive ultrasonic inspections for defects (including corrosion and cracking) of the wing top skin under the rib 0 joint strap, at the outer row of fasteners. The initial compliance time ranges from the earlier of 500 flights or 3 months (for airplanes with existing repairs and no previous inspection of the subject area) to the earlier of 4,000 flight cycles or 24 months (for airplanes previously inspected). For any defect found, the ISB specifies the related investigative actions of a radiographic inspection of the top wing skin to detect corrosion and cracking, and a high frequency eddy current inspection around the nuts of the stringer flanges to detect cracking and corrosion. The ISB describes the corrective actions of repairing the cracks or corrosion; alternatively, the ISB specifies operators may obtain an approved BAE Systems repair scheme. Accomplishing the actions specified in the ISB is intended to adequately address the unsafe condition. The EASA mandated the ISB and issued emergency airworthiness directive 2006-0091-E, dated April 20, 2006, to ensure the continued airworthiness of these airplanes in the European Union. The ISB refers to BAe 146 Series/AVRO-RJ Series Nondestructive Testing Manual 57-10-12, Revision 23, dated November 15, 2003, as an additional source of service information for the radiographic and high frequency eddy current inspections. The ISB refers to BAe Structural Repair Manual 57-10-15-001 as an additional source of service information for the repair. FAA's Determination and Requirements of the Proposed AD These airplane models are manufactured in the United Kingdom 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. As described in FAA Order 8100.14A, “Interim Procedures for Working with the European Community on Airworthiness Certification and Continued Airworthiness,” dated August 12, 2005, the EASA has kept the FAA informed of the situation described above. We have examined the EASA's findings, evaluated all pertinent information, and determined that we need to issue an AD for products 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 ISB described previously, except as discussed below. Differences Between the Proposed AD and ISB The ISB allows, as an option, an approved BAE Systems repair scheme for repairing certain conditions, but this AD requires repairing those conditions using a method approved by the FAA or the EASA (or its delegated agent). In light of the type of repair required to address the unsafe condition, and consistent with existing bilateral airworthiness agreements, we have determined that, for this AD, a repair approved by the FAA or the EASA is acceptable for compliance with this AD. Clarification of Compliance Time This AD refers to compliance times specified in the ISB. However, the ISB does not provide a relevant point from which to measure the compliance time. This AD requires that the required actions be done within the specified compliance times after the effective date of this AD. Costs of Compliance The following table provides the estimated costs for U.S. operators to comply with this proposed AD, per inspection cycle. Estimated Costs Action Work hours Average labor rate per hour Parts Cost per airplane Number of U.S.-registered airplanes Fleet cost Inspection 6 $80 $0 $480 10 $4,800 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): **BAE Systems (Operations) Limited (Formerly British Aerospace Regional Aircraft):** Docket No. FAA-2006-25232; Directorate Identifier 2006-NM-106-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by August 2, 2006. Affected ADs

(b)None. Applicability

(c)This AD applies to BAE Systems (Operations) Limited Model BAe 146-100A, -200A, and -300A series airplanes; and Avro 146-RJ70A, 146-RJ85A, and 146-RJ100A airplanes; certificated in any category; as identified in BAE Systems (Operations) Limited Alert Inspection Service Bulletin ISB.57-a071, dated April 12, 2006. Unsafe Condition

(d)This AD results from a report of a significant crack in the wing top skin under the rib 0 joint strap. We are issuing this AD to detect and correct corrosion and cracking in that area, which could result in reduced structural integrity of the wing. 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

(f)Inspect the airplane at the applicable time specified in paragraph 1.D. “Compliance” of BAE Systems (Operations) Limited Alert Inspection Service Bulletin

(ISB)ISB.57-a071, dated April 12, 2006, except, where the service bulletin specifies a compliance time after the date on the service bulletin, this AD requires compliance within the specified compliance time after the effective date of this AD. The inspection required by this paragraph involves an ultrasonic inspection for defects, including corrosion and cracking, of the wing top skin under the rib 0 joint strap, at the outer row of fasteners, by doing all applicable actions specified in the Accomplishment Instructions of the ISB. Do all applicable related investigative and corrective actions before further flight in accordance with the ISB, except as required by paragraph

(g)of this AD. Repeat the inspection at intervals not to exceed 4,000 flight cycles or 24 months, whichever occurs first. Exceptions to ISB Specifications

(g)BAE Systems (Operations) Limited Alert Inspection Service Bulletin

(ISB)ISB.57-a071, dated April 12, 2006, specifies two provisions not specified in this AD.

(1)No inspection report is necessary.

(2)As an option, the ISB would allow repairs specified in an approved BAE Systems repair scheme. This AD instead requires any repair using this option in accordance with a method approved by either the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (or its delegated agent). 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.

(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. Related Information

(i)The subject of this AD is also addressed in European Aviation Safety Agency emergency airworthiness directive 2006-0091-E, dated April 20, 2006. Issued in Renton, Washington, on June 23, 2006. Kalene C. Yanamura, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E6-10352 Filed 6-30-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Part 9 [Notice No. 59] RIN: 1513-AB13 Proposed Establishment of the Outer Coastal Plain Viticultural Area (2003R-166P) AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Notice of proposed rulemaking. SUMMARY: The Alcohol and Tobacco Tax and Trade Bureau proposes to establish the Outer Coastal Plain viticultural area in southeastern New Jersey. The proposed viticultural area consists of approximately 2,255,400 acres and includes all of Cumberland, Cape May, Atlantic, and Ocean Counties and portions of Salem, Gloucester, Camden, Burlington, and Monmouth Counties. We designate viticultural areas to allow bottlers to better describe the origin of their wines and to allow consumers to better identify the wines they may purchase. We invite comments on this proposed addition to our regulations. DATES: We must receive written comments on or before September 1, 2006. ADDRESSES: You may send comments to any of the following addresses: • Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, Attn: Notice No. 59, P.O. Box 14412, Washington, DC 20044-4412. • 202-927-8525 (facsimile). • *nprm@ttb.gov* (e-mail). • *http://www.ttb.gov/alcohol/rules/index.htm* . An online comment form is posted with this notice on our Web site. • *http://www.regulations.gov* (Federal e-rulemaking portal; follow instructions for submitting comments). You may view copies of this notice, the petition, the appropriate maps, and any comments we receive about this proposal by appointment at the TTB Information Resource Center, 1310 G Street, NW., Washington, DC 20220. To make an appointment, call 202-927-2400. You may also access copies of the notice and comments online at *http://www.ttb.gov/alcohol/rules/index.htm* . See the Public Participation section of this notice for specific instructions and requirements for submitting comments, and for information on how to request a public hearing. FOR FURTHER INFORMATION CONTACT: Jennifer Berry, Alcohol and Tobacco Tax and Trade Bureau, Regulations and Rulings Division, P.O. Box 18152, Roanoke, VA 24014; telephone 540-344-9333. SUPPLEMENTARY INFORMATION: Background on Viticultural Areas TTB Authority Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 *et seq.* ) requires that alcohol beverage labels provide consumers with adequate information regarding product identity and prohibits the use of misleading information on those labels. The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau

(TTB)administers these regulations. Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains the list of approved viticultural areas. Definition Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized and defined in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographical origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area is neither an approval nor an endorsement by TTB of the wine produced in that area. Requirements Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include— • Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition; • Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies; • Evidence relating to the geographical features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas; • A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey

(USGS)maps; and • A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked. Outer Coastal Plain Petition James Quarella of Bellview Winery, Landisville, New Jersey, petitioned TTB to establish the “Outer Coastal Plain” as an American viticultural area in southeastern New Jersey. The proposed viticultural area covers approximately 2,255,400 acres and includes all of Cumberland, Cape May, Atlantic, and Ocean Counties and portions of Salem, Gloucester, Camden, Burlington, and Monmouth Counties. According to the petitioner, the area currently includes thirteen wineries, several vineyards, and approximately 750 acres planted to vines. We summarize below the evidence submitted in support of the petition. Name Evidence The Outer Coastal Plain is one of five defined physiographic regions of New Jersey. The other regions are the Inner Coastal Plain, the Newark Basin Piedmont, the Highlands, and the Appalachian Valley and Ridge. The Outer Coastal Plain includes most of the State's Atlantic coastline and the area known as the “Pinelands.” The petitioner states that most geology reference sources and such government entities as the New Jersey Department of Environmental Protection, USGS, and the United States Department of Agriculture (USDA), call the region the “Outer Coastal Plain.” As evidence that the proposed viticultural area is known locally and nationally by this name, the petitioner submitted several documents that identify the area as the “Outer Coastal Plain.” These included— • A map from a National Park Service Web site showing landform regions in New Jersey ( *http://www.cr.nps.gov/history/online_books/nj2/chap1.htm* .); • A map entitled “Geographic Boundaries of the Outer Coastal Plain

(OCP)of New Jersey,” issued by the New Jersey Department of Environmental Protection; and • A list of native trees and shrubs for the Outer Coastal Plain on the Web site of the New Jersey Agricultural Experiment Station/Cook College, Rutgers, The State University of New Jersey ( *http://www.rce.rutgers.edu/njriparianforestbuffers/nativeOUTER.htm* .). The Outer Coastal Plain is part of the Atlantic Coastal Plain, an extensive seaward-sloping plain stretching about 2,200 miles along the coast of the Eastern United States from Massachusetts to Florida. It consists of an inner and outer coastal plain. Boundary Evidence The Outer Coastal Plain encompasses the southeastern part of the State of New Jersey. The proposed area is roughly triangular in shape and comprises the most easterly and southerly portions of New Jersey, including most of the State's Atlantic coastline and the area known as the “Pinelands” or “Pine Barrens.” According to the petitioner, the geographical and geological features that define the boundaries of the proposed viticultural area clearly distinguish it from surrounding areas. The proposed viticultural area's proximity to the Atlantic Ocean and Delaware Bay greatly influences its climate and geological features, such as soils and underlying sediments. These features are described in greater detail in the following section. The Atlantic Ocean coastline, including its barrier islands, forms the area's eastern boundary, and Delaware Bay forms its southern boundary. The diagonal western boundary is immediately east of a belt of low hills, called cuestas. These cuestas, which extend in a northeasterly direction from the Delaware River lowlands in the southwest to the Atlantic Highlands overlooking Raritan Bay in the northeast, separate the proposed area from the Inner Coastal Plain. The diagonal western boundary meets the eastern boundary within the city of Long Branch, New Jersey, on the Atlantic coastline. As historical evidence for these proposed boundaries, the petitioner cited the area's long viticultural history. According to evidence that the petitioner submitted, viticulture flourished in the area as early as the mid-nineteenth century. Egg Harbor City, New Jersey, was the center of a thriving wine industry with hundreds of acres of grapes. In 1864, Louis Renault established Renault Winery in Egg Harbor City, where he found the soils and climate to be similar to those of his native Rheims, France. Today, Renault Winery is one of the oldest, continuous winery operations in the United States. Around the same time, Dr. Thomas Welch founded the U.S. grape juice industry in Vineland, New Jersey, with a product that became known as Welch's Grape Juice. Although Prohibition devastated the area's wineries, the wine industry has made a strong comeback in recent years, due largely to the New Jersey Farm Winery Act of 1981. The number of wineries in the State jumped from 9 in 1981 to 27 today, 13 of which are in the proposed area. Distinguishing Features Soils and Geology The petitioner asserts that the soils and geology of the proposed viticultural area clearly distinguish it from surrounding areas. Despite its large landmass, the Outer Coastal Plain has remarkably uniform, well drained sandy soils that derived from unconsolidated sediments. The relatively low fertility and low pH of these soils, the petitioner notes, are favorable for grape growing. In contrast to the soils of the Outer Coastal Plain, the fine, silty soils of the Inner Coastal Plain to the west have both higher fertility and higher pH and the soils to the north are dense, rocky, and derived from bedrock. As evidence of the proposed viticultural area's distinctive geology, the petitioner submitted a document entitled “Geologic Map of New Jersey.” Published by the State's Department of Environmental Protection, this map clearly shows that most of the Outer Coastal Plain is underlain by unconsolidated deposits of sand, silt, and clay of the Tertiary period and that a small coastal fringe consists of beach and estuarine deposits of the Holocene epoch. The parent material of soils in other parts of the State formed in later geologic periods. The Inner Coastal Plain, in contrast, is underlain by sand, silt, and clay of the Cretaceous period, and the northern regions of the State are underlain by sedimentary, igneous, and metamorphic rocks of still later geologic periods. According to the petitioner, a unique feature of the proposed viticultural area is its significant aquifers, particularly the Cohansey aquifer, the largest freshwater aquifer in the mid-Atlantic region. The petitioner states that this aquifer is so important to the region's drainage and water supply that it was one of the reasons the Pinelands National Reserve was created as a federally protected area. The Cohansey aquifer is part of the 1.93-million-acre Kirkwood-Cohansey aquifer system, the borders of which nearly correspond to those of the proposed viticultural area. These aquifers, the petitioner notes, provide an abundant source of water for the proposed viticultural area's vineyards. In contrast, the adjacent Inner Coastal Plain has smaller, confined aquifers, which are mostly in the Potomac-Raritan-Magothy aquifer system. Elevation The petitioner states that the proposed viticultural area's elevation is another feature that distinguishes it from adjacent areas. According to an elevation map issued by the New Jersey Geological Survey, almost the entire area has elevations of less than 280 feet above sea level, and most of the area has elevations significantly below that height. The petitioner notes that the proposed viticultural area's low elevation and proximity to the Atlantic Ocean are moderating influences on its climate, as described below. Elevations in the other regions of New Jersey are higher. Elevations in the northwestern part of the State, for example, range from 1,300 to 1,680 feet. Climate According to the petitioner, the climate of the Outer Coastal Plain is strongly influenced by the Atlantic Ocean to the east and Delaware Bay to the south. Because of this maritime influence on its climate, the proposed viticultural area is generally warmer, has a longer growing season, and has more moderate temperatures than areas to the west and north. As evidence of the maritime influence, the petitioner submitted a USDA plant hardiness zone map of New Jersey and noted that the proposed viticultural area is in zones 6B, 7A, or 7B, while areas to the north and west are in cooler zones and have shorter growing seasons. The petitioner also submitted a climate overview published on the Web site of the New Jersey State Climatologist. ( *See http://climate.Rutgers.edu/stateclim_v1/njclimoverview.html* .) The overview shows that the proposed viticultural area ranges between 190 and 217 freeze-free days per year. In contrast, the Highlands region to the north averages 163 freeze-free days and the central Piedmont region averages 179 freeze-free days. The petitioner notes that because of these climatic differences, more temperature-sensitive grape varieties may be grown in vineyards within the proposed viticultural area than in vineyards in other adjacent regions. Boundary Description See the narrative boundary description of the petitioned-for viticultural area in the proposed regulatory text published at the end of this notice. Maps The petitioner provided the required maps, and we list them below in the proposed regulatory text. Impact on Current Wine Labels Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. If we establish this proposed viticultural area, its name, “Outer Coastal Plain,” will be recognized under 27 CFR 4.39(i)(3) as a name of viticultural significance. The text of the new regulation would clarify this point. Consequently, wine bottlers using “Outer Coastal Plain” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the viticultural area's name as an appellation of origin. On the other hand, we do not believe that any single part of the proposed viticultural area name standing alone would have viticultural significance if the new area is established. Accordingly, the proposed part 9 regulatory text set forth in this document specifies only the full “Outer Coastal Plain” name as a term of viticultural significance for purposes of part 4 of the TTB regulations. For a wine to be eligible to use as an appellation of origin a viticultural area name or other term specified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible to use the viticultural area name or other term as an appellation of origin and that name or term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other term appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Accordingly, if a new label or a previously approved label uses the name “Outer Coastal Plain” for a wine that does not meet the 85 percent standard, the new label will not be approved, and the previously approved label will be subject to revocation, upon the effective date of the approval of the Outer Coastal Plain viticultural area. Different rules apply if a wine has a brand name containing a viticultural area name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details. Public Participation Comments Invited We invite comments from interested members of the public on whether we should establish the proposed viticultural area. We are also interested in receiving comments on the sufficiency and accuracy of the name, boundary, climatic, and other required information submitted in support of the petition. Please provide any available specific information in support of your comments. Because of the potential impact of the establishment of the proposed Outer Coastal Plain viticultural area on brand labels that include the words “Outer Coastal Plain” as discussed above under “Impact on Current Wine Labels,” we are particularly interested in comments regarding whether there will be a conflict between the proposed area name and currently used brand names. If a commenter believes that a conflict will arise, the comment should describe the nature of that conflict, including any negative economic impact that approval of the proposed viticultural area will have on an existing viticultural enterprise. We are also interested in receiving suggestions for ways to avoid any conflicts, for example by adopting a modified or different name for the viticultural area. In addition, TTB is interested in comments regarding the noninclusion within the proposed viticultural area of areas within other States that are part of the Atlantic Coastal Plain and that may therefore also have a claim to use of the name “Outer Coastal Plain,” including information on any wine grape-growing in those areas. In this regard, we invite comments on whether the name “New Jersey Outer Coastal Plain” would more appropriately identify the proposed viticultural area. Comments in this regard should include documentation or other information supporting the conclusion that use of “New Jersey Outer Coastal Plain” rather than only “Outer Coastal Plain” on a wine label would better enable consumers and vintners to attribute to the wine in question the quality, reputation, or other characteristic of wine made from grapes grown in the proposed viticultural area. Submitting Comments Please submit your comments by the closing date shown above in this notice. Your comments must include this notice number and your name and mailing address. Your comments must be legible and written in language acceptable for public disclosure. We do not acknowledge receipt of comments, and we consider all comments to be originals. You may submit comments in one of five ways: • *Mail:* You may send written comments to TTB at the address listed in the ADDRESSES section. • *Facsimile:* You may submit comments by facsimile transmission to 202-927-8525. Faxed comments must—

(1)Be on 8.5- by 11-inch paper;

(2)Contain a legible, written signature; and

(3)Be no more than five pages long. This limitation assures electronic access to our equipment. We will not accept faxed comments that exceed five pages. • *E-mail:* You may e-mail comments to *nprm@ttb.gov.* Comments transmitted by electronic mail must—

(1)Contain your e-mail address;

(2)Reference this notice number on the subject line; and

(3)Be legible when printed on 8.5- by 11-inch paper. • *Online form:* We provide a comment form with the online copy of this notice on our Web site at *http://www.ttb.gov/alcohol/rules/index.htm.* Select the “Send comments via e-mail” link under this notice number. • *Federal e-rulemaking portal:* To submit comments to us via the Federal e-rulemaking portal, visit *http://www.regulations.gov* and follow the instructions for submitting comments. You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing. Confidentiality All submitted material is part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider to be confidential or inappropriate for public disclosure. Public Disclosure You may view copies of this notice, the petition, the appropriate maps, and any comments we receive by appointment at the TTB Information Resource Center at 1310 G Street, NW., Washington, DC 20220. You may also obtain copies at 20 cents per 8.5- x 11- inch page. Contact our information specialist at the above address or by telephone at 202-927-2400 to schedule an appointment or to request copies of comments. We will post this notice and any comments we receive on this proposal on the TTB Web site. All name and address information submitted with the comments will be posted, including e-mail addresses. We may omit voluminous attachments or material that we consider unsuitable for posting. In all cases, the full comment will be available in the TTB Information Resource Center. To access the online copy of this notice and the submitted comments, visit *http://www.ttb.gov/alcohol/rules/index.htm.* Select the “View Comments” link under this notice number to view the posted comments. Regulatory Flexibility Act We certify that this proposed regulation, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required. Executive Order 12866 This proposed rule is not a significant regulatory action as defined by Executive Order 12866, 58 FR 51735. Therefore, it requires no regulatory assessment. Drafting Information Jennifer Berry and Linda Chapman of the Regulations and Rulings Division drafted this notice. List of Subjects in 27 CFR Part 9 Wine. Proposed Regulatory Amendment For the reasons discussed in the preamble, we propose to amend 27 CFR, chapter 1, part 9, as follows: PART 9—AMERICAN VITICULTURAL AREAS 1. The authority citation for part 9 continues to read as follows: Authority: 27 U.S.C. 205. Subpart C—Approved American Viticultural Areas 2. Amend subpart C by adding § 9.__ to read as follows: § 9.__ Outer Coastal Plain.

(a)*Name.* The name of the viticultural area described in this section is “Outer Coastal Plain”. For purposes of part 4 of this chapter, “Outer Coastal Plain” is a term of viticultural significance.

(b)*Approved maps.* The appropriate maps for determining the boundary of the Outer Coastal Plain viticultural area are seven United States Geological Survey topographic maps. They are titled—

(1)Wilmington, Delaware-New Jersey-Pennsylvania-Maryland, 1984, 1:100,000 scale;

(2)Hammonton, New Jersey, 1984, 1:100,000 scale;

(3)Trenton, New Jersey-Pennsylvania-New York, 1986, 1:100,000 scale;

(4)Long Branch, New Jersey, 1954, photorevised 1981, 1:24,000 scale;

(5)Atlantic City, New Jersey, 1984, 1:100,000 scale;

(6)Cape May, New Jersey, 1981, 1:100,000 scale; and

(7)Dover, Delaware-New Jersey-Maryland, 1984, 1:100,000 scale.

(c)*Boundary.* The Outer Coastal Plain viticultural area includes all of Cumberland, Cape May, Atlantic, and Ocean Counties and portions of Salem, Gloucester, Camden, Burlington, and Monmouth Counties in the State of New Jersey. The boundary of the Outer Coastal Plain viticultural area is as described below.

(1)The beginning point is on the Wilmington map at the confluence of Alloway Creek with the Delaware River (within Mad Horse Creek State Wildlife Management Area) in Salem County;

(2)From the beginning point, proceed northeasterly in a straight line to the village of Hagerville; then

(3)Continue north on an unnamed road locally known as County Road

(CR)658 to its intersection with State Route

(SR)49; then

(4)Proceed northwesterly on SR 49 to its intersection with SR 45 in the center of the town of Salem; then

(5)Proceed northeasterly on SR 45 to its intersection with SR 540 at the village of Pointers; then

(6)Proceed north on SR 540 into the village of Slapes Corner; then

(7)In Slapes Corner, proceed northeasterly on an unnamed road locally known as CR 646 to its intersection with the New Jersey Turnpike near the village of Auburn; then

(8)Proceed northeasterly on the New Jersey Turnpike for approximately 18 miles to its intersection with SR 47; then

(9)Proceed south on SR 47 for approximately 0.5 mile to its intersection with SR 534 at the village of Gardenville Center; then

(10)Proceed southeasterly through Gardenville Center on SR 534 to its intersection with SR 544; then

(11)Proceed northeasterly on SR 544 to its intersection with SR 73 on the Hammonton map; then

(12)Proceed north-northwesterly on SR 73 to its intersection with SR 70 in Cropwell; then

(13)Proceed east on SR 70 to its intersection with U.S. 206 in Red Lion; then

(14)Proceed north on U.S. 206, onto the Trenton map, to the village of Chambers Corner; then

(15)Proceed northeasterly on an unnamed road locally known as CR 537, through the village of Jobstown; then

(16)Continue northeasterly on CR 537, through the villages of Smithburg and Freehold, to its intersection with SR 18; then

(17)Proceed easterly on SR 18 to its intersection with the Garden State Parkway; then

(18)Proceed north on the Garden State Parkway and immediately exit onto SR 36 East and onto the Long Branch map; then

(19)Using the Long Branch map, continue east on SR 36 to where it intersects with Joline Avenue; then

(20)Proceed northeasterly on Joline Avenue to the Atlantic Ocean shoreline; then

(21)Follow the Atlantic Ocean shoreline south, encompassing all coastal islands, onto the Trenton, Hammonton, Atlantic City, and Cape May maps, to the city of Cape May; then

(22)Proceed west, then north, along the eastern bank of the Delaware River, onto the Atlantic City, Dover, and Wilmington maps to the beginning point. Signed: June 26, 2006. John J. Manfreda, Administrator. [FR Doc. E6-10384 Filed 6-30-06; 8:45 am] BILLING CODE 4810-31-P DEPARTMENT OF THE INTERIOR Minerals Management Service 30 CFR Part 250 RIN 1010-AD18 Oil and Gas and Sulphur Operations in the Outer Continental Shelf (OCS)—Revisions to Subpart A—General; Subpart I—Platforms and Structures; and Subpart J—Pipelines and Pipeline Rights-of-Way AGENCY: Minerals Management Service (MMS), Interior. ACTION: Proposed rule. SUMMARY: MMS is proposing to amend its regulations to require lessees, lease operators, and pipeline right-of-way

(ROW)holders to submit assessment information on the structural integrity of their OCS platforms each year, and to submit an inspection program to MMS yearly. Also, a damage report would be required if a facility or pipeline was damaged by a hurricane or other natural phenomena. Lessees, lease operators, and pipeline ROW holders proposing to use unbonded flexible pipe for pipelines, or to install pipeline risers on floating platforms, would have to provide additional information on their projects. The proposed rule also would incorporate an industry-developed standard concerning the in-service inspection of mooring hardware for floating drilling units. These proposed changes would allow MMS to better regulate the safety of the oil and gas infrastructure, and to promptly assess damage resulting from hurricanes or other natural phenomena. DATES: Submit comments by September 1, 2006. MMS may not fully consider comments received after this date. Submit comments to the Office of Management and Budget on the information collection burden in this rulemaking by August 2, 2006. ADDRESSES: You may submit comments on the rulemaking by any of the following methods. Please use the Regulation Identifier Number

(RIN)1010-AD18 as an identifier in your message. See also Public Comment Procedures under Procedural Matters. • MMS's Public Connect on-line commenting system, *http://ocsconnect.mms.gov* . Follow the instructions on the Web site for submitting comments. • *Federal eRulemaking Portal: http://www.regulations.gov* . Follow the instructions on the Web site for submitting comments. • E-mail MMS at *rules.comments@mms.gov* . Use the RIN 1010-AD18 in the subject line. • *Fax:* 703-787-1546. Identify with the RIN, 1010-AD18. • Mail or hand-carry comments to the Department of the Interior; Minerals Management Service; Attention: Rules Processing Team (RPT); 381 Elden Street, MS-4024; Herndon, Virginia 20170-4817. Please reference 1010-AD18 in your comments and include your name and return address. • Send comments on the information collection in this rule to: Interior Desk Officer 1010-AD18, Office of Management and Budget, 202/395-6566 (facsimile); e-mail: *oira_docket@omb.eop.gov* . Please also send a copy to MMS. FOR FURTHER INFORMATION CONTACT: Larry Ake, Regulations and Standards Branch at

(703)787-1567. SUPPLEMENTARY INFORMATION: On July 19, 2005, MMS published a final rule (70 FR 41556) titled “Fixed and Floating Platforms and Structures and Documents Incorporated by Reference” in the **Federal Register** . That final rule expanded MMS regulations regarding the design, construction, and operation of OCS facilities to include coverage of floating oil and gas production platforms. The rule also incorporated by reference a number of industry-developed standards pertaining to floating platforms. During the process of developing and publishing that final rule, comments were received, both from the public and internally within MMS, that suggested additional requirements. MMS has since reviewed the suggested changes and is incorporating those with the greatest merit in this proposed rule. The first of these proposed revisions was suggested by both the Offshore Operator's Committee

(OOC)and Shell Oil Company. They suggested that MMS consider adopting American Petroleum Institute Recommended Practice (API RP) 2I, “In-Service Inspection of Mooring Hardware for Floating Drilling Units.” MMS agrees that API RP 2I, second edition, would be a valuable industry standard to consider for incorporation by reference into 30 CFR part 250, subparts A and I. API RP 2I is specifically written to address the inspection of mooring chain and wire rope for Mobile Offshore Drilling Units (MODUs), which frequently move from location to location. Moreover, the detailed information provided in API RP 2I on failure modes, inspection methods, and repair methods also could be useful in the development and implementation of the in-service inspection plan required under § 250.919(a) for other types of offshore floating facilities that remain on station for longer periods of time. Based on OOC's and Shell's recommendation, MMS has reviewed API RP 2I, “In-Service Inspection of Mooring Hardware for Floating Drilling Units,” and is proposing that it be incorporated by reference into our regulations. MMS welcomes further industry comments on the referencing of this document in subparts A and I. Subpart I currently requires that lessees and operators develop an in-service inspection plan for platforms (§ 250.919). The plan must show in detail the type, extent, and frequency of the inspections lessees and operators will conduct on platforms. The existing regulation does not specify when the plan must be submitted to MMS for approval. MMS is now proposing that the plan be submitted to the Regional Supervisor for approval each year by April 1. The proposed rule would add several requirements to subpart I, Platforms and Structures, to reflect MMS's concerns about the aging infrastructure on the OCS. These proposed new requirements are meant to help ensure that lessees, lease operators, and pipeline ROW holders are appropriately assessing their OCS structures to ascertain their fitness for continued use. Included in the proposed revisions to § 250.920 are the following:

(1)A complete platform structural assessment analysis if the platform meets one or more platform assessment initiators;

(2)platform mitigation actions, which must be approved by the Regional Supervisor, if the platform does not pass the assessment;

(3)approval from the Regional Supervisor before assessing a platform to either the medium or low consequence-of-failure exposure category; and

(4)MMS approval before changing the use of the platform. Also in subpart I, a proposed addition to the table contained at § 250.905 would require lessees and lease operators to submit a summary of the safety factors utilized when designing their platforms. This requirement was included in previous MMS regulations, but was omitted in the recently published subpart I due to an oversight. At § 250.916(c), the third-party Certified Verification Agent

(CVA)currently must submit the final platform design report to the Regional Supervisor before the fabrication phase begins. In addition, § 250.917(c) requires the CVA to submit the final fabrication report before the beginning of the installation phase. Finally, § 250.918(c) now requires the CVA to submit a final report covering the adequacy of the installation phase within 30 days of the installation of the platform. MMS recognizes that it may be difficult and impractical for lessees and operators to meet these deadlines for some projects. Therefore, the proposed rule would add language to require operators to submit a complete schedule for platform design, fabrication, and installation that shows when interim and final reports will be submitted to MMS. MMS often needs to obtain damage assessments and reports from lessees, lease operators, and pipeline right-of-way holders after events such as earthquakes or hurricanes. Proposed wording has been added to subpart I at § 250.919(c) and

(d)concerning special surveys of platforms that would be conducted in accordance with the provisions of API RP 2A-WSD. MMS would require lessees, lease operators, and pipeline right-of-way holders to provide MMS with the schedule for, and results of, these special surveys. A new proposed requirement also would be added to subpart A, General, at § 250.192, that would require lessees, lease operators, and pipeline ROW holders to submit reports to MMS if their facilities are damaged by a hurricane, earthquake, or other natural phenomenon. A new form (Form MMS-143, Facility/Equipment Damage Report) has been developed to assist lessees, lease operators, and pipeline ROW holders when reporting this damage. Adding this requirement to the regulations, with an Office of Management and Budget

(OMB)approval for information collection, would allow MMS to request damage information without the delay of obtaining OMB approval for each event. Additional requirements are also proposed for subpart J, Pipelines and Pipeline Rights-of-Way. These proposed requirements would require lessees, lease operators, and pipeline ROW holders to provide additional information in their pipeline applications if they intend to use unbonded flexible pipe or a pipeline riser with a floating platform. Procedural Matters Public Comment Procedures MMS's practice is to make comments, including the names and addresses of respondents, available for public review. Individual respondents may request that we withhold their addresses from the rulemaking record, which we will honor to the extent allowable by law. There may be circumstances in which we would withhold from the rulemaking record a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, MMS will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety. Regulatory Planning and Review (Executive Order (E.O.) 12866) This document is not a significant rule and does not require review by OMB under E.O. 12866.

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

(2)This proposal would not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.

(3)This proposed rule would not alter the budgetary effects of entitlements, grants, user fees, or loan programs, or the rights or obligations of their recipients; and has no effect on these programs or such rights.

(4)This proposed rule would not raise novel legal or policy issues. Regulatory Flexibility Act

(RFA)The Department certifies that this proposed rule would not have a significant economic effect on a substantial number of small entities as defined under the RFA (5 U.S.C. 601 *et seq.* ). Most of the costs for complying with this proposed rule would be information collection costs. The total estimated annual burden hours for responding to the information collection requirements in this proposed rule are 87,347. At an estimated cost of $50 per hour, the industry-wide cost for the information collection burden in this proposed rule would be slightly over four million dollars. Complying with the API RP 2I, “In-Service Inspection of Mooring Hardware for Floating Drilling Units,” should not be a financial burden since responsible companies already adhere to the practices described in the document. For a proposed rule with these relatively low projected costs to industry, a Regulatory Flexibility Analysis is not required. Accordingly, a Small Entity Compliance Guide is not required. This proposed rule would apply to all lessees, lease operators, and pipeline ROW holders operating on the OCS. MMS estimates that 130 lessees/operators explore for and produce oil and gas on the OCS. Approximately 70 percent of them (91 companies) fall into the small business category. MMS estimates that 207 companies currently hold pipeline rights-of-way. Approximately 65 percent of them (135 companies) fall into the small business category. Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of MMS, call toll-free 1-(888) 734-3247. Small Business Regulatory Enforcement Fairness Act (SBREFA) This proposed rule is not a major rule under SBREFA (5 U.S.C. 804(2)). This proposed rule:

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

(b)Would not cause a major increase in costs or prices for consumers, individual industries, Federal, state, or local government agencies, or geographic areas.

(c)Would not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. Unfunded Mandates Reform Act

(UMRA)This proposed rule would not impose an unfunded mandate on state, local, or tribal governments, or the private sector, of more than $100 million per year. The proposed rule would not have a significant or unique effect on state, local, or tribal governments, or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531 *et seq.* ) is not required. Takings Implications Assessment (Executive Order 12630) According to E.O. 12630, the proposed rule would not have significant Takings implications. A Takings Implication Assessment is not required. Federalism (Executive Order 13132) According to E.O. 13132, this proposed rule would not have Federalism implications. The proposed rule would not substantially and directly affect the relationship between the federal and state governments, and would not impose costs on states or localities. Civil Justice Reform (Executive Order 12988) With respect to E.O. 12988, the Office of the Solicitor has determined that this proposed rule would not unduly burden the judicial system, and meets the requirements of sections 3(a) and 3(b)(2) of the E.O. Paperwork Reduction Act

(PRA)This proposed rule contains a collection of information that has been submitted to OMB for review and approval under § 3507(d) of the PRA. As part of our continuing effort to reduce paperwork and respondent burdens, MMS invites the public and other federal agencies to comment on any aspect of the reporting and recordkeeping burden. If you wish to comment on the information collection aspects of this proposed rule, you may send your comments directly to the OMB (see the ADDRESSES section of this notice). Please identify your comments with 1010-AD18. Send a copy of your comments to the Rules Processing Team (RPT), Attn: Comments; 381 Elden Street, MS-4024; Herndon, Virginia 20170-4817. Please reference “30 CFR 250, Oil and Gas and Sulphur Operations in the Outer Continental Shelf-Revisions to Subpart A—General; Subpart I—Platforms and Structures; and Subpart J—Pipelines and Pipeline Rights-of-Way, 1010-AD18” in your comments. You may obtain a copy of the supporting statement for the new collection of information by contacting the Bureau's Information Collection Clearance Officer at

(202)208-7744. The PRA provides that an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. OMB is required to make a decision concerning the collection of information contained in these proposed regulations between 30 to 60 days after publication of this document in the **Federal Register** . Therefore, a comment to OMB is best assured of having its full effect if OMB received it by August 2, 2006. This does not affect the deadline for the public to comment to MMS on the proposed regulations. The title of the collection of information for the rule is “30 CFR 250, Oil and Gas and Sulphur Operations in the Outer Continental Shelf (OCS)—Revisions to Subpart A—General; Subpart I—Platforms and Structures; and Subpart J—Pipelines and Pipeline Rights-of-Way.” Respondents are approximately 130 Federal OCS lessees, operators, and their Independent Verification Agents or other third-party reviewers of production facilities, as well as 207 pipeline right-of-way holders. Responses to this collection are mandatory. The frequency of response varies, but is primarily annual or as needed. The information collection

(IC)does not include questions of a sensitive nature. MMS will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 522) and its implementing regulations (43 CFR part 2), and 30 CFR 250.196, “Data and information to be made available to the public,” and 30 CFR part 252, “OCS Oil and Gas Information Program.” The collection of information required by the current subparts A, I, and J of 30 CFR 250 are approved by OMB under control numbers 1010-0114 (expiration October 31, 2007); 1010-0149 (expiration March 31, 2008); and 1010-0050 (expiration March 31, 2009), respectively. MMS will use the information collected and records maintained under subpart I to determine the fitness of aging infrastructure for continued use, as well as to ensure that the in-service inspection plan for platforms is submitted to the Regional Supervisor for approval each year by April l. The information is necessary to determine that platforms and structures are sound and safe for their intended purpose, provide for the safety of personnel, and meet MMS standards for pollution prevention. The information collected under subpart A would require respondents to submit reports to MMS if their facilities are damaged by a natural phenomenon (e.g., hurricane, earthquake). A new Form MMS-143, Facility/Equipment Damage Report, was developed to assist respondents when reporting this damage. MMS will use this information to rapidly assess damage, and to project any disruption of oil and gas production from the OCS after such an event. MMS will use the information collected under subpart J to ensure that pipelines or pipeline risers with floating platforms have been designed to handle the environmental stresses put upon them (e.g., water currents, mudslides). When final regulations are promulgated, the new information collection burdens for 30 CFR part 250 subparts A, I, and J will be incorporated into their respective collections of information for those regulations. Also, this rule and ICR modify and incorporate the hours and requirements already approved in 1010-0164, expiration February 28, 2009; therefore, that collection will be discontinued when the final regulations take effect. The following table details the IC burden for the proposed new requirements in subparts A, I, and J. Citation 30 CFR 250 rule section and NTL(s) Reporting and recordkeeping requirement Hour burden Average No. of annual responses Annual burden hours Subpart A 192(a)(3) Inform MMS when you resume production .166 600 100 192(b) Use Form MMS-143 to submit an initial damage evaluation report to the Regional Supervisor within 48 hours after completing initial damage assessment 4 100 400 192(b) Use Form MMS-143 to submit subsequent damage reports on a weekly basis until the damaged structure or equipment is returned to service 1 400 400 Subpart I 900(e) Submit platform installation date and the final as-built location to the Regional Supervisor within 45 days after platform installation .5 140 70 905(i) Provide a summary of safety factors utilized in the design of the platform .25 331 83 911; 916; 917; 918 Submit complete schedule of all phases of design, fabrication, and installation with required information; also submit Gantt Chart with required information 40 15 600 919(a) Submit annual inspection plan to the Regional Supervisor for approval 250 130 32,500 919(c) NTL After an environmental event, submit to Regional Supervisor initial report followed by updates and supporting information 1 12 150 1,800 919(d) NTL Submit results of inspections; obtain MMS approval before making major repairs 120 200 24,000 920(b) Obtain approval from the Regional Supervisor before assessing your platform to medium or low consequence of failure exposure category 20 400 8,000 920(d) Obtain approval from the Regional Supervisor for mitigation actions 40 200 8,000 920(f) Submit a list of all platforms you operate, and appropriate supporting data, annually 40 130 5,200 920(g) Obtain approval from the Regional Supervisor for any change in the platform 40 100 4,000 Subpart J 1007(a)(4)(i)(A); (B);

(C)Provide specified information in your pipeline application if using unbonded flexible pipe 4 6 24 1007(a)(4)(i)(D) Provide results of third party IVA review in your pipeline application if using unbonded flexible pipe 40 1 40 1007(a)(4)(ii) Provide specified information in your pipeline application 30 35 1,050 Total Burden 3,028 87,347 1 Initial update. MMS specifically solicits comments on the following questions:

(a)Is the proposed collection of information necessary for MMS to properly perform its functions, and will it be useful?

(b)Are the estimates of the burden hours of the proposed collection reasonable?

(c)Do you have any suggestions that would enhance the quality, clarity, or usefulness of the information to be collected?

(d)Is there a way to minimize the information collection burden on those who are to respond, including the use of appropriate automated electronic, mechanical, or other forms of information technology? In addition, the PRA requires agencies to estimate the total annual reporting and recordkeeping “non-hour cost” burden resulting from the collection of information. We have not identified any, and we solicit your comments on this item. National Environment Policy Act

(NEPA)MMS has analyzed this proposed rule under NEPA and 516 Departmental Manual 6, Appendix 10.4C, “Issuance and/or modification of regulations.” This proposed rule would not constitute a major Federal action significantly affecting the quality of the human environment, and falls within the categorical exclusion of Appendix 10.4C(1) because the impact of the proposed rule would be limited to administrative and economic effects. A detailed statement under the NEPA is not required. Energy Supply, Distribution, or Use (Executive Order 13211) This proposed rule is not a significant rule and is not subject to review by the Office of Management and Budget under E.O. 13211. The proposed rule would not have a significant effect on energy supply, distribution, or use because the costs due to the proposed increases in reporting requirements will be very small when compared to the costs of operating on the OCS. Thus, a Statement of Energy Effects is not required. Consultation With Indian Tribes (Executive Order 13175) Under the criteria in E.O. 13175, we have evaluated this proposed rule and determined that it has no potential effects on federally recognized Indian tribes. There are no Indian lands or tribes on the OCS. Clarity of This Regulation Executive Order 12866 requires each agency to write regulations that are easy to understand. We invite your comments on how to make this proposed rule easier to understand, including answers to questions such as the following:

(1)Are the requirements in the proposed rule clearly stated?

(2)Does the proposed rule contain technical language or jargon that interferes with its clarity?

(3)Does the format of the proposed rule (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce its clarity?

(4)Is the description of the proposed rule in the “Supplementary Information” section of this preamble helpful in understanding the rule? What else can we do to make the rule easier to understand? Send a copy of any comments that concern how we could make this rule easier to understand to: Office of Regulatory Affairs, Department of the Interior, Room 7229, 1849 C Street, NW., Washington, DC 20240. You may also e-mail the comments to this address: *Exsec@ios.doi.gov.* List of Subjects in 30 CFR Part 250 Continental shelf, Environmental protection, Oil and gas exploration, Pipelines, Public lands—rights-of-way, Reporting and recordkeeping requirements. Dated: June 19, 2006. R.M. “Johnnie” Burton, Director, Minerals Management Service, Exercising the delegated authority of the Assistant Secretary, Land and Minerals Management. For the reasons stated in the preamble, MMS proposes to amend 30 CFR part 250 as follows: PART 250—LEASING OF SULPHUR OR OIL AND GAS IN THE OUTER CONTINENTAL SHELF 1. The authority citation for part 250 continues to read as follows: Authority: 43 U.S.C. 1331, *et seq.* ; 31 U.S.C. 9701. 2. Section 250.192 and its title are revised to read as follows: § 250.192 What reports and statistics must I submit relating to a hurricane, earthquake, or other natural occurrence?

(a)You must submit evacuation statistics to the Regional Supervisor for a natural occurrence, such as an earthquake, a hurricane, or tropical storm. Statistics include facilities and rigs evacuated and the amount of production shut in for gas and oil. You must:

(1)Submit the statistics by fax or e-mail (for activities in the MMS GOM OCS Region, use Form MMS-132) as soon as possible when evacuation occurs;

(2)Submit the statistics on a daily basis by 11 a.m., as conditions allow, during the period of shut-in and evacuation;

(3)Inform MMS when you resume production; and

(4)Submit the statistics either by MMS district, or the total figures for your operations in an MMS region.

(b)If your facility, production equipment, or pipeline is damaged by a hurricane, tropical storm, earthquake, or other natural occurrence, you must:

(1)Submit a report to the Regional Supervisor within 48 hours after you complete your initial evaluation of the damage. You must use Form MMS-143 to make this report and all subsequent reports. In the report, you must:

(i)Name the items damaged (e.g., platform or other structure, production equipment, pipeline);

(ii)Describe the damage and assess the extent of the damage (major, medium, minor); and

(iii)Estimate the time it will take to replace or repair each damaged structure and piece of equipment and return it to service.

(2)Submit subsequent reports on a weekly basis until the damaged structure or equipment is returned to service. In the final report, you must provide the date the item was returned to service. 3. Section 250.198 paragraph

(e)is amended by adding an entry in alphanumerical order in the table for API RP 2I, “In-Service Inspection of Mooring Hardware for Floating Drilling Units”, and revising the entry for API RP 2A-WSD to read as follows: § 250.198 Documents Incorporated by Reference.

(e)* * * Title of documents Incorporated by reference at * * * * * * * API RP 2A WSD, Recommended Practice for Planning, Designing, and Constructing Fixed Offshore Platforms—Working Stress Design; Twenty-first Edition, December 2000 (API Order No. G2AWSD) § 250.901(a)(4); § 250.908(a); § 250.919(c)(2); § 250.920(a)(b)(c)(e). * * * * * * * API RP 2I, In-Service Inspection of Mooring Hardware for Floating Drilling Units, February 1, 1997 § 250.901(a)(6). 4. Section 250.199 paragraph

(e)is amended by adding an entry for Form MMS-143, Facility/Equipment Damage Report, as follows: § 250.199 Paperwork Reduction Act statements—information collection.

(e)* * * 30 CFR 250 subpart/title (OMB control No.) Reasons for collecting information and how used * * * * * * *

(26)Form MMS-143, Facility/Equipment Damage Report, Subpart A (1010-0114) This information will allow MMS to rapidly assess damage and project any disruption of oil and gas production from the OCS after a major natural occurrence. 5. Section 250.900 paragraph

(e)is revised to read as follows: § 250.900 What general requirements apply to all platforms?

(e)You must submit notification of the platform installation date, and the final as-built location data, to the Regional Supervisor within 45 calendar days of completion of platform installation. MMS will cancel your approved platform installation permits 1 year after the approval is granted if the platform is not installed. If MMS cancels your permit approval, you must resubmit your application. 6. In section 250.901 paragraph (a), the following changes are made: A. Redesignate paragraphs (a)(6) through (a)(20) as (a)(7) through (a)(21), respectively. B. Add new paragraph (a)(6) to read as follows: § 250.901 What industry standards must your platform meet?

(a)* * *

(6)API RP 2I, In-Service Inspection of Mooring Hardware for Floating Drilling Units, (incorporated by reference as specified in § 250.198); 7. Section 250.905 is amended by redesignating current paragraphs

(i)and (j), as paragraphs

(j)and

(k)respectively, and adding new paragraph

(i)to read as follows: § 250.905 How do I get approval for the installation, modification, or repair of my platform? Required documents Required contents Other requirements * * * * * * *

(i)Summary of safety factors utilized A summary of pertinent derived factors of safety against failure for major structural members, e.g., unity check ratios exceeding 0.85 for steel-jacket platform members, indicated on “line” sketches of jacket sections You must submit one copy. * * * * * * * 8. Section 250.911 is amended by redesignating current paragraphs

(d)through (g), as paragraphs

(e)through (h), respectively, and adding new paragraph

(d)to read as follows: § 250.911 If my platform is subject to the Platform Verification Program, what must I do?

(d)Submit a complete schedule of all phases of design, fabrication, and installation for the Regional Supervisor's approval. You must include a project management timeline [Gantt Chart] that depicts when interim and final reports required by §§ 250.916, 250.917, and 250.918 will be submitted to the Regional Supervisor for each phase. On the timeline, you must break out the specific scopes of work that inherently stand alone (e.g., deck, mooring systems, tendon systems, riser systems, turret systems). 9. Section 250.916(c) is revised to read as follows: § 250.916 What are the CVA's primary duties during the design phase?

(c)The CVA must submit interim reports and a final report to the Regional Supervisor, and to you, during the design phase in accordance with the approved schedule required by § 250.911(d). In each interim and final report the CVA must:

(1)Provide a summary of the material reviewed and the CVA's findings;

(2)Make a recommendation that the Regional Supervisor either accept, request modifications, or reject the proposed design;

(3)Describe the particulars of how, by whom, and when the independent review was conducted; and

(4)Provide any additional comments the CVA may deem necessary. 10. Section 250.917(c) is revised to read as follows: § 250.917 What are the CVA's primary duties during the fabrication phase?

(c)The CVA must submit interim reports and a final report to the Regional Supervisor, and to you, during the fabrication phase in accordance with the approved schedule required by § 250.911(d). In each interim and final report the CVA must:

(1)Give details of how, by whom, and when the independent monitoring activities were conducted;

(2)Describe the CVA's activities during the verification process;

(3)Summarize the CVA's findings;

(4)Confirm or deny compliance with the design specifications and the approved fabrication plan;

(5)Make a recommendation to accept or reject the fabrication; and

(6)Provide any additional comments that the CVA deems necessary. 11. Section 250.918(c) is revised to read as follows: § 250.918 What are the CVA's primary duties during the installation phase?

(c)The CVA must submit interim reports and a final report to the Regional Supervisor, and to you, during the installation phase in accordance with the approved schedule required by § 250.911(d). In each interim and final report the CVA must:

(1)Give details of how, by whom, and when the independent monitoring activities were conducted;

(2)Describe the CVA's activities during the verification process;

(3)Summarize the CVA's findings;

(4)Confirm or deny compliance with the approved installation plan;

(5)Make a recommendation to accept or reject the installation; and

(6)Provide any additional comments that the CVA deems necessary. 12. Section 250.919 is amended by revising paragraph (a), and adding new paragraphs

(c)and

(d)to read as follows: § 250.919 What in-service inspection requirements must I meet?

(a)You must submit a comprehensive annual in-service inspection plan covering all of your platforms to the Regional Supervisor for approval by April 1 of each year. As a minimum, your plan must:

(1)Address the recommendations of the appropriate documents listed in § 250.901(a);

(2)Specify the type, extent, and frequency of in-place inspections which you will conduct for both the above-water and the below-water structure of all platforms and pertinent components of the mooring systems for floating platforms; and

(3)Address how you are monitoring the corrosion protection for both the above water and below water structure.

(c)If any of your structures have been exposed to a natural occurrence (e.g., hurricane, earthquake, or tropical storm), the Regional Supervisor may require you to submit an initial report, followed by subsequent updates, that includes the following:

(1)A list of affected structures;

(2)A timetable for conducting the inspections described in section 14.4.3 of API RP 2A-WSD (incorporated by reference as specified in § 250.198); and

(3)An inspection plan for each structure that describes the work you will perform to determine the condition of the structure.

(d)The Regional Supervisor may also require you to submit the results of the inspections referred to in paragraph (c)(2) of this section, including a description of any detected damage that may adversely affect structural integrity, an assessment of its ability to withstand any anticipated environmental conditions, and any remediation plans. Under §§ 250.900(b)(3) and 250.905, you must obtain approval from MMS before you make major repairs of any damage. 13. Section 250.920 is revised to read as follows: § 250.920 What are the MMS requirements for assessment of platforms?

(a)You must perform a platform assessment when platform assessment initiators exist. Platform assessment initiators are listed in Sections 17.2.1-17.2.5 of API RP 2A-WSD (incorporated by reference as specified in § 250.198).

(b)You must document all wells, equipment, and pipelines supported by the platform if you intend to use the medium or low consequence-of-failure exposure category for your assessment. Exposure categories are defined in API RP 2A-WSD Section 1.7. You must obtain approval from the Regional Supervisor before assessing your platform to either the medium consequence-of-failure or low consequence-of-failure exposure category.

(c)You must perform a complete platform structural assessment analysis when your platform assessment indicates that the platform is damaged; the deck height is inadequate; loading is significantly increased; or the exposure category changes to a more restrictive level.

(d)You must initiate mitigation actions for platforms that do not pass the assessment process of API RP 2A-WSD. Your mitigation actions must be approved by the Regional Supervisor.

(e)MMS may require you to conduct a platform assessment where the reduced environmental loading criteria contained in API RP 2A-WSD Section 17.6 are not allowed.

(f)By November 1 of each year, you must submit a complete list of all the platforms you operate, together with all the appropriate data to support the consequence-of-failure category you assign to each platform and the platform assessment initiators (as defined in API RP 2A-WSD) to the Regional Supervisor.

(g)The use of Section 17, Assessment of Existing Platforms, of API RP 2A-WSD is limited to existing fixed structures that are serving their original approved purpose and were designed in accordance with the provisions in the 19th or earlier edition of API RP 2A-WSD. You must obtain approval from the Regional Supervisor for any change in purpose of the platform, following the provisions of API RP 2A-WSD, Section 15, Re-use. 14. Section 250.1007 is amended by revising paragraph (a)(4) to read as follows: § 250.1007 What to include in applications.

(a)* * *

(4)A description of any additional design precautions you took to enable the pipeline to withstand the effects of water currents, storm or ice scouring, soft bottoms, mudslides, earthquakes, permafrost, and other environmental factors.

(i)If you propose to use unbonded flexible pipe, your application must include:

(A)The manufacturer's design specification sheet;

(B)The design pressure (psi);

(C)An identification of the design standards you used; and

(D)A review by a third-party independent verification agent

(IVA)according to API Spec 17J (incorporated by reference as specified in § 250.198), if applicable.

(ii)If you propose to use one or more pipeline risers for a tension leg platform or other floating platform, your application must include:

(A)The design fatigue life of the riser, with calculations, and the fatigue point at which you would replace the riser;

(B)The results of your vortex-induced vibration

(VIV)analysis;

(C)An identification of the design standards you used; and

(D)A description of any necessary mitigation measures such as the use of helical strakes or anchoring devices. [FR Doc. E6-10401 Filed 6-30-06; 8:45 am] BILLING CODE 4310-MR-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 122 and 412 [EPA-HQ-OW-2005-0037; FRL-8190-3] National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitations Guidelines and Standards for Concentrated Animal Feeding Operations—Proposed Revisions; Public Meetings AGENCY: Environmental Protection Agency. ACTION: Notice of public meetings. SUMMARY: The Environmental Protection Agency hereby gives notice that it will conduct five public meetings on proposed regulatory revisions under the Clean Water Act for Concentrated Animal Feeding Operations (CAFOs). These proposed regulations were signed by EPA Administrator Stephen L. Johnson on June 22, 2006, and are publishing in the **Federal Register** on June 30, 2006 (FRL 8189-7), under the title Revised National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitation Guidelines for Concentrated Animal Feeding Operations in Response to *Waterkeeper* Decision. The purpose of the meetings is to enhance public understanding of the proposed regulations for CAFOs. The meetings are not a mechanism for submitting formal comments on the proposal. The meetings will consist of a brief presentation by EPA officials on the proposed regulations followed by a question and answer session. Participants are encouraged to familiarize themselves with the basic aspects of the proposed regulations prior to the public meetings; each speaker's time will be limited so that all interested parties may have the opportunity to pose questions. Advance registration is not required. DATES: See SUPPLEMENTARY INFORMATION section for meeting dates. ADDRESSES: See SUPPLEMENTARY INFORMATION section for meeting addresses. FOR FURTHER INFORMATION CONTACT: For additional information, please visit the EPA Web site at *http://cfpub.epa.gov/npdes/afo/aforule.cfm,* or contact Kawana Cohen, Water Permits Division, Office of Wastewater Management (4203M), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number:

(202)564-2345, e-mail address: *cohen.kawana@epa.gov.* SUPPLEMENTARY INFORMATION: Dates, Times and Addresses for Public Meetings EPA is conducting five public meetings on the CAFO proposed regulations as described in the following table: Date Location Time Facility Mon., July 24, 2006 Fayetteville, NC 1 p.m.-4 p.m. EST Crown Coliseum, 1960 Coliseum Drive, Faryetteville, NC 28306. Tues., July 25, 2006 Ames, IA 1 p.m.-4 p.m. CST Iowa State Center, Scheman Conference Center, Ames, IA 50011-1113. Tues., August 1, 2006 Golden, CO 1 p.m.-4 p.m. MST Jefferson County Fairgrounds, 15200 W. 6th Ave., Golden, CO 80401. Wed., August 2, 2006 Dallas, TX 9 a.m.-12 p.m. CST Texas A&M—Dallas Agricultural Research & Extension Center (Pavilion), 17360 Coit Rd., Dallas, TX 75252. Thurs., August 3, 2006 Sacramento, CA 8 a.m.-11 a.m. PST CalEPA Building, Byran Sher Auditorium, 1001 I Street, Sacramento, CA 95814. This **Federal Register** announcement is intended to supplement and refer interested parties to the notice of the public meetings provided on EPA's AFO NPDES Web page, on June 22, 2006. EPA has established a comment period in the proposed rule of 45 days. In scheduling these public meetings, EPA wishes to provide the public the opportunity to be fully informed about the contents of the proposed rule in advance of the date by which comments must be submitted. EPA is utilizing its Web site, which will be updated periodically with specific details concerning location and time, as the principal means of providing information about the public meetings. EPA recommends that those interested in attending a meeting check the Web site for additional information as it becomes available. Please note that the purpose of these meetings is to enhance public understanding of the proposed regulations for CAFOs. The meetings are not a mechanism for submitting formal comments on the proposal, and formal comments should be submitted following the procedures described in the proposed regulation. Prior to attending any of these public meetings, please confirm exact location, date and time information via EPA's AFO NPDES Web page ( *http://cfpub.epa.gov/npdes/afo/aforule.cfm* ). Background On June 22, 2006, EPA Administrator Stephen Johnson signed the Agency's proposal to revise the regulations for CAFOs in response to the Second Circuit Court of Appeals decision in *Waterkeeper Alliance et al.* v. *EPA,* 399 F.3d 486 (2nd Cir. 2005). The proposed regulations, publishing in the **Federal Register** on June 30, 2006, respond to the court ruling. Dated: June 27, 2006. Jane S. Moore, Deputy Director, Office of Wastewater Management, Office of Water. [FR Doc. E6-10426 Filed 6-30-06; 8:45 am] BILLING CODE 6560-50-P DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 RIN 1018-AU30 Endangered and Threatened Wildlife and Plants; Proposed Designation of Critical Habitat for the Southern California Distinct Vertebrate Population Segment of the Mountain Yellow-Legged Frog (Rana muscosa) AGENCY: Fish and Wildlife Service, Interior. ACTION: Proposed rule; reopening of public comment period and notice of availability of draft economic analysis. SUMMARY: We, the U.S. Fish and Wildlife Service (Service), announce the reopening of the public comment period on the proposed designation of critical habitat for the southern California distinct vertebrate population segment of the mountain yellow-legged frog ( *Rana muscosa* ), and the availability of a draft economic analysis of the proposed designation of critical habitat. The draft economic analysis estimates the potential total future impacts, including costs resulting from modifications to fishing and other types of activities, to range from $11.4 million to $12.9 million (undiscounted) over 20 years. Discounted future costs are estimated to be $7.5 million to $8.9 million over this same time period ($704,000 to $842,000 annually) using a real rate of seven percent, or $9.3 million to $10.8 million ($626,000 to $725,000 annually) using a real rate of three percent. We are reopening the comment period to allow all interested parties an opportunity to comment simultaneously on the proposed rule and the associated draft economic analysis. Comments previously submitted on the proposed rule need not be resubmitted as they have already been incorporated into the public record and will be fully considered in our final determination. DATES: We will accept public comments and information until July 24, 2006. ADDRESSES: Written comments and materials may be submitted to us by any one of the following methods: 1. You may submit written comments and information to Jim Bartel, Field Supervisor, Carlsbad Fish and Wildlife Office, 6010 Hidden Valley Road, Carlsbad, CA 92011. 2. You may hand-deliver written comments and information to our Carlsbad Fish and Wildlife Office at the above address. 3. You may fax your comments to 760/431-9624. 4. You may send your comments by electronic mail (e-mail) to *FW1CFWO_MYLFPCH@fws.gov.* For directions on how to submit e-mail comments, see the “Public Comments Solicited” section. 5. You may submit comments via the Federal Rulemaking Portal: *http://www.regulations.gov.* Follow the instructions for submitting comments. FOR FURTHER INFORMATION CONTACT: Jim Bartel, Field Supervisor, Carlsbad Fish and Wildlife Office, at the address listed in ADDRESSES (telephone 760/431-9440; facsimile 760/431-9624). SUPPLEMENTARY INFORMATION: Public Comments Solicited We will accept written comments and information during this reopened comment period. We solicit comments on the original proposed critical habitat designation, published in the **Federal Register** on September 13, 2005 (70 FR 54106), and on our draft economic analysis of the proposed designation. We will consider information and recommendations from all interested parties. We are particularly interested in comments concerning:

(1)Specific information on the southern California distinct vertebrate population segment

(DPS)of the mountain yellow-legged frog, such as the locations of known occurrences of individuals or subpopulations; the dispersal behavior and distances of adults, juveniles and tadpoles; the developmental time of tadpoles and their habitat requirements throughout the year; genetic information on the mountain yellow-legged frog;, recreation impacts; and impacts of non-native predators;

(2)The reasons any habitat should or should not be determined to be critical habitat as provided by section 4 of the Endangered Species Act of 1973, as amended

(Act)(16 U.S.C. 1531 *et seq.* ), including whether it is prudent to designate critical habitat;

(3)Specific information as to whether the physical and biological features we have identified as being essential to the conservation of the frog are accurate and whether they exist on those areas we have identified as occupied;

(4)If those unoccupied areas proposed to be designated are all essential to the conservation to the species;

(5)Whether the benefit of exclusion of any particular area outweighs the benefit of inclusion under section 4(b)(2) of the Act, in particular the lands proposed for exclusion in the proposed rule (non-Federal lands within existing Public/Quasi Public

(PQP)lands, proposed conceptual reserve design lands, and lands targeted for conservation within the Western Riverside County Multiple Species Habitat Conservation Plan);

(6)Land use designations and current or planned activities in the subject areas and their possible impacts on proposed critical habitat;

(7)Information on any foreseeable economic, national security, or other potential impacts resulting from the proposed designation and, in particular, any impacts on small entities or families;

(8)Information on whether the draft economic analysis identifies all State and local costs attributable to the proposed critical habitat designation. If not, what other costs should be included;

(9)Information on whether the draft economic analysis makes appropriate assumptions regarding current practices and likely regulatory changes imposed as a result of the listing of the species or the designation of critical habitat;

(10)Information on whether the draft economic analysis correctly assesses the effect on regional costs associated with land- and water-use controls that may derive from the designation of critical habitat;

(11)Information on whether the designation will result in disproportionate economic impacts to specific areas that should be evaluated for possible exclusion from any final critical habitat designation;

(12)Information on whether the economic analysis appropriately identifies all costs that could result from the critical habitat designation;

(13)Information on whether there are areas that could be used as substitutes for the economic activities planned in critical habitat areas that would offset the costs and allow for the conservation of critical habitat areas; and

(14)Information on whether our approach to designating critical habitat could be improved or modified in any way to provide for greater public participation and understanding, or to assist us in accommodating public concerns and comments. All previous comments and information submitted during the initial comment period on the proposed rule need not be resubmitted. If you wish to comment, you may submit your comments and materials concerning the draft economic analysis and the proposed rule by any one of several methods (see ADDRESSES section). Our final determination concerning designation of critical habitat for the mountain yellow-legged frog will take into consideration all comments and any additional information received during both comment periods. On the basis of public comment on the critical habitat proposal, the draft economic analysis, and the final economic analysis, we may during the development of our final determination find that areas proposed are not essential, are appropriate for exclusion under section 4(b)(2) of the Act, or are not appropriate for exclusion. If you wish to submit comments electronically, please submit them in an ASCII format and avoid the use of any special characters or any form of encryption. Also, please include “Attn: Mountain Yellow-Legged Frog” and your name and return address in your e-mail message. If you do not receive a confirmation from the system that we have received your e-mail message, please contact the person listed under FOR FURTHER INFORMATION CONTACT or submit your comments in writing using one of the alternate methods listed in the ADDRESSES section. Please note that the Internet address *FW1CFWO_MYLFPCH@fws.gov* will be closed at the termination of the public comment period. Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their home address, which we will honor to the extent allowable by law. There also may be circumstances in which we would withhold a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comments, but you should be aware that the Service may be required to disclose your name and address pursuant to the Freedom of Information Act. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety. Comments and materials received, as well as supporting documentation used in preparation of the proposal to designate critical habitat, will be available for public inspection, by appointment, during normal business hours at the Carlsbad Fish and Wildlife Office at the address listed under ADDRESSES . Copies of the proposed critical habitat rule for the mountain yellow-legged frog and the draft economic analysis are also available on the Internet at *http://www.fws.gov/carlsbad.* In the event that our Internet connection is not functional, please obtain copies of documents directly from the Carlsbad Fish and Wildlife Office. Background On September 13, 2005, we published a proposed rule in the **Federal Register** (70 FR 54106) to designate critical habitat for the mountain yellow-legged frog. We identified approximately 8,770 acres

(ac)(3,549 hectares (ha)) of streams and riparian areas in southern California as containing features essential to the conservation of the mountain yellow-legged frog. From this total, we proposed approximately 8,283 ac (3,352 ha) for designation as critical habitat in three units, including 14 subunits, in Los Angeles, San Bernardino, and Riverside counties, California. Approximately 96 percent of the proposed lands are under Federal ownership on U.S. Forest Service

(USFS)lands, and the remaining lands are split between State and private ownership. Approximately 487 ac (197 ha) of non-Federal lands covered under the Western Riverside County Multiple Species Habitat Conservation Plan (MSHCP) in Riverside County contain features essential to the conservation of the mountain yellow-legged frog and are proposed for exclusion pursuant to section 4(b)(2) of the Act. The first comment period for the proposed critical habitat rule closed on November 14, 2005. For more information on this species, refer to the final rule listing this species as endangered, published in the **Federal Register** on July 2, 2002 (67 FR 44382). Critical habitat is defined in section 3 of the Act as the specific areas within the geographic area occupied by a species, at the time it is listed in accordance with the Act, on which are found those physical or biological features essential to the conservation of the species and that may require special management considerations or protection, and specific areas outside the geographic area occupied by a species at the time it is listed, upon a determination that such areas are essential for the conservation of the species. If the proposed rule is made final, section 7 of the Act will prohibit destruction or adverse modification of critical habitat by any activity funded, authorized, or carried out by any Federal agency. Federal agencies proposing actions affecting areas designated as critical habitat must consult with us on the effects of their proposed actions, pursuant to section 7(a)(2) of the Act. Section 4(b)(2) of the Act requires that we designate or revise critical habitat on the basis of the best scientific data available, after taking into consideration the economic impact, impact to national security, and any other relevant impacts of specifying any particular area as critical habitat. We have prepared a draft economic analysis of the September 13, 2005 (70 FR 54106), proposed designation of critical habitat for the mountain yellow-legged frog. The draft economic analysis considers the potential economic effects of actions relating to the conservation of the mountain yellow-legged frog, including costs associated with sections 4, 7, and 10 of the Act, and including those attributable to designating critical habitat. It further considers the economic effects of protective measures taken as a result of other Federal, State, and local laws that aid habitat conservation for the mountain yellow-legged frog in areas containing features essential to the conservation of this species. The analysis considers both economic efficiency and distributional effects. In the case of habitat conservation, efficiency effects generally reflect the “opportunity costs” associated with the commitment of resources to comply with habitat protection measures (e.g., lost economic opportunities associated with restrictions on land use). This analysis also addresses how potential economic impacts are likely to be distributed, including an assessment of any local or regional impacts of habitat conservation and the potential effects of conservation activities on small entities and the energy industry. This information can be used by decision-makers to assess whether the effects of the designation might unduly burden a particular group or economic sector. Finally, this analysis looks retrospectively at costs that have been incurred since the date the species was listed as an endangered species and considers those costs that may occur in the 20 years following the designation of critical habitat. Frog conservation activities are likely to primarily impact recreational activities, including trout fishing, hiking, camping, and rock climbing in the Angeles and San Bernardino National Forests. In particular, significant uncertainty exists regarding the potential impact to trout fishing. As a result, the draft economic analysis applies two methodologies to put upper and lower bounds on the range of potential costs. The lower-bound estimate assumes that anglers' overall welfare is unaffected, because numerous substitute fishing sites exist. The upper-bound estimate assumes that fishing trips currently taken to streams in essential habitat are foregone and not substituted elsewhere. The actual impact likely falls between these two bounds. The draft economic analysis assumes that the probability distribution of impacts between these bounds is continuous, and the distribution is not skewed toward either bound. With these two assumptions, the average of the two estimates represents the best estimate of trout fishing impacts. Total future impacts, including costs resulting from modifications to fishing and other types of activities, range from $11.4 million to $12.9 million (undiscounted) over 20 years. Assuming a three percent discount rate, present value impacts range from $9.3 million to $10.8 million over the 20-year period, or an annualized impact of $626,000 to $725,000. Assuming a seven percent discount rate, present value impacts range from $7.5 million to $8.9 million over the 20-year period, or an annualized impact of $704,000 to $842,000. Impacts are dominated by welfare losses and other costs related to recreational fishing, accounting for over 50 percent of the total impact. Lost fishing opportunities occur in Big Rock Creek, South Fork (Subunit 1B), Little Rock Creek (Subunit 1C), and San Jacinto River, North Fork (Subunit 3A). The costs of modifications to fire management practices, costs of modifying hiking trails, and welfare losses to rock climbers resulting from a temporary closure of Williamson Rock in the area of Little Rock Creek (Subunit 1C) account for approximately 30 and 40 percent of the total impact. Required Determinations—Amended Regulatory Planning and Review In accordance with Executive Order 12866, this document is a significant rule in that it may raise novel legal and policy issues. However, because the draft economic analysis indicates the potential economic impact associated with a designation of all habitat with features essential to the conservation of this species would total no more than $842,000 per year, applying a seven percent discount rate, we do not anticipate that this final rule will have an annual effect on the economy of $100 million or more or affect the economy in a material way. Due to the time line for publication in the **Federal Register** , the Office of Management and Budget

(OMB)did not formally review the proposed rule. Further, Executive Order 12866 directs Federal Agencies promulgating regulations to evaluate regulatory alternatives (Office of Management and Budget, Circular A-4, September 17, 2003). Pursuant to Circular A-4, once it has been determined that the Federal regulatory action is appropriate, the agency will need to consider alternative regulatory approaches. Since the determination of critical habitat is a statutory requirement pursuant to the Act, we must then evaluate alternative regulatory approaches, where feasible, when promulgating a designation of critical habitat. In developing our designations of critical habitat, we consider economic impacts, impacts to national security, and other relevant impacts pursuant to section 4(b)(2) of the Act. Based on the discretion allowable under this provision, we may exclude any particular area from the designation of critical habitat providing that the benefits of such exclusion outweigh the benefits of specifying the area as critical habitat and that such exclusion would not result in the extinction of the species. As such, we believe that the evaluation of the inclusion or exclusion of particular areas, or combination thereof, in a designation constitutes our regulatory alternative analysis. Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) Under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* , as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effects of the rule on small entities (e.g., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of the agency certifies the rule will not have a significant economic impact on a substantial number of small entities. In our proposed rule, we withheld our determination of whether this designation would result in a significant effect as defined under SBREFA until we completed our draft economic analysis of the proposed designation so that we would have the factual basis for our determination. According to the Small Business Administration (SBA), small entities include small organizations, such as independent nonprofit organizations, and small governmental jurisdictions, including school boards and city and town governments that serve fewer than 50,000 residents, as well as small businesses (13 CFR 121.201). Small businesses include manufacturing and mining concerns with fewer than 500 employees, wholesale trade entities with fewer than 100 employees, retail and service businesses with less than $5 million in annual sales, general and heavy construction businesses with less than $27.5 million in annual business, special trade contractors doing less than $11.5 million in annual business, and agricultural businesses with annual sales less than $750,000. To determine if potential economic impacts to these small entities are significant, we considered the types of activities that might trigger regulatory impacts under this designation as well as types of project modifications that may result. In general, the term significant economic impact is meant to apply to a typical small business firm's business operations. To determine if the proposed designation of critical habitat for the mountain yellow-legged frog would affect a substantial number of small entities, we considered the number of small entities affected within particular types of economic activities (e.g., recreational fishing, hiking, rock climbing, and residential development). We considered each industry or category individually to determine if certification is appropriate. In estimating the numbers of small entities potentially affected, we also considered whether their activities have any Federal involvement; some kinds of activities are unlikely to have any Federal involvement and so will not be affected by the designation of critical habitat. Designation of critical habitat only affects activities conducted, funded, permitted, or authorized by Federal agencies; non-Federal activities are not affected by the designation. If this proposed critical habitat designation is made final, Federal agencies must consult with us if their activities may affect designated critical habitat. Consultations to avoid the destruction or adverse modification of critical habitat would be incorporated into the existing consultation process. Our draft economic analysis determined that costs involving conservation measures for the mountain yellow-legged frog would be incurred for activities involving:

(1)Recreational trout fishing activities;

(2)recreational hiking activities;

(3)recreational rock climbing activities;

(4)residential development activities;

(5)fire management activities; and

(6)other activities on Federal lands. Of these six categories, impacts of frog conservation are not anticipated to affect small entities in three of these categories: Residential development, fire management, and other activities on Federal lands. As stated in our economic analysis, residential development is unlikely to be impacted by frog conservation activities for several reasons, including the unsuitability of large-scale development of these private lands due to their location in mountainous areas and the easy incorporation into building designs of a 50-foot buffer around streams to protect mountain yellow-legged frog habitat. Further, since neither Federal nor State governments are defined as small entities by the Small Business Administration (SBA), the economic impacts borne by the USFS and the California Department of Fish and Game

(CDFG)resulting from implementation of frog conservation activities or modifications to activities on Federal lands, including installation of signs and relocation of hiking trails, fire suppression efforts, monitoring recreational mining activity, development of hazardous spills management plans, and surveying and monitoring activities, are not relevant to the SBRFA analysis. The total miles of hiking trails potentially affected by frog conservation activities represent a small percentage, less than three percent, of the total miles of hiking trails available to National Forest visitors. Therefore, the draft economic analysis assumes that adequate substitute hiking trails are available to offset potential restrictions placed on recreational hiking within critical habitat and does not estimate any welfare losses to recreational hikers. Accordingly, the small business analysis focuses on economic impacts to recreational trout fishing and rock climbing activities. The draft economic analysis considers two scenarios to bound the range of potential economic impacts on recreational trout fishing activities. Under the first scenario—the lower- bound estimate—-future costs are limited to compliance costs associated with installing fish barriers and removing nonnative trout. The directly regulated entities under this scenario include the USFS and CDFG, both of which are large government agencies. As a result, the directly affected entities are not subject to this SBRFA analysis. Under the second scenario—the upper-bound estimate—economic impacts are also estimated for recreational trout anglers whose activities may be interrupted by frog conservation activities resulting in a decrease in the number of trout fishing trips. This second scenario concludes that fishing trips may decrease by as many as 7,100 to 14,300 trips per year. If fewer recreational fishing trips occur to areas within critical habitat, local establishments providing services to anglers may be indirectly affected by mountain yellow-legged frog conservation activities. Decreased visitation may reduce the amount of money spent in the region across a variety of industries, including food and beverage stores, food service and drinking places, accommodations, transportation and rental services. The draft economic analysis uses regional economic modeling—in particular a software package called IMPLAN—to estimate the total economic effects of the reduction in economic activity in recreational fishing-related industries in the counties (Los Angeles and Riverside Counties) associated with mountain yellow-legged frog conservation activities. Based on the 2001 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation for California, average expenditures per fishing trip are approximately $38 (in 2005 dollars), with the bulk of these expenditures occurring in the food service and gasoline industries. This per-trip estimate of expenditures is combined with the number of fishing trips potentially lost due to frog conservation activities (7,100 to 14,300 trips per year) to estimate total expenditures of $271,000 to $543,000 due to recreational trout fishing in proposed critical habitat areas. According to IMPLAN, these recreational fishing-related expenditures contribute between $471,000 and $943,000 per year to the regional economy. When compared to the total output of the industry sectors directly impacted by these expenditures (e.g., groceries, restaurants, gasoline stations, and lodging) in the regional economy of Los Angeles and Riverside Counties (or $29.4 billion), the potential loss generated by a decrease in recreational trout fishing trips is less than one-hundredth of one percent. The economic analysis also estimates welfare losses to rock climbers as the result of a temporary 1-year closure of Williamson Rock, adjacent to Little Rock Creek (Subunit 1C) in Los Angeles County. The analysis concludes that a 1-year closure will result in the loss of approximately 10,600 to 14,600 rock climbing trips in 2006. If fewer rock climbing trips occur to areas within proposed critical habitat, local establishments providing services to rock climbers may be indirectly affected by frog conservation activities. Decreased visitation may reduce the amount of money spent in the region across a variety of industries, including food and beverage stores, food service and drinking places, and gas and transportation services. To determine the potential regional economic impacts of decreases in rock climbing trips, the draft economic analysis again used IMPLAN to quantify the dollar value of goods and services produced and employment generated by consumer expenditures. Ideally, this analysis would develop and use a per-trip estimate of expenditures for rock climbing based on the existing economics literature. However, no such data are available. Instead, this analysis uses the average expenditures of approximately $26.23 per trip reported by the 2001 National Survey of Fishing, Hunting, and Wildlife-Associated Recreation for California. This per-trip estimate of expenditures is then combined with the number of rock climbing trips potentially lost due to frog conservation activities (a 1-year loss of 10,600 to 14,600 trips per year) to estimate total expenditures of $278,000 to $382,000 due to rock climbing in proposed critical habitat areas. According to IMPLAN, these rock climbing-related expenditures contribute between $480,000 and $660,000 per year to the regional economy. When compared to the total output of the industry sectors directly impacted by these expenditures (e.g., groceries, restaurants, and gasoline stations) in the regional economy of Los Angeles County (or $21.6 billion), the potential loss generated by a decrease in rock climbing trips is less than one-hundredth of one percent. We may exclude areas from the final designation if it is determined that designation of critical habitat in these localized areas would have an impact to a substantial number of businesses and a significant proportion of their annual revenues. Based on the above data, we have determined that this proposed designation would not result in a significant economic impact on a substantial number of small entities. As such, we are certifying that this proposed designation of critical habitat would not result in a significant economic impact on a substantial number of small entities. Please refer to Appendix A of our draft economic analysis of the proposed designation for a more detailed discussion of potential economic impacts to small business entities. Executive Order 13211 On May 18, 2001, the President issued Executive Order (E.O.) 13211 on regulations that significantly affect energy supply, distribution, and use. E.O. 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. This proposed rule is considered a significant regulatory action under E.O. 12866 because it raises novel legal and policy issues. On the basis of our draft economic analysis, the proposed critical habitat designation is not expected to significantly affect energy supplies, distribution, or use. Therefore, this action is not a significant action, and no Statement of Energy Effects is required. Please refer to Appendix A of our draft economic analysis of the proposed designation for a more detailed discussion of potential effects on energy supply. Unfunded Mandates Reform Act (2 U.S.C. 1501 *et seq.* ) In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501), the Service makes the following findings:

(a)This rule will not produce a Federal mandate. In general, a Federal mandate is a provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local, Tribal governments, or the private sector and includes both “Federal intergovernmental mandates” and “Federal private sector mandates.” These terms are defined in 2 U.S.C. 658(5)-(7). “Federal intergovernmental mandate” includes a regulation that “would impose an enforceable duty upon State, local, or tribal governments” with two exceptions. It excludes “a condition of federal assistance.” It also excludes “a duty arising from participation in a voluntary Federal program,” unless the regulation “relates to a then-existing Federal program under which $500,000,000 or more is provided annually to State, local, and tribal governments under entitlement authority,” if the provision would “increase the stringency of conditions of assistance” or “place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding” and the State, local, or tribal governments “lack authority” to adjust accordingly. At the time of enactment, these entitlement programs were: Medicaid; AFDC work programs; Child Nutrition; Food Stamps; Social Services Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and Child Support Enforcement. “Federal private sector mandate” includes a regulation that “would impose an enforceable duty upon the private sector, except

(i)a condition of Federal assistance; or

(ii)a duty arising from participation in a voluntary Federal program.” The designation of critical habitat does not impose a legally binding duty on non-Federal government entities or private parties. Under the Act, the only regulatory effect is that Federal agencies must ensure that their actions do not destroy or adversely modify critical habitat under section 7. Non-Federal entities that receive Federal funding, assistance, permits, or otherwise require approval or authorization from a Federal agency for an action, may be indirectly impacted by the designation of critical habitat. However, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency. Furthermore, to the extent that non-Federal entities are indirectly impacted because they receive Federal assistance or participate in a voluntary Federal aid program, the Unfunded Mandates Reform Act would not apply; nor would critical habitat shift the costs of the large entitlement programs listed above on to State governments.

(b)The draft economic analysis does not identify or examine small governments that fall within proposed critical habitat because there were no estimates of impacts to small governments. Consequently, we do not believe that this rule will significantly or uniquely affect small governments. As such, a Small Government Agency Plan is not required. Takings In accordance with Executive Order 12630 (“Government Actions and Interference with Constitutionally Protected Private Property Rights”), we have analyzed the potential takings implications of proposing critical habitat for the mountain yellow-legged frog. Critical habitat designation does not affect landowner actions that do not require Federal funding or permits, nor does it preclude development of habitat conservation programs or issuance of incidental take permits to permit actions that do require Federal funding or permits to go forward. In conclusion, the designation of critical habitat for the mountain yellow-legged frog does not pose significant takings implications. Author The primary authors of this notice are the staff of the Carlsbad Fish and Wildlife 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: June 26, 2006. Matt Hogan, Acting Assistant Secretary for Fish and Wildlife and Parks. [FR Doc. E6-10458 Filed 6-30-06; 8:45 am] BILLING CODE 4310-55-P 71 127 Monday, July 3, 2006 Notices ADVISORY COUNCIL ON HISTORIC PRESERVATION Extension of Public Comment Period on Draft “Policy Statement Regarding Treatment of Burial Sites, Human Remains and Funerary Objects” AGENCY: Advisory Council on Historic Preservation. ACTION: Extension of public comment period. SUMMARY: The Advisory Council on Historic Preservation has extended the public comment period regarding its previously published draft “Policy Statement Regarding Treatment of Burial Sites, Human Remains and Funerary Objects”. DATES: Comments must be received on or before July 28, 2006. ADDRESSES: Address all comments to the Archeology Task Force, Advisory Council on Historic Preservation, 1100 Pennsylvania Avenue, NW., Suite 809, Washington, DC 20004. Fax

(202)606-8672. Comments may also be submitted by electronic mail to: *archeology@achp.gov* . Please note that all responses become part of the public record once they are submitted. FOR FURTHER INFORMATION CONTACT: Dr. Tom McCulloch,

(202)606-8505. Further information may be found in the ACHP Web site: *http://www.achp.gov* . SUPPLEMENTARY INFORMATION: The Advisory Council on Historic Preservation

(ACHP)has extended until July 28, 2006, the public comment period on the draft “Policy Statement Regarding Treatment of Burial Sites, Human Remains and Funerary Objects.” That draft was published for public comment in the **Federal Register** on March 14, 2006 (71 FR 13066-13070). That notice is available on the ACHP Web site at *http://www.achp.gov* . The ACHP's Task Force on Archeology will use the public input it receives to finalize the draft policy before presenting it to the full ACHP membership for consideration and possible adoption. Dated: June 28, 2006. John M. Fowler, Executive Director. [FR Doc. 06-5946 Filed 6-30-06; 8:45 am]

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