Unknown. Interim rule and request for comments
49,856 words·~227 min read·
/register/2006/10/03/06-8429·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
--- schema: federal-register doc_type: fedreg source_file: FR-2006-10-03.xml --- 71 191 Tuesday, October 3, 2006 Contents Actuaries Actuaries, Joint Board for Enrollment See Joint Board for Enrollment of Actuaries African African Development Foundation NOTICES Meetings; Sunshine Act, 58365 06-8474 Agency Agency for Toxic Substances and Disease Registry NOTICES Organization, functions, and authority delegations: Health Assessment and Consultation Division, 58396-58397 06-8416 Agricultural Agricultural Marketing Service RULES Kiwifruit grown in California, 58246-58249 E6-16279 Vidalia onions grown in Georgia, 58249-58252 E6-16257 NOTICES Grade standards:
Bunched Italian sprouting broccoli, 58367-58368 E6-16256 Agriculture Agriculture Department See Agricultural Marketing Service See Animal and Plant Health Inspection Service See Food and Nutrition Service See Forest Service See National Agricultural Statistics Service See Natural Resources Conservation Service See Rural Business-Cooperative Service See Rural Utilities Service NOTICES Privacy Act; systems of records, 58365-58367 06-8418 Animal Animal and Plant Health Inspection Service RULES Interstate transportation of animals and animal products (quarantine):
Tuberculosis in cattle and bison— State and zone designations, 58252-58254 E6-16299 Plant-related quarantine, domestic: Pine shoot beetle, 58243-58246 E6-16278 Army Army Department NOTICES Environmental statements; availability, etc.: Fort Lee, VA; base closure and realignment actions, 58384-58385 06-8440 Fort Sam Houston, TX; base closure and realignment actions, 58385 06-8441 Arts Arts and Humanities, National Foundation See National Foundation on the Arts and the Humanities Centers Centers for Disease Control and Prevention NOTICES Agency information collection activities; proposals, submissions, and approvals, 58397-58398 E6-16306 Centers Centers for Medicare & Medicaid Services RULES Medicare:
Hospital inpatient prospective payment systems; 2007 FY occupational mix adjustment to wage index. implementation Correction, 58286-58287 06-8429 NOTICES Grant and cooperative agreement awards: Bucks County Health Improvement Project, Inc., 58398 06-8420 Medicaid: Disproportionate share hospital allotments; aggregate payments limitations for mental disease institutions, 58398-58415 06-8421 Medicare: Hospice wage index (2007 FY); correction, 58415-58416 06-8430 Coast Guard Coast Guard RULES Drawbridge operations:
Florida, 58283-58285 E6-16275 Maine, 58286 E6-16318 Massachusetts, 58285-58286 E6-16316 Regattas and marine parades: Poquoson Seafood Festival Workboat Races, 58279-58281 E6-16314 San Francisco Bay Navy Fleet Week Parade of Ships and Air Show Demonstration, 58279 E6-16312 Sunfish World Championship Regatta, 58281-58283 E6-16334 PROPOSED RULES Anchorage regulations: Texas, 58330-58332 E6-16315 Drawbridge operations: Florida, 58332-58336 E6-16274 E6-16285 Commerce Commerce Department See Foreign-Trade Zones Board See International Trade Administration See National Oceanic and Atmospheric Administration Commission of Fine Commission of Fine Arts NOTICES Meetings, 58377 06-8453 Customs Customs and Border Protection Bureau NOTICES Agency information collection activities; proposals, submissions, and approvals, 58422-58424 E6-16300 E6-16304 E6-16313 Defense Defense Department See Army Department See Navy Department PROPOSED RULES Federal Acquisition Regulation (FAR):
Cost accounting standards administration, 58336-58340 06-8413 06-8425 NOTICES Privacy Act; systems of records, 58377-58384 E6-16287 E6-16288 E6-16289 Education Education Department NOTICES Agency information collection activities; proposals, submissions, and approvals, 58386-58387 E6-16282 E6-16283 E6-16284 Employment Employment Standards Administration NOTICES Agency information collection activities; proposals, submissions, and approvals, 58432-58433 E6-16277 Energy Energy Department See Energy Efficiency and Renewable Energy Office See Federal Energy Regulatory Commission NOTICES Meetings:
Environmental Management Site-Specific Advisory Board Paducah Gaseous Diffusion Plant, KY, 58387-58388 E6-16296 Energy Energy Efficiency and Renewable Energy Office PROPOSED RULES Commerical and industrial equipment; energy efficiency program: Test procedures— Refrigerated beverage vending machines and commercial refrigerators, freezers, and refrigerator-freezers, 58308-58314 06-8432 EPA Environmental Protection Agency NOTICES Agency information collection activities; proposals, submissions, and approvals, 58388-58389 E6-16297 Confidential business information and data transfer, 58389-58390 E6-16298 Water pollution control:
Clean Water Act— Kmart Holding Corp., Class II consent agreement, 58390-58393 E6-16293 No discharge zone determinations— Kentucky and Tennessee, 58393-58394 E6-16290 FAA Federal Aviation Administration RULES Airworthiness directives: Rolls-Royce plc, 58254 E6-16235 Standard instrument approach procedures, 58254-58257 E6-16092 E6-16093 PROPOSED RULES Airworthiness directives: Airbus, 58318-58322 E6-16201 E6-16204 Boeing, 58314-58318, 58323-58325 E6-16198 E6-16307 NOTICES Advisory circulars; availability, etc.:
Aircraft Certification Service advisory circulars, policy documents, and technical standard orders, 58462-58463 06-8464 Meetings: RTCA, Inc., 06-8460 58463-58464 06-8461 06-8463 Federal Energy Federal Energy Regulatory Commission RULES Practice and procedure: Critical energy infrastructure information, 58273-58276 E6-15820 PROPOSED RULES Practice and procedure: Critical energy infrastructure information, 58325-58330 E6-15822 NOTICES Meetings; Sunshine Act, 58388 E6-16339 Federal Motor Federal Motor Carrier Safety Administration NOTICES Motor carrier safety standards:
Driver qualifications; diabetes exemption, 58464-58470 E6-16276 Federal Reserve Federal Reserve System NOTICES Meetings: Consumer Advisory Council, 58394 E6-16266 Fine Arts Fine Arts Commission See Commission of Fine Arts Fish Fish and Wildlife Service PROPOSED RULES Endangered and threatened species: Critical habitat designations— Vail Lake ceanothus and Mexican flannelbush, 58340-58363 06-8189 Findings on petitions, etc.— Plymouth redbelly turtle, 58363-58364 E6-16057 NOTICES Endangered and threatened species:
Recovery plans— Puerto Rican parrot, 58426-58427 E6-16320 Food Food and Drug Administration NOTICES Meetings: Medical Devices Advisory Committee, 58416 E6-16319 Food Food and Nutrition Service NOTICES Agency information collection activities; proposals, submissions, and approvals, 58368-58369 E6-16272 MISSING FOR: Foreign-Trade Zones Board Foreign-Trade Zones Board NOTICES *Applications, hearings, determinations, etc.:* Washington Norvanco International Inc.; kitting of home theater systems, 58372 E6-16324 Forest Forest Service NOTICES Meetings:
Eastern Washington Cascades Provincial and Yakima Provincial Advisory Committees; combined meeting, 58369 06-8454 Monument Advisory Committee, 58428 06-8417 Reports and guidance documents; availability, etc.: Basin Creek hazardous fuels reduction project; soil scientist specialist report, 58369 E6-16317 GSA General Services Administration PROPOSED RULES Federal Acquisition Regulation (FAR): Cost accounting standards administration, 58336-58340 06-8413 06-8425 NOTICES Senior Executive Service Performance Review Board; membership, 58394-58395 E6-16254 Health Health and Human Services Department See Agency for Toxic Substances and Disease Registry See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Food and Drug Administration See Health Resources and Services Administration See National Institutes of Health NOTICES Meetings:
American Health Information Community, 58395 06-8438 06-8439 Genetics, Health, and Society, Secretary's Advisory Committee, 58395 06-8442 Health Health Resources and Services Administration NOTICES Agency information collection activities; proposals, submissions, and approvals, 58416-58417 E6-16295 Homeland Homeland Security Department See Coast Guard See Customs and Border Protection Bureau Housing Housing and Urban Development Department NOTICES Agency information collection activities; proposals, submissions, and approvals, 58424-58425 E6-16311 06-8466 Indian Indian Affairs Bureau NOTICES Environmental statements; notice of intent:
Mississippi Band of Choctaw Indians, Jackson County, MS; fee-to-trust transfer and casino project, 58427-58428 E6-16259 Interior Interior Department See Fish and Wildlife Service See Indian Affairs Bureau See Land Management Bureau See Minerals Management Service IRS Internal Revenue Service RULES Employment taxes and collection of income taxes at source: Flat rate supplemental wage withholding Correction, 58276-58277 E6-16237 E6-16239 NOTICES Agency information collection activities; proposals, submissions, and approvals, 58471-58477 E6-16236 E6-16252 E6-16253 International International Trade Administration NOTICES Antidumping:
Stainless steel flanges from— India, 58372 E6-16302 International International Trade Commission NOTICES Import investigations: Carbon steel products from— Various countries, 58431-58432 E6-16230 Joint Joint Board for Enrollment of Actuaries NOTICES Committees; establishment, renewal, termination, etc.: Actuarial Examinations Advisory Committee, 58365 E6-16244 Justice Justice Department See Justice Programs Office RULES Privacy Act; implementation, 58277-58278 E6-16280 Justice Justice Programs Office NOTICES Agency information collection activities; proposals, submissions, and approvals, 58432 E6-16269 Labor Labor Department See Employment Standards Administration See Mine Safety and Health Administration Land Land Management Bureau NOTICES Meetings:
Monument Advisory Committee, 58428 06-8417 Survey plat filings: Louisiana, 58428-58429 E6-16321 Minerals Minerals Management Service NOTICES Agency information collection activities; proposals, submissions, and approvals, 58429-58431 E6-16305 Mine Mine Safety and Health Administration NOTICES Petitions for safety standards modification; summary of affirmative decisions, E6-16308 58433-58435 E6-16309 NASA National Aeronautics and Space Administration PROPOSED RULES Federal Acquisition Regulation (FAR):
Cost accounting standards administration, 58336-58340 06-8413 06-8425 National Agricultural National Agricultural Statistics Service NOTICES Agency information collection activities; proposals, submissions, and approvals, 58369-58370 06-8428 National Foundation National Foundation on the Arts and the Humanities NOTICES Meetings: Arts Advisory Panel, 58435 E6-16233 NIH National Institutes of Health NOTICES Meetings: Genetics, Health, and Society, Secretary's Advisory Committee, 58417-58418 06-8443 National Cancer Institute, 58418 06-8450 National Center for Research Resources, 58418-58419 06-8451 National Institute of Allergy and Infectious Diseases, 58420 06-8447 National Institute of Arthritis and Musculoskeletal and Skin Diseases, 58419 06-8445 National Institute of Biomedical Imaging and Bioengineering, 58419 06-8444 National Institute of Diabetes and Digestive and Kidney Diseases, 58419-58420 06-8446 National Institute of Environmental Health Sciences, 58420 06-8448 National Institute of Neurological Disorders and Stroke, 58420-58421 06-8449 Scientific Review Center, 58421-58422 06-8452 NOAA National Oceanic and Atmospheric Administration RULES Fishery conservation and management:
Atlantic highly migratory species— Atlantic bluefin tuna, 58287-58289 06-8435 West Coast States and Western Pacific fisheries— Pacific Coast groundfish, 58289-58307 06-8402 NOTICES Fishery conservation and management: Alaska; fisheries of Exclusive Economic Zone— Individual Fishing Quota and Community Development Quota Programs, 58372-58373 E6-16291 Meetings: Inter-American Tropical Tuna Commission; U.S. Section General Advisory Committee, 58374 E6-16292 Mid-Atlantic Fishery Management Council, 58374 E6-16263 Western Pacific Fishery Management Council, 58374-58377 E6-16264 National Science National Science Foundation NOTICES Meetings:
Biological Sciences Advisory Committee, 58435-58436 06-8455 Materials Research Proposal Review Panel, 58436 06-8456 Mathematical and Physical Sciences Advisory Committee, 58436 06-8458 Polar Programs Advisory Committee, 58436 06-8457 NRCS Natural Resources Conservation Service NOTICES Environmental statements; record of decision: Coal Creek, Cedar City, UT; flood-control improvements, 58370 E6-16373 Navy Navy Department RULES Navigation, COLREGS compliance exemptions: USS BENFOLD, 58278-58279 E6-16323 NOTICES Meetings:
Ocean Research and Resources Advisory Panel, 58385-58386 E6-16303 Nuclear Nuclear Regulatory Commission NOTICES Environmental statements; availability, etc.: Nuclear Management Co., LLC, 58442-58443 E6-16260 Meetings: Medical Uses of Isotopes Advisory Committee, 58443 E6-16267 Meetings; Sunshine Act, 58443-58444 06-8470 Reports and guidance documents; availability, etc.: Addition of LCO 3.0.9 on unavailability of barriers using consolidated line item improvement process; model safety evaluation, 58444-58454 06-8427 *Applications, hearings, determinations, etc.:* Entergy Nuclear Operations, Inc., 58436-58440 E6-16262 Tennessee Valley Authority, 58440-58442 E6-16270 Peace Peace Corps NOTICES Agency information collection activities; proposals, submissions, and approvals, 58454 06-8459 Rural Rural Business-Cooperative Service NOTICES Agency information collection activities; proposals, submissions, and approvals, 58370-58371 E6-16286 RUS Rural Utilities Service NOTICES Telecommunications loans:
Telecommunications plant category; depreciation rates, 58371 06-8323 SEC Securities and Exchange Commission RULES Investment companies: Redeemable securities; mutual fund redemption fees, 58257-58273 E6-16273 NOTICES Meetings; Sunshine Act, 58455 06-8473 Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC, 58455-58456 E6-16250 Chicago Stock Exchange, Inc., 58456-58457 E6-16248 Depository Trust Co., 58457-58458 E6-16251 International Securities Exchange, Inc., 58459-58460 E6-16249 NYSE Arca, Inc., 58460-58462 E6-16247 State State Department NOTICES Meetings:
Prviate International Law Advisory Committee, 58462 E6-16301 Statistical Statistical Reporting Service See National Agricultural Statistics Service Surface Surface Transportation Board NOTICES Rail carriers: Waybill data; release for use, 58470 E6-16294 Toxic Toxic Substances and Disease Registry Agency See Agency for Toxic Substances and Disease Registry Transportation Transportation Department See Federal Aviation Administration See Federal Motor Carrier Safety Administration See Surface Transportation Board Treasury Treasury Department See Internal Revenue Service NOTICES Agency information collection activities; proposals, submissions, and approvals, 58470 E6-16255 Boycotts, international:
Countries requiring cooperation; list, 58470-58471 06-8437 Veterans Veterans Affairs Department NOTICES Agency information collection activities; proposals, submissions, and approvals, 58477-58479 E6-16210 E6-16211 E6-16213 E6-16214 Meetings: CARES Business Plan Studies Advisory Committee, 58479-58480 06-8405 Clinical Science Research and Development Service Cooperative Studies Scientific Merit Review Board, 58480 06-8462 Environmental Hazards Advisory Committee, 58480 06-8404 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 71 191 Tuesday, October 3, 2006 Rules and Regulations DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 301 [Docket No. APHIS-2006-0117] Pine Shoot Beetle; Additions to Quarantined Areas AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Interim rule and request for comments. SUMMARY: We are amending the pine shoot beetle regulations by adding counties in Illinois, Indiana, Iowa, New Jersey, New York, and Ohio to the list of quarantined areas. In addition, we are designating the States of Massachusetts, Michigan, Minnesota, and Pennsylvania, in their entirety, as quarantined areas based on their decision not to enforce intrastrate movement restrictions. Finally, we are adding the States of Connecticut and Rhode Island, in their entirety, to the list of quarantined areas based on projections of the natural spread of pine shoot beetle that make it reasonable to believe that the pest is present in those States.
This action is necessary to prevent the spread of pine shoot beetle, a pest of pine trees, into noninfested areas of the United States. DATES: This interim rule is effective October 3, 2006. We will consider all comments that we receive on or before December 4, 2006. ADDRESSES: You may submit comments by either of the following methods: *Federal eRulemaking Portal:* Go to *http://www.regulations.gov,* select “Animal and Plant Health Inspection Service” from the agency drop-down menu, then click “Submit.
” In the Docket ID column, select APHIS-2006-0117 to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. *Postal Mail/Commercial Delivery:* Please send four copies of your comment (an original and three copies) to Docket No.
APHIS-2006-0117, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. APHIS-2006-0117. *Reading Room:* You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays.
To be sure someone is there to help you, please call
(202)690-2817 before coming. *Other Information:* Additional information about APHIS and its programs is available on the Internet at *http://www.aphis.usda.gov* . FOR FURTHER INFORMATION CONTACT: Mr. Weyman Fussell, Program Manager, Pest Detection and Management Programs, PPQ, APHIS, 4700 River Road, Unit 134, Riverdale, MD 20737-1231;
(301)734-5705. SUPPLEMENTARY INFORMATION: Background The regulations in 7 CFR 301.50 through 301.50-10 (referred to below as the regulations) restrict the interstate movement of certain regulated articles from quarantined areas in order to prevent the spread of pine shoot beetle
(PSB)into noninfested areas of the United States. PSB is a pest of pine trees that can cause damage in weak and dying trees, where reproduction and immature stages of PSB occur. During “shoot feeding,” young beetles tunnel into the center of pine shoots (usually of the current year's growth), causing stunted and distorted growth in host trees. PSB is also a vector of several diseases of pine trees. Factors that may result in the establishment of PSB populations far from the location of the original host tree include:
(1)Adults can fly at least 1 kilometer, and
(2)infested trees and pine products are often transported long distances. This pest damages urban ornamental trees and can cause economic losses to the timber, Christmas tree, and nursery industries. PSB hosts include all pine species. The beetle has been found in a variety of pine species ( *Pinus* spp.) in the United States. Scotch pine ( *P. sylvestris* ) is the preferred host of PSB. The Animal and Plant Health Inspection Service (APHIS) has determined, based on scientific data from European countries, that fir ( *Abies* spp.,) larch ( *Larix* spp.,) and spruce ( *Picea* spp.) are not hosts of PSB. Surveys conducted by State and Federal inspectors have revealed that 17 counties in Illinois, Indiana, New Jersey, New York, Iowa, and Ohio are infested with PSB. Copies of the surveys may be obtained by writing to the individual listed under FOR FURTHER INFORMATION CONTACT . The regulations in § 301.50-3 provide that the Administrator of APHIS will list as a quarantined area each State, or each portion of a State, in which PSB has been found by an inspector, in which the Administrator has reason to believe PSB is present, or that the Administrator considers necessary to regulate because of its inseparability for quarantine enforcement purposes from localities in which PSB has been found. The regulations further provide that less than an entire State will be designated as a quarantined area only if the Administrator determines that:
(1)The State has adopted and is enforcing a quarantine and regulations that impose restrictions on the intrastate movement of regulated articles that are equivalent to those imposed on the interstate movement of those articles and
(2)the designation of less than the entire State as a regulated area will otherwise be adequate to prevent the artificial interstate spread of PSB. In accordance with these criteria, we are designating Jo Daviess and Stark Counties, IL; Dearborn County, IN; Dubuque and Scott Counties, IA; Bergen, Hunterdon, Passaic, Sussex, and Warren Counties, NJ; Columbia, Orange, and Ulster Counties, NY; and Highland, Jackson, Ross, and Scioto Counties, OH, as quarantined areas, and we are adding them to the list of quarantined areas in § 301.50-3(c). As noted previously, the regulations provide that, for less than an entire State to be designated as a quarantined area, the State must have adopted and be enforcing a quarantine and regulations that impose restrictions on the intrastate movement of regulated articles that are equivalent to those imposed on the interstate movement of those articles. The States of Michigan and Pennsylvania have contained, respectively, 75 and 39 counties designated as quarantined areas in the regulations. However, those States have notified APHIS that they no longer wish to enforce a quarantine and regulations on the intrastate movement of regulated articles within their borders. In addition, the States of Massachusetts and Minnesota have recently detected PSB within their borders, and have notified APHIS that they do not wish to enforce an intrastate quarantine. Therefore, we are amending § 301.50-3(c) to designate the States of Massachusetts, Michigan, Minnesota, and Pennsylvania, in their entirety, as quarantined areas. Although there has been no detection of PSB in Connecticut or Rhode Island, the beetle has been detected in the remainder of New England and in the surrounding States. PSB has been moving by natural spread east and west from the original infested area in Ohio since 1992. It is reasonable to believe that PSB may already be present in Connecticut and Rhode Island, as they both have highly developed urban areas, and low quantities of host material, such that the population level of the beetle would be too low to detect. The States of Connecticut and Rhode Island have requested that APHIS designate both States as quarantined areas. Therefore, we are amending § 301.50-3(c) to designate the States of Connecticut and Rhode Island, in their entirety, as quarantined areas. Entities affected by this interim rule may include nursery stock growers, Christmas tree farms, logging operations, and others who sell, process, or move regulated articles. As a result of this interim rule, any regulated articles to be moved interstate from a quarantined area must first be inspected and/or treated in order to qualify for a certificate or limited permit authorizing the movement. Emergency Action This rulemaking is necessary on an emergency basis to prevent PSB from spreading to noninfested areas of the United States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the **Federal Register** . We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the **Federal Register** . The document will include a discussion of any comments we receive and any amendments we are making to the rule. Executive Order 12866 and Regulatory Flexibility Act This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866. This rule amends the PSB regulations by adding counties in Illinois, Indiana, Iowa, New Jersey, New York, and Ohio to the list of quarantined areas, by designating the States of Massachusetts, Michigan, Minnesota, and Pennsylvania, in their entirety, as quarantined areas based on their decision not to enforce intrastrate movement restrictions, and by adding the States of Connecticut and Rhode Island, in their entirety, to the list of quarantined areas based on projections of the natural spread of pine shoot beetle that make it reasonable to believe that the pest is present in those States. Entities affected by this rule may include nurseries, Christmas tree farms, logging operations, moving companies and others who sell, process, or move regulated articles interstate from these areas. As a result of this rule, any regulated articles to be moved interstate from a quarantined area must first be inspected and/or treated in order to qualify for a certificate or limited permit. This action will help prevent the artificial spread of the pest to new areas, and consequently avoid economic damage to timber, nursery, and Christmas tree producers in areas that could become infested if no action were taken. Certain pine products will not be allowed to be shipped during certain months of the year or will be required to undergo debarking before transport occurs. Enterprises such as Christmas tree farms, nurseries and greenhouses, sawmill and logging operations, and others in the newly designated PSB quarantined areas wishing to move regulated articles from these areas may be affected by compliance requirements, however, costs associated with issuance of certificates and limited permits are borne by the issuing agency. APHIS has identified approximately 12,684 entities which sell, process, or move forest products in these 17 counties and 6 States that may be impacted by this rule (table 1). Of these entities, there were approximately 8,800 which were producing nursery and greenhouse crops, and 3,884 Christmas tree farms in 2002. In addition, an unknown number of sawmills and logging operations in the newly quarantined counties process pine tree products. According to information previously collected by APHIS, pine trees and pine tree products such as cut Christmas trees sold in these areas largely remain within the regulated areas. Nurseries and greenhouses specialize in production of deciduous landscape products rather than production of rooted pine Christmas trees and pine nursery stock. The latter products in general constitute a small part of their production, if they are produced at all. Therefore, the rule is not likely to affect most nurseries and greenhouses. Table 1.—2002 Value of Sales and Number of Entities Selling Nursery Crops and Cut Christmas Trees Newly quarantined States and counties Number of nursery and greenhouse farms 2002 market value of products sold ($1,000) Number of cut Christmas tree and short rotation woody crops farms 2002 market value of products sold (1,000) Number of sawmills (NAICS code 321113) 1 Connecticut 685 $245,773 382 $3,407 19 2 counties in Illinois 14 856 5 22 unknown 1 county in Indiana 17 443 2
(D)2 unknown 2 counties in Iowa 33 2,972 3 16 unknown Massachusetts 902 153,540 306 1,800 37 Michigan 2,185 628,699 1,076 30,411 148 Minnesota 983 224,410 327 11,855 69 5 counties in New Jersey 403 47,609 345 1,505 +
(D)2 unknown 3 counties in New York 201 26,147 42 118 +
(D)2 unknown 4 counties in Ohio 77 4,220+(D) 2 10 NA unknown Pennsylvania 3,075 732,709 1,326 31,193 291 Rhode Island 225 37,593 60 658 8 Total 8,800 2,104,971+(D) 2 3,884 80,985 *Source:* USDA, NASS, 2002 Census of Agriculture (Table 2, Market Value of Agricultural Products sold including Direct and Organic in 2002 by State and County Data and 2002 Economic Census, Geographical Area Series by State (Table 1, Industry Statistics for the State 2002, Manufacturing.) 1 The number of sawmills is reported by State only and thus there are no numbers by county. The number of sawmills in the newly quarantined areas is bigger than 572 (i.e., the known number of sawmills for the 6 States) and smaller than 1,021 (i.e., the number of sawmills in all 12 States). 2 (D): Amount has not been reported to avoid disclosure. The Small Business Administration
(SBA)has established size standards to determine when an entity is considered small. Nursery stock growers may be considered small when they have annual sales of $750,000 or less, and Christmas tree growers may be considered small when they have annual sales of $5 million or less. The 2002 Agricultural Census does not report sales by entity size. However, from previously gathered information, APHIS expects that the majority of these entities are small by the SBA size standards. Regulated articles from quarantined areas may be moved interstate if accompanied by a certificate or limited permit. A certificate for interstate movement of regulated articles from quarantined areas is issued by an inspector after it is determined that the regulated articles are not infested with PSB and do not present a risk of spreading PSB to other areas. A limited permit is issued by an inspector for the interstate movement of regulated articles from quarantined areas when they are to be moved to a specified destination for processing, handling or utilization and the movement will not result in the spread of PSB. Regulated articles must have the name of the consignor and consignee, as well as the certificate or limited permit, attached during all segments of interstate movement. A request for a certificate or a limited permit must be made at least 48 hours prior to transporting the regulated articles interstate. The cost for this service falls upon the issuing agency, and not the person/business entity requesting the certificate/limited permit. This rule designates newly quarantined areas for PSB. APHIS has identified approximately 8,800 nursery and greenhouse farms, 3,884 cut Christmas tree farms, and an unknown number of logging operations, in the newly quarantined 17 counties and 6 States. As noted previously, the movement of cut Christmas pine trees and pine tree products by these establishments is generally within the regulated counties and States. Thus, those farms, nurseries, logging operations, and other entities are expected to be little affected by this rule. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities. Executive Order 12372 This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.) Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule:
(1)Preempts all State and local laws and regulations that are inconsistent with this rule;
(2)has no retroactive effect; and
(3)does not require administrative proceedings before parties may file suit in court challenging this rule. Paperwork Reduction Act This interim rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). List of Subjects in 7 CFR Part 301 Agricultural commodities, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Transportation. Accordingly, we are amending 7 CFR part 301 as follows: PART 301—DOMESTIC QUARANTINE NOTICES 1. The authority citation for part 301 continues to read as follows: Authority: 7 U.S.C. 7701-7772 and 7781-7786; 7 CFR 2.22, 2.80, and 371.3. Section 301.75-15 issued under Sec. 204, Title II, Public Law 106-113, 113 Stat. 1501A-293; sections 301.75-15 and 301.75-16 issued under Sec. 203, Title II, Public Law 106-224, 114 Stat. 400 (7 U.S.C. 1421 note). 2. In § 301.50-3, paragraph
(c)is amended as follows: a. By adding, in alphabetical order, entries for Connecticut, Iowa, Massachusetts, Minnesota, New Jersey, and Rhode Island to read as set forth below. b. By revising the entries for Michigan and Pennsylvania to read as set forth below. c. In the entries for Illinois, Indiana, New York and Ohio, by adding new counties in alphabetical order to read as set forth below. § 301.50-3 Quarantined areas.
(c)* * * Connecticut The entire State. Illinois *Jo Daviess County.* The entire county. *Stark County.* The entire county. Indiana *Dearborn County.* The entire county. Iowa *Dubuque County.* The entire county. *Scott County.* The entire county. Massachusetts The entire State. Michigan The entire State. Minnesota The entire State. New Jersey *Bergen County.* The entire county. *Hunterdon County.* The entire county. *Passaic County.* The entire county. *Sussex County.* The entire county. *Warren County.* The entire county. New York *Columbia County.* The entire county. *Orange County.* The entire county. *Ulster County.* The entire county. Ohio *Highland County.* The entire county. *Jackson County.* The entire county. *Ross County.* The entire county. *Scioto County.* The entire county. Pennsylvania The entire State. Rhode Island The entire State Done in Washington, DC, this 27th day of September 2006. Elizabeth E. Gaston, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6-16278 Filed 10-2-06; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 920 [Docket No. FV06-920-1 IFR] Kiwifruit Grown in California; Relaxation of Container Marking Requirements AGENCY: Agricultural Marketing Service, USDA. ACTION: Interim final rule with request for comments. SUMMARY: This rule relaxes the container marking requirements for kiwifruit covered under the California kiwifruit marketing order (order). The order regulates the handling of kiwifruit grown in California and is administered locally by the Kiwifruit Administrative Committee (Committee). Currently, kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers must, be positive lot identified, which requires reinspection. This rule establishes procedures for handlers to ship such kiwifruit without positive lot identification (PLI), and announces the Agricultural Marketing Service's intention to request emergency approval by the Office of Management and Budget
(OMB)of a new information collection. This rule is intended to reduce handler inspection costs and facilitate the marketing of kiwifruit. DATES: Effective October 4, 2006. Pursuant to the Paperwork Reduction Act, comments on the information collection burden that will result from this rule must be received by December 4, 2006 which will be considered prior to issuance of a final rule. ADDRESSES: Interested persons are invited to submit written comments concerning this rule. Comments must be sent to the Docket Clerk, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Fax:
(202)720-8938, E-mail: *moab.docketclerk@usda.gov* , or Internet: *http://www.regulations.gov.* All comments should reference the docket number and the date and page number of this issue of the **Federal Register** and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: *http://www.ams.usda.gov/fv/moab.html.* FOR FURTHER INFORMATION CONTACT: Shereen Marino, Marketing Specialist, or Kurt J. Kimmel, Regional Manager, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, telephone:
(559)487-5901, *Fax:*
(559)487-5906, or *E-mail:* *Shereen.Marino@usda.gov* , or *Kurt.Kimmel@usda.gov.* Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone:
(202)720-2491, Fax:
(202)720-8938, or E-mail: *Jay.Guerber@usda.gov.* SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order No. 920 as amended (7 CFR part 920), regulating the handling of kiwifruit grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Department of Agriculture
(USDA)is issuing this rule in conformance with Executive Order 12866. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. This rule relaxes the container marking requirements for kiwifruit covered under the order. Currently, kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers, must be positive lot identified, which requires reinspection. This rule establishes procedures for handlers to ship such kiwifruit without PLI. This rule is intended to reduce handler inspection costs and facilitate the marketing of kiwifruit. The Committee unanimously recommended this change at its April 6, 2006, meeting. Section 920.52(a) of the order provides authority for grade, size, pack, container, and container marking requirements for shipments of fresh kiwifruit. Section 920.55 of the order requires inspection and certification of kiwifruit prior to shipment by Federal or Federal-State Inspection Service (FSIS). Section 920.302 of the order's regulations specifies applicable grade, size, pack, and container requirements and § 920.303 specifies applicable container marking requirements. Paragraph
(d)of § 920.303 requires that containers of kiwifruit be positive lot identified prior to shipment. PLI helps to ensure that a specific load or lot of kiwifruit can be linked to an inspection certificate and provides verification that the fruit was inspected. No less than 75 percent of the containers of kiwifruit on a pallet must be marked with a lot stamp number corresponding to the lot inspection conducted by the FSIS. This lot stamp number is a PLI number that can be matched to an inspection certificate. Individual consumer packages within a master container, and containers being directly loaded into a vehicle for export under FSIS supervision are exempt from PLI. Individual consumer packages placed directly on a pallet, and plastic containers of kiwifruit must be positive lot identified. Currently, kiwifruit that has been inspected and certified, and is subsequently placed into new containers, must be positive lot identified. When such kiwifruit is placed into new containers, the PLI mark on the container is lost and thus the lot is not easily identified. The new containers must be reinspected and marked with a new PLI number. Reinspection costs for such kiwifruit account for roughly 20 percent of annual inspection costs for handlers. In an effort to reduce handler costs, the Committee recommended establishing procedures for handlers to ship previously inspected kiwifruit placed in new containers without PLI. Handlers will have the option of having such kiwifruit reinspected and marked with a PLI number or requesting a verification number under a new verification process. Such kiwifruit must be of the same grade and size as originally inspected. The handler must contact the FSIS to obtain a verification number prior to shipment, and plainly mark one end of each container with the letter “R” and the verification number. The letter “R” and the verification number must not be less than one-half inch in height. The handler must submit a Kiwifruit Verification Form to the FSIS within 3 business days of such request, and provide the following information from the original inspection:
(i)The positive lot identification numbers;
(ii)the identity of the handler;
(iii)the inspection certificate numbers;
(iv)the grade and size of the kiwifruit;
(v)the number and type of containers; and
(v)the handler's brand; and the following information on the kiwifruit placed into new containers:
(i)The number and type of containers; and
(ii)the applicable brand. The verification number will be linked to the PLI number, thus providing a method to trace the fruit back to the original inspection certificate. The FSIS will maintain the Kiwifruit Verification Forms. The Committee will make use of completed forms to audit handlers as needed to ensure compliance, pursuant to authority provided in § 920.61. Accordingly, a new paragraph
(f)is added to § 920.303 that establishes the verification procedures described above. Additionally, a new sentence is added to the beginning of paragraph
(d)in that section to clarify that except as provided in the new paragraph (f), containers of kiwifruit must be positive lot identified prior to shipment in accordance with specified requirements. Paragraph
(d)is modified further for clarification purposes to change the term “lot stamp number” to “positive lot identified,” and to change the term “plastic container” to “reusable plastic container.” Initial Regulatory Flexibility Analysis Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service
(AMS)has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility. There are approximately 37 handlers of kiwifruit subject to regulation under the marketing order and approximately 220 growers in the production area. Small agricultural service firms are defined by the Small Business Administration (13 CFR 121.201) as those whose annual receipts are less than $6,500,000, and small agricultural producers are defined as those whose annual receipts are less than $750,000. None of the 37 handlers subject to regulation have annual kiwifruit sales of $6,500,000. In addition, six growers subject to regulation have annual sales exceeding $750,000. Therefore, all of the kiwifruit handlers and a majority of the growers may be classified as small entities. This rule relaxes the container marking requirements currently specified in § 920.303. Currently, kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers must be positive lot identified, which requires reinspection. This rule establishes procedures for handlers to ship such kiwifruit without PLI. This rule adds a new paragraph
(f)to § 920.303 that establishes the verification procedures. Handlers must obtain a verification number from the FSIS, mark their new containers with such number and the letter “R,” and submit a Kiwifruit Verification Form to the FSIS. The verification number can be linked to the original PLI number, thereby providing a method to trace the fruit back to the original inspection certificate. This action is intended to reduce handler inspection costs and facilitate the marketing of kiwifruit. This rule also makes minor modifications to paragraph
(d)of § 920.303 for clarification purposes. Authority for this action is provided in §§ 902.52(a)(3) and 920.55 of the order. The impact of this change on handlers was discussed by the Committee. Reinspection costs due to current PLI requirements account for roughly 20 percent of annual inspection costs for the industry. Additionally, an average of 20 percent of the crop is placed into new containers annually. The following table shows inspection costs for in-line inspection, lot inspection, and kiwifruit placed into new containers for 2001 to 2005. Year In-line Lot New containers Total cost 2001-02 $107,702 $15,254 $38,411 $161,367 2002-03 96,376 24,866 35,521 156,763 2003-04 111,228 12,064 29,197 152,489 2004-05 129,197 24,319 31,415 184,931 This change reduces inspection costs because handlers have the option of using the new verification process instead of having kiwifruit reinspected to conform to PLI requirements. Additionally, reinspection can delay shipments because kiwifruit cannot be shipped until reinspection has been completed by the FSIS. The Committee considered the alternative of maintaining the status quo, but this was not viable. As an option to reinspection, identity of the lot can be achieved through the verification number, which provides a trace back to the original inspection certificate. Additionally, such kiwifruit has already met the minimum requirements of the marketing order. It is anticipated that the rule provides a cost savings to handlers. This action imposes an additional reporting and recordkeeping burden on California kiwifruit handlers. This action requires a new Committee form that must be completed by handlers and provided to the FSIS. The information collection requirement is discussed later in this document. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule. In addition, the Committee's meeting was widely publicized throughout the kiwifruit industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the April 6, 2006, meeting was a public meeting and all entities, both large and small, were encouraged to express their views on these issues. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: *http://www.ams.usda.gov/fv/moab.html.* Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), this notice announces that AMS is requesting emergency approval from the Office of Management and Budget
(OMB)for a new information collection request under OMB No. 0581-NEW. Upon approval by OMB, this collection will be merged with the forms currently approved for use under OMB No. 0581-0189, “Generic OMB Fruit Crops.” The emergency request was necessary because insufficient time was available to follow normal clearance procedures. *Title:* Kiwifruit Grown in California, Marketing Order No. 920. *OMB No.:* 0581-NEW. *Expiration Date of Approval:* Emergency request. *Type of Request:* New collection. *Abstract:* The information collection requirement in this request is essential to provide handlers with a procedure to ship kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers without PLI. On April 6, 2006, the Committee unanimously recommended relaxing the container marking requirements prescribed under the order. Currently, kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers must be positive lot identified, which requires reinspection. This rule establishes procedures for handlers to ship such kiwifruit without PLI. Kiwifruit handlers must submit a new Kiwifruit Verification Form to the FSIS and report information prior to shipment. On this form, handlers must report information from the original inspection certificate (PLI and inspection certification numbers, handler name, grade and size, number and type of containers, and brand), and information for such kiwifruit placed into new containers (number and type of container, and brand). The FSIS will assign verification numbers for lots of such kiwifruit in order to provide a trace back to the original inspection certificate. This action is intended to reduce handler inspection costs and facilitate the marketing of kiwifruit. The information collected is used only by authorized representatives of USDA, including AMS, Fruit and Vegetable Programs regional and headquarters' staff, and authorized employees and agents of the Committee. Authorized Committee employees, agents, and the industry are the primary users of the information and AMS is the secondary user. Kiwifruit Verification Form *Estimate of Burden:* Public reporting burden for this collection of information is estimated to be no more than .25 hour per response. *Respondents:* Kiwifruit handlers. *Estimated Number of Respondents:* 30. *Estimated Number of Responses per Respondent:* 150. *Estimated Total Annual Burden on Respondents:* 1,125 hours. *Comments:* Comments are invited on:
(1)Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2)the accuracy of the agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;
(3)ways to enhance the quality, utility, and clarity of the information to be collected; and
(4)ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments should reference OMB No. 0581-NEW and the California kiwifruit marketing order, and be sent to the USDA in care of the Docket Clerk at the previously mentioned address. All comments received will be available for public inspection during regular business hours at the same address. All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record. As previously mentioned, because there was insufficient time for a normal clearance procedure and prompt implementation is needed, AMS is requesting emergency approval for the use of this form by October 11, 2006, because the season began August 1. As previously mentioned, upon OMB approval, this collection will be merged with the forms currently approved for use under OMB No. 0581-0189 “Generic OMB Fruit Crops.” The AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. In summary, this rule establishes procedures for handlers to ship kiwifruit that has been inspected, meets applicable grade and size requirements, and is subsequently placed into new containers without PLI. This rule is intended to reduce handler inspection costs and facilitate the marketing of kiwifruit. The additional reporting requirement will contribute to the efficient operation of the program and assist in ensuring handler compliance with marketing order provisions. Any comments received will be considered prior to finalization of this rule. After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act. Pursuant to 5 U.S.C. 553, it is also found and determined in good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and good cause exists for not postponing the effective date of this rule until 30 days after publication in the **Federal Register** because:
(1)This rule should be in place as soon as possible because the 2006-07 season began on August 1, 2006, and handlers will begin shipping kiwifruit by mid-September;
(2)the Committee unanimously recommended this change at a public meeting and all interested parties had an opportunity to provide input;
(3)this rule relaxes requirements currently in effect and kiwifruit producers and handlers are aware of this rule and need no additional time to comply with the relaxed requirements;
(4)this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule. List of Subjects in 7 CFR Part 920 Kiwifruit, Marketing agreements, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 920 is amended as follows: PART 920—KIWIFRUIT GROWN IN CALIFORNIA 1. The authority citation for 7 CFR part 920 continues to read as follows: Authority: 7 U.S.C. 601-674. 2. In § 920.303, revise paragraph (d), and add a new paragraph
(f)to read as follows: § 920.303 Container marking regulations.
(d)Except as provided in paragraph
(f)of this section, containers of kiwifruit must be positive lot identified prior to shipment in accordance with the following requirements. All exposed or outside containers of kiwifruit, but not less than 75 percent of the total containers on the pallet, shall be positive lot identified with a plain mark corresponding to the lot inspection conducted by an authorized inspector, except for individual consumer packages within a master container and containers that are being directly loaded into a vehicle for export shipment under the supervision of the Federal or Federal-State Inspection Service. Individual consumer packages of kiwifruit placed directly on a pallet shall have all outside or exposed packages on a pallet positive lot identified with a plain mark corresponding to the lot inspection conducted by an authorized inspector or have one inspection label placed on each side of the pallet. Reusable plastic containers of kiwifruit, placed on a pallet, shall be positive lot identified in accordance with Federal or Federal-State Inspection Service procedures and shall have required information on the cards of the individual containers, as provided in this section of the regulations.
(f)Kiwifruit that has been inspected and certified, and is subsequently placed into new containers, does not have to be positive lot identified, as prescribed in paragraph
(d)of this section: *Provided,* That:
(1)Such kiwifruit is of the same grade and size as originally inspected; and
(2)The handler requests a verification number from the Federal or Federal-State Inspection Service prior to shipment; plainly marks one end of each container with such number and the letter “R,” both of which shall be at least one-half inch in height; and submits a Kiwifruit Verification Form to the Federal or Federal-State Inspection Service within 3 business days of such request. The handler shall provide the following information on the Kiwifruit Verification Form.
(i)From the original inspection:
(A)The positive lot identification numbers;
(B)The identity of the handler;
(C)The inspection certificate numbers;
(D)The grade and size of the kiwifruit;
(E)The number and type of containers; and
(F)The handler's brand; and
(ii)On the kiwifruit placed into new containers:
(A)The number and type of containers; and
(B)The applicable brand. Dated: September 27, 2006. Kenneth C. Clayton, Acting Administrator, Agricultural Marketing Service. [FR Doc. E6-16279 Filed 10-2-06; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 955 [Docket No. FV06-955-1 FIR] Vidalia Onions Grown in Georgia; Revision of Reporting and Assessment Requirements AGENCY: Agricultural Marketing Service, USDA. ACTION: Final rule. SUMMARY: The Department of Agriculture
(USDA)is adopting, as a final rule, without change, an interim final rule changing the reporting and assessment requirements under the marketing order for Vidalia onions grown in Georgia (order). The order regulates the handling of Vidalia onions grown in Georgia and is administered locally by the Vidalia Onion Committee (Committee). This rule continues in effect the action that changed the reporting requirements for handlers from filing weekly shipment reports to monthly reporting. It also continues in effect a change in when assessments are due and how delinquent assessments are handled. These changes are expected to benefit handlers without negatively affecting program compliance. DATES: *Effective Date:* November 2, 2006. FOR FURTHER INFORMATION CONTACT: Doris Jamieson, Marketing Specialist, or Christian Nissen, Regional Manager, Southeast Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; telephone:
(863)324-3375, fax:
(863)325-8793, or e-mail: *Doris.Jamieson@usda.gov* , or *Christian.Nissen@usda.gov.* Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone:
(202)720-2491, fax:
(202)720-8938, or e-mail: *Jay.Guerber@usda.gov.* SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Agreement and Order No. 955, both as amended (7 CFR part 955), regulating the handling of Vidalia onions grown in Georgia, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” USDA is issuing this rule in conformance with Executive Order 12866. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. This rule continues in effect the action that revised the reporting and assessment requirements prescribed under the order. This rule continues in effect to change the reporting requirements for handlers from filing weekly shipment reports to monthly reporting. It also continues in effect to change when assessments are due and how delinquent assessments are handled. These changes are expected to benefit handlers without negatively affecting program compliance. The Committee unanimously recommended these changes at a meeting on January 19, 2006. Section 955.60 of the order provides authority for the Committee to require handlers to file reports and provide other information as may be necessary for the Committee to perform its duties. Section 955.101 of the regulations provides the requisite reporting requirements. Prior to this action, handlers were required to file weekly reports that included, among other things, the name and address of the handler, the period covered in the report, the total volume of Vidalia onions received by the handler, and the handler's total fresh market shipments. Section 955.42 provides the authority for the formulation of an annual budget of expenses and the collection of assessments from handlers to administer the order. Section 955.42(f) provides the authority to impose a late payment charge or an interest charge or both, on any handler who fails to pay assessments in a timely manner and the authority to establish the time and rate of such charges. Section 955.142 of the rules and regulations outlines the procedures for applying interest charges to delinquent assessments. This rule continues in effect the action that revised § 955.101 to require handlers to file shipping reports on a monthly basis rather than weekly. This rule also continues in effect the action that revised § 955.142 to specify when assessments are due and to adjust the way interest is applied to delinquent assessments. Previously, § 955.101 required handlers to provide the Committee with information regarding the volume of Vidalia onions they received and shipped during each week of the shipping season. The shipping reports were to be filed no later than 4 p.m. on the Tuesday immediately following the shipping week. The Committee provided a form to assist handlers with supplying the required shipping information. Fresh Vidalia onions are primarily shipped from April through June with some limited shipments through December with the use of Controlled Atmosphere storage. Handler reports are used by the Committee to calculate the assessments owed by each handler. When handler reports are not received in a timely manner, it delays the receipt of assessment payments and in turn, the collection process the Committee uses to pursue late payments. Thus, timely receipt of handler reports is important. In 2002, the Committee changed from monthly reporting and assessment collection to weekly (67 FR 58511). This change was made to address the problems the Committee staff was experiencing in receiving monthly reports and assessment payments in a timely manner. The change was made in an effort to provide an earlier indication to Committee staff of potential problems with handlers not reporting or paying their assessments so these potential problems could be addressed before the amounts involved grew to significant levels. After several seasons of weekly reporting, the Committee received requests from the industry to return to monthly reporting. It was reported that several handlers considered weekly reporting too cumbersome and unnecessary. In discussing this issue, Committee members stated that during harvest, handlers utilize all their resources to get the onions harvested and to market. They stated that weekly reporting is very time consuming and puts an additional burden on their staff to ensure weekly reports are submitted on time to avoid penalties and interest. In addition, many handlers do not ship onions every week of the season. Nevertheless, under the reporting requirements then in effect, handlers had to file a report each week. Committee members recognized that monthly reporting would reduce Committee expenditures. The Committee also recognized that several adjustments have been made in the compliance and assessment collection process which have helped address some of the problems relating to late reporting and assessment collection. The Committee has implemented an electronic tracking system to ensure all reports and assessment payments are received from each handler. A database has been created with each handler's name and the date reports are due. As reports are received from each handler, the data is entered into the computer. A detailed report listing all handlers, the date reports are due, and whether all handlers have submitted reports for each due date can be generated to assist with compliance efforts. If a handler fails to file a report for a specific reporting date, the tracking report reflects that information. The handler can then be notified that a report is due. The Committee has also hired a part-time compliance officer. The compliance officer visits handlers on a routine basis throughout the season to ensure compliance with the order, including the timely submission of reports and payment of assessments. Further, the Committee's compliance plan has been modified to better address late reports and assessment payments. Consequently, the Committee follows up more rapidly on late reports and assessments. These efforts will help prevent an accumulation of a large assessment debt from handlers. The Committee believes that the adjustments to its compliance and assessment collection process and the addition of a compliance officer better address the problems with late payment and reporting that were experienced previously during monthly reporting. Therefore, the Committee voted unanimously to return to monthly reporting. This rule also continues in effect to revise the rules and regulations specifying when reports and assessments are to be received by the Committee office. Prior to this change, handler reports and assessments were both due at 4 p.m. the Tuesday immediately following the week in which the shipments were made. This action continues in effect to change §§ 955.101 and 955.142 to require that reports and assessments must be submitted to the Committee office by 5 p.m. on the fifth day of each month following a month of active shipping. Should the fifth day of the month fall on a weekend or holiday, payments and reports are due by the first business day prior to the fifth day of the month. This rule also continues in effect to change the way delinquent assessments are handled to reflect the change to monthly reporting. Previously, § 955.142 specified that handlers must pay interest charges of 1 percent per week on any unpaid assessments and on any accrued unpaid interest beginning the day immediately after the date the weekly assessments were due, until the delinquent handler's assessments, plus applicable interest, had been paid in full. This rule continues in effect to revise § 955.142 by adjusting the way interest charges are applied so that interest accrues at 1 percent per month on any unpaid assessments and on any accrued unpaid interest beginning the day immediately after the date the monthly assessments are due until the delinquent handler's assessments plus applicable interest has been paid in full. Final Regulatory Flexibility Analysis Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service
(AMS)has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility. There are approximately 100 producers of Vidalia onions in the production area and approximately 100 handlers of Vidalia onions who are subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration
(SBA)as those having annual receipts of less than $750,000, and small agricultural service firms, which include handlers, are defined as those whose annual receipts are less than $6,500,000 (13 CFR 121.201). Based on the Georgia Agricultural Statistical Service and Committee data, the average annual grower price for fresh Vidalia onions during the 2005 season was around $12 per 40-pound bag. Total Vidalia onion shipments for the 2005 season were around 3,571,500 40-pound bags. Using available data, more than 90 percent of Vidalia onion handlers could be considered small businesses under the SBA definition. In addition, based on acreage, production, grower prices as reported by the National Agricultural Statistics Service, and the total number of Vidalia onion growers, the average annual grower revenue is below $750,000. Thus, the majority of handlers and producers of Vidalia onions may be classified as small entities. This rule continues in effect the action that revised the reporting and assessment requirements prescribed under the order. This rule continues in effect to change the reporting requirements for handlers from filing weekly shipment reports to monthly reporting. It also continues in effect to change when assessments are due and how delinquent assessments are handled. These changes reduce the number of reports a handler must submit annually and are expected to benefit handlers without negatively affecting program compliance. This rule continues in effect to revise §§ 955.101 and 955.142. Authority for this action is provided for in §§ 955.42 and 955.60 of the order. This change was unanimously recommended by the Committee at a meeting held on January 19, 2006. Requiring handlers to file shipping reports on a monthly basis rather than weekly reduces the reporting burden on both small and large handlers. Fresh Vidalia onions are primarily shipped from April through June with some limited shipments through December. Therefore, total reporting requirements per handler for weekly reporting totaled around 60 minutes per handler annually (5 minutes per response times approximately 12 responses). This resulted in a total annual industry burden of about 100 hours (60 minutes per handler times 100 handlers). Requiring handlers to report monthly decreases the annual burden on a handler to around 15 minutes annually (5 minutes per response times approximately 3 responses), for a total annual industry burden of approximately 25 hours (15 minutes times 100 handlers). Thus, the total annual burden for handlers is decreased by around 75 hours, which is expected to benefit all handlers. This rule is not expected to result in any additional costs for handlers. This rule continues in effect to reduce the number of reports and assessment payments handlers are required to submit annually, which reduces the amount of time necessary for handlers to file reports and assessments. It also continues in effect to reduce the amount of time required by the Committee staff to monitor shipping reports and assessment payments by reducing the number of submissions. Thus, this rule offers the potential for cost savings. The potential reduction in Committee costs would benefit all handlers regardless of their size. Consequently, the benefits of this rule are expected to be equally available to all. The Committee did consider the alternative of making no change in the regulation. However, the change to monthly reporting reduces the number of reports a handler must submit annually and the Committee believes it benefits handlers without negatively affecting program compliance. Therefore, this alternative was rejected and the Committee unanimously agreed to return to monthly reporting and assessment collection requirements. The AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirements contained in this rule have been previously approved by the Office of Management and Budget
(OMB)and assigned OMB No. 0581-0178, Vegetable and Specialty Crops. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, as noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule. Further, the Committee's meeting was widely publicized throughout the Vidalia onion industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the January 19, 2006, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. An interim final rule concerning this action was published in the **Federal Register** on June 15, 2006. Copies of the rule were mailed by the Committee's staff to all Committee members and Vidalia onion handlers. In addition, the rule was made available through the Internet by USDA and the Office of the Federal Register. That rule provided for a 60-day comment period which ended August 14, 2006. No comments were received. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: *http://www.ams.usda.gov/fv/moab.html.* Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the **Federal Register** (71 FR 34507, June 15, 2006) will tend to effectuate the declared policy of the Act. List of Subjects in 7 CFR Part 955 Onions, Marketing agreements, Reporting and recordkeeping requirements. PART 955—VIDALIA ONIONS GROWN IN GEORGIA Accordingly, the interim final rule amending 7 CFR part 955 which was published at 71 FR 34507 on June 15, 2006, is adopted as a final rule without change. Dated: September 27, 2006. Kenneth C. Clayton, Associate Administrator, Agricultural Marketing Service. [FR Doc. E6-16257 Filed 10-2-06; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Part 77 [Docket No. APHIS-2006-0145] Tuberculosis in Cattle and Bison; State and Zone Designations; Texas AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Interim rule and request for comments. SUMMARY: We are amending the bovine tuberculosis regulations regarding State and zone classifications by raising the designation of Texas from modified accredited advanced to accredited-free. We have determined that Texas meets the criteria for designation as an accredited-free State. DATES: This interim rule is effective September 29, 2006. We will consider all comments that we receive on or before December 4, 2006. ADDRESSES: You may submit comments by either of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov,* select “Animal and Plant Health Inspection Service” from the agency drop-down menu, then click “Submit.” In the Docket ID column, select APHIS-2006-0145 to submit or view public comments and to view supporting and related materials available electronically. Information on using *Regulations.gov,* including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. • *Postal Mail/Commercial Delivery:* Please send four copies of your comment (an original and three copies) to Docket No. APHIS-2006-0145, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state that your comment refers to Docket No. APHIS-2006-0145. *Reading Room:* You may read any comments that we receive on this docket in our reading room. The reading room is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue, SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call
(202)690-2817 before coming. *Other Information:* Additional information about APHIS and its programs is available on the Internet at *http://www.aphis.usda.gov.* FOR FURTHER INFORMATION CONTACT: Dr. Kathy Orloski, Epidemiologist, National Tuberculosis Eradication Program, National Center for Animal Health Programs, VS, APHIS, 2150 Centre Avenue, Building B, M/S 3E20, Fort Collins, CO 80526-8117,
(970)494-7221. SUPPLEMENTARY INFORMATION: Background Bovine tuberculosis is a contagious and infectious granulomatous disease caused by *Mycobacterium bovis* . It affects cattle, bison, deer, elk, goats, and other warm-blooded species, including humans. Tuberculosis in infected animals and humans manifests itself in lesions of the lung, lymph nodes, bone, and other body parts, causes weight loss and general debilitation, and can be fatal. At the beginning of the past century, tuberculosis caused more losses of livestock than all other livestock diseases combined. This prompted the establishment of the National Cooperative State/Federal Bovine Tuberculosis Eradication Program for tuberculosis in livestock. Through this program, the Animal and Plant Health Inspection Service (APHIS) works cooperatively with the national livestock industry and State animal health agencies to eradicate tuberculosis from domestic livestock in the United States and prevent its recurrence. Federal regulations implementing this program are contained in 9 CFR part 77, “Tuberculosis” (referred to below as the regulations), and in the “Uniform Methods and Rules—Bovine Tuberculosis Eradication” (UMR), which is incorporated by reference into the regulations. The regulations restrict the interstate movement of cattle, bison, and captive cervids to prevent the spread of tuberculosis. Subpart B of the regulations contains requirements for the interstate movement of cattle and bison not known to be infected with or exposed to tuberculosis. The interstate movement requirements depend upon whether the animals are moved from an accredited-free State or zone, modified accredited advanced State or zone, modified accredited State or zone, accreditation preparatory State or zone, or nonaccredited State or zone. Request for Accredited-free Status in Texas The entire State of Texas has been classified as modified accredited advanced for cattle and bison since June 3, 2002. Prior to that date, all of the State, except for a portion of El Paso and Hudspeth Counties, had been classified as an accredited-free zone; the zone in El Paso and Hudspeth Counties had been classified as modified accredited advanced. However, we have received from the State of Texas a request to be recognized as an accredited-free State for cattle and bison. With regard to cattle and bison, State animal health officials in Texas have demonstrated to APHIS that Texas meets the criteria for accredited-free status set forth in the definition of *accredited-free State or zone* in § 77.5 of the regulations. In accordance with these conditions, Texas has demonstrated that the zone within the State that had been previously classified as accredited-free has zero percent prevalence of affected cattle or bison herds and has had no findings of tuberculosis in any cattle or bison herds in the 2 years since the depopulation of the last affected herd in the zone. Similarly, with respect to the zone in El Paso and Hudspeth Counties that was not previously accredited-free, Texas has demonstrated that the zone has zero percent prevalence of affected cattle or bison herds and has had no findings of tuberculosis in any cattle or bison herds for the previous 5 years. Additionally, the State complies with the conditions of the UMR. Therefore, we are amending the regulations to remove Texas from the list of modified accredited advanced States in § 77.9(a) and adding it to the list of accredited-free States in § 77.7(a). Nonsubstantive Correction In § 77.9(b), the words “The following are modified accredited advanced zones:” appear as the introductory text of the paragraph and are repeated at the beginning of paragraph (b)(1). We are amending paragraph (b)(1) in this rule to eliminate that duplication. Immediate Action Immediate action is warranted to accurately reflect the current tuberculosis status of Texas as an accredited-free State. This action will provide prospective cattle and bison buyers with accurate and up-to-date information, which may affect the marketability of cattle and bison since some prospective buyers prefer to buy cattle and bison from accredited-free States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this action effective less than 30 days after publication in the **Federal Register** . We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the **Federal Register** . The document will include a discussion of any comments we receive and any amendments we are making to the rule. Executive Order 12866 and Regulatory Flexibility Act This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866. We are amending the bovine tuberculosis regulations regarding State and zone classifications by raising the designation of Texas from modified accredited advanced to accredited-free. We have determined that Texas meets the criteria for designation as an accredited-free State. Cattle or bison that originate in an accredited-free State or zone may be moved interstate without restriction, whereas sexually intact cattle and bison not from an accredited herd are required to have one negative test within 60 days prior to being moved interstate from a modified accredited advanced State or zone. Thus, raising Texas's designation to accredited-free will eliminate the costs of that testing for herd owners in the State. Tuberculosis testing, which includes veterinary fees and handling expenses, costs approximately $10 to $15 per test. The average per-head value of cattle in Texas was $840 in 2005, so the cost of testing represented between 1.2 and 1.8 percent of that average value. These cost savings, while beneficial, will not represent a significant monetary savings. Of course, the more a particular herd owner is involved in interstate movement, the greater the cost savings will be. Cattle and bison are moved interstate for slaughter, for use as breeding stock, or for feeding. In 2002, there were 13.979 million cattle and calves in Texas and approximately 122,194 farms with sales of cattle and calves. Over 99 percent of herd owners would be considered small businesses. Changing the status of Texas may enhance the marketability of cattle and bison from the State, since some prospective cattle and bison buyers prefer to buy cattle and bison from accredited-free States. This may also result in some beneficial economic impact on some small entities. However, based on our experience in similar designations of other States, the impact should not be significant. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities. Executive Order 12372 This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.) Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule:
(1)Preempts all State and local laws and regulations that are in conflict with this rule;
(2)has no retroactive effect; and
(3)does not require administrative proceedings before parties may file suit in court challenging this rule. Paperwork Reduction Act This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). List of Subjects in 9 CFR Part 77 Animal diseases, Bison, Cattle, Reporting and recordkeeping requirements, Transportation, Tuberculosis. Accordingly, we are amending 9 CFR part 77 as follows: PART 77—TUBERCULOSIS 1. The authority citation for part 77 continues to read as follows: Authority: 7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4. § 77.7 [Amended] 2. In § 77.7, paragraph
(a)is amended by adding the word “Texas,” immediately after the word “Tennessee,”. § 77.9 [Amended] 3. Section 77.9 is amended as follows: a. In paragraph (a), by removing the words “and Texas”. b. In paragraph (b)(1), by removing the words “The following are modified accredited advanced zones:”. Done in Washington, DC, this 28th day of September 2006. W. Ron DeHaven, Administrator, Animal and Plant Health Inspection Service. [FR Doc. E6-16299 Filed 10-2-06; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. 2003-NE-12-AD; Amendment 39-14609; AD 2006-11-05] RIN 2120-AA64 Airworthiness Directives; Rolls-Royce plc RB211 Series Turbofan Engines; Correction AGENCY: Federal Aviation Administration, DOT. ACTION: Final rule; correction. SUMMARY: This document makes a correction to Airworthiness Directive
(AD)2006-11-05 applicable to Rolls-Royce plc
(RR)RB211-22B series, RB211-524B, -524C2, -524D4, -524G2, -524G3, and -524H series, and RB211-535C and -535E series turbofan engines with high pressure compressor
(HPC)stage 3 disc assemblies, part numbers (P/Ns) LK46210, LK58278, LK67634, LK76036, UL11706, UL15358, UL22577, UL22578, and UL24738 installed. That AD published in the **Federal Register** on May 23, 2006 (71 FR 29586). The “-524B-02, B-B-02, B3-02, and B4 series, Pre SB No. 72-7730” in the Regulatory section is incorrect. This document corrects that requirement. In all other respects, the original document remains the same. DATES: *Effective Date:* October 3, 2006. FOR FURTHER INFORMATION CONTACT: Ian Dargin, Aerospace Engineer, Engine Certification Office, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; telephone
(781)238-7178; fax
(781)238-7199. SUPPLEMENTARY INFORMATION: A final rule AD FR Doc, 06-4713 applicable to RR RB211-22B series, RB211-524B, -524C2, -524D4, -524G2, -524G3, and -524H series, and RB211-535C and -535E series turbofan engines with high pressure compressor
(HPC)stage 3 disc assemblies, part numbers (P/Ns) LK46210, LK58278, LK67634, LK76036, UL11706, UL15358, UL22577, UL22578, and UL24738 installed, was published in the **Federal Register** on May 23, 2006 (71 FR 29586). The following correction is needed: § 39.13 [Corrected] On page 29587, in the first column of Table 1, in the second row, in the third line, “-524B-02, B-B-02, B3-02, and B4 series, Pre SB No. 72-7730” is corrected to read “-524B-02, B-B-02, B3-02, and B4 series, Pre and Post accomplishment of SB No. 72-7730”. Issued in Burlington, Massachusetts, on September 26, 2006. Peter A. White, Acting Manager, Engine and Propeller Directorate, Aircraft Certification Service. [FR Doc. E6-16235 Filed 10-2-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 30516; Amdt. No. 3187] Standard Instrument Approach Procedures; Miscellaneous Amendments AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This amendment amends Standard Instrument Approach Procedures (SIAPs) for operations at certain airports. These regulatory actions are needed because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, addition of new obstacles, or changes in air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports. DATES: This rule is effective October 3, 2006. The compliance date for each SIAP is specified in the amendatory provisions. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 3, 2006. ADDRESSES: Availability of matter incorporated by reference in the amendment is as follows: *For Examination* — 1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Ave., SW., Washington, DC 20591; 2. The FAA Regional Office of the region in which affected airport is located; or 3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or, 4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.* *For Purchase* —Individual SIAP copies may be obtained from: 1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; or 2. The FAA Regional Office of the region in which the affected airport is located. *By Subscription* —Copies of all SIAPs, mailed once every 2 weeks, are for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. FOR FURTHER INFORMATION CONTACT: Donald P. Pate, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (mail address: P.O. Box 25082 Oklahoma City, OK 73125); telephone:
(405)954-4164. SUPPLEMENTARY INFORMATION: This amendment to Title 14, Code of Federal Regulations, part 97 (14 CFR part 97) amends Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in the appropriate FAA Form 8260, as modified by the the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), which is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Code of Federal Regulations. Materials incorporated by reference are available for examination or purchase as stated above. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the **Federal Register** expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number. The Rule This amendment to 14 CFR Part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P-NOTAMs. The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments require making them effective in less than 30 days. Further, the SIAPs contained in this amendment are based on the criteria contained in TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days. Conclusion The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866;
(2)is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and
(3)does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. List of Subjects in 14 CFR Part 97 Air Traffic Control, Airports, Incorporation by Reference, and Navigation (Air). Issued in Washington, DC on September 22, 2006. James J. Ballough, Director, Flight Standards Service. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722. 2. Part 97 is amended to read as follows: §§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33 and 97.35 [Amended] By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, ISMLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows: * * * Effective Upon Publication FDC Date State City Airport FDC No. Subject 09/13/06 FM WENO ISLAND CHUUK INTL 6/0004 RNAV
(GPS)RWY 4, ORIG 09/13/06 MP SAIPAN ISLAND FRANCISCO C. ADA/SAIPAN INTL 6/0005 GPS RWY 25, AMDT 1 09/13/06 MP SAIPAN ISLAND FRANCISCO C. ADA/SAIPAN INTL 6/0009 GPS RWY 7, ORIG 09/13/06 MQ SAND ISLAND HENDERSON FIELD/MIDWAY ATOLL 6/0011 RNAV
(GPS)RWY 24, ORIG 09/13/06 MQ SAND ISLAND HENDERSON FIELD/MIDWAY ATOLL 6/0012 RNAV
(GPS)RWY 6, ORIG 09/13/06 CQ ROTA ISLAND ROTA INTL 6/0013 GPS RWY 27, ORIG-A 09/13/06 CQ ROTA ISLAND ROTA INTL 6/0014 GPS RWY 9, ORIG-A 09/13/06 CQ ROTA ISLAND ROTA INTL 6/0015 NDB RWY 27, AMDT 3A 09/15/06 FL FORT MYERS SOUTHWEST FLORIDA INTL 6/0222 RNAV
(GPS)RWY 24, AMDT 1 09/15/06 FL FORT MYERS SOUTHWEST FLORIDA INTL 6/0224 RNAV
(GPS)RWY 6, AMDT 1 09/18/06 IA WATERLOO WATERLOO REGIONAL 6/0498 ILS OR LOC RWY 12, AMDT 8C 09/07/06 NY PLATTSBURGH PLATTSBURGH INTL 6/9204 ILS RWY 17, AMDT 1B 09/07/06 ME AUGUSTA AUGUSTA STATE 6/9252 ILS OR LOC RWY 17, AMDT 2D 09/07/06 FL DAYTONA BEACH DAYTONA BEACH INTL 6/9253 RNAV
(GPS)Y RWY 7L, ORIG 09/07/06 FL WEST PALM BEACH PALM BEACH INTL 6/9313 RNAV
(GPS)RWY 13, AMDT 1 09/07/06 FL GAINESVILLE GAINESVILLE REGIONAL 6/9316 ILS OR LOC RWY 29, AMDT 12B 09/07/06 FL GAINESVILLE GAINESVILLE REGIONAL 6/9319 VOR RWY 29, ORIG-C 09/07/06 FL GAINESVILLE GAINESVILLE REGIONAL 6/9321 VOR/DME RWY 11, ORIG-B 09/07/06 FL GAINESVILLE GAINESVILLE REGIONAL 6/9323 RNAV
(GPS)RWY 11, AMDT 1 09/07/06 NC CHARLOTTE CHARLOTTE/DOUGLAS INTL 6/9356 ILS OR LOC RWY 36L, ILS RWY 36L(CAT II), ILS RWY 36L(CAT III), AMDT 15A 09/08/06 VA CULPEPER CULPEPER REGIONAL 6/9410 VOR OR GPS-A, AMDT 4A 09/08/06 WY CHEYENNE CHEYENNE REGIONAL/JERRY OLSON FIELD 6/9491 RADAR-1, AMDT 1 09/08/06 CA LONG BEACH LONG BEACH/DAUGHERTY FIELD 6/9591 RNAV
(GPS)RWY 30, AMDT 1A 09/11/06 ID BURLEY BURLEY MUNI 6/9607 VOR A, AMDT 4 09/11/06 WY KEMMERER KEMMERER MUNI 6/9640 RNAV
(GPS)RWY 34, ORIG 09/11/06 OR PRINEVILLE PRINEVILLE MUNI 6/9641 RNAV
(GPS)RWY 28, ORIG 09/11/06 OR PORTLAND PORTLAND INTL 6/9642 RNAV
(GPS)RWY 10R, ORIG 09/11/06 ID BURLEY BURLEY MUNI 6/9646 VOR/DME B, AMDT 4 09/11/06 OR BURNS BURNS MUNI 6/9661 VOR RWY 30, AMDT 3 09/11/06 WA SEATTLE BOEING FIELD/KING COUNTY INTL 6/9662 ILS RWY 13R, AMDT 28B 09/11/06 WA SEATTLE BOEING FIELD/KING COUNTY INTL 6/9663 RNAV
(GPS)RWY 13R, ORIG 09/12/06 FL FORT LAUDERDALE FORT LAUDERDALE EXECUTIVE 6/9665 ILS RWY 8, AMDT 4C 09/11/06 NY PENN YAN PENN YAN 6/9724 NDB RWY 19, AMDT 6A 09/11/06 NY PENN YAN PENN YAN 6/9726 RNAV
(GPS)RWY 19, ORIG 09/12/06 ME AUBURN-LEWISTON AUBURN-LEWISTON MUNI 6/9736 ILS OR LOC RWY 4, AMDT 10 09/12/06 ME WATERVILLE WATERVILLE ROBERT LAFLEUR 6/9740 ILS RWY 5, AMDT 2 09/12/06 DE WILMINGTON NEW CASTLE 6/9741 VOR RWY 9, AMDT 6A 09/12/06 DE WILMINGTON NEW CASTLE 6/9742 MLS RWY 9, ORIG-A 09/12/06 DE WILMINGTON NEW CASTLE 6/9743 VOR OR GPS RWY 19, AMDT 4A 09/12/06 GA AMERICUS SOUTHER FIELD 6/9750 ILS OR LOC/NDB RWY 23, ORIG 09/12/06 GA AMERICUS SOUTHER FIELD 6/9752 RNAV
(GPS)RWY 5, ORIG 09/12/06 GA AMERICUS SOUTHER FIELD 6/9755 RNAV
(GPS)RWY 23, ORIG 09/12/06 NY PENN YAN PENN YAN 6/9844 NDB RWY 28, AMDT 6A 09/12/06 MI DETROIT DETROIT METROPOLITAN WAYNE COUNTY 6/9847 ILS RWY 4R, AMDT 15 09/12/06 MI DETROIT DETROIT METROPOLITAN WAYNE COUNTY 6/9848 ILS RWY 4R (CAT III), AMDT 15 09/12/06 MI DETROIT DETROIT METROPOLITAN WAYNE COUNTY 6/9849 ILS RWY 4R (CAT II), AMDT 15 [FR Doc. E6-16092 Filed 10-2-06; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 30515 Amdt. No. 3187] Standard Instrument Approach Procedures, Weather Takeoff Minimums; Miscellaneous Amendments AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This amendment establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs) and/or Weather Takeoff Minimums for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, addition of new obstacles, or changes in air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports. DATES: This rule is effective October 3, 2006. The compliance date for each SIAP and/or Weather Takeoff Minimums is specified in the amendatory provisions. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 3, 2006. ADDRESSES: Availability of matters incorporated by reference in the amendment is as follows: *For Examination* — 1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; 2. The FAA Regional Office of the region in which the affected airport is located; 3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or, 4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . *For Purchase* —Individual SIAP and Weather Takeoff Minimums copies may be obtained from: 1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; or 2. The FAA Regional Office of the region in which the affected airport is located. *By Subscription* —Copies of all SIAPs and Weather Takeoff Minimums mailed once every 2 weeks, are for sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. FOR FURTHER INFORMATION CONTACT: Donald P. Pate, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK. 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK. 73125) telephone:
(405)954-4164. SUPPLEMENTARY INFORMATION: This amendment to Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), establishes, amends, suspends, or revokes SIAPs and/or Weather Takeoff Minimums. The complete regulatory description of each SIAP and/or Weather Takeoff Minimums is contained in official FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms are identified as FAA Forms 8260-3, 8260-4, 8260-5 and 8260-15A. Materials incorporated by reference are available for examination or purchase as stated above. The large number of SIAPs and/or Weather Takeoff Minimums, their complex nature, and the need for a special format make their verbatim publication in the **Federal Register** expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs and/or Weather Takeoff Minimums but refer to their depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP and/or Weather Takeoff Minimums contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR sections, with the types and effective dates of the SIAPs and/or Weather Takeoff Minimums. This amendment also identifies the airport, its location, the procedure identification and the amendment number. The Rule This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and/or Weather Takeoff Minimums as contained in the transmittal. Some SIAP and/or Weather Takeoff Minimums amendments may have been previously issued by the FAA in a Flight Data Center
(FDC)Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP, and/or Weather Takeoff Minimums amendments may require making them effective in less than 30 days. For the remaining SIAPs and/or Weather Takeoff Minimums, an effective date at least 30 days after publication is provided. Further, the SIAPs and/or Weather Takeoff Minimums contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and/or Weather Takeoff Minimums, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs and/or Weather Takeoff Minimums and safety in air commerce, I find that notice and public procedure before adopting these SIAPs and/or Weather Takeoff Minimums are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs and/or Weather Takeoff Minimums effective in less than 30 days. Conclusion The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866;
(2)is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and
(3)does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. List of Subjects in 14 CFR Part 97 Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air). Issued in Washington, DC on September 22, 2006. James J. Ballough, Director, Flight Standards Service. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, under Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and Weather Takeoff Minimums effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722. 2. Part 97 is amended to read as follows: Effective 26 October 2006 Fort Myers, FL, Southwest Florida Intl, RADAR-2, Orig Fort Myers, FL, Southwest Florida Intl, Takeoff Minimums and Textual DP, Orig State College, PA, University Park, RNAV
(GPS)RWY 6, Orig-A Effective 23 November 2006 Mekoryuk, AK, Mekoryuk, RNAV
(GPS)RWY 5, Orig Mekoryuk, AK, Mekoryuk, RNAV
(GPS)RWY 23, Orig Mekoryuk, AK, Mekoryuk, NDB-B, Orig Mekoryuk, AK, Mekoryuk, NDB/DME-A, Amdt 4 Mekoryuk, AK, Mekoryuk, GPS RWY 23, Orig, CANCELLED Mekoryuk, AK, Mekoryuk, NDB RWY 23, Amdt 2, CANCELLED Mekoryuk, AK, Mekoryuk, Takeoff Minimums and Textual DP, Amdt. 1 Mekoryuk, AK, Mekoryuk, DF RWY 23, Amdt 1 Butler, AL, Butler-Choctaw County, RNAV
(GPS)RWY 11, Orig Butler, AL, Butler-Choctaw County, RNAV
(GPS)RWY 29, Orig Butler, AL, Butler-Choctaw County, NDB OR GPS RWY 11, Amdt 2B, CANCELLED Butler, AL, Butler-Choctaw County, Takeoff Minimums and Textual DP, Orig Butler, GA, Butler Muni, RNAV
(GPS)RWY 18, Orig Butler, GA, Butler Muni, RNAV
(GPS)RWY 36, Orig Butler, GA, Butler Muni, Takeoff Minimums and Textual DP, Orig Davenport, IA, Davenport Muni, RNAV
(GPS)RWY 15, Amdt 1 Topeka, KS, Philip Billard Muni, RNAV
(GPS)RWY 18, Amdt 1 Topeka, KS, Philip Billard Muni, RNAV
(GPS)RWY 22, Amdt 1 Oakdale, LA, Allen Parish, RNAV
(GPS)RWY 36, Amdt 1 Oakdale, LA, Allen Parish, NDB RWY 36, Amdt 1 Oakdale, LA, Allen Parish, Takeoff Minimums and Textual DP, Orig Kalispell, MT, Glacier Park Intl, ILS OR LOC RWY 2, Amdt 5 Austin, TX, Austin-Bergstrom Intl, Takeoff Minimums and Textual DP, Amdt 1 Big Lake, TX, Reagan County, RNAV
(GPS)RWY 16, Orig Big Lake, TX, Reagan County, GPS RWY 16, Orig, CANCELLED Big Lake, TX, Reagan County, Takeoff Minimums and Textual DP, Amdt 1 Paris, TX, Cox Field, RNAV
(GPS)RWY 17, Orig Paris, TX, Cox Field, RNAV
(GPS)RWY 35, Orig Paris, TX, Cox Field, VOR RWY 35, Amdt 2 Paris, TX, Cox Field, Takeoff Minimums and Textual DP, Orig The FAA published an Amendment in Docket No. 30513, Amdt No. 3184 to Part 97 if the Federal Aviation Regulations (Vol 71, FR No. 179, Page 54405; dated Friday, September 15, 2006) under section 97.33 effective 23 November 2006, which is hereby *rescinded:* St. George, UT, St George Muni, RNAV
(GPS)RWY 34, Amdt 1A [FR Doc. E6-16093 Filed 10-2-06; 8:45 am] BILLING CODE 4910-13-P SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 270 [Release No. IC-27504; File No. S7-06-06; File No. 4-512] RIN 3235-AJ51 Mutual Fund Redemption Fees AGENCY: Securities and Exchange Commission. ACTION: Final rule. SUMMARY: The Securities and Exchange Commission (“Commission” or “SEC”) is adopting amendments to a rule under the Investment Company Act. The rule, among other things, requires most open-end investment companies (“funds”) to enter into agreements with intermediaries, such as broker-dealers, that hold shares on behalf of other investors in so called “omnibus accounts.” These agreements must provide funds access to information about transactions in these accounts to enable the funds to enforce restrictions on market timing and similar abusive transactions. The Commission is amending the rule to clarify the operation of the rule and reduce the number of intermediaries with which funds must negotiate shareholder information agreements. The amendments are designed to reduce the costs to funds (and fund shareholders) while still achieving the goals of the rulemaking. DATES: *Effective Date:* December 4, 2006. *Compliance Dates:* Section III of this Release contains more information on applicable compliance dates. FOR FURTHER INFORMATION CONTACT: Thoreau Bartmann, Staff Attorney, or C. Hunter Jones, Assistant Director, Office of Regulatory Policy
(202)551-6792, Division of Investment Management, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-5041. SUPPLEMENTARY INFORMATION: The Commission today is adopting amendments to rule 22c-2 1 under the Investment Company Act of 1940 2 (the “Investment Company Act” or the “Act”). 3 1 17 CFR 270.22c-2. 2 15 U.S.C. 80a. 3 Unless otherwise noted, all references to statutory sections are to the Investment Company Act, and all references to “rule 22c-2,” “the rule,” or any paragraph of the rule will be to 17 CFR 270.22c-2. Table of Contents I. Background II. Discussion A. Shareholder Information Agreements 1. Small Intermediaries 2. Intermediary Chains 3. Effect of Lacking an Agreement B. Operation of the Rule C. Redemption Fees III. Compliance Dates IV. Cost-Benefit Analysis V. Consideration of Promotion of Efficiency, Competition and Capital Formation VI. Paperwork Reduction Act VII. Final Regulatory Flexibility Analysis VIII. Statutory Authority Text of Amended Rule I. Background On March 11, 2005, the Commission adopted rule 22c-2 under the Investment Company Act to help address abuses associated with short-term trading of fund shares. 4 Rule 22c-2 provides that if a fund redeems its shares within seven days, 5 its board must consider whether to impose a fee of up to two percent of the value of shares redeemed shortly after their purchase (“redemption fee”). 6 The rule also requires such a fund to enter into agreements with its intermediaries that provide fund management the ability to identify investors whose trading violates fund restrictions on short-term trading (“shareholder information agreements”). 7 4 *See* Mutual Fund Redemption Fees, Investment Company Act Release No. 26782 (Mar. 11, 2005) [70 FR 13328 (Mar. 18, 2005)] (“Adopting Release”). 5 Because the large majority of funds redeem shares within seven days of purchase, the practical effect of rule 22c-2, and these amendments, would be to require most funds to comply with the rule's requirements. Therefore, throughout this Release we may describe funds as being “required to comply” with a provision of the rule, when the actual requirement only applies if a fund redeems its shares within seven days. A fund that does not redeem its shares within seven days would not be required to comply with those provisions of rule 22c-2. 6 Rule 22c-2(a)(1). Under the rule, the board of directors must either
(i)approve a fee of up to 2% of the value of shares redeemed, or
(ii)determine that the imposition of a fee is not necessary or appropriate. *Id.* A board, on behalf of the fund, may determine that the imposition of a redemption fee is unnecessary or inappropriate because, for example, the fund is not vulnerable to frequent trading or the nature of the fund makes it unlikely that the fund would be harmed by frequent trading. Indeed, a redemption fee is not the only method available to a fund to address frequent trading in its shares. As we have stated in previous releases, funds have adopted different methods to address frequent trading, including:
(i)Restricting exchange privileges;
(ii)limiting the number of trades within a specified period;
(iii)delaying the payment of proceeds from redemptions for up to seven days (the maximum delay permitted under section 22(e) of the Act);
(iv)satisfying redemption requests in-kind; and
(v)identifying market timers and restricting their trading or barring them from the fund. *See* Adopting Release, *supra* note 4, at n.9; Disclosure Regarding Market Timing and Selective Disclosure of Portfolio Holdings, Investment Company Act Release No. 26287 (Dec. 11, 2003) [68 FR 70402 (Dec. 17, 2003)] at text preceding and following n.14. 7 Under the rule, the fund (or its principal underwriter) must enter into a written agreement with each of its financial intermediaries under which the intermediary agrees to
(i)provide, at the fund's request, identity and transaction information about shareholders who hold their shares through an account with the intermediary, and
(ii)execute instructions from the fund to restrict or prohibit future purchases or exchanges. The fund must keep a copy of each written agreement for six years. Rule 22c-2(a)(2), (3). After hearing concerns about the operation of the information sharing provisions of the rule from fund management companies, in March of this year we proposed amendments that would reduce the costs of compliance and clarify the rule's application in certain circumstances. 8 The amendments are described in more detail below. We received 32 comment letters on the proposed amendments. 9 Most commenters supported the proposal. Today we are adopting those amendments substantially as proposed, with some changes that reflect the comments we received. 8 *See* Mutual Fund Redemption Fees, Investment Company Act Release No. 27255 (Feb. 28, 2006) [71 FR 11351 (Mar. 7, 2006)] (“2006 Proposing Release”). 9 Comment letters on the 2006 Proposing Release are available in File No. S7-06-06, which is accessible at *http://www.sec.gov/rules/proposed/s70606.shtml.* Comment letters on the 2005 adoption are available in File No. S7-11-04, which is accessible at *http://www.sec.gov/rules/proposed/s71104.shtml.* References to comment letters are to letters in those files. II. Discussion A. Shareholder Information Agreements The amendments to rule 22c-2 we are adopting today
(i)limit the types of intermediaries with which funds must enter into shareholder information agreements,
(ii)address the rule's application when there are chains of intermediaries, and
(iii)clarify the effect of a fund's failure to obtain an agreement with any of its intermediaries. 1. Small Intermediaries Rule 22c-2 prohibits a fund from redeeming shares within seven days unless, among other things, the fund enters into written agreements with its financial intermediaries (such as broker-dealers or retirement plan administrators) that hold shares on behalf of other investors. 10 Under those agreements, the intermediaries must agree to provide, at the fund's request, shareholder identity ( *i.e.* , taxpayer identification number or “TIN” 11 ) and transaction information, 12 and carry out instructions from the fund to restrict or prohibit further purchases or exchanges by a shareholder (as identified by the fund) who has engaged in trading that violates the fund's frequent trading ( *e.g.* market timing) policies. 13 We designed this provision to enable funds to obtain the information that they need to monitor short-term trading in omnibus accounts and enforce their market timing policies. 10 Rule 22c-2(a)(2). The rule excepts a fund from the requirement to enter into written agreements if, among other things, the fund “affirmatively permits short-term trading of its securities.” See rule 22c-2(b)(3). “Financial intermediary” is defined in rule 22c-2(c)(1). 11 Some commenters noted that in the case of foreign shareholders, TINs may not always be available, and suggested that the rule permit alternate identifiers in those circumstances. *See* Comment Letter of the Investment Company Institute (“ICI”) (Apr. 10, 2006). In order to accommodate the use of alternative identifiers in those circumstances, we have revised the rule to allow for the use of Individual Taxpayer Identification Numbers (“ITINs”) or other government issued identifiers to identify foreign shareholders if a TIN is unavailable. *See* rule 22c-2(c)(5)(i). 12 One comment letter submitted after the adoption of rule 22c-2 expressed concern that the rule's contract provision, requiring that agreements with intermediaries mandate the disclosure of shareholder information at the fund's request, conflicts with Commission rules governing proxy solicitations. *See* Comment Letter of the American Bankers Assoc. (June 6, 2005). The Commission's proxy solicitation rules are set forth in Regulation 14A under the Securities Exchange Act of 1934, 17 CFR 240.14a-1 to 14b-2. The proxy rules govern the disclosure of information in the context of proxy solicitations, and do not prohibit banks, broker-dealers and other intermediaries from complying with agreements entered under rule 22c-2. See 2006 Proposing Release, *supra* note 8, at n.17. 13 *See* rule 22c-2(c)(5) (defining “shareholder information agreement,” which is discussed further in Section II.B below). After we adopted the rule in 2005, many fund managers expressed concern that the rule would require them to review a large number of their shareholder accounts in order to determine which shareholders are “financial intermediaries” as defined under the rule. 14 They noted that, because the definition encompassed any entity that holds securities in nominee name for other investors, it would include, for example, a small business retirement plan that holds mutual fund shares on behalf of only a few employees and that may not identify itself as a financial intermediary to the fund. These commenters emphasized that the task of identifying these intermediaries, as well as negotiating agreements with them, would be costly and burdensome. 14 *See, e.g.* , Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). To address these concerns, earlier this year we proposed to narrow the scope of the rule by excluding from the definition of “financial intermediary” those intermediaries that the fund treats as individual investors for purpose of the fund's frequent trading policies. Our proposal was premised on the understanding that when a fund places restrictions on transactions at the intermediary level ( *i.e.* , when the fund treats the intermediary itself as an individual investor), the fund is unlikely to need data about frequent trading by individual shareholders who hold shares through that intermediary, because abusive short-term trading by the individual shareholders holding through the omnibus account would ordinarily trigger application of those policies to the intermediary's trades. 15 Therefore, transparency regarding underlying shareholder transactions executed through these accounts seemed unnecessary to achieve the goals of the rule. We believed that this new approach would substantially eliminate the need for funds to devote resources to identifying intermediaries, because the funds will have already identified the relevant intermediaries in the course of administering their policies on short-term trading. Commenters agreed with our analysis and urged that we adopt the amendments. 16 15 A fund typically exempts from its frequent trading policies the transactions of an intermediary that holds fund shares, on behalf of its customers, in an omnibus account with the fund. *See, e.g.* , Mandatory Redemption Fees For Redeemable Fund Securities, Investment Company Act Release No. 26375A, at text accompanying n. 39 (Mar. 5, 2004) [69 FR 11762 (Mar. 11, 2004)] (“2004 Proposing Release”). The fund exempts the intermediary because the daily changes in the intermediary's position, on behalf of its various customers' purchases and redemptions, result in a single purchase or redemption each day in the intermediary's omnibus account. If the intermediary were not exempt, its daily net trades would likely subject it to redemption fees or trading limitations. See The Coalition of Mutual Fund Investors, An Evaluation of the Redemption Fee and Market Timing Policies of the Largest Mutual Fund Groups (May 5, 2005) ( *available at http://www.investorscoalition.com/CMFIMarketTimingStudy05.pdf.* ). 16 *See, e.g.* , Comment Letter of the Investment Company Institute (Apr. 10, 2006); Comment Letter of Charles Schwab & Co., Inc. (Apr. 10, 2006). Today we are amending the definition of “financial intermediary” in rule 22c-2 to exclude from that definition any entity that the fund treats as an “individual investor” for purposes of the fund's policies intended to eliminate or reduce dilution of the value of fund shares, *i.e.* , frequent trading and redemption fee policies. 17 As a result, if a fund, for example, applies a redemption fee or exchange limits to transactions by a retirement *plan* (an intermediary) rather than to the purchases and redemptions of the *employees* in the plan, then the plan would not be considered a “financial intermediary” under the rule, and the fund would not be required to enter into an agreement with that plan. 18 17 Rule 22c-2(c)(1)(iv). If a fund has not established frequent trading policies and thus has not determined which persons it does not treat as individual investors, this exclusion from the definition of “financial intermediary” would not apply, and the fund would need to identify those shareholder accounts that are “financial intermediaries.” *See* 2006 Proposing Release, *supra* note 8, at n.23. 18 We have not, as recommended by some commenters, revised the rule to specify the circumstances under which a fund may treat an intermediary as an individual investor rather than an intermediary for purposes of its frequent trading policies. *See, e.g.,* Comment Letter of Charles Schwab & Co., Inc. (Apr. 10, 2006). We continue to believe that funds are in the best position to determine the treatment of an account as an individual investor under their frequent trading policies. Moreover, we believe a fund will have little incentive to “inappropriately” treat any intermediary as an individual shareholder, because the intermediary is free to terminate its relationship with the fund. The Commission is making one change from our proposal in response to commenters who pointed out that, in some cases, purchase and redemption orders are aggregated and submitted by agents of intermediaries on behalf of the intermediaries. 19 These commenters stated that under the rule as proposed, it was unclear whether an order submitted by an agent of an intermediary would be covered by the rule. In order to clarify the rule in response to those comments, we have revised it to provide that funds must enter into agreements with “each financial intermediary that submits orders, itself *or through its agent,* to purchase or redeem shares directly to the fund * * *” (changes in italics). 20 This revision clarifies that funds must enter into agreements with financial intermediaries or their agents even if the intermediaries submit orders through entities that do not qualify as financial intermediaries. 19 *See, e.g.,* Comment Letter of Matrix Settlement & Clearing Services, L.L.C. (Apr. 10, 2006). 20 Rule 22c-2(a)(2). We are also revising paragraph (a)(2)(i) of the rule to require that the fund enter into an agreement with each such “intermediary (or its agent).” Rule 22c-2(a)(2)(i). 2. Intermediary Chains In some cases, an intermediary such as a broker-dealer may hold shares of a mutual fund not only on behalf of individual investors, but also on behalf of other financial intermediaries, such as pension plans or other broker-dealers (“indirect intermediaries”) through one or more layers of intermediaries or “chains.” After we adopted rule 22c-2 in 2005, fund managers expressed uncertainty as to how the rule applied to these arrangements, and expressed concern how, as a practical matter, a fund could obtain shareholder information through multiple layers of intermediaries. 21 In response to these concerns, we proposed and are now adopting amendments to clarify the operation of the rule as it applies to “chains of intermediaries.” 21 *See, e.g.,* Comment Letter of T. Rowe Price Associates, Inc. (May 24, 2005). The revised rule requires that a fund (or, on the fund's behalf, its principal underwriter or transfer agent 22 ) enter into a shareholder information agreement 23 only with those financial intermediaries 24 that submit purchase or redemption orders directly to the fund, its principal underwriter or transfer agent, or a registered clearing agency (“first-tier intermediaries”). 25 The rule does not require first-tier intermediaries to enter into shareholder information agreements with any indirect intermediaries. 22 When rule 22c-2 was adopted in 2005, it required a fund, or a principal underwriter acting on behalf of the fund, to enter into shareholder information agreements with intermediaries. In addition to the amendments described above, as proposed, we are also revising the rule to include a fund's *transfer agent* as an entity that may enter into a shareholder information agreement on the fund's behalf. As we noted when we proposed this change, the fund's transfer agent often has preexisting agreements with a fund's financial intermediaries, and thus permitting transfer agents to enter into information agreements may avoid potentially duplicative agreements or inefficiencies in the process. *See* 2006 Proposing Release, *supra* note 8, at text accompanying n.38. If a transfer agent enters into an agreement on behalf of the fund, the agreement must require the financial intermediary to provide the requested information to the *fund* upon the fund's request. *See id* . at n.37. We are not adopting the proposed revision that would have permitted a registered clearing agency to enter into shareholder information agreements on behalf of a fund. We received comment from the only registered clearing agency that receives orders for transactions in fund shares, noting that it does not have the capability to serve in this function (because it does not act as an agent for funds) and requesting that we revise the final rule to reflect this fact. *See* Comment Letter of the National Securities Clearing Corporation (Apr. 10, 2006). We agree with the commenter's concern that including this reference to clearing agencies might cause confusion. 23 Rule 22c-2(c)(5). The agreement, which must be in writing, may be part of another contract or agreement, such as a distribution agreement. 24 We understand that retirement plan administrators and other persons that maintain the plan's participant records typically submit fund shares transactions to the fund or its transfer agent, principal underwriter, or a registered clearing agency. The rule as we adopted it last year specifically includes these administrators and recordkeepers within the definition of a “financial intermediary.” *See* rule 22c-2(c)(1)(iii). 25 Rule 22c-2(a)(2). We also considered, as an alternative to this requirement, that shareholder information agreements not require the collection of any shareholder information from indirect intermediaries. We did not take that approach because we are concerned that providing such an exception might encourage abusive short-term traders to conduct their activities through an indirect intermediary in order to avoid detection by the fund. Under the proposed rule amendments, a shareholder information agreement would obligate a first-tier intermediary to, upon request of the fund, use its best efforts to identify any accountholders who are themselves intermediaries, and obtain and forward (or have forwarded) the underlying shareholder identity and transaction information from those indirect intermediaries farther down the chain. 26 Some commenters expressed concern that shareholder information agreements might require first-tier intermediaries (and indirect intermediaries) to canvass all of their shareholder accounts to determine which accountholders are themselves intermediaries if a fund made a blanket request to identify all indirect intermediaries. 27 26 *See* proposed rule 22c-2(c)(5)(iii) (discussed in 2006 Proposing Release, *supra* note 8, at Section II.B). 27 *See* Comment Letter of the Securities Industry Assoc. (Apr 10, 2006); Comment Letter of Charles Schwab & Co., Inc. (Apr. 10, 2006). In light of these concerns, we have revised the rule text to clarify that a fund, after receiving initial transaction information from a first-tier intermediary, must make a *specific* further request to the first-tier intermediary for information on certain shareholders. 28 As adopted, the amended rule defines “shareholder information agreement” as an agreement under which a financial intermediary agrees to “[u]se best efforts to determine, promptly upon request of the fund, whether any *specific person about whom it has received the identification and transaction information * * * [required by the rule],* is itself a financial intermediary * * *” (changes in italics). 29 Under the revised rule, a shareholder information agreement need not obligate a first-tier intermediary to perform a complete review of its books and records to identify all indirect intermediaries. Instead, pursuant to a shareholder information agreement, a first-tier intermediary must use its best efforts to identify whether or not certain specific accounts identified by the fund are indirect intermediaries. 30 If an indirect intermediary that holds an account with a first-tier intermediary does not provide underlying shareholder information, the agreement must obligate the first-tier intermediary to prohibit, upon the fund's request, that indirect intermediary from purchasing additional shares of the fund through the first-tier intermediary. 31 28 *See* rule 22c-2(c)(5)(iii). For example, after receiving identity and transaction information from a first-tier intermediary, the fund could then request information from the first-tier intermediary concerning those frequent trading shareholders whose transactions were particularly active, in order to determine whether those shareholders are themselves intermediaries. Under the shareholder information agreement, the first-tier intermediary would then be required to use its best efforts to determine, on behalf of the fund, whether any of those shareholders are intermediaries ( *i.e.* , second-tier intermediaries). After the first-tier intermediary informs the fund which of the shareholders are second-tier intermediaries, the fund could then request that the first-tier intermediary obtain underlying shareholder transaction information from any or all of those second-tier intermediaries. 29 *See* rule 22c-2(c)(5)(iii). 30 Rule 22c-2(a)(2). A first-tier intermediary also may choose to indicate to the fund, when the intermediary initially discloses transaction information requested by the fund, which shareholders it knows to be indirect intermediaries. This practice may reduce a fund's need to request further information about indirect intermediaries. 31 Rule 22c-2(c)(5)(iii)(B). Under the rule, therefore, if, upon specific request of the fund, an indirect intermediary (such as a third-tier intermediary) does not provide information whether one or more of its shareholders is an intermediary, then upon further request by the fund, the first-tier intermediary would be required to restrict or prohibit that indirect intermediary from purchasing additional shares of the fund on behalf of other investors. 3. Effect of Lacking an Agreement After we adopted the rule, some commenters expressed concern that the rule, which made it unlawful for a fund to redeem a security within seven days without entering into a shareholder information agreement, could be interpreted to prevent a fund from redeeming any of its shares if it failed to enter into an agreement with any intermediary. Therefore we proposed, and are today adopting, an amendment to the rule that clarifies and further limits the consequences of failing to enter into an information agreement. Under rule 22c-2, as amended, if a fund does not have an agreement with a particular intermediary, the fund thereafter must prohibit that intermediary from purchasing securities issued by the fund. 32 The prohibition applies only to the intermediary with which the fund does not have an agreement; purchases from other intermediaries will not be affected. 33 One commenter argued that the rule should not prohibit purchases that are fully disclosed to the fund. 34 We agree that the fund does not need further information under an agreement to scrutinize those purchases. Therefore, we have revised the final rule to provide that, if there is no shareholder information agreement with a particular intermediary, the fund must prohibit the intermediary from purchasing the fund's securities only “in nominee name on behalf of other persons.” 35 We have also, for the same reason, revised this provision so that it does not apply to the intermediary's purchases of fund securities on behalf of the intermediary itself. 36 32 Rule 22c-2(a)(2)(ii). One commenter suggested that we clarify that in these circumstances a “purchase” would not include the automatic reinvestment of dividends. *See* Comment Letter of the Investment Company Institute (Apr. 10, 2006). We agree that the reinvestment of dividends does not present the types of frequent trading risks that the rule is designed to help funds prevent. We therefore have revised the rule text to clarify that, for purposes of this provision, a “purchase” does not include the automatic reinvestment of dividends. *See* rule 22c-2(a)(2)(ii). 33 A number of commenters expressed concerns about possible conflicts with the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001 (“ERISA”), and Department of Labor rules under ERISA, in complying with rule 22c-2. They stated that those laws:
(i)Require certain “blackout” disclosures before a plan sponsor may carry out a fund's request to prohibit future purchases; and
(ii)provide a safe harbor under section 404(c) of ERISA from liability as a fiduciary only if the plan provides participants an adequate number of investment alternatives and the ability to trade among them with appropriate frequency, in light of the market volatility of those alternatives. *See, e.g.* , Comment Letter of the American Bankers Assoc. (Apr. 14, 2006) (citing ERISA section 101(i), ERISA section 404(c), 29 CFR 2520, and 29 CFR 2550.404c-1); Comment Letter of the American Benefits Council (Apr. 10, 2006). Our staff has conferred with representatives of the Department of Labor, who have advised us that these concerns have been addressed in guidance on the duties of employee benefit plan fiduciaries in light of alleged abuses involving mutual funds. *See* Statement of Ann L. Combs, Assistant Secretary, Department of Labor, *Fiduciary Responsibilities Related to Mutual Funds,* (Feb. 17, 2004) (available at *http://www.dol.gov/ebsa/newsroom/sp021704.html* ) (reasonable redemption fees and reasonable plan or investment fund limits on the number of times a participant can move in and out of a particular investment within a particular period “represent approaches to limiting market timing that do not, in and of themselves, run afoul of the ‘volatility' and other requirements set forth in the Department's regulation under section 404(c), provided that any such restrictions are allowed under the terms of the plan and clearly disclosed to the plan's participants and beneficiaries.”). 34 *See* Comment Letter of the American Bankers Assoc. at 6 (Apr. 14, 2006). 35 A similar revision has been made to the same type of provision concerning chains of intermediaries. *See* rule 22c-2(c)(5)(iii)(B). 36 Rule 22c-2(a)(2)(ii), (c)(5)(iii)(B). One commenter requested that the Commission provide further guidance to financial intermediaries that attempt to carry out instructions from a fund, under rule 22c-2(c)(5)(ii), to “restrict or prohibit further purchases or exchanges” by a particular investor whom the fund has identified as violating its frequent trading policies. *See* Comment Letter of the Committee of Annuity Insurers (submitted by Sutherland Asbill & Brennan LLP) (Apr. 10, 2006). The commenter noted that an “exchange” (or transfer) request is actually two simultaneous orders: an order to redeem shares of one fund and an order to purchase, with the proceeds of the redemption, shares of another fund. This commenter questioned whether the rule was meant to include both the redemption and purchase order. As noted, the rule permits a fund to restrict or prohibit “exchanges.” We agree with the commenter that an “exchange” request includes both a redemption order and purchase order, and if a fund instructs an intermediary to restrict an “exchange” (or a purchase), the intermediary may notify the investor that it will not effect the redemption portion of a request to exchange into the fund, as well as the purchase portion of the request. Some commenters suggested alternative approaches that we have decided not to adopt. One recommended that the rule preclude intermediaries that lack an agreement with funds from redeeming shares within seven days of purchase, rather than prohibiting further purchases of fund shares. 37 This approach is not acceptable to us because it would deny investors access to their funds for seven days after purchasing shares through such an intermediary, thereby penalizing investors for the inability or unwillingness of a fund and intermediary to enter into a shareholder information agreement. Another commenter argued that the rule should instead preclude a fund from making further payments under selling or dealer agreements to intermediaries that lack shareholder information agreements. 38 However, all funds do not necessarily have selling or dealer agreements with all of their “financial intermediaries” as defined in the rule, and restricting the rule's scope to those intermediaries that have such agreements would likely seriously restrict a fund's ability to gather information and enforce its policies. After careful consideration of the suggested alternatives, we believe that barring future purchases by intermediaries best serves the purposes of the rule. 37 *See* Comment Letter of the American Benefits Council (Apr. 10, 2006). 38 *See* Comment Letter of Federated Investors, Inc. (submitted by ReedSmith LLP) (Apr. 6, 2006). B. Operation of the Rule When we adopted rule 22c-2, we explained that the shareholder information agreement requirement is designed to give fund managers (and their chief compliance officers) a compliance tool to monitor trading activity in order to detect frequent trading and to assure consistent enforcement of fund policies. 39 But we also explained that the rule gives managers flexibility to request information periodically such as when circumstances suggested that abusive trading activity is occurring. 40 39 Adopting Release, *supra* note 4, at text accompanying n.49. 40 *Id.* at text following n.42. We recognize that in some cases, frequent use of this tool might be costly for funds and intermediaries. Commenters expressed concerns about these costs, and several commenters urged us to impose limits on the frequency of information requests made by funds pursuant to the information agreements. 41 We are not imposing limits because, as we noted in the Adopting Release, we expect funds that are susceptible to market timing to use the tool regularly. 42 Not all funds, however, are susceptible to market timing. 41 *See, e.g.* , Comment Letter of Massachusetts Mutual Life Insurance Company (Apr. 10, 2006); Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). 42 Adopting Release, *supra* note 4, at text accompanying n.50. A fund, in determining the frequency with which it should seek transaction information from its intermediaries, could consider:
(i)Unusual trading patterns, such as abnormally large inflows or outflows, that may indicate the existence of frequent trading abuses;
(ii)the risks that frequent trading poses to the fund and its shareholders in light of the nature of the fund and its portfolio;
(iii)the risks to the fund and its shareholders of frequent trading in light of the amount of assets held by, or the volume of sales and redemptions through, the financial intermediary; and
(iv)the confidence the fund (and its chief compliance officer 43 ) has in the implementation by an intermediary of trading restrictions designed to enforce fund frequent trading policies or similar restrictions designed to protect the fund from abusive trading practices. In some cases, fund managers may seek transaction information only occasionally to determine whether the intermediary is, in fact, enforcing trading restrictions or imposing redemption fees on behalf of the fund. 44 43 *See, e.g.* , Compliance Programs of Investment Companies and Investment Advisors, Investment Company Act Release No. 26299, at n.69 and accompanying text (Dec. 17, 2003) [68 FR 74714 (Dec. 24, 2003)] (“[U]nder rule 38a-1, a fund must have procedures reasonably designed to ensure compliance with its disclosed policies regarding market timing. These procedures should provide for monitoring of shareholder trades or flows of money in and out of the funds in order to detect market timing activity, and for consistent enforcement of the fund's policies regarding market timing.”). 44 Some commenters expressed concern about the ability of financial intermediaries to provide information to funds, in light of applicable privacy laws. *See, e.g.* , Comment Letter of the American General Life Insurance Company, *et al* (submitted by O'Melveny & Myers LLP), (May 9, 2005); 15 U.S.C. 6801-09, 6821-27 (privacy provisions of Gramm-Leach-Bliley Act); Regulation S-P, 17 CFR Part 248 (Commission rules implementing privacy provisions for funds, broker-dealers, and registered investment advisers). Under those laws, financial institutions such as funds, broker-dealers, and banks must provide a notice describing the institution's privacy policies and an opportunity for consumers to opt out of the sharing of information with nonaffiliated third parties. These privacy laws also contain important exceptions to the notice and opt-out requirements. Under the Commission's privacy rules, for example, these requirements do not apply to the disclosure of information that is “necessary to effect, administer, or enforce a transaction that a consumer requests or authorizes,” which includes a disclosure that is “[r]equired, or is a usual, appropriate, or acceptable method * * * [t]o carry out the transaction or the product or service business of which the transaction is a part * * *” 17 CFR 248.14(a), (b)(2). *See also* 17 CFR 248.15(a)(7)(i) (notice and opt-out requirements not applicable to disclosure of information to comply with law). Financial privacy rules that are substantially identical to these rules apply to financial intermediaries other than broker-dealers, and contain comparable exceptions. *See, e.g.* , 12 CFR Part 40 (rules applicable to national banks, adopted by the Comptroller of the Currency). We believe that the disclosure of information under shareholder information agreements, and the fund's request and receipt of information under those agreements, are covered by these exceptions. We also note that financial institutions often state in their privacy policy notices that the institution makes “disclosures to other nonaffiliated third parties as permitted by law.” *See* 17 CFR 248.6(b). Therefore we believe it will not be necessary for intermediaries such as broker-dealers and banks to provide new privacy notices or opt-out opportunities to their customers, in order to comply with rule 22c-2. Commenters on the 2006 Proposing Release generally agreed that complying with rule 22c-2 should not require broker-dealers and banks to provide new privacy notices to their customers. *See* Comment Letter of the Investment Company Institute (Apr. 10, 2006); Comment Letter of the American Bankers Assoc. (Apr. 14, 2006). A fund that receives shareholder information for a purpose permitted by the privacy rules under the exceptions to consumer notice and opt out requirements may not disclose that information for other purposes, such as marketing, unless permitted under the intermediary's privacy policy. *See* Adopting Release, *supra* note 4, at n.47. Some intermediaries have responded to market timing concerns by enforcing their own frequent trading policies, which may be different from policies established by fund boards. We believe that a fund in appropriate circumstances could reasonably conclude that an intermediary's frequent trading policies sufficiently protect fund shareholders, and could therefore defer to the intermediary's policies, rather than seek to apply the fund's policies on frequent trading to shareholders who invest through that intermediary. In those circumstances, the fund should describe in its prospectus that certain intermediaries through which a shareholder may own fund shares may impose frequent trading restrictions that differ from those of the fund, generally describe the types of intermediaries ( *e.g.* , broker-dealers, insurance company separate accounts, and retirement plan administrators), and direct shareholders to any disclosures provided by the intermediaries with which they have an account to determine what restrictions apply to the shareholder. We note that a fund is required to disclose whether each restriction imposed by the fund to prevent or minimize frequent trading applies to trades that occur through omnibus accounts at intermediaries, and to describe with specificity the circumstances, if any, under which each such restriction will not be imposed. 45 45 *See* Item 6(e) of Form N-1A [17 CFR 239.15A and 274.11A]; Item 8(e) of Form N-3 [17 CFR 239.17a and 274.11b]; Item 7(e) of Form N-4 [17 CFR 239.17b and 274.11c], Item 6(f) of Form N-6 [17 CFR 239.17c and 274.11d]. These disclosure items would not require a fund to describe the frequent trading policies of each intermediary to whose policies the fund defers. C. Redemption Fees Rule 22c-2 requires fund directors to consider whether to adopt a redemption fee, but the rule neither requires funds to adopt such a fee nor specifies the terms under which such a fee should be assessed. 46 A number of commenters raised concerns about redemption fees, and encouraged us to become involved in establishing the terms and conditions under which funds charge them. 47 A number of commenters, for example, urged us to require that fund redemption fee policies waive fees that might be imposed as a result of transactions not initiated by investors. 48 46 The rule does, however, require that any redemption fee charged not exceed two percent and apply to redemptions no less than seven days after purchase. *See* rule 22c-2(a)(1)(i). 47 *See, e.g.* , Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006); Comment Letter of the American Council of Life Insurers (Apr. 10, 2006); Comment Letter of the Committee of Annuity Insurers (submitted by Sutherland Asbill & Brennan) (Apr. 10, 2006). 48 *See, e.g.* , Comment Letter of the American Society of Pension Professionals & Actuaries (Apr. 10, 2006); Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). Non-investor initiated transactions may include automatic asset rebalancing, automatic distributions, and prearranged periodic contributions. We appreciate the commenters' suggestions that standardizing the terms and conditions of redemption fee policies might reduce the costs that intermediaries and others (including funds themselves) will bear in implementing fund redemption fees. However, we have decided not to propose to standardize the terms or conditions to preserve the flexibility of each fund to fashion policies that are best suited to protect the investors in each fund. We have done this after receiving extensive comment on the matter and after observing a lack of consensus among industry participants on the appropriate terms of a uniform redemption fee. 49 Although we may reconsider our decision at a later time, until then, the terms of redemption fee policies are a matter for fund boards to determine. 50 49 *See* 2006 Proposing Release, *supra* note 8, at text following n.12. 50 Several commenters noted that a number of state insurance and contract law issues might arise in connection with a redemption fee charged to investors who invest in funds through insurance company separate accounts. *See, e.g.* , Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006); Comment Letter of the American Council of Life Insurers (Apr. 10, 2006). As we stated in the 2006 Proposing Release, we believe that because redemption fees and frequent trading policies are imposed by the fund, and not the insurance company, enforcing those limits or fees with respect to these investors should not cause insurance companies to breach their contracts. *See* 2006 Proposing Release, *supra* note 8, at n.12. Moreover, nothing in this rule would preclude a fund that is concerned about the legality under existing contracts of imposing these limits or fees on certain insurance contractholders, from choosing not to impose them with regard to investors whose policies would not permit imposition of such limits or fees. III. Compliance Dates When the Commission adopted rule 22c-2 in March 2005, we established a compliance date of October 16, 2006. In the 2006 Proposing Release, we requested comment on whether we should extend that compliance date. Nearly every commenter requested an extension, pointing out the need for significant time to revise agreements with intermediaries and change systems to accommodate the transmission and receipt of trading information. Commenters requested a variety of compliance date extensions, ranging from 6 months to 18 months. Today we are extending the compliance date for the shareholder information agreement provisions of rule 22c-2. We are extending by 6 months, until April 16, 2007, the date by which funds must enter into shareholder information agreements with their intermediaries. 51 We also are extending by 12 months, until October 16, 2007, the date by which funds must be able to request and promptly receive shareholder identity and transaction information pursuant to shareholder information agreements. This latter extension is designed to allow additional time for funds, intermediaries, and others to revise their systems to accommodate the request, provision, and use of information from intermediaries after the negotiation of shareholder information agreements. 51 *See* rule 22c-2(a)(2). We did not propose, nor did we receive comment on, an extension of the compliance date for section 22c-2(a)(1), which requires a fund's board to consider the adoption of a redemption fee policy. The compliance date for that provision, October 16, 2006, remains in effect. IV. Cost-Benefit Analysis The Commission is sensitive to the costs and benefits imposed by its rules. As discussed above, the amendments we are adopting today will
(i)limit the types of intermediaries with which funds must enter into shareholder information agreements,
(ii)address the rule's application when there are chains of intermediaries, and
(iii)clarify the effect of a fund's failure to obtain an agreement with any of its intermediaries. These amendments are designed to respond to concerns that commenters identified during the course of implementing rule 22c-2, and in response to our request for comment on these proposed amendments. We believe that the amendments will result in substantial cost savings to funds, financial intermediaries, and investors, and provide clarification of the rule's requirements. A. Benefits We anticipate that funds, financial intermediaries, and investors will benefit from these amendments to rule 22c-2. As discussed more fully in the Adopting Release we issued in 2005, rule 22c-2 is designed to allow a fund to deter, and to provide the fund and its shareholders reimbursement for the costs of, short-term trading in fund shares. 52 52 *See* Adopting Release, *supra* note 4, at Section IV.A. The amendments to rule 22c-2 that we are adopting today will likely result in additional benefits to funds, financial intermediaries, and investors. As discussed in the previous sections of this Release, some commenters on the Adopting Release argued that the rule's definition of “financial intermediary” was too broad because it would have required funds to identify and enter into agreements with a number of intermediaries that may not pose a significant short-term trading risk to funds, and may have imposed unnecessary costs to market participants. 53 For example, one large fund complex indicated that, under the rule as adopted, identifying their “financial intermediaries” could cost that fund complex $8.5 million or more. 54 These amendments will modify the definition of financial intermediary to exclude entities that a fund treats as an individual investor for purposes of the fund's policies on market timing or frequent trading. We believe that these amendments will reduce the burden on funds of identifying those entities that might have qualified as financial intermediaries under the rule as adopted, because a fund should already know which entities it treats as intermediaries for purposes of its policies on market timing or frequent trading. 55 As further discussed in the Paperwork Reduction Act Section below, for purposes of the Paperwork Reduction Act we have estimated that identifying the intermediaries with which a fund complex must enter into agreements may take the average fund complex a total of 250 hours of a service representative's time, at a cost of $40 per hour, 56 for a total burden to all funds of 225,000 hours, at a total cost of $9 million. These amendments will likely provide a significant benefit because they should reduce the costs associated with the intermediary identification process. 53 *See* Comment Letter of the Investment Company Institute at 3 (May 9, 2005). The ICI stated in its 2005 comment letter that, under the rule as adopted in 2005, three large fund complexes alone would have to evaluate 6.5 million accounts that are “not in the name of a natural person and thus could be held as an intermediary for purposes of the rule” and might have to enter into agreements with a significant portion of those accounts that are held in nominee name. *Id.* The ICI noted that many of these accounts are likely associated with small retirement plans, small businesses, trusts, bank nominees and other entities that are unlike typical financial intermediaries such as broker-dealers. It added that funds typically do not have agreements with such small entities, other than agreements incidental to the opening of an account. 54 *See* 2006 Proposing Release, *supra* note 8, at n.48. 55 Under the revised rule, if the fund does *not* exempt an intermediary from its frequent trading policies, *i.e.* if the fund treats the intermediary as an individual investor for purposes of those policies, then the entity would not be a “financial intermediary” (with respect to that fund), and the fund would not have to enter into a shareholder information agreement with it. These intermediaries might include small retirement plans that do not identify themselves as intermediaries or omnibus accounts to the fund and request an exemption from the fund's frequent trading policies. These intermediaries will likely either have very few underlying investors, and/or restrict their transactions so that transactions by investors do not trigger application of a redemption fee or violate the fund's frequent trading policies. 56 *See infra* note 95. By enabling funds to forego the cost of entering into agreements with omnibus accountholders that they treat as individual investors, we anticipate that the large majority of small omnibus accountholders will now fall outside the shareholder information agreement provisions of the rule. This will likely result in significant cost and time savings to funds and financial intermediaries through reduction of the expenses associated with these agreements. The reduction of these costs also may benefit fund investors and fund advisers, to the extent that these costs may have been passed on to them. We estimate that this will significantly reduce the burden on many entities that would otherwise have qualified as intermediaries under the rule as adopted, because the excluded entities would no longer need to enter into shareholder information agreements, or develop and maintain systems to provide the relevant information to funds. Commenters on the 2006 Proposing Release generally agreed that the rule amendments are likely to reduce costs to market participants. 57 57 *See, e.g.* , Comment Letter of the Investment Company Institute (Apr. 10, 2006) (“[The proposed approach] should reduce the costs and burdens associated with the rules implementation while still providing funds access to underlying shareholder information.”) Commenters on the 2005 adoption were also concerned that the rule as adopted might have required funds to enter into agreements with intermediaries that hold fund shares in the name of other intermediaries (a “chain of intermediaries”), potentially resulting in a fund having to enter into agreements with intermediaries with which it may not have a direct relationship ( *i.e.* , indirect intermediaries). 58 These amendments further clarify and define the operation of the rule with respect to intermediaries that invest through other intermediaries. These amendments to rule 22c-2 define the term “shareholder information agreement,” and provide that funds need only enter into shareholder information agreements with intermediaries that directly submit orders to the fund, its principal underwriter, transfer agent, or to a registered clearing agency. Accordingly, funds will not need to enter into agreements with indirect intermediaries and may incur lower systems development costs related to the collection of underlying shareholder information, thereby reducing the costs of compliance. 58 *See* Comment Letter of T. Rowe Price Associates, Inc. at 2 (May 24, 2005); Comment Letter of OppenheimerFunds, Inc. at 3 (May 9, 2005). Under the amendments adopted today, a first-tier intermediary, in its agreement with the fund, must agree to, upon further request by the fund:
(i)Provide the fund with the underlying shareholder identification and transaction information of any other intermediary that trades through the first-tier intermediary ( *i.e.* , indirect intermediary); or
(ii)prohibit the indirect intermediary from purchasing, on behalf of others, securities issued by the fund. This approach is designed to preserve the investor protection goals of the rule by ensuring that funds have the ability to identify short-term traders that may attempt to evade the reach of the rule by trading through chains of financial intermediaries. By defining minimum standards for what must be included in these shareholder information agreements, we intended to balance the need for funds to acquire shareholder information from indirect intermediaries who trade in fund shares, with practical concerns regarding the difficulty that funds might face in identifying these intermediaries and entering into agreements with them. Because an intermediary that trades directly with a fund already has a relationship with its second-tier intermediaries (and is likely to have a closer relationship than the fund to any intermediary that is farther down the “chain”), a first-tier intermediary appears to be in the best position to arrange for the provision of information to a fund regarding the transactions of shareholders trading through its indirect intermediaries. By providing a definition of the term “shareholder information agreement,” the amended rule clarifies the balance of duties and obligations between funds and financial intermediaries. Because first-tier intermediaries may already have access to the shareholder transaction and identification information of their indirect intermediaries, they will likely be able to provide this information to funds at a minimal cost, especially compared to the significant costs that funds would incur if they were required to collect the same information from indirect intermediaries themselves. Although first-tier intermediaries may incur some costs in collecting and gathering this information from indirect intermediaries, there is a benefit in having the entity that has the easiest access to the relevant information have the responsibility for arranging for its delivery to funds. In general, commenters on the 2006 Proposing Release agreed that first tier intermediaries are in a better position than funds to collect data from indirect intermediaries, 59 although one commenter disagreed and stated that intermediaries are not in a better position than funds to collect information from indirect intermediaries. 60 We continue to believe that the amended rule's approach of having the agreements require first-tier intermediaries to identify and collect information from indirect intermediaries appears to be the most cost effective method of handling the chain of intermediaries issue while still effectuating the purposes of the rule. Funds and intermediaries are also likely to engage in negotiations that will distribute the costs of information sharing between the entities, resulting in incentives for funds to narrowly target their information requests. 59 *See* Comment Letter of Massachusetts Mutual Life Insurance Company (Apr. 10, 2006); Comment Letter of the Investment Company Institute (Apr. 10, 2006). 60 *See* Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). As discussed in the previous sections, these amendments clarify the result if a fund lacks an agreement with a particular intermediary. In such a situation, the fund may continue to redeem securities within seven calendar days, but it must prohibit that financial intermediary from purchasing fund shares in nominee name, on behalf of any other person. Some commenters had stated that the rule, as adopted in 2005, could be interpreted to require a different approach to these situations. 61 The amendments will provide the benefit of certainty regarding the duties of funds and financial intermediaries under the rule without imposing additional costs. 61 *See* Comment Letter of the Investment Company Institute at 4 (May 9, 2005). B. Costs Many commenters expressed concerns about the costs of rule 22c-2 as adopted in 2005. As discussed above, we anticipate that the amendments adopted today will allow funds, financial intermediaries, and investors to incur significantly reduced costs. Although these amendments will reduce many of the costs of the rule, they should nonetheless maintain the investor protections afforded by the rule. One of the primary results of these amendments will be to reduce the number of financial intermediaries with which funds must enter into shareholder information agreements. This should reduce costs to all participants by allowing funds to enter into shareholder information agreements only with those intermediaries that hold omnibus accounts that are most likely to trade fund shares frequently. The rule's investor protections will be maintained because funds will continue to monitor the short-term trading activity of the rest of the fund's omnibus accounts as if they were individual investors in the fund, according to the fund's policies on short-term trading. The amendments will reduce the number of entities that will be considered financial intermediaries under the rule. Commenters in 2005 raised concerns about the costs of identifying which accountholders are financial intermediaries. 62 The costs related to this review will be greatly reduced under the rule as we have revised it, because we expect that a fund will generally already have identified those accountholders that it does not treat as an individual investor for purposes of its restrictions on short-term trading. As discussed above in the benefits section, for purposes of the Paperwork Reduction Act, we have estimated that completion of this identification process will cost all funds a total of approximately $9 million. 62 As discussed above, the ICI noted that, between just three large fund complexes, 6.5 million accounts may need to be reviewed, and estimated that the total number of accounts which would be evaluated by all funds could be in the “tens of millions.” Comment Letter of the Investment Company Institute at 3 (May 9, 2005). OppenheimerFunds noted that, although it has more than 7.5 million shareholder accounts in its records, 137,000 or fewer of those accounts may qualify as financial intermediaries under the rule as adopted last spring. *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005). Neither commenter estimated the costs of performing this review. We also received a few comments on the 2005 adoption regarding the number of accounts maintained by funds that qualify as financial intermediaries. 63 Commenters indicated that revising the rule to address concerns about the definition of financial intermediaries would significantly reduce the costs of entering into or modifying these agreements, as well as the costs of developing, maintaining and monitoring the systems that will collect the shareholder information related to these agreements for funds. 64 Omnibus accountholders that previously would have qualified as financial intermediaries are also likely to realize substantial savings under the amended rule. When an omnibus accountholder is treated as an individual investor (or does not trade directly with the fund), such an omnibus account will no longer be treated as a financial intermediary and will not incur the costs of entering into or modifying agreements with that fund. There will also no longer be the start-up and ongoing costs of developing and maintaining shareholder information-sharing systems for those accountholders. 63 OppenheimerFunds estimated that it has 137,000 omnibus accounts that might qualify as financial intermediaries, USAA Investment Management Company stated that it has “thousands” of these accounts, and T. Rowe Price estimated 1.3 million accounts that are not registered as natural persons. *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005); Comment Letter of USAA Investment Management Company at 2 (May 9, 2005); Comment Letter of T. Rowe Price Associates, Inc. at 2 (May 24, 2005). 64 *See* Comment Letter of USAA Investment Management Company at 2 (May 9, 2005); Comment Letter of the ICI at 3 (May 9, 2005). In 2005, we received a few comments regarding the costs of modifying or entering into shareholder information agreements. One of the few commenters that gave specific numbers indicated that it would take approximately four hours to modify and/or enter into, follow up on, and maintain an agreement on its systems for each account identified as a financial intermediary. 65 The same commenter indicated that it may have as many as 137,000 accounts that might qualify as financial intermediaries under the rule as adopted. We anticipate that the large majority of the omnibus accountholders that would have qualified as financial intermediaries under the rule as initially adopted, will now be treated as individual investors by funds, and therefore no new agreements will be required. As discussed in the 2006 Proposing Release, we anticipate that in most cases, complying with the amended rule will require a very limited number of new agreements between funds and intermediaries (in many cases virtually no new agreements would be required). 66 We understand that the number of existing agreements that funds have with their intermediaries can vary greatly, from less than 10 agreements for a small direct-sold fund, to 3,000 or more agreements for a very large fund complex sold through various channels. 67 Although funds will still need to modify the existing agreements that they have with their intermediaries ( *i.e.* , distribution agreements), we believe that these amendments will greatly reduce or eliminate the need for most funds to identify and negotiate new agreements. Funds are also likely to incur lower costs when modifying existing agreements than when entering into new agreements, and the actual hours required to modify an existing agreement thus may be less than the four hour figure suggested by the commenter. 68 Accordingly, based on the cost data provided by this commenter, we estimate that the cost reduction that may result from the amendments for a fund complex in a similar position as the commenter could be approximately 536,000 hours. 69 65 *See* Comment Letter of OppenheimerFunds, Inc. at 8 (May 9, 2005). 66 *See* 2006 Proposing Release, *supra* note 8, at text following n.55. 67 *See id.* 68 *See* Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). Section VI below contains a discussion, in the context of the Paperwork Reduction Act, of some of the estimated costs of the shareholder information agreement and information-sharing system development and operations aspects of the rule. 69 *See* Comment Letter of OppenheimerFunds, Inc. (May 9, 2005). This estimate is based on the following calculations: 137,000 potential accounts times 4 hours per account equals 548,000 potential hours. However, the amendments might eliminate the burden of reviewing and modifying those 137,000 potential accounts, and could limit the burden to a far reduced number, perhaps 3,000 agreements for a very large fund. (3,000 agreements to be modified times 4 hours equals 12,000 hours.) Instead of potentially incurring 548,000 hours complying with the agreement portion of the rule, a similar fund might incur 12,000 hours in modifying its existing agreements, for a savings of 536,000 hours (548,000 potential hours minus 12,000 hours equals 536,000 hours saved). For purposes of the Paperwork Reduction Act as discussed below, we have estimated that it will cost all funds and financial intermediaries a total of approximately $53,550,000 to enter into and/or modify the agreements required under the amended rule. 70 This represents a significant cost reduction from the estimates provided to us in response to the rule's adoption. 71 70 *See infra* Section VII. 71 However, this revised estimate is a significant increase over the amount we estimated in the Adopting Release ($3,353,279) for funds and intermediaries to enter into shareholder information agreements. *See* Adopting Release, *supra* note 4, at n.108. In response to our request for comment on any aspect of the rule's implementation, we received new information and updated estimates that noted that the cost of entering into agreements for funds and intermediaries would be significantly higher than the estimate included in the Adopting Release. After reviewing the comments we received in response to the Adopting Release, as well as other information received from fund representatives prior to the 2006 Proposing Release, we estimated in the 2006 Proposing Release that on average, a fund complex might incur $250,000 or more in expenses related to entering into or modifying the agreements required under the rule as adopted. *See* 2006 Proposing Release, *supra* note 8, at n.59. With approximately 900 fund complexes currently operating, we therefore estimate that the agreement portion of the rule as adopted could potentially cost all funds a total of approximately $225,000,000. Despite the increase in estimated costs for entering into agreements that we have included here over the cost estimates included in the Adopting Release, we anticipate that the amendments will reduce the costs of the agreement portion of the rule as adopted by approximately $171,450,000 ($225,000,000 (updated cost estimate) minus $53,550,000 (cost estimate after proposed amendments) equals $171,450,000 (total potential cost reduction)). There will also be some costs related to the amendments we are adopting to the rule regarding chains of intermediaries. By clearly defining the duties that a fund's agreement must impose on intermediaries in the “chain of intermediaries” context, the proposed rule amendments may result in first-tier intermediaries incurring some costs that might otherwise have been borne by funds. These may include costs related to negotiating agreements (if necessary) with indirect intermediaries, processing requests from funds to investigate accounts, costs related to collecting and providing the underlying shareholder information to funds from the indirect intermediaries and restricting further trading by indirect intermediaries if the fund requests it. We believe that first-tier intermediaries are in a better position than funds to fulfill these obligations. Unlike funds, first-tier intermediaries have a direct relationship with second-tier intermediaries (and may be in a better position than funds to collect information from other indirect intermediaries), and will thus be able to identify, communicate with, and collect information from these indirect intermediaries at a lower cost than if funds were to conduct such activities. First-tier intermediaries are also in a better position than funds to identify and gather shareholder information from more distant indirect intermediaries because of their relationships with second-tier intermediaries. As further discussed in connection with the Paperwork Reduction Act, we have estimated that the costs of entering into arrangements between first-tier and more indirect intermediaries will be approximately $63 million. 72 We anticipate that intermediaries will generally use the same systems that they use to provide the required underlying shareholder identity and transaction information directly to funds to process the information that first-tier intermediaries will forward (or have forwarded) to funds from indirect intermediaries, thus resulting in significant cost efficiencies. 72 *See infra* note 131 and accompanying text. Funds and intermediaries may also incur some costs related to drafting or revising terms for the agreements required by rule 22c-2. We have been informed that industry representatives are working together to develop a uniform set of model terms, and anticipate that such model terms may significantly reduce the costs related to developing individualized agreement terms for each fund and intermediary. 73 As further discussed in the Paperwork Reduction Act section of this release, for purposes of the Paperwork Reduction Act, we estimate that a typical fund complex will incur a total of 5 hours of legal time at $300 per hour in drafting these agreement terms, for a total of 4,500 hours for all 900 fund complexes at a total cost of $1,350,000. 73 *See* Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). We understand that several service providers are developing systems to accommodate the transmission and receipt of transaction information between funds and intermediaries pursuant to contracts negotiated to comply with rule 22c-2. At least one of these organizations is revising the infrastructure that it already has in place, in order to facilitate the communication of fund trades and other “back office” information between funds and financial intermediaries, including the information required under the rule. We understand that, with the exception of some smaller to mid-sized funds and intermediaries, the large majority of funds and intermediaries currently use the organization's existing infrastructure to process fund trades. 74 In addition, some funds, intermediaries, or third party vendors may develop their own competing or complementary information-sharing systems. 75 74 *See* 2006 Proposing Release, *supra* note 8, at text following n.61. 75 *See id* . at n.40. Commenters on the 2006 Proposing Release suggested that in complying with the amended rule, funds and intermediaries may choose to incur certain additional costs in analyzing data received under shareholder information agreements, including costs for additional staffing, third-party vendors, and data repositories. 76 Generally, any such potential costs would be a consequence of the initial rule adoption, and are not a result of these rule amendments. These potential costs are also likely to vary significantly among entities depending on their size, the services they use, and the frequency with which they request and analyze information, among other factors. 76 See, *e.g.* , Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006); Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). One commenter on the 2006 Proposing Release noted that, as a large fund complex, it had received estimates of up to $730,000 a year for a third party to provide information transmittal systems, certain data analysis, and data repository services for the information requested under shareholder information agreements. 77 Such third-party vendor systems costs will vary significantly depending on the size of the fund complex, the frequency that information is requested, the length of time the information is stored, any analysis performed, a fund's preexisting internal resources, and many other factors. In the Paperwork Reduction Act section below, we have estimated the costs we believe an average fund will incur in building these systems internally, or in using a third party vendor to provide these services. The same commenter also suggested that intermediaries might incur third party vendor costs to store and process data, and make it available to funds, with such costs possibly ranging up to $170,000 in start up costs, and $360,000 a year in annual costs. 78 We have incorporated the estimates provided by commenters on the 2006 Proposing Release into the cost calculations we made for purposes of the Paperwork Reduction Act, and as a result have increased the cost estimates made in this release over the estimates provided in the 2006 Proposing Release. 79 77 *See* Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006). The commenter has informed our staff that the latest estimates it has received have been revised downwards to $620,000 a year for these services. 78 *Id.* 79 *See infra* Section VI. One commenter also suggested that funds and intermediaries might choose to hire additional staff to process information received under the rule, although it noted that if the current volume of transactions continues, a fund in its position probably would not need to hire additional staff. 80 Other commenters did not estimate the potential costs related to hiring additional staff, the number of additional staff that might be hired, or the likelihood that more staff would be needed. In some circumstances, funds or intermediaries might choose to hire additional staff to process information received under the rule, but funds and intermediaries are likely to have sufficient staff in place to monitor frequent trading abuses that violate fund policies, and therefore are unlikely to need more staff under the amended rule. 81 The rule, by requiring funds to set up formalized information-sharing networks with their intermediaries, might also result in more efficient monitoring of frequent trading by funds and possible opportunities to reduce staff. 80 *See* Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006). During further discussions with the commenter, it noted that the cost of hiring one additional analyst to monitor information received under rule 22c-2 and these amendments could be approximately $35,000-40,000 a year, exclusive of overhead. Although we believe that most funds will not need to hire additional staff to comply with rule 22c-2, we estimate that the cost of hiring one additional senior compliance examiner could be $347,000 a year, inclusive of overhead and other expenses (based on compensation estimates for a Senior Compliance Examiner, from the *Securities Industry Assoc., Report on Management & Professional Earnings in the Securities Industry* (2005), multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead). 81 *See, e.g.* , Compliance Programs of Investment Companies and Investment Advisers, *supra* note 43 at n.75 and surrounding text. In response to comments received on the 2006 Proposing Release, we have revised certain of our cost estimates upwards over those discussed in the 2006 Proposing Release. As further described in Section VI below, for purposes of the Paperwork Reduction Act, we have estimated that all funds will incur a total of approximately $47,500,000 82 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and receive the required identity and transaction information from intermediaries, and a total of $22,655,000 each year thereafter in operation costs related to the transmission and receipt of the information. 83 We have also estimated that financial intermediaries may incur $280,000,000 84 in one-time capital costs to develop or upgrade their software and other technological systems to collect, store, and transmit the required identity and transaction information to funds and from other intermediaries, and a total of $192,500,000 85 each year thereafter in operation costs related to the transmission and receipt of the information. These estimates were made for purposes of the Paperwork Reduction Act, and do not include certain costs, discussed above, that funds and intermediaries may incur which are not related to collections of information required by the rule. For example, the Paperwork Reduction Act estimates do not include all potential staffing costs, outside vendor analysis of information to discern trading patterns, or data repository costs that funds and intermediaries may incur in analyzing the information that they may collect under the agreements required by the rule. Although these are costs that funds and intermediaries may choose to incur, they are not required by the rule, and may vary significantly between every fund and intermediary depending on the frequency of data requests, their policies on frequent trading, their ability to analyze information, and many other factors. 82 This estimate, as well as many other estimates in this section may differ from the estimates made in the 2006 Proposing Release. These differences reflect new information provided to us by commenters, and are further discussed in Section VI. 83 *See* infra Section VI. 84 We estimate a total of approximately $327,500,000 in one time start-up costs ($280,000,000 + $47,500,000 = $327,500,000) for purposes of the Paperwork Reduction Act. 85 We estimate a total of approximately $215,155,000 in ongoing annual costs ($192,500,000 + $22,655,000 = $215,155,000) for purposes of the Paperwork Reduction Act. For the reasons discussed above, we anticipate that these amendments will not create additional costs beyond the rule as adopted. In fact, we anticipate that the amendments will significantly reduce costs to most market participants. 86 86 *See infra* note 135. V. Consideration of Promotion of Efficiency, Competition and Capital Formation Section 2(c) of the Investment Company Act requires the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is necessary or appropriate in the public interest, to consider whether the action will promote efficiency, competition, and capital formation. As discussed in the Cost-Benefit Analysis above, these amendments to rule 22c-2 are designed to reduce the burdens of the rule as adopted in 2005, while maintaining its investor protections. Funds will no longer be required to incur the expense of modifying or entering into agreements with omnibus accounts that they already effectively monitor by treating as individual investors, and would not need to enter into agreements with intermediaries that do not trade directly with the fund. These amendments will promote efficiency in the capital markets by enabling funds to focus their short-term trading deterrence efforts on those omnibus accounts that could be used to disguise this type of trading. These amendments will also promote efficiency by reducing the number of omnibus accountholders that would otherwise incur the expenses of entering into agreements, and of establishing and maintaining systems for collecting and sharing shareholder information. We do not anticipate that these amendments will harm competition. They apply to all market participants and, as discussed in the Cost-Benefit Analysis above, serve to reduce cost burdens for large funds as well as small funds. 87 Some commenters expressed concern that the rule as adopted may disproportionately burden small intermediaries, and thus hinder competition. 88 We anticipate that under these amendments, most omnibus accounts that are treated by the fund as individual investors will be small intermediaries. By excluding these small intermediaries from the rule's requirements, the amendments should serve to alleviate potential anti-competitive effects on small intermediaries. 87 *See supra* Section IV. 88 *See, e.g.* , Comment Letter of the Investment Company Institute (May 9, 2005). These amendments are designed to reduce the costs of imposing redemption fees for both funds and intermediaries. Even after these amendments, the competitive pressure of marketing funds, especially smaller funds, coupled with the costs of imposing redemption fees in omnibus accounts, may deter some funds from imposing redemption fees. Intermediaries may use their market power to prevent funds from applying the fees, or provide incentives for fund groups to waive fees. However, by reducing the costs of imposing redemption fees, we believe that these amendments will likely reduce such anti-competitive effects. We anticipate that these amendments may indirectly foster capital formation by reducing the costs of the rule for funds and intermediaries. If these cost savings are passed on to investors, they may increase investment in funds, thereby promoting capital formation. These amendments also may foster capital formation by improving the beneficial effect of the rule on investor confidence, because the rule is designed to permit funds to deter, and recoup the costs of, abusive short-term trading. To the extent that the amended rule enhances investor confidence in funds, investors are more likely to make assets available through intermediaries for investment in the capital markets. VI. Paperwork Reduction Act As discussed in the Adopting Release, 89 the rule includes “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995. 90 The Commission submitted the collections of information to the Office of Management and Budget (“OMB”) for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11, and OMB approved these collections of information under control number 3235-0620 (expiring 06/30/2009). The title for the collection of information requirements associated with the rule is “Rule 22c-2 under the Investment Company Act of 1940, Redemption fees for redeemable securities.” An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. 89 *See* Adopting Release, *supra* note 4, at Section V. 90 44 U.S.C. 3501-3520. In response to the 2006 Proposing Release, we received a number of comments on the estimates made in the Paperwork Reduction Act section, and which provided additional cost estimates and other information. 91 In light of those comments, we have revised upwards several of the per-fund estimates made in this section. However, because these amendments reduce the number of shareholder information agreements required, we estimate that the amendments should, in general, reduce the aggregate burden associated with the collections of information required by the rule, and will not create new collections of information. We have revised our previous burden estimates under the Paperwork Reduction Act to reflect
(i)new cost and time burden information that we have received from market participants, and
(ii)the revised number of entities that will be affected by the amended rule. 91 *See, e.g.* , Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006); Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). This revised Paperwork Reduction Act section contains a number of new cost and hour estimates that are significantly altered from the estimates made in the Adopting Release. Some of these estimates are based on different methods, and different sources, from those in the Adopting Release. Therefore there is not a strict comparability between the estimates made here and those made in the Adopting Release. These cost estimates, hourly rate estimates, and the methodology used to make these proposed estimates are based on comments we received in response to the Adopting Release and the 2006 Proposing Release, as well as information received from funds, intermediaries, and other market participants. 92 92 *See* 2006 Proposing Release, *supra* note 8, at Sections VI and VIII. In general, the cost estimates provided in this section are derived from rounded and weighted averages of the cost estimates provided during conversations with industry representatives that took place prior to the 2006 Proposing Release, combined with the additional information submitted by commenters on that release. Rule 22c-2 includes two distinct “collections of information” for purposes of the Paperwork Reduction Act. The first is related to shareholder information agreements, including the costs and time related to identifying the relevant intermediaries, drafting the agreements, negotiating new agreements or modifying existing ones, and maintaining the agreements in an easily accessible place. The second is related to the costs and time related to developing, maintaining, and operating the systems to collect, transmit, and receive the information required under the shareholder information agreements. 93 93 This second collection of information does not include potential costs or time that funds or intermediaries might incur in analyzing or using the provided information. Both collections of information are mandatory for funds that choose to redeem shares within seven days of purchase. These funds will use the information collected to ensure that shareholders comply with the fund's policies on abusive short-term trading of fund shares. There is a six year recordkeeping retention requirement for the shareholder information agreements required under the rule. Any responses that are provided in the context of the Commission's examination and oversight program are generally kept confidential. 94 94 For a discussion of restrictions on the disclosure of information under applicable privacy laws, *see supra* note 44. A. Shareholder Information Agreements The Commission staff anticipates that most shareholder information agreements will be entered into at the fund complex level, and estimates that there are approximately 900 fund complexes. The Commission staff understands that the number of intermediaries that hold fund shares can vary for each fund complex, from less than 10 for some fund complexes to more than 3000 for others. Based on conversations with fund and financial intermediary representatives that took place prior to the 2006 Proposing Release, our staff estimates that, on average, under the revised definition of financial intermediary, each fund complex has 300 financial intermediaries. We understand that most funds already know and previously identified the majority of their intermediaries that they do not treat as individual investors. Therefore, funds should expend a limited amount of time and costs related to the identification of such intermediaries. Our staff estimates that identifying the intermediaries with which a fund complex must enter into agreements may take the average fund complex 250 hours of a service representative's time at a cost of $40 per hour, 95 for a total of 225,000 hours at a cost of $9,000,000. 96 Our staff estimates that for a fund complex to prepare the model agreement, or provisions modifying a preexisting agreement, between the fund and the intermediaries, it will require a total of 5 hours of legal time at $300 per hour, for a total of 4500 hours 97 at a total cost of $1,350,000. 95 The title and hourly cost of the person performing the intermediary identification and entering into agreements may vary depending on the fund or financial intermediary. This $40 per hour cost is an average estimate for the hourly cost of employing the person doing the relevant work, derived from conversations with industry representatives that took place prior to the 2006 Proposing Release. 96 This estimate is based on the following calculations: 250 hours times 900 fund complexes equals 225,000 hours, and 225,000 hours times $40 equals $9,000,000. 97 This estimate is based on the following calculation: 5 hours times 900 fund complexes equals 4500 hours of legal time. The Commission staff estimates that for a fund complex to enter into or modify a shareholder information agreement with each existing intermediary, it will require a total one-time expenditure of approximately 2.5 hours of fund time and 1.5 hours of intermediary time for each agreement, for a total of 4 hours expended per agreement. 98 Therefore, for an average fund complex to enter into shareholder agreements, the fund complex and its intermediaries may expend approximately 1200 hours at a cost of $48,000, 99 and all fund complexes and intermediaries may incur a total one-time burden of 1,080,000 hours at a cost of $43,200,000. 100 The Commission staff understands that there are efforts under way (including an industry task force devoted to the project) to produce standardized shareholder information-sharing model agreements and terms. 101 These efforts may reduce the costs associated with the agreement provision of the rule for both funds and intermediaries. 102 Finally, the Commission staff does not anticipate that funds or intermediaries will incur any new costs in maintaining these agreements in an easily accessible place, because such maintenance is already done as a matter of course. 98 The 4 hour figure represents time incurred by both the fund and the financial intermediary for each agreement. The Commission staff estimates that this 4 hour figure is comprised of approximately 2.5 hours of a fund service representative's time at $40 per hour and 1.5 hours of an intermediary representative's time at $40 per hour. 99 This estimate is based on the following calculations: 4 hours times 300 intermediaries equals 1200 hours; and 1200 hours times $40 dollars per hour equals $48,000. 100 This estimate is based on the following calculations: 1200 hours times 900 fund complexes equals 1,080,000 hours; and 1,080,000 hours times $40 per hour equals $43,200,000. 101 *See* 2006 Proposing Release, *supra* note 8, at text accompanying n.45. 102 *See, e.g.,* Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). The staff therefore estimates that, for purposes of the Paperwork Reduction Act, the shareholder information agreement provision of the rule as revised will require a total of 1,309,500 hours at a total cost of $53,550,000. 103 103 This estimate is based on the following calculations: 4500 hours of legal drafting time plus 1,080,000 hours of agreement negotiating time plus 225,000 hours of intermediary identification time equals 1,309,500 total hours; and $43,200,000 plus $1,350,000 plus $9,000,000 equals $53,550,000. B. Information-Sharing Some funds and intermediaries will incur the system development costs discussed in this section, but many will not because they already process all of their trades on a fully disclosed basis, use a third party administrator to handle their back office work, 104 or already have systems in place that allow intermediaries to transmit the shareholder identity and transaction information to funds. Other funds and intermediaries may have special circumstances that may increase the costs they face in developing and operating systems to comply with the rule. The estimates below represent the Commission staff's understanding of the average costs that might be encountered by a typical fund complex or intermediary in complying with the information-sharing aspect of the rule as amended. 104 Third party administrators maintain accounts for many other intermediaries, and therefore incur the costs to develop a single system. 1. Funds The Commission staff understands that various organizations have developed, or are in the process of developing, enhancements to their systems that will allow funds and intermediaries to share the information required by the rule without developing or maintaining systems of their own. 105 Our staff anticipates that most funds and intermediaries will use these systems, and will generally make minor changes to their back office systems to comply with the rule requirements and to match their systems to those of the service providers. Our staff estimates that most funds could adapt their in-house systems to utilize these service providers' systems at a one-time cost of approximately $10,000 or less. 106 Although the costs that systems providers will charge may vary, one large provider has indicated that it plans to charge a monthly fee of $200 and fees of 25 cents for every 100 account transactions requested through the service. 107 105 These service providers systems include the National Securities Clearing Corporation's Fund/SERV system, as well as other systems being developed by a number of other providers such as SunGard, BISYS, AccessData, and Charles Schwab. *See, e.g.* , Comment Letter of AccessData Corp. (Apr. 10, 2006). 106 We expect that, in many cases, upgrades to fund transfer agents' as well as fund complex's systems will take place, and the transfer agents' costs will be charged back to the fund complex 107 *See* National Securities Clearing Corporation, Networking Service to Support SEC Rule 22c-2, Important Notice A #6228, P&S #5798 (Apr. 12, 2006) ( *available at http://www.nscc.com/impnot/notices/notice2006/a6228.pdf.* ) As an example of the cost of using these services, if a fund complex requests information for 100,000 transactions each week, 108 then it would incur costs of $250 each week, or $13,000 a year, plus the monthly fee of $200, equaling $2,400 a year, for a total cost of $15,400 a year. 109 Our staff estimates that approximately 475 fund complexes would use these systems (including substantially all of the largest, and most of the medium-sized, fund complexes). If all of these complexes use these service providers' systems at the rate described above, they would incur a one-time system development cost of $4,750,000 110 and an annual system use cost of approximately $7,315,000. 111 Those 475 fund complexes may also incur system development costs related to the processing of information under the rule on trades that they receive through other channels than these service providers' systems, which we estimate to cost an average approximately $50,000 per fund complex, and $20,000 annually, 112 for a total of $23,750,000 113 in system development costs and $9,500,000 annually. 114 Our staff estimates that the total system development cost for these 475 fund complexes that are likely to use these existing systems is $28,500,000 with annual operation costs of $16,815,000. 115 108 The number of transactions and weekly request used here is an example, and is not intended to be a guideline as to how often a fund should request information under the rule. The frequency of information requests could vary significantly based on a wide variety of factors, as discussed in Section II.C above. 109 This estimate is based on the following calculations: 100,000 transaction requests times one quarter of a cent (the charge is 25 cents per 100 transactions requested, or one quarter of a cent per transaction) equals $250; $250 times 52 weeks equals $13,000; $200 monthly charges times 12 months equals $2,400; and $13,000 plus $2,400 equals $15,400. The costs of utilizing these services may vary widely, based on the frequency funds make information sharing requests, and the number of accounts requested. 110 This estimate is based on the following calculation: 475 fund complexes times $10,000 (one-time system update costs) equals $4,750,000. 111 This estimate is based on the following calculation: 475 fund complexes times $15,400 (annual costs) equals $7,315,000. 112 In response to the 2006 Proposing Release, many commenters discussed the difficulty of estimating the costs of creating and operating information-sharing systems. As a result, very few monetary cost estimates were submitted by commenters. One fund commenter did provide some monetary estimates, and noted that although it agreed that many of the cost estimates made in the 2006 Proposing Release were reasonable, it believed that the Commission may have underestimated some of the costs it will likely encounter when designing and operating information sharing systems. *See* Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006). The commenter noted that additional staffing, data repository, and intermediary vendor costs related to information sharing systems may result in costs significantly higher than those estimated in the Paperwork Reduction Act section of the 2006 Proposing Release. We agree that these may be significant costs, but note that the estimates made in this section are limited to the scope of the Paperwork Reduction Act, and therefore do not include all of the costs encountered by funds and intermediaries in implementing the rule that are not related to a “collection of information” as defined under that Act. 44 U.S.C. 3501-3520. Other costs and benefits of the rule, including the costs mentioned by that and other commenters, are discussed in Section IV of this Release. 113 This estimate is based on the following calculation: 475 fund complexes times $50,000 system development cost per fund complex equals $23,750,000. 114 This estimate is based on the following calculation: 475 fund complexes times $20,000 annual costs per fund complex equals $9,500,000. 115 This estimate is based on the following calculations: $23,750,000 plus $4,750,000 (one-time system development costs) equals $28,500,000 total start-up costs for fund complexes utilizing existing systems; and $7,315,000 plus $9,500,000 equals $16,815,000 in annual costs. There are approximately 900 fund complexes currently operating, of which approximately 475 may use these existing systems, leaving approximately 425 fund complexes possibly needing to develop specific systems to meet their own particular needs. Our staff understands that approximately 75 percent of those fund complexes (or 319 complexes) are small to medium-sized direct-sold funds that have a very limited number of intermediaries. Our staff anticipates that those 319 fund complexes would incur minimal system development costs to comply with the information-sharing provisions of the rule, due to the limited number of intermediaries with which they interact. Our staff estimates that system development costs for handling information under the rule for those 319 fund complexes will be approximately $25,000 each, with annual operation costs of approximately $10,000, for a total system development cost of $7,975,000 116 and an annual operations cost of $3,190,000. 117 116 This estimate is based on the following calculation: 319 funds times $25,000 equals $7,975,000. 117 This estimate is based on the following calculation: 319 funds times $10,000 equals $3,190,000. The remaining approximately 106 fund complexes may face additional complexities or special circumstances in developing their systems. Our staff estimates that the start-up costs for those fund complexes will be approximately $100,000 per fund complex and the annual costs for handling the information will be approximately $25,000, for a total start-up cost of $10,600,000 and an annual cost of $2,650,000 for these fund complexes. 118 118 This estimate is based on the following calculations: 106 funds times $100,000 equals $10,600,00; and 106 funds times $25,000 equals $2,650,000. For purposes of the Paperwork Reduction Act, our staff therefore estimates that the information-sharing provisions of the rule as amended will cost all fund complexes a total of approximately $100,625,000 in one-time capital costs to enter into agreements and develop or upgrade their software and other technological systems that allows them to collect, store, and receive the required identity and transaction information from intermediaries, and a total of $22,655,000 each year thereafter in operation costs related to the transmission and receipt of the information. 119 119 This estimate is based on the following calculations: $28,500,000 (funds that use service providers start-up costs) plus $7,975,000 (direct-traded funds' start-up costs) plus $10,600,000 (other funds' start-up costs) equals $47,075,000 system development costs; $47,075,000 (system development costs) plus $53,550,000 (agreement costs) equals $100,625,000 total fund start-up costs; and $16,815,000 (funds that use service providers annual costs) plus $3,190,000 (direct-traded funds' annual costs) plus $2,650,000 (other funds' annual costs) equals $22,655,000 annual funds' costs. 2. Intermediaries The Commission staff estimates that there are approximately 7000 intermediaries that may provide information pursuant to the information-sharing provisions of rule 22c-2. 120 Of those 7000 intermediaries, our staff anticipates that approximately 350 of these intermediaries are likely to primarily use the existing systems that are in place or under development. The staff understands that these approximately 350 intermediaries include several major “clearing brokers” and third-party administrators that aggregate trades and handle the back-end work for thousands of other smaller broker-dealers and intermediaries, thereby providing access to these service providers' information-sharing systems to a significant majority of all intermediaries in the marketplace. Our staff estimates that these approximately 350 intermediaries will provide access to systems that will allow for the transmission of information required by the rule and other processing for the transactions of approximately 80 percent of the 7,000 intermediaries (5,600 intermediaries) affected by the rule, leaving 1,400 intermediaries that do not in some way utilize these systems, that may need to develop their own systems. 121 120 This number is a rounded estimate, based on the number of intermediaries that may be affected by the rule. The number consists of the following: 2,203 broker-dealers classified as specialists in fund shares, 196 insurance companies sponsoring registered separate accounts organized as unit investment trusts, approximately 2,400 banks that sell funds or variable annuities (the number of banks is likely over inclusive because it may include a number of banks that do not sell registered variable annuities or funds, or banks that do their business through a registered broker-dealer on the same premises), and approximately 2,000 retirement plans, third-party administrators, and other intermediaries (this number may be either over or under inclusive, because under the rule as we are amending it, the actual number of intermediaries that funds have is dependent on the precise application of varying fund policies on short-term trading). 121 This number is based on the following calculation: 7,000 total intermediaries times 20% (the percentage of intermediaries that do not use these service providers systems or use the services of those 350 intermediaries that use those service provider systems) equals 1,400 intermediaries that do not use service providers' systems. Our staff understands that in general, the providers who have developed or are developing these information sharing systems charge the fund, and not the intermediary, for providing these systems to transmit shareholder identity and transaction information, or else include access to such systems as a complementary part of their other processing systems, and do not charge additional fees to intermediaries for its utilization. These intermediaries may be required to develop systems to ensure that they are able to transmit the records to these service providers in a standardized format. 122 Our staff estimates that it will cost each of these 350 intermediaries approximately $200,000 to update its systems to record and transmit shareholder identity and transaction records to these service providers, and an additional $100,000 each year to operate their own systems for communicating with the service providers, for a total start-up cost of $70,000,000, and an annual cost of $35,000,000. 123 We understand that these approximately 350 intermediaries may also have to upgrade their systems to handle rule 22c-2 information on trades that do not go through the service providers' systems. Our staff estimates that it will cost each of those 350 intermediaries 124 an additional $400,000 125 to update their systems, and $250,000 126 annually to process this information through non-service provider networks, for a total cost of $140,000,000 in system development costs and $87,500,000 in annual costs to process data through non-service provider networks. 127 We have increased these estimates over those made in the 2006 Proposing Release in light of the new cost information provided to us by the commenters in 2006. Our staff therefore estimates that these approximately 350 intermediaries will incur a total of approximately $210,000,000 in start-up costs and $122,500,000 in annual costs associated with the information-sharing provisions of the rule. 128 122 Our staff anticipates that in most cases, first-tier intermediaries will use the same or slightly modified systems that have been developed to identify and transmit shareholder identity and transaction information to funds when collecting and transmitting this information from indirect intermediaries. Therefore, we have also included the costs of developing and operating systems to collect information from indirect intermediaries and providing the information to funds in these estimates. 123 This estimate is based on the following calculations: 350 broker-dealer times $200,000 (start-up costs) equals $70,000,000; and 350 broker-dealer times $100,000 (start-up costs and annual costs) equals $35,000,000. 124 The estimate includes higher costs for these 350 intermediaries in developing systems to handle non-service provider information than for remaining intermediaries to handle the same data due to our staff's understanding that, in general, these 350 intermediaries that utilize the service provider's networks represent the largest intermediaries in the marketplace, and will face the highest costs in complying with the rule. 125 Many of the costs that intermediaries incur in developing and operating systems to handle this information may be recouped from fund complexes through a variety of methods. However, it is unclear what recoupment might take place, and therefore the cost estimates for funds and intermediaries are made here prior to any potential recoupment. 126 In response to the 2006 Proposing Release, a few commenters provided additional cost estimates regarding the costs intermediaries may face in designing and operating information sharing systems under the amended rule. One commenter estimated that some intermediary system start-up costs may range from approximately $125,000 to $2,300,000, and that ongoing annual costs may range from $150,000 to approximately $1,000,000. *See* Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). Another commenter estimated that for some insurance company intermediaries, the cost to comply with all aspects of the redemption fee rule could exceed $2,000,000 per company. *See* Comment Letter of the National Association for Variable Annuities (Apr. 7, 2006). We have incorporated this additional information into our calculations for our revised estimates. 127 This estimate is based on the following calculations: 350 broker-dealers times $400,000 (start-up costs) equals $140,000,000; and 350 broker-dealers times $250,000 (annual costs) equals $87,500,000. 128 This estimate is based on the following calculations: $70,000,000 (intermediary start-up costs for processing information through service providers) plus $140,000,000 (intermediary start-up costs for handling information through other channels) equals $210,000,000; and $35,000,000 (intermediary annual costs for processing information through service providers) plus $87,500,000 (intermediary annual costs for handling information through other channels) equals $122,500,000. The fund complexes and intermediaries that do not use these service providers' systems to process their trades will have to either develop their own systems to share information under the rule or engage some other third-party administrator to process the information. Our staff estimates that approximately 1,400 intermediaries will not utilize these service provider systems to process this information, and estimates that each of these intermediaries will incur $50,000 in system development costs and $50,000 in annual costs in complying with the rule, for a total of $70,000,000 in development costs and $70,000,000 in annual costs for those intermediaries. 129 129 This estimate is based on the following calculations: 1,400 intermediaries times $50,000 (development costs) equals $70,000,000; and 1,400 intermediaries times $50,000 (annual costs) equals $70,000,000. Although the amended rule does not require first-tier intermediaries to enter into agreements with their indirect intermediaries to share the indirect intermediaries' underlying shareholder data to funds upon a fund's request, we anticipate that in many cases, intermediaries will nonetheless enter into such agreements, or at least enter into informal arrangements and design methods by which to collect the shareholder information. Our staff estimates that each of the 7,000 intermediaries potentially affected by the rule will spend approximately 150 hours of service representatives' time at $40 per hour, and 10 hours of legal counsel time at $300 per hour, for a total of 1,050,000 hours of service representatives' time at a cost of $42,000,000, and 70,000 hours of in-house legal time at a cost of $21,000,000 to design and enter into these arrangements with other intermediaries. 130 The Commission staff therefore estimates that intermediaries will expend a total of approximately 1,120,000 hours at a cost of $63,000,000 to enter into arrangements to ensure the proper transmittal of information to funds through chains of intermediaries. 131 130 This estimate is based on the following calculations: 7,000 intermediaries times 150 service representative hours at $40 per hour equals 1,050,000 hours at a cost of $42,000,000; and 7,000 intermediaries times 10 hours of in-house legal time at $300 per hour equals 70,000 hours at a cost of $21,000,000. 131 This estimate is based on the following calculations: 1,050,000 service representative hours at $42,000,000 plus 70,000 in-house counsel hours at $21,000,000 equals 1,120,000 hours at $63,000,000. Our staff estimates that the information-sharing provisions of the rule will cost all intermediaries a total of approximately $343,000,000 in one-time capital costs to enter into agreements and develop or upgrade their software and other technological systems to collect, store, and transmit the required identity and transaction information to funds and from other intermediaries, and a total of $192,500,000 each year thereafter in operation costs related to the transmission and receipt of the information. 132 132 This estimate is based on the following calculations: $210,000,000 (intermediaries that use service providers start-up costs) plus $70,000,000 (other intermediaries' start-up costs) plus $63,000,000 (intermediary agreement costs) equals $343,000,000 in intermediary start-up costs; and $122,500,000 (annual costs of intermediaries that use service providers) plus $70,000,000 (other intermediaries' annual costs) equals $192,500,000 in annual costs. C. Total Costs and Hours Incurred For purposes of the Paperwork Reduction Act, our staff estimates that the amended rule will have a total collection of information cost in the first year to both funds and intermediaries of $443,625,000 in one-time start-up costs, and annual operation costs of $215,155,000. 133 Our staff estimates that the weighted average annual cost of the rule to funds and intermediaries for each of the first three years would be $363,030,000. 134 The total hours expended by both funds and intermediaries in complying with the amended rule will be a one-time expenditure of 2,429,500 hours at a total internal cost of $116,550,000. 135 We anticipate that there will be a total of approximately 7900 136 respondents, with approximately 14,310,000 total responses in the first year, and 14,040,000 annual responses each year thereafter. 137 133 This estimate is based on the following calculations: $100,625,000 (fund start-up costs) plus $343,000,000 (intermediary start-up costs) equals $443,625,000 in total start-up costs; and $22,655,000 (fund annual costs) plus $192,500,000 (intermediary annual costs) equals $215,155,000 in total annual costs. 134 This estimate is based on the following calculations: $443,625,000 in total start-up costs plus $645,465,000 (3 years at $215,155,000 in total annual costs) equals $1,089,090,000 in total costs over a three-year period. $1,089,090,000 divided by three years, equals a weighted average cost of $363,030,000 per year. 135 This estimate is based on the following calculations: 1,309,500 hours at a cost of $53,550,000 in agreement time plus 1,120,000 hours at a cost of $63,000,000 in chain of intermediary arrangement time equals 2,429,500 hours at a cost of $116,550,000. For purposes of the Paperwork Reduction Act, Section VI of the Adopting Release, *supra* note 4, included an estimate of the total start-up costs to funds and financial intermediaries in complying with the collection of information aspect of the rule of approximately $1,111,500,000. We now estimate that funds and intermediaries will incur the reduced amount of $443,625,000 in start-up costs, for a potential cost reduction of approximately $667,875,000 resulting from the amendments. In the Adopting Release we also estimated that the ongoing annual costs will be $390,556,800. We now estimate that after these amendments funds and intermediaries will incur the reduced amount of $215,155,000 in total annual costs, for a potential ongoing annual cost reduction of approximately $175,401,800 resulting from the amendments. 136 This estimate is based on the following calculation: 7,000 intermediaries plus 900 fund complexes equals 7,900 respondents. 137 This estimate is based on the following calculation: 900 fund complexes with an average of 300 intermediaries each, equals 270,000 one time responses for the shareholder information portion of the collection (900 funds times 300 intermediaries equals 270,000). Assuming that each fund requests information from each of its intermediaries once each week (we have revised our initial monthly assumption to a weekly assumption, although we expect that the frequency of requests will vary significantly between funds depending on their circumstances), the total number of annual responses would be 14,040,000 (270,000 fund intermediaries times 52 weeks equals 14,040,000 annual responses). Therefore, in the first year, there would be 14,310,000 total responses (14,040,000 weekly responses plus the 270,000 initial responses required for the agreements) and 14,040,000 annual responses thereafter. VII. Final Regulatory Flexibility Analysis This Final Regulatory Flexibility Analysis (“FRFA”) has been prepared in accordance with 5 U.S.C. 604. It relates to amendments to rule 22c-2 under the Investment Company Act, which we are adopting in this Release. The Initial Regulatory Flexibility Analysis (“IRFA”) which was prepared in accordance with 5 U.S.C. 603 was published in the 2006 Proposing Release. A. Need For and Objectives of Rule Rule 22c-2 allows funds to recover some, if not all, of the direct and indirect ( *e.g.* , market impact and opportunity) costs incurred when shareholders engage in short-term trading of the fund's shares, and to deter this short-term trading. As discussed more fully in Sections I and II of this Release, the amendments to rule 22c-2 are necessary to clarify the operation of the rule, to enable funds and intermediaries to reduce costs associated with entering into agreements under the rule, and to enable funds to focus their short-term trading deterrence efforts on the entities most likely to violate fund policies. These amendments also set forth the limitations on transactions between a fund and an intermediary with whom the fund does not have an agreement. B. Significant Issues Raised By Public Comment We requested comment on the IRFA. We specifically requested comment on the number of small entities that would be affected by the rule amendments, and the likely effect of the amendments on small entities, the nature of any impact, and any empirical data supporting the extent of the impact. We received a number of comments discussing the impact that the rule amendments will have on small entities in the mutual fund marketplace. Generally, these comments supported the rule amendments, and agreed that the amendments would reduce the costs of compliance with the rule for small entities, and would reduce the number of small entities that would be required to comply with the rule. 138 They indicated that the rule amendments would reduce costs for all mutual fund marketplace participants and would alleviate many of the concerns they had expressed with the rule as it was originally adopted. 138 *See, e.g.* , Comment Letter of the Investment Company Institute (Apr. 10, 2006); Comment Letter of Charles Schwab & Co., Inc. (Apr. 10, 2006). Although most commenters supported the rule amendments, some commenters also suggested other changes that may reduce the costs of compliance. A few commenters noted that as proposed, the amended rule might have posed some difficulties to funds (including small funds) in contracting with certain entities that do not qualify as financial intermediaries under the rule, but who nevertheless submit trades directly to funds on behalf of financial intermediaries. 139 In light of this concern, we have clarified the amended rule to require that if a financial intermediary submits orders directly, itself or through its agent, the fund must enter into a shareholder information agreement with that financial intermediary. This clarification should eliminate any confusion and attendant costs to small entities in determining whether and with which entities funds must enter into shareholder information agreements. 139 *See, e.g.* , Comment Letter of T. Rowe Price Associates, Inc. (Apr. 10, 2006); Comment Letter of Matrix Settlement & Clearing Services, L.L.C. (Apr. 10, 2006); and Comment Letter of the Investment Company Institute (Apr. 10, 2006). Some commenters noted that in some cases (such as foreign shareholders) Taxpayer Identification Numbers (“TINs”) may not always be available, and suggested that the rule allow for the use of alternate forms of identification in those cases. 140 To reduce the costs of compliance, alleviate any confusion, and provide flexibility to funds and intermediaries, we have revised the rule to allow for the use of Individual Taxpayer Identification Numbers or other government issued identifiers when a TIN is not available. 140 *See* Comment Letter of the Investment Company Institute (Apr. 10, 2006); Supplemental Comment Letter of the SPARK Institute, Inc. (May 1, 2006). We also received many comments requesting an extension of the compliance date. Commenters noted that with the uncertainty accompanying the exact requirements of the rule, the significant technical challenges associated with compliance, and the current unsettled state of contracting and information sharing standards in the marketplace it would be very beneficial to provide an extended compliance date. We agree, and are extending the compliance date for all entities. 141 141 *See* *supra* Section III. C. Small Entities Subject to the Rule A small business or small organization (collectively, “small entity”) for purposes of the Regulatory Flexibility Act is a fund that, together with other funds in the same group of related investment companies, has net assets of $50 million or less as of the end of its most recent fiscal year. 142 Of approximately 3,925 funds (2,700 registered open-end investment companies and 825 registered unit investment trusts), approximately 163 are small entities. 143 A broker-dealer is considered a small entity if its total capital is less than $500,000, and it is not affiliated with a broker-dealer that has $500,000 or more in total capital. 144 Of approximately 7,000 registered broker-dealers, approximately 880 are small entities. 142 17 CFR 270.0-10. 143 Some or all of these entities may contain multiple series or portfolios. If a registered investment company is a small entity, the portfolios or series it contains are also small entities. 144 17 CFR 240.0-10. As discussed above, rule 22c-2 provides funds and their boards with the ability to impose a redemption fee designed to reimburse the fund for the direct and indirect costs incurred as a result of short-term trading strategies, such as market timing. These amendments are designed to maintain these investor protections while reducing costs to market participants and clarifying the operation of the rule. While we expect that the rule and these amendments will require some funds and intermediaries to develop or upgrade software or other technological systems to enforce certain market timing policies, or make trading information available in omnibus accounts, the amendments we are adopting today are specifically designed to reduce the costs incurred by small entities. In particular, we anticipate that the changes we are making to the definition of financial intermediary will significantly reduce the number of small intermediaries that funds must enter into agreements with, and reduce the burden of complying with the rule for small funds and small intermediaries. D. Reporting, Recordkeeping, and Other Compliance Requirements These amendments do not introduce any new mandatory reporting requirements. Rule 22c-2 already contains a mandatory recordkeeping requirement for funds that redeem shares within seven days of purchase. The fund must retain a copy of the written agreement between the fund and financial intermediary under which the intermediary agrees to provide the required shareholder information in omnibus accounts. 145 The amendments reduce the number of small entities that would otherwise be subject to this recordkeeping requirement. 145 Rule 22c-2(a)(3). E. Commission Action to Minimize Effect on Small Entities The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities. Alternatives in this category would include:
(i)Establishing different compliance or reporting standards that take into account the resources available to small entities;
(ii)clarifying, consolidating, or simplifying the compliance requirements under the rule for small entities;
(iii)using performance rather than design standards; and
(iv)exempting small entities from coverage of the rule, or any part of the rule. The Commission does not presently believe that these amendments would require the establishment of special compliance requirements or timetables for small entities. These amendments are specifically designed to reduce any unnecessary burdens on all funds (including small funds) and on small intermediaries. To establish special compliance requirements or timetables for small entities may in fact disadvantage small entities by encouraging larger market participants to focus primarily on the needs of larger entities when establishing the information-sharing systems envisioned by the rule and these proposed amendments, and possibly ignoring the needs of smaller entities. With respect to further clarifying, consolidating, or simplifying the compliance requirements of the rule, using performance rather than design standards, and exempting small entities from coverage of these amendments or any part of the rule, we believe additional such changes would be impracticable. These amendments in effect except a large number of smaller entities from the scope of the rule, by revising the definition of financial intermediary. We have designed these amendments to reduce the cost and compliance burden on small entities to the greatest extent practicable while still maintaining the investor protections of the rule as adopted. Small entities are as vulnerable to the problems uncovered in recent enforcement actions and settlements as large entities. Therefore, shareholders of small entities are equally in need of protection from short-term traders. We believe that the rule and these amendments will enable funds to more effectively discourage short-term trading of all fund shares, including those held in omnibus accounts. Further excepting small entities from coverage of the rule or any part of the rule could compromise the effectiveness of the rule. We anticipate that the amendments will alleviate much of the burden imposed by the rule on small entities, and result in a more cost effective system for discouraging short-term trading for all entities. Alternatives that we considered but are not adopting included, among others,
(i)fully exempting all small entities from complying with the information-sharing aspect of the rule,
(ii)not requiring that the information-sharing agreement obligate first-tier intermediaries to assist in providing information from indirect intermediaries to funds, and
(iii)extending the compliance date for small entities. VIII. Statutory Authority The Commission is amending rule 22c-2 pursuant to the authority set forth in sections 6(c), 22(c), and 38(a) of the Investment Company Act [15 U.S.C. 80a-6(c), 80a-22(c) and 80a-37(a)]. List of Subjects in 17 CFR Part 270 Investment companies, Reporting and recordkeeping requirements, Securities. Text of Amended Rule For reasons set out in the preamble, Title 17, Chapter II of the Code of Federal Regulations is amended as follows: PART 270—RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940 1. The authority citation for part 270 continues to read in part as follows: Authority: 15 U.S.C. 80a-1 *et seq.* , 80a-34(d), 80a-37, and 80a-39, unless otherwise noted. 2. Section 270.22c-2 is revised to read as follows: § 270.22c-2 Redemption fees for redeemable securities.
(a)*Redemption fee* . It is unlawful for any fund issuing redeemable securities, its principal underwriter, or any dealer in such securities, to redeem a redeemable security issued by the fund within seven calendar days after the security was purchased, unless it complies with the following requirements:
(1)*Board determination* . The fund's board of directors, including a majority of directors who are not interested persons of the fund, must either:
(i)Approve a redemption fee, in an amount (but no more than two percent of the value of shares redeemed) and on shares redeemed within a time period (but no less than seven calendar days), that in its judgment is necessary or appropriate to recoup for the fund the costs it may incur as a result of those redemptions or to otherwise eliminate or reduce so far as practicable any dilution of the value of the outstanding securities issued by the fund, the proceeds of which fee will be retained by the fund; or
(ii)Determine that imposition of a redemption fee is either not necessary or not appropriate.
(2)*Shareholder information* . With respect to each financial intermediary that submits orders, itself or through its agent, to purchase or redeem shares directly to the fund, its principal underwriter or transfer agent, or to a registered clearing agency, the fund (or on the fund's behalf, the principal underwriter or transfer agent) must either:
(i)Enter into a shareholder information agreement with the financial intermediary (or its agent); or
(ii)Prohibit the financial intermediary from purchasing in nominee name on behalf of other persons, securities issued by the fund. For purposes of this paragraph, “purchasing” does not include the automatic reinvestment of dividends.
(3)*Recordkeeping* . The fund must maintain a copy of the written agreement under paragraph (a)(2)(i) of this section that is in effect, or at any time within the past six years was in effect, in an easily accessible place.
(b)*Excepted funds* . The requirements of paragraph
(a)of this section do not apply to the following funds, unless they elect to impose a redemption fee pursuant to paragraph (a)(1) of this section:
(1)Money market funds;
(2)Any fund that issues securities that are listed on a national securities exchange; and
(3)Any fund that affirmatively permits short-term trading of its securities, if its prospectus clearly and prominently discloses that the fund permits short-term trading of its securities and that such trading may result in additional costs for the fund.
(c)*Definitions* . For the purposes of this section:
(1)*Financial intermediary* means:
(i)Any broker, dealer, bank, or other person that holds securities issued by the fund, in nominee name;
(ii)A unit investment trust or fund that invests in the fund in reliance on section 12(d)(1)(E) of the Act (15 U.S.C. 80a-12(d)(1)(E)); and
(iii)In the case of a participant-directed employee benefit plan that owns the securities issued by the fund, a retirement plan's administrator under section 3(16)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(16)(A)) or any person that maintains the plan's participant records.
(iv)*Financial intermediary* does not include any person that the fund treats as an individual investor with respect to the fund's policies established for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund.
(2)*Fund* means an open-end management investment company that is registered or required to register under section 8 of the Act (15 U.S.C. 80a-8), and includes a separate series of such an investment company.
(3)*Money market fund* means an open-end management investment company that is registered under the Act and is regulated as a money market fund under § 270.2a-7.
(4)*Shareholder* includes a beneficial owner of securities held in nominee name, a participant in a participant-directed employee benefit plan, and a holder of interests in a fund or unit investment trust that has invested in the fund in reliance on section 12(d)(1)(E) of the Act. A shareholder does not include a fund investing pursuant to section 12(d)(1)(G) of the Act (15 U.S.C. 80a-12(d)(1)(G)), a trust established pursuant to section 529 of the Internal Revenue Code (26 U.S.C. 529), or a holder of an interest in such a trust.
(5)*Shareholder information agreement* means a written agreement under which a financial intermediary agrees to:
(i)Provide, promptly upon request by a fund, the Taxpayer Identification Number (or in the case of non U.S. shareholders, if the Taxpayer Identification Number is unavailable, the International Taxpayer Identification Number or other government issued identifier) of all shareholders who have purchased, redeemed, transferred, or exchanged fund shares held through an account with the financial intermediary, and the amount and dates of such shareholder purchases, redemptions, transfers, and exchanges;
(ii)Execute any instructions from the fund to restrict or prohibit further purchases or exchanges of fund shares by a shareholder who has been identified by the fund as having engaged in transactions of fund shares (directly or indirectly through the intermediary's account) that violate policies established by the fund for the purpose of eliminating or reducing any dilution of the value of the outstanding securities issued by the fund; and
(iii)Use best efforts to determine, promptly upon request of the fund, whether any specific person about whom it has received the identification and transaction information set forth in paragraph (c)(5)(i) of this section, is itself a financial intermediary (“indirect intermediary”) and, upon further request by the fund:
(A)Provide (or arrange to have provided) the identification and transaction information set forth in paragraph (c)(5)(i) of this section regarding shareholders who hold an account with an indirect intermediary; or
(B)Restrict or prohibit the indirect intermediary from purchasing, in nominee name on behalf of other persons, securities issued by the fund. Dated: September 27, 2006. By the Commission. Nancy M. Morris, Secretary. [FR Doc. E6-16273 Filed 10-2-06; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 388 [Docket No. RM06-24-000; Order No. 683] Critical Energy Infrastructure Information Issued September 21, 2006. AGENCY: Federal Energy Regulatory Commission. ACTION: Final rule. SUMMARY: The Federal Energy Regulatory Commission (Commission) is issuing this final rule amending its regulations for gaining access to Critical Energy Infrastructure Information (CEII). The definition of CEII is being clarified to exclude information that the Commission never intended to be deemed as containing critical infrastructure information. In addition, procedural changes are being made based on over three years experience processing CEII requests. These changes simplify the procedures for obtaining access to CEII without increasing vulnerability of the energy infrastructure. DATES: *Effective Date:* The rule will become effective November 2, 2006. FOR FURTHER INFORMATION CONTACT: Teresina A. Stasko, Office of the General Counsel, GC-13, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 202-502-8317. SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. 1. It has been over three years since the Commission issued its final order on Critical Energy Infrastructure Information (CEII). *See* Critical Energy Infrastructure Information, Order No. 630, 68 FR 9857 (Mar. 3, 2003), FERC Stats. & Regs. ¶ 31,140 (2003); *order on reh'g* , Order No. 630-A, 68 FR 46456 (Aug. 6, 2003), FERC Stats. & Regs. ¶ 31,147 (2003). Since the issuance of Order No. 630, the Commission has continually monitored and evaluated the effectiveness of the CEII process. The most recent review indicates that changes are needed to assure the rules work in the manner intended. 2. As explained below, the Commission makes strictly procedural changes in this instant and final rule. In a notice of proposed rulemaking in Docket No. RM06-23-000, which is being issued concurrently with this final rule, the Commission proposes other changes, which require notice and comment. *See* 5 U.S.C. 553 (2000). 3. In this final rule the Commission clarifies and limits the definition of CEII to minimize the amount of information which qualifies as CEII, and makes the following changes to its regulations:
(1)The definition of CEII is clarified; and
(2)requesters are required to submit executed non-disclosure agreements
(NDA)with their requests. In addition, the Commission is providing notice that, for CEII requests, the notice and opportunity to comment on a request will be combined with the notice of release. The Commission further takes this opportunity to reiterate its requirement that submitters segregate CEII from other information and file as CEII only information which truly warrants being kept from public access. Accordingly, this rule is being issued as an instant and final rule because it only concerns procedural matters. *See* 5 U.S.C. 553(b)(3)(A) (2000). 4. In a notice of proposed rulemaking in Docket No. RM06-23-000 issued concurrently with this final rule, the Commission seeks comments on, among other things:
(1)Revisions to its regulations regarding CEII requests;
(2)the limited portions of various forms and reports the Commission now defines as containing CEII; and
(3)its proposal to abolish the non-Internet public
(NIP)designation. Background 5. The Commission began its efforts with respect to CEII shortly after the attacks of September 11, 2001. *See* Statement of Policy on Treatment of Previously Public Documents, 66 FR 52917 (Oct. 18, 2001), 97 FERC ¶ 61,130 (2001). The Commission's initial step was to remove from its public files and Internet page documents such as oversized maps that were likely to contain detailed specifications of facilities licensed or certified by the Commission, directing the public to request such information pursuant to the Freedom of Information Act
(FOIA)process detailed in 5 U.S.C. 552
(2000)and in the Commission's regulations at 18 CFR 388.108 (2001). In September 2002, the Commission issued a notice of proposed rulemaking regarding CEII, which proposed an expanded definition of CEII to include detailed information about proposed facilities as well as those already licensed or certificated by the Commission. *See* Notice of Rulemaking and Revised Statement of Policy, 67 FR 57994 (Sept. 13, 2002); FERC Stats. & Regs. ¶ 32,564 (2002). The Commission issued its final rule on CEII on February 21, 2003, defining CEII to include information about proposed facilities, and to exclude information that simply identified the location of the infrastructure. *See* Order No. 630, 68 FR 9857, FERC Stats. & Regs. ¶ 31,140. After receiving a request for rehearing on Order No. 630, the Commission issued Order No. 630-A on July 23, 2003, denying the request for rehearing, but amending the rule in several respects. *See* Order No. 630-A, 68 FR 46456, FERC Stats. & Regs. ¶ 31,147. Specifically, the order on rehearing made several minor procedural changes and clarifications, added a reference in the regulation regarding the filing of NIP information, a term first described in Order No. 630, and added a commitment to review the effectiveness of the new process after six months. Also on July 23, 2003, the Commission issued Order No. 643, which revised the Commission's regulations to require companies to make certain information available directly to the public under certain circumstances. These revisions were necessary to conform the regulations to Order No. 630. *See* Order No. 643, 68 FR 52089, FERC Stats. & Regs. ¶ 31,149 (2003). In Order No. 662, the Commission modified its CEII regulations to ease the burden on agents of owners or operators of energy facilities that are seeking CEII relating to the owner/operator's own facility. The rule also simplified federal agencies' access to CEII. *See* Order No. 662, 70 FR 37031, FERC Stats. & Regs. ¶ 31,189 (2005). Summary and Discussion I. Regulatory Changes A. Clarification of What Constitutes CEII 6. The CEII regulations were designed to restrict unfettered general public access to critical energy infrastructure information, but still permit those with a need for the information to obtain it in an efficient manner. In other words, CEII reflects a delicate balance between the due process rights of interested persons to participate fully in Commission proceedings and the Commission's responsibility to protect public safety by ensuring that access to CEII does not facilitate acts of terrorism. Although CEII was intended only to protect detailed information that would aid a terrorist attack, many submitters overutilize the designation. Therefore, the Commission is specifically clarifying and refining the definition to better inform companies of what constitutes CEII to limit the amount of material which constitutes CEII. CEII is clarified as specific engineering, vulnerability, or detailed design information about proposed or existing critical infrastructure that:
(1)Relates details about the production, generation, transportation, transmission, or distribution of energy;
(2)could be useful to a person in planning an attack on critical infrastructure;
(3)is exempt from mandatory disclosure under the Freedom of Information Act, 5 U.S.C. 552 (2000); and
(4)does not simply give the general location of the critical infrastructure. The particular clarifications consist of adding the words “specific engineering, vulnerability, or detailed design” at the beginning of § 388.113(c)(1) and adding the words “details about” at the beginning of § 388.113(c)(1)(i). 7. The Commission further clarifies that narratives such as the descriptions of facilities and processes are generally not CEII unless they describe specific engineering and design details of critical infrastructure. B. Requirement To Provide an Executed Non-Disclosure Agreement With a CEII Request 8. Requesters will now be required to submit an executed non-disclosure agreement with their signed requests. As CEII contains information that may be used to harm the critical infrastructure of the United States, it is only fitting to require that a requester execute an agreement not to disclose the information, and provide that agreement with his or her request. Often processing of a request is delayed because the requester does not promptly submit an executed non-disclosure agreement upon request. Posted on the Commission's Web site at *http://www.ferc.gov* are the various non-disclosure agreements that pertain to various types of requesters. For example, a member of the media should submit the non-disclosure agreement entitled Media NDA. If a requester does not know the appropriate non-disclosure agreement to submit with his or her request, he or she may contact the Office of External Affairs at
(202)502-8004. Including an executed non-disclosure agreement with an executed request will help to expedite processing of requests. A CEII request will not be accepted until the Commission receives an executed NDA. II. Reiteration of Current Regulatory Standards A. Notice and Opportunity To Comment and Notice Prior To Release 9. Section 388.112(d) of the Commission's regulations provides that, among other things, when a CEII requester seeks a document for which CEII status has been claimed, or when the Commission itself is considering releasing such a document, the Commission will provide the submitter of the document notice and an opportunity to comment. 18 CFR 388.112(d) (2006). Section 388.112(e) of the Commission's regulations provides that, among other things, the Commission or an appropriate official will give notice to the submitter prior to release of a document for which CEII status has been claimed. 18 CFR 388.112(e) (2006). In processing CEII requests, it has been the practice of the Commission to issue these notifications separately. Henceforth, the Commission will provide the notice and opportunity to comment in the same document as the notice of release. 10. The Commission acknowledges that the notice and comment process affords the Commission the opportunity to get information on the requester from the submitter, who may be most familiar with the requester, and the opportunity to get the submitter's input into potential harm from release of the information. However, experience has shown that only in a limited number of requests has the submitter provided information about the requester. In many instances, the submitter provides a boilerplate response that does not address release of information to a particular requester. In an effort to increase the efficiency of processing CEII requests, the Commission will combine the notice of release with an opportunity to comment. Submitters may still provide comments or input upon notice of release. The release would proceed as scheduled unless the CEII Coordinator or her designee receives opposition to release, in which case the CEII Coordinator or his or her designee will issue a revised notice. The vast majority of submitters support release with a properly executed NDA. Only in extremely rare instances would a submitter's comments be the determinative factor in not releasing CEII. These rare instances should not impede an efficient CEII process. In the event a submitter provides comments opposing release, the information would not be released until the submitter receives a revised notice of release. B. Requirement To Segregate and Justify CEII 11. The CEII process was not intended as a mechanism for companies to withhold from public access information that does not pose a risk of attack on the energy infrastructure. Therefore, in an effort to achieve proper designation while avoiding misuse of the CEII designation, the Commission reiterates its requirement that submitters segregate public information from CEII and file as CEII only information which truly warrants being kept from ready public access. 12. To this end, the Commission emphasizes that the Commission's regulation at 18 CFR 388.112(b)(1) requires that submitters provide a justification for CEII treatment. The way to properly justify CEII treatment is by describing the information for which CEII treatment is requested and explaining the legal justification for such treatment. C. Enforcement of Proper Designation and Justification 13. The Commission retains its concern for filing abuses and will take action against applicants or parties who knowingly misfile information as CEII, including rejection of an application where information is mislabeled as CEII or where a legal justification is not provided. Further, concurrent with this order, the Commission is issuing a notice of proposed rulemaking in Docket No. RM06-23-000 seeking comments on its proposal to, among other things, clarify what specific portions of various forms and reports submitted to the Commission contain CEII. Information Collection Statement 14. The Office of Management and Budget's (OMB's) regulations require that OMB approve certain information collection requirements imposed by agency rule. *See* 5 CFR 1320.12 (2006). This final rule does not impose any additional information collection requirements. Therefore, the information collection regulations do not apply to this final rule. Environmental Analysis 15. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. *See* Order No. 486, Regulations Implementing the National Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 (1987). The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusions are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended. *See* 18 CFR 380.4(a)(2)(ii) (2006). This rule is procedural in nature and therefore falls under this exception; consequently, no environmental consideration is necessary. Regulatory Flexibility Act Certification 16. The Regulatory Flexibility Act of 1980
(RFA)generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. 5 U.S.C. 601-612 (2000). The Commission is not required to make such analyses if a rule would not have such an effect. The Commission certifies that this rule will not have such an impact on small entities. Document Availability 17. In addition to publishing the full text of this document in the **Federal Register** , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page ( *http://www.ferc.gov* ) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426. 18. From FERC's Home Page on the Internet, this information is available in the Commission's document management system, eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field. 19. User assistance is available for eLibrary and the FERC's Web site during normal business hours. For assistance, please contact FERC Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-mail at *FERCOnlineSupport@FERC.gov* ), or the Public Reference Room at 202-502-8371, TTY 202-502-8659 (e-mail at *public.referenceroom@ferc.gov* ). Effective Date 20. These regulations are effective November 2, 2006. The provisions of 5 U.S.C. 801
(2000)regarding Congressional review of final rules do not apply to this final rule, because the rule concerns agency procedure and practice and will not substantially affect the rights of non-agency parties. List of Subjects in 18 CFR Part 388 Confidential business information, Freedom of information. By the Commission. Magalie R. Salas, Secretary. In consideration of the foregoing, the Commission amends Part 388, Chapter I, Title 18, Code of Federal Regulations, as follows: PART 388—INFORMATION AND REQUESTS 1. The authority citation for part 388 continues to read as follows: Authority: 5 U.S.C. 301-305, 551, 552 (as amended), 553-557; 42 U.S.C. 7101-7352. 2. In § 388.113, paragraphs (c)(1), (d)(3)(i), and (d)(3)(ii) are revised to read as follows: § 388.113 Accessing critical energy infrastructure information.
(c)* * *
(1)*Critical energy infrastructure* information means specific engineering, vulnerability, or detailed design information about proposed or existing critical infrastructure that:
(i)Relates details about the production, generation, transportation, transmission, or distribution of energy;
(ii)Could be useful to a person in planning an attack on critical infrastructure;
(iii)Is exempt from mandatory disclosure under the Freedom of Information Act, 5 U.S.C. 552; and
(iv)Does not simply give the general location of the critical infrastructure.
(d)* * *
(3)* * *
(i)File a signed, written request with the Commission's CEII Coordinator. The request must contain the following: Requester's name (including any other name(s) which the requester has used and the dates the requester used such name(s)), date and place of birth, title, address, and telephone number; the name, address, and telephone number of the person or entity on whose behalf the information is requested; a detailed statement explaining the particular need for and intended use of the information; and a statement as to the requester's willingness to adhere to limitations on the use and disclosure of the information requested. A requester must also file an executed non-disclosure agreement. Requesters are also requested to include their social security number for identification purposes.
(ii)Once the request is received, the CEII Coordinator will determine if the information is CEII, and, if it is, whether to release the CEII to the requester. The CEII Coordinator will balance the requester's need for the information against the sensitivity of the information. If the requester is determined to be eligible to receive the information requested, the CEII Coordinator will determine what conditions, if any, to place on release of the information. The CEII Coordinator's decisions regarding release of CEII are subject to rehearing as provided in § 385.713 of this chapter. Copies of requests for rehearing of the CEII Coordinator's decision must be served on the CEII Coordinator and the Associate General Counsel for General Law. [FR Doc. E6-15820 Filed 10-2-06; 8:45 am] BILLING CODE 6717-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 31 [TD 9276] RIN 1545-BD96 Flat Rate Supplemental Wage Withholding; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correcting amendment. SUMMARY: This document contains a correction to final regulations (TD 9276), that were published in the **Federal Register** on Tuesday, July 25, 2006 (71 FR 142). These regulations apply to all employers and others making supplemental wage payments to employees. DATES: This correction is effective January 1, 2007. FOR FURTHER INFORMATION CONTACT: A.G. Kelley,
(202)622-6040 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The final regulations (TD 9276) that are the subject of this correction are under sections 3401 and 3402 of the Internal Revenue Code. Need for Correction As published, TD 9276 contains language that is repetitious. List of Subjects in 26 CFR Part 31 Employment taxes, Income taxes, Penalties, Pensions, Railroad retirement, Reporting and recordkeeping requirements, Social security, Unemployment compensation. Correction of Publication Accordingly, 26 CFR part 31 is corrected by making the following correcting amendment: PART 31—EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE **Paragraph 1.** The authority citation for part 31 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * § 31.3402(g)-1 [Corrected] **Par. 2.** Section 31.3402(g)-1 is amended by removing the last sentence from paragraph (a)(8), *Example 4* (i). Cynthia E. Grigsby, Senior Federal Register Liaison Officer, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration). [FR Doc. E6-16237 Filed 10-2-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 31 [TD 9276] RIN 1545-BD96 Flat Rate Supplemental Wage Withholding; Correction AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Correction to final regulations. SUMMARY: This document contains a correction to final regulations (TD 9276), that were published in the **Federal Register** on Tuesday, July 25, 2006 (71 FR 142). These regulations apply to all employers and others making supplemental wage payments to employees. DATES: This correction is effective January 1, 2007. FOR FURTHER INFORMATION CONTACT: A. G. Kelley,
(202)622-6040 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background The final regulations (TD 9276) that is the subject of this correction are under sections 3401 and 3402 of the Internal Revenue Code. Need for Correction As published, TD 9276 contains an error that may prove to be misleading and is in need of clarification. Correction of Publication Accordingly, the publication of the final regulations (TD 9276), that were the subject of FR Doc. E6-11764, is corrected as follows: On page 42051, column 2, in the preamble under the paragraph heading “Special Rules for Determining Applicability of Mandatory Flat Rate Withholding”, lines 2 and 3 from the top of the column, the language, “the final regulations and the revenue procedure provide employers with a” is corrected to read “the final regulations provide employers with a”. Cynthia E. Grigsby, Senior Federal Register Liaison Officer, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedures and Administration). [FR Doc. E6-16239 Filed 10-2-06; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF JUSTICE 28 CFR Part 16 [AAG/A Order No. 015-2006] Privacy Act of 1974; Implementation AGENCY: Department of Justice. ACTION: Final rule. SUMMARY: This rule amends part 16 of title 28 of the Code of Federal Regulations to reflect the applicability of Privacy Act Systems of Records Notices and any associated exemptions to the newly established National Security Division
(NSD)at the Department of Justice. The National Security Division was created by section 506 of the USA PATRIOT Improvement and Reauthorization Act of 2005, by consolidating the resources of the Office of Intelligence Policy and Review
(OIPR)and the Criminal Division's Counterterrorism and Counterespionage Sections. Therefore, Privacy Act Systems of Records Notices and any associated exemptions that applied to OIPR and the Criminal Division's Counterterrorism and Counterespionage Sections, are adopted by and applicable to the NSD until modified, superseded, or revoked in accordance with law. DATES: *Effective Date:* This rule is effective October 3, 2006 FOR FURTHER INFORMATION CONTACT: Mary Cahill, Justice Management Division, U.S. Department of Justice, 1331 Pennsylvania Ave., NW., Suite 1400, Washington, DC 20530; Telephone:
(202)307-1823. SUPPLEMENTARY INFORMATION: Because OIPR is transferring in its entirety to NSD, all the Privacy Act Systems of Records Notices and exemptions that applied to OIPR are adopted by and now apply to NSD. As a result of the transfer of the Criminal Division's Counterterrorism and Counterespionage Sections to NSD, the following Privacy Act System of Records Notice and associated exemptions are adopted by and apply to NSD: “Central Criminal Division Index File and Associated Records, JUSTICE/CRM-001” (to the extent that subject matters therein are transferred to the jurisdiction of NSD), 63 FR 8659 (February 20, 1998), as amended in part by 66 FR 17200 (March 29, 2001), (this notice and associated exemptions continue to apply to the Criminal Division as well). The notices for the following nonexempt Systems of Records are also adopted by and apply to NSD: “Registration and Propaganda Files Under the Foreign Agents Registration Act of 1938, as amended, JUSTICE/CRM-017” 53 FR 16794 (May 11, 1988), and “Registration Files of Individuals Who Have Knowledge of or Have Received Instruction or Assignment in Espionage, Counterespionage, or Sabotage Service or Tactics of a Foreign Government or of a Foreign Political Party, JUSTICE/CRM-018” 52 FR 47197 (December 11, 1987). No substantive changes are being made to the Privacy Act Systems of Records Notices and associated exemptions at this time, and the adoption by and continued applicability of the notices and exemptions to NSD will not add or remove any substantive rights or obligations of the public. Administrative Procedure Act—5 U.S.C. 553 This rule is a rule of agency organization and relates to a matter relating to agency management and is therefore exempt from the requirements of prior notice and comment and a 30-day delay in the effective date. *See* 5 U.S.C. 553(a)(2), 553(b)(3)(A). Regulatory Flexibility Act The Attorney General, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and by approving it certifies that this regulation will not have a significant economic impact on a substantial number of small entities because it pertains to personnel and administrative matters affecting the Department. Further, a Regulatory Flexibility Analysis was not required to be prepared for this final rule since the Department was not required to publish a general notice of proposed rulemaking for this matter. Executive Order 12866—Regulatory Planning and Review This action has been drafted and reviewed in accordance with Executive Order 12866 Regulatory Planning and Review, section 1(b), Principles of Regulation. This rule is limited to agency organization, management, and personnel as described by Executive Order 12866 section 3(d)(3) and, therefore, is not a “regulation” or “rule” as defined by that Executive Order. Accordingly, this action has not been reviewed by the Office of Management and Budget. Executive Order 13132—Federalism This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 12612, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. Executive Order 12988—Civil Justice Reform This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988. Unfunded Mandates Reform Act of 1955 This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. Congressional Review Act This action pertains to agency management, personnel and organizations and does not substantially affect the rights or obligations of non-agency parties and, accordingly, is not a “rule” as that term is used by the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). Therefore, the reporting requirement of 5 U.S.C. section 801 does not apply. List of Subjects in 28 CFR Part 16 Administrative Practices and Procedures, Courts, Freedom of Information, Sunshine Act and Privacy. Pursuant to the authority vested in the Attorney General by 5 U.S.C. 552a and delegated to me by Attorney General Order 793-78, title 28 of the Code of Federal Regulations is amended as follows: PART 16—PRODUCTION OR DISCLOSURE OF MATERIAL OR INFORMATION 1. The authority for part 16 continues to read as follows: Authority: 5 U.S.C. 301, 552, 552a, 552b(g), 553; 18 U.S.C. 4203(a)(1); 28 U.S.C. 509, 510, 534; 31 U.S.C. 3717, 9701. 2. Amend § 16.74 by revising paragraph
(a)introductory text to read as follows: § 16.74 Exemption of Office of Intelligence Policy and Review Systems—limited access.
(a)The following systems of records are exempt from 5 U.S.C. 552a(c)(3), (c)(4), (d), (e)(2), (e)(3), (e)(4)(G), (e)(4)(H), (e)(8),
(f)and (g); these systems of records and associated exemptions are adopted by and apply with equal force and effect to the National Security Division, until modified, superseded, or revoked in accordance with law: 3. Amend § 16.91 by adding a sentence at the end of paragraph (a)(1) to read as follows: § 16.91 Exemption of Criminal Division Systems—limited access, as indicated.
(a)* * *
(1)* * * This system of records and associated exemptions is adopted by and applies with equal force and effect to the National Security Division, until modified, superseded, or revoked in accordance with law. Dated: September 28, 2006. Lee J. Lofthus, Acting Assistant Attorney General for Administration. [FR Doc. E6-16280 Filed 10-2-06; 8:45 am] BILLING CODE 4410-14-P DEPARTMENT OF DEFENSE Department of the Navy 32 CFR Part 706 Certifications and Exemptions Under the International Regulations for Preventing Collisions at Sea, 1972 AGENCY: Department of the Navy, DOD. ACTION: Final rule. SUMMARY: The Department of the Navy is amending its certifications and exemptions under the International Regulations for Preventing Collisions at Sea, 1972 (72 COLREGS), to reflect that the Deputy Assistant Judge Advocate General (Admiralty and Maritime Law) has determined that USS BENFOLD (DDG 65) is a vessel of the Navy which, due to its special construction and purpose, cannot fully comply with certain provisions of the 72 COLREGS without interfering with its special function as a naval ship. The intended effect of this rule is to warn mariners in waters where 72 COLREGS apply. DATES: *Effective Date:* September 21, 2006. FOR FURTHER INFORMATION CONTACT: Commander Gregg A. Cervi, JAGC, U.S. Navy, Deputy Assistant Judge Advocate General (Admiralty and Maritime Law), Office of the Judge Advocate General, Department of the Navy, 1322 Patterson Ave., SE., Suite 3000, Washington Navy Yard, DC 20374-5066, telephone 202-685-5040. SUPPLEMENTARY INFORMATION: Pursuant to the authority granted in 33 U.S.C. 1605, the Department of the Navy amends 32 CFR Part 706. This amendment provides notice that the Deputy Assistant Judge Advocate General (Admiralty and Maritime Law), under authority delegated by the Secretary of the Navy, has certified that USS BENFOLD (DDG 65) is a vessel of the Navy which, due to its special construction and purpose, cannot fully comply with the following specific provisions of 72 COLREGS without interfering with its special function as a naval ship: Annex I, paragraph 3(a), pertaining to the horizontal distance between the forward and after masthead lights; and Annex I, paragraph 2(f)(ii), pertaining to the vertical placement of task lights. The Deputy Assistant Judge Advocate General (Admiralty and Maritime Law) has also certified that the lights involved are located in closest possible compliance with the applicable 72 COLREGS requirements. All other previously certified deviations from the 72 COLREGS not affected by this amendment remain in effect. Moreover, it has been determined, in accordance with 32 CFR Parts 296 and 701, that publication of this amendment for public comment prior to adoption is impracticable, unnecessary, and contrary to public interest since it is based on technical findings that the placement of lights on this vessel in a manner differently from that prescribed herein will adversely affect the vessel's ability to perform its military functions. List of Subjects in 32 CFR Part 706 Marine safety, Navigation (water), and Vessels. For the reasons set forth in the preamble, amend part 706 of title 32 of the Code of Federal Regulations as follows: PART 706-CERTIFICATIONS AND EXEMPTIONS UNDER THE INTERNATIONAL REGULATIONS FOR PREVENTING COLLISIONS AT SEA, 1972 1. The authority citation for part 706 continues to read: Authority: 33 U.S.C. 1605. 2. In Table Five of § 706.2 revise the entry for USS BENFOLD (DDG 65) to read as follows: § 706.2 Certifications of the Secretary of the Navy under Executive Order 11964 and 33 U.S.C. 1605. Table Five Vessel No. Masthead lights not over all other lights and obstructions. Annex I, sec. 2(f) Forward masthead light not in forward quarter of ship. Annex I, sec. 3(a) After mast-head light less than 1/2 ship's length aft of forward masthead light. Annex I, sec. 3(a) Percentage horizontal separation attained * * * * * * * USS BENFOLD DDG 65 X X X 14.8 * * * * * * * Approved: September 21, 2006. Gregg A. Cervi, Commander, JAGC, U.S. Navy, Deputy Assistant Judge Advocate, General (Admiralty and Maritime Law. Dated: September 26, 2006. M.A. Harvison, Lieutenant Commander, Judge Advocate General's Corps, U.S. Navy, Federal Register Liaison Officer. [FR Doc. E6-16323 Filed 10-2-06; 8:45 am] BILLING CODE 3810-FF-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD11-06-010] RIN 1625-AA08 Special Local Regulations for Marine Events; San Francisco Bay Navy Fleet Week Parade of Ships and Air Show Demonstration, San Francisco Bay, CA AGENCY: Coast Guard, DHS. ACTION: Notice of enforcement. SUMMARY: The Coast Guard will enforce the special local regulations (SLR's) in the navigable waters of San Francisco Bay for the annual U.S. Navy and City of San Francisco sponsored Fleet Week Parade of Navy Ships and Air Show Demonstration to be held October 5 thru October 8, 2006. This SLR will be used to keep spectator vessels out of the path of parading Navy ships and away from the area directly below participating aircraft during the air show in order to ensure the safety of event participants and spectators. DATES: The regulations at 33 CFR 100.1105(b)(1), Regulated Area “Alpha” for Navy Parade of Ships will be enforced from 11 a.m. to 1 p.m. on October 7, 2006, while the regulations at 33 CFR 100.1105(b)(2), Regulated Area “Bravo” for the Fleet Week Air Show Demonstration will be enforced from 9 a.m. to 4 p.m. on October 5, 2006, 12:30 a.m. to 4:30 p.m. on October 6 and 7, and 1:30 p.m. to 4:30 p.m. on October 8, 2006. FOR FURTHER INFORMATION CONTACT: Lieutenant Eric Ramos, Waterways Safety Branch, U.S. Coast Guard Sector San Francisco, at
(415)556-2950 Ext. 143 or the Sector San Francisco Command Center, at
(415)399-3547. SUPPLEMENTARY INFORMATION: On October 1, 1993, the Coast Guard published a final rule (58 FR 51242) modifying the regulations in 33 CFR 100.1105, that establish regulated areas to ensure the safe execution of the San Francisco Bay Navy Fleet Week Parade of Ships and Air Show Demonstration. The U. S. Navy and City of San Francisco are sponsoring the Annual Fleet Week Parade of Navy Ships and Air Show Demonstration to be held October 5 thru October 8, 2006. Due to the security concerns associated with the participating naval vessels and hazards associated with the air show demonstration, 33 CFR 100.1105 is necessary to provide for the safety of event participants, spectator craft, and other vessels transiting the event area. Under the provisions of 33 CFR 100.1105, a vessel may not enter Regulated area “Alpha” or “Bravo”, unless it receives permission from the Coast Guard Patrol Commander. Additionally, no person or vessel may enter or remain within 500 yards ahead of the lead Navy parade vessel, within 200 yards astern of the last parade vessel, or within 200 yards on either side of any parade vessel. Spectator vessels may safely transit outside the regulated area but may not anchor, block, loiter in, or impede the transit of ship parade participants or official patrol vessels. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing the SLR. Because this SLR will be in effect for a limited period, it should not result in a significant disruption of maritime traffic. Additionally, the maritime community will be provided advance notification of these events via the Local Notice to Mariners. Dated: September 8, 2006. J.A. Breckenridge, Rear Admiral, U.S. Coast Guard Commander, Eleventh Coast Guard District. [FR Doc. E6-16312 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD05-06-075] RIN 1625-AA08 Special Local Regulations for Marine Events; Back River, Poquoson, VA AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing special local regulations during the “Poquoson Seafood Festival Workboat Races”, a marine event to be held October 15, 2006 on the waters of the Back River, Poquoson, Virginia. These special local regulations are necessary to provide for the safety of life on navigable waters during the event. This action is intended to temporarily restrict vessel traffic in a portion of the Back River during the event. DATES: This rule is effective from 12 p.m. to 5 p.m. on October 15, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket, are part of docket (CGD05-06-075) and are available for inspection or copying at Commander (dpi), Fifth Coast Guard District, 431 Crawford Street, Portsmouth, Virginia 23704-5004, between 9 a.m. and 2 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Dennis Sens, Project Manager, Fifth Coast Guard District, Inspections and Investigations Branch, at
(757)398-6204. SUPPLEMENTARY INFORMATION: Regulatory Information On August 1, 2006, we published a Notice of proposed rulemaking
(NPRM)entitled Special Local Regulations for Marine Events; Back River, Poquoson, VA in the **Federal Register** (71 FR 43400). We received no letters commenting on the proposed rule. No public meeting was requested, and none was held. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the **Federal Register** . Delaying the effective date would be contrary to the public interest, since immediate action is needed to ensure the safety of the event participants, support craft and other vessels transiting the event area. However, advance notifications will be made to affected waterway users via marine information broadcasts, area newspapers and local radio stations. Background and Purpose On October 15, 2006, the City of Poquoson will sponsor “Poquoson Seafood Festival Workboat Races” on the Back River, immediately adjacent and south of Messick Point. The event will consist of approximately 60 traditional Chesapeake Bay deadrise workboats racing along a marked strait line race course in heats of 2 to 4 boats for a distance of approximately 600 yards. Due to the need for vessel control during the event, the Coast Guard will temporarily restrict vessel traffic in the event area to provide for the safety of participants, spectators and other transiting vessels. Discussion of Comments and Changes The Coast Guard did not receive comments in response to the Notice of proposed rulemaking
(NPRM)published in the **Federal Register** . Accordingly, the Coast Guard is establishing temporary special local regulations on specified waters of the Back River, Poquoson, Virginia. Regulatory Evaluation This temporary rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. Although this regulation will prevent traffic from transiting a portion of the Back River during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners, marine information broadcasts, area newspapers and local radio stations, so mariners can adjust their plans accordingly. Additionally, the regulated area has been narrowly tailored to impose the least impact on general navigation yet provide the level of safety deemed necessary. Vessel traffic will be able to transit the regulated area at slow speed between heats, when the Coast Guard Patrol Commander deems it is safe to do so. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this temporary rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would not have a significant economic impact on a substantial number of small entities. This rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in the effected portions of the Back River during the event. Although this regulation prevents traffic from transiting a portion of the Back River during the event, this temporary rule would not have a significant economic impact on a substantial number of small entities for the following reasons. This rule would be in effect for only a limited period. Vessel traffic will be able to transit the regulated area between heats, when the Coast Guard Patrol Commander deems it is safe to do so. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the address listed under ADDRESSES . The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule would not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( *e.g.* , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD and Department of Homeland Security Management Directive 5100.1, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. Special local regulations issued in conjunction with a regatta or marine parade permit are specifically excluded from further analysis and documentation under that section. Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule. List of Subjects in 33 CFR Part 100 Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows: PART 100—REGATTAS AND MARINE PARADES 1. The authority citation for part 100 continues to read as follows: Authority: 33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1. 2. Add a temporary § 100.35-T05-075 to read as follows: § 100.35-T05-075 Back River, Poquoson, VA.
(a)*Definitions:* The following definitions apply to this section;
(1)*Coast Guard Patrol Commander* means a commissioned, warrant, or petty officer of the Coast Guard who has been designated by the Commander, Coast Guard Sector Hampton Roads.
(2)*Official Patrol* means any vessel assigned or approved by Commander, Coast Guard Sector Hampton Roads with a commissioned, warrant, or petty officer on board and displaying a Coast Guard ensign.
(3)*Participant* includes all vessels participating in the Poquoson Seafood Festival Workboat races under the auspices of a Marine Event Permit issued to the event sponsor and approved by Commander, Coast Guard Sector Hampton Roads.
(4)*Regulated area* includes the waters of the Back River, Poquoson, Virginia, bounded on the north by a line drawn along latitude 37°06′30″ North, bounded on the south by a line drawn along latitude 37°06′15″ North, bounded on the east by a line drawn along longitude 076°18′52″ West and bounded on the west by a line drawn along longitude 076°19′30″ West. All coordinates reference Datum NAD 1983.
(b)Special local regulations:
(1)Except for event participants and persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the regulated area.
(2)The operator of any vessel in the regulated area shall:
(i)Stop the vessel immediately when directed to do so by any Official Patrol.
(ii)Proceed as directed by any Official Patrol.
(iii)When authorized to transit the regulated area, all vessels shall proceed at the minimum speed necessary to maintain a safe course that minimizes wake near the race course.
(c)*Effective period.* This section will be enforced from 12 p.m. to 5 p.m. on October 15, 2006. Dated: September 18, 2006. Larry L. Hereth, Rear Admiral, U.S. Coast Guard, Commander, Fifth Coast Guard District. [FR Doc. E6-16314 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [CGD07-06-174] RIN 1625-AA08 Special Local Regulation; Sunfish World Championship Regatta, Charleston Harbor, SC AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is establishing temporary special local regulations for the Sunfish World Championship Regatta located in Charleston Harbor, South Carolina. The event will run from October 1, 2006 through October 6, 2006. This Regulation is necessary to ensure safety and security during this international event, while also reducing the impact to commercial traffic in Charleston Harbor. DATES: This rule is effective from 8 a.m. on October 1, 2006 until 6 p.m. on October 6, 2006. ADDRESSES: Documents indicated in this preamble as being available in the docket, are part of docket CGD 07-06-174 and are available for inspection or copying at Coast Guard Sector Charleston, Prevention Department
(WWM)between 7 a.m. and 3:30 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: CWO Hunter G. Crider, U.S. Coast Guard Sector Charleston, South Carolina, at
(843)724-7647. SUPPLEMENTARY INFORMATION: Regulatory Information We did not publish a notice of proposed rulemaking
(NPRM)for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. An NPRM would be impracticable and contrary to the public interest since the specific details of this event, including the race course location, and dates were not provided to the Coast Guard with sufficient time to publish an NPRM and receive public comments. This regulation is necessary to ensure the safety and security of participants and vessel traffic during this event. The Coast Guard will provide additional notification of this event to the public through broadcast notice to mariners and a Coast Guard Patrol Commander will be on-scene to provide notice to spectators and other vessels in the area. For the same reasons mentioned above, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the **Federal Register** . Background and Purpose The Sunfish World Championship Regatta is a sailing race that will consist of one hundred Sunfish sailboats of identical design and build, each approximately 16 feet in length, participating in race events over several days. In order to ensure safety during this event, the Coast Guard has defined a regulated area within Charleston Harbor where the competition will take place and to ensure the safety and security of the competitors, the Coast Guard is establishing a “no entry” zone around the fleet of participating vessels. When by necessity a course is set across the South Channel, which includes the Atlantic Intracoastal Waterway, the “no entry” zone will have the effect of temporarily closing the South Channel to non-participant vessel traffic in order to allow the fleet to pass safely. Discussion of Rule The regulated area contains Charleston Harbor's “Middle Ground”, Anchorage area “Alpha” and is bound by the following GPS points connected to each other in a clockwise direction: A. 32°46.3′ N 079°53.6′ W B. 32°47.1′ N 079°52.5′ W C. 32°43.1′ N 079°52.5′ W D. 32°45.3′ N 079°55.1′ W E. 32°46.5′ N 079°55.4′ W F. 32°46.6′ N 079°54.9′ W G. 32°46.3′ N 079°54.6′ W and back to point “A”. While the regulation is enforced, non-participating vessels will be prohibited from anchoring or mooring within the regulated area unless authorized by the Captain of the Port (COTP), Charleston, South Carolina or the Coast Guard Patrol Commander. During the designated race times, the sailing committee will establish and mark one or more race courses within the boundaries of the regulated area. Each course will be designed to have races that last approximately 2 hours in duration. There will be no more than 3 races held on any given day. All races will occur between the hours of 8 a.m. and 6 p.m. local time. Given the intended course designs and skill of the competitors, it is expected that at any given time, the participants will occupy only a portion of the regulated area. A “no entry” zone will follow the fleet around courses set within the regulated area. The “no entry” zone extends 200 yards ahead of the lead vessel and 50 yards from all participants. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the DHS (44 FR 11040, February 26, 1979). The Coast Guard expects the economic impact of this proposal to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DHS is unnecessary. This rule is only effective for six hours on each day of the regatta, and will expire thereafter. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit through the regulated area of Charleston Harbor during the hours of 8 a.m. to 6 p.m. on each day from October 1, 2006 through October 6, 2006. This special local regulation will not have a significant economic impact on a substantial number of small entities for the following reasons. This regulation will only be enforced a total of 10 hours per day. Further, the courses will be set within the regulated area to minimize the impact on commercial traffic and recreational vessel traffic. Lastly, it is anticipated that the “no entry” zone will only overlay the South Channel less than 6 times per day, at intervals of less than 30 minutes each time. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. If the rule will affect your small business, organization, or government jurisdiction and you have questions concerning its revisions or options for compliance, please contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding this rule. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule will not effect a taking of private property or otherwise have taking implications under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(h), of the Instruction, from further environmental documentation. Under figure 2-1, paragraph (34)(h), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule. List of Subjects in 33 CFR Part 100 Marine Safety, Navigation (water), Reporting and recordkeeping requirements, waterways. For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows: PART 100—SAFETY OF LIFE ON NAVIGABLE WATERS 1. The authority citation for part 100 continues to read as follows: Authority: 33 U.S.C. 1233; Department of Homeland Security Delegation No. 0170.1 2. Add § 100.35T-07-174 to read as follows: § 100.35T-07-174 Special Local Regulation; Sunfish World Championship Regatta, Charleston, South Carolina
(a)Regulated Area—The regulated area is bounded by an imaginary line connecting the following coordinates in order as described below: A. 32°46.3′ N 079°53.6′ W B. 32°47.1′ N 079°52.5′ W C. 32°43.1′ N 079°52.5′ W D. 32°45.3′ N 079°55.1′ W E. 32°46.5′ N 079°55.4′ W F. 32°46.6′ N 079°54.9′ W G. 32°46.3′ N 079°54.6′ W and back to point “A”.
(b)*Coast Guard Patrol Commander.* The Coast Guard Patrol Commander is a commissioned, warrant, or petty officer of the Coast Guard that has been designated as such by the Captain of the Port, Charleston, South Carolina.
(c)*Regulations.*
(1)No person or vessel shall be anchored or moored within the regulated area unless authorized by the Coast Guard Captain of the Port of Charleston or Coast Guard Patrol Commander.
(2)Spectators and other non-participant vessels may enter and transit through the regulated area but are prohibited from entering into a mobile buffer zone extending 50 yards in all directions around all participants and extending 200 yards ahead of the lead boat during races.
(3)Spectators and non-participant vessels are prohibited from anchoring, mooring or otherwise stopping their vessel within the confines of any Navigational channel unless authorized or directed by the Coast Guard Patrol Commander.
(d)*Enforcement Period.* This rule will be enforced from 8 a.m. to 6 p.m. daily from October 1, 2006 through October 6, 2006.
(e)*Effective Dates.* This rule is effective from October 1 to October 6, 2006. Dated: September 21, 2006. J.A. Watson, Captain, U.S. Coast Guard, Commander, Seventh Coast Guard District, Acting. [FR Doc. E6-16334 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [CGD07-06-204] RIN 1625-AA09 Drawbridge Operation Regulation; Atlantic Intracoastal Waterway Mile 1072.2, Hollywood, Broward County, FL AGENCY: Coast Guard, DHS. ACTION: Temporary final rule. SUMMARY: The Coast Guard is temporarily changing the regulation governing the operation of the Hollywood Boulevard Drawbridge across the Atlantic Intracoastal Waterway mile 1072.2, Hollywood, Broward County, Florida, due to repair work on the bridge. This rule will provide for worker and mariner safety during the repairs to this drawbridge. The drawbridge will be on single-leaf operations during most of the repair period and several waterway closures will be needed. DATES: This rule is effective from October 3, 2006 to July 27, 2007. ADDRESSES: Documents indicated in this preamble as being available in the docket are part of docket CGD07-06-204 and are available for inspection or copying at Commander (dpb), Seventh Coast Guard District, 909 SE 1st Ave., Ste 432 Miami, Florida 33131-3050 between 7:30 a.m. and 4 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Mr. Michael Lieberum, Seventh Coast Guard District, Bridge Branch,
(305)415-6744. SUPPLEMENTARY INFORMATION: Regulatory Information We did not publish a notice of proposed rulemaking
(NPRM)for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Publishing an NPRM is contrary to the public interest because the rule is needed to provide for worker and marine safety during repairs to the drawbridge. Also, this temporary final rule provides provisions for vessels to transit through the area except during short waterway closure periods. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after **Federal Register** publication. This rule provides for scheduled drawbridge openings and provisions for vessels to transit through the drawbridge except during short waterway closure periods and provides for the safety of the public and mariners during the scheduled repair period. Background and Purpose The Florida Department of Transportation notified the Coast Guard on February 4, 2006, that the current operation of the Hollywood Boulevard Drawbridge, Intracoastal Waterway mile 1072.2, Hollywood, Broward County, Florida, would need to be changed to allow for extensive repairs. However, the construction repair contractor did not provide the repair schedule dates to the Coast Guard until August 4, 2006, at which time repairs to the bridge had already begun. Therefore, there was not enough time to publish an NPRM. The drawbridge will be required to only open a single-leaf twice an hour. A double-leaf opening will be available, except on some dates and times. The waterway will be closed for short periods to allow for the reconstruction of portions of the drawbridge. Exact times and dates of waterway closures and drawbridge restrictions will be published in the Local Notice to Mariners and Broadcast Notice to Mariners. In cases of emergency, the drawbridge will be opened as soon as possible. Discussion of Rule The draw of the Hollywood Boulevard drawbridge shall open a single-leaf on the hour and half-hour. Double-leaf operations shall be available during certain periods. Waterway closures shall be authorized by the Captain of the Port Miami as needed and will be published in the Local Notice to Mariners and Broadcast Notice to Mariners. The draw shall open as soon as possible for the passage of tugs with tows, public vessels of the United States and vessels in a situation where a delay would endanger life or property. Regulatory Evaluation This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. The Coast Guard expects the economic impact of this rule to be so minimal that a full Regulatory Evaluation is unnecessary, because the rule will allow for bridge openings during the repairs to this drawbridge and all closure times will be published with adequate time for mariners to plan accordingly. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities, because the regulations provide for drawbridge openings, short closure periods and will provide for the reasonable needs of navigation. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit the Atlantic Intracoastal Waterway under the Hollywood Boulevard drawbridge from October 3, 2006 to July 27, 2007. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. Taking of Private Property This rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. Environment We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969
(NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (32)(e) of the Instruction, from further environmental documentation. Under figure 2-1, paragraph (32)(3), of the Instruction, and “Environmental Analysis Check List” and “Categorical Exclusion Determination” are not required for this rule. List of Subjects in 33 CFR Part 117 Bridges. Regulations For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows: PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority: 33 U.S.C. 499; Department of Homeland Security Delegation No. 0170.1; 33 CFR 1.05-1(g); section 117.255 also issued under the authority of Pub. L. 102-587, 106 Stat. 5039. 2. From 7 a.m. on October 3, 2006 to 7 p.m. on July 27, 2007, Sec. 117.261(bb)(11) is suspended and new paragraph (bb)(13), is added to read as follows: § 117.261 Atlantic Intracoastal Waterway from St. Mary's River to Key Largo. (bb)(13) Hollywood Beach Boulevard (SR 820) bridge, mile 1072.2 at Hollywood. The draw shall open a single-leaf on the hour and half-hour. A double-leaf shall be available with two hours advance notice to the bridge tender, except during certain time periods to be published in the Local Notice to Mariners. Waterway closures will be published in the Local Notice to Mariners as needed. Dated: September 21, 2006. J.A. Watson, Captain, U.S. Coast Guard, Commander, Seventh Coast Guard District Acting. [FR Doc. E6-16275 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [CGD01-06-121] Drawbridge Operation Regulations; Chelsea River, Chelsea and East Boston, MA AGENCY: Coast Guard, DHS. ACTION: Notice of temporary deviation from regulations. SUMMARY: The Commander, First Coast Guard District, has issued a temporary deviation from the regulation governing the operation of the P.J. McArdle Bridge across the Chelsea River at mile 0.3, between Chelsea and East Boston, Massachusetts. Under this temporary deviation, the bridge may remain in the closed position from 6 a.m. to 6 p.m., on October 10, 2006. This deviation is necessary to facilitate scheduled bridge maintenance. DATES: This deviation is effective from 6 a.m. to 6 p.m. on October 10, 2006. ADDRESSES: Materials referred to in this document are available for inspection or copying at the First Coast Guard District, Bridge Branch Office, 408 Atlantic Avenue, Boston, Massachusetts 02110, between 7 a.m. and 3 p.m., Monday through Friday, except Federal holidays. The telephone number is
(617)223-8364. The First Coast Guard District Bridge Branch Office maintains the public docket for this temporary deviation. FOR FURTHER INFORMATION CONTACT: John McDonald, Project Officer, First Coast Guard District, at
(617)223-8364. SUPPLEMENTARY INFORMATION: The P.J. McArdle Bridge, across the Chelsea River at mile 0.3, between Chelsea and East Boston, Massachusetts, has a vertical clearance in the closed position of 21 feet at mean high water and 30 feet at mean low water. The existing drawbridge operation regulations are listed at 33 CFR 117.593. The owner of the bridge, the City of Boston, requested a temporary deviation to facilitate scheduled bridge maintenance, replacement of gear oil. The bridge will not be able to open while the bridge maintenance is underway. Under this temporary deviation, the P.J. McArdle Bridge need not open for the passage of vessel traffic between 6 a.m. and 6 p.m. on October 10, 2006. In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. Should the bridge maintenance authorized by this temporary deviation be completed before the end of the effective period published in this notice, the Coast Guard will rescind the remainder of this temporary deviation, and the bridge shall be returned to its normal operating schedule. Notice of the above action shall be provided to the public in the Local Notice to Mariners and the **Federal Register** , where practicable. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: September 25, 2006. Gary Kassof, Bridge Program Manager, First Coast Guard District. [FR Doc. E6-16316 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [CGD01-06-120] Drawbridge Operation Regulations; Kennebec River, Bath and Woolwich, ME AGENCY: Coast Guard, DHS. ACTION: Notice of temporary deviation from regulations. SUMMARY: The Commander, First Coast Guard District, has issued a temporary deviation from the regulation governing the operation of the Carlton Bridge across the Kennebec River at mile 14.0, between Bath and Woolwich, Maine. Under this temporary deviation, the bridge may remain in the closed position from 7 a.m. on October 16, 2006 through 8 p.m., on October 17, 2006. This deviation is necessary to facilitate scheduled bridge maintenance. DATES: This deviation is effective from October 16, 2006 through October 17, 2006. ADDRESSES: Materials referred to in this document are available for inspection or copying at the First Coast Guard District, Bridge Branch Office, 408 Atlantic Avenue, Boston, Massachusetts 02110, between 7 a.m. and 3 p.m., Monday through Friday, except Federal holidays. The telephone number is
(617)223-8364. The First Coast Guard District Bridge Branch Office maintains the public docket for this temporary deviation. FOR FURTHER INFORMATION CONTACT: John McDonald, Project Officer, First Coast Guard District, at
(617)223-8364. SUPPLEMENTARY INFORMATION: The Carlton Bridge, across the Kennebec River at mile 14.0, between Bath and Woolwich, Maine, has a vertical clearance in the closed position of 10 feet at mean high water and 16 feet at mean low water. The existing drawbridge operation regulations are listed at 33 CFR 117.525. The owner of the bridge, Maine Department of Transportation, requested a temporary deviation to facilitate scheduled bridge maintenance, replacement of the bridge lift cables. The bridge will not be able to open while the bridge maintenance is underway. Under this temporary deviation, the Carlton Bridge need not open for the passage of vessel traffic from 7 a.m. on October 16, 2006 through 8 p.m. on October 17, 2006. In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. Should the bridge maintenance authorized by this temporary deviation be completed before the end of the effective period published in this notice, the Coast Guard will rescind the remainder of this temporary deviation, and the bridge shall be returned to its normal operating schedule. Notice of the above action shall be provided to the public in the Local Notice to Mariners and the **Federal Register** , where practicable. This deviation from the operating regulations is authorized under 33 CFR 117.35. Dated: September 25, 2006. Gary Kassof, Bridge Program Manager, First Coast Guard District. [FR Doc. E6-16318 Filed 10-2-06; 8:45 am] BILLING CODE 4910-15-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 409, 410, 412, 413, 414, 424, 485, 489, and 505 [CMS-1488-CN] RIN 0938-AO12 Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007 Rates; Correction AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Correction of final rule. SUMMARY: This document corrects technical errors that appeared in the final rule published in the **Federal Register** on August 18, 2006 entitled “Medicare Program; Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007 Rates.” DATES: *Effective Date:* These corrections are effective on October 1, 2006. FOR FURTHER INFORMATION CONTACT: Marc Hartstein,
(410)786-4548. SUPPLEMENTARY INFORMATION: I. Background In FR Doc. 06-6692 of August 18, 2006 (71 FR 47870), the final rule entitled “Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007 Rates” (hereinafter referred to as the FY 2007 IPPS final rule) there were several minor typographical and technical errors that we are identifying and correcting in section III. of this notice. The provisions in this correction notice are effective as if they had been included in the published FY 2007 IPPS final rule. Accordingly, the corrections are effective October 1, 2006. II. Summary of the Corrections to the FY 2007 IPPS Final Rule On page 47944, in our preamble discussion regarding Carotid Artery Stents, we erroneously stated that we were creating a new DRG 583, when, in fact, we were creating a new DRG 577. Therefore, in section III. A. of this notice, we are correcting that error. This technical correction merely corrects the description of the new DRG in the preamble text and does not affect the GROUPER or the relative weight for the new DRG. On page 48137, we made several errors in the first amendatory statement for § 412.25. First, we misstated that we were amending the introductory text of § 412.25(e) when instead we were amending § 412.25(e)(1). Second, we inadvertently misquoted a portion of § 412.25(e)(1). Specifically, we stated that we were removing the phrase “paragraph (e)(2) and (e)(4)” in the existing regulations. However, the existing regulation states “paragraphs (e)(2) through (e)(4)”. Third, we made a typographical error in describing the phrase that was replacing the cross-reference described above. Specifically, we stated that “paragraph (e)(2) and (e)(5)” was replacing “paragraph (e)(2) and (e)(4).” (We note that our final regulations make paragraphs (e)(2) through (e)(5), not just paragraphs (e)(2) and (e)(5), applicable to satellite facilities.) Therefore, in section III. B. of this notice, we are correcting the aforementioned errors by revising the first amendatory statement of § 412.25 to indicate that in paragraph (e)(1) we are removing the cross-reference to “paragraphs (e)(2) through (e)(4)” and adding the cross-reference “paragraphs (e)(2) through (e)(5)” in its place. On pages 48191, 48201, and 48202, in Table 5—List of Diagnosis-Related Groups (DRGS), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay (LOS), we inadvertently listed the incorrect DRG title for several DRGs and the incorrect major diagnosis category
(MDC)for DRG 566 and DRG 572. Therefore, we are correcting these errors in section III. C. of this notice. III. Correction of Errors In FR Doc. 06-6692 of August 18, 2006 (71 FR 47870), make the following corrections: A. Corrections to Errors in the Preamble On page 47944, first column, second full paragraph, lines 1 and 5, the figure “583” is corrected to read “577”. B. Corrections to Errors in the Regulations Text § 412.25 [Corrected] On page 48137, first column, lines 10 through 14, in the first amendatory statement for § 412.25, the sentence “In paragraph
(e)introductory text, remove the cross-reference ‘paragraph (e)(2) and (e)(4)' and add the cross-reference ‘paragraph (e)(2) and (e)(5)' in its place.” is corrected to read, “In paragraph (e)(1), remove the cross-reference ‘paragraphs (e)(2) through (e)(4)' and add the cross-reference ‘paragraphs (e)(2) through (e)(5)' in its place.” C. Corrections to Errors in the Addendum Note: The addendum does not appear in the Code of Federal Regulations. 1. On pages 48191, 48201, and 48202 in Table 5—List of Diagnosis-Related Groups (DRGS), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay
(LOS)the following DRG titles (column 6) are corrected to read as follows: DRG DRG title DRG 303 Kidney and Ureter Procedures for Neoplasm. DRG 304 Kidney and Ureter Procedures for Non-Neoplasm With CC. DRG 305 Kidney and Ureter Procedures for Non-Neoplasm Without CC. DRG 543 Craniotomy With Major Device Implant or Acute Complex CNS Principal Diagnosis. DRG 568 Stomach, Esophageal & Duodenal Proc Age >17 W CC W/O Major GI DX. 2. On page 48202, in Table 5—List of Diagnosis-Related Groups (DRGS), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay (LOS),— a. Row 9, DRG 566, the MDC (column 4) “06” is corrected to read “04”. b. Row 15, DRG 572, the MDC (column 4) “08” is corrected to read “06”. IV. Waiver of Proposed Rulemaking and Delay in Effective Date We ordinarily publish a notice of proposed rulemaking in the **Federal Register** to provide a period for public comment before the provisions of a rule take effect in accordance with section 553(b) of the Administrative Procedure Act
(APA)(5 U.S.C. 553(b)). However, we can waive this notice and comment procedure if the Secretary finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice. Section 553(d) of the APA ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in the **Federal Register** . This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued. Therefore, we are waiving proposed rulemaking and the 30-day delayed effective date for the technical corrections in this notice. This notice merely corrects typographical and technical errors in the preamble, regulations text, and addendum of the FY 2007 IPPS final rule and does not make substantive changes to the policies or payment methodologies that were adopted in the final rule. As a result, this notice is intended to ensure that the FY 2007 IPPS final rule accurately reflects the policies adopted in the final rule. Therefore, we find that undertaking further notice and comment procedures to incorporate these corrections into the final rule or delaying the effective date of these changes is unnecessary and contrary to the public interest. (Catalog of Federal Domestic Assistance Program No. 93.773, Medicare—Hospital Insurance; and Program No. 93.774, Medicare—Supplementary Medical Insurance Program) Dated: September 28, 2006. Ann C. Agnew, Executive Secretary to the Department. [FR Doc. 06-8429 Filed 9-29-06; 8:45 am]
Connectionstraces to 48
Traces to 48 documents
U.S. Code
- Rule making§ 553
- Purposes§ 3501
- Price support§ 1421
- Public information; agency rules, opinions, orders, records, and proceedings§ 552
- Federal Aviation Administration§ 106
- Congressional findings and declaration of policy§ 1001
- Public information collection activities; submission to Director; approval and delegation§ 3507
- Final regulatory flexibility analysis§ 604
- Initial regulatory flexibility analysis§ 603
- Exemptions§ 80a–6
- Findings and declaration of policy§ 80a–1
- Functions and activities of investment companies§ 80a–12
- Definitions§ 1002
- Registration of investment companies§ 80a–8
- Qualified tuition programs§ 529
- SHORT TITLE.§ 801
- Rules and regulations§ 7805
- Avoidance of duplicative or unnecessary analyses§ 605
- Records maintained on individuals§ 552a
- Departmental regulations§ 301
- Functions of the Attorney General§ 509
- Interest and penalty on claims§ 3717
- CENTERS OF EXCELLENCE RESEARCH GRANTS.§ 1605
- Establishment, functions, and activities§ 272
- Regulations for drawbridges§ 499
register
CFR
- What size standards has SBA identified by North American Industry Classification System codes?§ 121.201
- General.§ 97.20
- Exceptions to notice and opt out requirements for processing and servicing transactions.§ 248.14
- Other exceptions to notice and opt out requirements.§ 248.15
- Information to be included in privacy notices.§ 248.6
- Small entities under the Investment Company Act for purposes of the Regulatory Flexibility Act.§ 270.0-10
- Small entities under the Securities Exchange Act for purposes of the Regulatory Flexibility Act.§ 240.0-10
- Requests for Commission records not available from the Commission's website, https://www.ferc.gov.§ 388.108
- Requests for privileged treatment for documents submitted to the Commission.§ 388.112
- Projects or actions categorically excluded.§ 380.4
- San Francisco Bay Navy Fleetweek Parade of Ships and Blue Angels Demonstration.§ 100.1105
- Delegation of rulemaking authority.§ 1.05-1
- Chelsea River.§ 117.593
- Temporary change to a drawbridge operating schedule.§ 117.35
- Kennebec River.§ 117.525
47 references not yet in our index
- 7 CFR 301
- 7 CFR 301.50
- 7 CFR 3015
- 7 USC 7701-7772
- 7 CFR 2.22
- Pub. L. 106-113
- Pub. L. 106-224
- 114 Stat. 400
- 7 CFR 920
- 7 USC 601-674
- 7 CFR 955
- 9 CFR 77
- 7 USC 8301-8317
- 14 CFR 39
- 14 CFR 97
- 1 CFR 51
- 17 CFR 270
- 17 CFR 270.22
- 15 USC 80a
- 17 CFR 240.14
- 29 CFR 2520
- 29 CFR 2550.404
- 15 USC 6801-09
- 17 CFR 248
- 12 CFR 40
- 17 CFR 239.15
- 17 CFR 239.17
- 5 CFR 1320.11
- 44 USC 3501-3520
- 18 CFR 388
- 5 CFR 1320.12
- 5 USC 601-612
- 5 USC 301-305
- 42 USC 7101-7352
- 26 CFR 31
- T.D. 9276
- 28 CFR 16
- 18 USC 4203(a)(1)
- 32 CFR 706
- 33 CFR 100
+ 7 more
Citation graph
cites case law
Unknown
Interim rule and request for comments
Cite7 CFR 301
Cite7 CFR 301.50
Cite7 CFR 3015
Cites 95 · showing 12Cited by 0 across 0 sources