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Code · REGISTER · 2006-11-27 · Alcohol and Tobacco Tax and Trade Bureau, Treasury · Rules and Regulations

Rules and Regulations. Final rule; Treasury decision

56,164 words·~255 min read·/register/2006/11/27/06-9403·

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 1505-01-D DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Part 9 [T.D. TTB-56; Re: Notice No. 18] RIN 1513-AA57 Establishment of the Chehalem Mountains Viticultural Area (2002R-214P) AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Final rule; Treasury decision. SUMMARY: This Treasury decision establishes the 68,265-acre Chehalem Mountains viticultural area in Clackamas, Yamhill, and Washington Counties, Oregon. This new viticultural area is entirely within the existing Willamette Valley viticultural area.
We designate viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase. DATES: *Effective Date:* December 27, 2006. FOR FURTHER INFORMATION CONTACT: N.A. Sutton, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 925 Lakeville St., No. 158, Petaluma, CA 94952; telephone 415-271-1254. SUPPLEMENTARY INFORMATION: Background on Viticultural Areas TTB Authority Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 *et seq.* ) requires that alcohol beverage labels provide consumers with adequate information regarding product identity and prohibits the use of misleading information on those labels.
The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau
(TTB)administers these regulations. Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains the list of approved viticultural areas. Definition Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized and defined in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area is neither an approval nor an endorsement by TTB of the wine produced in that area. Requirements Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include— • Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition; • Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies; • Evidence relating to the geographical features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas; • A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey
(USGS)maps; and • A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked. Chehalem Mountains Viticultural Area Petition and Rulemaking Background TTB received a petition from Alex Sokol-Blosser, secretary of the North Willamette Valley AVA Group, proposing establishment of the new “Chehalem Mountains” viticultural area. David Adelsheim, Paul Hart, and Richard Ponzi authored the petition. The proposed Chehalem Mountains viticultural area is located in portions of Clackamas, Yamhill, and Washington Counties in northwestern Oregon. The proposed area lies in the northern region of the Willamette Valley viticultural area (27 CFR 9.90) and, along its southwestern boundary, encompasses the smaller Ribbon Ridge viticultural area (27 CFR 9.182). The Chehalem Mountains viticultural area is approximately 19 miles southwest of Portland, Oregon, and 45 miles inland from the Pacific Ocean. The proposed Chehalem Mountains viticultural area covers 106.6 square miles, or 68,265 acres. The petition states that, in 2002, the area contained at least 80 vineyards, totaling over 1,100 acres, and 12 commercial wineries. Terrain, elevation, and climate are the significant distinguishing features of the proposed Chehalem Mountains viticultural area. The proposed boundary line, which is generally at 200 to 250 feet in elevation, encompasses this single, continuous landmass lifted from the Willamette Valley floor. We summarize below the supporting evidence presented with the petition. Name Evidence The petition explains that the region within the proposed viticultural area is locally known as the “Chehalem Mountains.” The petition notes that use of the Chehalem name extends back to the early 19th century, that it is featured on USGS maps of the region, and that it is used by a variety of present-day businesses, housing developments, parks, and roads. The modern word “Chehalem” comes from the Native American name “Chahelim,” listed under the heading Atfalati (Tualatin) in the “Handbook of American Indians,” according to references in the petition. Also, beginning in the early 1800s, the “Chehalem” name referred to more than 20 bands of Native Americans living in the general vicinity of the Chehalem Mountains. Historically, the “Chehalem” name entered the vocabulary of the early European settlers prior to 1840, according to the petition. The petition explains that in 1834 a lumber mill started operations on Chehalem Creek. Also, in 1848, Joseph B. Rogers platted the town of “Chehalem” on his property, the current site of Newberg, Oregon. The petition further states that on March 14, 1851, the township of “Chehalem” established one of the earliest post offices in Yamhill County. The “Chehalem Mountains” name figures prominently on the USGS quadrangle maps of Newberg, Dundee, Laurelwood, and Scholls, Oregon, submitted with the petition. Within the Chehalem Mountains, these USGS maps name the Parrett Mountain and Ribbon Ridge spurs, as well as other hills, peaks, and ridges, including Laurel Ridge, Bald Peak, Iowa Hill, Spring Hill, and Fern Hill. The entry for Chehalem Mountains in “Oregon Geographic Names” by Lewis L. McArthur reads, “These are the highest mountains in the Willamette Valley * * *. The Chehalem Mountains and some independent spurs extend from the Willamette River east of Newberg to the foothills of the Coast range south of Forest Grove, Oregon.” Additional geographic location name references on the USGS maps include Chehalem Creek, which runs through Chehalem Valley, on the south side of the Chehalem Mountains. In addition to the USGS map references, modern “Chehalem” name usages include a municipal park and recreation district, a public middle school, public roads, 27 business names, and several housing developments, according to petition evidence. Boundary Evidence The proposed boundary line of the Chehalem Mountains viticultural area relies primarily on geographical features and elevations, the petition explains and the USGS regional maps confirm. In addition to terrain and elevation, slope and soil criteria help delineate the line between mountains and valley floor, according to the petition. Thus, the proposed Chehalem Mountains viticultural area boundary line includes mountainous and hillside terrain, but excludes flat or barely sloping lands. A valley formed by the Tualatin River and its tributaries lies on much of the west side and all of the north side of the Chehalem Mountains. On the east side of the Chehalem Mountains, Rock Creek and Seely Ditch separate the mountains from the high ground around Tonquin. The southeast side of the Chehalem Mountains borders the flood plain of the Willamette River, and the Chehalem Valley lies along the southwest side of the proposed viticultural area's boundary line. Historically, the first vineyard acquisition in the Chehalem Mountains dates to 1968, when Dick Erath purchased 49 acres on Dopp Road in Yamhill County, according to the petition. Mr. Erath planted vineyards in the spring of 1969, the petition continues, and shortly thereafter other land owners also started planting wine grapes. Distinguishing Features The petition states that the distinguishing features of the proposed Chehalem Mountains viticultural area include its terrain, elevation, and climate. These features contrast with the surrounding Willamette Valley, Coast Range, and Columbia Gorge regions. Physical Features The length and towering peaks of the Chehalem Mountains landform distinguish the proposed viticultural area from the surrounding Willamette Valley area, the petition explains. Viewable from the West Hills of Portland, Oregon, and the northern Willamette Valley floor, the Chehalem Mountains measure more than 20 miles in length and 5 miles in width. The mountains are a single continuous landmass of increasing elevation, containing a series of ridges and two highly delineated spurs, Ribbon Ridge and Parrett Mountain. The mountains also serve to separate the Tualatin River basin and the Chehalem Valley, the petition continues. The slopes of the Chehalem Mountains, both steep and gentle, significantly contrast with the almost flat Willamette Valley floor, the petition explains. On the west side of Ribbon Ridge and the southeast side of Parrett Mountain, the slopes descend steeply, according to the petition and the USGS maps of the region. At the bottom of these steep descents, the slopes become almost level and flatten into the valley floor. The majority of the Chehalem Mountains slopes shift gradually and gently to the valley floor, as shown on USGS regional maps. Where the terrain transition lacks distinction, the petitioner uses a combination of terrain, elevation, slope, and soil criteria to determine the boundary line of the proposed Chehalem Mountains viticultural area. Elevation Within the Willamette Valley, the Chehalem Mountains tower in height over the surrounding landforms and terrain, according to the petition. Bald Peak, northwest of Newberg and within the proposed Chehalem Mountains viticultural area, rises to 1,633 feet above sea level, while the surrounding valley floor sits at or below 200 feet in elevation, according to the USGS regional maps. Most of the vineyards in the proposed Chehalem Mountains viticultural area, the petition states, lie between the 200 feet and 1,000 feet contour lines. The areas below 200 feet in elevation have alluvial soils, characterized by greater depth, fertility, and water-holding capacity, according to the petition. This combination of soil features extends the growing period of the Willamette Valley floor and delays grape ripening. Also, frost potential increases at the lower elevations of the valley floor when compared to the higher hillside and mountain elevations. As a result, the proposed Chehalem Mountains viticultural area boundary line excludes valley floor elevations and its alluvial soils, the petition states. Climate Significant annual precipitation best distinguishes the climate of the proposed Chehalem Mountains viticultural area from surrounding regions, the petition claims. As the highest mountains in the Willamette Valley the Chehalems create a large obstacle for west-to-east moving storms. When the moist air rises over the Chehalem Mountains, water vapor in the cooling air condenses and falls to earth as terrain-induced rain, the petition explains. According to data from the “Atlas of Oregon,” second edition (University of Oregon Press, 2001), annual rainfall within the boundaries of the proposed viticultural area ranges from 37 inches in the lower elevations to almost 60 inches at the highest elevation at Bald Peak. This annual precipitation contrasts with the 36 inches received in Hillsboro and Beaverton to the north of the proposed viticultural area, French Prairie to the south, and Portland International Airport to the east, the petition explains. To the west of the Chehalems, the Coast Range, closer to the moisture-laden air of the Pacific Ocean, annually averages over 100 inches of rain. Several other uplifted regions within the Willamette Valley include higher rainfall levels than the surrounding valley floor, but none are as dramatic as the Chehalem Mountains. For example, to the south-southwest of the proposed viticultural area, the Eola Hills, which peak at approximately 1,160 feet, receive 40 to 48 inches of annual precipitation, while to the south of the proposed viticultural area, the Dundee Hills, which peak at 1,067 feet in elevation, receive 40 to 44 inches of annual precipitation. Temperatures vary within the Chehalem Mountains more than in any other region within the Willamette Valley, the petition explains. According to data from the Oregon Climate Service, heat accumulation during the Chehalem Mountains growing season varies from over 2,200 degree days along the mountains' south side base to less than 1,800 degree days on the northsides of their higher peaks. The annual 400 degree-day variation typically results in a three-week difference in the ripening of Pinot Noir grapes, the petition explains. (Each degree that a day's mean temperature is above 50 degrees Fahrenheit, which is the minimum temperature required for grapevine growth, is counted as one degree day; see “General Viticulture,” Albert J. Winkler, University of California Press, 1975.) Evapotranspiration, or the loss of water from soil and plants by a combination of evaporation and transpiration, averages about 3 inches less at the higher elevations of the Chehalem Mountains when compared to the surrounding valleys, the petition states. This difference corresponds to the warmer growing temperatures found at the lower elevations, as compared to the cooler growing temperatures at the higher elevations of the Chehalem Mountains, the petition explains. Soil The petition emphasizes that the diverse Chehalem Mountains soils fail to qualify as a distinguishing feature for this viticultural area petition. The soils, according to the petition, include loess, sedimentary, basaltic, and alluvial origins. The Ribbon Ridge spur, within the proposed Chehalem Mountains southwest boundary line and heavily planted to red wine grapes, includes sedimentary soil of the Willakenzie Series, the petition explains. The central and southern Chehalem Mountains, with vineyards of white grapes and extensive Pinot Noir plantings, include large deposits of basaltic soils, mainly of the Jory Series. The central Chehalem Mountains region also includes loess soils, primarily of the Laurelwood Series. The petition further states that the sedimentary western flank of the Chehalem Mountains contains similarities to the adjacent hilly region surrounding the Yamhill River Basin, beyond the proposed boundary line. Also, the basaltic-origin soils of the Chehalem Mountains' southern slope and the Parrett Mountain spur resemble soils found further south and outside the proposed boundary line in the Dundee Hills and on the east side of the Eola Hills. Eolian soils on the north side of the Chehalem Mountains, the petition continues, resemble those found on the hills further north and east, beyond the proposed boundary line, in the Tualatin basin at Cooper and Bull Mountains. Finally, alluvial soils at the base of the Chehalem Mountains contain similarities to the surrounding valley flood plain soils found at elevations below the proposed viticultural area boundary line. The petition concludes that terrain, elevation, and climatic features of the proposed Chehalem Mountains viticultural area join to create the distinguishing features of this proposed viticultural region. The Chehalem Mountains soils, with their variety of parent material types, lack distinction from the surrounding Willamette Valley floor and hill formations. Notice of Proposed Rulemaking and Comments Received On October 7, 2003, TTB published in the **Federal Register** (68 FR 57840) as Notice No. 18 a notice of proposed rulemaking regarding the establishment of the Chehalem Mountains viticultural area. We received eight comments in response to that notice. All comments supported the establishment of the Chehalem Mountains viticultural area. Six of the eight comments agreed that the proposed “Chehalem Mountains” name, boundary line, and distinguishing features accurately represented the proposed viticultural area. The remaining two comments also supported establishment of the Chehalem Mountains viticultural area, but specifically expressed concern about a possible conflict with one winery's longstanding use of “Chehalem” in its brand name, because the winery does not source all of its grapes from within the proposed Chehalem Mountains boundary. It is the understanding of TTB that these two commenters were referring to Chehalem Winery and Vineyards, which utilizes grapes grown within the boundary of the proposed Chehalem Mountains viticultural area but also relies on grapes from the nearby Dundee Hills viticultural area (27 CFR 9.180) for its production, with the result that the wine produced would not meet the 85 percent standard for use of “Chehalem Mountains” as an appellation of origin (see the Impact on Current Wine Labels discussion below). The two commenters recommended that TTB allow the winery to continue to use the “Chehalem” brand name for grapes obtained outside the proposed Chehalem Mountains viticultural area boundary line. One of these commenters specifically suggested that such continued use of “Chehalem” in the winery's brand name would be appropriate so long as all of the grapes in question came from within the Willamette Valley viticultural area. TTB Finding After careful review of the petition and the eight comments received, TTB finds that the evidence submitted supports the establishment of the proposed viticultural area. Therefore, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we establish the “Chehalem Mountains” viticultural area in Clackamas, Yamhill, and Washington Counties, Oregon, effective 30 days from the publication date of this document. Regarding the concerns about use of the “Chehalem” name by Chehalem Winery and Vineyards, TTB has determined that only the full “Chehalem Mountain” name should have viticultural significance upon the establishment of the new viticultural area. Therefore, the name “Chehalem” standing alone will not have viticultural significance. Accordingly, the Chehalem Winery and Vineyards may continue to use its brand name for wines produced from grapes grown outside the boundaries of the Chehalem Mountains viticultural area. Boundary Description As originally proposed, the boundary of the Chehalem Mountains viticultural area encompassed the Ribbon Ridge landform, and the petitioning North Willamette Valley AVA Group intended to include the then proposed Ribbon Ridge viticultural area entirely within the proposed Chehalem Mountains area. Notice No. 8, included, therefore, proposed regulatory text that used the 200-foot and the 240-foot contour lines to define much of the southwestern boundary of the Chehalem Mountains viticultural area. In contrast, the regulatory text of § 9.182 adopted in T.D. TTB-27, which established the Ribbon Ridge viticultural area, uses Dopp and North Valley Roads for the Ribbon Ridge area's southern and western boundary lines, thus placing the Ribbon Ridge boundary slightly outside the originally proposed Chehalem Mountains southwestern boundary line. TTB has, with the petitioner's agreement, modified the originally proposed southwestern boundary of the Chehalem Mountains viticultural area to mirror the established Ribbon Ridge viticultural area boundary line. This minor boundary line change ensures that the Chehalem Mountains and Ribbon Ridge viticultural areas share a common boundary where appropriate so that the Ribbon Ridge area is entirely within the Chehalem area as the petitioner intended. This boundary line modification increases the overall size of the proposed Chehalem Mountains viticultural area by approximately 425 acres. In addition, for clarity, we have made minor editorial, non-substantive changes to the wording of the originally proposed Chehalem Mountains viticultural area boundary description. See the narrative boundary description of the viticultural area in the regulatory text published at the end of this document. Maps The maps for determining the boundary of the viticultural area are listed below in the regulatory text. Impact on Current Wine Labels Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area and its inclusion in part 9 of the TTB regulations, its name, “Chehalem Mountains” is recognized under 27 CFR 4.39(i)(3) as a name of viticultural significance. The text of the new regulation clarifies this point. Consequently, wine bottlers using “Chehalem Mountains” in a brand name, including a trademark, or in another label reference as to the origin of the wine, must ensure that the product is eligible to use the viticultural area name or other term as an appellation of origin. For a wine to be eligible to use as an appellation of origin a viticultural area name or other term specified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible to use the viticultural area name or term as an appellation of origin and that name or other term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other term appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing a viticultural area name or other viticulturally significant term that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details. Regulatory Flexibility Act We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required. Executive Order 12866 This rule is not a significant regulatory action as defined by Executive Order 12866 (58 FR 51735). Therefore, it requires no regulatory assessment. Drafting Information N.A. Sutton of the Regulations and Rulings Division drafted this notice. List of Subjects in 27 CFR Part 9 Wine. The Regulatory Amendment For the reasons discussed in the preamble, we amend title 27 CFR, chapter 1, part 9, as follows: PART 9—AMERICAN VITICULTURAL AREAS 1. The authority citation for part 9 continues to read as follows: Authority: 27 U.S.C. 205. Subpart C—Approved American Viticultural Areas 2. Subpart C is amended by adding § 9.205 to read as follows: § 9.205 Chehalem Mountains.
(a)*Name.* The name of the viticultural area described in this section is “Chehalem Mountains”. For purposes of part 4 of this chapter, “Chehalem Mountains” is a term of viticultural significance.
(b)*Approved Maps.* The appropriate maps for determining the boundary of the Chehalem Mountains viticultural area are six United States Geological Survey 1:24,000 scale topographic maps. They are titled:
(1)Newberg Quadrangle, Oregon, 7.5 Minute Series, 1961 (photorevised 1985);
(2)Dundee Quadrangle, Oregon, 7.5 Minute Series, 1956 (revised 1993);
(3)Laurelwood Quadrangle, Oregon, 7.5 Minutes Series 1956 (revised 1992);
(4)Scholls Quadrangle, Oregon, 7.5 Minute Series, 1961 (photorevised 1985);
(5)Beaverton Quadrangle, Oregon, 7.5 Minute Series, 1961 (photorevised 1984); and
(6)Sherwood Quadrangle, Oregon, 7.5 Minute Series, 1961 (photorevised 1985).
(c)*Boundary.* The Chehalem Mountains viticultural area is located in Clackamas, Yamhill, and Washington Counties, Oregon. The boundary of the Chehalem Mountains viticultural area is as described below:
(1)The beginning point is in Yamhill County on the Newberg map in section 15, T3S/R2W, at the intersection of Oregon Highway 99W and the 250-foot contour line, 0.4 mile east of Spring Brook;
(2)From the beginning point, proceed northwesterly 1.2 miles along the 250-foot contour to its intersection with an unnamed light-duty road locally known as Benjamin Road, section 50, T3S/R2W, Newberg map; then
(3)Proceed west 0.5 mile along Benjamin Road, crossing railroad tracks, to its intersection with an unnamed light-duty road locally known as Spring Brook Road, section 48, T3S/R2W, Newberg map; then
(4)Proceed southwest 0.3 mile along Spring Brook Road, parallel to the railroad tracks, to its intersection with an unnamed light-duty road locally known as Mountainview Drive, section 48, T3S/R2W, on the Newberg map; then
(5)Proceed west 0.35 mile on Mountainview Drive to its intersection with an unnamed light-duty road locally known as Aspen Way, along the western boundary of section 8, T3S/R2W, Newberg map; then
(6)Proceed northwesterly 1.4 miles on Aspen Way to its intersection with Bell Road, along the northern boundary of section 47, T3S/R2W, Newberg map; then
(7)Proceed west 0.8 mile on Bell Road, which becomes North Valley Road after crossing Oregon Highway 219, to its intersection with the 250-foot contour line, immediately before an unimproved dirt road on the left, section 46, T3S/R2W, Newberg map; then
(8)Proceed westerly 2 miles along the 250-foot contour line to its first intersection with the western boundary line of section 43, T3S/R3W, along the western border of the Newberg map; then
(9)Proceed north 0.2 mile along the western boundary of section 43, T3S/R3W, to its intersection with the 240-foot contour line, Newberg map; then
(10)Proceed westerly for 4 miles along the 240-foot contour line, crossing onto the Dundee map, to its intersection with an unnamed light-duty road locally known as Sullivan Lane, section 74, T3S/R3, Dundee map; then
(11)Proceed south 0.25 mile along Sullivan Lane to its intersection with North Valley Road at elevation point 216, section 74, T3S/R3, Dundee map; then
(12)Proceed west 0.1 mile along North Valley Road to its intersection with the 200-foot contour line, section 74, T3S/R3W, Dundee map; then
(13)Proceed northwesterly 1 mile along the 200-foot contour line to its intersection with an unnamed creek northeast of elevation point 215, and continue northwesterly 0.05 mile along the unnamed creek to its intersection with Dopp Road along the western boundary line of section 74, T3S/R3W, Dundee map; then
(14)Proceed south 0.8 mile along Dopp Road to its intersection with North Valley Road at the elevation point 202 near the Ewing Young School, section 39, T3S/R3W, Dundee map; then
(15)Proceed northerly 5 miles on North Valley Road, crossing onto the Laurelwood map, to the road's intersection with Laughlin Road and Albertson Road at elevation point 235, section 58, T2S/R3W, Laurelwood map; then
(16)Proceed east 0.1 mile on Albertson Road to its intersection with the 240-foot contour line, section 58, T2S/R3W, Laurelwood map; then
(17)Proceed northerly 15.6 miles along the 240-foot contour line to its intersection with Sandstrom Road, section 19, T1S/R3W, Laurelwood map; then
(18)Proceed west 0.15 mile on Sandstrom Road to its third crossing of the 200-foot contour line, just before Fern Hill Road to the west, section 24, T1S/R4W, Laurelwood map; then
(19)Proceed northwesterly and then northeasterly 4.5 miles along the meandering 200-foot contour line to its intersection with La Follette Road along the eastern boundary of section 8, T1S/R3W, Laurelwood map; then
(20)Proceed south 0.25 mile on La Follette Road to its intersection with the 240-foot contour line, north of Blooming Fern Hill Road, along the western boundary line of section 16, T1S/R3W, Laurelwood map; then
(21)Proceed easterly and then southerly 17 miles along the meandering 240-foot contour line, crossing over and back on the Scholls map in section 25 and 56, T1S/R3W, crossing Christensen Creek in section 35, T1S/R3W, and continuing to the contour line's intersection with Laurel Road West, along the southern boundary line of section 1, T2S/R3W, Laurelwood map; then
(22)Proceed east 0.15 mile on Laurel Road West to its intersection with the 200-foot contour line, along the southern boundary line of section 1, T2S/R3W, Laurelwood map; then
(23)Proceed easterly 17.5 miles along the meandering 200-foot contour line, and, after crossing onto the Scholls map and crossing over Laurel Road South, McCormick Hill Road four times, and Midway Road, and after crossing over and back on the Newberg map (crossing Heaton Creek) in section 28, T2S/R2W, continue to the contour line's intersection with Mountain Home Road, east of Heaton Creek, section 21, T2S/R2W, Scholls map; then
(24)Continue easterly and then southerly 8.9 miles along the 200-foot contour line and, after crossing Baker Creek, skirting Laurel Ridge to the north, crossing onto the Beaverton map, crossing over and back on the Sherwood map, crossing over in the northwest corner of the Beaverton map, and returning to the Scholls map, continue to the contour line's intersection with the middle tributary of an unnamed creek, along the western boundary line of section 24, T2S/R2W, Scholls map; then
(25)Proceed southeast along the meandering 200-foot contour line and, after crossing over to the northeast corner of the Newberg map to the Sherwood map, continue to the contour line's intersection with Edy Road, section 25, T2S/R2W, Sherwood map; then
(26)Proceed southwest along the meandering 200-foot contour line and, after crossing onto the Newberg map, skirting part of Chicken Creek, and returning to the Sherwood map, continue to the contour line's intersection with Elwert Road, along the eastern boundary line of section 25, T2S/R2W, Sherwood map; then
(27)Proceed south 0.85 mile on Elwert Road to its intersection with Oregon Highway 99W, along the eastern boundary line of section 36, T2S/R2W, Sherwood map; then
(28)Proceed south-southwest 0.45 mile on Oregon Highway 99W to its intersection with the 250-foot contour line immediately south of an unnamed Cedar Creek tributary, section 36, T2S/R2W, Sherwood map; then
(29)Proceed southerly 1 mile along the meandering 250-foot contour line to its intersection with Middleton Road, section 1, T3S/R2W, Sherwood map; then
(30)Proceed southwesterly 0.5 mile on Middleton Road, which becomes Rein Road, to the road's intersection with the 200-foot contour line, immediately south of Cedar Creek, section 1, T3S/R2W, Sherwood map; then
(31)Proceed 1.6 miles generally east along the 200-foot contour line to its intersection, in the village of Middleton, with an unnamed light-duty east-west road locally known as Brookman Road, section 6, T3S/R1W, Sherwood map; then
(32)Proceed easterly 0.7 mile on Brookman Road to its intersection with the Washington-Clackamas County line, at the northwest corner of section 5, T3S/R1W, Sherwood map; then
(33)Proceed east 1 mile along the Washington-Clackamas County line to its intersection with Brown Road, at the northeast corner of section 5, T3S/R1W, Sherwood map; then
(34)Proceed southerly 1 mile on Brown Road to its second intersection with the 250-foot contour line, immediately south of an intermittent stream, in section 4, T3S/R1W, Sherwood map; then
(35)Proceed southerly 2.8 miles along the meandering 250-foot contour line, skirting Hoodview, to the contour line's intersection with Baker Road, section 16, T3S/R1W, Sherwood map; then
(36)Proceed south 0.15 mile on Baker Road to its intersection with the 200-foot contour line, section 16, T3S/R1W, Sherwood map; then
(37)Proceed southwesterly 13.1 miles along the meandering 200-foot contour line and, after crossing onto the Newberg map, continue to the contour line's intersection with Wilsonville Road, north of Willamette Greenway State Park, section 60, T3S/R2W, Newberg map; then
(38)Proceed northwesterly 2 miles on Wilsonville Road to its intersection with an unnamed tributary of Spring Brook, east-northeast of Grouse Butte, section 57, T3S/R2W, Newberg map; then
(39)Proceed southwesterly 0.25 mile along the unnamed tributary of Spring Brook to its intersection with the 200-foot contour line, section 57, T3S/R2W, Newberg map; then
(40)Proceed westerly and then northerly 0.45 mile along the 200-foot contour line, following the base of Grouse Butte, to the contour line's intersection with Wilsonville Road, section 57, T3S/R2W, Newberg map; then
(41)Proceed east 0.45 mile on Wilsonville Road to its intersection with the same unnamed tributary of Spring Brook, section 57, T3S/R2W, Newberg map; then
(42)Proceed northeasterly 0.05 mile along the unnamed tributary of Spring Brook to its intersection with the 250-foot contour line, southwest of the quarries, section 57, T3S/R2W, Newberg map; then
(43)Proceed northerly 2.2 miles along the 250-foot contour line to its intersection with Corral Creek Road (misnamed Ladd Hill Road on the Newberg map), south of Oregon Highway 99W, section 15, T3S/R2W, Newberg map; then
(44)Proceed north 0.5 mile along Corral Creek Road to its western-most intersection with an unnamed light-duty road locally known as Veritas Lane, section 15, T3S/R2W, Newberg map; then
(45)Proceed north-northwesterly in a straight line approximately 0.05 mile and return to the beginning point. Signed: September 8, 2006. John J. Manfreda, Administrator. Approved: October 27, 2006. Timothy E. Skud, Deputy Assistant Secretary (Tax, Trade, and Tariff Policy). [FR Doc. E6-20018 Filed 11-24-06; 8:45 am] BILLING CODE 4810-31-P DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Part 9 [T.D. TTB-57; Re: Notice No. 39] RIN 1513-AA70 Establishment of the Shawnee Hills Viticultural Area (2002R-345P) AGENCY: Alcohol and Tobacco Tax and Trade Bureau, Treasury. ACTION: Final rule; Treasury decision. SUMMARY: This Treasury decision establishes the Shawnee Hills viticultural area in the Shawnee National Forest region of southern Illinois. We designate viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase. DATES: *Effective Date:* December 27, 2006. FOR FURTHER INFORMATION CONTACT: Rita Butler, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street, NW., Washington, DC 20220; telephone 202-927-8210. SUPPLEMENTARY INFORMATION: Background on Viticultural Areas TTB Authority Section 105(e) of the Federal Alcohol Administration Act (the FAA Act, 27 U.S.C. 201 *et seq.* ) requires that alcohol beverage labels provide consumers with adequate information regarding a product's identity and prohibits the use of misleading information on those labels. The FAA Act also authorizes the Secretary of the Treasury to issue regulations to carry out its provisions. The Alcohol and Tobacco Tax and Trade Bureau
(TTB)administers these regulations. Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains the list of approved viticultural areas. Definition Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized and defined in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area is neither an approval nor an endorsement by TTB of the wine produced in that area. Requirements Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include— • Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition; • Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies; • Evidence relating to the geographic features, such as climate, soils, elevation, and physical features, that distinguish the proposed viticultural area from surrounding areas; • A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey
(USGS)maps; and • A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked. Rulemaking Proceedings Shawnee Hills Petition TTB received a petition from Dr. Theodore F. Wichmann, president of Owl Creek Vineyard, Inc., and Dr. Imed Dami, Illinois State Viticulturist, proposing the establishment of the “Shawnee Hills” American viticultural area in southern Illinois. The proposed Shawnee Hills viticultural area lies within portions of Alexander, Gallatin, Hardin, Jackson, Johnson, Pope, Pulaski, Randolph, Saline, Union, and William counties. The Shawnee National Forest is located largely within the proposed area. The proposed viticultural area covers about 2,140 square miles or 1.37 million acres between the Ohio and Mississippi Rivers, and is approximately 80 miles long east to west and 20 miles wide north to south. The proposed Shawnee Hills viticultural area encompasses a region of unglaciated hills and ridges that are from 400 to 800 feet higher in elevation than the flatter, glaciated land to the north and the river flood plains to the south. Below, we discuss the evidence presented in the Shawnee Hills viticultural area petition. Name Evidence The Shawnee Indian Nation, led by Chief Tecumseh and his brother, The Prophet, occupied the southern Illinois hill country in the early 1800s in an attempt to stem the flow of white settlers from the east. As a result, the petition states, the Shawnee name became attached to the hills, and academic and State government publications document the continued use of the name. For example, the book “Land Between the Rivers” (C.W. Horrell, *et al.* , 1973), as cited in the petition, describes the region as follows: South of the Mount Vernon hill country you come next to the Shawnee Hills [which mark] the southernmost limit of the prehistoric ice sheets. The Shawnee Hills culminate in Shawneetown Ridge, a heavily timbered wilderness of bluffs and knobs reaching up to an elevation of over a thousand feet, with rocky cliffs towering hundreds of feet above the valley floor. The Shawnee Hills are the heart of Southern Illinois [and] the 204,000 acre Shawnee National Forest. (pg. 11.) The Illinois State Geological Survey map “Landforms of Illinois”
(1980)labels the hills within the proposed viticultural area as the Shawnee Hills. In addition, an Illinois Department of Natural Resources brochure titled “Illinois’ Natural Divisions and Biodiversity” (April 2002) describes the State's 14 unique natural regions. These regions are based upon such natural features as topology, geology, soils, and climate, as well as their unique flora and fauna. According to the brochure, the Shawnee Hills natural region consists of two sections, the Greater and the Lesser Shawnee Hills. “Shawnee” also appears in many other political and geographic names within the proposed viticultural area, including Shawneetown, Shawneetown Ridge, and the Shawnee National Forest, which lies largely within the proposed area. Furthermore, five wineries within the proposed viticultural area formed the “Shawnee Hills Wine Trail” in 1996, which is described in a brochure of the same name. According to the petition, the names “Shawnee Hills” and “Shawnee Hills Wine Trail” have been used numerous times in other national, State, and local publications. Boundary Evidence People have raised grapes in southern Illinois and the Shawnee Hills since 1860, according “Grape Culture” by W.E. Gould
(1891)as cited in the petition. The region contained 1,250 acres of vineyards in 1890, and vintners produced 19,750 gallons of wine in 1891, the petition adds, citing “Grape and Wine Production in Illinois from 1983 to Present,” by R.M. Skirvin, *et al.* , in “Illinois Grape Growers and Vintners Association Conference Proceedings” (2000). Currently, there are eight wineries and 51 vineyards with approximately 160 acres planted to wine varietals within the proposed Shawnee Hills viticultural area, the petition states, citing “1999 Grape Growers and Vintner's Survey,” in “Illinois Grape Growers and Vintners Association Conference Proceedings” (2000). Academic and Illinois State government publications describe the boundaries of the Shawnee Hills landform, and the petition included copies of these publications. As described by Horrell, *et al.* , the Shawnee Hills is a region of unglaciated hills and ridges that extends across southern Illinois, about 80 miles long, from the Ohio River in the east to the Mississippi River in the west, and approximately 20 miles wide from north to south. The region's elevation is its most distinguishing feature, averaging roughly 400 to 800 feet higher in elevation than the glaciated land immediately to the north and the Mississippi and Ohio River flood plains immediately to the south. According to the petition, and the State of Illinois publications and maps submitted with it, the eastern boundary of the Shawnee Hills landform is the bluff line along the Ohio River, while the landform's western boundary is the high bluff line above the Mississippi bottomland. The “Illinois’ Natural Divisions and Biodiversity” brochure notes that the Mt. Vernon Hill Country section of the Southern Till Plain division lies north of the Shawnee Hills. As the petition and the accompanying publications note, the dividing line between the Shawnee Hills region and the Mt. Vernon Hill Country marks the southernmost advance of Ice Age glaciers. The area immediately to the south of the Shawnee Hills consists of the lowlands and flood plains found along the Ohio and Mississippi Rivers. This region, according to the petition, is commonly called the “Cairo Delta.” Differences between the natural boundaries of the Shawnee Hills region and the boundaries of the proposed Shawnee Hills viticultural area are minor and largely a matter of convenience. For example, a road near the base of the Mississippi River bluff rather than a complex meandering elevation line is used to mark a portion of the proposed area's western boundary. The proposed Shawnee Hills viticultural area boundary also follows, in places, the boundary of the Shawnee National Forest, which covers much of the Shawnee Hills region. Distinguishing Features Elevation As noted by the petitioners and by Horrell, *et al.* , in “Land Between the Rivers,” elevation is the most obvious feature distinguishing the Shawnee Hills from surrounding areas. As shown on the “Paducah; Kentucky: Illinois-Missouri-Indiana” USGS map
(1987)submitted with the petition, the Shawnee Hills range from 400 to 800 feet higher in elevation than the glaciated land to the north and the river delta land to the south. Most of the highest elevations in Illinois, many above 1,000 feet, are in the Shawnee Hills. According to the petition, spectacular hills and ridges and a unique mesoclimate characterize the proposed Shawnee Hills viticultural area. Nearly all vineyards in the proposed Shawnee Hills viticultural area are on ridge tops and bench lands ranging between 600 and 900 feet in elevation. As such, the commercial vineyards in the Shawnee Hills area have experienced little or no spring frost or winter freeze injury. An additional benefit of the Shawnee Hills topography, the petition notes, is the enhanced air circulation caused by constant summer breezes, allowing faster drying of vineyard leaves and fruit clusters following rain, thus minimizing the risk of fungal infections in an otherwise humid, wet climate. In contrast, the Mt. Vernon Hill County region immediately to the north of the Shawnee Hills was glaciated, and, as a result, is 400 to 500 feet lower in elevation than the Shawnee Hills, according to the petition, which adds that the Mt. Vernon region is relatively flatter with no high ridges, cliffs, or gorges. Horrell, *et al.* , describe the topography of the Mt. Vernon Hill Country as “rolling farmland.” The Cairo Delta area to the south of the Shawnee Hills is lower still, averaging about 300 to 400 feet in elevation, with an extremely flat topography that is often totally flooded by the Mississippi, Ohio, Wabash, and Cache Rivers, which all converge there. This delta region comprises all of the land in Illinois south of the Shawnee Hills. Horrell, *et al.* (1973), describe this area as follows: Beyond Shawneetown Ridge the land drops away in gentle foothills to the low-lying swamps and lakes along the Cache River—the ancient bed of the Ohio River. Beyond Cache valley you come to the flood plain of the Ohio River itself. Two similar flood plains border Southern Illinois on the east and west, forming the banks of the Wabash and Mississippi rivers. Geology The petitioners also note that the geological characteristics of the Shawnee Hills are a distinguishing feature. The “Illinois Geological Survey,” compiled by H.B. William, *et al.* (1967), as cited in the petition, notes that the backbone of the Shawnee Hills is the Shawneetown Ridge, a high ridge of Pennsylvanian, Caseyville Formation Battery Rock sandstone up to 600 feet thick, which runs east to west from the Ohio River south of the village of Shawneetown to the Mississippi River near the town of Chester. This rock is very obvious in the ridge's south-facing bluffs, as well as along the north-south roads cut through it. The ridge's northern slope consists primarily of Pennsylvanian, Abbott Formation, Grindstaff sandstone up to 350 feet thick. The southern slope consists primarily of Mississippian Upper Chesterian, Grove Church shale up to 65 feet thick, and Kinkaid Limestone, which is 110 to 180 feet thick. The bluffs above the Mississippi River consist primarily of Lower Devonian Clear Creek chert and Backbone limestone. This underlying mixture of sandstone, chert, and limestone gives the Shawnee Hills a Karst-like topography, honeycombed with sinkholes and limestone caves feeding many surface springs, the petition states. One of the few such areas in Illinois, the petition notes that this combination of steep slopes, rock fissures, sink holes, and caves provides the proposed viticultural area with superior surface and ground water drainage in a region that often has excessive rainfall (38 to 46 inches annually). In contrast, the petition notes, the Mt. Vernon Hill Country to the north of the Shawnee Hills was totally glaciated, resulting in lower elevations, flatter topography, and a different geology. The southern portion of the Mt. Vernon Hill Country consists primarily of Pennsylvanian, Spoon Formation, Curlew limestone layered with DeKoren and Davis coal, as well as Carbondale Formation, Piasa limestone with number 2, 5, and 6 coals. The northern part of the Mt. Vernon Hill Country area consists primarily of Modesto Formation Shoal Creek limestone 200 to 500 feet thick with number 7 and 8 coal throughout, as well as Bond Formation, Millersville limestone 100 to 350 thick. Horrell, *et al.* (1973), describe this area as “a great crescent stretching southeast from Randolph and Perry counties to Gallatin county, where coal beds come so close to the surface that they have made this the most heavily mined region in the state.” Also in contrast, the petition notes that the Cairo Delta area south of the Shawnee Hills was flattened by water from both glacial melt and the tremendous flow and flooding of the two largest rivers in the country—the Mississippi and the Ohio, which eroded and replaced rock with clay, sand, and gravel. According to the “Illinois State Geological Survey,” the northern part of the delta area consists of Cretaceous, Gulfian McNary sand, and Tuscaloesa gravel. The southern part of the delta region consists of Paleocene and Eocene Wilcox Formation, Porters Creek clay 75 to 150 feet thick. Climate Another distinguishing factor of the proposed Shawnee Hills viticultural area, according to the petitioners, is its climate. While the Shawnee Hills area generally has a continental climate, as does all of the Midwestern United States, the hills climatically separate the upper Midwest from the South. The petition states that the Shawnee Hills region is warmer than the adjacent areas to the north but cooler than the adjacent areas to the south, which are often too hot in the summer to grow quality grapes. This climate provides a longer growing season for ripening late varieties of grapes, higher degree-days for optimum ripeness, and fewer winter occurrences of below-zero degree Fahrenheit temperatures, which can kill buds and damage wood on many grape varieties, according to the petition. As evidence of this unique climate, the petition included data from the Midwestern Climate Center ( *http://mcc.sws.uiuc.edu/summary* ) for Mt. Vernon, Anna, and Cairo, Illinois. Anna is located within the proposed Shawnee Hills viticultural area; Mt. Vernon, which is within the Mt. Vernon Hill Country region, is approximately 50 miles north of Anna; while Cairo, which is within the Cairo Delta region, is approximately 35 miles south of Anna. The table shown below, which the petitioners provided, compares Shawnee Hills, Mt. Vernon, and Cairo temperature data. The table shows that the Shawnee Hills could be classified as a mid-Region IV climate in the Winkler heat summation climate classification system, with 3,770 growing degree-days. (During the growing season, one degree day accumulates for each degree Fahrenheit that a day's median temperature is above 50 degrees, which is the minimum temperature required for grapevine growth. See “General Viticulture,” by Albert J. Winkler, University of California Press, 1974.) Heat Summation as Degree-Days Above 50 Degrees Fahrenheit for the Period April 15 to October 15 Climate station Degree days over 50° F Apr 15-30 May Jun Jul Aug Sept Oct 1-15 Apr 15-Oct 15 Winkler climate region Mt. Vernon 108 447 706 835 774 550 123 3,543 Low Region IV Anna 127 498 733 868 815 587 142 3,770 Mid Region IV Cairo 159 586 823 950 872 643 168 4,201 Low Region V Source Midwest Climate Center Data: *http://mcc.sws.uiuc.edu/summary/data* . For the proposed Shawnee Hills viticultural area, average temperatures are highest from mid-June to mid-August during early ripening; then the temperatures taper off in September and October, which is the period of late ripening and harvest. Typically, the area experiences warm days and cool nights from late August to October. The table below, which the petitioners also provided, describes the length of growing season for the three areas (Mt. Vernon, Anna, and Cairo). For the Shawnee Hills, the median last spring frost occurs by April 10. In 10 percent of the years, the last frost occurred after April 23. North of this area, the median last spring frost occurs in mid-April, with 10 percent occurring after May 2. Since bud break generally occurs during the second week of April, areas to the north of the Shawnee Hills often experience more bud and shoot damage due to late frost. Also, since the first frost in the fall occurs one to three weeks later in the Shawnee Hills than in areas to the north, late varieties such as Chambourcin and Norton ripen more fully before leaf drop. Growing Season Summary, 1961-1990 Base Temperature = 32 Degrees Fahrenheit Station Date of last spring frost occurrence Median 90% 10% Date of first fall frost occurrence Median 90% 10% Length of growing season Median 90% 10% Mt. Vernon 4/12 3/27 5/02 10/16 10/03 10/29 184 207 150 Anna 4/10 3/23 4/23 10/27 10/12 11/07 200 215 186 Cairo 3/24 3/01 4/08 11/13 10/31 11/28 233 260 214 Source Midwest Climate Center Data: *http://mcc.sws.uiuc.edu/summary/data.* Because the Midwestern United States is a continental climate, one of the limiting factors in growing quality wine grapes is dormant wood and bud damage due to extreme cold temperatures in the winter. The next table, as provided by the petitioners, shows that the Shawnee Hills area averages 81 days below 30 degrees Fahrenheit and 1.8 days below 0 degrees Fahrenheit each year. The region immediately to the north averages 104 days below 30 degrees Fahrenheit and 3.5 days below 0 degrees Fahrenheit. One or two days of extreme cold can mean the difference between a full crop and healthy wood, and a partial crop and damaged wood. Average Annual Temperature Variation [Averages: 1961-1990; Extremes: 1896-2000] Station Average annual temperature (degrees fahrenheit) Maximum Minimum Mean Annual number of days of minimum temperature <32° F <0° F Mt. Vernon 65.0 42.9 54.0 104 3.5 Anna 67.1 46.1 56.6 81 1.8 Cairo 67.5 49.9 58.7 64 0.7 Source: Midwest Climate Center Data: *http://mcc.sws.uiuc.edu/summary/data.* Rainfall The petitioners note that while rainfall does not appear to be a distinguishing feature for the proposed Shawnee Hills viticultural area, the area's drainage capacity does differ from that of surrounding areas. Because of its well-drained soils, steep topography, and limestone base, the Shawnee Hills can shed excess water more quickly and completely than adjacent areas. In the Shawnee Hills area, most precipitation occurs in the spring months of March through May. The driest months are generally September and October, which receive an average of only 2 to 3 inches per month. Although the area receives excessive rainfall on an annual basis, the growing season and the harvest months are more moderate in terms of rainfall. The drier harvest months allow grapes to develop more intensity in flavor, color, sugar, and acid. In most years, the petition states, the Shawnee Hills vineyards produce wine grapes that are very well balanced relative to these quality parameters. Soils While noting that soils vary in the Shawnee Hills region, the petitioners provided a general description contrasting the soils of the proposed area with the soils of adjacent areas. As noted on the “General Soil Map of Illinois,” prepared by J.B. Fehrenbacher (1982), the soils in the proposed Shawnee Hills viticultural area are, generally, class XIII and class XIV, which tend to be thin loess with or without residuum on limestone or interbedded sandstone, siltstone, and shale. The main soils are Alford, Hosmer, Wellston, and Zanesville. All of these soils are light colored, moderately developed, and moderately well drained. The western and southern parts of the area tend to have deeper soils, 12 to 20 feet thick, on limestone. The central and northern parts of the area tend to have soil that is 20 to 48 inches thick on sandstone, siltstone, and shale. The primary viticultural advantage of the soils within the Shawnee Hills is that they are moderately well drained and are of low fertility. Soil drainage in the Shawnee Hills area is moderate to excellent. In this area of Karst topography, the loess soils, which tend to erode easily, are very good for quality vines and grapes. However, the best vineyard sites within the proposed Shawnee Hills viticultural area are on flat ridge tops and bench lands with deep soils that are not highly eroded. In contrast, the soil north of the Shawnee Hills in the Mt. Vernon Hill Country are class II, which are primarily thick loess (30 to 70 inches) on Illinois drift. The main soils are Stoy, Weir, Bluford, Wynoose, Colp, and Del Rey. These soils tend to be much deeper than those in the Shawnee Hills, as well as more fertile but with poorer drainage. In general, these soils are more suited to growing such crops as corn and soybeans, which are the primary crops of the Mt. Vernon Hill Country, than to growing apples, peaches, and grapes, which are the primary crops in the Shawnee Hills area. The soils south of the Shawnee Hills in the Cairo Delta, according to the petition, are primarily class XV, which are sandy to clay alluvial sediments on bottomlands. The soils include Lawson, Sawmill, Darwin, Haymond, Perrolia, and Karnak. These soils tend to be poorly developed and poorly drained. Notice of Proposed Rulemaking On April 8, 2005, TTB published a notice of proposed rulemaking regarding the establishment of the Shawnee Hills viticultural area in the **Federal Register** (70 FR 17940) as Notice No. 39. Comments on the proposed establishment of the Shawnee Hills viticultural area were due on or before June 7, 2005. Comments Received We received 46 comments in response to Notice No. 39. Of those, 28 comments supported the petition and 18 comments opposed the petition, including one comment with 84 additional signatures attached. Supporting commenters included the Governor of Illinois, two officers of the Illinois Grape Growers and Vintners Association (IGGVA), a representative of the Southernmost Illinois Tourism Bureau, various wine industry members with interests within the proposed area, and several wine consumers. In addition, TTB received a detailed response to the opposing comments from one of the original Shawnee Hills petitioners, Dr. Theodore F. Wichmann, president of Owl Creek Vineyard, Inc. Opposing commenters included industry members with interests in southern Illinois outside of the proposed area, the president of the Greater Shawnee Grape Growers Association (GSGGA), and the mayors of Pulaski and Benton, Illinois. Below, we discuss the issues raised by the opposing commenters. We discuss some opposing comments individually, and where more than one opposing comment covers the same issue, we address those comments as a group. Where applicable, we also discuss Dr. Wichmann's responses to the opposing comments. We do not discuss the 28 supporting comments in detail. Opposing Comments in Support of a Larger Viticultural Area All commenters opposed to the establishment of the proposed Shawnee Hills viticultural area as outlined in Notice No. 39 express support for expanding the proposed viticultural area and naming it “Shawnee,” “Greater Shawnee,” or “Southern Illinois.” For example, an industry member associated with the Shawnee Winery comments that “the area should be designated as all of Southern Illinois south of Interstate 64 and from the Mississippi River to the Wabash River.” A few commenters support an even larger viticultural area encompassing all of Illinois south of Interstate 70. Economic Consequences, Development, and Support Most opposing commenters supporting the designation of a larger viticultural area in southern Illinois note that more growers would reap the economic benefits from inclusion within a larger viticultural area. One commenter states that a viticultural area encompassing all of Illinois south of Interstate 64 would double the number of growers able to benefit from inclusion in a viticultural area. Another commenter believes that the number of benefiting growers could triple. Several opposing commenters also add that, with a larger viticultural area, wineries would have more grapes to choose from. Some opposing commenters also state that exclusion from the proposed Shawnee Hills viticultural area would have negative economic consequences for their operations and those of other excluded southern Illinois growers. For example, the owner of the Flint Hill Vineyard near Muddy, Illinois, states that exclusion from the proposed area would “negatively affect the price of my grapes,” and that as a result he could be displaced by novice growers. A Carbondale-area grower also notes that exclusion from the proposed Shawnee Hills viticultural area “would put my grapes in a competitive disadvantage and impose economic hardship on my existing enterprise.” In addition, several opposing commenters state that the creation of a smaller, rather than a larger, viticultural area in southern Illinois would negatively affect economic development efforts in the region. A commenter associated with the Office of Economic and Regional Development at Southern Illinois University states, “The future of the viticultural industry in southern Illinois is dependent upon a whole region, not the gerrymandered version being proposed.” The owners of the Lost Creek Vineyard near Benton, Illinois, believe that the development of grape growing in southern Illinois should be given the same consideration in setting the boundaries of the proposed viticultural area as soil and climate conditions. Several opposing commenters fear that economic development incentives and technical assistance offered by the State of Illinois to viticulturists, as well as U.S. Department of Agriculture assistance and loans, could be denied to growers outside of the proposed viticultural area. In particular, three growers who identified themselves as minority group members commented on this concern. Noting his exclusion from the proposed Shawnee Hills viticultural area, one such grower from Carrier Mills, Illinois, believes that it is “highly likely in the future I will hear that the location of my vineyard does not justify any State support” or support from the banking establishment. Arbitrary Boundaries Some opposing commenters state that the proposed Shawnee Hills viticultural area boundaries are arbitrary, leaving some growers outside the proposed area by a few miles or, in some cases, “by a matter of a few hundred feet!” Others contend the proposed viticultural area boundary is arbitrary since it does not encompass most growers in southern Illinois or does not include all of the historic grape growing areas within southern Illinois. For example, the mayor of Benton, Illinois, comments that “[t]here are just too many vineyards scattered through [southern Illinois] to pretend to draw an artificial line * * * along the bottom of ditches, unnamed dirt roads, and through the center of communities like Carbondale and Marion.” While most opposing commenters expressed their support for a larger viticultural area in general terms, several other industry members sought the addition of specific vineyard properties to the viticultural area as proposed. For example, the owner of the Flint Hill Vineyard notes that while members of his family have grown grapes on the same ridge since the 1920s, that ridge was excluded from the proposed viticultural area by a few miles. The president of the GSGGA states that his vineyard is outside of the proposed Shawnee Hills viticultural area “by less than one-quarter mile.” Lack of Distinguishing Characteristics A few opposing commenters also state that the boundary of the proposed Shawnee Hills viticultural area is arbitrary since the proposed area is not truly distinguishable from the rest of southern Illinois based on its geography, climate, or soils. In his comment, the president of the GSGGA included a table showing the elevation of various southern Illinois communities in support of his contention that the elevations found inside and outside the proposed Shawnee Hills viticultural area are not significantly different. These elevation differences between the proposed viticultural area and the surrounding region, this opposing commenter concludes, “are not significant enough to warrant a case for different growing conditions,” and thus will not result in “detectable flavor differences” in the resulting wine. The GSGGA president notes in particular that, given the 30-mile distance between them, the difference in elevation between Alto Vineyards, one of the highest vineyards within the proposed Shawnee Hills viticultural area, and his Monte Alegre Vineyard, outside of the proposed area, results in only a slope of 0.20 percent. In terms of climate, he states that “elevation differences of the order or 300 feet for over 30 to 40 miles do not present a topographical hurdle for the large continental air masses that dominate the climate of the region.” This commenter notes that the relative flatness and location in the center of the continent gives southern Illinois “very uniform climatic characteristics.” Other commenters also contend that there is little difference in the climate of the proposed Shawnee Hills viticultural area when compared with the climate of the surrounding region of southern Illinois, particularly as measured in average temperatures, last and first frost dates, heat accumulation as measured in degree days, 1 or in average rainfall. One grower notes, “Every year, the trees bud and turn at the same time, the farmers plant and harvest at the same time, [and] the rivers are all high or low at the same time.” 1 As a measurement of heat accumulation during the growing season, one degree day accumulates for each degree Fahrenheit that a day's mean temperature is above 50 degrees, which is the minimum temperature required for grapevine growth. See “General Viticulture,” by Albert J. Winkler, University of California Press, 1974. A few opposing commenters also questioned the soil differences outlined by the original petitioners. One commenter notes that soils in southern Illinois “are mostly all acidic, heavy soils, with organic content in the 1 to 2% range or less, and although they may exhibit differences in texture, this texture can change within a single vineyard.” This commenter adds “these marginal differences will be undetectable in the wine.” Other Issues Some opposing commenters believe inclusion within a viticultural area is a judgment of the quality of an area's fruit and that grapes from vineyards outside of the proposed area will be regarded as substandard. The mayor of Pulaski, Illinois, states in his comment that the Shawnee Hills petition “simply assumes” that the hills surrounding the village are “substandard for grapes.” One opposing commenter questioned the value of establishing a viticultural area in a region that grows only French-American hybrids and North American varieties since these “do not aspire to the flavor complexities” usually found in wines from viticultural areas growing *vinifera* grapes. In addition, a few opposing commenters note that the petitioners did not consult with growers outside the proposed Shawnee Hills viticultural area in developing their proposal. Petitioner's Response Regarding the economic issues raised by the opposing commenters, the lead Shawnee Hills petitioner, Dr. Wichmann, notes in his response that some southern Illinois growers may mistakenly believe that the establishment of a viticultural area limits to whom they may sell their grapes or who may buy their grapes. The petitioner dismisses the role of viticultural areas in economic development as being irrelevant since viticultural areas are established only to “inform consumers of where the grapes in a given bottle of wine were grown.” The petitioner also states that the establishment of a viticultural area does not “imply or guarantee the quality of grapes grown within or outside its boundaries.” The Shawnee Hills petitioner contends that, by definition, a viticultural area's boundaries are restrictive since the boundaries define an area that is different from surrounding areas. In this case, the petitioner states that the proposed Shawnee Hills viticultural area differs from the surrounding areas of southern Illinois in that the Shawnee Hills landform is higher than surrounding areas, is warmer, and has different soils. The petitioner's response notes that the president of the GSGGA compared the elevations of communities outside of the proposed Shawnee Hills viticultural area mostly with communities located at the bottom of valleys and gorges within the proposed area, which, the petitioner states, minimizes the elevation differences between the proposed area and the rest of southern Illinois. The petitioner states that most commercial vineyards in the Shawnee Hills are “on high ridges above 600 feet” while elevations in the Mt. Vernon Hill Country north of the proposed area range from 300 to 450 feet and are no higher than 500 feet. In terms of climate, the petitioner acknowledges that southern Illinois has the same overall macroclimate and agrees that the differences in elevation do not “present a topographical hurdle” for the large continental air masses that cover the region. Rather, the petitioner contends that the opposing commenters ignore how changes in elevation of 100 to 300 feet can change an area's mesoclimate and how changes in elevation of as little as 10 feet can effect a vineyard's microclimate. The petitioner's response specifically notes that due to cold air drainage, especially during times of minimum temperatures, the ridgetop vineyards within the proposed viticultural area are slightly warmer than vineyards to the north of the proposed area, a difference the petitioners contend is significant for growing grapes. In terms of soil differences, the petitioner's response states that soils within the proposed Shawnee Hills viticultural area are class XIII and class XIV, which tend to be thin loess on limestone, with the main soils being of the Alford, Hosmer, Wellston, and Zanesville series. In contrast, the petitioner states, the soils to the north in the Mt. Vernon Hill Country are class II, which are primarily thick loess on Illinois drift. The main soils there are of the Stoy, Weir, Bluford, Wynoose, Colp, and Del Rey series. TTB Response *General Discussion:* As previously stated, a viticultural area is defined under the TTB regulations as a delimited grape growing region distinguishable by geographical features. TTB considers evidence relating to name, boundaries, and geographical features in determining whether to approve a petitioned-for viticultural area. Though the establishment of a particular viticultural area may potentially have an economic impact on local grape growers and wineries outside the area, viticultural area designations under TTB regulations are not made on the basis of the potential economic impacts in adjacent localities. We designate viticultural areas in order to allow vintners to better describe the origin of their wines and to allow consumers to better identify the wines they may purchase. TTB wishes to clarify that the establishment of a viticultural area, by itself, does not prohibit or limit the sale of grapes grown outside the established area to vintners within the established area. The designation of a viticultural area only restricts the use of the name of the viticultural area and any related term of viticultural significance on wine labels and in wine advertisements. Requirements for the use of appellations of origin, including viticultural area names, are contained in § 4.25 of the TTB regulations (27 CFR 4.25). In order to use a viticultural area name on a wine label, at least 85 percent of the wine must be derived from grapes grown within the viticultural area and the wine must be finished within the State or States in which the viticultural area lies. However, this does not mean that vintners within a designated viticultural area may only produce wines that are subject to the 85 percent rule. Vintners located within a viticultural area may continue to produce wine from grapes grown outside that area; they simply would not be able to use the viticultural area name on the label of a wine that does not meet the 85 percent rule. TTB also wishes to clarify, as previously noted in this document, that its establishment of a viticultural area is neither an approval nor an endorsement by TTB of the grapes grown or the wine produced in that area. Therefore, financial or other assistance to a viticultural enterprise should not be based solely on the enterprise's location inside or outside of a viticultural area. Opposing comments raised several other issues that do not pertain to the approval standards for viticultural areas under the TTB regulations. TTB understands that these issues are important to the commenters; nevertheless, those issues are beyond the scope of this rulemaking action. *Viticultural Area Boundary and Distinguishing Characteristics:* TTB understands that many growers in southern Illinois support the establishment of a larger viticultural area. By definition, a viticultural area is a “delimited grape-growing region distinguishable by geographic features.” In other words, by its very nature, a viticultural area is a limited geographical area that excludes those growers outside that limited region. It is not the intent of TTB to harm any industry member excluded from the petitioned-for viticultural area. Rather, the designation of a viticultural area merely signifies that the viticultural area is different from surrounding areas based on one or more geographic factors. These factors may include, but are not limited to, climate (temperature, precipitation, fog, winds, etc.), soils, geology, topography, elevation, or another physical feature that may affect growing conditions within the area. TTB believes the evidence provided in the petition shows that the proposed Shawnee Hills viticultural area encompasses an area that is different from the surrounding areas of southern Illinois. We note the evidence available to us shows that the Shawnee Hills landform is generally higher in elevation, has a different underlying geology, has somewhat warmer vineyard temperatures due to cold air drainage, and has different soils when compared to the surrounding areas of southern Illinois. While we recognize that grapes are grown across southern Illinois, to include growers outside the proposed viticultural area would ignore the differences between the Shawnee Hills landform and the surrounding region of the State. As required by our regulations, we use features (both natural and man-made) found on the USGS map supplied by the original petitioners to define the boundary of the proposed Shawnee Hills viticultural area. As a result, the proposed viticultural area's boundary may fall slightly inside or outside of the Shawnee Hills landform's natural boundary. As noted in Notice No. 39, rather than using the exact natural limit of the Shawnee Hills, which is delineated by a complex set of elevation lines, we mark the boundary of the proposed viticultural area using more convenient features, such as nearby roads and streams. This is consistent with our past practice regarding the use of features different from a viticultural area's natural extent to draw its boundary. (For example, see the *Boundary Description* section of T.D. TTB-27, Establishment of the Ribbon Ridge Viticultural Area, published in the **Federal Register** on June 1, 2005, at 70 FR 31342.) However, TTB will entertain a properly prepared and submitted petition from any interested party regarding the establishment of a larger viticultural area in southern Illinois under an appropriate name. Section 4.25(e)(2) of the TTB regulations outlines the requirements for proposing an American viticultural area. A viticultural area petition must include evidence related to the proposed area's name, its boundaries, and its distinguishing geographic features, as well as a specific description of and maps showing the proposed area's boundaries. For details, see the *Requirements* section above and § 9.3(b) of our regulations. In addition, TTB notes that all Illinois vintners may use “Illinois” or the name of an Illinois county as an appellation of origin provided that the wine in question meets the requirements of 27 CFR 4.25. Multistate and multicounty appellations can also be claimed for some wines (see § 4.25(c) and
(d)for details). Opposing Comments Regarding Possible Consumer Confusion As noted above, all commenters opposing the establishment of the proposed Shawnee Hills viticultural area express support for a larger viticultural area to be named “Shawnee,” “Greater Shawnee,” or “Southern Illinois.” In addition, one commenter states that the Shawnee Hills name is inappropriate and could cause consumer confusion since that name is associated with a “small five or six winery wine trail” that “represents a very small geographic area” within the proposed viticultural area. The same commenter adds that the Shawnee Hills name ignores that the grapegrowing and winemaking area “already accepted by the public” includes all of southern Illinois. A similar comment states that some consumers may come to believe that only those wineries located along the Shawnee Hills Wine Trail are included in the Shawnee Hills viticultural area. Likewise, the president of the GSGGA notes in his comment that other localities in Kentucky and Ohio also are known as “Shawnee Hills,” which he believes could cause consumer confusion over the location of a Shawnee Hills viticultural area. Petitioner's Response The lead Shawnee Hills petitioner sees no potential for consumer confusion since Shawnee Hills “is the name of the landform itself” and that name is used by agencies of the State of Illinois, “as well as by many others.” The petitioner adds that “Southern Illinois” or “Little Egypt” may be appropriate for a larger, regional viticultural area. TTB Response After considering the petition evidence and the comments received, TTB concludes that the “Shawnee Hills” name is appropriate for the proposed viticultural area. We note that the Illinois State Geological Survey's “Landforms of Illinois” map labels the landform within the proposed Shawnee Hills viticultural area as the Shawnee Hills. Other State of Illinois publications also use this name for the hills and ridges located within the proposed viticultural area. TTB believes the names “Greater Shawnee,” “Southern Illinois” or “Little Egypt” may best be associated with a region larger than the proposed Shawnee Hills viticultural area and, therefore, are not appropriate for the smaller proposed viticultural area. As noted above, we will consider a petition to create a larger viticultural area in southern Illinois under an appropriate name. We also believe that the use of the Shawnee Hills name will not cause consumers to confuse the proposed viticultural area with the wine trail within it. We believe that most wine consumers understand that a viticultural area encompasses more land than the winery or vineyard properties located along any given winery driving tour. In addition, we believe that consumers will not confuse the proposed Shawnee Hills viticultural area with similarly named places in Kentucky and Ohio. We note that Shawnee Hills, Kentucky, is a real estate development on the eastern shore of Lake Barkley, while the unincorporated community of Shawnee Hills in Greene County, Ohio, is a housing development built around an artificial lake. The village of Shawnee Hills in Delaware County, Ohio, is now a suburb of the city of Columbus. We do not believe that any of these non-rural places are or will become known as grape-growing areas. We also note that our regulations do not require that the name of a proposed viticultural area be absolutely exclusive to the area in question. TTB Finding After careful review of the petition and the comments received, TTB finds that the evidence submitted supports the establishment of the proposed Shawnee Hills viticultural area. Therefore, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we establish the “Shawnee Hills” viticultural area in Alexander, Gallatin, Hardin, Jackson, Johnson, Pope, Pulaski, Randolph, Saline, Union, and William counties in southern Illinois, effective 30 days from the publication date of this document. Boundary Description See the narrative boundary description of the viticultural area in the regulatory text published at the end of this document. Maps The maps for determining the boundary of the viticultural area are listed below in the regulatory text. Impact on Current Wine Labels Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area and its inclusion in part 9 of the TTB regulations, its name, “Shawnee Hills,” is recognized under 27 CFR 4.39(i)(3) as a name of viticultural significance. The text of the new regulation clarifies this point. Consequently, wine bottlers using “Shawnee Hills” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the viticultural area's name as an appellation of origin. On the other hand, we do not believe that “Shawnee” standing alone has viticultural significance. A search of the Geographic Names Information System maintained by the U.S. Geological Survey shows no entries for “Shawnee Hills,” but does show entries for “Shawnee” standing alone or in conjunction with words such as “Creek,” “Lake,” “Peak,” or “Valley” in 29 States. We therefore conclude that “Shawnee” standing alone does not have a geographical context or meaning that is generally limited to the location of the Shawnee Hills viticultural area. Accordingly, the regulatory text set forth in this document specifies only the full “Shawnee Hills” name as a term of viticultural significance for purposes of part 4 of the TTB regulations. For a wine to be eligible to use as an appellation of origin the name of a viticultural area or other term specified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must derive from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible to use the viticultural area name or other term as an appellation of origin and that name or term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other term appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing a viticultural area name or other viticulturally significant term that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details. Regulatory Flexibility Act We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required. Executive Order 12866 This rule is not a significant regulatory action as defined by Executive Order 12866, 58 FR 51735. Therefore, it requires no regulatory assessment. Drafting Information Rita Butler of the Regulations and Rulings Division drafted this notice. List of Subjects in 27 CFR Part 9 Wine. The Amendment For the reasons discussed in the preamble, we amend 27 CFR, chapter 1, part 9 as follows: PART 9—AMERICAN VITICULTURAL AREAS 1. The authority citation for part 9 continues to read as follows: Authority: 27 U.S.C. 205. Subpart C—Approved American Viticultural Areas 2. Amend subpart C by adding § 9.206 to read as follows: § 9.206 Shawnee Hills.
(a)*Name.* The name of the viticultural area described in this section is “Shawnee Hills”. For purposes of part 4 of this chapter, “Shawnee Hills” is a term of viticultural significance.
(b)*Approved maps.* The United States Geological Survey
(USGS)1:250,000-scale topographic map used to determine the boundary of the Shawnee Hills viticultural area is titled—Paducah: Kentucky-Illinois, Missouri-Indiana, 1987 edition.
(c)*Boundary.* The Shawnee Hills viticultural area is located in southern Illinois between the Ohio and Mississippi Rivers, and largely within the Shawnee National Forest. The boundary of the Shawnee Hills viticultural area is described below—
(1)Beginning at the intersection of State Routes 3 and 150 in the town of Chester (Randolph County), proceed northeast on Route 150 to its intersection with the surveyed boundary line between Township 6 South
(T6S)and Township 7 South (T7S); then
(2)Proceed due east along the T6S/T7S boundary line until it becomes the boundary between Perry and Jackson Counties, and continue east along the Perry-Jackson County line to State Route 4; then
(3)Proceed southeast on State Route 4 through the villages of Campbell Hill, Ava, and Oraville to its intersection with State Route 13/127; then
(4)Proceed south on State Route 13/127 to the intersection where State Routes 13 and 127 divide in the town of Murphysboro; then
(5)Proceed east on State Route 13 through the city of Carbondale to State Route 13's intersection with Interstate 57; then
(6)Proceed south on Interstate 57 to its intersection with State Route 148; then
(7)Proceed southeast on State Route 148 to its intersection with State Route 37; then
(8)Proceed south on State Highway 37 to Saline Creek; then
(9)Proceed northeasterly (downstream) along Saline Creek to its confluence with the South Fork of the Saline River, then continue easterly (downstream) along the South Fork of the Saline River to its confluence with the Saline River, then continue easterly and then southeasterly (downstream) along the Saline River to its confluence with the Ohio River near Saline Landing; then
(10)Proceed southwesterly (downstream) along the Ohio River to the Interstate 24 bridge; then
(11)Proceed north on Interstate 24 to its intersection with the New Columbia Ditch (with the towns of Big Bay to the northeast and New Columbia to the northwest); then
(12)Proceed westerly along the New Columbia Ditch to its confluence with the Main Ditch, and continue westerly along the Main Ditch to its confluence with the Cache River (near the Cache River's confluence with the Post Creek Cutoff), approximately 1.5 miles east-northeast of the village of Karnak; then
(13)Proceed westerly (downstream) along the Cache River, passing under Interstate 57 near the village of Ullin, and continue southeasterly along the Cache River to the river's confluence with Sandy Creek (northeast of the village of Sandusky); then
(14)Proceed westerly (upstream) along Sandy Creek approximately 4 miles to its junction with an unnamed secondary road (known locally as Alexander County Road 4); then
(15)Proceed south along the unnamed secondary road (Alexander County Road 4) to its junction with State Route 3 at the village of Olive Branch; then
(16)Proceed northwest on State Route 3 to its intersection with the Main Ditch (also known locally as Sexton Creek) at the village of Gale; then
(17)Proceed northerly along Main Ditch and Clear Creek Ditch to a light-duty road (known locally as State Forest Road) near the southwest corner of the Trail of Tears State Forest, approximately 3.75 miles east of the village of Wolf Lake; then
(18)Proceed west on the light-duty road (State Forest Road) to its intersection with State Route 3 just south of Wolf Lake; then
(19)Proceed north on State Route 3 to its junction with the Big Muddy River (near the village of Aldridge), and continue north (upstream) along the Big Muddy River to its confluence with Kincaid Creek near the village of Grimsby; then
(20)Continue northerly along Kincaid Creek to its junction with State Route 149; then
(21)Proceed west on State Route 149 to its junction with State Route 3, and then continue northwest along State Route 3 to the beginning point in the town of Chester. Signed: September 25, 2006. John J. Manfreda, Administrator. Approved: October 27, 2006. Timothy E. Skud, Deputy Assistant Secretary (Tax, Trade, and Tariff Policy). [FR Doc. E6-20023 Filed 11-24-06; 8:45 am] BILLING CODE 4810-31-P LIBRARY OF CONGRESS Copyright Office 37 CFR Part 201 [Docket No. RM 2005-11] Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies AGENCY: Copyright Office, Library of Congress. ACTION: Final rule. SUMMARY: This notice announces that during the next three years, the prohibition against circumvention of technological measures that effectively control access to copyrighted works shall not apply to persons who engage in noninfringing uses of six classes of copyrighted works. EFFECTIVE DATE: November 27, 2006. FOR FURTHER INFORMATION CONTACT: Steven Tepp, Principal Legal Advisor, and David O. Carson, General Counsel, Copyright GC/&, P.O. Box 70400, Southwest Station, Washington, D.C. 20024-0400. Telephone:
(202)707-8380; telefax:
(202)707-8366. SUPPLEMENTARY INFORMATION: In this notice, the Librarian of Congress, upon the recommendation of the Register of Copyrights, announces that during the period from the time of this notice through October 27, 2009, the prohibition against circumvention of technological measures that effectively control access to copyrighted works shall not apply to persons who engage in noninfringing uses of six classes of copyrighted works. This announcement is the culmination of a rulemaking proceeding commenced by the Register on October 3, 2005. A more comprehensive statement of the background and legal requirements of the rulemaking, a discussion of the record and the Register’s analysis may be found in the Register’s memorandum of November 17, 2006, to the Librarian, which contains the full explanation of the Register’s recommendation. 1 This notice summarizes the Register’s recommendation and publishes the regulatory text codifying the six exempted classes of works. 1 A copy of the Register’s memorandum may be found at *http://www.copyright.gov/1201.* I. Background *A. Legislative Requirements for Rulemaking Proceeding* In 1998, Congress enacted the Digital Millennium Copyright Act (“DMCA”), which among other things amended title 17, United States Code, to add section 1201. Section 1201 prohibits circumvention of technological measures employed by or on behalf of copyright owners to protect their works (hereinafter “access controls”). In order to ensure that the public will have continued ability to engage in noninfringing uses of copyrighted works, such as fair use, subparagraph
(B)limits this prohibition, exempting noninfringing uses of any “particular class of works” when users are (or in the next 3 years are likely to be) adversely affected by the prohibition in their ability to make noninfringing uses of that class of works. Identification of such classes of works is made in a rulemaking proceeding conducted by the Register of Copyrights, who is to provide notice of the rulemaking, seek comments from the public, consult with the Assistant Secretary for Communications and Information of the Department of Commerce, and recommend final regulations to the Librarian of Congress. The regulations, to be issued by the Librarian of Congress, announce “any class of copyrighted works for which the Librarian has determined, pursuant to the rulemaking conducted under subparagraph (C), that noninfringing uses by persons who are users of a copyrighted work are, or are likely to be, adversely affected, and the prohibition contained in subparagraph
(A)shall not apply to such users with respect to such class of works for the ensuing 3-year period.” 2 2 17 U.S.C. 1201(a)(1)(D). The first section 1201 rulemaking took place in 2000, and on October 27, 2000, the Librarian determined that noninfringing users of two classes of works would not be subject to the prohibition on circumvention of access controls. 3 Exemptions to the prohibition on circumvention remain in force for a three-year period and expire at the end of that period. The Librarian is required to make a determination on potential new exemptions every three years. The second rulemaking culminated in the Librarian’s October 28, 2003, announcement that noninfringing users of four classes of works would not be subject to the prohibition on circumvention of access controls. 4 3 Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 65 FR 64555 (October 27, 2000); *http://www.copyright.gov/fedreg/2000/65fr64555.pdf.* The **Federal Register** notice contained the recommendation of the Register of Copyrights and the determination of the Librarian. 4 The announcement was published in the **Federal Register** on October 31, 2003. Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 68 FR 62011 (October 31, 2003); *http://www.copyright.gov/fedreg/2003/68fr2011.pdf.* On October 30, 2006, the Librarian announced that the existing classes of works were being extended, on an interim basis, pending the conclusion of the current rulemaking proceeding. Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 71 FR 63247 (October 30, 2006). *B. Responsibilities of Register of Copyrights and Librarian of Congress* The purpose of the rulemaking proceeding conducted by the Register is to determine whether users of particular classes of copyrighted works are, or in the next three years are likely to be, adversely affected by the prohibition in their ability to make noninfringing uses of copyrighted works. In making her recommendation to the Librarian, the Register must carefully balance the availability of works for use, the effect of the prohibition on particular uses and the effect of circumvention on copyrighted works. Section 1201(a)(1)(C) directs the Register and the Librarian to examine: “(i) the availability for use of copyrighted works;
(ii)the availability for use of works for nonprofit archival, preservation, and educational purposes;
(iii)the impact that the prohibition on the circumvention of technological measures applied to copyrighted works has on criticism, comment, news reporting, teaching, scholarship, or research;
(iv)the effect of circumvention of technological measures on the market for or value of copyrighted works; and
(v)such other factors as the Librarian considers appropriate.” *C. The Purpose and Focus of the Rulemaking* *1. Purpose of the Rulemaking* As originally drafted, section 1201(a)(1) provided simply that “No person shall circumvent a technological measure that effectively controls access to a work protected under this title.” However, in response to concerns that section 1201, in its original form, might undermine Congress's commitment to fair use if developments in the marketplace relating to use of access controls result in less access to copyrighted materials that are important to education, scholarship, and other socially vital endeavors, it was determined that a triennial rulemaking proceeding should take place to monitor the use of access controls. If the rulemaking record revealed that access was being unduly restricted, *e.g.* , by elimination of print or other hard-copy versions, permanent encryption of all electronic copies or adoption of business models that restrict distribution and availability of works, then users of particular classes of works who are engaging in noninfringing uses of those works would be allowed to circumvent access controls without running afoul of the prohibition in section 1201(a)(1). The rulemaking proceeding, to be conducted by the Register of Copyrights, was considered a “fail-safe” mechanism, monitoring developments in the marketplace for copyrighted materials, and would allow the enforceability of the prohibition against the act of circumvention to be selectively waived, for limited time periods, if necessary to prevent a diminution in the availability to individual users of a particular category of copyrighted materials. *2. The Necessary Showing* Proponents of an exemption have the burden of proof. In order to make a prima facie case for an exemption, proponents must show by a preponderance of the evidence that there has been or is likely to be a substantial adverse effect on noninfringing uses by users of copyrighted works. De minimis problems, isolated harm or mere inconveniences are insufficient to provide the necessary showing. Similarly, for proof of “likely” adverse effects on noninfringing uses, a proponent must prove by a preponderance of the evidence that the harm alleged is more likely than not; a proponent may not rely on speculation alone to sustain a prima facie case of likely adverse effects on noninfringing uses. It is also necessary to show a causal nexus between the prohibition on circumvention and the alleged harm. Proposed exemptions are reviewed *de novo* . The existence of a previous exemption creates no presumption for consideration of a new exemption, but rather the proponent of such an exemption must make a prima facie case in each three-year period. *3. Determination of “Class of Works”* In previous rulemakings, it was determined that the starting point for any definition of a “particular class” of works in this rulemaking must be one of the categories of works set forth in section 102 of the Copyright Act, but that those categories are only a starting point and a “class” will generally constitute some subset of a section 102 category. The determination of the appropriate scope of a “class of works” recommended for exemption will also take into account the likely adverse effects on noninfringing uses and the adverse effects an exemption may have on the market for or value of copyrighted works. It was also determined that while starting with a section 102 category of works, or a subcategory thereof, the description of a “particular class”of works ordinarily should be further refined by reference to other factors that assist in ensuring that the scope of the class addresses the scope of the harm to noninfringing uses. For example, the class might be defined in part by reference to the medium on which the works are distributed, or even to the access control measures applied to them. But classifying a work solely by reference to the medium on which the work appears, or the access control measures applied to the work, would be beyond the scope of what “particular class of work” is intended to be. In the current proceeding, the Register has concluded that in certain circumstances, it will also be permissible to refine the description of a class of works by reference to the type of user who may take advantage of the exemption or by reference to the type of use of the work that may be made pursuant to the exemption. The Register reached this conclusion in reviewing a request to exempt a class of works consisting of “audiovisual works included in the educational library of a college or university’s film or media studies department and that are protected by technological measures that prevent their educational use.” Concluding that a “class” must be properly tailored not only to address the harm demonstrated, but also to limit the adverse consequences that may result from the creation of an exempted class, the Register has concluded that given the facts demonstrated by the film professor proponents of the exemption and the legitimate concerns expressed by the opponents of the proposed exemption, it makes sense that a class may, in appropriate cases, be additionally refined by reference to the particular type of use and/or user. *D. Consultation with the Assistant Secretary for Communications and Information* As required by section 1201(a)(1)(C), the Register consulted with the Assistant Secretary for Communications and Information of the Department of Commerce, meeting with him at the outset of the rulemaking proceeding and exchanging information throughout the course of the proceeding. The Assistant Secretary communicated his views to the Register in letters dated September 13, 2006, and October 31, 2006. The letters related to the proposal to designate as a class of works “Computer programs that operate wireless communications handsets,” and are discussed below in the discussion of that particular proposal. II. Solicitation of Public Comments and Hearings On October 3, 2005, the Register initiated the current rulemaking proceeding pursuant to section 1201(a)(1)(C) with publication of a Notice of Inquiry. 5 The Copyright Office received 74 written comments proposing a class or classes of works for exemption. Supporters and opponents of these proposals filed 35 reply comments. Four days of public hearings were conducted in Spring 2006 in Washington, D.C., and Palo Alto, California. Following the hearings, the Office sent follow-up questions to some of the hearing witnesses, and responses were received during the summer. The entire record in this and the previous section 1201(a)(1)(C) rulemakings are available on the Office’s website. 6 5 70 FR 57526 (October 3, 2005); *http://www.copyright.gov/fedreg/2005/70fr57526.html.* 6 *http://www.copyright.gov/1201/index.html.* Some of the witnesses at the hearing submitted audiovisual materials which are not available on the website, but are on file with the Copyright Office. The Register has now carefully reviewed and analyzed the entire record in this rulemaking proceeding to determine whether any classes of copyrighted works should be exempt from the prohibition against circumvention during the next three years. The Register recommends that noninfringing users of six classes of works be exempt from the prohibition on circumvention of access controls. III. Discussion *A.The Six Exempted Classes* Based on the Register’s review of the record, the case has been made for exemptions pertaining to the following six classes of copyrighted works. 1. Audiovisual works included in the educational library of a college or university’s film or media studies department, when circumvention is accomplished for the purpose of making compilations of portions of those works for educational use in the classroom by media studies or film professors. A number of film and media studies professors proposed a class consisting of “Audiovisual works included in the educational library of a college or university’s film or media studies department and that are protected by technological measures that prevent their educational use.” They asserted that in order to teach their classes effectively, they need to be able to create compilations of portions of motion pictures distributed on DVDs protected by CSS for purposes of classroom performance. They also asserted that in order to show pedagogically necessary, high quality content in a reasonably efficient manner, they must circumvent CSS in order to extract the portions of motion pictures or audiovisual works necessary for their pedagogical purposes. The proponents of this exemption demonstrated that the reproduction and public performance of short portions of motion pictures or other audiovisual works in the course of face-to-face teaching activities of a film or media studies course would generally constitute a noninfringing use. Moreover, the record did not reveal any alternative means to meet the pedagogical needs of the professors. The professors demonstrated that the encrypted DVD versions of motion pictures often are of higher quality than copies in other available formats and contain attributes that are extremely important to teaching about film for a number of reasons. For example, the DVD version of a motion picture can preserve the original color balance and aspect ratio of older motion pictures when other available alternatives fail to do so. The most significant objection to the proposal was the concern expressed by copyright owners that an exemption for a “class of works” would necessarily exempt a much broader range of uses than those in which the film professors wished to engage. Copyright owners noted that in prior rulemakings, the Register had determined that a class must be based primarily on attributes of the work itself and not the nature of the use or the user. Therefore, recognizing the class sought by the film professors would benefit not only persons similarly situated to the film professors, but others engaging in entirely different uses. Further, copyright owners believed that such an exemption would create confusion about the circumstances in which circumvention was appropriate. The concerns of the copyright owners were well-founded, but the Register has concluded that those concerns can be addressed without denying an exemption that will enable the film professors to engage in the noninfringing uses they have identified. The facts underlying the film professors’ proposal justify a refinement of the approach that has been taken in determining what may be a “particular class of works.” Even though a “class” must begin, as its starting point, by reference to one of the categories of authorship enumerated in section 102 of the Copyright Act (or a subset thereof), the ways in which that primary classification should be further delineated depend on the specific facts demonstrated in the proceeding. Based on the facts presented with respect to this proposed class of works and based on a review of the statutory text and legislative history, the Register has concluded that given the appropriate factual showing, it is permissible to refine the definition of a “class” of works by reference to particular types of uses and/or users. If it had not been possible to define a class of works by reference to the users or the uses made of those works, it might have been difficult for the Register to recommend an exemption for this class of works. The Register would have had to make difficult choices between
(1)recommending an exemption for a particular class of works that would permit circumvention for a broad ranges of uses, even though the case had been made for only a narrow noninfringing use, and
(2)refusing to recognize an exemption for a class because the adverse consequences of a broadly defined class would outweigh the prohibition's adverse effects to a narrow noninfringing use. Refining the exempted class by reference to the users and uses for which a case had been made in this rulemaking proceeding permits the Librarian to designate a class of works that is tailored to the case that was made in the rulemaking but avoids adverse consequences that may result from the recognition of too broad a class. Such an approach is consistent with Congress’s directive that a “‘particular class of copyrighted works’ [should] be a narrow *and focused* subset of the broad categories of works of authorship identified in section 102.” In this case, the proposed class should be refined by reference to both the user and the use, as follows: “when circumvention is accomplished for the purpose of making compilations of portions of those works for educational use in the classroom by media studies or film professors.” 2. Computer programs and video games distributed in formats that have become obsolete and that require the original media or hardware as a condition of access, when circumvention is accomplished for the purpose of preservation or archival reproduction of published digital works by a library or archive. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace. The Internet Archive, along with some supporting commenters, proposed an exemption that is identical to the classes of works exempted in the 2003 Rulemaking proceeding. There was no direct opposition to this request, apart from a concern by copyright owners that many old video games and computer programs are being reintroduced into the market in new ways by their copyright owners, who wished to exclude from the exemption video games that have been re-released on a new gaming platform because circumvention of access controls would cause significant harm to copyright owners in their exploitation of these re-released works. The copyright owners stated that they appreciated that the Internet Archive is solely interested in preservation and archival use, which would not necessarily be harmful to copyright owners’ interests. Yet, they argued, because the exemption is not limited by reference to the specific use or user, the effect of the exemption could extend well beyond the specific use that served as the basis of the exemption, i.e., archival and preservation use. Because the particular noninfringing use sought by the Internet Archive that serves as the sole basis for this exemption is preservation and archival use, and because the Register has determined that in appropriate cases, the definition of a class of works may be refined by reference to particular kinds of users and/or uses, the concerns of copyright owners can be addressed by such a refinement, which also meets the case presented by the Internet Archive. The Internet Archive established that its archival and preservation activities are noninfringing and that computer programs and video games that were distributed in formats that have become obsolete and that require the original media or hardware as a condition of access ( *e.g.* , that the original floppy diskette must be inserted into a computer’s disc drive in order for the program to operate) constitute works protected by access controls. Without the ability to circumvent those “original-only” access controls, the Internet Archive could not engage in its preservation and archival activities with respect to those works. Therefore, the Register recommends renewal of this exemption. The Internet Archive also sought an exemption for a second proposed class: “Computer programs and video games distributed in formats that require obsolete operating systems or obsolete hardware as a condition of access.” The Register cannot recommend adoption of an exemption for this proposed class because it does not involve access controls and, therefore, no exemption is needed. This is, in fact, consistent with the request of the Internet Archive, which sought designation of the second class “only if, and only to the extent that, the Copyright Office determines that such practical restrictions on access created by the lack of backward compatibility in new software and hardware platforms constitute “technological protection measures’ within the meaning of the Digital Millennium Copyright Act.” The fact that the creators of the computer programs and video games in question designed them to run on particular operating systems or particular hardware does not make the operating system or hardware ‘technological measures that control access to works.” Section 1201 addresses technological measures that copyright owners place on works in order to restrict access to those who are not authorized to gain access. There is no suggestion in the record that the operating systems and hardware in question are such technological measures. Because organizations such as the Internet Archive do not violate § 1201(a)(1)(A) when they take measures to make such computer programs and video games run on new operating systems or hardware, there is no need to designate a class for exemption from the operation of § 1201(a)(1)(A). 3. Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. A dongle shall be considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace. A number of commenters proposed the renewal of an existing exemption from 2003, which in turn was a modified version of one of the exemptions from the first rulemaking in 2000. As described in the first rulemaking, “[the] issue relates to the use of ‘dongles,’ hardware locks attached to a computer that interact with software to prevent unauthorized access to that software.” In both the previous rulemakings, evidence was presented that damaged or malfunctioning dongles can prevent authorized access to the protected software. Because in some instances the software vendors may be unresponsive or have gone out of business, the evidence painted a compelling picture of a genuine problem for authorized users of often-expensive computer programs who lose their ability to gain access to those programs due to malfunctioning or damaged hardware that cannot be replaced or repaired. The legal and analytical rationale for this exemption remains unchanged. Thus, the key question is whether the evidence in this record supports renewing the exemption for another three years. The Register concludes that a sufficient factual showing was made at the public hearing on this proposed exemption. However, for purposes of clarity and consistency, the description of the class should be refined to include an explanation of what constitutes an “obsolete” dongle. This is consistent with the existing exemption for “computer programs and video games distributed in formats that have become obsolete and which require the media or hardware as a condition of access.” That class of works includes a second sentence describing when a format is obsolete: “A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace.” A similar explanation should be included in the description of this class. However, the Register cannot recommend adoption of an expanded exemption sought by one proponent. At the hearing on the proposed class of computer programs protected by dongles, that proponent asked, for the first time, that the class of works be expanded from “Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete” to “Computer programs protected by dongles that prevent access due to malfunction or damage or *hardware or software incompatibilities or require obsolete operating systems or obsolete hardware as a condition of access.”* (Emphasis added.) That request was untimely. The purpose of the hearing, at a relatively late stage of the proceedings, is not to accept new proposals for exemptions or to entertain requests for expanded versions of exemptions that were proposed in a timely manner, but rather to give proponents and opponents of exemptions an opportunity to summarize the facts and arguments that have already been presented in written comments, to draw attention to those facts and arguments that they believe are most pertinent in the time allotted for the hearing, to respond to questions from the Register and her staff, and, if appropriate and applicable, to demonstrate some of the facts related in the written comments. 4. Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling either of the book’s read-aloud function or of screen readers that render the text into a specialized format. A number of commenters, led by the American Foundation for the Blind, proposed renewal of an existing exemption for ebooks for which the “screen readers” and the “read-aloud” function have been disabled. These functions enable the blind to “read” the text of an ebook by rendering the written text of the book into audible, synthetic speech. Screen readers also allow the text and layout of a text screen to be conveyed spatially so that a blind user can perceive the organization of a page on the screen or even the organization of a work as a whole and navigate through that ebook. Some literary works are distributed in ebook form with the read-aloud and screen reader functions disabled through the use of digital rights management tools. In order to alter the usage settings of such ebooks in order to enable read-aloud and screen reader functionality, a user would have to circumvent access controls. The proponents of this exemption selected a sample of five titles and conducted only a limited examination of the options available even for those five titles — a minimal showing at best. However, the Register has concluded that the proponents have met their burden, if only barely. Especially in light of the fact that nobody, including the copyright owners whose works would be subject to this exemption, has urged rejection of the proposed exemption, the Register recommends renewal of the exemption. However, proponents of the exemption have made a persuasive argument for a minor modification of the existing exemption, which currently is applicable only if there is no ebook edition of the work that contains access controls that prevent the enabling *both* of the ebook’s read-aloud function *and* of screen readers. Because of the limited functionality of the read-aloud function on ebooks and the ability that screen readers offer to the blind to actually navigate within an ebook, the Register is persuaded that the exemption should be applicable to a literary work when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling *either* of the book’s read-aloud function or of screen readers that render the text into a specialized format. In other words, if there is no screen reader functionality or no read-aloud functionality, the exemption will apply. 5. Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network. The Wireless Alliance and Robert Pinkerton proposed an exemption for “Computer programs that operate wireless communications handsets.” The proponents of this exemption stated that providers of mobile telecommunications (cellphone) networks are using various types of software locks in order to control customer access to the “bootloader” programs on cellphones and the operating system programs embedded inside mobile handsets (cellphones). These software locks prevent customers from using their handsets on a competitor’s network (even after all contractual obligations to the original wireless carrier have been satisfied) by controlling access to the software that operates the mobile phones ( *e.g.* , the mobile firmware). Many reply comments were submitted in support of this exemption and only one reply comment provided any opposition to the proposal. Only two witnesses testified at the hearing on this issue: a representative of the principal proponent of the exemption and a representative of some copyright owners (none of whom operate wireless telecommunication services, manufacture wireless handsets or make bootloader or operating system programs for cellphones). It was undisputed that mobile handset consumers who desire to use their handsets on a different telecommunications network are often precluded from doing so unless they can obtain access to the bootloader or operating system within the handset in order to direct the phone to a different carrier’s network. The evidence demonstrated that most wireless telecommunications network providers do not allow a consumer to obtain such access in order to switch a cell phone from one network to another, and that the consumer could not use the cell phone with another carrier, even after fulfilling his or her contractual obligations with the carrier that sold the phone. In order to switch carriers, the consumer would have to purchase a new phone from a competing mobile telecommunications carrier. The obstacle that prevents customers from using lawfully acquired handsets on different carriers is the software lock. At least one wireless telecommunications service has filed lawsuits alleging that circumvention of the software lock is a violation of section 1201(a)(1)(A) and has obtained a permanent injunction (albeit by stipulation). The Register has concluded that the software locks are access controls that adversely affect the ability of consumers to make noninfringing use of the software on their cellular phones. Moreover, a review of the four factors enumerated in § 1201(a)(1)(C)(i)-(iv) supports the conclusion that an exemption is warranted. There is nothing in the record that suggests that the availability for use of copyrighted works would be adversely affected by permitting an exemption for software locks. Nor is there any reason to conclude that there would be any impact — positive or negative — on the availability for use of works for nonprofit archival, preservation, and educational purposes or on the ability to engage in criticism, comment, news reporting, teaching, scholarship, or research. Nor would circumvention of software locks to connect to alternative mobile telecommunications networks be likely to have any effect on the market for or value of copyrighted works. The reason that these four factors appears to be neutral is that in this case, the access controls do not appear to actually be deployed in order to protect the interests of the copyright owner or the value or integrity of the copyrighted work; rather, they are used by wireless carriers to limit the ability of subscribers to switch to other carriers, a business decision that has nothing whatsoever to do with the interests protected by copyright. And that, in turn, invokes the additional factor set forth in § 1201(a)(1)(C)(v): “such other factors as the Librarian considers appropriate.” When application of the prohibition on circumvention of access controls would offer no apparent benefit to the author or copyright owner in relation to the work to which access is controlled, but simply offers a benefit to a third party who may use § 1201 to control the use of hardware which, as is increasingly the case, may be operated in part through the use of computer software or firmware, an exemption may well be warranted. Such appears to be the case with respect to the software locks involved in the current proposal. The copyright owners who did express concern about the proposed exemption are owners of copyrights in music, sound recordings and audiovisual works whose works are offered for downloading onto cellular phones. They expressed concern that the proposed exemption might permit circumvention of access controls that protect their works when those works have been downloaded onto cellular phones. The record on this issue was fairly inconclusive, but in any event the proponents of the exemption provided assurances that there was no intention that the exemption be used to permit unauthorized access to those works. Rather, the exemption is sought for the sole purpose of permitting owners of cellular phone handsets to switch their handsets to a different network. Because the Register has concluded that, in appropriate circumstances, a class of works may be refined by reference to uses made of the works, this issue can best be resolved by modifying the proposed class of works to extend only to “Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network.” On September 18, 2006, long after the comments had been submitted and the hearings had been conducted in this rulemaking, the Register received unsolicited submissions from CTIA - The Wireless Association (a nonprofit trade association that promotes the interests of the wireless industry, representing both wireless carriers and manufacturers) and TracFone Wireless, Inc. (which describes itself as “America’s largest prepaid wireless company”). The submissions included the submitters’ responses to written questions that the Copyright Office had submitted to the two witnesses who had testified at the March 23, 2006, hearing on the proposed exemption — witnesses who had no relationship with Tracfone or CTIA. The submissions also contained arguments opposing the proposed exemption. In the course of his consultation with the Register of Copyrights on this rulemaking, the Acting Assistant Secretary of Commerce for Communications and Information shared his concern that the record on this proposal appeared to be incomplete and stated that he was pleased that the Register had sought additional information (in the form of the written questions to the witnesses) to supplement the record. Subsequently, he expressed to the Register his view that the CTIA and TracFone comments “afford you a complete record in which the views of both users and creators of content are currently represented,” and urged the Register to consider those submissions in making her recommendation. The Assistant Secretary’s concerns are understandable, and the Register shares his desire that the views of both users and creators of content be represented in the rulemaking. However, complying with the Assistant Secretary’s request and accepting the last-minute submissions of CTIA and TracFone would undermine the procedural requirements of this proceeding and of the rulemaking process in general. While it is preferable that all interested parties make their views known in the rulemaking process, they must do so in compliance with the process that is provided for public comment, or offer a compelling justification for their failure to do so. In this case, they have failed to offer such justification. CTIA (which counts TracFone among its members) was aware of this rulemaking proceeding and this request for an exemption as early as January or February, 2006. Yet it remained silent until September 18, long after the opportunities provided for comment and testimony had expired. Nor did it offer any explanation for its silence. If these extremely untimely submissions were accepted, it would be difficult to imagine when it ever would be justified to reject an untimely comment. Such a precedent would be an invitation to chaos in future rulemakings. Therefore, the late submissions of CTIA and TracFone have not been considered. 6. Sound recordings, and audiovisual works associated with those sound recordings, distributed in compact disc format and protected by technological protection measures that control access to lawfully purchased works and create or exploit security flaws or vulnerabilities that compromise the security of personal computers, when circumvention is accomplished solely for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities. A number of commenters sought an exemption based on facts arising out of the distribution, by Sony BMG Music Entertainment, of compact discs
(CDs)which employed certain digital rights management (“DRM”) software that created security vulnerabilities on computers on which the software was installed. Specifically, they identified SunnComm’s MediaMax content protection software and First4Internet’s XCP copy protection software program. The leading proponents of such an exemption, Edward W. Felten, Professor of Computer Science and Public Affairs at Princeton University, and J. Alex Halderman, a graduate student at Princeton, proposed a class of “sound recordings and audiovisual works distributed in compact disc format and protected by technological measures that impede access to lawfully purchased works by creating or exploiting security vulnerabilities that compromise the security of personal computers.” The evidence in the record demonstrated that MediaMax and XCP controlled access to the sound recordings (as well as some related audiovisual works, such as music videos) on a number of CDs distributed in 2005 and, as a consequence, ended up being installed on perhaps half a million computer networks worldwide. The evidence also established that these access controls created security vulnerabilities on the personal computers on which they were installed. For example, XCP includes a “rootkit” which cloaks the existence of other aspects of the XCP digital rights management software (a music player application and a device driver). The rootkit creates security vulnerabilities by providing a cloak that conceals malicious software, a cloak that, in fact, was exploited by disseminators of malware within days of the discovery of the XCP rootkit. Copyright owners opposed the proposed exemption primarily on the ground that they believe there already exists a statutory exemption that permits circumvention of access controls “for the purpose of good faith testing, investigating, or correcting, a security flaw or vulnerability, with the authorization of the owner or operator of such computer, computer system, or computer network.” *See* 17 U.S.C. § 1201(j). But while it appears that this statutory exemption may permit circumvention in cases such as those involving MediaMax and XCP, it is not clear whether that provision extends to such conduct. In light of that uncertainty and the seriousness of the problem, the Register recommends that the Librarian designate a class of works consisting of sound recordings, and audiovisual works associated with those sound recordings, distributed in compact disc format and protected by technological protection measures that control access to lawfully purchased works and create or exploit security flaws or vulnerabilities that compromise the security of personal computers, when circumvention is accomplished solely for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities. The restriction of the exemption to cases where the purpose of circumvention is to engage in good faith testing, investigating, or correcting of security flaws or vulnerabilities is language taken directly from § 1201(j), in recognition of Congress’s judgment that in such cases, the privilege to circumvent should extend only to conduct directed at the security flaws or vulnerabilities that justify the exemption in the first place. *B. Other Exemptions Considered, But Not Recommended* A number of other proposed exemptions were considered, but rejected. They are briefly discussed below. Similar proposed exemptions are discussed together. 1. Compilations consisting of lists of Internet locations blocked by commercially marketed filtering software applications that are intended to prevent access to domains, websites or portions of websites, but not including lists of Internet locations blocked by software applications that operate exclusively to protect against damage to a computer or a computer network or lists of Internet locations blocked by software applications that operate exclusively to prevent receipt of email. This proposal is for the renewal of an existing exemption from 2003, which in turn was a modified version of one of the original exemptions from the 2000 rulemaking. As in the previous two rulemakings, initial comments proposed an exemption to the prohibition on circumvention in order to access the lists of blocked websites or Internet addresses that are used in various filtering software programs sometimes referred to as “censorware.” These programs are intended to prevent children and other Internet users from viewing objectionable material while online. It has been alleged that although the software is intended to serve a useful societal purpose, the emphasis of the programs is on robust blocking rather than accuracy. Critics contend that the result of this focus is that this type of filtering software tends to over-block, thereby preventing access to legitimate informational resources. Proponents of the exemption (both previously and again this year) wish to legalize the circumvention of the technology which controls access to lists of blocked Internet locations and thus adversely affects one’s ability to comment on and criticize the lists of sites blocked by the technological protection measure. Although the notice of proposed rulemaking made clear that proponents of renewal of an existing exemption must make their case de novo, proponents in the current rulemaking proceeding made no attempt to make any factual showing whatsoever, choosing instead to rest on the record from three years ago and argue that the existing exemption has done no harm, that nothing has changed to suggest the exemption is no longer needed, and that if anything, the use of filtering software is on the rise. In a rulemaking proceeding that places the burden of coming forward with facts to justify an exemption for the ensuing three-year period on proponents, one cannot assume that the elements of the case that was made three years ago remain true now. Nor is there any evidence in the record that there has been any use of the exemption in the past three years, or that there would be likely to be any use of an exemption during the next three years. While this is not necessarily fatal, nevertheless a record that reveals no use of an existing exemption tends to indicate that the exemption is unnecessary. Together, the absence of any quantification of the current scope of the problem along with the absence of any demonstration that the existing exemption has offered any assistance to noninfringing users leaves a record that provides no basis to justify a recommendation for renewal of the exemption. 2. Space-shifting. A number of commenters sought an exemption for an activity that is referred to by some of those commenters generally as “space-shifting.” In essence, these commenters sought an exemption to permit circumvention of technological protection measures applied to audiovisual and musical works in order to copy these works to other media or devices and to access these works on those alternative media or devices. In most cases, the comments did not identify the particular technological measures; indeed, in most cases it was unclear whether the commenters were referring to access controls or copy controls, or simply to incompatibility of formats. Many of the commenters claimed that their space-shifting of the works and their access to those works on an alternative device were noninfringing uses and that technological restrictions were impeding their ability to engage in a noninfringing use. Yet these commenters uniformly failed to cite legal precedent that establishes that such space-shifting is, in fact, a noninfringing use. The Register concludes that the reproduction of those works onto new devices is an infringement of the exclusive reproduction right unless some exemption or defense is applicable. In the absence of any persuasive legal authority for the proposition that making copies of a work onto any device of the user’s choosing is a noninfringing use, there is no basis for recommending an exemption to the prohibition on circumvention. 3. DVDs that cannot be viewed on Linux operating systems. Some commenters proposed an exemption to allow circumvention of CSS in order to use their computers running the Linux operating system to view motion pictures on DVDs. DVDs protected by CSS may be played only on authorized DVD players licensed by the DVD Copy Control Association (DVD-CCA). Proponents of an exemption assert that there is no licensed player available for the Linux operating system. However, there is evidence in the record that Linux-based DVD players currently exist. Moreover, there are many readily available ways in which to view purchased DVDs. Standard DVD players that can connect to televisions have become inexpensive and portable DVD players have decreased in price. Similarly, Linux users can create dual-boot systems on their computers in order to use DVD software that is compatible with, for example, the Microsoft operating system. There are also alternative formats in which to purchase the motion pictures contained on DVDs. Due to these alternative options for access and use by consumers, there is no reason to conclude that the availability for use of the works on DVDs is adversely affected by the prohibition. An exemption is not warranted simply because some uses are unavailable in the particular manner that a user seeks to make the use, when other options are available. If a user may access the DVD in readily-available alternative ways or may purchase the works in alternative formats, the need for the exemption becomes simply a matter of convenience or preference. The proposal by users of the Linux operating system is a matter of consumer preference or convenience that is unrelated to the types of uses to which Congress instructed the Librarian to pay particular attention, such as criticism, comment, news reporting, teaching, scholarship, and research as well as the availability for use of works for nonprofit archival, preservation and educational purposes. The Register cannot recommend an exemption for this class of works. 4. Region Coded DVDs. Two commenters sought an exemption to permit circumvention in order to obtain access to motion pictures protected by region coding, a technological protection measure contained on many commercially distributed DVDs that limits access to the content on DVDs to players coded for the same geographical region. On a more extensive record, such an exemption was denied three and six years ago. The reasoning behind the denial of the exemption in 2000 and 2003 appears to be equally valid today: Region coding imposes, at most, an inconvenience rather than actual or likely harm, because there are numerous options available to individuals seeking access to content from other regions. Consumers who wish to view DVDs from other regions have a number of inexpensive options other than circumvention, including obtaining DVD players, including portable devices, set to play DVDs from other regions and obtaining DVD-ROM drives for their computers, and setting those drives to play DVDs from other regions. Region coding of audiovisual works on DVDs serves legitimate purposes as an access control, such as preventing the marketing of DVDs of a motion picture in a region of the world where the motion picture has not yet been released in theaters, or is still being exhibited in theaters. In light of the de minimis showing made in support of the proposed exemption, the Register recommends rejection of this proposed class. 5. Computer programs protected by mechanisms that restrict their full operation to a particular platform or operating system. Two commenters asserted that certain lawfully obtained computer programs do not work properly when operating systems are upgraded. The brief comments submitted on this issue failed to present sufficient evidence from which to conclude that technological measures that control access to works are interfering with the ability of users of copyrighted works to make noninfringing uses. No exemption can be recommended in this case because insufficient information has been presented to understand the nature of the problem or even the relevance of § 1201(a)(1). 6. Computer games and software with Copy Protections that prevent legitimate users from installing and using games and programs. One commenter, in a one-page comment, stated that some copy protection systems create problems with the installation or using of computer games or programs, specifically citing SecureRom and StarForce as examples of such systems. The commenter did not present any evidence that the adverse effect articulated is the result of an access control. There is not sufficient evidence in the record to understand the problem adequately, to know whether the prohibition is the cause of the problem, or to know whether an exemption is warranted. 7. Literary works distributed in electronic audio format by libraries. One commenter stated that an exemption should issue for circumvention of literary works distributed in electronic audio format by libraries, because although libraries lend downloadable versions of audio books, they require special software in order to use the legally checked-out downloaded books. However, the commenter did not identify any technological measures that control access to the literary content of the digital books, nor does it explain how such measures are creating problems for users. His complaint appeared to be about software incompatibility. In any event, it appears that the technology in question is the type of use-facilitating technology the DMCA was enacted to encourage. It would appear that the deployment of such technology actually results in greater access to copyrighted works by enabling libraries to engage in online lending that they would not otherwise be able to conduct without infringing the copyrights of the books that they distribute online. The Register cannot recommend an exemption. 8. All works and fair use works. Many commenters stated that the DMCA adversely affects consumer rights and that all works should be exempt for a variety of purposes. These commenters have not articulated a sufficient class or provided sufficient evidence of adverse effects by the prohibition on noninfringing uses that would allow the articulation of a cognizable class. 9. All works protected by access controls that prevent the creation of back-up copies. A number of commenters sought an exemption for a class that, while described in various ways, can be summarized as “works protected by access controls that prevent the creation of back-up copies.” Proponents made assertions such as that it is common sense to make back-up copies of expensive media such as CDs and DVDs due to their alleged fragility. However, the proponents offered no legal arguments in support of the proposition that the making of backup copies is noninfringing, and the Register is aware of no authority (apart from section 117 of the Copyright Act, which relates to computer programs) in support of that notion. Nor did proponents offer facts that would warrant a conclusion that media such as DVDs and CDs are so susceptible to damage and deterioration that the practice of making preventive backup copies should be noninfringing. The unauthorized reproduction of DVDs is already a critical problem facing the motion picture industry. Creating an exemption to satisfy the concern that a DVD may become damaged would sanction widespread circumvention to facilitate reproduction for works that are currently functioning properly. The Register finds that the record does not justify the proposed exemption. 10. Audiovisual works and sound recordings protected by a broadcast flag. A number of comments assert that broadcast flags for television and radio broadcasts would interfere with time shifting, format-shifting, and recording for personal use. However, there is currently no broadcast flag mandate for either television or radio broadcasts and whether such a mandate will exist within the next three years is a matter of speculation. If it does exist, it will be due in whole or in part to Congressional action. Moreover, even if an audio or television broadcast flag were to be established, the precise substance of the requirement is unknown at this time. The Register cannot recommend an exemption based upon speculation about a legal regime that may or may not be imposed in the next three years. 11. Miscellaneous Proposals. A number of individual comments, each of one page or less, were submitted that do not fall into any of the categories noted above. In each case, the proponent failed to provide information that would justify an exemption. These proposals include “any copyrighted work which has been available for purchase for more then one year”; “any digital work” for the purpose of overriding End User License Agreements (“EULAs”) containing terms which prohibit comment and criticism; access controls used by satellite television services; “computer games and software”; “any works in digital or electronic format which, due to their access controls, prevent the user from being able to access the user-created content”; and “Digital Broadcasts which employ measures that protect ‘access’ to copyrighted works which disable, prevent, or otherwise make impossible, time-shifting of programs.” None of these comments presented sufficient facts or justification to warrant an exemption. IV. Conclusion Having considered the evidence in the record, the contentions of the parties, and the statutory objectives, the Register of Copyrights recommends that the Librarian of Congress publish the six classes of copyrighted works designated above, so that the prohibition against circumvention of technological measures that effectively control access to copyrighted works shall not apply to persons who engage in noninfringing uses of those particular classes of works. Dated: November 17, 2006 Marybeth Peters, Register of Copyrights. **Determination of the Librarian of Congress** Having duly considered and accepted the recommendation of the Register of Copyrights that the prohibition against circumvention of technological measures that effectively control access to copyrighted works shall not apply to persons who engage in noninfringing uses of the six classes of copyrighted works designated above, the Librarian of Congress is exercising his authority under 17 U.S.C. 1201(a)(1)(C) and
(D)and is publishing as a new rule the six classes of copyrighted works that shall be subject to the exemption found in 17 U.S.C. 1201(a)(1)(B) from the prohibition against circumvention of technological measures that effectively control access to copyrighted works set forth in 17 U.S.C. 1201(a)(1)(A) for the period from November 27, 2006 through October 27, 2009. List of Subjects 37 CFR Part 201 Copyright, Exemptions to prohibition against circumvention. Final Regulations For the reasons set forth in the preamble, 37 CFR part 201 is amended as follows: PART 201—GENERAL PROVISIONS 1. The authority citation for part 201 continues to read as follows: Authority: Authority: 17 U.S.C. 702 2. Section 201.40 is amended by revising paragraphs
(b)and
(c)to read as follows: § 201.40 Exemption to prohibition against circumvention. *(b) Classes of copyrighted works.* Pursuant to the authority set forth in 17 U.S.C. 1201(a)(1)(C) and (D), and upon the recommendation of the Register of Copyrights, the Librarian has determined that during the period from November 27, 2006 through October 27, 2009, the prohibition against circumvention of technological measures that effectively control access to copyrighted works set forth in 17 U.S.C. 1201(a)(1)(A) shall not apply to persons who engage in noninfringing uses of the following six classes of copyrighted works:
(1)Audiovisual works included in the educational library of a college or university’s film or media studies department, when circumvention is accomplished for the purpose of making compilations of portions of those works for educational use in the classroom by media studies or film professors.
(2)Computer programs and video games distributed in formats that have become obsolete and which require the original media or hardware as a condition of access, when circumvention is accomplished for the purpose of preservation or archival reproduction of published digital works by a library or archive. A format shall be considered obsolete if the machine or system necessary to render perceptible a work stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace.
(3)Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. A dongle shall be considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace.
(4)Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling either of the book’s read-aloud function or of screen readers that render the text into a specialized format.
(5)Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network.
(6)Sound recordings, and audiovisual works associated with those sound recordings, distributed in compact disc format and protected by technological protection measures that control access to lawfully purchased works and create or exploit security flaws or vulnerabilities that compromise the security of personal computers, when circumvention is accomplished solely for the purpose of good faith testing, investigating, or correcting such security flaws or vulnerabilities. *(c) Definition.* “Specialized format,” “digital text” and “authorized entities” shall have the same meaning as in 17 U.S.C. 121. Dated: November 20, 2006 James H. Billington, The Librarian of Congress, [FR Doc. E6-20029 Filed 11-24-06; 8:45 am] BILLING CODE 1410-30-S ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2006-0016; FRL-8248-3] Approval and Promulgation of Air Quality Implementation Plans; Texas; Revisions to Reid Vapor Pressure Requirements for Gasoline AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule. SUMMARY: EPA is taking direct final action approving Texas State Implementation Plan
(SIP)revisions. The revisions pertain to Reid Vapor Pressure
(RVP)requirements for gasoline. The revisions add exemptions to RVP requirements for research laboratories and academic institutions, competition racing, and gasoline that is being stored or transferred that is not used in the affected counties. The revisions also reduce recordkeeping requirements for retail gasoline dispensing outlets in the affected counties, and correct a typographical error. We are approving the revisions pursuant to section 110 and part D of the Federal Clean Air Act (CAA). DATES: This rule is effective on January 26, 2007 without further notice, unless EPA receives adverse comment by December 27, 2006. If EPA receives such comment, EPA will publish a timely withdrawal in the **Federal Register** informing the public that this rule will not take effect. ADDRESSES: Submit your comments, identified by Docket No. EPA-R06-OAR-2006-0016, by one of the following methods: • Federal eRulemaking Portal: *http://www.regulations.gov* . Follow the on-line instructions for submitting comments. • EPA Region 6 “Contact Us” Web site: *http://epa.gov/region6/r6coment.htm* . Please click on “6PD” (Multimedia) and select “Air” before submitting comments. • E-mail: Mr. Thomas Diggs at *diggs.thomas@epa.gov* . Please also send a copy by e-mail to the person listed in the FOR FURTHER INFORMATION CONTACT section below. • Fax: Mr. Thomas Diggs, Chief, Air Planning Section (6PD-L), at fax number 214-665-7263. • Mail: Mr. Thomas Diggs, Chief, Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. • Hand or Courier Delivery: Mr. Thomas Diggs, Chief, Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 1200, Dallas, Texas 75202-2733. Such deliveries are accepted only between the hours of 8 a.m. and 4 p.m. weekdays except for legal holidays. Special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R06-OAR-2006-0016. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *www.regulations.gov* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. *Docket:* All documents in the docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy at the Air Planning Section (6PD-L), Environmental Protection Agency, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733. The file will be made available by appointment for public inspection in the Region 6 FOIA Review Room between the hours of 8:30 a.m. and 4:30 p.m. weekdays except for legal holidays. Contact the person listed in the FOR FURTHER INFORMATION CONTACT paragraph below or Mr. Bill Deese at 214-665-7253 to make an appointment. If possible, please make the appointment at least two working days in advance of your visit. There will be a 15 cent per page fee for making photocopies of documents. On the day of the visit, please check in at the EPA Region 6 reception area at 1445 Ross Avenue, Suite 700, Dallas, Texas. The State submittal is also available for public inspection at the State Air Agency listed below during official business hours by appointment: Texas Commission on Environmental Quality, Office of Air Quality, 12124 Park 35 Circle, Austin, Texas 78753. FOR FURTHER INFORMATION CONTACT: Alima Patterson, State/Oversight Section (6PD-O), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733, telephone
(214)665-7247; fax number 214-665-7263; e-mail address *patterson.alima@epa.gov* . SUPPLEMENTARY INFORMATION: Throughout this document, whenever “we”, “us”, or “our” is used, we mean the EPA. Outline I. What Is a SIP? II. What Action Is EPA Taking? III. Final Action IV. Statutory and Executive Order Reviews I. What Is a SIP? Section 110 of the CAA requires states to develop air pollution regulations and control strategies to ensure that state air quality meets the NAAQS established by EPA. These ambient standards are established under section 109 of the CAA, and they currently address six criteria pollutants. These pollutants are: Carbon monoxide, nitrogen dioxide, ozone, lead, particulate matter, and sulfur dioxide. Each state which contains areas that are not attaining the NAAQS must submit these regulations and control strategies to us for approval and incorporation into the federally-enforceable SIP. Each federally-approved SIP protects air quality primarily by addressing air pollution at its point of origin. These SIPs can be extensive, containing state regulations or other enforceable documents and supporting information such as emission inventories, monitoring networks, and modeling demonstrations. II. What Action Is EPA Taking? We are taking direct final action to approve revisions to the Texas SIP that pertain to regulations on gasoline RVP submitted by the State on October 4, 2001. The Texas RVP regulations were originally approved into the SIP by EPA on April 26, 2001 (66 FR 20927). The regulations are part of the State strategy to achieve the NAAQS for ozone in the Houston/Galveston and Dallas/Fort Worth nonattainment areas. The regulations reduce volatile organic compound emissions by requiring conventional gasoline in a 95-county area of central and eastern Texas to be limited to maximum RVP of 7.8 pounds per square inch from May 1 through October 1 of each year. The 95 Texas counties are: Anderson, Angelina, Aransas, Atascosa, Austin, Bastrop, Bee, Bell, Bexar, Bosque, Bowie, Brazos, Burleson, Caldwell, Calhoun, Camp, Cass, Cherokee, Colorado, Comal, Cooke, Coryell, De Witt, Delta, Ellis, Falls, Fannin, Fayette, Franklin, Freestone, Goliad, Gonzales, Grayson, Gregg, Grimes, Guadalupe, Harrison, Hays, Henderson, Hill, Hood, Hopkins, Houston, Hunt, Jackson, Jasper, Johnson, Karnes, Kaufman, Lamar, Lavaca, Lee, Leon, Limestone, Live Oak, Madison, Marion, Matagorda, McLennan, Milam, Morris, Nacogdoches, Navarro, Newton, Nueces, Panola, Parker, Polk, Rains, Red River, Refugio, Robertson, Rockwall, Rusk, Sabine, San Jacinto, San Patricio, San Augustine, Shelby, Smith, Somervell, Titus, Travis, Trinity, Tyler, Upshur, Van Zandt, Victoria, Walker, Washington, Wharton, Williamson, Wilson, Wise, and Wood. Texas developed this fuel requirement as part of a strategy to reduce emissions of volatile organic compounds and achieve the NAAQS for ozone in the Houston-Galveston and Dallas-Fort Worth nonattainment areas. The revised regulations being approved are Sections 114.307 and 114.309 of Title 30 of the Texas Administrative Code, Chapter 114. The revisions add exemptions to RVP requirements for research laboratories and academic institutions, competition racing, and gasoline that is being stored or transferred that is not used in the affected counties. The exemptions are similar to those in place for Texas low emission diesel fuel approved by EPA on November 14, 2001 (66 FR 57196). It is expected that the emissions that would occur from the exempted sources would be insignificant in comparison with emissions from sources covered by the regulation. Because of this the revisions are not expected to have a significant impact on air quality. The revisions also reduce record keeping requirements for retail gasoline dispensing outlets in the affected counties, and correct a typographical error relating to the name of Smith County. Retail gasoline dispensing outlets in the affected counties no longer have to keep records of the RVP of all the gasoline they store or sell. These records will be maintained by the provider of the gasoline to the retail outlet. The retail outlets will have to keep records documenting that the gasoline they sell is certified as meeting the Texas RVP regulations. III. Final Action We are approving the revisions to the Texas SIP that pertain to regulations on gasoline RVP submitted by the State on October 4, 2001 pursuant to section 110 and part D of the CAA. The revisions add exemptions to RVP requirements for research laboratories, competitive racing, and gasoline that is being stored or transferred that is not used in the affected counties. The revisions to RVP requirements are not expected to have a significant impact on air quality. The State's revisions will not interfere with any applicable requirement concerning attainment or any other applicable requirement of the CAA. As such, EPA's approval of the revisions complies with the requirements of section 110( *l* ) of the CAA. Under section 110( *l* ) EPA may not approve a SIP revision if the revision would interfere with any applicable requirement concerning attainment or any other applicable requirement of the CAA. This approval will make the revised regulations federally enforceable. EPA is publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate no relevant adverse comments. However, in the proposed rules section of this **Federal Register** publication, we are publishing a separate document that will serve as the proposal to approve the SIP revision if relevant adverse comments are received. This rule will be effective on January 26, 2007 without further notice unless we receive relevant adverse comment by December 27, 2006. If we receive relevant adverse comments, we will publish a timely withdrawal in the **Federal Register** informing the public that the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so now. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment. IV. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will 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, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register.** A major rule cannot take effect until 60 days after it is published in the **Federal Register.** This action is not a “major rule” as defined by 5 U.S.C. 804(2). Under Section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 26, 2007. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See Section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Intergovernmental Relations, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds. Dated: November 9, 2006. Lawrence E. Starfield, Acting Regional Administrator, Region 6. 40 CFR part 52 is amended as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 et seq. Subpart SS—Texas 2. In § 52.2270 (c), the table entitled “EPA APPROVED REGULATIONS IN THE TEXAS SIP” is amended under Chapter 114 (Reg 4)—Control of Air Pollution from Motor Vehicles by revising the entries for sections 114.307 and 114.309 to read as follows: § 52.2270 Identification of plan.
(c)* * * EPA Approved Regulations in the Texas SIP State citation Title/subject State approval/ submittal date EPA approval date Explanation * * * * * * * Chapter 114 (Reg 4)—Control of Air Pollution From Motor Vehicles * * * * * * * Subchapter H—Low Emission Fuels Division 1: Gasoline Volatility * * * * * * * Section 114.307 Exemptions 10/04/01 11/27/06 [Insert *FR* page number where document begins] Section 114.309 Affected Counties 10/04/01 11/27/06 [Insert *FR* page number where document begins] [FR Doc. E6-19991 Filed 11-24-06; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 122 [OW-2003-0063; FRL-8248-1] RIN 2040-AE79 Application of Pesticides to Waters of the United States in Compliance With FIFRA AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: Today, EPA is issuing a regulation stating that the application of a pesticide in compliance with relevant requirements of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) does not require a National Pollutant Discharge Elimination System (NPDES) permit in two specific circumstances. The first circumstance is when the application of the pesticide is made directly to waters of the United States to control pests that are present in the water. The second circumstance is when the application of the pesticide is made to control pests that are over, including near, waters of the United States. This rulemaking is based on the Agency's interpretation of the definition of the term “pollutant” under the Clean Water Act
(CWA)as not including such pesticides. This final rulemaking replaces EPA's previously published Interim and Final Interpretive Statements on the Application of Pesticides to Waters of the United States in Compliance with FIFRA. EPA's Interpretive Statement, published February 1, 2005, described the Agency's interpretation of the CWA with regard to the application of pesticides regulated under FIFRA that are applied to or over, including near, waters of the United States. On August 13, 2003, EPA provided public notice of and solicited public comment on an Interim Statement and incorporated that input into the Interpretive Statement. On February 1, 2005, EPA published the Interpretive Statement and proposed to codify its substance in EPA's NPDES regulations and solicited comment on that proposed action. Today's final rule is the result of this process. DATES: These final regulations are effective on January 26, 2006. ADDRESSES: EPA has established a docket for this action under Docket ID No. OW-2003-0063. All documents in the docket are listed online at *http://www.regulations.gov* . Although listed in the online docket, some information is not publicly available, i.e., Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either online or in hard copy at the Water Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is
(202)566-1744, and the telephone number for the Water Docket is
(202)566-2426. FOR FURTHER INFORMATION CONTACT: For additional information, contact Jeremy Arling, Water Permits Division, Office of Wastewater Management (4203M), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: 202-564-2218, e-mail address: *arling.jeremy@epa.gov* . SUPPLEMENTARY INFORMATION: I. General Information A. Does This Action Apply to Me? You may be affected by this action if you apply pesticides to or over, including near, water. Potentially affected entities may include, but are not limited to: Table 1.—Entities Potentially Regulated by This Rule Category NAICS Examples of potentially affected entities Agriculture parties—General agricultural interests, farmers/producers, forestry, and irrigation 111 Crop Production Producers of crops mainly for food and fiber including farms, orchards, groves, greenhouses, and nurseries. 113110 Timber Tract Operations The operation of timber tracts for the purpose of selling standing timber. 113210 Forest Nurseries Gathering of Forest Products Growing trees for reforestation and/or gathering forest products, such as gums, barks, balsam needles, rhizomes, fibers, Spanish moss, ginseng, and truffles. 221310 Water Supply for Irrigation Operating irrigation systems. Pesticide parties (includes pesticide manufacturers, other pesticide users/interests, and consultants) 325320 Pesticide and Other Agricultural Chemical Manufacturing Formulation and preparation of agricultural pest control chemicals. Public health parties (includes mosquito or other vector control districts and commercial applicators that service these) 923120 Administration of Public Health Programs Government establishments primarily engaged in the planning, administration, and coordination of public health programs and services, including environmental health activities. Resource management parties (includes State departments of fish and wildlife, State departments of pesticide regulation, State environmental agencies, and universities) 924110 Administration of Air and Water Resource and Solid Waste Management Programs Government establishments primarily engaged in the administration, regulation, and enforcement of air and water resource programs; the administration and regulation of water and air pollution control and prevention programs; the administration and regulation of flood control programs; the administration and regulation of drainage development and water resource consumption programs; and coordination of these activities at intergovernmental levels. 924120 Administration of Conservation Programs Government establishments primarily engaged in the administration, regulation, supervision and control of land use, including recreational areas; conservation and preservation of natural resources; erosion control; geological survey program administration; weather forecasting program administration; and the administration and protection of publicly and privately owned forest lands. Government establishments responsible for planning, management, regulation and conservation of game, fish, and wildlife populations, including wildlife management areas and field stations; and other administrative matters relating to the protection of fish, game, and wildlife are included in this industry. Utility parties (includes utilities) 221 Utilities Provide electric power, natural gas, steam supply, water supply, and sewage removal through a permanent infrastructure of lines, mains, and pipes. Other Parties 713910 Golf courses and country clubs Golf course operators who have ponds for irrigation. This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. This table lists the types of entities that EPA is now aware could potentially be affected by this action. Other types of entities not listed in the table could also be affected. To determine whether your facility is affected by this action, you should carefully examine the applicability criteria in 40 CFR 122.23. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section. II. Background A. Clean Water Act and the Federal Insecticide, Fungicide, and Rodenticide Act Congress passed the Federal Water Pollution Control Act (1972), also known as the Clean Water Act (CWA), to “restore and maintain the chemical, physical, and biological integrity of the nation's waters” 33 U.S.C. 1251(a). The CWA prohibits the discharge of any pollutant by any person from a point source into a water of the United States, except in compliance with certain other provisions of the Act, including Section 402. 33 U.S.C. 1311(a). Section 402 in turn authorizes EPA to issue permits under the National Pollutant Discharge Elimination System (NPDES) permit program for such discharges. States may also issue NPDES permits if authorized to do so by EPA. 33 U.S.C. 1342(a) and (b). NPDES permits under the CWA are required only for point source discharges of materials that are *pollutants* to waters of the United States. Section 502(6) of the CWA defines “pollutant” to mean: * * * dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt and industrial, municipal and agricultural waste discharged into water. 33 U.S.C. 1362(6). 1 In the more than 30 years that EPA has administered the CWA, the Agency has never issued an NPDES permit for the application of a pesticide to or over water to target a pest that is present in or over the water. Nor has the Agency ever stated in any general policy or guidance that an NPDES permit is required for such applications. 1 The remaining language of the definition of “pollutant” in Section 502(6) is as follows, and is not relevant to today's action: “The term does not mean
(A)“sewage from vessels” within the meaning of Section 312 of this Act; or
(B)water, gas, or other material which is injected into a well to facilitate production of oil or gas, or water derived in association with oil or gas production and disposed of in a well, if the well used either to facilitate production or for disposal purposes is approved by authority of the State in which the well is located, and if such State determines that such injection or disposal will not result in the degradation of ground or surface water resources.” EPA regulates the sale, distribution and use of pesticides in the United States under the statutory framework of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to ensure that when used in conformance with FIFRA labeling directions, pesticides will not pose unreasonable risks to human health and the environment. All new pesticides must undergo a rigorous registration procedure under FIFRA during which EPA assesses a variety of potential human health and environmental effects associated with use of the product. Under FIFRA, EPA is required to consider the effects of pesticides on the environment by determining, among other things, whether a pesticide “will perform its intended function without unreasonable adverse effects on the environment,” and whether “when used in accordance with widespread and commonly recognized practice [the pesticide] will not generally cause unreasonable adverse effects on the environment.” 7 U.S.C. 136a(c)(5). In performing this analysis, EPA examines the ingredients of a pesticide, the intended type of application site and directions for use, and supporting scientific studies for human health and environmental effects and exposures. The applicant for registration of the pesticide must provide data from tests done according to EPA guidelines. This process is discussed in more detail below. Several courts have recently addressed the question of whether the CWA requires NPDES permits for pesticide applications. These cases have resulted in some confusion among the regulated community and other affected citizens about the applicability of the CWA to pesticides applied to waters of the United States. In 2001, the U.S. Court of Appeals for the Ninth Circuit held in *Headwaters, Inc.* v. T *alent Irrigation District* ( *Talent* ) that an applicator of herbicides was required to obtain an NPDES permit under the circumstances before the court (described in detail in Section V.C. below). 243 F.3rd 526 (9th Cir. 2001). The *Talent* decision caused considerable concern and confusion among public health authorities, natural resource managers, and others who rely on pesticides regarding their potential obligation to obtain an NPDES permit when applying a pesticide consistent with FIFRA and particularly about the impact of such a requirement on accomplishing their mission of protecting human health and the environment. In 2002, the Ninth Circuit in *League of Wilderness Defenders et al.* v. *Forsgren* ( *Forsgren* ) held that the application of pesticides to control gypsy moths in National Forest lands required an NPDES permit. 309 F.3d 1181 (9th Cir. 2002). The court in Forsgren did not analyze the question of whether the pesticides applied were pollutants, because it assumed that the parties agreed that they were. In fact, the United States expressly reserved its arguments on that issue in its brief to the District Court. Id. at 1184, n.2. The court instead analyzed the question of whether the aerial application of the pesticide constituted a point source discharge, and concluded that it did. Id. at 1185. Since *Talent and Forsgren* , California, Nevada, Oregon, and Washington, all of which are within the Ninth Circuit, have issued permits for the application of certain types of pesticides (e.g., products to control aquatic weeds and algae and products to control mosquito larvae). Other States have continued their longstanding practice of not issuing permits to people who apply pesticides to waters of the United States. These varying practices reflect the substantial uncertainty among regulators, the regulated community, and the public regarding how the Clean Water Act applies to pesticides that have been properly applied and used for their intended purpose. The Ninth Circuit recently addressed the Clean Water Act's applicability to pesticide applications for a third time. In *Fairhurst* v. *Hagener* , the court held that pesticides applied directly to a lake in order to eliminate non-native fish species, where there are no residues or unintended effects, are not “pollutants” under the CWA because they are not chemical wastes. 422 F.3d 1146 (9th Cir. 2005). Since *Talent* and *Forsgren* , other courts have addressed the applicability of the CWA's NPDES permit requirements to pesticide applications. In *Altman* v. *Town of Amherst (Altman)* , the Second Circuit vacated and remanded for further development of the record a District Court decision holding that the Town of Amherst was not required to obtain an NPDES permit to spray mosquitocides over waters of the United States. 47 Fed. Appx. 62, 67 (2nd Cir. 2002). The United States filed an amicus brief setting forth the Agency's views in the context of that particular case. In its opinion, the Second Circuit stated that “[u]ntil the EPA articulates a clear interpretation of current law—among other things, whether properly used pesticides released into or over waters of the United States can trigger the requirement for NPDES permits * * *—the question of whether properly used pesticides can become pollutants that violate the CWA will remain open.” *Id.* at 67. B. Interim and Interpretive Statements In August 2003, EPA first analyzed the applicability of the NPDES permit program to pesticide applications in an administrative context through an Interim Statement and Guidance. 68 FR 48385 (Aug. 13, 2003). The Interim Statement presented EPA's position on the two circumstances in which pesticides applied to waters of the United States consistent with all relevant requirements of FIFRA are not “pollutants” under the CWA and thus do not require an NPDES permit. Although the United States previously addressed issues related to the Interim Statement in several *amicus* briefs, including those filed in *Talent* and *Altman* , those briefs reflected the government's evaluation of the law in the context of specific factual situations, and did not result from deliberative consideration through an administrative process. As such, the amicus briefs did not represent EPA's legal position on the precise questions at issue in the Interim Statement or in today's regulation. EPA solicited public comments on its interpretation of the term “pollutant” in the Interim Statement as it relates to certain pesticide applications. After considering the public comments, EPA issued a final Interpretive Statement on January 25, 2005. EPA simultaneously published a notice of proposed rulemaking to incorporate the substance of the Interpretive Statement into EPA regulations and solicited public comment on the proposed rulemaking. 70 FR 5093 (Feb.1, 2005). EPA has considered the comments received and is today taking final action on the proposed regulation. The final regulation is substantially similar to the proposed regulations, with certain modifications described below. 2 2 On March 29, 2002, EPA issued an Interpretive Statement and Regional Guidance on the Clean Water Act's Exemption for Return Flows from Irrigated Agriculture, which clarified that the application of an aquatic herbicide consistent with the FIFRA labeling to ensure the passage of irrigation return flow is a nonpoint source activity not subject to NPDES permit requirements under the Clean Water Act. This regulation does not address the March 2002 guidance. III. Summary of the Final Rule EPA is revising the NPDES permit program regulations to add a paragraph to the list of discharges in 40 CFR 122.3 that are excluded from NPDES permit requirements. Specifically, today's regulation excludes applications of pesticides to waters of the United States consistent with all relevant requirements under FIFRA in two specific circumstances as follows:
(1)The application of pesticides directly to waters of the United States in order to control pests. Examples of such applications include applications to control mosquito larvae, aquatic weeds, or other pests that are present in waters of the United States.
(2)The application of pesticides to control pests that are present over waters of the United States, including near such waters, where a portion of the pesticides will unavoidably be deposited to waters of the United States in order to target the pests effectively; for example, when insecticides are aerially applied to a forest canopy where waters of the United States may be present below the canopy or when pesticides are applied over or near water for control of adult mosquitoes or other pests. Pesticides applied under these circumstances are not pollutants and therefore are not subject to NPDES permitting requirements. EPA's final rule is substantially similar to the rule proposed in February 2005. EPA has modified the proposed regulatory text only to clarify the types of pesticide applications covered in the second circumstance (those to control pests present over, including near, waters of the United States). Commenters raised concerns that the second circumstance, as written in the proposed rule, could be interpreted more broadly than the Agency intended (e.g. encompassing drift from terrestrial pesticide applications). The final rule clarifies that the applications in the second circumstance are those in which it is unavoidable that some of the pesticides will be deposited into water in order to effectively target the pests. In other words, EPA is clarifying in the final rule that the regulation encompasses only those applications to control pests over, including near, waters of the United States, where the pesticide necessarily must enter the water in order for the application to achieve its intended purpose. Thus, the applications must first be intended to control pests over (including near) a water of the United States. Second, it must be unavoidable that the pesticide enter the water in order to target such pests effectively. For example, EPA believes that wide-area forest canopy insecticide applications can result in deposition to streams and other waters of the U.S. which are either not visible to the aerial applicator or not possible to avoid given the location of aerial application, and that in such circumstances, it is unavoidable that the pesticide enter the water in order to effectively target pests living in the canopy. Likewise, mosquito adulticide applications can result in some pesticide product entering the water because adult mosquitoes generally live over and adjacent to waterbodies. Similarly, pesticide applications to control non-native plants which grow at the water's edge, such as purple loosestrife, are intended to be covered by this provision, because when targeting plants at the water's edge, it is unavoidable that some of the herbicide will enter the water. EPA notes that the clarifying language in § 122.3(h)(2) is not intended to impose any additional requirements on pesticide applications beyond relevant FIFRA requirements. In addition, it is not intended to address applications of pesticides to terrestrial agricultural crops. IV. Discussion Today's rulemaking implements EPA's interpretation of the CWA's definition of “pollutant” with respect to certain applications of pesticides. Under the CWA, pollutant means: * * * dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, chemical wastes, biological materials, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt and industrial, municipal, and agricultural waste discharged into water. 33 U.S.C. 1362(6). The circumstances of pesticide applications covered under today's rule are limited to the two types of applications described above, when conducted in compliance with all relevant requirements of FIFRA. EPA considers “relevant requirements” of FIFRA to mean those FIFRA requirements that relate to water quality. For instance, violating a requirement that the person mixing the pesticide must wear protective clothing, while an unlawful act that can be enforced under FIFRA, is not related to the protection of water quality, and therefore not a relevant FIFRA requirement for purposes of today's regulation. However, a labeling provision that governs application rates, active ingredient concentrations and dilution requirements, buffer zones, application locations, intended targets, times of day, temperature or other application requirements, and thus concerns the amounts, concentrations, and viability of substances that may potentially end up in waters of the United States, is related to water quality. Relevant FIFRA requirements may appear in product labeling, FIFRA regulation, or other documents setting forth requirements applied pursuant to FIFRA. The application of a pesticide from a point source to waters of the United States requires an NPDES permit only if it constitutes the discharge of a “pollutant” within the meaning of that term in the CWA. EPA has evaluated whether pesticides regulated under and applied consistent with relevant FIFRA requirements for the two circumstances previously described fall within the terms in the CWA's definition of “pollutant,” and concludes that they do not. Pesticides are not dredged spoil, solid waste, incinerator residue, sewage, garbage, sewage sludge, munitions, radioactive materials, heat, wrecked or discarded equipment, rock, sand, cellar dirt or industrial, municipal, and agricultural waste. See CWA section 502(6). In addition, as described below, the terms, “chemical waste” and “biological materials,” also do not encompass the types of pesticide applications addressed in today's action. First, such pesticides are not “chemical wastes.” The term “waste” ordinarily means that which is “eliminated or discarded as no longer useful or required after the completion of a process.” The New Oxford American Dictionary 1905 (Elizabeth J. Jewell & Frank Abate eds., 2001). Pesticides applied consistent with relevant FIFRA requirements are not “wastes” as that term is commonly defined—on the contrary, they are products that EPA has evaluated and registered for the purpose of controlling target organisms, and are designed, purchased, and applied to perform that purpose. See *Fairhurst* v. *Hagener* , 422 F.3d at 1150. EPA also interprets the term “biological materials” not to include biological pesticides applied consistent with relevant FIFRA requirements. This interpretation is both reasonable and consistent with Congressional intent, and is supported by relevant case law. It is unlikely that Congress intended to include biological pesticides applied in the circumstances described in today's rule within the Clean Water Act's definition of “pollutant.” To do so would mean that biological pesticides are pollutants, while chemical pesticides used in the same circumstances are not. Since biologically and chemically based pesticides applied consistent with relevant requirements adopted by EPA under FIFRA are both EPA-evaluated products, treating them differently under the Clean Water Act is not warranted. Moreover, at the time the Act was adopted in 1972, chemical pesticides were predominant. It is therefore not surprising that Congress failed to discuss whether biological pesticides were to be covered by the Act. The fact that more biological pesticides have been developed since passage of the Act in 1972 does not justify expanding the reach of the NPDES permit requirement when there is no evidence that Congress intended the CWA to regulate biological pesticides in a manner different from chemical pesticides. Finally, biological pesticides in use today are generally reduced-risk products that have a narrower range of potential adverse environmental effects compared to many chemical pesticides. For this reason it would not make sense, and would be inconsistent with the goals of the Clean Water Act, to discourage the use of biological pesticides by requiring applicators of these products to obtain an NPDES permit when chemical pesticides have no such requirement. In cases in which courts have found specific biological materials to be “pollutants” under section 502(6) the substances at issue were waste materials discharged from a point source. See *Concerned Area Residents for the Environment* v. *Southview Farm* , 34 F.3d 114 (2d Cir. 1994) (liquid manure is solid waste, sewage, biological material, and agricultural waste and is therefore a pollutant); *USPIRG* v. *Atlantic Salmon* , 215 F.Supp. 2d 239, 247-49 (D. Maine 2002) (non-native fish escaped from net pens and salmon feces and urine exiting net pens are biological materials; pharmaceuticals in excess salmon feed exiting net pens are chemical wastes), *National Wildlife Federation* v. *Consumers Power Co.* , 862 F.2d 580, 585 (6th Cir. 1988) (live fish, dead fish, and fish remains released from hydro-electric facility's turbine are biological materials), *U.S.* v. *Plaza Health Laboratories, Inc.* , 3 F.3d 643, 646 (2d Cir. 1993), *cert. denied* 114 S.Ct. 2764
(1994)(discarded vials of human blood are pollutants). In none of these cases, which were cited by commenters, did a court find that a product applied for its intended purpose consistent with applicable EPA requirements was a “biological material” and therefore a pollutant under the CWA. The Ninth Circuit Court of Appeals in *Assn. to Protect Hammersley, Eld, and Totten Inlets (APHETI)* v. *Taylor Resources, Inc.* , 299 F.3d 1007, 1017 (9th Cir. 2002), cited to several of these cases as being in accord with its finding that “biological materials” means the waste product of a human or industrial process. The APHETI court based its decision that mussel shells, mussel feces, and other materials emitted from mussels grown on harvesting rafts are not pollutants on the doctrine of *ejusdem generis.* The court found that the more specific terms in the CWA's definition of “pollutant” support an understanding of the more general term “biological materials” as waste material of a human or industrial process. *Id.* at 1015. The court went on to analyze Congress' intent in enacting the CWA and found that the purpose of the statute further supported such an interpretation of biological materials in that case. *Id.* at 1016. Furthermore, EPA's interpretation that biological and chemical pesticides are not pollutants is reasonable because both types of pesticides must comply with FIFRA registration requirements. EPA reviews and evaluates these pesticides and authorizes their use, subject to the limitations and requirements of the EPA registration. Today's action applies only to the specific categories of pesticide applications addressed in the text of the regulation. EPA notes that pesticides are waste materials, and therefore pollutants under the Act, when contained in a waste stream, including storm water regulated under section 402(p) or other industrial or municipal discharges. In those circumstances, an NPDES permit may be required if the pesticides are discharged into a water of the United States from a point source. In addition, if there are residual materials resulting from pesticides that remain in the water after the application and its intended purpose (elimination of targeted pests) have been completed, these residual materials are also pollutants under CWA section 502(6) because they are wastes of the pesticide application. Such residuals include excess amounts of pesticide that do not reach a target organism and materials that remain after the application has completed its intended task. These materials are waste materials, as that term is commonly defined, because they are substances that are “no longer useful or required after the completion of a process.” The New Oxford American Dictionary 1905, supra. See also *Fairhurst* v. *Hagener* , 422 F.3d 1146. However, pesticide applications under the circumstances described above and consistent with FIFRA do not require NPDES permits, even if the application leaves residual materials which are “pollutants” under the Act in waters of the United States. Section 301(a) of the CWA prohibits the “discharge of any pollutant” except in compliance with certain other provisions of the Act. The CWA defines “discharge of a pollutant” to mean “any *addition* of any pollutant to navigable waters from *any point source.* ” Thus, at the time of discharge to a water of the United States, the material in the discharge must be both a pollutant, and from a point source. In this case, while the discharge of the pesticide is from a point source (generally a hose or an airplane), it is not a pollutant at the time of the discharge. The material added by a pesticide applicator to or over, including near, water is not a pollutant for the reasons stated above. Even though the pesticide may become a “pollutant” at a later time ( *e.g.* , after the pesticide product has served its intended purpose), a permit is not required for its application because it did not meet both statutory prerequisites (pollutant and point source) at the time of its discharge into the water. Instead, the residual should be treated as a nonpoint source pollutant, potentially subject to CWA programs other than the NPDES permit program ( *e.g.* , listing and TMDL development pursuant to CWA section 303(d)). Today's action does not address drift over and into waters of the United States from pesticide applications to land. As discussed below, EPA has established a multi-stakeholder workgroup under one of its federal advisory committees to explore policy issues relating to the terrestrial application of pesticides that may drift into aquatic environments. EPA also notes that today's discussion of the terms “chemical waste” and “biological materials” applies only for CWA purposes and is not intended to address the use of those terms or similar terms under any other statutes the Agency administers. V. Public Comment EPA first solicited comment on its interpretation of “pollutant” under the CWA with respect to certain pesticide applications on August 13, 2003. See 68 FR 48385 (Aug. 13, 2003). EPA provided a second opportunity for public comment on its interpretation when it proposed the regulation on which the Agency is today taking final action. See 70 FR 5093 (Feb. 1, 2005). EPA received many comments on its interpretation during both comment periods, from a wide range of interested parties including pesticide manufacturers and applicators, public health control agencies, State agricultural agencies, State environmental agencies, environmental groups, human health advocates, farming interests, and other members of the public. Many commenters supported EPA's interpretation, while others opposed it as inconsistent with the CWA. The record for today's action contains EPA's detailed responses to comments received during both public comment periods. See Docket ID No. OW-2003-0063 at *http://www.regulations.gov.* EPA is providing a summary below of its responses to some of the significant comments received. A. Scope of Regulation Many of the commenters who supported EPA's proposed rule also recommended that EPA broaden the scope of the final rule to cover all pesticide applications, including agricultural applications over land, that are conducted in accordance with the relevant requirements of FIFRA. This final rule addresses only the following two circumstances described in the proposed rule: The application of aquatic pesticides directly to waters of the United States, and the application of pesticides to control pests over, including near, such waters. In the meantime, EPA will continue to follow its long-standing practice of not requiring NPDES permits for agricultural pesticide applications that are conducted in compliance with relevant FIFRA requirements. EPA is continuing to consider the applicability of the CWA to situations other than those EPA is addressing in today's action where pesticides applied in accordance with relevant FIFRA requirements may reach and enter waters of the United States, including drift of pesticides applied aerially over land. Therefore, EPA does not believe it is appropriate to broaden the scope of the regulation to include additional types of pesticide applications at this time. To assist the Agency's consideration of these issues, EPA has established a workgroup under the existing Pesticide Program Dialogue Committee
(PPDC)(an advisory committee chartered under the Federal Advisory Committee Act (FACA)) to address issues involving pesticide spray drift from agricultural and other applications. The goals of the workgroup are the following:
(1)Improving understanding of the perspectives of all stakeholders regarding pesticide spray drift;
(2)finding common ground for further work toward minimizing both the occurrence and potential adverse effects of pesticide spray drift;
(3)developing options for undertaking work where common ground exists; and
(4)exploring the extent of drift, even with proper usage, and the range and effectiveness of potential responses to unacceptable levels of off-target drift. The spray drift workgroup will provide advice to EPA through the PPDC. The PPDC is a FACA-authorized forum for a diverse group of stakeholders to provide feedback to the Agency's pesticide program on various pesticide regulatory, policy, and program implementation issues. Topics of discussion at past meetings have included the disclosure of inert ingredients, registration review, nonanimal testing, antimicrobial pesticides, endangered species, reduced risk pesticides, labeling, minor uses, ecological standards, fees for service, experimental use permits, environmental marketing claims, outreach to the public, and several implementation issues emanating from the Food Quality Protection Act of 1996. Members of the PPDC include representatives of environmental and public interest groups, pesticide manufacturers and trade associations, user and commodity groups, public health and academic institutions, federal and State agencies, and the general public. Participants in the Spray Drift workgroup reflect the range of stakeholder interests represented on the full PPDC, and also include members with backgrounds in water quality issues. By operating under the PPDC, the Spray Drift workgroup will comply with FACA procedural requirements including timely public notice of meetings, public access to meetings and opportunity for the public to comment; public availability of documents considered by the workgroup; and attendance of a federal officer or employee at each meeting. B. Sufficiency of FIFRA to Address Water Quality Impacts of Pesticide Applications Many commenters objected to the proposed rule on the basis that EPA's regulation of pesticides under FIFRA does not adequately protect water quality, and thus pesticide applications should require an NPDES permit. These commenters alleged both legal and policy shortcomings of FIFRA. They also asserted that EPA's interpretation is improper because FIFRA does not preempt CWA requirements and because EPA lacks authority to exempt categories of discharges from the CWA's prohibition against discharges without an NPDES permit. These commenters may have misinterpreted the legal interpretation that provides the basis for today's action. First, EPA is not expressly or by implication repealing any provision of the CWA in today's action, nor is the Agency arguing that FIFRA registration preempts CWA section 301(a) or section 402(a). Moreover, EPA is not arguing that registration under FIFRA or compliance with FIFRA requirements replaces or satisfies an otherwise applicable requirement under the CWA to obtain an NPDES permit. Nor is EPA exempting from section 301(a) or section 402(a) any categories of pollutants, because the pesticide applications at issue here are not pollutants under the Act. The proscription in the CWA against discharging pollutants from point sources to waters of the United States except in compliance with section 402 continues to apply. Rather, EPA is exercising its authority to interpret a term in a statute it administers. EPA is clarifying that pesticides applied to or over, including near, water for their intended purpose consistent with all relevant requirements under FIFRA in the circumstances specified in the rule are not, at the time of application, “pollutants” under the CWA, and therefore applications are not discharges required to obtain permits. EPA's review, evaluation, and registration of pesticides used in these two circumstances further demonstrate that this is a reasonable interpretation, consistent with Congressional intent. EPA's regulatory programs under FIFRA provide support for the Agency's conclusion that the pesticides applied to or over, including near, water are not wastes (and therefore not pollutants) and serve as an indicator of when a pesticide is being applied as a product for its intended, beneficial purpose. Under FIFRA, EPA receives applications from people who wish to sell and distribute pesticides. The Agency may approve and issue a registration for a product if EPA determines that the product will not cause “unreasonable adverse effects on the environment,” which is defined as “any unreasonable risk to man or the environment, taking into account the economic, social and environmental costs and benefits of the use of [a] pesticide * * *.” FIFRA Section 3(c)(5). In other words, the Agency may register a pesticide only if the product provides economic, social, and environmental benefits that outweigh risks from its use. As part of FIFRA registration, EPA may establish requirements, which are typically contained in the label for the pesticide, to ensure that when used, it will not cause unreasonable adverse effects on the environment, including the aquatic environment. Thus, registration and use of a pesticide in accordance with its approved labeling or other relevant FIFRA requirements indicates that a pesticide is a product intended to be used for a beneficial purpose that is authorized by EPA and is not a waste. For these reasons, comments regarding the adequacy of EPA's pesticide regulatory program do not pertain to the legal interpretation of whether a pesticide is a “chemical waste” or a “biological material” for purposes of the definition of “pollutant” under the CWA. Nonetheless, it is important to note that EPA disagrees with commenters' concerns that EPA's registration process does not take into account local conditions, existing water quality standards and use designations, synergistic effects of multiple pesticides, inert ingredients, non-target aquatic organisms, and the effect of multiple applicators in the same area. The regulatory and non-regulatory tools under FIFRA provide means of addressing water quality problems arising from the use of pesticides. In particular, the pesticide registration and re-registration processes consider impacts on both human health from the presence of pesticides in drinking water, and on aquatic resources ( *e.g.* , fish, invertebrates, plants, and other species in fresh water, estuarine, and marine environments). EPA requires a pesticide company to submit a substantial body of data in support of an application for registration. EPA then supplements this required database with information obtained through a systematic search of the open literature on the ecotoxicity of environmental substances. EPA compares the estimated environmental concentrations expected to result from use of a pesticide with toxicity values observed in required studies and studies from the open literature. This database provides sufficient information to conduct assessments of potential ecological and human health risks, including the identification of toxicologically significant degradation products and/or metabolites. For additional information on EPA's approach to ecological risk assessment in general, and endangered and threatened species in particular, see: *http://www.epa.gov/espp/consultation/ecorisk-overview.pdf.* C. EPA's Interpretation of the Term “Pollutant” Under the CWA Some commenters claimed that EPA's interpretation of the term “pollutant” is inconsistent with the Clean Water Act, with relevant case law, or with prior Agency statements. EPA disagrees with the commenters and believes its interpretation of the term “pollutant” is reasonable and consistent with the language and legislative intent of the Clean Water Act. As described above, pesticides applied in the circumstances addressed in today's regulation, in compliance with FIFRA, for their intended purpose, are not pollutants under the Act. EPA also disagrees with commenters that the term “biological materials” can only be read to include biological pesticides applied in the circumstances addressed by today's regulation—i.e., application to or over waters of the United States consistent with relevant requirements of FIFRA. EPA's analysis of the terms “chemical waste” and “biological materials” in the circumstances addressed by today's regulation is described in more detail above. In addition, the Ninth Circuit Court of Appeals recently held that pesticides that do not generate a residue when applied directly to a lake to eliminate a non-native fish species are not “pollutants” under the CWA because they are not chemical wastes. *Fairhurst* v. *Hagener* , 422 F.3d 1146 (9th Cir. 2005). In so holding, the court considered the plain meaning of the term “chemical waste” and noted that its analysis was in accord with EPA's interpretation of the term in its July 2003 Interim Statement, and that EPA's interpretation is “reasonable and not in conflict with the expressed intent of Congress.” Id. at 1149-50. Today's regulation is based on the same interpretation EPA first articulated in the Interim Statement, and is consistent with the *Fairhurst* court's holding. Moreover, EPA's interpretation is not inconsistent with *Talent* and *Forsgren* as some commenters have asserted. As explained below, these cases do not interpret the term “pollutant” as including the pesticide applications addressed in today's rule. In *Headwaters* v. *Talent* , the Ninth Circuit reversed the District Court's dismissal of a CWA citizen suit against an irrigation district alleging that application of the herbicide Magnacide H to irrigation canals to control aquatic weeds and vegetation required an NPDES permit. The District Court had concluded that the application of the pesticide was adequately regulated under FIFRA, and further regulation under the CWA was unnecessary. *Headwaters* v. *Talent* , No. 98-6004-AA slip op. at 12 (D. Ore. Feb. 1, 1999). The Ninth Circuit found that residual from the application of Magnacide H was a pollutant in this case and that registration of the herbicide under FIFRA did not preclude applicability of the CWA. *Headwaters* v. *Talent* , 243 F.3d at 532. This conclusion is consistent with EPA's interpretation. As described above, EPA agrees that residual materials from pesticide applications are “pollutants” under the Act. In addition, the irrigation district in *Talent* failed to comply with a FIFRA registration requirement to contain the herbicide-laden water in an irrigation canal for a specified number of days. EPA's interpretation codified in today's action is that pesticides applied in the circumstances described in the rule are not “pollutants” where they are applied consistent with relevant FIFRA requirements. Thus, EPA's interpretation is consistent with the result reached by the *Talent* court. In *League of Wilderness Defenders* v. *Forsgren* , the Ninth Circuit held that the aerial application of insecticides over National Forest lands in Washington and Oregon to control a predicted outbreak of the Douglas fir tussock moth required an NPDES permit. However, the court in Forsgren stated incorrectly that the parties in the case did not dispute that the insecticides met the CWA definition of “pollutant.” * League of Wilderness Defenders* v. * Forsgren* , 309 F.3d at 1184, n.2. In fact, the Forest Service in its brief before the District Court reserved its arguments on that particular issue. Because the Ninth Circuit erroneously assumed that the question of whether the applications were pollutants was not in dispute, it did not analyze the issue but simply stated that they were. * Id.* at 1185. The issue that the * Forsgren* court did analyze in detail was whether the airplanes from which the insecticides were sprayed are point sources under the CWA—a different issue from that addressed in today's interpretation. 3 3 EPA's General Counsel issued a memorandum on September 3, 2003, addressing the Agency's views on the effect of the *Forsgren* decision. Specifically, EPA stated that it did not acquiesce outside the Ninth Circuit with the court's decision regarding the application of EPA regulation defining “silvicultural point source” at 40 CFR 122.27(b)(1), and would continue to follow its longstanding interpretation of the statute and these regulations. Memorandum from Robert E. Fabricant to Regional Administrators, “interpretive Statement and Guidance Addressing Effect of Ninth Circuit Decision in *League of Wilderness Defenders* v. *Forsgren* on Application of Pesticides and Fire Retardants,” Sept. 3, 2003. Commenters also claimed that EPA's interpretation is inconsistent with the Clean Water Act because the purpose for which a pesticide is applied is not relevant to the question of whether it is a pollutant under the Act. The commenters pointed primarily to two cases— *Hudson River Fisherman's Assn.* v. *City of New York* , 751 F.Supp. 1088 (S.D.N.Y.), affd., 940 F.2d 649 (2d Cir. 1991), and *Minnehaha Creek Watershed District* v. *Hoffman* , 597 F.2d 617 (8th Cir. 1979)—as supporting their assertion. However, both these cases are distinguishable from EPA's interpretation. In *Minnehaha Creek* , the court was interpreting the terms “rock, sand, [and] cellar dirt” in the definition of “pollutant” in CWA Section 502(6). The federal appellants in that case appealed a District Court decision finding that the U.S. Army Corps of Engineers did not have jurisdiction under CWA Section 404 over the placement of riprap and the construction of dams in Minnehaha Creek and adjacent Lake Minnetonka. The District Court's decision was based on its conclusion that the creek and the lake were not navigable waters of the United States and that while the riprap and construction materials were “rock and sand,” the activities at issue in the case were not within the purview of the Act because they did not significantly affect water quality. *Minnehaha Creek Watershed District* v. *Hoffman* , 449 F.Supp 876, 886 (D. Minnesota 1978). The Eighth Circuit disagreed and held that a significant alteration in water quality need not be demonstrated for a substance to be a pollutant. *Minnehaha Creek Watershed District* v. *Hoffman* , 597 F.3d at 626-27. The Eighth Circuit stated in Minnehaha Creek that it found “no justification in the District Court's determination that whether the discharge of a particular substance *listed in s[ection] 502(6)* constitutes the discharge of a ‘pollutant' under the Act depends upon the purpose for which the discharge is made.” *Id.* at 627, emphasis added. EPA notes that nowhere in its opinion does the District Court reach such a conclusion. In any case, EPA is not concluding that the question of whether a substance is a pollutant depends on the specific purpose for which it is discharged. Rather, EPA is interpreting what specific terms in section 502(6) mean in the context of certain pesticide applications. The Second Circuit Court of Appeals decision in *Hudson River Fishermen's Assn.* v. *City of New York* is also distinguishable from the circumstances addressed in today's rule. In that case, the District Court held that discharges of chlorine and aluminum sulfate (alum floc) from an aqueduct into a reservoir were discharges of pollutants requiring an NPDES permit. First, this case involved the discharge of alum floc from a point source at a point when it was a “chemical waste” and, therefore, consistent with EPA's interpretation, properly constituted a pollutant under the statute. *Hudson River Fishermen's Assn.* v. *City of New York* , 751 F.Supp 1088, 1102. In contrast, today's rule addresses certain pesticides which are being applied in compliance with relevant FIFRA requirements and, for the reasons described above, are not pollutants. Moreover, the court's holding that chlorine was a pollutant also referred to the chlorine in the aqueduct at the time it discharged into the reservoir, not at the time it was first added to the water. The court held that the chlorine was a pollutant, no matter how useful it may earlier have been, citing to the Eighth Circuit's decision in *Minnehaha Creek.* *Id.* at 1101. Similarly, EPA is not concluding that the question of whether substances listed in section 502(6) are pollutants depends on the purpose for which they are discharged. Rather, EPA is interpreting what specific terms in section 502(6) (terms other than those addressed in *Minnehaha Creek* ) mean in the context of these two types of pesticide applications. Finally, while EPA's interpretation is not inconsistent with either *Hudson River* or *Minnehaha Creek* , it is further supported by the Ninth Circuit's decision in *Fairhurst* v. *Hagener.* In *Fairhurst* , the Ninth Circuit specifically considered the purpose for which the pesticide was applied—the same factor commenters claim is not relevant under *Hudson River* and *Minnehaha Creek* —and the fact that it was applied consistent with the product's FIFRA label, in concluding that it was not a pollutant under the CWA. *Fairhurst* v. *Hagener* , 422 F.3d 1146, 1150 (“Because intentionally applied and properly performing pesticides are not ‘pollutants,' a potential discharger is not required to secure an NPDES permit for such pesticides before discharge.”) Some commenters also claimed that EPA's interpretation is inconsistent with positions taken by the government in several *amicus curiae* briefs related to the issues addressed by the interpretation. As mentioned above, these briefs reflected the government's evaluation of the law in the context of the specific factual situations at issue and did not result from the deliberative consideration through an administrative process, as today's rule does. As such, the briefs were not a comprehensive statement of EPA's legal position on the precise questions addressed in today's rule, nor did they reflect the exercise of EPA's legal and policy judgment after consideration of public comments. See Memorandum from Ann R. Klee to Benjamin Grumbles and Susan Hazen, “Analysis of Previous Federal Government Statements on Application of Pesticides to Waters of the United States in Compliance with FIFRA,” Jan. 24, 2005. VI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action.” Accordingly, EPA submitted this action to the Office of Management and Budget
(OMB)for review under Executive Order 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action. B. Paperwork Reduction Act This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 *et seq.* This rule merely identifies two circumstances in which the application of a pesticide to waters of the United States consistent with all relevant requirements under FIFRA does not constitute the discharge of a pollutant that requires an NPDES permit under the Clean Water Act. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. C. Regulatory Flexibility Act The Regulatory Flexibility Act
(RFA)generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today's rule on small entities, small entity is defined as:
(1)A small business based on Small Business Administration
(SBA)size standards at 13 CFR 121.201;
(2)a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and
(3)a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of today's rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. Because EPA is identifying two circumstances in which the application of a pesticide to waters of the United States consistent with all relevant requirements under FIFRA does not constitute the discharge of a pollutant that requires a NPDES permit under the Clean Water Act, this action will not impose any requirement on any small entity. D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. EPA has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. Thus, today's rule is not subject to the requirements of sections 202 and 205 of the UMRA. For the same reason, EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. Thus, today's rule is not subject to the requirements of section 203 of UMRA. E. Executive Order 13132: Federalism Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. EPA is merely identifying two circumstances in which the application of a pesticide to waters of the United States consistent with all relevant requirements under FIFRA does not constitute the discharge of a pollutant that requires a NPDES permit under the Clean Water Act. Thus, Executive Order 13132 does not apply to this rule. In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicited comment on the proposed rule from State and local officials. EPA additionally consulted with state officials in the development of the final rule. Especially important were consultations regarding the manner in which States in the Ninth Circuit currently permit pesticides in response to the *Talent* decision and how states use TMDLs and other authorities to address pesticide residuals. F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.” This final rule does not have tribal implications. It will not have substantial direct effects on tribal governments, 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, as specified in Executive Order 13175. EPA is merely identifying two circumstances in which the application of a pesticide to waters of the United States consistent with all relevant requirements under FIFRA does not constitute the discharge of a pollutant that requires a NPDES permit under the Clean Water Act. Thus, Executive Order 13175 does not apply to this rule. Moreover, in the spirit of Executive Order 13175, and consistent with EPA policy to promote communications between EPA and tribal governments, EPA specifically solicited comment on the proposed rule from tribal officials. G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks Executive Order 13045: “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997) applies to any rule that:
(1)Is determined to be “economically significant” as defined under Executive Order 12866, and
(2)concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This regulation is not subject to Executive Order 13045 because it is not economically significant as defined under Executive Order 12866 and because the Agency does not have reason to believe the environmental health and safety risks addressed by this action present a disproportionate risk to children. The regulation only interprets the legal scope of the NPDES permit requirement under the CWA and does not change how pesticide applications are addressed under FIFRA. H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). The only effect of this rule is to identify two circumstances in which the application of a pesticide to waters of the United States consistent with all relevant requirements under FIFRA does not constitute the discharge of a pollutant that requires a NPDES permit under the Clean Water Act. I. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standard bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This rulemaking does not involve technical standards. J. Congressional Review Act The Congressional Review Act, 5 U.S.C. 801 *et seq.* , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register** . A major rule cannot take effect until 60 days after it is published in the **Federal Register** . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective January 26, 2007. List of Subjects in 40 CFR Part 122 Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous substances, Reporting and recordkeeping requirements, Water pollution control. Dated: November 20, 2006. Stephen L. Johnson, Administrator. For the reasons set forth in the preamble, chapter I of title 40 of the Code of Federal Regulations is to be amended as follows: PART 122—EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 1. The authority citation for part 122 continues to read as follows: Authority: The Clean Water Act, 33 U.S.C. 1251 *et seq.* 2. Section 122.3 is amended by adding paragraph
(h)to read as follows: § 122.3 Exclusions.
(h)The application of pesticides consistent with all relevant requirements under FIFRA (i.e., those relevant to protecting water quality), in the following two circumstances:
(1)The application of pesticides directly to waters of the United States in order to control pests. Examples of such applications include applications to control mosquito larvae, aquatic weeds, or other pests that are present in waters of the United States.
(2)The application of pesticides to control pests that are present over waters of the United States, including near such waters, where a portion of the pesticides will unavoidably be deposited to waters of the United States in order to target the pests effectively; for example, when insecticides are aerially applied to a forest canopy where waters of the United States may be present below the canopy or when pesticides are applied over or near water for control of adult mosquitoes or other pests. [FR Doc. E6-20002 Filed 11-24-06; 8:45 am] BILLING CODE 6560-50-P COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED 41 CFR Parts 51-1, 51-2, 51-3, 51-4, and 51-6 RIN 3037-AA07 AbilityOne Program AGENCY: Committee for Purchase From People Who Are Blind or Severely Disabled. ACTION: Final rule; change to program name. SUMMARY: The Committee for Purchase From People Who Are Blind or Severely Disabled (the Committee) has deliberated and voted to change the name of the JWOD Program to the AbilityOne Program. The name of the program is being changed to AbilityOne to give a stronger, more unified identity to the program and to show a connection between the program name and the abilities of those who are blind or have other severe disabilities. DATES: *Effective Date:* November 27, 2006. ADDRESSES: The Committee office is located at Jefferson Plaza 2, Suite 10800, 1421 Jefferson Davis Highway, Arlington, VA 22202-3259. FOR MORE INFORMATION CONTACT: Kimberly Zeich, Director, JWOD Business Development, by telephone
(703)603-7740, or by facsimile at
(703)603-0030, or by mail at the Committee for Purchase From People Who Are Blind or Severely Disabled, 1421 Jefferson Davis Hwy, Suite 10800, Arlington, VA 22202-3259. SUPPLEMENTARY INFORMATION: The Committee's statutory authority includes making rules and regulations necessary to carry out the Javits-Wagner-O'Day
(JWOD)Act (41 U.S.C. 46-48c). The program implementing the Act provides employment opportunities for people who are blind or have other severe disabilities in the manufacture and delivery of products and services to the Federal Government. The Committee has designated two Central Nonprofit Agencies (CNAs), National Industries for the Blind
(NIB)and NISH (serving people with a wide range of disabilities) to provide technical and financial assistance to qualified nonprofit agencies nationwide. These qualified nonprofit agencies employ the blind or severely disabled in the fulfillment of product and service requirements deemed suitable by the Committee and placed on its Procurement List. In the 1980s, the Committee informally adopted the “JWOD” acronym to serve as a program and umbrella name, and subsequently made changes to its regulations referencing the JWOD Program. However, the Committee has long recognized that confusion regarding the JWOD Program and the roles and identities of the governing and participating organizations continues to exist among Federal customers and other key audiences, including advocates for people with disabilities, the business community, elected representatives and the workforce. The Committee believes that a more unified program identity, as part of a strategic communications plan, would be more effective in communicating the program's mission and benefits to many diverse stakeholders. The Committee intends to establish a national program identity or affiliation that participating nonprofit agencies can use in conjunction with their local identities and existing name recognition. Working closely with its CNAs, the Committee conducted a strategic program identity exploration, to include name research with several stakeholder groups. The study found that the JWOD acronym is not a descriptive or compelling name, and it does not clearly communicate information about the program, its workforce or its benefits. The JWOD acronym had relatively high recognition among Government employees who make small purchases with purchase cards, but not as high as the recognition of SKILCRAFT®, the registered trademark licensed and managed by National Industries for the Blind. The SKILCRAFT® name is used on most of the common, retail-type items in the JWOD Program and is not affected by this rulemaking. The JWOD name did not have high levels of recognition among Government program managers, or audiences outside of the Executive Branch such as Congress, the disability community or the public. It was further noted that the JWOD Act is scheduled to be routinely codified in the U.S. Code, which would result in a repeal of the underlying legislation and which would further distance the acronym “JWOD” from the employment program that will continue. The Committee considered the strengths and weaknesses of the current program name, the estimated benefits and costs of a name change, and the risk mitigation strategies that would minimize both the potential for loss of current program familiarity and the potential financial burden on participating nonprofit agencies that currently use the JWOD name on their business materials. It also looked at the availability of appropriate naming alternatives from an effective communication and trademark perspective. After an informed and deliberative process, and with full participation, a majority of Committee members voted in favor of changing the JWOD Program name. In deciding to change the JWOD name, the Committee recognized that success in the 21st century requires an improved ability to communicate the employment mission and the customer value delivered by the program. While the enabling Act remains critical to success, changes in the competitive and Federal procurement environment require the Committee to build a program brand identity beyond that legislation in order to fulfill its mission. The Committee sought a new program name that would best reflect the workforce comprised of people who are blind or who have other severe disabilities; a name that would sound more official or professional than “JWOD,” that would align with the program's value proposition and that would be expansive enough to cover all participating organizations, among other criteria. In September 2006, the Committee selected “AbilityOne” to be the future program name. AbilityOne has a much closer linkage to the program's workforce and capabilities, and alludes to the intersection of all program participants into one umbrella organization and one total solution. In order to ensure that all program stakeholders who are familiar with the JWOD name are able to recognize and transfer their support to the new program name, the Committee will continue to use the JWOD acronym as a part of the program name for a transition period of at least 18 months. The transition period will enable participating organizations to deplete business materials that contain the JWOD name and to begin using the new name voluntarily when they refresh their materials as part of the normal supply cycle. *Executive Order 12866:* This agency has made the determination that this rule is not significant for the purposes of EO 12866. *Administrative Procedure Act:* The Committee finds under 5 U.S.C. 553(b)(3)(A) that the statute does not apply to interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice. This final rule simply changes the name of the program from the JWOD Program to the AbilityOne Program. Further, pursuant to 5 U.S.C. 553 (b)(3)(A), this rule of agency organization, procedure and practice is not subject to the requirement to provide prior notice and an opportunity for public comment. The Committee also finds that the 30-day delay in effectiveness, required under 5 U.S.C. 553(d), is inapplicable because this rule is not a substantive rule. *Regulatory Flexibility Act:* Because notice and opportunity for comment are not required pursuant to 5 U.S.C. 553 or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) are inapplicable. Therefore, a regulatory flexibility analysis is not required and has not been prepared. List of Subjects 41 CFR Part 51-1 Government procurement, Individuals with disabilities. 41 CFR Part 51-2 Government procurement, Individuals with disabilities, Organization and functions (Government agencies). 41 CFR Part 51-3 Government procurement, Individuals with disabilities. 41 CFR Part 51-4 Government procurement, Individuals with disabilities, Reporting and recordkeeping requirements. 41 CFR Part 51-6 Government procurement, Individuals with disabilities. For the reasons set out in the preamble, Parts 51-1, 51-2, 51-3, 51-4, 51-6 of Title 41, Chapter 51 of the Code of Federal Regulations are amended as follows: PART 51-1—GENERAL 1. The authority citation for part 51-1 continues to read as follows: Authority: 41 U.S.C. 46-48c § 51-1.3 [Amended] 2. In § 51-1.3, revise the definition heading “JWOD Program” to read “AbilityOne Program”. PART 51-2—COMMITTEE FOR PURCHASE FROM PEOPLE WHO ARE BLIND OR SEVERELY DISABLED 3. The authority citation for part 51-2 continues to read as follows: Authority: 41 U.S.C. 46-48c § 51-2.2 [Amended] 4. Remove the words “JWOD Program” and add in their place the words “AbilityOne Program” wherever they occur in the following places: a. Section 51-2.2(e); and b. Section 51-2.2(f). PART 51-3—CENTRAL NONPROFIT AGENCIES 5. The authority citation for part 51-3 continues to read as follows: Authority: 41 U.S.C. 46-48c § 51-3.2 [Amended] 6. Remove the words “JWOD Program” from the heading of § 51-3.2 and add in their place the words “AbilityOne Program”. § 51-3.5 [Amended] 7. In § 51-3.5, remove the words “JWOD Program” and add in their place “AbilityOne Program”. PART 51-4—NONPROFIT AGENCIES 8. The authority citation for part 51-4 continues to read as follows: Authority: 41 U.S.C. 46-48c § 51-4.1 [Amended] 9. In § 54-4.1, remove the words “JWOD Program” and add in their place the words “AbilityOne Program”. § 51-4.3 [Amended] 10. In § 51-4.3, remove the words “JWOD Program” and add in their place the words “AbilityOne Program” in paragraphs
(b)introductory text, (b)(9), and
(c)introductory text. PART 51-6—PROCUREMENT PROCEDURES 11. The authority citation for part 51-6 continues to read as follows: Authority: 41 U.S.C. 46-48c § 51-6.3 [Amended] 12. In § 51-6.3(b), remove the words “JWOD Program” and add in their place the words “AbilityOne Program”. § 51-6.8 [Amended] 13. In § 51-6.8(e), remove the words “JWOD Program” and add in their place the words “AbilityOne Program”. Dated: November 20, 2006. Leon A. Wilson, Jr., Executive Director. [FR Doc. E6-19971 Filed 11-24-06; 8:45 am] BILLING CODE 6353-01-P 71 227 Monday, November 27, 2006 Proposed Rules DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Parts 35 and 37 [Docket Nos. RM05-25-000 and RM05-17-000] Preventing Undue Discrimination and Preference in Transmission Service November 15, 2006. AGENCY: Federal Energy Regulatory Commission, DOE. ACTION: Notice of Request for Supplemental Comments. SUMMARY: On May 19, 2006, the Commission issued a Notice of Proposed Rulemaking
(NOPR)in this proceeding. *Preventing Undue Discrimination and Preference in Transmission Service* , 71 FR 32636 (June 6, 2006). In the NOPR, the Commission proposed, inter alia, to modify the redispatch obligations associated with long-term firm point-to-point service and, in addition, sought comments on whether the creation of a conditional firm product would represent a superior approach to address circumstances under which firm transmission service can be provided in most, but not all, of the hours of the request. Based on the comments received in response to the NOPR, the Commission is seeking further comment on the following two topics: the proposal of the Transparent Dispatch Advocates for transmission providers to post redispatch cost information and provide real-time redispatch; and specific questions related to the provision of conditional firm service. DATES: Comments are due December 15, 2006. ADDRESSES: You may submit comments, identified by Docket Nos. RM05-25-000 and RM05-17-000, by one of the following methods: • *Agency Web Site: http://www.ferc.gov.* Follow the instructions for submitting comments via the eFiling link found in the Comment Procedures section of the preamble of the May 19, 2006 NOPR. • *Mail:* Commenters unable to file comments electronically must mail or hand deliver an original and 14 copies of their comments to: Federal Energy Regulatory Commission, Office of the Secretary, 888 First Street, NE., Washington, DC, 20426. Please refer to the Comment Procedures section of the preamble of the May 19, 2006 NOPR for additional information on how to file paper comments. FOR FURTHER INFORMATION CONTACT: Daniel Hedberg, Office of Energy Markets and Reliability, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426,
(202)502-6243, *daniel.hedberg@ferc.gov.* Jennifer Amerkhail, Office of Energy Markets and Reliability, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426,
(202)502-8650, *jennifer.amerkhail@ferc.gov.* Mason Emnett, Office of the General Counsel—Energy Markets, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426,
(202)502-6540, *mason.emnett@ferc.gov.* SUPPLEMENTARY INFORMATION: Notice of Request for Supplemental Comments On May 19, 2006, the Commission issued a Notice of Proposed Rulemaking
(NOPR)in this proceeding. *Preventing Undue Discrimination and Preference in Transmission Service* , 71 FR 32,636 (June 6, 2006), FERC Stats. & Regs. ¶ 32,603 (2006). In the NOPR, the Commission proposed, *inter alia* , to modify the redispatch obligations associated with long-term firm point-to-point service and, in addition, sought comments on whether the creation of a conditional firm product would represent a superior approach to address circumstances under which firm transmission service can be provided in most, but not all, of the hours of the request. Based on the comments received in response to the NOPR, the Commission is seeking further comment on the following two topics: 1. Transparent Dispatch Advocates
(TDA)Proposal In Reply Comments submitted on September 20, 2006, the TDA submitted a proposal that, among other things, would require transmission providers to:
(1)Post the real-time cost estimate of providing redispatch service from their resources at congested locations;
(2)accept bids from third parties that choose to offer and are capable of providing redispatch service; and
(3)provide real-time redispatch to resolve transmission constraints. In order to provide an opportunity for others to respond to the TDA proposal, the Commission is allowing an additional period to file comments on the proposal generally and, more specifically, the following questions: • Is the TDA proposal required to remedy undue discrimination? • What are the implementation impediments to requiring greater transparency of redispatch cost information? For example, if long-term point-to-point service is granted based on redispatch of the transmission provider's generation, would it be reasonable to require the transmission provider to post its daily or hourly redispatch cost for the constraint implicated by that request? • Are there confidentiality or anticompetitive issues associated with requiring posting of this type of information? Are any concerns alleviated or exacerbated if the transmission provider were required to post the differential in costs between redispatched generators? • Would the TDA proposal for the transmission provider to provide real-time redispatch using third party resources require the establishment of limited markets and, if so, what are the costs or benefits of doing so? 2. Conditional Firm Service In the NOPR, the Commission sought comment on whether a new conditional firm transmission service would provide a better means than redispatch for addressing circumstances in which insufficient transfer capacity exists to grant a long-term point-to-point request. Subsequent to the NOPR, the Commission held a technical conference on October 12, 2006, that addressed, among other things, conditional firm service. In addition, Commission staff has held informal outreach sessions with industry stakeholders on conditional firm service. During these discussions, certain additional issues regarding conditional firm service have arisen that merit further comment by the industry. The Commission invites comments on the following issues, to the extent supplemental comments add to the record rather than repeat arguments already made: • Should conditional firm be offered as an alternative to redispatch or are they complementary services? For example, if redispatch is not available, should the transmission provider nevertheless be required to offer conditional firm service if available? • Should conditional firm service be available for all long-term requests (including those of 20-30 years) or should it be offered only as a “bridge” service where the customer agrees to pay for transmission system upgrades and conditional firm service is provided until those relevant upgrades are constructed? For example, for a 20-year request for service, should the transmission provider be required to offer conditional firm service only during the first few years until relevant upgrades are constructed? • Do limitations on system modeling present problems in offering conditional firm service over long periods (e.g., 10-30 years)? For example, do standard modeling techniques make it easier to analyze system conditions in the near term (e.g., 1-5 years) than over the long term (e.g., 10-30 years)? • If conditional firm service is considered as a “bridge” product, should special rules apply when the necessary upgrades are extremely expensive (e.g., 10 times the embedded cost rate)? • If any necessary upgrades produce “lumpy” capacity (e.g., a request for 100 MW of point-to-point service results in upgrades that create 1,000 MW of additional flowgate capacity), how should the lumpy capacity be handled? Should the costs be assigned exclusively to the requesting customer or, alternatively, be shared with other customers? If costs are assigned to the requesting customers, should it obtain rights to the lumpy capacity that can be resold in the marketplace? Alternatively, could a “bridging” application of conditional firm service even out the “lumpiness” of the upgrade requirement by permitting deferral of the upgrade until load growth or new customers are prepared to absorb and help pay for the excess capacity from the upgrade and, if so, how could the transmission provider implement such a mechanism? • In responding to a request for conditional firm service, should the transmission provider be required to provide customers with a choice between conditional curtailment based on specified system conditions and the maximum number of hours per year? • Should conditional firm service qualify as a network resource when the associated resource is imported by a network customer on an adjacent system? Commenters are invited to file supplemental comments with the Commission on or before December 15, 2006. Commenters are invited to file joint supplemental comments in lieu of individually-filed comments. The Commission strongly discourages repetition of prior arguments. By direction of the Commission. Magalie R. Salas, Secretary. [FR Doc. E6-19998 Filed 11-24-06; 8:45 am] BILLING CODE 6717-01-P DEPARTMENT OF DEFENSE Office of the Secretary [DOD-2006-HA-0210; RIN 0720-AB12] 32 CFR Part 199 TRICARE; TRICARE Retiree Dental Program
(TRDP)Basic Benefit Descriptions and Administrative Corrections AGENCY: Office of the Secretary, DoD. ACTION: Proposed rule. SUMMARY: This proposed rule amends TRICARE Retiree Dental Program
(TRDP)Basic benefit descriptions by replacing specific American Dental Association
(ADA)dental procedure codes and nomenclature with general benefit categories and descriptions. This revision is necessary to keep the regulation current, since dental procedure codes are added, revised, and deleted on a regular basis. This proposed rule does not change or eliminate any benefits that are currently available under the TRDP program. This proposed rule also revises several incorrect, obsolete, or historical terms pertaining to the TRICARE program. DATES: Written comments received at the address indicated below by January 26, 2007 will be accepted. ADDRESSES: You may submit comments, identified by docket number and/or RIN number and title, by any of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • Mail: Federal Docket Management System Office, 1160 Defense Pentagon, Washington, DC 20301-1160. *Instructions:* All submissions received must include the agency name and docket number or Regulatory Information Number
(RIN)for this **Federal Register** document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at *http://regulations.gov* as they are received without change, including any personal identifiers or contact information. FOR FURTHER INFORMATION CONTACT: Debra Hatzel, Program Requirements Division, TRICARE Management Activity, telephone
(303)676-3572. SUPPLEMENTARY INFORMATION: This proposed rule amends TRICARE Retiree Dental Program
(TRDP)Basic benefit descriptions by removing specific American Dental Association
(ADA)dental procedure codes and nomenclature, and replacing them with general benefit categories and descriptions from the most recent Current Dental Terminology
(CDT)Manual (CDT-2005). This action is required because dental procedure codes and nomenclature are added, revised, and deleted by the ADA every two years; when this occurs, the regulation must also be revised to reflect the new codes and nomenclature. Maintaining specific procedure codes and nomenclature in the regulation is unnecessary, since the TRDP contract and TRDP marketing materials (available at *http://www.tricare.osd.mil/dental/dm2.cfm* ) already contain detailed benefit descriptions. Also, the TRDP contractor and enrollees are notified when the Government directs any changes to TRDP benefits, limits, or exclusions. The TRDP contract and TRDP marketing materials will continue to be the primary vehicles for communicating specific benefit information to the TRDP contractor and beneficiaries. Removal of specific procedure codes and nomenclature from this section does not change or eliminate any benefits that are currently available under the TRDP. The general categories of benefits that are listed in this proposed rule will be adjusted periodically to conform to the current CDT Manual. Although there are many similarities between the TRDP and the TRICARE Dental Program (TDP), the benefits are not identical. Also, there are different dental benefits available under the TRDP Basic program and the TRDP Enhanced program. The general benefit categories in this TRDP proposed rule differ from the TDP benefit categories listed in 32 CFR 199.13. This variance exists because some of the benefits offered under the TDP are not benefits under the TRDP Basic program (e.g., prosthodontic and orthodontic services), and because the TDP benefit categories were derived from an earlier version of the CDT Manual. This proposed rule also revises several incorrect, obsolete or historical terms; specifically, “Director, OCHAMPUS” is revised to “Director, TRICARE Management Activity”; “Assistant Secretary of Defense (Human Affairs)” is revised to “Assistant Secretary of Defense (Health Affairs)”; “Active Duty Dependents Dental Program” is revised to “TRICARE Dental Program”; “CHAMPUS” is revised to “TRICARE/CHAMPUS”; and “OCHAMPUS” is revised to “TRICARE Management Activity.” Regulatory Procedures Executive Order 12866 directs agencies to assess all costs and benefits available, regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity. The Order classifies a rule as a significant regulatory action requiring review by the Office of Management and Budget if it meets any one of a number of specified conditions, including having an annual effect on the national economy of $100 million or more, creating a serious inconsistency or interfering with an action of another agency, materially altering the budgetary impact of entitlements or the rights of entitlement recipients, or raising novel legal or policy issues. DoD has examined the economic, legal, and policy implications of this proposed rule and has concluded that it is not a significant regulatory action. The changes set forth in the proposed rule are minor administrative revisions to the existing regulation which do not change the basic TRDP benefit structure. This is neither a significant regulatory action under Executive Order 12866, nor would it have a significant impact on small entities. Regulatory Flexibility Act
(RFA)requires that each Federal Agency prepare and make available for public comment, a regulatory flexibility analysis when the agency issues a Regulation which would have a significant impact on a substantial number of small entities. This proposed rule is not a major rule under the Congressional Review Act because its economic impact will be less than $100 million. Executive Order 13132 requires that each Federal Agency shall consult with State and local officials and obtain their input if a rule has federalism implications which have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have examined the impact of the proposed rule under Executive Order 13132 and it does not have policies that have federalism implications that would have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government; therefore, consultation with State and local officials is not required. In addition, this proposed rule does not impose new information collection requirements for purposes of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3511). List of Subjects in 32 CFR Part 199 Claims, Dental health, Health care, Health insurance, Individuals with disabilities, Military personnel. Accordingly, 32 CFR part 199 is proposed to be amended as follows: PART 199—CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED SERVICES (CHAMPUS) 1. The authority citation for part 199 continues to read as follows: Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55. 2. Section 199.22 is proposed to be amended by revising the last sentence of paragraph (b)(1), paragraph (b)(4), paragraph (c), paragraph (d)(1)(v), the first sentence of paragraph (d)(4)(ii), paragraph
(f)introductory text, paragraph (f)(1) introductory text, paragraphs (f)(1)(i) through (f)(1)(vii), first sentence of paragraph (f)(3) introductory text, paragraph (g), and the first sentence of paragraph (k); and by removing paragraphs (f)(1)(viii) and (f)(1)(ix) to read as follows: § 199.22 TRICARE Retiree Dental Program (TRDP).
(b)* * *
(1)* * * Additional services comparable to those contained in paragraph (e)(2) of § 199.13 may be covered pursuant to benefit policy decisions made by the Director, TRICARE Management Activity, or designee.
(4)Except as otherwise provided in this section or by the Assistant Secretary of Defense (Health Affairs) or designee, the TRDP is administered in a manner similar to the TRICARE Dental Program under § 199.13 of this part.
(c)Except as may be specifically provided in this section, to the extent terms defined in § 199.2 and § 199.13(b) are relevant to the administration of the TRICARE Retiree Dental Program, the definitions contained in § 199.2 and § 199.13(b) shall apply to the TRDP as they do to TRICARE/CHAMPUS and the TRICARE Dental Program.
(d)* * *
(1)* * *
(v)The unremarried surviving spouse and eligible child dependents of a deceased member who died while in status described in paragraph (d)(1)(i) or paragraph (d)(1)(ii) of this section; the unremarried surviving spouse and eligible child dependents who receive a surviving spouse annuity; or the unremarried surviving spouse and eligible child dependents of a deceased member who died while on active duty for a period of more than 30 days and whose eligible dependents are not eligible or no longer eligible for the TRICARE Dental Program.
(4)* * *
(ii)*Enrollment period for enhanced benefits.* The initial enrollment period for enhanced benefit coverage described in paragraph (f)(2) of this section shall be established by the Director, TRICARE Management Activity, or designee, when such coverage is offered, to be a period of not less than 12 months and not more than 24 months. * * *
(f)*Plan benefits.* The Director, TRICARE Management Activity, or designee, may modify the services covered by the TRDP to the extent determined appropriate based on developments in common dental care practices and standard dental programs. In addition, the Director, TRICARE Management Activity, or designee, may establish such exclusions and limitations as are consistent with those established by dental insurance and prepayment plans to control utilization and quality of care for the services and items covered by the TRDP.
(1)The minimum TRDP benefit is basic dental care to include diagnostic services, preventive services, restorative services, endodontic services, periodontic services, oral surgery services, and other general services. The following is the minimum TRDP covered dental benefit:
(i)*Diagnostic services.*
(A)Clinical oral examinations.
(B)Radiographs and diagnostic imaging.
(C)Tests and laboratory examinations.
(ii)*Preventive services.*
(A)Dental prophylaxis.
(B)Topical fluoride treatment (office procedure).
(C)Sealants.
(D)Other preventive services.
(E)Space maintenance.
(iii)*Restorative services.*
(A)Amalgam restorations.
(B)Resin-based composite restorations.
(C)Other restorative services.
(iv)*Endodontic services.*
(A)Pulp capping.
(B)Pulpotomy and pulpectomy.
(C)Root canal therapy.
(D)Apexification and recalcification procedures.
(E)Apicoectomy and periradicular services.
(F)Other endodontic procedures.
(v)*Periodontic Services.*
(A)Surgical services.
(B)Periodontal services.
(vi)*Oral surgery.*
(A)Extractions.
(B)Surgical extractions.
(C)Alveoloplasty.
(D)Biopsy.
(E)Other surgical procedures.
(vii)*Other general services.*
(A)Palliative (emergency) treatment of dental pain.
(B)Therapeutic drug injection.
(C)Other drugs and/or medicaments.
(D)Treatment of postsurgical complications.
(3)*Alternative course of treatment policy.* The Director, TRICARE Management Activity, or designee, may establish, in accordance with generally accepted dental benefit practices, an alternative course of treatment policy which provides reimbursement in instances where the dentist and TRDP enrollee select a more expensive service, procedure, or course of treatment than is customarily provided. * * *
(g)*Maximum coverage amounts.* Each enrollee is subject to an annual maximum coverage amount for non-orthodontic dental benefits and, if an orthodontic benefit is offered, a lifetime maximum coverage amount for orthodontics as established by the Director, TRICARE Management Activity, or designee.
(k)All levels of appeals and grievances established by the Contractor for internal review shall be exhausted prior to forwarding to TRICARE Management Activity for a final review. * * * Dated: November 20, 2006. L.M. Bynum, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. E6-19975 Filed 11-24-06; 8:45 am] BILLING CODE 5001-06-P DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 36 RIN 2900-AL65 Loan Guaranty: Loan Servicing and Claims Procedures Modifications AGENCY: Department of Veterans Affairs. ACTION: Supplemental notice of proposed rulemaking; reopening of comment period. SUMMARY: This document provides supplemental notice regarding a proposal to amend the Department of Veterans Affairs
(VA)Loan Guaranty regulations related to several aspects of the servicing and liquidating of guaranteed housing loans in default, and submission of guaranty claims by loan holders. It provides specific information regarding the computer-based system that VA proposes to implement as part of the loan servicing and claims procedure modifications in this rulemaking. VA is reopening the comment period for the limited purpose of accepting public comments concerning the supplemental information provided in this notice. DATES: Comments must be received on or before December 11, 2006. All comments previously received following publication of the proposed rule referenced above are being considered and do not need to be resubmitted. ADDRESSES: Written comments may be submitted through *www.regulations.gov* ; by mail or hand-delivery to the Director, Regulations Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., NW, Room 1068, Washington, DC 20420; or by fax to
(202)273-9026. Comments should indicate that they are submitted in response to “RIN 2900-AL65.”; Copies of comments received will be available for public inspection in the Office of Regulation Policy and Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday (except holidays). Please call
(202)273-9515 for an appointment. In addition, during the comment period, comments may be viewed online through the Federal Document Management System (FDMS). Comments previously received regarding the notice of proposed rulemaking for RIN 2900-AL65, published February 18, 2005 (70 FR 8472), will still be considered in the rulemaking process and do not need to be resubmitted. FOR FURTHER INFORMATION CONTACT: Mike Frueh, Assistant Director for Loan Management (261), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue, NW, Washington, DC 20420, at 202-273-7325. (This is not a toll-free telephone number.) SUPPLEMENTARY INFORMATION: VA published a notice of proposed rulemaking in the **Federal Register** on February 18, 2005 (70 FR 8472), to amend regulations concerning the servicing and claims submission requirements on VA-guaranteed home loans. Included in that proposed rule were requirements for reporting information to VA under new 38 CFR 36.4315a. Under the Revised Reporting Requirements preamble heading, 70 FR 8474-8475, VA stated that proposed § 36.4315a would require all loan holders to electronically report information to the Department by use of a computer system, and that VA would be providing more specific information on this system prior to implementation. As VA has progressed in developing the VA Loan Electronic Reporting Interface (VALERI) necessary to receive reports from loan servicers, it has more clearly defined the system events and data elements that would be reported under § 36.4315a and is now ready to submit for public comment this more detailed information on VALERI. VA identifies these events and data elements in the supplementary information that follows. Event Definitions
(1)*Loan paid in full* —when the loan obligation has been fully satisfied by receipt of funds and not a servicing transfer.
(2)*Transfer of ownership* —when the title holder of the property changes.
(3)*Release of liability* —when an obligor has been released from liability.
(4)*Unauthorized transfer of ownership* —when the servicer discovers that the loan has been assumed without prior approval (only on loans originated on or after March 1, 1988).
(5)*SCRA relief filed* —when any obligor on the loan requests or is deemed to be entitled to relief with regard to the loan under the Servicemembers Civil Relief Act (SCRA).
(6)*Partial release of security* —when pursuant to 38 CFR 36.4324, the holder has released the lien on a part of the security for the loan.
(7)*Insurable loss occurred* —when an insurable loss has occurred on the loan.
(8)*Servicing transfer (transferring servicer)* —when a servicer of a loan transfers servicing to a new servicer.
(9)*Servicing transfer (receiving servicer)* —when the new servicer boards the loan.
(10)*Electronic Default Notification (EDN)* —when the loan becomes at least 61 days delinquent.
(11)*Delinquency status* —when the holder notifies VA of any updates to the delinquency information on loans for which an EDN has been submitted.
(12)*Contact information change* —when there is a change to the contact information for current owners or a property or mailing address change.
(13)*Occupancy status change* —when there is a change in property occupancy status.
(14)*Bankruptcy filed* —when any owner files a petition under the Bankruptcy Code.
(15)*Bankruptcy update* —when a significant event related to the bankruptcy has occurred.
(16)*Loss mitigation letter sent* —when the holder sends the loss mitigation letter to the borrower as required by 38 CFR 36.4346(g)(1)(iv).
(17)*Partial payment returned* —when the holder returns a partial payment to the borrower.
(18)*Default cured/loan reinstated* —when a previously reported default (i.e., an EDN was filed) has been cured and the loan reinstated.
(19)*Cure/reinstatement reversal* —when a defaulted loan was reported “default cured/loan reinstated” and it must later be reversed.
(20)*Default reported to credit bureau* —when the holder notifies any of the credit bureaus of a defaulted loan or loan termination.
(21)*Extenuating property circumstances* —when extenuating property circumstances occur.
(22)*Repayment plan approved* —when the holder approves a repayment plan.
(23)*Repayment plan infeasible* —when the holder determines that a repayment plan is not feasible.
(24)*Special forbearance approved* —when the holder approves a special forbearance agreement.
(25)*Special forbearance infeasible* —when the holder determines that a special forbearance agreement is not feasible.
(26)*Loan modification approved* —when the holder approves a loan modification.
(27)*Loan modification complete* —when both the holder and the owner(s) have executed the modification agreement.
(28)*Loan modification infeasible* —when the holder determines the loan modification option infeasible.
(29)*Compromise sale approved* —when the holder approves a compromise sale.
(30)*Compromise sale complete* —when a compromise sale closes.
(31)*Compromise sale infeasible* —when the holder determines the compromise sale option infeasible.
(32)*Deed-in-lieu of foreclosure approved* —when the holder approves a deed-in-lieu of foreclosure.
(33)*Deed-in-lieu of foreclosure complete* —when the holder records the deed-in-lieu of foreclosure.
(34)*Deed-in-lieu of foreclosure infeasible* —when the holder determines the deed-in-lieu of foreclosure option infeasible.
(35)*Foreclosure referral* —when the loan is referred to legal counsel for foreclosure.
(36)*Foreclosure sale scheduled* —when the foreclosure sale is scheduled.
(37)*Substantial equity case* —when the holder determines that equity of at least 25 percent exists per 38 CFR 36.4319a(e).
(38)*Foreclosure sale postponed or cancelled* —when the foreclosure sale is postponed or cancelled.
(39)*Results of sale* —when the foreclosure sale is complete, the holder reports the results of the foreclosure sale.
(40)*Transfer of custody* —when the holder notifies VA of the holder's intent to convey the property.
(41)*Improper transfer of custody* —when the holder discovers that the conveyance of the property to VA was improper.
(42)*Invalid sale results* —when the foreclosure sale is invalid.
(43)*Changed sale results* —when the foreclosure sale results were changed.
(44)*Confirmed sale date with no transfer of custody* —when the loan is terminated, the property is not conveyed, and the property is located in a confirmation/ratification of sale state.
(45)* Basic claim information* —when the holder files a claim under guaranty.
(46)*Refunding Settlement* —when VA refunds a loan and the holder reports the tax and insurance information. Data Element Definitions Event name Data elements Business definition of data element Header information for all event reporting VA loan number 12 position unique identifier for each loan guaranteed by VA. The VA Loan Number consists of a two-position numeric code for the regional office which has jurisdiction over the loan (OJ), a two-position numeric code for the regional office which originated the loan (OO), a one-position code for the type of loan (T), and a seven-position serial number or loan number (NNNNNNN). The format is OJOOTNNNNNNN. VALERI uses the twelve-digit VA loan number as the primary means of identifying loan data. Header information Date of the loan Month, day, and year that the loan originated. Header information Original loan amount Total amount of principal owed on the mortgage at loan origination before any payments are made on the loan. Header information Property state abbreviation The state abbreviation of the expanded property address. Header information Current servicer identification number Unique VA-issued number for the servicer location that is responsible for billing, collecting and disbursing payments, and filing reports on the VA loan. VALERI also uses this as secondary loan identification data, as needed, to identify records. Header information Servicer loan number Unique servicer-issued number given to the VA loan for record keeping on the servicer system. VALERI also uses this as secondary loan identification data, as needed, to identify records. Header information Unique event ID Unique event identification number for event the servicer is reporting. Monthly loan status update Unpaid principal balance Present portion of the loan not yet repaid, exclusive of interest or other charges. Monthly loan status update Payment due date (a.k.a. date of first uncured default) Month, day, and year of the earliest payment not fully satisfied by the proper application of available credits or deposits. Loan paid in full Date loan was paid in full Month, day, and year of full satisfaction of a guaranteed loan. Transfer of ownership Date of transfer of ownership Month, day, and year that loan is assumed by another party (date of settlement). Transfer of ownership Last name of transferee, if applicable Last name of individual assuming the loan; reported if an individual and not an entity is assuming the loan. Transfer of ownership First name of transferee, if applicable First name of individual assuming the loan; reported if an individual and not an entity is assuming the loan Transfer of ownership Middle initial of transferee, if applicable Middle initial of individual assuming the loan; reported if an individual and not an entity is assuming the loan. Transfer of ownership Suffix of transferee, if applicable Suffix (Jr., Sr., III, etc.), if any, of individual assuming loan; reported if an individual and not an entity is assuming the loan. Transfer of ownership Social security number of transferee, if applicable Social security number of individual assuming loan; reported if an individual and not an entity is assuming the loan. Transfer of ownership Name of entity assuming loan, if applicable Name of entity assuming loan, if applicable; reported if an entity and not an individual is assuming the loan. Transfer of ownership Taxpayer identification number, if applicable Taxpayer identification number of entity assuming the loan; reported if an entity and not an individual is assuming the loan. Transfer of ownership Last name of co-transferee, if applicable Last name of second individual assuming the loan; reported if there is a co-transferee. Transfer of ownership First name of co-transferee, if applicable First name of second individual assuming the loan; reported if there is a co-transferee. Transfer of ownership Middle initial of co-transferee, if applicable Middle initial of second individual assuming the loan; reported if there is a co-transferee. Transfer of ownership Suffix of co-transferee, if applicable Suffix (Jr., Sr., III, etc.), if any, of second individual assuming loan; reported if there is a co-transferee. Transfer of ownership Social security number of co-transferee, if applicable Social security number of second individual assuming loan; reported if there is a co-transferee. Release of liability Date of release Month, day, and year on which the former obligor is no longer responsible for the loan. Unauthorized transfer of ownership Date servicer discovers unauthorized transfer Month, day, and year servicer discovers that a transfer of ownership occurred without prior approval by VA and/or servicer. SCRA relief filed Date SCRA relief requested Month, day, and year assistance under the SCRA was requested (explicit request or discovery of eligibility during servicing). SCRA relief filed Effective date of SCRA relief (can be prior to request date) Month, day, and year that the veteran became eligible for assistance under the SCRA. SCRA relief filed Expected SCRA relief end date Month, day, and year the relief is expected to end pursuant to the requirements of the Act. Partial release of security Date partial release of security document was executed Month, day, and year that the security document releasing a portion of the secured property is executed. Partial release of security Amount of the proceeds from the partial release of security that are applied to the outstanding loan balance Amount that is applied to the outstanding loan balance from the partial release of security; if the loan to value ratio is greater than or equal to 80 percent, the servicer must apply sufficient proceeds from the release to the outstanding loan balance to bring LTV to less than 80 percent. Partial release of security Amount of consideration offered for the property Amount offered for the portion of the security being released. Partial release of security Date applied to principal Month, day, and year that proceeds from the partial release of security are applied to the loan balance. Partial release of security Unpaid principal balance after application of proceeds Loan balance that is outstanding after application of proceeds from the partial release of security. Partial release of security Value of remaining security Appraised value of the remaining security after the release is completed. Insurable loss occurred Type of damage Type of property damage that resulted in an insurance claim being filed. Insurable loss occurred Fire Damage Type of property damage that resulted in an insurance claim being filed is fire damage. Insurable loss occurred Neglect Type of property damage that resulted in an insurance claim being filed is neglect. Insurable loss occurred Vandalized Type of property damage that resulted in an insurance claim being filed is property vandalism. Insurable loss occurred Freeze Type of property damage that resulted in an insurance claim being filed is the result of a freeze. Insurable loss occurred Storm Type of property damage that resulted in an insurance claim being filed is caused by a storm. Insurable loss occurred Flood Type of property damage that resulted in an insurance claim being filed is flood damage. Insurable loss occurred Unknown Type of property damage that resulted in an insurance claim being filed is unknown. Insurable loss occurred Hurricane Type of property damage that resulted in an insurance claim being filed is caused by a hurricane. Insurable loss occurred Hail Type of property damage that resulted in an insurance claim being filed is hail damage. Insurable loss occurred Tornado Type of property damage that resulted in an insurance claim being filed is tornado damage. Insurable loss occurred Wind Type of property damage that resulted in an insurance claim being filed is wind damage. Insurable loss occurred Mud/Landslide Type of property damage that resulted in an insurance claim being filed is mud or landslide damage. Insurable loss occurred Earthquake Type of property damage that resulted in an insurance claim being filed is earthquake damage. Insurable loss occurred Boiler Explosion Type of property damage that resulted in an insurance claim being filed was caused by a boiler explosion. Insurable loss occurred Untypical Damage Type of property damage that resulted in an insurance claim being filed is other than the typical specified reasons. Insurable loss occurred Date damage discovered Month, day, and year the damage is discovered by the servicer. Insurable loss occurred Date insurance claim filed Month, day, and year that the insurance claim for damage is filed, either by the borrower or the servicer. Insurable loss occurred Total loss (Y/N) Decision made by the insurance company as to whether or not the property can be repaired. Servicing transfer (transferring servicer) Servicing release date Month, day, and year that a servicer transfers responsibility for servicing a guaranteed loan to another servicer. Servicing transfer (transferring servicer) Name of new servicer Name of servicer receiving responsibility for servicing a guaranteed loan. Servicing transfer (receiving servicer) Date loan acquired Month, day, and year on which a servicer became responsible for servicing a guaranteed loan. Servicing transfer (receiving servicer) Previous servicer loan number Loan number associated with the loan on the previous servicer's system. Electronic default notification Date of first payment on the original loan Month, day, and year of the first scheduled payment on the loan (per the loan instruments). Electronic default notification Payment due date Month, day, and year of the earliest payment not fully satisfied by the proper application of available credits or deposits. Electronic default notification Property address line 1 The first line of the expanded property address. Electronic default notification Property address line 2 The second line of the expanded property address. Electronic default notification Property address unit number The unit number of the expanded property address. Electronic default notification Property address city The city name of the expanded property address. Electronic default notification Property address zip code A group of fields containing the zip code. Electronic default notification Property address suffix The zip code suffix of the expanded property address. Electronic default notification Property address state abbreviation The state abbreviation of the expanded property address. Electronic default notification Last name of current owner, if applicable Surname of the individual who currently owns the property; if owner is an individual and not an entity. Electronic default notification First name of current owner, if applicable First name of the individual who currently owns the property. Electronic default notification Middle initial of current owner, if applicable First letter of the middle name, if any, of the individual who currently owns the property; if owner is an individual and not an entity. Electronic default notification Suffix of current owner, if applicable Suffix (Jr., Sr., III, etc.), if any, of the individual who currently owns the property; if owner is an individual and not an entity. Electronic default notification Social security number of current owner; if current owner is an individual Unique SSA-issued number assigned to the individual who currently owns the property; if owner is an individual and not an entity. Electronic default notification Last name of current co-owner, if applicable Surname of the individual who currently co-owns the property, if applicable. Electronic default notification First name of current co-owner, if applicable First name of the individual who currently co-owns the property, if applicable. Electronic default notification Middle initial of current co-owner, if applicable First letter of the middle name, if any, of the individual who currently co-owns the property, if applicable. Electronic default notification Suffix of current co-owner, if applicable Suffix (Jr., Sr., III, etc.), if any, of the individual who currently co-owns the property, if applicable. Electronic default notification Social security number of current co-owner; if applicable Unique SSA-issued number assigned to the individual who currently co-owns the property, if applicable. Electronic default notification Name of entity that is current owner, if applicable Name of entity that currently owns the property, if owner is an entity and not an individual. Electronic default notification Taxpayer identification number, if current owner is an entity Unique IRS-issued number assigned to the entity who currently owns the property, if owner is an entity and not an individual. Electronic default notification Mailing address line 1 (if different from property address) First line of the mailing address of current owners. Electronic default notification Mailing address line 2 (if different from property address) Second line of the mailing address of current owners. Electronic default notification Mailing address suffix (if different from property address) The zip code suffix of the mailing address. Electronic default notification Mailing address unit number (if different from property address) The unit number of the expanded mailing address. Electronic default notification Mailing address city (if different from property address) The city name of the expanded mailing address. Electronic default notification Mailing address zip code (if different from property address) A group of fields containing the zip code +4 of the expanded mailing address. Electronic default notification Mailing address state abbreviation (if different from property address) The state abbreviation of the expanded mailing address. Electronic default notification Interest rate on loan Rate of interest charged on the loan, expressed as a percentage, per the loan instruments. Electronic default notification Unpaid principal balance Present portion of the loan not yet repaid, exclusive of interest or other charges. Electronic default notification Principal and interest (P&I) portion of monthly installment Amount of principal and interest due monthly under the terms of the loan agreement. Electronic default notification Taxes and insurance (T&I) portion of monthly installment Amount of the tax and insurance deposit due monthly under the terms of the loan agreement and determined by the servicer in accordance with Real Estate Settlement Procedures Act (RESPA). Electronic default notification Other portion of monthly installment Amount due monthly that does not pertain to principal and interest, taxes and insurance or late charges due under the terms of the obligation as of notice date (e.g., Homeowner Association
(HOA)fees). Electronic default notification Late charges due Amount due as a result of penalties imposed by the servicer that a borrower must pay when a payment is missed or made after the due date under the terms of the obligation as of notice date. Electronic default notification Occupant of property Status of who currently resides in the property securing the loan obligation, or reason why no one resides there. Electronic default notification Original veteran Individual who signed the loan documents and originated the loan. Electronic default notification Tenant Individual who rents or leases the property securing the loan obligation. Electronic default notification Transferee Individual who purchased the property and may have assumed the loan. Electronic default notification Vacant Property is not occupied by anyone but appears to be maintained and is secure. Electronic default notification Abandoned Property is vacant, is not being maintained, is not offered for sale or rent, and there has been no contact with the current owner. Electronic default notification First phone number (obligor 1) First phone number (obligor 1). Electronic default notification Phone number type for first phone number (obligor 1) Phone number type for first phone number (obligor 1). Electronic default notification Home Home. Electronic default notification Work Work. Electronic default notification Cell Cell. Electronic default notification Second phone number (obligor 1) Second phone number (obligor 1). Electronic default notification Phone number type for second phone number (obligor 1) Phone number type for second phone number (obligor 1). Electronic default notification Home Home. Electronic default notification Work Work. Electronic default notification Cell Cell. Electronic default notification Phone number (obligor 2) Phone number (obligor 2). Electronic default notification Phone number type (obligor 2) Phone number type (obligor 2). Electronic default notification Home Home. Electronic default notification Work Work. Electronic default notification Cell Cell. Electronic default notification Phone number 1 (other authorized party) Phone number 1 (other authorized party). Electronic default notification Primary reason for default (servicer may report only one) Reason obligor is unable to or did not remit monthly payments. Electronic default notification Business failure Reason for default is the occupation, work, or trade in which obligor is engaged did not generate enough funds for obligor to meet his financial obligations. Electronic default notification Casualty loss Reason for default is the damage to the property as a result of a fire, storm, accident, flood, earthquake, or other catastrophic event. Electronic default notification Curtailment of income Reason for default is a reduction or the curtailment of obligor's income from employment, investment, or other sources. Electronic default notification Death of borrower Reason for default is that the obligor died. Electronic default notification Death of borrower's family member Reason for default is the death of obligor's relative who was contributing towards the loan (directly or indirectly) and/or that obligor has incurred extraordinary expenses as a result of such death. Electronic default notification Distant employment transfer Reason for default is the result of the borrower being transferred or relocated to a distant job location. Electronic default notification Energy/environmental cost Reason for default is the result of the borrower incurring excessive energy related costs or costs associated with removal of an environmental hazard in or near the property. Electronic default notification Excessive obligations Reason for default is obligor(s) incurred excessive debt in addition to the mortgage obligation or the mortgage payment has increased significantly. Electronic default notification Fraud Reason for default is a legal dispute arising out of a fraudulent or illegal action that occurred in connection with the origination of the mortgage or at a later date. Electronic default notification Illness of borrower Reason for default is a serious illness that keeps the borrower from working and generating income, and/or the borrower has incurred extraordinary expenses as a result of the illness. Electronic default notification Illness of borrower's family Reason for default is the result of obligor(s) incurring extraordinary expenses as the result of the illness of a family member. Electronic default notification Inability to rent property Reason for default is obligor has insufficient income and/or assets to make the monthly mortgage payment and the rental property is vacant. Electronic default notification Inability to sell property Reason for default is obligor has insufficient income and/or assets to make the monthly mortgage payment and is unable to sell the property. Electronic default notification Incarceration Reason for default is the result of obligor being jailed or imprisoned, regardless of whether obligor is still incarcerated. Electronic default notification Marital difficulties Reason for default is problems associated with separation or divorce including dispute over payments during divorce settlement, reduction in income available to pay the mortgage debt, etc. Electronic default notification Military service Reason for default is the result of obligor being called into active duty status and the military pay is insufficient to make the monthly mortgage payment. Electronic default notification Payment adjustment Reason for default is the result of the borrower being unable to make new payments that resulted from an increase in the monthly payment. Electronic default notification Payment dispute Reason for default is the result of a disagreement between obligor and the mortgage servicer about the amount of the mortgage payment, the acceptance of a partial payment, the application of previous payments, etc., that result in obligor refusing to make payments until the dispute is resolved. Electronic default notification Property problems Reason for default is the result of the condition of the property such as substandard construction, expensive and extensive repairs required, etc. Electronic default notification Servicing problems Reason for default is the result of obligor being dissatisfied with the servicer of the loan or with the fact that servicing has been transferred to a new servicer. Electronic default notification Tenant not paying Reason for default is the result of the obligor's tenant not paying rent. Electronic default notification Transfer of ownership Reason for default is the result of the obligor not making payments while sale of the property is pending. Electronic default notification Unemployment notification Reason for default is the result of a reduction in obligor's income due to loss of job. Electronic default notification Borrower never responded to outreach Reason for default is unknown (unable to get contact or unable to determine the reason). Delinquency status Unpaid principal balance
(UPB)Amount of principal due under the terms of the obligation as of payment due date. Delinquency status Payment due date Month, day, and year of the earliest payment not fully satisfied by the proper application of available credits or deposits. Delinquency status Principal and interest (P&I) portion of monthly installment, if changed Amount of principal and interest due monthly under the terms of the loan agreement, if changed from last report. Delinquency status Taxes and insurance (T&I) portion of monthly installment, if changed Amount of taxes and insurance due monthly under the terms of the loan agreement, if changed from last report. Delinquency status Other portion of monthly installment, if changed Amount due that does not pertain to principal and interest and/or taxes and insurance, due under the terms of the obligation (example is HOA fees), if changed from last report. Delinquency status Late charges due Amount due as a result of penalties imposed by the servicer that a borrower must pay when a payment is missed or made after the due date under the terms of the obligation as of notice date. Delinquency status Expenses incurred to date Any costs that have been paid by the servicer and can be charged to the loan. Contact information change Updated mailing address line 1 (if different from property address) First line of the mailing address of current owners, if changed from last report. Contact information change Updated mailing address line 2 (if different from property address) Second line of the mailing address of current owners, if changed from last report. Contact information change Updated mailing address unit number (if different from property address) The unit number of the expanded mailing address, if changed from last report. Contact information change Updated mailing address city (if different from property address) The city name of the expanded mailing address, if changed from last report. Contact information change Updated mailing address zip code (if different from property address) A group of fields containing the zip code of the expanded mailing address, if changed from last report. Contact information change Updated mailing address suffix (if different from property address) The zip code suffix of the mailing address, if changed from last report. Contact information change Updated mailing address state abbreviation (if different from property address) The state abbreviation of the expanded mailing address, if changed from last report. Contact information change Updated first phone number (obligor 1) First phone number (obligor 1). Contact information change Updated phone number type for first phone number (obligor 1) Phone number type for first phone number (obligor 1). Contact information change Home Home. Contact information change Work Work. Contact information change Cell Cell. Contact information change Updated second phone number (obligor 1) Second phone number (obligor 1). Contact information change Updated phone number type for second phone number (obligor 1) Phone number type for second phone number (obligor 1). Contact information change Home Home. Contact information change Work Work. Contact information change Cell Cell. Contact information change Updated phone number (obligor 2) Phone number (obligor 2). Contact information change Updated phone number type (obligor 2) Phone number type (obligor 2). Contact information change Home Home. Contact information change Work Work. Contact information change Cell Cell. Contact information change Updated phone number 1 (other authorized party) Phone number 1 (other authorized party). Occupancy status change Date the change in occupancy status is discovered by servicer Month, day, and year that occupancy status change was discovered by the servicer. Occupancy status change Occupancy status Status of who currently resides in the property securing the loan obligation, or reason why no one resides there. Occupancy status change Original veteran Original veteran currently resides in the property securing the loan obligation. Occupancy status change Tenant Individual rents or leases the property securing the loan obligation. Occupancy status change Transferee A conveyance was made and an individual/entity currently resides in the property securing the loan obligation. Occupancy status change Vacant Property is not occupied by anyone but appears to be maintained and is secure. Occupancy status change Abandoned Property is vacant, is not being maintained, and is not offered for sale or rent. Bankruptcy filed Date bankruptcy filed Month, day, and year that obligor filed for protection under U.S. bankruptcy codes. Bankruptcy filed Type of bankruptcy Type of bankruptcy (chapter number) under which the obligor filed for protection. Bankruptcy filed Chapter 7 Chapter of the U.S. bankruptcy code providing for the sale of an obligor's nonexempt property and assets and the distribution of the proceeds to creditors. Bankruptcy filed Chapter 11 Chapter of the U.S. bankruptcy code providing obligor or obligor's failing firm protection against all creditors while being reorganized to pay off debts. Bankruptcy filed Chapter 12 Chapter of the U.S. bankruptcy code designed to give special relief to obligor if obligor is a family farmer with seasonal income. Bankruptcy filed Chapter 13 Chapter of the U.S. bankruptcy code allowing obligor to begin debt repayment without forfeiting property. Bankruptcy filed Bankruptcy case number Case number assigned by the bankruptcy court. Bankruptcy filed Bankruptcy code Indicates whether the mortgagor, co-mortgagor, or both are filing bankruptcy. Bankruptcy filed Only the obligor has filed Indicates that only the obligor has filed for bankruptcy. Bankruptcy filed Only the co-obligor has filed Indicates that only the co-obligor has filed for bankruptcy. Bankruptcy filed Both the obligor and co-obligor have filed Indicates that both obligor and co-obligor have filed for bankruptcy Bankruptcy filed Name(s) of debtor(s)-report all applicable Name of obligor(s) that filed petition for relief under the U.S. bankruptcy code-report all applicable. Bankruptcy filed Alternate debtor This field indicates the second alternate debtor (if any) for the loan. Bankruptcy filed Social security number (SSN)(s) of debtor(s) Unique SSA-issued number or unique IRS-issued number
(TIN)of the obligor(s) that filed a petition for relief under the U.S. bankruptcy code. Bankruptcy filed Alternate debtor social security number
(SSN)This field indicates the second alternate debtor social security number (if any) for the loan. Bankruptcy update Bankruptcy event Any significant action taken during the bankruptcy process as defined in the eight following items. Bankruptcy update Date relief of stay filed Date a petition was filed by servicer requesting relief from the stay so that servicer may proceed to terminate the loan. Bankruptcy update Date of discharge Date of the court order terminating bankruptcy proceedings, usually relieving the obligor of his/her obligation. Bankruptcy update Date of dismissal Date of the court order terminating the case without either the entry of a discharge or a denial of discharge. Bankruptcy update Date stay lifted Date of the court order permitting collection/termination actions against the obligor and/or the property that secures the loan. Loss mitigation letter sent Date that the letter was sent Month, day, and year loss mitigation (foreclosure avoidance) notice sent by the servicer. Partial payment returned Reason why the partial payment was returned VA-authorized reason for the return of a payment of any amount less than the full amount due under the loan terms. Partial payment returned Tenant payments not being forwarded Property is completely or partially tenant-occupied and rental payments are not being paid to servicer for application to the loan account. Partial payment returned Less than 50 percent of total due and no repayment plan is in place Payment is less than 50 percent of the total amount then due, and the amount has not been agreed to in a documented repayment plan. Partial payment returned Personal checks not accepted Amount tendered is in the form of a personal check and the borrower has been previously notified in writing that only cash or certified payments are acceptable. Partial payment returned Foreclosure process started Foreclosure has been started with the first action required for foreclosure under local law. Partial payment returned Less than one monthly installment and no repayment plan in place Payment is less than one full monthly installment, including escrow and late charges, and the amount has not been agreed to in a documented repayment plan. Partial payment returned Less than repayment plan agreed amount Payment is less than the amount agreed to in a documented repayment plan. Partial payment returned Unpaid delinquency over six months and no repayment plan in place Delinquency of any amount has continued for at least 6 months since the account first became delinquent and no documented repayment plan has been arranged. Partial payment returned Servicer lien would be jeopardized Holder's lien position would be jeopardized by acceptance of partial payment. Partial payment returned Date partial payment returned Month, day, and year that servicer returned the partial payment. Partial payment returned Amount of partial payment returned Amount of partial payment that servicer returned. Default cured/loan reinstated Date loan reinstated Month, day, and year all delinquent amounts were fully repaid; a loan is current if the payment due date is the first day of the next month (as of the last day of the previous month). Cure/reinstatement reversal Date of reversal Month, day, and year the servicer discovered that a previously reported cure was in error. Cure/reinstatement reversal Payment due date Month, day, and year the last full monthly obligation was applied; as of the date of the cure reversal. Cure/reinstatement reversal Reason for reversal Basis for determination that all delinquent amounts thought to be fully repaid were not. Cure/reinstatement reversal NSF check Reason for reversal of cured default is that obligor's bank account has insufficient funds available to pay the check. Cure/reinstatement reversal Misapplication of funds Reason for reversal of cured default is that funds were applied to the loan in error. Cure/reinstatement reversal Reporting error (includes erroneously reported servicing transferred) Reason for reversal of cured default is that the servicer reported the cure in error. Default reported to credit bureau Date reported Month, day, and year that servicer reports to the credit bureau that obligor has failed to comply with the terms of the loan agreement. Extenuating property circumstances Date the extenuating property circumstance was discovered The date the property damage was discovered. Extenuating property circumstances Type of unusual property circumstance Basis for determination that foreclosure process should be sped up or delayed due to the condition of obligor's property. Extenuating property circumstances Hazardous conditions or materials Reason for extenuating property circumstances is the presence of conditions or materials on the property which create an immediate or potential danger to the public health or safety or to the environment. Extenuating property circumstances Significant property deterioration Reason for extenuating property circumstances is property has deteriorated significantly. Extenuating property circumstances Condemned Reason for extenuating property circumstances is property is deemed legally unfit for occupancy or continued existence due to its physical defects or for other causes or the property is being acquired by a governmental body for public uses as per receipt of official notice from the appropriate local government office. Extenuating property circumstances Natural disaster Reason for extenuating property circumstances is the result of a natural disaster, such as fire, storm, accident, flood, earthquake, or other catastrophic event. Extenuating property circumstances Property seizure Law enforcement officials have taken a property that has been used
(a)in connection with or acquired by illegal activities or
(b)in satisfaction of an unpaid judgment. Extenuating property circumstances Demolished Reason for extenuating property circumstances is property has been razed. Extenuating property circumstances Other Reason for extenuating property circumstances is other than one of the reasons listed. Repayment plan approved Date repayment plan approved Month, day, and year servicer approved written agreement with the obligor for reinstatement of the loan through a schedule of increased payments. Repayment plan approved Plan start date (month and year) Month and year that repayment plan is documented to begin. Repayment plan approved Estimated cure date Estimated month, day, and year the delinquency will be fully satisfied by the proper application of available credits or deposits resulting from the repay plan. Repayment plan infeasible Date of determination Month, day, and year that servicer determines that a repay plan with the obligor is not a home retention option. Repayment plan infeasible Reason for infeasibility Basis for determination that repay plan with the obligor is not a home retention option. Repayment plan infeasible Unwilling borrower(s) Reason for infeasibility of the repay plan is that obligor does not agree to a repay plan. Repayment plan infeasible Unable to contact Reason for infeasibility of the repay plan is that servicer is not able to contact obligor to negotiate. Repayment plan infeasible Current owner not liable Reason for infeasibility of the repay plan is current owner of the property is not the obligor on the loan. Repayment plan infeasible Property abandoned Reason for infeasibility of the repay plan is the property is vacant, is not being maintained, is not offered for sale or rent, and no contact with the borrower has been established. Repayment plan infeasible Insufficient income Reason for infeasibility of the repay plan is that obligor does not have enough income to meet the obligations under a repay plan. Special forbearance approved Estimated cure date Estimated month, day, and year the delinquency will be fully satisfied by the proper application of available credits or deposits resulting from the proposed special forbearance. Special forbearance infeasible Date of determination Month, day, and year that servicer determines that neither suspension nor reduction of obligor's payments for one or more months is a home retention option. Special forbearance infeasible Reason for infeasibility Basis for determination that special forbearance with the obligor is not a home retention option. Special forbearance infeasible Unwilling borrower Reason for infeasibility of the special forbearance is that obligor does not agree to special forbearance. Special forbearance infeasible Unable to contact Reason for infeasibility of the special forbearance is that servicer is not able to contact obligor to negotiate. Special forbearance infeasible Insufficient income Reason for infeasibility of the special forbearance is that obligor does not have enough income to meet the obligations under a special forbearance. Special forbearance infeasible Current owner not liable Reason for infeasibility of the special forbearance is current owner of the property is not the obligor on the loan. Special forbearance infeasible Property abandoned Reason for infeasibility of the special forbearance is the property is vacant, is not being maintained, is not offered for sale or rent, and no contact with the homeowner has been established. Special forbearance infeasible No means to reinstate Reason for infeasibility of the special forbearance is that reducing payments and/or forbearing payments will have no impact on the obligor's inability to cure the delinquency and reinstate the loan. Loan modification approved Date modification of loan approved Month, day, and year that servicer approves a permanent change in one or more of the terms of the loan and usually includes re-amortization of the balance due. Loan modification complete Date loan modification fully executed Month, day, and year that servicer and borrower execute the modification agreement thereby completing a permanent change in one or more of the terms of the loan that results in loan reinstatement. Loan modification complete Modified loan amount Total amount of principal owed on the mortgage after the loan modification and before any payments are made; only unpaid principal, accrued interest, deficits in the taxes and insurance impound accounts, and advances required to preserve the lien position, such as HOA fees, special assessments, water and sewer liens, etc., may be included in the modified indebtedness; late fees and other charges may not be capitalized. Loan modification complete Term Number of months over which the unpaid balance of the modified loan will be repaid. Loan modification complete Modified loan maturity date Month, day, and year that modified loan will be paid in full. Loan modification complete Interest rate Rate of interest charged on the loan, expressed as a percentage, per the modified loan instruments. Loan modification complete Date of first payment Month, day, and year that first installment on modified loan is due. Loan modification complete New principal and interest (P&I) payment Monthly amount due (for principal and interest) on the modified loan. Loan modification infeasible Date of determination Month, day, and year that servicer determines that loan modification is not a home retention option. Loan modification infeasible Reason for infeasibility Basis for determination that loan modification with the obligor is not a home retention option. Loan modification infeasible Unwilling borrower Reason for infeasibility of the loan modification is that obligor does not agree to a loan modification. Loan modification infeasible Unable to contact Reason for infeasibility of the loan modification is that servicer is not able to contact obligor to negotiate. Loan modification infeasible Insufficient income Reason for infeasibility of the loan modification is that obligor does not have enough income to meet the obligations under a loan modification. Loan modification infeasible Insufficient borrower contribution Reason for infeasibility of the loan modification is that obligor has insufficient cash to satisfy all delinquent amounts not included in the new loan amount. Loan modification infeasible Junior lien issues Reason for infeasibility of the loan modification is that junior lien holder refuses to subordinate. Loan modification infeasible Ineligible-prior approval denied Reason for infeasibility of the loan modification is that VA denied a prior approval of a non-conforming loan modification. Loan modification infeasible Ineligible-not submitted for prior approval Reason for infeasibility of the loan modification is that the servicer did not submit a non-conforming loan modification for prior approval. Loan modification infeasible Current owner not liable Reason for infeasibility of the loan modification is that the current owner is not legally liable on the loan. Loan modification infeasible Ginnie Mae pooling issues Reason for infeasibility of the loan modification is that the servicer is unwilling to bear the cost of repurchasing the loan from the pool and/or repooling. Loan modification infeasible Property abandoned Reason for infeasibility of the loan modification is the property is vacant, is not being maintained, and is not offered for sale or rent. Loan modification infeasible Not owner occupied Reason for infeasibility of the loan modification is that the owner does not currently reside in the property. Compromise sale approved Date purchase offer submitted by borrower for consideration Month, day, and year that obligor submits a purchase offer to the servicer for consideration where the proceeds of the private sale will be less than the amount required to pay the mortgage in full. Compromise sale approved Date compromise sale approved Month, day, and year that servicer approves obligor's request to complete a private sale where the proceeds will be less than the amount required to pay the mortgage in full. Compromise sale approved Estimated settlement date Estimated month, day, and year that obligor's property is scheduled to close by private sale and the proceeds will be less than the amount required to pay the mortgage in full. Compromise sale complete Actual settlement date Actual month, day, and year that obligor's property was sold to a third party in a private sale and the proceeds were less than the amount required to pay the mortgage in full. Compromise sale complete Payoff of first mortgage loan (line 504 from HUD-1) Net proceeds from the sale, listed in line 504 from HUD-1 form (also known as the “closing statement” or “settlement sheet”), which will be applied toward the payoff of the first mortgage loan. Compromise sale infeasible Date of determination Month, day, and year that servicer determines that the compromise sale is not an alternative to foreclosure. Compromise sale infeasible Reason for infeasibility Basis for determination that compromise sale is not an alternative to foreclosure. Compromise sale infeasible No buyers Reason for infeasibility of the compromise sale is that there are no buyers interested in the obligor's property. Compromise sale infeasible Closing not consummated Reason for infeasibility of the compromise sale is that a potential sale did not legally close. Compromise sale infeasible Unwilling borrower(s) Reason for infeasibility of the compromise sale is that obligor does not agree to a compromise sale. Compromise sale infeasible Property abandoned Reason for infeasibility of the compromise sale is the property is vacant, is not being maintained, is not offered for sale or rent, and no contact with the homeowner has been established. Compromise sale infeasible Unable to contact Reason for infeasibility of the compromise sale is that servicer is not able to contact obligor to negotiate. Compromise sale infeasible Junior lien issues Reason for infeasibility of the compromise sale is that junior lien holder is unwilling to participate in the compromise sale. Compromise sale infeasible Title problems Reason for infeasibility of the compromise sale is that the owner is unable to provide clear title to the prospective purchaser. Deed-in-lieu approved Date DIL was requested Month, day, and year that the obligor requests a voluntary transfer of the property to the holder in exchange for a release of all obligations under the mortgage. Deed-in-lieu approved Date of approval Month, day, and year that a deed in lieu of foreclosure is approved by the servicer. Deed-in-lieu complete Date that deed was recorded Month, day, and year that the deed in lieu of foreclosure was recorded with the local government office. Deed-in-lieu complete Net value The fair market value of the property minus the VA cost factor (net value = fair market value of the property * (1-the net value factor)). Deed-in-lieu complete Total eligible indebtedness The unpaid principal balance, accrued unpaid interest, allowable advances, liquidation expenses, and property preservation expenses (if incurred prior to the actual foreclosure sale date or the end of the foreclosure timeframe, whichever is earlier), less any credits. Deed-in-lieu infeasible Date of determination Month, day, and year that servicer determines that the deed in lieu of foreclosure is not an alternative to foreclosure. Deed-in-lieu infeasible Reason for infeasibility Basis for determination that deed in lieu of foreclosure is not an alternative to foreclosure. Deed-in-lieu infeasible Junior lien(s) Reason for infeasibility of the deed in lieu of foreclosure is that there is a junior lien on the property. Deed-in-lieu infeasible Title problems Reason for infeasibility of the deed in lieu of foreclosure is that the owner is unable to transfer clear title. Deed-in-lieu infeasible Unwilling borrower(s) Reason for infeasibility of the deed in lieu of foreclosure is that one or more of the owners do not agree to a deed in lieu of foreclosure. Deed-in-lieu infeasible Property abandoned Reason for infeasibility of the deed in lieu of foreclosure is the property is vacant, is not being maintained, is not offered for sale or rent, and contact with the homeowner has not been established. Deed-in-lieu infeasible Unable to contact Reason for infeasibility of the deed in lieu of foreclosure is that servicer is not able to contact obligor to negotiate. Foreclosure referral Date of referral to attorney Month, day, and year servicer refers obligor's loan to legal counsel to initiate the foreclosure process. Foreclosure referral Date of most recent property inspection Month, day, and year of the most recently performed property inspection for the current default. Foreclosure referral Date 30 day delinquency letter sent (if no successful phone contact) Month, day, and year that servicer sent 30 day delinquency letter (letter to the borrower if payment has not been received within 30 days after it was due and telephone contact could not be made—38CFR 36.4346(g)). Foreclosure referral Date phone contact successful Month, day, and year that servicer successfully contacted obligor via telephone for the current default (“right party” contact). Foreclosure referral Updated reason for default at time of foreclosure Basis for determination that foreclosure process should be initiated. Foreclosure referral Business failure Reason for default is the occupation, work, or trade in which obligor is engaged did not generate enough funds to meet his financial obligations. Foreclosure referral Casualty loss Reason for default is the damage to the property as a result of a fire, storm, accident, flood, earthquake, or other catastrophic event. Foreclosure referral Curtailment of income Reason for default is a reduction or the curtailment of obligor's income from employment, investment, or other sources. Foreclosure referral Death of borrower Reason for default is that the obligor died. Foreclosure referral Death of borrower's family member Reason for default is the death of obligor's relative who is contributing towards the loan (directly or indirectly) and/or that obligor has incurred extraordinary expenses as a result of such death. Foreclosure referral Distant employment transfer Reason for default is the result of the borrower being transferred or relocated to a distant job location. Foreclosure referral Energy/environmental cost Reason for default is the result of the borrower incurring excessive energy related costs or costs associated with removal of an environmental hazard in or near the property. Foreclosure referral Excessive obligations Reason for default is obligor incurred excessive debt in addition to the mortgage obligation or the mortgage payment has increased significantly. Foreclosure referral Fraud Reason for default is a legal dispute arising out of a fraudulent or illegal action that occurred in connection with the origination of the mortgage or at a later date. Foreclosure referral Illness of borrower Reason for default is a serious illness that keeps the borrower from working and generating income, and/or the borrower has incurred extraordinary expenses as a result of the illness. Foreclosure referral Illness of borrower's family Reason for default is the result of obligor incurring extraordinary expenses as the result of the illness of a family member. Foreclosure referral Inability to rent property Reason for default is obligor has insufficient income and/or assets to make the monthly mortgage payment and the rental property is vacant. Foreclosure referral Inability to sell property Reason for default is obligor has insufficient income and/or assets to make the monthly mortgage payment and is unable to sell the property. Foreclosure referral Incarceration Reason for default is the result of obligor being jailed or imprisoned, regardless of whether obligor is still incarcerated. Foreclosure referral Marital difficulties Reason for default is problems associated with separation or divorce including dispute over payments during divorce settlement, reduction in income available to pay the mortgage debt, etc. Foreclosure referral Military service Reason for default is the result of obligor being called into active duty status and the military pay is insufficient to make the monthly mortgage payment. Foreclosure referral Payment adjustment Reason for default is the result of the borrower being unable to make new payments that resulted from an increase in the monthly payment. Foreclosure referral Payment dispute Reason for default is that a disagreement between obligor and the mortgage servicer about the amount of the mortgage payment, the acceptance of a partial payment, the application of previous payments, etc. resulted in obligor refusing to make payments until the dispute is resolved. Foreclosure referral Property problems Reason for default is the result of the condition of the property such as substandard construction, expensive and extensive repairs required, etc. Foreclosure referral Servicing problems Reason for default is the result of obligor being dissatisfied with the servicer of the loan or with the fact that servicing has been transferred to a new servicer. Foreclosure referral Tenant not paying Reason for default is the result of the obligor's tenant not paying rent. Foreclosure referral Transfer of ownership Reason for default is the result of the obligor not making payments while sale of the property is pending. Foreclosure referral Unemployment notification Reason for default is the result of a reduction in obligor's income due to loss of job. Foreclosure referral Borrower never responded to outreach Reason for default is unknown (unable to get contact or unable to determine the reason). Foreclosure sale scheduled Date of scheduled foreclosure sale Month, day, and year the property will be sold to satisfy the loan obligation (or month, day, and year it is anticipated the property will be sold to satisfy the loan obligation for states such as South Dakota). Foreclosure sale scheduled Foreclosure type Type of legal process by which the property is sold to satisfy the loan obligation. Foreclosure sale scheduled Judicial Type of foreclosure process done through court action. Foreclosure sale scheduled Non-judicial Type of foreclosure process done through the power of sale. Substantial equity case Total eligible indebtedness The unpaid principal balance, accrued unpaid interest, allowable advances, liquidation expenses, and property preservation expenses (if incurred prior to the actual foreclosure sale date or the end of the foreclosure timeframe, whichever is earlier), less any credits. Substantial equity case Estimated unpaid principal balance of all other liens The unpaid balance of any outstanding liens against the property. Substantial equity case Calculated equity amount (fair market value less all liens) The fair market value of the property minus all monies owed on other liens. Foreclosure sale postponed or cancelled Date postponed or cancelled Month, day, and year that foreclosure sale is postponed or cancelled. Foreclosure sale postponed or cancelled Postponed or cancelled indicator Indicator denoting whether the foreclosure sale was postponed or whether it was cancelled. Foreclosure sale postponed or cancelled Reason Basis for postponement or cancellation of foreclosure sale. Foreclosure sale postponed or cancelled Reinstatement Reason for postponement or cancellation of foreclosure sale is to allow additional time for obligor to reinstate the loan. Foreclosure sale postponed or cancelled Bankruptcy Reason for postponement or cancellation of foreclosure sale is petition for relief was filed under U.S. bankruptcy codes by or on behalf of the obligor. Foreclosure sale postponed or cancelled Repayment plan Reason for postponement or cancellation of foreclosure sale is servicer has an agreement with the obligor for reinstatement of the loan through a schedule of increased payments. Foreclosure sale postponed or cancelled Special forbearance Reason for postponement or cancellation of foreclosure sale is servicer has an agreement with the obligor to suspend foreclosure for a specified period of time to allow for loan reinstatement. Foreclosure sale postponed or cancelled Loan modification Reason for postponement or cancellation of foreclosure sale is servicer has modified or is considering modification of the loan that will result in loan reinstatement. Foreclosure sale postponed or cancelled Private sale Reason for postponement or cancellation of foreclosure sale is to allow additional time for obligor to complete a sale of the property, in which there is equity. Foreclosure sale postponed or cancelled Compromise sale Reason for postponement or cancellation of foreclosure sale is to allow additional time to complete a sale of the property, even though the sale proceeds will be less than the total indebtedness. Foreclosure sale postponed or cancelled Title problems Reason for postponement or cancellation of foreclosure sale is that title search disclosed problems which must be resolved prior to foreclosure. Foreclosure sale postponed or cancelled VA requested (includes refund consideration) Reason for postponement or cancellation of foreclosure sale is VA requested. Foreclosure sale postponed or cancelled Procedural errors (failure to give notice, legal issues, failure to comply with foreclosure laws, incorrect publication, trustee appointments, recording issues) Reason for postponement or cancellation of foreclosure sale is procedural error, such as failure to give notice, legal issues, failure to comply with foreclosure laws, incorrect publication, trustee appointments, recording issues, etc. Foreclosure sale postponed or cancelled Late appraisal Reason for postponement or cancellation of foreclosure sale is that appraisal was not performed in time to proceed to foreclosure sale. Foreclosure sale postponed or cancelled Contested foreclosure Reason for postponement or cancellation of foreclosure sale is the obligor or other party contests the validity or priority of the mortgage or lien being foreclosed or creates an issue with respect to mortgage holder's right to foreclose it. Foreclosure sale postponed or cancelled Property damage Reason for postponement or cancellation of foreclosure sale is damage to the property occurred subsequent to completion of liquidation appraisal which could change or invalidate the bid amount. Foreclosure sale postponed or cancelled Hazardous conditions or materials (when a municipality requires property clean-up prior to foreclosure) Reason for postponement or cancellation of foreclosure sale is municipality requires property clean-up of hazardous conditions and/or materials prior to foreclosure sale, or servicer discovers hazardous conditions and/or materials that will have an impact on final value determination. Foreclosure sale postponed or cancelled Condemned (with need to demolish or eminent domain) or demolished Reason for postponement or cancellation of foreclosure sale is property is
(a)deemed legally unfit for occupancy or continued existence due to its physical defects or for other causes,
(b)property is being acquired by a governmental body for public uses, or
(c)property has already been torn down as a result of being condemned. Foreclosure sale postponed or cancelled Natural disaster Reason for postponement or cancellation of foreclosure sale is result of a natural disaster, such as fire, storm, accident, flood, earthquake, or other catastrophic event. Foreclosure sale postponed or cancelled Property seizure Reason for postponement or cancellation of foreclosure sale is the result of law enforcement officials taking the property that has been used in connection with or acquired by illegal activities or to satisfy an unpaid judgment. Foreclosure sale postponed or cancelled SCRA Reason for postponement or cancellation of foreclosure sale is obligor has filed for relief under or is deemed to be entitled to the (SCRA). Foreclosure sale postponed or cancelled Other Reason for postponement or cancellation of foreclosure sale is other than one of the reasons listed. Results of sale Date of sale Month, day, and year the foreclosure sale was held. Results of sale Sherriff's appraised value (if applicable, Kentucky, Ohio. Louisiana, and Oklahoma only) Value of the property as determined by the court-ordered sheriff's appraisal. Results of sale Successful bidder Designates whether the successful bidder was the holder or a third party. Results of sale Holder The property was acquired by the holder of the loan. Results of sale Third party The property was acquired by a third party. Results of sale Amount of successful bid The amount of money bid to acquire the property. Results of sale Net value The fair market value of the property minus the VA cost factor (net value = fair market value of the property * (1-the net value factor)). Results of sale Total eligible indebtedness The unpaid principal balance, accrued unpaid interest, allowable advances, liquidation expenses, and property preservation expenses (if incurred prior to the actual foreclosure sale date or the end of the foreclosure timeframe, whichever is earlier), less any credits. Transfer of custody Insurance type (flood, earthquake, forced place, homeowner's, wind, fire)-report all applicable Information about insurance policy(ies) in force at the time of transfer of custody to VA. Transfer of custody Flood Reported insurance type is flood insurance. Transfer of custody Earthquake Reported insurance type is earthquake insurance. Transfer of custody Forced place Reported insurance type is forced place insurance. Transfer of custody Homeowner's Reported insurance type is homeowner's insurance. Transfer of custody Wind Reported insurance type is wind insurance. Transfer of custody Fire Reported insurance type is fire insurance. Transfer of custody Policy number Unique insurance company issued number identifying the specific insurance coverage plan. Transfer of custody Name of carrier Name of the company that provides the insurance coverage. Transfer of custody Expiration date Month, day, and year that the insurance coverage terminates. Transfer of custody Tax parcel/identification number(s)-report as many as are applicable Unique number assigned by the local taxing authority to identify the property. Transfer of custody Redemption expiration date (if applicable) Month, day, and year on which the redemption period terminates. Transfer of custody Date of confirmation/ratification of sale Month, day, and year the foreclosure sale was confirmed or ratified (as required by State law). Transfer of custody Mortgage holder's payee vendor ID (per internal VA financial system) Unique VA-assigned number used to identify the payee for VA purposes; servicer reports own vendor ID if servicer is payee. Transfer of custody Payee loan number (if payee differs from servicer) Unique payee-assigned custody number used to identify the account. Improper transfer of custody Reason for the improper transfer of custody Reason servicer erroneously transferred custody of a property to VA. Improper transfer of custody Holder wanted to keep the property Holder intended to retain property but conveyed to VA in error. Improper transfer of custody Third party was the successful bidder Third party was successful bidder so holder did not have the option to convey to VA. Invalid sale results Reason sale invalidated Basis for determining that results changed or sale was invalid. Invalid sale results Bankruptcy Reason sale was determined to be invalid is that petition for relief was filed under U.S. bankruptcy codes by or on behalf of the obligor. Invalid sale results Contested foreclosure Reason sale was determined to be invalid is that the foreclosure was contested. Invalid sale results Third party fails to consummate sale Reason sale was determined to be invalid is that third party purchaser did not complete the purchase requirements. Invalid sale results Procedural errors Reason sale was determined to be invalid is procedural error, such as failure to give notice, legal issues, failure to comply with foreclosure laws, incorrect publication, trustee appointments, recording issues, etc. Invalid sale results SCRA Reason sale was determined to be invalid is that obligor has filed for relief under or is deemed to be entitled to the SCRA. Changed sale results Date third party failed to consummate the sale Month, day, and year the third party failed to consummate the sale as per consummation requirements in the applicable state (i.e. the timeframe for consummation expired). Confirmed sale date with no transfer of custody Confirmation or ratification date (when no transfer of custody) Month, day, and year of sale confirmation or ratification when the servicer chooses to retain the property and the property is located in a confirmation or ratification of sale state. Basic Claim Information Claim type (for the claim submission—initial, supplemental, appeal) Type of claim servicer is submitting, either initial, supplemental, or appeal. Basic Claim Information Payee vendor ID (per FMS) Unique FMS-assigned number used to identify the payee for VA purposes. Basic Claim Information Payee loan number (if payee differs from servicer) Unique payee-assigned number, used to identify the account. Basic Claim Information Borrower prepayment amount Any unscheduled payment to principal by the borrower. Basic Claim Information Date of prepayment Month, day, and year each prepayment was applied. Basic Claim Information Interest Rate Changes Interest Rate Changes. Basic Claim Information Effective date of change for SCRA (change date), if applicable Effective date of change for SCRA (change date). Basic Claim Information Interest rate for SCRA change, if applicable Interest rate for SCRA change. Basic Claim Information ARM Loans (report all changes) ARM Loans (report all changes). Basic Claim Information Effective date of change for ARM loans (change date) Effective date of change for ARM loans (change date). Basic Claim Information Margin (for ARM interest rate changes) Margin (for ARM interest rate changes). Basic Claim Information Date loan termination reported to credit bureaus Month, day, and year that servicer reports to the credit bureau that the loan has been terminated. Basic Claim Information Credits Any monies being held to be applied to the account indebtedness. Basic Claim Information Refunds of insurance premiums Any monies received from refunds of insurance premiums. Basic Claim Information Tenant rents Any monies received from collection of rents from tenants. Basic Claim Information Insurance loss information The following elements detail the allocation of insurance proceeds. Basic Claim Information Date insurance claim payment received by servicer Month, day, and year monies were paid to servicer as a result of insurable loss. Basic Claim Information Date denied (if applicable) Month, day, and year that the insurance claim for damages was denied. Basic Claim Information Proceeds from insurance claim Amount of insurance loss proceeds received. Basic Claim Information Disposition of insurance proceeds Whether the insurance monies received were
(a)applied to the unpaid principal balance,
(b)used to restore the security, or
(c)held in suspense. Basic Claim Information Applied to UPB Whether the monies were
(a)above. Basic Claim Information Used to restore security Whether the monies were
(b)above. Basic Claim Information Held in suspense Whether the monies were
(c)above. Basic Claim Information Amount applied to principal (if applicable) Amount of monies from the insurance loss proceeds that were applied to the unpaid principal balance. Basic Claim Information Date applied to UPB (if applicable) Month, day, and year that the insurance loss proceeds were applied to the unpaid principal balance. Basic Claim Information Escrow credit balance Amount of monies, if any, remaining in tax and insurance escrow account. Basic Claim Information Suspended credits (partial payments in suspense) Any other monies being held in suspense. Basic Claim Information Buydown credits from origination (seller buydowns) Any unapplied seller buydown credits from loan origination. Basic Claim Information Buydown credits from foreclosure (only for pre-VALERI claims) Amounts applied to
(1)principal balance,
(2)interest, or
(3)escrow to obtain specified bid (pre-VALERI terminations). Buydown funds should have been applied, not held in suspense. Basic Claim Information Date of buydown or buydowns Date or dates of foreclosure buydowns (pre-VALERI terminations). Basic Claim Information Interest on escrow Amount of monies earned from obligor's escrow account as a result of interest payments. Basic Claim Information Itemized Advances (payment date and amount must be provided for each) Amounts required to be advanced by the servicer to preserve and protect the property and/or the lien position. Need date and amount for every advance). Basic Claim Information Insurance Amounts advanced by the servicer to obtain and/or continue insurance coverage. Basic Claim Information Forced place (annual), must also provide effective date Amounts advanced by the servicer to obtain and/or continue yearly forced place insurance coverage; including month, day, and year that coverage became effective. Basic Claim Information Forced place (monthly binder) Amounts advanced by the servicer to obtain and/or continue monthly forced place insurance coverage. Basic Claim Information Flood Amounts advanced by the servicer to obtain and/or continue flood insurance coverage. Basic Claim Information Homeowner's/Fire/Hazard Amounts advanced by the servicer to obtain and/or continue homeowner's, fire, and/or hazard insurance coverage. Basic Claim Information Wind Amounts advanced by the servicer to obtain and/or continue wind insurance coverage. Basic Claim Information Earthquake Amounts advanced by the servicer to obtain and/or continue earthquake insurance coverage. Basic Claim Information Taxes Amounts advanced by the servicer to pay amounts which were levied by a government authority upon the property. Basic Claim Information City Amounts advanced by the servicer to pay city taxes. Basic Claim Information County/Parish Amounts advanced by the servicer to pay county/parish taxes. Basic Claim Information School Amounts advanced by the servicer to pay school taxes. Basic Claim Information Levee Amounts advanced by the servicer to pay levee taxes. Basic Claim Information Township Amounts advanced by the servicer to pay township taxes. Basic Claim Information Municipal Utility District
(MUD)Amounts advanced by the servicer to pay MUD taxes. Basic Claim Information Public Utility District
(PUD)Amounts advanced by the servicer to pay PUD taxes. Basic Claim Information Special assessments Amounts advanced by the servicer to pay special assessments against the property. Basic Claim Information Ground rent Amounts advanced by the servicer to pay ground rent due on the property. Basic Claim Information Association fees Amounts advanced by the servicer to pay HOA, CIA, PUD, and/or condo association fees. Basic Claim Information Property preservation Amounts advanced by the servicer to protect and preserve the property. Basic Claim Information Yard maintenance Amounts advanced by the servicer for required yard maintenance services performed on the property. Basic Claim Information Initial cut up to 5,000 s.f. Amounts advanced by the servicer for initial mowing services of up to 5,000 square feet. Basic Claim Information Initial cut 5,001-10,000 s.f. Amounts advanced by the servicer for initial mowing services of between 5,001 and 10,000 square feet. Basic Claim Information Initial cut 10,000 s.f. or larger Amounts advanced by the servicer for initial mowing services of greater than 10,000 square feet. Basic Claim Information Recut cut up to 5,000 s.f. Amounts advanced by the servicer for additional mowing services of up to 5,000 square feet. Basic Claim Information Recut cut 5,001-10,000 s.f. Amounts advanced by the servicer for additional mowing services of between 5,001 and 10,000 square feet. Basic Claim Information Recut cut 10,000 s.f. or larger Amounts advanced by the servicer for additional mowing services of greater than 10,000 square feet. Basic Claim Information Trim shrubs Amounts advanced by the servicer for shrub trimming services performed on the property. Basic Claim Information Snow removal Amounts advanced by the servicer for snow removal services performed on the property. Basic Claim Information Winterization Amounts advanced by the servicer to prepare the property to withstand cold winter conditions. Basic Claim Information Dry heat-1 unit Amounts advanced by the servicer to winterize one property unit with dry heat. Basic Claim Information Dry heat-addl. units Amounts advanced by the servicer to winterize any additional property units with dry heat. Basic Claim Information Wet heat-1unit Amounts advanced by the servicer to winterize one property unit with wet heat. Basic Claim Information Wet heat-addl. unit Amounts advanced by the servicer to winterize any additional property units with wet heat. Basic Claim Information Radiant heat-1 unit Amounts advanced by the servicer to winterize one property unit with radiant heat. Basic Claim Information Radiant heat-addl. unit Amounts advanced by the servicer to winterize any additional property units with radiant heat. Basic Claim Information Reduced pressure zone
(RPZ)valve Amounts advanced by the servicer to repair, replace, or install (as necessary to comply with state health department requirements) a reduced pressure zone
(RPZ)valve. Basic Claim Information Pools, spas, and hot tubs winterization Amounts advanced by the servicer to winterize pools, spas, and hot tubs. Basic Claim Information Utilities Amounts advanced by the servicer to pay for necessary utility services. Basic Claim Information Electricity Amounts advanced by the servicer to pay for electricity. Basic Claim Information Gas Amounts advanced by the servicer to pay for gas. Basic Claim Information Oil Amounts advanced by the servicer to pay for oil. Basic Claim Information Propane Amounts advanced by the servicer to pay for propane. Basic Claim Information Water and sewer Amounts advanced by the servicer to pay for water and sewer services. Basic Claim Information Equipment repair or replacement Amounts advanced by the servicer for necessary equipment repair or replacement. Basic Claim Information Sump pump repair Amounts advanced by the servicer to pay for repair of a required sump pump. Basic Claim Information Sump pump installation Amounts advanced by the servicer to pay for installation of a required sump pump. Basic Claim Information Pumping water from basement Amounts advanced by the servicer to pay for services related to removing water from the basement of the property. Basic Claim Information Water well (pump, tank, and lines) Amounts advanced by the servicer to pay for necessary water well equipment repair or replacement. Basic Claim Information Securing Amounts advanced by the servicer to properly secure, protect, and preserve vacant and abandoned properties. Basic Claim Information Securing of the property Amounts advanced by the servicer to initially secure the property. Basic Claim Information Resecure property Amounts advanced by the servicer to resecure the property. Basic Claim Information Temporary roof repairs Amounts advanced by the servicer to make required temporary roof repairs. Basic Claim Information Pools, spas, and hot tubs securing Amounts advanced by the servicer to properly secure pools, spas, and hot tubs. Basic Claim Information In-ground pools Amounts advanced by the servicer to properly secure in-ground pools. Basic Claim Information Above ground Amounts advanced by the servicer to properly secure above ground pools. Basic Claim Information Hot tubs or spas Amounts advanced by the servicer to properly secure hot tubs or spas. Basic Claim Information Pools, spas, and hot tubs maintenance Amounts advanced by the servicer to pay for necessary maintenance to pools, spas, and hot tubs. Basic Claim Information Boarding Amounts advanced by the servicer to properly board any openings in the property (windows and doors) with plywood. Basic Claim Information Boarding- 1/2 ″ plywood Amounts advanced by the servicer to pay for boarding with 1/2 ″ plywood. Basic Claim Information Boarding- 5/8 ″ plywood Amounts advanced by the servicer to pay for boarding with 5/8 ″ plywood. Basic Claim Information Boarding- 3/4 ″plywood Amounts advanced by the servicer to pay for boarding with 3/4 ″ plywood. Basic Claim Information Hazard Abatement Amounts advanced by the servicer to take necessary actions in compliance with federal, state and local regulations with regards to environmental hazards (such as asbestos and radon). Basic Claim Information Debris removal Amounts advanced by the servicer to remove debris from the property, in compliance with federal, state and local regulations. Basic Claim Information Cubic yards removed Total number of cubic yards of debris removed. Basic Claim Information Amount paid per cubic yard Amounts advanced by the servicer to remove debris from the property, per cubic yard. Basic Claim Information Number of units (1, 2, 3, or 4) Amounts advanced by the servicer for debris removal from one unit. Basic Claim Information Vehicle removal Amounts advanced by the servicer to remove abandoned vehicle(s) from the property in compliance with state and local requirements. Basic Claim Information Liquidation expenses Expenses incurred by the servicer necessary to terminate the loan. Basic Claim Information Attorney fees Expenses incurred by the servicer for legal representation necessary to terminate the loan. Basic Claim Information Foreclosure attorney fees Expenses incurred by the servicer for necessary legal representation related to terminating the loan by foreclosure. Basic Claim Information DIL attorney fees Expenses incurred by the servicer for necessary legal representation related to terminating the loan by deed in lieu of foreclosure. Basic Claim Information Bankruptcy attorney fees—chapter 7 Expenses incurred by the servicer for necessary legal representation related to filing for a relief of stay in a Chapter 7 bankruptcy proceeding. Basic Claim Information Bankruptcy attorney fees—chapter 13/11 Expenses incurred by the servicer for necessary legal representation related to filing for a relief of stay in a Chapter 13 or 11 bankruptcy proceeding. Basic Claim Information Bankruptcy attorney fees—multiple Expenses incurred by the attorney fees-servicer for necessary legal multiple representation related to filing for a relief of stay in multiple bankruptcy proceedings. Basic Claim Information Ad litem/ curator fees/ warning order attorney fees Expenses incurred by the servicer for legal representation appointed by a court to act on behalf of another party, which is necessary to terminate the loan. Basic Claim Information Attorney service tax Expenses incurred by the servicer for payment of taxes imposed on attorney service fees. Basic Claim Information Attorney fee for foreclosure restarts Expenses incurred by the servicer for necessary legal representation related to terminating the loan in the event that the initial foreclosure was cancelled (not postponed) due to events outside the servicer's control and must be restarted. Basic Claim Information Appraisals Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the property. Basic Claim Information Single unit Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the single unit property. Basic Claim Information Duplex Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the two unit property. Basic Claim Information Three units Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the three unit property. Basic Claim Information Four units Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the four unit property. Basic Claim Information Condominium Expenses incurred by the servicer to have a VA-assigned appraiser determine the market value of the condominium property. Basic Claim Information Appraisal service tax Expenses incurred by the servicer for payment of taxes imposed on services of appraiser. Basic Claim Information Court appraisal Expenses incurred by the servicer to have a court ordered appraisal completed to determine the market value of the property. Basic Claim Information Mileage Expenses incurred by the servicer to have a VA-assigned appraiser travel to the property to perform an appraisal. Basic Claim Information Appraisal update Expenses incurred by the servicer to have a VA-assigned appraiser update the original appraisal of the property. Basic Claim Information Title Expenses incurred by the servicer for title related costs necessary to terminate the loan. Basic Claim Information Title search Expenses incurred by the servicer for search of records (performed by title company or attorney) prior to a foreclosure sale (to insure a valid foreclosure). Basic Claim Information Title examination Expenses incurred by the servicer for a close examination of all public records that affect the title to the property, including reviewing past deeds, wills, and trusts to make sure the title has passed correctly to each owner and to verify that all prior mortgages have been extinguished. Basic Claim Information Title commitment Expenses incurred by the servicer for a written commitment from the title company stating the conditions under which the title company will insure title to the property. Basic Claim Information Trustee sale guaranty
(TSG)Expenses incurred by the servicer for a written commitment from the title company stating the conditions under which it will insure title to the property following a proper foreclosure. Basic Claim Information Title endorsement Expenses incurred by the servicer to pay required endorsement fees. Basic Claim Information Title update Expenses incurred by the servicer to pay for required updates to the title commitment. Basic Claim Information Title policy Expenses incurred by the servicer to pay for the title policy. Basic Claim Information Title opinion/abstracting legal opinion Expenses incurred by the servicer for a statement issued by an attorney as to the quality of title after examining an abstract of title. Basic Claim Information Abstracting update Expenses incurred by the servicer to pay for required updates to the abstract. Basic Claim Information Title service tax Expenses incurred by the servicer to pay taxes imposed on title services. Basic Claim Information Certificate of regularity Expenses incurred by the servicer to establish sufficiency of probate (wills) proceedings, or other proceedings held outside the county in which the property is situated. Basic Claim Information Filing fees Expenses incurred by the servicer as charged by public officials in the property's area for recording or filing documents related to the loan obligation. Basic Claim Information Judgment Expenses incurred by the servicer as charged by public officials for the recording or filing of a judgment. Basic Claim Information Bankruptcy Expenses incurred by the servicer as charged by public officials for the recording or filing of bankruptcy-related motions. Basic Claim Information Lis pendens Expenses incurred by the servicer as charged by public officials for the recording or filing of notice of the filing of a suit. Basic Claim Information Summons Expenses incurred by the servicer as charged by public officials for the recording or filing of a summons. Basic Claim Information Complaint Expenses incurred by the servicer as charged by public officials for the recording or filing of a complaint. Basic Claim Information Petition Expenses incurred by the servicer as charged by public officials for the recording or filing of a petition. Basic Claim Information Order confirming sale Expenses incurred by the servicer as charged by public officials for the recording or filing of an order confirming sale. Basic Claim Information Posting notice of sale Expenses incurred by the servicer as charged by public officials for the posting of the notice of sale. Basic Claim Information Notice affidavit Expenses incurred by the servicer as charged by public officials for the recording or filing of the affidavit stating that proper notice of sale was posted. Basic Claim Information Military affidavit Expenses incurred by the servicer for a sworn, written statement, affirming that the property owner is not entitled to any rights under the SCRA. Basic Claim Information Notice of publication affidavit Expenses incurred by the servicer as charged by public officials for the recording or filing of the affidavit stating that proper notice of sale was published. Basic Claim Information Index number Expenses incurred by the servicer as charged by public officials for the recording or filing of the index number. Basic Claim Information Request for judicial intervention Expenses incurred by the servicer as charged by public officials for the recording or filing of a request for judicial intervention. Basic Claim Information Recording fees—foreclosure Expenses incurred by the servicer as charged by public officials for recording or filing foreclosure documents. Basic Claim Information Foreclosure deed (sheriff's, trustee's, referee's, or commissioner's deed) Expenses incurred by the servicer as charged by public officials for recording or filing of the deed following foreclosure. Basic Claim Information Assignment of sheriff's deed Expenses incurred by the servicer as charged by public officials for recording or filing the assignment of the deed following foreclosure. Basic Claim Information Sheriff's certificate of sale Expenses incurred by the servicer as charged by public officials for recording or filing the Sheriff's certificate of sale. Basic Claim Information Assignment of sheriff's certificate of sale Expenses incurred by the servicer as charged by public officials for recording or filing the assignment of the Sheriff's certificate of sale. Basic Claim Information Deed to VA Expenses incurred by the servicer as charged by public officials for recording or filing the deed to VA. Basic Claim Information Notice of foreclosure Expenses incurred by the servicer as charged by public officials for recording or filing the notice of foreclosure. Basic Claim Information Substitution of trustee (appointment, agreement, or document) Expenses incurred by the servicer as charged by public officials for recording or filing the substitution of trustee. Basic Claim Information Notice of default/foreclosure notice Expenses incurred by the servicer as charged by public officials for recording or filing the notice of default/foreclosure notice. Basic Claim Information Judgment Expenses incurred by the servicer as charged by public officials for the recording or filing of a judgment. Basic Claim Information Summons Expenses incurred by the servicer as charged by public officials for the recording or filing of a summons. Basic Claim Information Certificate of non-redemption Expenses incurred by the servicer as charged by public officials for the recording or filing of a certificate of non-redemption. Basic Claim Information Recording Fees—DIL Expenses incurred by the servicer as charged by public officials for recording or filing deed in lieu of foreclosure documents. Basic Claim Information Warranty deed from owner to holder Expenses incurred by the servicer as charged by public officials for recording or filing the deed from owner to holder. Basic Claim Information Estoppel affidavit Expenses incurred by the servicer as charged by public officials for recording or filing the estoppel affidavit. Basic Claim Information Deed to VA Expenses incurred by the servicer as charged by public officials for recording or filing the deed to VA. Basic Claim Information Satisfaction of mortgage Expenses incurred by the servicer as charged by public officials for recording or filing the satisfaction of mortgage/release of mortgage. Basic Claim Information Deed of reconveyance/full release Expenses incurred by the servicer as charged by public officials for recording or filing the deed of reconveyance/full release. Basic Claim Information Foreclosure facilitation fees Expenses incurred by the servicer as charged by public officials to facilitate the foreclosure process. Basic Claim Information Sheriff's/administrator/commissioner fees and costs (includes court costs) Expenses payable with respect to sheriff/administrator/commissioner fees and costs. Basic Claim Information Trustee/referee/master in equity fees Expenses incurred by the servicer to pay the trustee/referee/master in equity for fees charged. Basic Claim Information Auctioneer's fee Expenses incurred by the servicer to pay the auctioneer to conduct the foreclosure sale. Basic Claim Information Court recorder fee Expenses incurred by the servicer to pay the court recorder for recording services. Basic Claim Information Prothonatory/clerk's fee Expenses incurred by the servicer to pay the prothonotary/clerk for fees charged. Basic Claim Information Other fees and costs Expenses incurred by the servicer to pay for any liquidation Expenses not previously listed. Basic Claim Information Publication of sale/advertisement in newspaper or on the internet Expenses incurred by the servicer to pay for publication/advertisement of the notice of sale in an appropriate newspaper. Basic Claim Information Service of process Expenses incurred by the servicer to serve papers on any necessary party of interest. Basic Claim Information Personal (sheriff or private entity) Expenses incurred by the servicer to pay for fees charged to personally serve papers on any necessary party of interest. Basic Claim Information By publication Expenses incurred by the servicer to pay for fees charged to serve legal notice on any necessary party of interest by publication. Basic Claim Information By certified Mail Expenses incurred by the servicer to send required notices by certified mail to all parties of interest. Basic Claim Information Investigation fee Expenses incurred by the servicer to pay the investigator for fees charged. Basic Claim Information Non-extinguishable liens Expenses incurred by the servicer to pay for any liens that are not extinguished by the foreclosure action. Basic Claim Information Committee fees and costs Fees and costs incurred by the servicer to convene the committee to confirm the sale when there is equity and/or IRS liens. Basic Claim Information Transfer tax/documentary stamps Expenses incurred by the servicer for the state or local tax payable upon the transfer of a title. Basic Claim Information Property inspections Expenses incurred by the servicer for required property inspections. Basic Claim Information Dates inspections completed Months, days, years, property inspections were completed. Basic Claim Information Property inspection fee Expenses incurred by the servicer to pay fees charged for required property inspections. Basic Claim Information Municipal lien certificate Expenses incurred by the servicer to obtain a municipal lien certificate. Basic Claim Information Title V septic (Massachusetts) Expenses incurred by the servicer to inspect for and certify compliance with Title V septic requirements. Basic Claim Information Poundage Fee charged by the court for handling the funds received from the sale of the property for third party bids. Basic Claim Information Mennonite notices Expenses incurred by the servicer to notify every party holding a legally protected property interest whose name and address can reasonably be determined by diligent efforts. Paperwork Reduction Act of 1995 While the proposed rule sets forth collections of information pertaining to proposed § 36.4315a, this supplemental notice contains no new or proposed revised collections of information outside of those referenced in the proposed rule. Executive Order 12866 Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a “significant regulatory action,” requiring review by the Office of Management and Budget
(OMB)unless OMB waives such review, as any regulatory action that is likely to result in a rule that may:
(1)Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;
(2)Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3)Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4)Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. The economic, interagency, budgetary, legal, and policy implications of this supplemental notice of proposed rulemaking has been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. Unfunded Mandates The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any given year. This supplemental notice of proposed rulemaking would have no such effect on State, local, or tribal governments, or the private sector. Regulatory Flexibility Act The Secretary hereby certifies that this supplemental notice of proposed rulemaking would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This notice provides additional information concerning the computer-based system that VA proposed to implement in its prior rulemaking notice. The additional information does not alone have any economic impact on small entities. Therefore, pursuant to 5 U.S.C. 605(b), the supplemental notice of proposed rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604. Catalog of Federal Domestic Assistance The Catalog of Federal Domestic Assistance Program number is 64.114, Veterans Housing Guaranteed and Insured Loans. Approved: November 20, 2006. R. James Nicholson, Secretary of Veterans Affairs. [FR Doc. 06-9403 Filed 11-21-06; 12:29 pm]
Connectionstraces to 36
Traces to 36 documents
U.S. Code
28 references not yet in our index
  • 27 CFR 9
  • 27 CFR 4
  • 37 CFR 201
  • 40 CFR 52
  • Pub. L. 104-4
  • 40 CFR 122
  • 40 CFR 122.23
  • 309 F.3d 1181
  • 422 F.3d 1146
  • 40 CFR 122.3
  • 34 F.3d 114
  • 215 F. Supp. 2d 239
  • 862 F.2d 580
  • 3 F.3d 643
  • 299 F.3d 1007
  • 40 CFR 122.27(b)(1)
  • 751 F. Supp. 1088
  • 940 F.2d 649
  • 597 F.2d 617
  • 449 F. Supp. 876
  • 40 CFR 9
  • Pub. L. 104-113
  • 41 USC 46-48c
  • 41 CFR 51
  • 32 CFR 199
  • 44 USC 3501-3511
  • 38 CFR 36
  • 5 USC 601-612
Citation graph
cites case law
Rules and Regulations
Final rule; Treasury decision
U.S.C.§ 201
C.F.R.§ 4.25
C.F.R.§ 9.90
C.F.R.§ 9.182
C.F.R.§ 9.180
C.F.R.§ 4.39
Fed. Reg.Notices
U.S.C.§ 205
U.S.C.§ 1201
F. App'x309 F.3d 1181
F. App'x422 F.3d 1146
F. App'x34 F.3d 114
Cites 64 · showing 12Cited by 0 across 0 sources
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