Proposed Rules. Proposed rule; request for comments

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BILLING CODE 3410-02-P FEDERAL RESERVE SYSTEM 12 CFR Part 202 [Regulation B; Docket No. R-1281] Equal Credit Opportunity AGENCY: Board of Governors of the Federal Reserve System. ACTION: Proposed rule; request for comments. SUMMARY: The Board is proposing to amend Regulation B, which implements the Equal Credit Opportunity Act, to withdraw portions of the interim final rules for the electronic delivery of disclosures issued March 30, 2001. The interim final rules address the timing and delivery of electronic disclosures, consistent with the requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign Act).

Compliance with the 2001 interim final rules is not mandatory. Thus, removing the interim rules from the *Code of Federal Regulations* would reduce confusion about the status of the provisions and simplify the regulation. The Board is also proposing to amend Regulation B to provide that when an application is accessed by an applicant in electronic form, certain disclosures must be provided to the applicant in electronic form on or with the application, and that in these circumstances the consumer consent and other provisions of the E-Sign Act do not apply.

Similar rules are being proposed under other consumer financial services regulations administered by the Board. DATES: Comments must be received on or before June 29, 2007. ADDRESSES: You may submit comments, identified by Docket No. R-1281, by any of the following methods: • *Agency Web site: http://www.federalreserve.gov* . Follow the instructions for submitting comments at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* . • *Federal eRulemaking Portal: http://www.regulations.gov* .

Follow the instructions for submitting comments. • *E-mail: regs.comments@federalreserve.gov* . Include the docket number in the subject line of the message. • *FAX:*

(202)452-3819 or

(202)452-3102. • *Mail:* Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at *www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: John C. Wood or David A. Stein, Counsels, Division of Consumer and Community Affairs, at

(202)452-2412 or

(202)452-3667. For users of Telecommunications Device for the Deaf

(TDD)only, contact

(202)263-4869. SUPPLEMENTARY INFORMATION: I. Background The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 *et seq.* , makes it unlawful for creditors to discriminate in any aspect of a credit transaction on the basis of sex, race, color, religion, national origin, marital status, or age (provided the applicant has the capacity to contract), because all or part of an applicant's income derives from public assistance, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Board's Regulation B (12 CFR part 202) implements the ECOA. The ECOA and Regulation B require certain disclosures to be provided to applicants, and some of those disclosures must be provided in writing. Board Proposals Regarding Electronic Disclosures On May 2, 1996, the Board proposed to amend Regulation E (Electronic Fund Transfers) to permit financial institutions to provide disclosures by sending them electronically (61 FR 19,696). Based on comments received, in 1998 the Board published an interim rule permitting the electronic delivery of disclosures under Regulation E (63 FR 14,528, March 25, 1998) and similar proposals under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings)(63 FR 14,552, 14,538, 14,548, and 14,533, respectively, March 25, 1998). Based on comments received on the 1998 proposals, in September 1999 the Board published revised proposals under Regulations B, E, M, Z, and DD (64 FR 49,688, 49,699, 49,713, 49,722 and 49,740, respectively, September 14, 1999). At the same time, the Board published an interim rule under Regulation DD allowing depository institutions to deliver disclosures on periodic statements in electronic form if the consumer agreed (64 FR 49,846, September 14, 1999). While these rulemakings were pending, federal legislation was enacted addressing the use of electronic documents and records, including consumer disclosures. Federal Legislation Addressing Electronic Commerce On June 30, 2000, the President signed into law the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The E-Sign Act provides that electronic documents and electronic signatures have the same validity as paper documents and handwritten signatures. The E-Sign Act contains special rules for the use of electronic disclosures in consumer transactions. Consumer disclosures required by other laws or regulations to be provided or made available in writing may be provided or made available, as applicable, in electronic form if the consumer affirmatively consents after receiving a notice that contains certain information specified in the statute, and if certain other conditions are met. The E-Sign Act, including the special consumer notice provisions, became effective October 1, 2000, and did not require implementing regulations. Thus, financial institutions are currently permitted to provide in electronic form any disclosures that are required to be provided or made available to the consumer in writing under Regulations B, E, M, Z and DD if the consumer affirmatively consents to receipt of electronic disclosures in the manner required by section 101(c) of the E-Sign Act. The Interim Final Rules On April 4, 2001, the Board published interim final rules to establish uniform standards for the electronic delivery of disclosures required under Regulation B (66 FR 17,779). Similar interim final rules for Regulations E, M, Z, and DD were published on March 30, 2001 (66 FR 17,322

(M)and 17,329 (Z)), and April 4, 2001 (66 FR 17,786

(E)and 17,795 (DD)). The interim final rules incorporated most of the provisions that were part of the 1999 proposals. Each of the interim final rules incorporated, but did not interpret, the requirements of the E-Sign Act. Creditors and other persons, as applicable, generally were required to obtain applicants' affirmative consent to provide disclosures electronically, consistent with the requirements of the E-Sign Act. The 2001 interim final rule for Regulation B established uniform requirements for the timing and delivery of electronic disclosures. Under the interim rule, disclosures could be sent to an e-mail address designated by the applicant, or could be made available at another location, such as an Internet web site. If the disclosures were not sent by e-mail, creditors would have to provide a notice to applicants alerting them to the availability of the disclosures. Disclosures posted on a web site would have to be available for at least 90 days to allow applicants adequate time to access and retain the information. Creditors also would be required to make a good faith attempt to redeliver electronic disclosures that were returned undelivered, using the address information available in their files. Similar provisions were included in the interim final rules adopted under Regulations E, M, Z, and DD. Commenters on the interim final rules identified significant operational and security concerns with respect to the requirement to send the disclosure or an alert notice to an e-mail address designated by the consumer. For example, commenters stated that some consumers do not have e-mail addresses or may not want personal financial information sent to them by e-mail. Commenters also noted that e-mail is not a secure medium for delivering confidential information and that consumers' e-mail addresses frequently change. The commenters also opposed the requirement for redelivery in the event a disclosure was returned undelivered. In addition, many commenters asserted that making the disclosures available for at least 90 days, as required by the interim final rule, would increase costs and would not be necessary for consumer protection. In August 2001, in response to comments received, the Board lifted the previously established October 1, 2001 mandatory compliance date for all of the interim final rules. (66 FR 41,439, August 8, 2001.) Thus, institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules on electronic disclosures in order to allow electronic commerce, including electronic disclosure practices, to continue to develop without regulatory intervention and to allow the Board to gather further information about such practices. II. The Proposed Rules The Board is proposing to amend Regulation B and the official staff commentary by

(1)withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act and accordingly are unnecessary;

(2)withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and

(3)retaining the substance of certain provisions of the interim final rule that provide regulatory relief or guidance regarding electronic disclosures. (Similar amendments are also being proposed by the Board, in today's issue of the **Federal Register** , under Regulations E, M, Z, and DD.) Because compliance with the 2001 interim final rules is not mandatory, removing most portions of the interim rules from the *Code of Federal Regulations* , while finalizing other provisions, would reduce confusion about the status of the electronic disclosure provisions and simplify the regulation. Certain provisions in the interim final rules, including provisions addressing foreign language disclosures, were not affected by the lifting of the mandatory compliance date and accordingly are now in final form; these provisions would not be deleted. The Board is also proposing to adopt certain provisions that are identical or similar to provisions in the 2001 interim final rules in order to enhance the ability of consumers to apply for credit online and provide guidance or eliminate a substantial burden on electronic commerce, as discussed further below. Since 2001, industry and consumers have gained considerable experience with electronic disclosures. During that period, there has been no indication that consumers have been harmed by the fact that compliance with the interim final rules is not mandatory. The Board also has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of increased concerns about data security, identity theft, and “phishing” (i.e., prompting consumers to reveal confidential personal or financial information through fraudulent e-mail requests that appear to originate from a financial institution, government agency, or other trusted entity) that have become more pronounced since 2001. Finally, the Board is proposing to eliminate certain aspects of the 2001 interim final rule, such as provisions regarding the availability and retention of electronic disclosures, as unnecessary in light of current industry practices. Pursuant to the Board's authority under section 703(a)(1) of the ECOA, as well as under section 104(d) of the E-Sign Act, 1 the Board is also proposing to specify the circumstances under which certain disclosures may be provided to an applicant in electronic form, rather than in writing as required by Regulation B, without obtaining the applicant's consent under section 101(c) of the E-Sign Act. The proposed rule would also amend § 202.4(d) of Regulation B to clarify that certain disclosures must be provided to the applicant in electronic form on or with an application that is provided to and accessed by the applicant in electronic form. 1 Section 703(a)(1) of ECOA provides that regulations prescribed by the Board under ECOA “may provide for such adjustments and exceptions * * * as in the judgment of the Board are necessary or proper to effectuate the purposes of [ECOA], * * * or to facilitate or substantiate compliance [with the requirements of ECOA].” Section 104(d) of the E-Sign Act authorizes federal agencies to adopt exemptions for specified categories of disclosures from the E-Sign notice and consent requirements, “if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.” For the reasons stated in this **Federal Register** notice, the Board believes that these criteria are met in the case of the application disclosures. In addition, the Board believes ECOA section 703(a)(1) authorizes the Board to permit institutions to provide disclosures electronically, rather than in paper form, independent of the E-Sign Act. The interim final rule allowed creditors to provide certain disclosures to applicants in electronic form without obtaining E-Sign consent if the disclosures were provided on or with an application. The Board continues to believe that creditors should not be required to obtain the consumer's consent in order to provide application-related disclosures if the applicant accesses the application containing these disclosures in electronic form, such as at an Internet Web site. The Board believes consumers would not be harmed, and in fact would benefit, by having timely access to these application-related disclosures in electronic form. Consumers who choose to apply for credit online would be unduly burdened if they had to consent in accordance with the E-Sign Act in order to access application forms that are accompanied by disclosures. Applying the consumer consent provisions of the E-Sign Act to these disclosures could impose substantial burdens on electronic commerce and make it more difficult for consumers to apply for credit. At the same time, the Board recognizes that consumers who apply for credit online may not want to receive other disclosures electronically. Therefore, with respect to, for example, adverse action notices or copies of appraisal reports, creditors would be required to provide written disclosures or obtain the consumer's consent in accordance with the E-Sign Act to provide such disclosures in electronic form. Finally, the Board is proposing to delete, as unnecessary, certain provisions that restate or cross-reference the E-Sign Act's general rules regarding electronic disclosures (including the consumer consent provisions) and electronic signatures because the E-Sign Act is a self-effectuating statute. The proposed revisions to Regulation B and the official staff commentary are described more fully below in the Section-by-Section Analysis. The Board solicits comment on all aspects of this proposal. Specifically, the Board seeks comment on the appropriateness of eliminating certain provisions and retaining other provisions contained in the 2001 interim final rule. III. Section-by-Section Analysis 12 CFR Part 202 (Regulation B) Section 202.4 General rules Introduction Section 202.4(d) prescribes the form of disclosures, and specifically provides that a creditor that provides in writing any disclosures or information required by the regulation must provide the disclosures in a clear and conspicuous manner and, except for the disclosures required by §§ 202.5 and 202.13, in a form that the applicant may keep. The Board proposes to redesignate this provision as the general rule in § 202.4(d)(1). The Board also proposes to add a new § 202.4(d)(2) to clarify that, with regard to disclosures that the regulation requires to be given in writing, creditors may provide such disclosures in electronic form, subject to compliance with the consumer consent and other applicable sections of the E-Sign Act. Some creditors may provide disclosures to applicants both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those creditors, the duplicate electronic form of the disclosures may be provided to applicants without regard to the consumer consent or other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's disclosure requirements. Section 202.4(d)(2) would also provide that certain disclosures, when included on or with an application, must be provided to the applicant in electronic form if the applicant accesses the application electronically. Under those circumstances, these disclosures may be provided in electronic form without regard to the consumer consent or other provisions of the E-Sign Act. The Board believes that, for an application accessed by the consumer in electronic form, permitting creditors to provide application-related disclosures in electronic form without regard to the consumer consent and other provisions of the E-Sign Act will eliminate a potential significant burden on electronic commerce without increasing the risk of harm to consumers. This approach will facilitate applications for credit by enabling consumers to receive important disclosures at the same time they access an application without first having to provide consent in accordance with the requirements of the E-Sign Act. Requiring consumers to follow the consent procedures set forth in the E-Sign Act in order to complete an online application is potentially burdensome and could discourage consumers from shopping for credit online. Moreover, because these consumers are viewing the application online, there appears to be little, if any, risk that the consumer will be unable to view the disclosures online as well. The following disclosures would be provided electronically without obtaining the consumer's consent under E-Sign, as set forth in § 202.4(d)(2): *Section 202.5(b)(1).* Section 202.5(b)(1) provides that if a creditor inquires about an applicant's race, color, religion, national origin, or sex for the purpose of conducting a self-test, the creditor must disclose that providing the information is optional for the applicant, that the information is requested to monitor compliance with the ECOA, and that the creditor may not discriminate either on the basis of the information or whether the applicant chooses to furnish it. *Section 202.5(b)(2).* Section 202.5(b)(2) provides that when a creditor requests an applicant to designate a title on an application form, the application form must disclose that the designation of a title is optional. *Section 202.5(d)(1).* Section 202.5(d)(1) provides that if an application is for other than individual unsecured credit, a creditor may inquire about the applicant's marital status, but must use only the terms *married, unmarried,* and *separated* . The creditor may also explain that the *unmarried* category includes single, divorced, and widowed persons. *Section 202.5(d)(2).* Section 202.5(d)(2) prohibits a creditor from inquiring whether income stated in an application is derived from alimony, child support, or separate maintenance payments, unless the creditor discloses to the applicant that such income need not be revealed if the applicant does not want the creditor to consider it in determining the applicant's creditworthiness. *Section 202.13.* Section 202.13(a) requires a creditor to request information regarding an applicant's ethnicity, race, sex, marital status, and age as part of an application for dwelling-secured credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence. Section 202.13(b) provides that questions about ethnicity, race, sex, marital status and age may be listed, at the creditor's option, on the application form or on a separate form that refers to the application. Section 202.13(c) requires the creditor to disclose to the applicant that the information about ethnicity, race, sex, marital, status and age is being requested by the federal government to monitor compliance with federal statutes that prohibit creditors from discriminating against applicants. The creditor must also disclose that if the applicant chooses not to provide the information, the creditor is required to note the ethnicity, race, and sex on the basis of visual observation or surname. *Section 202.14(a)(2)(i).* Section 202.14(a)(2)(i) requires a creditor that provides copies of appraisal reports only upon request (rather than routinely) to notify the applicant of the right to obtain a copy of the report. Discussion Under Regulation B, an application generally is not required to be in writing. 2 Section 202.2(f) of the regulation defines the term “application” to include “an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested.” Since an application does not have to be in writing, the disclosures that are provided on or with an application in certain circumstances do not have to be provided in writing. These disclosures include those required under §§ 202.5(b)(1), 202.5(b)(2), 202.5(d)(1), 202.5(d)(2), and 202.13. (Section 202.14(a)(2)(i) specifies that the notice of the right to a copy of the appraisal report must be provided in writing.) As a practical matter, however, most creditors use written or electronic application forms and typically make these disclosures, where applicable, on the written or electronic application form or a separate accompanying form. The Board's Model Application Forms in Appendix B to the regulation include some of these disclosures on the application forms. 2 Under § 202.4(c), a creditor must take written applications for dwelling-related credit for which monitoring information (under § 202.13) must be collected. However, use of a printed form is not required. A creditor may accept telephone or other oral applications and either write down or enter into a computer the pertinent information provided orally by the applicant. *See* Comments 202.4(c)-1 and 2. Therefore, the Board proposes to amend § 202.4(d) to provide that each of the disclosures noted above, where given on or with the application and where the application is accessed by the applicant in electronic form, must be provided to the applicant in electronic form on or with the application. The proposed revision would also clarify that under those circumstances, those disclosures may be provided in electronic form without regard to the consumer consent or other provisions of the E-Sign Act. The Board also proposes to add new comment 4(d)(2)-1 to clarify that if an applicant accesses an application in electronic form, the disclosures required to accompany the application must be provided to the applicant in electronic form on or with the application. An applicant accesses an application in electronic form when, for example, the applicant views the application on his or her home computer. On the other hand, if an applicant receives an application in the mail, the creditor would *not* satisfy its obligation to provide the disclosures at that time by including a reference in the application to the web site where the disclosures are located. Section 202.9 Notifications Section 202.9(g) provides that when an application for credit is submitted through a third party to more than one creditor and no credit is offered (or the applicant does not expressly accept or use any credit offered), each creditor taking adverse action must provide the notice required by § 202.9(a), but may do so through a third party. The 2001 interim final rule added a new § 202.9(h) to clarify that such third parties may use electronic disclosures to provide the required adverse action notice. The Board is proposing to remove this provision as unnecessary because the E-Sign Act is a self-effectuating statute and permits any person to use electronic records subject to the conditions set forth in the Act. Section 202.16 Requirements for electronic communication Section 202.16 was added by the 2001 interim final rule to address the general requirements for electronic communications. 3 The Board proposes to remove § 202.16 from Regulation B and the accompanying sections of the staff commentary. 3 The requirements for electronic communication were initially adopted in § 202.17. In the Board's comprehensive review of Regulation B, this provision was renumbered as § 202.16. (68 FR 13144, March 18, 2003.) In the interim rule, § 202.16(a) defines the term “electronic communication” to mean a message transmitted electronically that can be displayed on equipment as visual text, such as a message displayed on a personal computer monitor screen. The deletion of § 202.16(a) would not change applicable legal requirements under the E-Sign Act. Sections 202.16(b),

(c)and

(f)incorporate by reference provisions of the E-Sign Act, such as the provision allowing disclosures to be provided in electronic form, the requirement to obtain the applicant's affirmative consent before providing disclosures in electronic form, and the provision allowing electronic signatures. The deletion of these provisions will have no impact on the general applicability of the E-Sign Act to Regulation B disclosures. The special rule in § 202.16(c) exempting from the disclosures relating to adverse action in connection with business credit, appraisal reports, and the collection of monitoring information has been eliminated. The special rule for disclosures relating to adverse action notices provided in connection with business credit has been removed because the E-Sign Act's consumer consent requirements do not apply to business credit. The special rules for disclosures relating to appraisal reports and the collection of monitoring information are addressed in § 202.4(d)(2) of the proposed rule. Sections 202.16(d) and

(e)of the interim final rule address specific timing and delivery requirements for electronic disclosures under Regulation B, such as the requirement to send disclosures to an applicant's e-mail address (or post the disclosures on a Web site and send a notice alerting the applicant to the disclosures). The Board no longer believes that these additional provisions are necessary or appropriate. Electronic disclosures have evolved since 2001, as industry and consumers have gained experience with them. Although many institutions offer e-mail alert notices to consumers in connection with online services, some consumers may choose not to receive notifications by e-mail and the Board sees no reason to require e-mail alert notices in all cases. In addition, the Board has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and phishing that have become more pronounced since 2001. With regard to the requirement to attempt to redeliver returned electronic disclosures, as the commenters noted, creditors would be required to search their files for an additional e-mail address to use, and might be required to use a postal mail address for redelivery if no additional e-mail address was available. The Board believes that both requirements would likely be unduly burdensome. In addition, the concerns that have been raised about the requirement to use e-mail for the initial delivery of a disclosure or notice apply equally to the use of e-mail for an attempted redelivery. Under the proposed rule, the Board would not require creditors to maintain disclosures posted on a Web site for at least 90 days as provided in the 2001 interim final rule for several reasons. The Board believes that an appropriate time period consumers may want electronic disclosures to be available may vary depending upon the type of disclosure, and is reluctant to establish specific time periods depending on the disclosures. Nevertheless, while the Board is not proposing to require disclosures to be maintained on an Internet Web site for any specific time period, the general requirements of Regulation B continue to apply to electronic disclosures, such as the requirement to provide certain disclosures to consumers at specified times and in a form that the consumer may keep. Although these general requirements apply to electronic disclosures, the Board does not believe that the 90-day time period set out in § 202.16(d) of the 2001 interim final rule is needed to ensure that creditors satisfy these requirements when they provide electronic disclosures. The Board, however, will monitor creditors' electronic disclosure practices with regard to the ability of applicants to retain certain Regulation B disclosures and will consider further regulatory action if it appears necessary. The official staff commentary to § 202.16 of the interim final rule provides guidance on the provisions set forth in § 202.16 such as delivery of disclosures or alert notices by e-mail, redelivery if disclosures or a notice is returned undelivered, and retention of disclosures on a Web site for 90 days. As noted above, because the Board is proposing to delete § 202.16 of the regulation, the Board also proposes to delete the accompanying provisions of the official staff commentary. Section 202.17 Enforcement, penalties, and liabilities The Board proposes to redesignate § 202.17 as § 202.16 concurrent with the deletion of current § 202.16, as discussed above. No changes would be made to the substance of the provision. The Board is also proposing to redesignate the provisions of § 202.17 of the official staff commentary as § 202.16, with a conforming, non-substantive revision. IV. Solicitation of Comments Regarding the Use of “Plain Language” Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand. V. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* )

(PRA)(44 U.S.C. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the rule under the authority delegated to the Board by the Office of Management and Budget (OMB). The collection of information that is required by this proposed rule is found in 12 CFR 202. The Federal Reserve may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number is 7100-0201. Section 703(a)(1) of the Equal Credit Opportunity Act (15 U.S.C. 1691b(a)(1)) authorizes the Board to issue regulations to carry out the provisions of the Act. This information collection is mandatory. The purpose of the Act is to ensure that credit is made available to all creditworthy customers without discrimination on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), receipt of public assistance income, or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act (15 U.S.C. 1600 *et seq.* ). The adverse action disclosure is confidential between the institution and the consumer involved. Since the Federal Reserve does not collect any information, no issue of confidentiality normally arises. However, the information may be protected from disclosure under the exemptions (b)(4), (6), and

(8)of the Freedom of Information Act (5 U.S.C. 522(b)). Regulation B applies to all types of creditors, not just State member banks. However, under the Paperwork Reduction Act, the Federal Reserve accounts for the burden of the paperwork associated with the regulation only for entities that are supervised by the Federal Reserve. Appendix A of Regulation B defines these creditors as State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act. Other federal agencies account for the paperwork burden for the institutions they supervise. Creditors are required to retain records for 12 to 25 months as evidence of compliance. The annual burden is estimated to be 165,630 hours for the 1,172 Federal Reserve-regulated creditors that are respondents for purposes of the PRA. As mentioned in the Preamble, new § 202.4(d)(2) would be added to clarify the disclosure requirements in §§ 202.5(b)(1), 202.5(b)(2), 202.5(d)(1), 202.5(d)(2), 202.13, and 202.14. The Federal Reserve estimates that 200 respondents would take approximately 1 minute per transaction to comply with the existing disclosures requirements in §§ 202.5(b)(1), 202.5(b)(2), 202.5(d)(1), 202.5(d)(2), and estimates the annual burden to be 8,350 hours; 1,172 respondents would take approximately .50 minutes per transaction to comply with the existing disclosures requirements in § 202.13 and estimates the annual burden to be 3,502 hours. 1,172 respondents would take approximately 5.25 minutes per transaction to comply with the existing disclosures requirements in § 202.14 and estimates the annual burden to be 26,613 hours. The Federal Reserve requests specific comment on whether the revisions in this proposed rule would change the burden on respondents. Comments are invited on: a. whether the collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; b. the accuracy of the Federal Reserve's estimate of the burden of the information collection, including the cost of compliance; c. ways to enhance the quality, utility, and clarity of the information to be collected; and d. ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0201), Washington, DC 20503. List of Subjects in 12 CFR Part 202 Aged, Banks, banking, Civil rights, Credit, Federal Reserve System, Marital status discrimination, Penalties, Religious discrimination, Reporting and recordkeeping requirements, Sex discrimination. Text of Proposed Revisions Certain conventions have been used to highlight the proposed changes to Regulation B. New language is shown inside bold-faced arrows, while language that would be removed is set off with bold-faced brackets. For the reasons set forth in the preamble, the Board proposes to amend Regulation B, 12 CFR part 202, as set forth below: PART 202—EQUAL CREDIT OPPORTUNITY (REGULATION B) 1. The authority citation for part 202 continues to read as follows: Authority: 15 U.S.C. 1691-1691f. 2. Section 202.4 would be amended by revising paragraph

(d)to read as follows: § 202.4 General rules.

(d)*Form of disclosures* [.]▸—(1) *General rule* .◂ A creditor that provides in writing any disclosures or information required by this regulation must provide the disclosures in a clear and conspicuous manner and, except for the disclosures required by §§ 202.5 and 202.13, in a form the applicant may retain. ▸(2) *Disclosures in electronic form* . The disclosures required by this part that are required to be given in writing may be provided to the applicant in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 *et seq.* ). Where the disclosures under §§ 202.5(b)(1), 202.5(b)(2), 202.5(d)(1), 202.5(d)(2), 202.13, and 202.14(a)(2)(i) accompany an application accessed by the applicant in electronic form, these disclosures must be provided to the applicant in electronic form on or with the application form. These disclosures may be made in electronic form without regard to the consumer consent or other provisions of the E-Sign Act.◂ 3. Section 202.9 would be amended by removing paragraph (h), to read as follows: § 202.9 Notifications. [(h) *Duties of third parties* . A third party may use electronic communication in accordance with the requirements of § 202.16, as applicable, to comply with the requirements of paragraph

(g)of this section on behalf of a creditor.] 4. Section 202.16 would be removed. 5. Section 202.17 would be redesignated as § 202.16. 6. In Supplement I to Part 202, the following amendments would be made: a. In *Section 202.4—General Rules* , under *(4)(d) Form of Disclosures* , new paragraph 2. would be added. b. Section 202.16 would be removed; c. Section 202.17 would be redesignated as § 202.16. The amendments to read as follows: Supplement I to Part 202—Official Staff Interpretations Section 202.4—General Rules (4)(d) Form of Disclosures ▸2. *Electronic form of disclosures* . If a consumer accesses an application in electronic form, the disclosures required to accompany the application must be provided to the consumer in electronic form on or with the application; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer is provided with a paper application, the disclosures must be provided in paper form on or with the application. For example, if a consumer receives an application in the mail, the creditor would *not* satisfy its obligation to provide the disclosures at that time by including a reference in the application to the web site where the disclosures are located.◂ Section 202.[17] ▸16◂—Enforcement, Penalties, and Liabilities [17]▸16◂(c) *Failure of compliance.* 1. *Inadvertent errors* . Inadvertent errors include, but are not limited to, clerical mistake, calculation error, computer malfunction, and printing error. An error of legal judgment is not an inadvertent error under the regulation. 2. *Correction of error* . For inadvertent errors that occur under §§ 202.12 and 202.13, this section requires that they be corrected prospectively. By order of the Board of Governors of the Federal Reserve System. Dated: April 20, 2007. Jennifer J. Johnson, Secretary of the Board. [FR Doc. E7-7875 Filed 4-27-07; 8:45 am] BILLING CODE 6210-01-P FEDERAL RESERVE SYSTEM 12 CFR Part 205 [Regulation E; Docket No. R-1282] Electronic Fund Transfer AGENCY: Board of Governors of the Federal Reserve System. ACTION: Proposed rule; request for comments. SUMMARY: The Board is proposing to amend Regulation E, which implements the Electronic Fund Transfer Act, to withdraw the interim final rules for the electronic delivery of disclosures issued March 30, 2001. The interim final rules address the timing and delivery of electronic disclosures, consistent with the requirements of the Electronic Signatures in Global and National Commerce Act. Compliance with the 2001 interim final rules is not mandatory. Thus, removing the interim rules from the *Code of Federal Regulations* would reduce confusion about the status of the provisions and simplify the regulation. Similar rules are being proposed under other consumer fair lending and financial services regulations administered by the Board. DATES: Comments must be received on or before June 29, 2007. ADDRESSES: You may submit comments, identified by Docket No. R-1282, by any of the following methods: • *Agency Web site: http://www.federalreserve.gov.* Follow the instructions for submitting comments at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.* • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • *E-mail: regs.comments@federalreserve.gov.* Include the docket number in the subject line of the message. • *FAX:*

(202)452-3819 or

(202)452-3102. • *Mail:* Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: John C. Wood or David A. Stein, Counsels, Division of Consumer and Community Affairs, at

(202)452-2412 or

(202)452-3667. For users of Telecommunications Device for the Deaf

(TDD)only, contact

(202)263-4869. SUPPLEMENTARY INFORMATION: I. Background The purpose of the Electronic Fund Transfer Act (EFTA), 15 U.S.C. 1693 *et seq.* , is to provide a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund transfer

(EFT)systems, and to provide individual consumer rights. The Board's Regulation E (12 CFR part 205) implements the EFTA. Examples of types of transfers covered by the EFTA and Regulation E include transfers initiated through an automated teller machine (ATM), point-of-sale

(POS)terminal, automated clearinghouse (ACH), telephone bill-payment plan, or remote banking service. The EFTA and Regulation E require financial institutions to provide certain disclosures to consumers in writing, including but not limited to initial disclosures of terms and conditions of an EFT service, documentation of EFTs by means of terminal receipts and periodic account activity statements, and change in terms notices. Certain persons other than financial institutions are also required to comply with specific disclosure provisions of Regulation E. Board Proposals Regarding Electronic Disclosures On May 2, 1996, the Board proposed to amend Regulation E (Electronic Fund Transfers) to permit financial institutions to provide disclosures by sending them electronically (61 FR 19696). Based on comments received, in 1998 the Board published an interim rule permitting the electronic delivery of disclosures under Regulation E (63 FR 14528, March 25, 1998) and similar proposals under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings) (63 FR 14552, 14538, 14548, and 14533, respectively, March 25, 1998). Based on comments received on the 1998 proposals, in September 1999 the Board published revised proposals under Regulations B, E, M, Z, and DD (64 FR 49688, 49699, 49713, 49722 and 49740, respectively, September 14, 1999). At the same time, the Board published an interim rule under Regulation DD allowing depository institutions to deliver disclosures on periodic statements in electronic form if the consumer agreed (64 FR 49846, September 14, 1999). While these rulemakings were pending, Federal legislation was enacted addressing the use of electronic documents and records, including consumer disclosures. Federal Legislation Addressing Electronic Commerce On June 30, 2000, the President signed into law the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The E-Sign Act provides that electronic documents and electronic signatures have the same validity as paper documents and handwritten signatures. The E-Sign Act contains special rules for the use of electronic disclosures in consumer transactions. Under the E-Sign Act, consumer disclosures required by other laws or regulations to be provided or made available in writing may be provided or made available, as applicable, in electronic form if the consumer affirmatively consents after receiving a notice that contains certain information specified in the statute, and if certain other conditions are met. The E-Sign Act, including the special consumer notice provisions, became effective October 1, 2000, and did not require implementing regulations. Thus, financial institutions are currently permitted to provide in electronic form any disclosures that are required to be provided or made available to the consumer in writing under Regulations B, E, M, Z and DD if the consumer affirmatively consents to receipt of electronic disclosures in the manner required by section 101(c) of the E-Sign Act. The Interim Final Rules On April 4, 2001, the Board published for comment interim final rules to establish uniform standards for the electronic delivery of disclosures required under Regulation E (66 FR 17,786). Similar interim final rules for Regulations B, M, Z, and DD were published on March 30, 2001 (66 FR 17322

(M)and 17329 (Z)), and April 4, 2001 (66 FR 17779

(B)and 17795 (DD)). The interim final rules incorporated most of the provisions that were part of the 1999 proposals. Each of the interim final rules incorporated, but did not interpret, the requirements of the E-Sign Act. Financial institutions and other persons, as applicable, generally were required to obtain consumers' affirmative consent to provide disclosures electronically, consistent with the requirements of the E-Sign Act. The 2001 interim final rule for Regulation E established uniform requirements for the timing and delivery of electronic disclosures. Under the interim rule, disclosures could be sent to an e-mail address designated by the consumer, or could be made available at another location, such as an Internet Web site. If the disclosures were not sent by e-mail, financial institutions would have to provide a notice to consumers alerting them to the availability of the disclosures. Disclosures posted on a Web site would have to be available for at least 90 days to allow consumers adequate time to access and retain the information. Financial institutions also would be required to make a good faith attempt to redeliver electronic disclosures that were returned undelivered, using the address information available in their files. Similar provisions were included in the interim final rules adopted under Regulations B, M, Z, and DD. Commenters on the interim final rules identified significant operational and security concerns with respect to the requirement to send the disclosure or an alert notice to an e-mail address designated by the consumer. For example, commenters stated that some consumers do not have e-mail addresses or may not want personal financial information sent to them by e-mail. The commenters also opposed the requirement for redelivery in the event a disclosure was returned undelivered. In addition, many commenters asserted that making the disclosures available for at least 90 days, as required by the interim final rule, would increase costs and would not be necessary for consumer protection. In August 2001, in response to comments received, the Board lifted the previously established October 1, 2001 mandatory compliance date for all of the interim final rules. (66 FR 41439, August 8, 2001.) Thus, institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules on electronic disclosures in order to allow electronic commerce, including electronic disclosure practices, to continue to develop without regulatory intervention and to allow the Board to gather further information about such practices. II. The Proposed Rules The Board is proposing to amend Regulation E and the official staff commentary by

(1)withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act and accordingly are unnecessary;

(2)withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and

(3)adding certain provisions to provide guidance regarding electronic disclosures. (Similar amendments are also being proposed by the Board, in today's issue of the **Federal Register** , under Regulations B, M, Z, and DD.) Because compliance with the 2001 interim final rules is not mandatory, removing this material from the *Code of Federal Regulations* would reduce confusion about the status of the electronic disclosure provisions and simplify the regulation. Certain provisions in the interim final rules, including provisions addressing foreign language disclosures, were not affected by the lifting of the mandatory compliance date and accordingly are now in final form; these provisions would not be deleted. Since 2001, industry and consumers have gained experience with electronic disclosures. During that period, the Board has received no indication that consumers have been harmed by the fact that compliance with the interim final rules is not mandatory. The Board has also reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and “phishing” (i.e., prompting consumers to reveal confidential personal or financial information through fraudulent e-mail requests that appear to originate from a financial institution, government agency, or other trusted entity) that have become more pronounced since 2001. The Board is proposing to eliminate certain aspects of the 2001 interim final rule, such as provisions regarding the availability and retention of electronic disclosures, as unnecessary in light of current industry practices. Finally, the Board is proposing to delete, as unnecessary, certain provisions that restate or cross-reference the E-Sign Act's general rules regarding electronic disclosures (including the consumer consent provisions) and electronic signatures because the E-Sign Act is a self-effectuating statute. The Board is issuing the proposed rules pursuant to its authority under section 904 of the EFTA to prescribe rules to carry out the purposes of the Act. The proposed revisions to Regulation E and the official staff commentary are described more fully below in the Section-by-Section Analysis. The Board solicits comment on all aspects of this proposal. Specifically, the Board seeks comment on the appropriateness of eliminating certain provisions contained in the 2001 interim final rule. III. Section-by-Section Analysis 12 CFR Part 205 (Regulation E) Section 205.4 General Disclosure Requirements; Jointly Offered Services Section 205.4 contains the general disclosure requirements under Regulation E, including provisions relating to the form of disclosure. Section 205.4(a)(1) generally requires financial institutions to provide disclosures in writing and in a form that the consumer may keep. The Board proposes to revise § 205.4(a)(1) to clarify that institutions may provide disclosures to consumers in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. Some institutions may provide disclosures to consumers both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those institutions, the duplicate electronic form of the disclosures may be provided to consumers without regard to the consumer consent or other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's disclosure requirements. Section 205.4(c) in the 2001 interim final rule refers to § 205.17, the section of the interim final rule setting forth general rules for electronic disclosures. Because the Board is proposing to delete § 205.17, as discussed further below, the Board also proposes to delete § 205.4(c). Sections 205.4(d) (multiple accounts and account holders) and

(e)(services offered jointly) would be renumbered as §§ 205.4(c) and

(d)respectively. Section 205.17 Requirements for Electronic Communication Section 205.17 was added by the 2001 interim final rule to address the general requirements for electronic communications. The Board proposes to delete § 205.17 from Regulation E and the accompanying sections of the staff commentary, reserving that section for future use. In the interim rule, § 205.17(a) defines the term “electronic communication” to mean a message transmitted electronically that can be displayed on equipment as visual text, such as a message displayed on a personal computer monitor screen. The deletion of § 205.17(a) would not change applicable legal requirements under the E-Sign Act. Section 205.17(b) incorporates by reference the provisions of the E-Sign Act, such as the provision allowing disclosures to be provided in electronic form. The deletion of this provision would have no impact on the general applicability of the E-Sign Act to Regulation E disclosures. Section 205.17(e) was added in the 2001 interim final rule to clarify that persons, other than financial institutions, that are required to comply with the regulation may use electronic disclosures. The Board is proposing to delete this provision as unnecessary because the E-Sign Act is a self-effectuating statute and permits any person to use electronic records subject to the conditions set forth in the Act. Sections 205.17(c) and

(d)address specific timing and delivery requirements for electronic disclosures under Regulation E, such as the requirement to send disclosures to a consumer's e-mail address (or post the disclosures on a website and send a notice alerting the consumer to the disclosures). The Board no longer believes that these additional provisions are necessary or appropriate. Electronic disclosures have evolved since 2001, as industry and consumers have gained experience with them. Although many institutions offer e-mail alert notices to consumers in connection with online services, some consumers may choose not to receive notifications by e-mail and the Board sees no reason to require e-mail alert notices in all cases. In addition, the Board has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and phishing that have become more pronounced since 2001. With regard to the requirement to attempt to redeliver returned electronic disclosures, as the commenters noted, institutions would be required to search their files for an additional e-mail address to use, and might be required to use a postal mail address for redelivery if no additional e-mail address was available. The Board believes that both requirements would likely be unduly burdensome. In addition, the concerns that have been raised about the requirement to use e-mail for the initial delivery of a disclosure or notice apply equally to the use of e-mail for an attempted redelivery. Under the proposed rule, the Board would not require institutions to maintain disclosures posted on a web site for at least 90 days as provided in the 2001 interim final rule for several reasons. First, based on a review of industry practices, it appears that many institutions maintain disclosures posted on an Internet Web site for several months, and, in a number of cases, for more than a year. For example, it appears that institutions that offer online periodic statements to consumers typically make those statements available without charge for six months or longer in electronic form. This practice has developed even though Regulation E does not currently require institutions to maintain disclosures for any specific period of time. Second, the Board believes that an appropriate time period consumers may want electronic disclosures to be available may vary depending upon the type of disclosure, and is reluctant to establish specific time periods depending on the disclosures. Nevertheless, while the Board is not proposing to require disclosures to be maintained on an Internet Web site for any specific time period, the general requirements of Regulation E continue to apply to electronic disclosures, such as the requirement to provide disclosures to consumers at certain specified times and in a form that the consumer may keep. Although these general requirements apply to electronic disclosures, the Board does not believe that the 90-day time period set out in § 205.17(c) of the 2001 interim final rule is needed to ensure that institutions satisfy these requirements when they provide electronic disclosures. The Board, however, will monitor institutions' electronic disclosure practices with regard to the ability of consumers to retain Regulation E disclosures and will consider further regulatory action if it appears necessary. The official staff commentary to § 205.17 of the interim final rule provides guidance on the provisions set forth in § 205.17 such as delivery of disclosures or alert notices by e-mail, redelivery if disclosures or a notice is returned undelivered, and retention of disclosures on a Web site for 90 days. As noted above, because the Board is proposing to delete § 205.17 of the regulation, the Board also proposes to delete the accompanying provisions of the official staff commentary. IV. Solicitation of Comments Regarding the Use of “Plain Language” Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand. V. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* )

(EFT)systems. The primary purpose of the act is the provision of individual consumer rights. 15 U.S.C. 1593. The EFTA authorizes the Board to prescribe regulations to carry out the purposes of the statute. 15 U.S.C. 1693b. The Act expressly states that the Board's regulations may contain “such classifications, differentiations, or other provisions, * * * as, in the judgment of the Board, are necessary or proper to carry out the purposes of [the Act], to prevent circumvention or evasion [of the act], or to facilitate compliance [with the Act].” 15 U.S.C. 1693b(c). The Board believes that the revisions to Regulation E discussed above are within the Congress' broad grant of authority to the Board to adopt provisions that carry out the purposes of the statute. 2. *Small entities affected by the proposal.* The proposed revisions would delete provisions of Regulation E that are not in effect on a mandatory basis and, accordingly, the proposed revisions would not change the legal requirements applicable to any financial institutions, regardless of their size. Therefore, the proposed revisions would not have a significant economic impact on small entities. The number of small entities affected by this proposal is unknown. 3. *Other federal rules.* The Board believes no federal rules duplicate, overlap, or conflict with the proposed revisions to Regulation E. 4. *Significant alternatives to the proposed revisions.* The Board solicits comment on any significant alternatives that may provide additional ways to reduce regulatory burden associated with this proposed rule. VI. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the rule under the authority delegated to the Board by the Office of Management and Budget (OMB). The collection of information that is required by this proposed rule is found in 12 CFR part 205. The Federal Reserve may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number is 7100-0200. Section 904 of the Electronic Fund Transfer Act

(EFTA)(15 U.S.C. § 1693b) authorizes the Board to issue regulations to carry out the purposes of the Act. This information collection is mandatory. Since the Federal Reserve does not collect any information, no issue of confidentiality normally arises. However, the information, if made available to the Federal Reserve, may be protected from disclosure under exemptions (b)(4), (6), and

(8)of the Freedom of Information Act (5 U.S.C. 552 (b)(4), (6), and (8)). The disclosures required by the rule and information about error allegations and their resolution are confidential between the institution and the consumer. The EFTA and Regulation E are designed to ensure adequate disclosure of basic terms, costs, and rights relating to electronic fund transfer

(EFT)services provided to consumers. Institutions offering EFT services must disclose to consumers certain information, including: initial and updated EFT terms, transaction information, periodic statements of activity, the consumer's potential liability for unauthorized transfers, and error resolution rights and procedures. These disclosures are triggered by certain events specified in the EFTA and Regulation E. Institutions are required to retain evidence of compliance for not less than two years from the date that disclosures are required to be made or action is required to be taken; however, the regulation does not specify the types of records that must be retained. To ease institutions' burden and cost of complying with the disclosure requirements of Regulation E (particularly for small entities), the Federal Reserve publishes model forms and disclosure clauses. Regulation E applies to all financial institutions and merchants and payees that engage in ECK transactions. The Board has determined that no new requirements or revisions to existing requirements are contained in this proposed rule. Comments are invited on: a. Whether the collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; b. the accuracy of the Federal Reserve's estimate of the burden of the information collection, including the cost of compliance; c. ways to enhance the quality, utility, and clarity of the information to be collected; and d. ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0202), Washington, DC 20503. List of Subjects in 12 CFR Part 205 Consumer protection, Electronic fund transfers, Federal Reserve System, Reporting and recordkeeping requirements. Text of Proposed Revisions Certain conventions have been used to highlight the proposed changes to Regulation E. New language is shown inside bold-faced arrows, while language that would be removed is set off with bold-faced brackets. For the reasons set forth in the preamble, the Board proposes to amend Regulation E, 12 CFR part 205, as set forth below: PART 205—ELECTRONIC FUND TRANSFERS (REGULATION E) 1. The authority citation for part 205 continues to read as follows: Authority: 15 U.S.C. 1693b. 2. Section 205.4 would be amended by revising paragraph (a)(1), removing paragraph (c), and redesignating paragraph

(d)as paragraph (c), and paragraph

(e)as paragraph (d), respectively, as follows: § 205.4 General disclosure requirements; jointly offered services. (a)(1) *Form of disclosures.* Disclosures required under this part shall be clear and readily understandable, in writing, and in a form the consumer may keep. ▸The disclosures required by this part may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act)(15 U.S.C. 7001 *et seq.* ).◂ A financial institution may use commonly accepted or readily understandable abbreviations in complying with the disclosure requirements of this part. [(c) *Electronic communication.* For rules governing the electronic delivery of disclosures, including the definition of electronic communication, see § 205.17.] [(d)] ▸(c)◂ *Multiple accounts and account holders* —(1) *Multiple accounts.* A financial institution may combine the required disclosures into a single statement for a consumer who holds more than one account at the institution.

(2)*Multiple account holders.* For joint accounts held by two or more consumers, a financial institution need provide only one set of required disclosures and may provide them to any of the account holders. [(e)] ▸(d)◂ *Services offered jointly.* Financial institutions that provide electronic fund transfer services jointly may contract among themselves to comply with the requirements that this part imposes on any or all of them. An institution need make only the disclosures required by §§ 205.7 and 205.8 that are within its knowledge and within the purview of its relationship with the consumer for whom it holds an account. § 205.17 [Removed and Reserved] 3. Section 205.17 would be removed and reserved. 4. In Supplement I to Part 205, Section 205.17 would be removed and reserved. By order of the Board of Governors of the Federal Reserve System, April 20, 2007. Jennifer J. Johnson, Secretary of the Board [FR Doc. E7-7876 Filed 4-27-07; 8:45 am] BILLING CODE 6210-01-P FEDERAL RESERVE SYSTEM 12 CFR Part 213 [Regulation M; Docket No. R-1283] Consumer Leasing AGENCY: Board of Governors of the Federal Reserve System. ACTION: Proposed rule; request for comments. SUMMARY: The Board is proposing to amend Regulation M, which implements the Consumer Leasing Act, to withdraw portions of the interim final rules for the electronic delivery of disclosures issued March 30, 2001. The interim final rules address the timing and delivery of electronic disclosures, consistent with the requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign Act). Compliance with the 2001 interim final rules is not mandatory. Thus, removing the interim rules from the *Code of Federal Regulations* would reduce confusion about the status of the provisions and simplify the regulation. The Board is also proposing to amend Regulation M to provide that when an advertisement is accessed by a consumer in electronic form, certain disclosures must be provided to the consumer in electronic form on or with the advertisement, and that in these circumstances the consumer consent and other provisions of the E-Sign Act do not apply. Similar rules are being proposed under other consumer fair lending and financial services regulations administered by the Board. DATES: Comments must be received on or before June 29, 2007. ADDRESSES: You may submit comments, identified by Docket No. R-1283, by any of the following methods: • *Agency Web site: http://www.federalreserve.gov.* Follow the instructions for submitting comments at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.* • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • *E-mail: regs.comments@federalreserve.gov.* Include the docket number in the subject line of the message. • *FAX:*

(202)452-3819 or

(202)452-3102. • *Mail:* Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: John C. Wood or David A. Stein, Counsels, Division of Consumer and Community Affairs, at

(202)452-2412 or

(202)452-3667. For users of Telecommunications Device for the Deaf

(TDD)only, contact

(202)263-4869. SUPPLEMENTARY INFORMATION: I. Background The Consumer Leasing Act (CLA), 15 U.S.C. 1667-1667e, was enacted into law in 1976 as an amendment to the Truth in Lending Act (TILA), 15 U.S.C. 1601 *et seq.* The CLA requires lessors to provide lessees with uniform cost and other disclosures about consumer lease transactions. The act generally applies to consumer leases of personal property in which the contractual obligation does not exceed $25,000 and has a term of more than four months. An automobile lease is the most common type of consumer lease covered by the act. The Board's Regulation M (12 CFR part 213) implements the act. The CLA and Regulation M require disclosures to be provided in writing. Board Proposals Regarding Electronic Disclosures On May 2, 1996, the Board proposed to amend Regulation E (Electronic Fund Transfers) to permit financial institutions to provide disclosures by sending them electronically (61 FR 19696). Based on comments received, in 1998 the Board published an interim rule permitting the electronic delivery of disclosures under Regulation E (63 FR 14528, March 25, 1998) and proposals under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings) (63 FR 14552, 14538, 14548, and 14533, respectively, March 25, 1998). Based on comments received on the 1998 proposals, in September 1999 the Board published revised proposals under Regulations B, E, M, Z, and DD (64 FR 49688, 49699, 49713, 49722 and 49740, respectively, September 14, 1999). At the same time, the Board published an interim rule under Regulation DD allowing depository institutions to deliver disclosures on periodic statements in electronic form if the consumer agreed (64 FR 49846, September 14, 1999). While these rulemakings were pending, federal legislation was enacted addressing the use of electronic documents and records, including consumer disclosures. Federal Legislation Addressing Electronic Commerce On June 30, 2000, the President signed into law the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The E-Sign Act provides that electronic documents and electronic signatures have the same validity as paper documents and handwritten signatures. The E-Sign Act contains special rules for the use of electronic disclosures in consumer transactions. Under the E-Sign Act, consumer disclosures required by other laws or regulations to be provided or made available in writing may be provided or made available, as applicable, in electronic form if the consumer affirmatively consents after receiving a notice that contains certain information specified in the statute, and if certain other conditions are met. The E-Sign Act, including the special consumer notice provisions, became effective October 1, 2000, and did not require implementing regulations. Thus, financial institutions are currently permitted to provide in electronic form any disclosures that are required to be provided or made available to the consumer in writing under Regulations B, E, M, Z, and DD if the consumer affirmatively consents to receipt of electronic disclosures in the manner required by section 101(c) of the E-Sign Act. The Interim Final Rules On March 30, 2001, the Board published for comment interim final rules to establish uniform standards for the electronic delivery of disclosures required under Regulation M (66 FR 17322). Similar interim final rules for Regulations B, E, Z, and DD were published on March 30, 2001 (66 FR 17329 (Z)) and April 4, 2001 (66 FR 17779 (B), 66 FR 17786 (E), and 66 FR 17795 (DD)). The interim final rules incorporated most of the provisions that were part of the 1999 proposals. Each of the interim final rules incorporated, but did not interpret, the requirements of the E-Sign Act. Lessors, financial institutions, creditors, and other persons, as applicable, generally were required to obtain consumers' affirmative consent to provide disclosures electronically, consistent with the requirements of the E-Sign Act. The 2001 interim final rule for Regulation M established uniform requirements for the timing and delivery of electronic disclosures. Under the interim rule, disclosures could be sent to an e-mail address designated by the lessee, or could be made available at another location, such as an Internet Web site. If the disclosures were not sent by e-mail, lessors would have to provide a notice to lessees alerting them to the availability of the disclosures. Disclosures posted on a Web site would have to be available for at least 90 days to allow lessees adequate time to access and retain the information. Lessors also would be required to make a good faith attempt to redeliver electronic disclosures that were returned undelivered, using the address information available in their files. Similar provisions were included in the interim final rules adopted under Regulations B, E, Z, and DD. Commenters on the interim final rules identified significant operational and information security concerns with respect to the requirement to send the disclosure or an alert notice to an e-mail address designated by the consumer. For example, commenters stated that some consumers do not have e-mail addresses or may not want personal financial information sent to them by e-mail. Commenters also noted that e-mail is not a secure medium for delivering confidential information and that consumers' e-mail addresses frequently change. The commenters also opposed the requirement for redelivery in the event a disclosure was returned undelivered. In addition, many commenters asserted that making the disclosures available for at least 90 days, as required by the interim final rule, would increase costs and would not be necessary for consumer protection. In August 2001, in response to comments received, the Board lifted the previously established October 1, 2001 mandatory compliance date for all of the interim final rules. (66 FR 41439, August 8, 2001.) Thus, institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules on electronic disclosures in order to allow electronic commerce, including electronic disclosure practices, to continue to develop without regulatory intervention and to allow the Board to gather further information about such practices. II. The Proposed Rules The Board is proposing to amend Regulation M and the official staff commentary by

(1)withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act and accordingly are unnecessary;

(2)withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and

(c)incorporate by reference provisions of the E-Sign Act, such as the provision allowing disclosures to be provided in electronic form and the requirement to obtain the lessee's affirmative consent before providing such disclosures. The deletion of these provisions will have no impact on the general applicability of the E-Sign Act to Regulation M disclosures. Sections 213.6(d) and

(e)address specific timing and delivery requirements for electronic disclosures under Regulation M, such as the requirement to send disclosures to a lessee's e-mail address (or post the disclosures on a Web site and send a notice alerting the lessee to the disclosures). The Board no longer believes that these additional provisions are necessary or appropriate. Electronic disclosures have evolved since 2001, as industry and consumers have gained experience with them. Although many institutions offer e-mail alert notices to consumers, some consumers may choose not to receive notifications by e-mail and the Board sees no reason to require e-mail alert notices. In addition, the Board has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and phishing that have become more pronounced since 2001. With regard to the requirement to attempt to redeliver returned electronic disclosures, as the commenters noted, lessors would be required to search their files for an additional e-mail address to use, and might be required to use a postal mail address for redelivery if no additional e-mail address was available. The Board believes that both requirements would likely be unduly burdensome. In addition, the concerns that have been raised about the requirement to use e-mail for the initial delivery of a disclosure or notice apply equally to the use of e-mail for an attempted redelivery. Under the proposed rule, the Board would not require lessors to maintain disclosures posted on a Web site for at least 90 days as provided in the 2001 interim final rule. While the Board is not proposing to require disclosures to be maintained on an Internet Web site for any specific time period, the general requirements of Regulation M continue to apply to electronic disclosures, such as the requirement to provide disclosures to lessees at a specified time and in a form that the lessee may keep. Although these general requirements apply to electronic disclosures, the Board does not believe that the 90-day time period set out in § 213.6(d) of the 2001 interim final rule is needed to ensure that lessors satisfy these requirements when they provide electronic disclosures. The Board, however, will monitor lessors' electronic disclosure practices with regard to the ability of lessees to retain Regulation M disclosures and will consider further regulatory action if it appears necessary. The official staff commentary to § 213.6 of the interim final rule provides guidance on the provisions set forth in § 213.6 such as delivery of disclosures or alert notices by e-mail, redelivery if disclosures or a notice is returned undelivered, and retention of disclosures on a Web site for 90 days. As noted above, because the Board is proposing to delete § 213.6 of the regulation, the Board also proposes to delete the accompanying provisions of the official staff commentary. Section 213.7 Advertising Section 213.7 contains requirements for lease advertisements and requires that if an advertisement includes certain “trigger terms” (such as the payment amount), the advertisement must also include certain required disclosures (such as the total amount due prior to or at consummation and a statement that an extra charge may be imposed at the end of the lease term). Section 213.7(c) relates to catalogs and other multipage advertisements and (under this proposal) to electronic advertisements. The Board is proposing to add a new comment 7(c)-3 to clarify that if a consumer accesses a lease advertisement in electronic form, the disclosures required on or with the advertisement must be provided to the consumer in electronic form on or with the advertisement. A consumer accesses an advertisement in electronic form when, for example, the consumer views the advertisement on his or her home computer. On the other hand, if a consumer receives a written advertisement in the mail, the lessor would *not* satisfy its obligation to provide the disclosures at that time by including a reference in the advertisement to the Web site where the disclosures are located. Section 213.7(c) provides that in a catalog or other multipage advertisement, the required disclosures need not be shown on each page where a “trigger term” appears, as long as each such page includes a cross-reference to the page where the required disclosures appear. The 2001 interim final rule clarified, in comment 7(c)-2, that the multipage rule for lease advertising also applies to advertisements in electronic form. For example, if a “trigger term” appears on a particular web page, the additional disclosures may appear in a table or schedule on another web page and still be considered part of a single advertisement if there is a clear reference to the page or location where the table or schedule begins (which may be accomplished, for example, by including a link). The Board proposes to retain the rule allowing the use of links or other cross-references in electronic credit advertisements to provide guidance on how the advertising rules apply to Web sites, by amending § 213.7(c), as well as by retaining comment 7(c)-2 with minor wording changes. Section 213.7(b)(1) requires that any affirmative or negative reference to a charge that constitutes part of the total amount due prior to or at consummation of the lease not be more prominent in the advertisement than the disclosure of the total amount due. In the 2001 interim final rule, comment 7(b)(1)-3 was added to state that in an advertisement using electronic communication, both the reference to the charge and the disclosure of the total amount due must appear in the same location so that they can be viewed simultaneously. Section 213.7(b)(2) requires that a percentage rate in an advertisement not be more prominent than any of the required disclosures, except for a notice required to accompany the rate under § 213.4(s). The interim final rule revised comment 7(b)(2)-1 to state that in an advertisement using electronic communication, both the rate and the accompanying notice must appear in the same location so that they can be viewed simultaneously, and that this requirement is not satisfied by the use of a link that connects the consumer to information appearing at another location. The Board proposes to delete comment 7(b)(1)-3, and to delete the language added to comment 7(b)(2)-1 by the interim final rule, as unnecessary. The prominence requirements of § 213.7(b) continue to apply to electronic advertisements no less than to advertisements in other media. Requiring the consumer to scroll to another part of the page, or access a link, in order to view the required disclosures would likely not satisfy this requirement. IV. Solicitation of Comments Regarding the Use of “Plain Language” Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand. V. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* )

(RFA)generally requires an agency to perform an assessment of the impact a rule is expected to have on small entities. However, under section 605(b) of the RFA, 5 U.S.C. 605(b), the regulatory flexibility analysis otherwise required under section 604 of the RFA is not required if an agency certifies, along with a statement providing the factual basis for such certification, that the rule will not have a significant economic impact on a substantial number of small entities. Based on its analysis and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial number of small entities. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period. 1. *Statement of the objectives of the proposal.* The Board is proposing revisions to Regulation M to withdraw the 2001 interim final rule on electronic communication and to allow lessors to provide certain disclosures to lessees in electronic form on or with an advertisement that is accessed by the lessee in electronic form without regard to the consumer consent and other provisions of the E-Sign Act. The Board is also proposing to clarify that other Regulation M disclosures may be provided to lessees in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act. The purpose of CLA is to assure a meaningful disclosure of the terms of consumer leases, so that the lessee can compare more readily the various lease terms available, limit balloon payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and assure meaningful and accurate disclosures of lease terms in advertisements. 15 U.S.C. 1601. CLA authorizes the Board to prescribe regulations to carry out the purposes of the statute. 15 U.S.C. 1604(a), 1667f. The Act expressly states that the Board's regulations may contain “such classifications, differentiations, or other provisions, * * *, as in the judgment of the Board are necessary or proper to effectuate the purposes of [the Act], to prevent circumvention or evasion of [the Act], or to facilitate compliance with [the Act].” 15 U.S.C. 1604(a). The Board believes that the revisions to Regulation M discussed above are within Congress's broad grant of authority to the Board to adopt provisions that carry out the purposes of the statute. These revisions facilitate the informed use of leases by consumers in circumstances where a consumer accesses a lease advertisement in electronic form. 2. *Small entities affected by the proposal.* The ability to provide advertising disclosures in electronic form on or with an advertisement that is accessed by the consumer in electronic form applies to all lessors, regardless of their size. Accordingly, the proposed revisions would reduce burden and compliance costs for small entities by providing relief, to the extent the E-Sign Act applies in these circumstances. The number of small entities affected by this proposal is unknown. 3. *Other federal rules.* The Board believes no federal rules duplicate, overlap, or conflict with the proposed revisions to Regulation M. 4. *Significant alternatives to the proposed revisions.* The Board solicits comment on any significant alternatives that may provide additional ways to reduce regulatory burden associated with this proposed rule. VI. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the rule under the authority delegated to the Board by the Office of Management and Budget (OMB). The collection of information that is required by this proposed rule is found in 12 CFR part 213. The Federal Reserve may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number is 7100-0202. Sections 105(a) and 187 of TILA (15 U.S.C. 1604(a) and 1667f) authorize the Board to issue regulations to carry out the provisions of the Consumer Leasing Act (CLA). The CLA and Regulation M are intended to provide consumers with meaningful disclosures about the costs and terms of leases for personal property. The disclosures enable consumers to compare the terms for a particular lease with those for other leases and, when appropriate, to compare lease terms with those for credit transactions. The act and regulation also contain rules about advertising consumer leases and limit the size of balloon payments in consumer lease transactions. The information collection pursuant to Regulation M is triggered by specific events. All disclosures must be provided to the lessee prior to the consummation of the lease and when the availability of consumer leases on particular terms is advertised. This information collection is mandatory. Since the Federal Reserve does not collect any information, no issue of confidentiality normally arises. However, in the event the Board were to retain records regarding consumer leases during the course of an examination, the information regarding the consumer and the lease would be kept confidential pursuant to section (b)(8) of the Freedom of Information Act (5 U.S.C. 522(b)(8)). Regulation M applies to all types of lessors of personal property. The Federal Reserve accounts for the paperwork burden associated with the regulation only for Federal Reserve-supervised institutions. Appendix B of Regulation M defines the Federal Reserve-supervised institutions as: State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act. Other federal agencies account for the paperwork burden on other lessors for which they have administrative enforcement authority. To ease the compliance cost (particularly for small entities) model forms are appended to the regulation. Lessors are required to retain evidence of compliance for twenty-four months, but the regulation does not specify types of records that must be retained. The estimated annual burden for the entities supervised by the Federal Reserve is approximately 3,534 hours for the 270 State member banks that engage in consumer leasing. As mentioned in the Preamble, § 213.3 would be revised to clarify the disclosure requirements in §§ 213.4 and 213.7. The Federal Reserve estimates that 270 respondents would take approximately 6.5minutes per transaction to comply with the existing disclosure requirements in § 213.4 and estimates the annual burden to be 3,509 hours. The Federal Reserve estimates that 15 respondents would take approximately 2.5 minutes per transaction to comply with the existing disclosure requirements in § 213.7 and estimates the annual burden to be 25 hours. The Federal Reserve requests specific comment on whether the revisions in this proposed rule would change the burden on respondents. Comments are invited on: a. Whether the collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; b. the accuracy of the Federal Reserve's estimate of the burden of the information collection, including the cost of compliance; c. ways to enhance the quality, utility, and clarity of the information to be collected; and d. ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0202), Washington, DC 20503. List of Subjects in 12 CFR Part 213 Advertising, Federal Reserve System, Reporting and recordkeeping requirements, Truth in lending. Text of Proposed Revisions Certain conventions have been used to highlight the proposed changes to Regulation M. New language is shown inside bold-faced arrows, while language that would be removed is set off with bold-faced brackets. For the reasons set forth in the preamble, the Board proposes to amend Regulation M, 12 CFR part 213, as set forth below: PART 213—CONSUMER LEASING (REGULATION M) 1. The authority citation for part 213 continues to read as follows: Authority: 15 U.S.C. 1604 and 1667f. 2. Section 213.3 would be amended by revising paragraph

(a)introductory text and removing paragraph (a)(5), to read as follows: § 213.3 General disclosure requirements.

(a)*General requirements* . A lessor shall make the disclosures required by § 213.4, as applicable. The disclosures shall be made clearly and conspicuously in writing in a form the consumer may keep, in accordance with this section. ▸The disclosures required by this part may be provided to the lessee in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. § 7001 *et seq.* ). For an advertisement accessed by the consumer in electronic form, the disclosures required by § 213.7 must be provided to the consumer in electronic form on or with the advertisement. The § 213.7 disclosures may be made in electronic form without regard to the consumer consent or other provisions of the E-Sign Act.◂ [(5) *Electronic communication* . For rules governing the electronic delivery of disclosures, including a definition of electronic communication, see § 213.6.] § 213.6 [Removed and Reserved] 3. Section 213.6 would be removed and reserved. 4. Section 213.7 would be amended by revising paragraph (c), to read as follows: § 213.7 Advertising.

(c)*Catalogs or other multipage advertisements ▸; electronic advertisements◂. A catalog or other multipage advertisement ▸, or an electronic advertisement (such as an advertisement appearing on an Internet Web site),◂ that provides a table or schedule of the required disclosures shall be considered a single advertisement if, for lease terms that appear without all the required disclosures, the advertisement refers to the page or pages on which the table or schedule appears.* 5. In Supplement I to Part 213, the following amendments would be made: a. Section 213.6 would be removed and reserved. b. In *Section 213.7—Advertising* , under *7(b)(1) Amount Due at Lease Signing or Delivery* , paragraph 3. would be removed. c. In *Section 213.7—Advertising* , under *7(b)(2) Advertisement of a Lease Rate* , paragraph 1., the last two sentences would be removed. d. In *Section 213.7—Advertising* , under *7(c) Catalogs or Other Multipage Advertisements; Electronic Advertisements* , paragraph 2. would be revised and new paragraph 3. would be added. The amendments read as follows: Supplement I to Part 213—Official Staff Commentary to Regulation M Section 226.7—Advertising *7(b)(1) Amount Due at Lease Signing or Delivery* [3. *Electronic advertisements* . For advertisements using electronic communication, to satisfy the prominence rule in § 213.7(b)(1), both the triggering terms and the required disclosures must appear in the same location so that they can be viewed simultaneously.] *7(b)(2) Advertisement of a Lease Rate* 1. *Location of statement* . The notice required to accompany a percentage rate stated in an advertisement must be placed in close proximity to the rate without any other intervening language or symbols. For example, a lessor may not place an asterisk next to the rate and place the notice elsewhere in the advertisement. In addition, with the exception of the notice required by § 213.4(s), the rate cannot be more prominent than any other § 213.4 disclosure stated in the advertisement. [For advertisements using electronic communication, to comply with proximity rule in, both the rate and the accompanying notice must appear in the same location so that they can be viewed simultaneously. The prominent rule in § 213.7(b)(2) is not met if the disclosures can be viewed only by use of a link that connects the consumer to the information appearing at another location.] *7(c) Catalogs or Other Multipage Advertisements; Electronic Advertisements* 2. *Cross references* . A catalog or other multiple-page advertisement or an electronic advertisement ▸(such as an advertisement appearing on an Internet web site)◂ is a single advertisement (requiring only one set of lease disclosures) if it contains a table, chart, or schedule with the disclosures required under § 213.7(d)(2)(i) through (v). If one of the triggering terms listed in § 213.7(d)(1) appears in a catalog, or in a multiple-page or electronic advertisement, it must clearly direct the consumer to the page or location where the table, chart, or schedule begins. For example, in an electronic advertisement, a term triggering additional disclosures may be accompanied by a link that directly connects the consumer to the additional information [(but see comments under § 213.7(b) about rules regarding the prominence of disclosures)]. ▸3. *Electronic form of disclosures* . For an advertisement that is accessed by the consumer in electronic form (such as an advertisement appearing on an Internet web site), the disclosures required under this section must be provided to the consumer in electronic form on or with the advertisement. Providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer views a paper advertisement, the required disclosures must be provided in paper form on or with the advertisement. For example, if a consumer receives an advertisement in the mail, the creditor would *not* satisfy its obligation to provide the disclosures at that time by including a reference in the advertisement to the web site where the disclosures are located.◂ By order of the Board of Governors of the Federal Reserve System, April 20, 2007. Jennifer J. Johnson, Secretary of the Board. [FR Doc. E7-7877 Filed 4-27-07; 8:45 am] BILLING CODE 6210-01-P FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Regulation Z; Docket No. R-1284] Truth in Lending AGENCY: Board of Governors of the Federal Reserve System. ACTION: Proposed rule; request for comments. SUMMARY: The Board is proposing to amend Regulation Z, which implements the Truth in Lending Act, to withdraw portions of the interim final rules for the electronic delivery of disclosures issued March 30, 2001. The interim final rules address the timing and delivery of electronic disclosures, consistent with the requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign Act). Compliance with the 2001 interim final rules is not mandatory. Thus, removing the interim rules from the *Code of Federal Regulations* would reduce confusion about the status of the provisions and simplify the regulation. The Board is also proposing to amend Regulation Z to provide that when an application, solicitation, or advertisement is accessed by a consumer in electronic form, certain disclosures must be provided to the consumer in electronic form on or with the application, solicitation, or advertisement, and that in these circumstances the consumer consent and other provisions of the E-Sign Act do not apply. The proposal would also implement certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Similar rules are being proposed under other consumer fair lending and financial services regulations administered by the Board. DATES: Comments must be received on or before June 29, 2007. ADDRESSES: You may submit comments, identified by Docket No. R-1284, by any of the following methods: • *Agency Web site: http://www.federalreserve.gov* . Follow the instructions for submitting comments at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* . • *Federal eRulemaking Portal: http://www.regulations.gov* . Follow the instructions for submitting comments. • *E-mail: regs.comments@federalreserve.gov* . Include the docket number in the subject line of the message. • *FAX:*

(202)452-3819 or

(202)452-3102. • *Mail:* Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at *www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: John C. Wood or David A. Stein, Counsels, Division of Consumer and Community Affairs, at

(202)452-2412 or

(202)452-3667. For users of Telecommunications Device for the Deaf

(TDD)only, contact

(202)263-4869. SUPPLEMENTARY INFORMATION: I. Background The purpose of the Truth in Lending Act (TILA), 15 U.S.C. 1601 *et seq.* , is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. The Board's Regulation Z (12 CFR part 226) implements the act. The act requires creditors to disclose the cost of credit as a dollar amount (the finance charge) and as an annual percentage rate (the APR). Uniformity in creditors' disclosures is intended to promote the informed use of credit and assist in shopping for credit. TILA requires additional disclosures for loans secured by consumers' homes and permits consumers to rescind certain transactions that involve their principal dwellings. TILA and Regulation Z require a number of disclosures to be provided in writing. Board Proposals Regarding Electronic Disclosures On May 2, 1996, the Board proposed to amend Regulation E (Electronic Fund Transfers) to permit financial institutions to provide disclosures by sending them electronically (61 FR 19,696). Based on comments received, in 1998 the Board published an interim rule permitting the electronic delivery of disclosures under Regulation E (63 FR 14,528, March 25, 1998) and proposals under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings) (63 FR 14,552, 14,538, 14,548, and 14,533, respectively, March 25, 1998). Based on comments received on the 1998 proposals, in September 1999 the Board published revised proposals under Regulations B, E, M, Z, and DD (64 FR 49,688, 49,699, 49,713, 49,722 and 49,740, respectively, September 14, 1999). At the same time, the Board published an interim rule under Regulation DD allowing depository institutions to deliver disclosures on periodic statements in electronic form if the consumer agreed (64 FR 49,846, September 14, 1999). While these rulemakings were pending, Federal legislation was enacted addressing the use of electronic documents and records, including consumer disclosures. Federal Legislation Addressing Electronic Commerce On June 30, 2000, the President signed into law the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The E-Sign Act provides that electronic documents and electronic signatures have the same validity as paper documents and handwritten signatures. The E-Sign Act contains special rules for the use of electronic disclosures in consumer transactions. Under the E-Sign Act, consumer disclosures required by other laws or regulations to be provided or made available in writing may be provided or made available, as applicable, in electronic form if the consumer affirmatively consents after receiving a notice that contains certain information specified in the statute, and if certain other conditions are met. The E-Sign Act, including the special consumer notice provisions, became effective October 1, 2000, and did not require implementing regulations. Thus, financial institutions are currently permitted to provide in electronic form any disclosures that are required to be provided or made available to the consumer in writing under Regulations B, E, M, Z, and DD if the consumer affirmatively consents to receipt of electronic disclosures in the manner required by section 101(c) of the E-Sign Act. The Interim Final Rules On March 30, 2001, the Board published for comment interim final rules to establish uniform standards for the electronic delivery of disclosures required under Regulation Z (66 FR 17,329). Similar interim final rules for Regulations B, E, M, and DD were published on March 30, 2001 (66 FR 17,322 (M)) and April 4, 2001 (66 FR 17,779 (B), 66 FR 17,786 (E), and 66 FR 17,795 (DD)). The interim final rules incorporated most of the provisions that were part of the 1999 proposals. Each of the interim final rules incorporated, but did not interpret, the requirements of the E-Sign Act. Creditors and other persons, as applicable, generally were required to obtain consumers' affirmative consent to provide disclosures electronically, consistent with the requirements of the E-Sign Act. The 2001 interim final rule for Regulation Z established uniform requirements for the timing and delivery of electronic disclosures. Under the interim rule, disclosures could be sent to an e-mail address designated by the consumer, or could be made available at another location, such as an Internet Web site. If the disclosures were not sent by e-mail, creditors would have to provide a notice to consumers alerting them to the availability of the disclosures. Disclosures posted on a Web site would have to be available for at least 90 days to allow consumers adequate time to access and retain the information. Creditors also would be required to make a good faith attempt to redeliver electronic disclosures that were returned undelivered, using the address information available in their files. Similar provisions were included in the interim final rules adopted under Regulations B, E, M, and DD. Commenters on the interim final rules identified significant operational and information security concerns with respect to the requirement to send the disclosure or an alert notice to an e-mail address designated by the consumer. For example, commenters stated that some consumers do not have e-mail addresses or may not want personal financial information sent to them by e-mail. Commenters also noted that e-mail is not a secure medium for delivering confidential information and that consumers' e-mail addresses frequently change. The commenters also opposed the requirement for redelivery in the event a disclosure was returned undelivered. In addition, many commenters asserted that making the disclosures available for at least 90 days, as required by the interim final rule, would increase costs and would not be necessary for consumer protection. In August 2001, in response to comments received, the Board lifted the previously established October 1, 2001 mandatory compliance date for all of the interim final rules. (66 FR 41,439, August 8, 2001). Thus, institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules on electronic disclosures in order to allow electronic commerce, including electronic disclosure practices, to continue to develop without regulatory intervention and to allow the Board to gather further information about such practices. II. The Proposed Rules The Board is proposing to amend Regulation Z and the official staff commentary by

(1)withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act and accordingly are unnecessary;

(2)withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and

(3)retaining the substance of certain provisions of the interim final rule that provide regulatory relief or guidance regarding electronic disclosures. (Similar amendments are also being proposed by the Board, in today's issue of the **Federal Register** , under Regulations B, E, M, and DD). In addition, the proposal would amend the regulation to implement certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act. Because compliance with the 2001 interim final rules is not mandatory, removing most portions of the interim rules from the *Code of Federal Regulations* , while finalizing other provisions, would reduce confusion about the status of the electronic disclosure provisions and simplify the regulation. Certain provisions in the interim final rules, including provisions addressing foreign language disclosures, were not affected by the lifting of the mandatory compliance date and accordingly are now in final form; these provisions would not be deleted. The Board is also proposing to adopt certain provisions that are identical or similar to provisions in the 2001 interim final rules in order to enhance the ability of consumers to shop for credit online, minimize the information-gathering burdens on consumers, and provide guidance or eliminate a substantial burden on the use of electronic disclosures, as discussed further below. Finally, the Board is proposing to implement certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23 (the “Bankruptcy Act”), that amend TILA and relate to electronic disclosures. Since 2001, industry and consumers have gained considerable experience with electronic disclosures. During that period, the Board has received no indication that consumers have been harmed by the fact that compliance with the interim final rules is not mandatory. The Board also has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and “phishing” (i.e., prompting consumers to reveal confidential personal or financial information through fraudulent e-mail requests that appear to originate from a financial institution, government agency, or other trusted entity) that have become more pronounced since 2001. Finally, the Board is proposing to eliminate certain aspects of the 2001 interim final rule, such as provisions regarding the availability and retention of electronic disclosures, as unnecessary in light of current industry practices. The 2001 interim final rule allowed creditors to provide certain disclosures to consumers electronically, without regard to the consumer consent or other provisions of the E-Sign Act, for disclosures provided on or with an application or solicitation (the “shopping disclosures”) or an advertisement. The Board reasoned that these disclosures, which would be available to the general public while shopping for credit, did not “relate to a transaction,” which is a prerequisite for triggering the E-Sign consumer consent provisions, and thus were not subject to those provisions. Some commenters on the interim final rules did not agree with the Board's rationale. Upon further consideration, the Board does not believe it is necessary to determine whether or not these disclosures are related to a transaction. This proposal does not make such determinations. Instead, pursuant to the Board's authority under section 105(a) of TILA, as well as under section 104(d) of the E-Sign Act, 1 the Board is proposing to specify the circumstances under which certain disclosures may be provided to a consumer in electronic form, rather than in writing as generally required by Regulation Z, without obtaining the consumer's consent under section 101(c) of the E-Sign Act. The proposed rule would also amend various sections of Regulation Z, discussed in detail below, to clarify that certain disclosures must be provided to the consumer in electronic form on or with an application, solicitation, or advertisement that is accessed by the consumer in electronic form. 1 Section 105(a) of TILA provides that regulations prescribed by the Board under TILA “may provide for such adjustments and exceptions * * * as in the judgment of the Board, are necessary or proper to effectuate the purposes of [TILA], * * * or to facilitate compliance [with the requirements of TILA].” Section 104(d) of the E-Sign Act authorizes federal agencies to adopt exemptions for specified categories of disclosures from the E-Sign notice and consent requirements, “if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.” For the reasons stated in this **Federal Register** notice, the Board believes that these criteria are met in the case of the application, solicitation, and advertising disclosures. In addition, the Board believes TILA section 105(a) authorizes the Board to permit institutions to provide disclosures electronically, rather than in paper form, independent of the E-Sign Act. The Board continues to believe that creditors should not be required to obtain the consumer's consent in order to provide shopping or advertising disclosures to the consumer in electronic form if the consumer accesses an application, solicitation, or advertisement containing those disclosures in electronic form, such as at an Internet Web site. The Board believes consumers would not be harmed, and in fact would benefit, by having timely access to shopping and advertising disclosures in electronic form when they are shopping for credit online or viewing online credit advertising. Conversely, consumers who choose to apply for credit online would be unduly burdened if they had to consent in accordance with the E-Sign Act in order to access application forms that must be accompanied by disclosures. The Board also believes that consumers' ability to shop for credit online and compare the terms of various credit offers could be substantially diminished if consumers had to consent in accordance with the E-Sign Act in order to access solicitations and advertisements that must be accompanied by disclosures. Applying the consumer consent provisions of the E-Sign Act to these disclosures could impose substantial burdens on electronic commerce and make it more difficult for consumers to gather information and shop for credit. At the same time, the Board recognizes that consumers who shop or apply for credit online may not want to receive other disclosures electronically. Therefore, with respect to, for example, account-opening disclosures, periodic statements, and change-in-terms notices, creditors would be required to provide written disclosures or obtain the consumer's consent in accordance with the E-Sign Act to provide such disclosures in electronic form. Finally, the Board is proposing to delete, as unnecessary, certain provisions that restate or cross-reference the E-Sign Act's general rules regarding electronic disclosures (including the consumer consent provisions) and electronic signatures because the E-Sign Act is a self-effectuating statute. The proposed revisions to Regulation Z and the official staff commentary are described more fully below in the Section-by-Section Analysis. The Board solicits comment on all aspects of this proposal. Specifically, the Board seeks comment on the appropriateness of eliminating certain provisions and retaining other provisions contained in the 2001 interim final rule. III. Section-by-Section Analysis 12 CFR Part 226 (Regulation Z) Subpart B Open-End Credit Section 226.5 General Disclosure Requirements Section 226.5(a) prescribes the form of disclosures required for open-end credit plans. Section 226.5(a)(1) generally requires creditors to provide open-end credit disclosures in writing and in a form that the consumer may keep. The Board proposes to revise § 226.5(a)(1) to clarify that creditors may provide open-end credit disclosures to consumers in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. Some creditors may provide open-end credit disclosures to consumers both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those creditors, the duplicate electronic form of the open-end credit disclosures may be provided to consumers without regard to the consumer consent or other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's open-end credit disclosure requirements. Section 226.5(a)(1) would also be revised to provide that the open-end credit disclosures required by §§ 226.5a, 226.5b, and 226.16 may be provided to the consumer in electronic form, under the circumstances set forth in those sections, without regard to the consumer consent or other provisions of the E-Sign Act. The Board believes that, for an application, solicitation, or advertisement accessed by the consumer in electronic form, permitting creditors to provide credit and charge card application and solicitation disclosures, application disclosures for home equity lines of credit (HELOCs), and open-end credit advertising disclosures in electronic form without regard to the consumer consent and other provisions of the E-Sign Act will eliminate a potential significant burden on electronic commerce without increasing the risk of harm to consumers. This approach will facilitate shopping for credit by enabling consumers to receive important disclosures at the same time they access an application, solicitation, or advertisement without first having to provide consent in accordance with the requirements of the E-Sign Act. Requiring consumers to follow the consent procedures set forth in the E-Sign Act in order to access an online application, solicitation, or advertisement, or complete an online application is potentially burdensome and could discourage consumers from shopping for credit online. Moreover, because these consumers are viewing the application, solicitation, or advertisement online, there appears to be little, if any, risk that the consumer will be unable to view the disclosures online as well. Section 226.5(a)(5) in the 2001 interim final rule refers to § 226.36, the section of the interim final rule setting forth general rules for electronic disclosures. Because the Board is proposing to delete § 226.36, as discussed further below, the Board also proposes to delete § 226.5(a)(5). The 2001 interim final rule revised comment 5(b)(2)(ii)-3 to reference the E-Sign Act's consumer consent requirements. The Board proposes to delete this language as unnecessary because the E-Sign Act is a self-effectuating statute. Section 226.5a Credit and Charge Card Applications and Solicitations 5a(a) General Rules Section 226.5a(a)(2) prescribes the form of disclosures required with credit and charge card applications and solicitations. The Board proposes to amend § 226.5a(a)(2) by adding a new paragraph

(v)to provide that if a consumer accesses an application or solicitation for a credit or charge card in electronic form, the disclosures required on or with an application or solicitation for a credit or charge card must be provided to the consumer in electronic form on or with the application or solicitation. A consumer accesses an application or solicitation in electronic form when, for example, the consumer views the application or solicitation on his or her home computer. On the other hand, if a consumer receives an application or solicitation in the mail, the creditor would not satisfy its obligation to provide § 226.5a disclosures at that time by including a reference in the application or solicitation to the Web site where the disclosures are located. Comment 5a(a)(2)-9 would be added to clarify this point. Comment 5a(a)(2)-8 of the 2001 interim final rule states that a consumer must be able to access the electronic disclosures at the time the application form or solicitation reply form is made available by electronic communication. The Board proposes to revise this comment to describe alternative methods for presenting electronic disclosures, which are examples rather than an exhaustive list. Comment 5a(a)(2)-2.ii., which was added in 2000, specifies how the tabular disclosures required by § 226.5a can be “prominently located” if provided on or with electronic applications and solicitations, and is similar to revised comment 5a(a)(2)-8. Revised comment 5a(a)(2)-8 reminds creditors that for disclosures required to be provided in tabular form, the electronic form of the table must satisfy the requirements of comment 5a(a)(2)-2.ii. Section 1304 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. 109-8, 119 Stat. 23 (the “Bankruptcy Act”), amends Section 127(c) of TILA to require that credit card application and solicitation disclosures provided “using the Internet or other interactive computer service” must be “readily accessible to consumers in close proximity” to the solicitation. 15 U.S.C. 1637(c)(7). In connection with the Board's ongoing review of Regulation Z, the Board issued an Advance Notice of Proposed Rulemaking (70 FR 60235, October 17, 2005) (October 2005 ANPR), soliciting comments on how these Bankruptcy Act amendments should be implemented. The Bankruptcy Act provision applies to solicitations to open a card account “using the Internet or other interactive computer service.” The term “Internet” is defined as the international computer network of both Federal and non-Federal interoperable packet switched data networks. The term “interactive computer service” is defined as any information service, system or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions. 15 U.S.C. 1637(c)(7). Based on the definitions of “Internet” and “interactive computer service,” the Board believes that Congress intended to cover all card offers that are provided to consumers in electronic form. In the October 2005 ANPR, the Board solicited comment on what guidance the Board should provide regarding when disclosures are “readily accessible to consumers in close proximity” to an application or solicitation that is made in electronic form. In particular, the Board asked whether additional or different guidance is needed from the guidance previously issued by the Board. Most commenters stated that the Board should retain the existing guidance in comment 5a(a)(2)-2.ii on “prominent location” to interpret the “close proximity” standard. A few commenters stated that the 2000 guidance should not apply, and that, for example, it should suffice to provide a link to the disclosures that the consumer could choose to access or not. Some commenters urged the Board generally to allow maximum flexibility to creditors regarding the display of electronic disclosures, and stated that no guidance or specific rules were necessary. The Board intends to interpret the Bankruptcy Act's “close proximity” standard in its ongoing review of the credit card provisions of Regulation Z. Based on comments received on the October 2005 ANPR, the Board is considering how to apply the “close proximity” standard to electronic applications and solicitations, including whether to retain the existing guidance in comment 5a(a)(2)-2.ii. The Board anticipates issuing a proposal addressing these and other Regulation Z issues within the next few months. 5a(b) Required Disclosures 5a(c) Direct-Mail and Electronic Applications and Solicitations Section 226.5a(b)(1) sets forth rules for accuracy of the annual percentage rate

(APR)disclosure in an application or solicitation for a variable-rate credit card plan. Section 226.5a(b)(1)(ii) provides, in part, that direct mail APR disclosures are accurate if the rate was in effect within 60 days before mailing the disclosures. The 2001 interim final rule added a new § 226.5a(b)(1)(iii) to provide that, in the case of electronic disclosures, the variable APR disclosure is considered accurate if the disclosed rate was in effect within 30 days before the disclosure was sent by electronic mail to a consumer or made available at another location, such as the card issuer's Internet Web site, and amended § 226.5a(b)(1)(ii) to reference the new section. Preparing revised electronic disclosures when the index rate for a variable APR changes should require less time than revising printed materials in preparation for a direct mail campaign. Thus, specifying a shorter time frame for accuracy of electronic disclosures than for printed disclosures appeared reasonable. The 2001 interim final rule did not contain specific guidance on accuracy requirements for other disclosures provided electronically, such as fee disclosures. Section 226.5a(c) requires that certain disclosures be included on or with a credit card application or solicitation that is sent to consumers by direct mail. The 2001 interim final rule revised § 226.5a(c) to apply the direct mail rules to applications and solicitations provided to consumers electronically. More recently, section 1304 of the Bankruptcy Act amended Section 127(c) of TILA to require that solicitations to open a card account using the Internet or other interactive computer service must contain the same disclosures as those made for applications or solicitations sent by direct mail. Although this Bankruptcy Act provision refers to credit card solicitations (where no application is required), the Board requested comment in the October 2005 ANPR on whether the provision should be interpreted also to include applications provided electronically. Almost all commenters on this issue stated that there is no reason to treat electronic applications differently from electronic solicitations in applying the Bankruptcy Act provision. The Board concurs. With respect to both electronic applications and solicitations, it is important for consumers who are shopping for a card to receive accurate cost information about the card before submitting an electronic application or responding to an electronic solicitation. Thus, the Board proposes to use its authority in section 105(a) of TILA to apply the Bankruptcy Act provision relating to electronic offers to both electronic solicitations and applications, as necessary to effectuate the informed use of credit, a primary purpose of TILA. 15 U.S.C. 1601(a), 1604(a). The Bankruptcy Act also provides that the disclosures for electronic credit card offers must be “updated regularly to reflect the current policies, terms, and fee amounts.” In the October 2005 ANPR, the Board solicited comment on how that standard should be implemented. The majority of commenters to the October 2005 ANPR who addressed the accuracy of variable rates agreed that a 30-day standard would be appropriate to implement the “updated regularly” standard in the Bankruptcy Act. Some commenters advocated longer periods such as 60 days, or shorter periods such as daily or weekly updating, or suggested that the Board should not provide specific guidance or rules, instead allowing maximum flexibility in this area. The Board proposes to revise §§ 226.5a(b)(1) and 226.5a(c) to make the direct-mail provision of § 226.5a applicable to electronic applications and solicitations and to implement the “updated regularly” standard in the Bankruptcy Act with regard to the accuracy of variable APRs. Current § 226.5a(c) would be revised and renumbered as new § 226.5a(c)(1). A new § 226.5a(c)(2) would be added to address the accuracy of a variable APR in direct mail solicitations. This new section would require issuers to update variable APRs disclosed on mailed applications and solicitations every 60 days and variable APRs disclosed on applications and solicitations provided in electronic form every 30 days, and to update other terms when they change. The Board believes the 30-day and 60-day accuracy requirements for variable APRs strike an appropriate balance between seeking to ensure consumers receive updated information and avoiding imposing undue burdens on creditors. The Board does not believe it is necessary for creditors to disclose to consumers the exact variable APR in effect on the date the application or solicitation is accessed by the consumer because consumers should understand that variable APRs are subject to change. Moreover, it could be costly and operationally burdensome for creditors to comply with a requirement to disclose the exact variable APR in effect at the time the application or solicitation is accessed. The obligation to update the other terms when they change ensures that consumers receive information that is reasonably accurate and current, and should not impose significant burdens on issuers. Based on discussions with industry concerning operational issues, the Board understands that issuers typically change other terms infrequently, perhaps once or twice a year. Section 226.5a(c)(2) consists of two subsections. Section 226.5a(c)(2)(i) would provide that § 226.5a disclosures mailed to a consumer must be accurate as of the time the disclosures are mailed. This section would also provide that an accurate variable APR is one that is in effect within 60 days before mailing. Section 226.5a(c)(2)(ii) would provide that § 226.5a disclosures provided in electronic form (except for a variable APR) must be accurate as of the time they are sent to a consumer's e-mail address, or as of the time they are viewed by the public on a web site. For the reasons discussed above, this section would provide that a variable APR is accurate if it is in effect within 30 days before it is sent, or viewed by the public, as applicable. Presently, variable APRs on most credit cards may change on a monthly basis, so the Board believes the 30-day accuracy requirement for variable APRs is appropriate. Many of the provisions included in proposed § 226.5a(c)(2) have been incorporated from § 226.5a(b)(1). To eliminate redundancy, the Board proposes to revise § 226.5a(b)(1) by deleting § 226.5a(b)(1)(ii) and

(iii)and comment 5a(c)-1. The portion of § 226.5a(b)(1)(ii) that relates to the accuracy of APRs provided in “take-ones” would be incorporated in new § 226.5a(e)(5). Section 226.5b Requirements for Home-Equity Plans Section 226.5b(a) sets forth requirements for the form of disclosures required to be made on or with applications for HELOCs. The Board proposes to amend § 226.5b(a) by adding a new paragraph

(3)to provide that if a consumer accesses a HELOC application in electronic form, the disclosures required on or with an application for a HELOC must be provided to the consumer in electronic form on or with the application. A consumer accesses a HELOC application in electronic form when, for example, the consumer views the application on his or her home computer. On the other hand, if a consumer receives a HELOC application in the mail, the creditor would *not* satisfy its obligation to provide § 226.5b disclosures at that time by including a reference in the application to the web site where the disclosures are located. Comment 5b(a)(3)-1 would be added to clarify this point. Section 226.5b(c) states that persons other than the creditor that provide HELOC applications to consumers must provide the required home equity disclosures in certain cases. The 2001 interim final rule added a new § 226.5b(c)(2) to clarify that such third parties may use electronic disclosures. The Board is proposing to delete this provision as unnecessary because the E-Sign Act is a self-effectuating statute and permits any person to use electronic records subject to the conditions set forth in the Act. Comment 5b(b)-7 of the 2001 interim final rule states that a consumer must be able to access the electronic disclosures at the time the application form or solicitation reply form is made available by electronic communication. This comment is substantially similar to comment 5a(a)(2)-8 of the 2001 interim final rule, discussed above. The Board proposes to delete comment 5b(b)-7 and substitute a new comment 5b(a)(1)-5 in its place, which generally parallels the content of the revised comment 5a(a)(2)-8. The new comment would describe alternative methods for presenting electronic disclosures, which are examples rather than an exhaustive list. Comment 5b(a)(1)-5 would omit all references to reply forms to recognize that the HELOC disclosures are application disclosures. The renumbering of the comment reflects the Board's belief that the focus of this comment is the form of electronic disclosures, rather than the timing of those disclosures. Section 226.15 Right of Rescission Section 226.15 gives consumers the right to rescind certain open-end credit plans secured by their principal dwelling. Under § 226.15(b), creditors must provide two copies of a notice of this right to each consumer entitled to rescind. For written (paper) disclosures, this allows consumers to return one copy to the creditor if they exercise the right of rescission and retain the second copy. For rescission notices provided in electronic form, the 2001 interim final rule added language permitting creditors to provide only one copy of the electronic notice to each consumer when the notice is provided in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act. The Board proposes to retain this provision. It does not appear that consumers would benefit by receiving two electronic copies of rescission notices because a second electronic “copy” is unnecessary for purposes of consumer retention. In the 2001 interim final rule, comment 15(b)-1 was revised to state that if there is more than one property owner, a single rescission notice may be sent to each consumer if electronic communication is used, that each co-owner must consent to electronic disclosures, and that each must designate an electronic (e-mail) address to be used for this purpose. The Board believes, as discussed above, that provisions requiring the use of e-mail are no longer appropriate; comment 15(b)-1 would be revised accordingly. The Board also proposes to delete the statement that each co-owner must consent to electronic disclosures. Section 226.16 Advertising Section 226.16 contains requirements for advertisements for open-end credit, and in particular requires that if an advertisement includes certain “trigger terms” (such as an APR), the advertisement must also include certain required disclosures (such as minimum finance charge and transaction charges and annual fees). Section 226.16(c) relates to catalogs and other multiple-page advertisements and to electronic advertisements. The Board proposes to add a new paragraph

(3)to § 226.16(c) to clarify that if a consumer accesses an advertisement for open-end credit in electronic form, the disclosures required on or with the open-end credit advertisement must be provided to the consumer in electronic form on or with the advertisement. A consumer accesses an advertisement in electronic form when, for example, the consumer views the advertisement on his or her home computer. On the other hand, if a consumer receives a written advertisement in the mail, the creditor would *not* satisfy its obligation to provide § 226.16 disclosures at that time by including a reference in the advertisement to the web site where the disclosures are located. Comment 16(c)(3)-1 would be added to clarify this point. Section 226.16(c) provides that in a catalog or other multiple-page advertisement, the required disclosures need not be shown on each page where a “trigger term” appears, as long as each such page includes a cross-reference to the page where the required disclosures appear. The 2001 interim final rule clarified that this multiple-page rule also applies to credit advertisements in electronic form. For example, if a “trigger term” appears on a particular web page, the additional disclosures may appear in a table or schedule on another web page and still be considered part of a single advertisement if there is a clear reference to the page or location where the table or schedule begins (which may be accomplished, for example, by including a link). The Board proposes to retain the rule (in § 226.16(c)(1) and (2)) allowing the use of links or other cross-references in electronic credit advertisements to provide guidance on how the advertising rules apply to Web sites. The 2001 interim final rule revised comment 16(c)(1)-1 and added comment 16(c)(1)-2 to provide guidance on multiple-page advertisements in electronic form. Because the Board is proposing to retain the changes to § 226.16(c)(1) with minor wording changes, the Board is also proposing to retain comments 16(c)(1)-1 and 2 as revised by the 2001 interim final rule with corresponding wording changes. Subpart C Closed-end Credit Section 226.17 General Disclosure Requirements Section 226.17(a) prescribes the form of disclosures required for closed-end credit. Section 226.17(a)(1) requires creditors to provide closed-end credit disclosures in writing and in a form that the consumer may keep. The Board proposes to revise § 226.17(a)(1) to clarify that creditors may provide the closed-end credit disclosures to consumers in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. Some creditors may provide closed-end credit disclosures to consumers both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those creditors, the duplicate electronic form of the closed-end credit disclosures may be provided to consumers without regard to the consumer consent and other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's closed-end credit disclosure requirements. Section 226.17(a)(1) would also be revised to provide that the closed-end credit disclosures required by §§ 226.19(b) and 226.24 may be provided to the consumer in electronic form, and that the disclosures required by § 226.17(g) may be made available to the consumer or to the public in electronic form, under the circumstances set forth in those sections, without regard to the consumer consent or other provisions of the E-Sign Act. The Board believes that, for an application or advertisement accessed by the consumer in electronic form, permitting creditors to provide disclosures relating to applications for adjustable-rate mortgage

(ARM)loans secured by the consumer's principal dwelling (§ 226.19(b)) and closed-end credit advertising (§ 226.24) in electronic form, without regard to the consumer consent and other provisions of the E-Sign Act, will eliminate a potential significant burden on electronic commerce without increasing the risk of harm to consumers. This approach will assist consumers in shopping for credit by enabling them to receive important disclosures at the same time they access an application or advertisement without first having to provide consent in accordance with the requirements of the E-Sign Act. Requiring consumers to follow the consent procedures set forth in the E-Sign Act in order to access an online application or advertisement, or complete an online application is potentially burdensome and could discourage consumers from shopping for credit online. Moreover, because these consumers are viewing the application or advertisement online, there appears to be little, if any, risk that the consumer will be unable to view the disclosures online as well. Section 227.17(g) applies where a creditor receives a request for credit by mail, telephone, or electronic communication without face-to-face or direct telephone solicitation. In these circumstances, the creditor may delay making the TILA disclosures for the credit transaction until the due date of the first payment, provided certain disclosures (specified in § 226.17(g)(1)-(5)) have been made available to the consumer or to the public generally (such as in a catalog or advertisement). For example, a retailer may mail catalogs to consumers, or provides advertising inserts in newspapers, containing information for ordering merchandise by telephone or mail. If a consumer calls the retailer, orders an item, and agrees to pay for the item by obtaining a closed-end extension of credit from the retailer, the TILA closed-end disclosures would normally be required to be provided to the consumer before the consummation of the transaction. Since this is impracticable where the transaction is consummated by telephone, however, § 226.17(g) permits the retailer to delay providing the specific disclosures for the transaction, as long as the disclosures in § 226.17(g)(1)-(5), for representative amounts or ranges of credit, are included in the catalog or newspaper insert. In the 2001 interim final rule, the Board replaced the term “electronic communication” in § 226.17(g) with “facsimile machine.” The Board explained that the rule in § 226.17(g) predated Internet commerce, and the term “electronic communication” was intended to cover credit requests by facsimile or telegram. The rationale underlying the rule was that creditors are unable to provide written transaction-specific disclosures at the time of the consumer's credit request where the request is made by facsimile or telegram, no less than in the case of requests made by telephone or mail. That practical problem does not exist, however, where a consumer requests credit at a web site. Therefore, the Board believes it would be inappropriate to extend the application of § 226.17(g) to electronic requests for credit made at an Internet Web site. Accordingly, the Board proposes to retain the amendment to § 226.17(g) from the 2001 interim final rule. Where § 226.17(g) does apply, *i.e.* , where the consumer requests credit by telephone, mail, or facsimile machine, the regulation requires the creditor to make available in written form to the consumer or the public the disclosures set forth in § 226.17(g)(1)-(5) before the actual purchase order or request. The Board believes that these disclosures can appropriately be made available to the consumer or to the public either in electronic form (for example, on the creditor's web site) or in paper form. Accordingly, the Board proposes to amend § 226.17(g) to provide that the requirement to make available the § 226.17(g)(1)-(5) disclosures in written form to the consumer or to the public may be satisfied by making the disclosures available in electronic form, such as at a creditor's Web site. Thus, for example, a consumer might see information about a product on a retailer's web site and order the product by telephone using closed-end credit; the transaction-specific disclosures could be delayed, provided the § 226.17(g)(1)-(5) disclosures are set forth on the Web site. In this situation, the E-Sign consent procedures would not have to be followed in order for the § 226.17(g)(1)-(5) disclosures to be provided in electronic form. On the other hand, if the consumer ordered the product via the web site itself, the transaction-specific disclosures could not be delayed and would be required to be provided before consummation of the transaction. For the disclosures to be provided in electronic form in this situation, the E-Sign consent procedures would have to be followed. Section 226.17(a)(3) in the interim final rule cross-references § 226.36, the section of the interim final rule setting forth general rules for electronic disclosures. Because the Board is proposing to delete § 226.36, as discussed further below, the Board also proposes to delete § 226.17(a)(3). Section 226.19 Certain Residential Mortgage and Variable-Rate Transactions Section 226.19(b) requires creditors to provide certain disclosures relating to ARM loans secured by the consumer's principal dwelling when an application form is provided to the consumer or before the consumer pays a nonrefundable fee, whichever is earlier. The Board proposes to amend § 226.19 by adding a new paragraph

(c)to provide that if a consumer accesses a ARM application in electronic form, the disclosures required on or with an application for an ARM must be provided to the consumer in electronic form on or with the application. A consumer accesses an ARM application in electronic form when, for example, the consumer views the ARM application on his or her home computer. On the other hand, if a consumer receives an ARM application in the mail, the creditor would *not* satisfy its obligation to provide § 226.19 disclosures at that time by including a reference in the application to the web site where the disclosures are located. Comment 19(c)-1 would be added to clarify this point. Comment 19(b)-2 of the 2001 interim final rule states that a consumer must be able to access the electronic disclosures at the time the blank application form for ARMs is made available by electronic communication. The Board proposes to revise comment 19(b)-2 in a manner substantially similar to proposed comment 5b(a)(1)-5, discussed above. The revised comment would describe alternative methods for presenting electronic disclosures, which are examples rather than an exhaustive list. Section 226.23 Right of Rescission Section 226.23 gives consumers the right to rescind certain closed-end mortgage loans secured by their principal dwelling. Under § 226.23(b), creditors must provide two copies of a notice of this right to each consumer entitled to rescind. For written (paper) disclosures, this allows consumers to return one copy to the creditor if they exercise the right of rescission and retain the second copy. For rescission notices provided in electronic form, the 2001 interim final rule added language permitting creditors to provide only one copy of the electronic notice to each consumer when the notice is provided in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act. The Board proposes to retain this provision. It does not appear that consumers would benefit by receiving two electronic copies of rescission notices because a second electronic “copy” is unnecessary for purposes of consumer retention. In the 2001 interim final rule, comment 23(b)-1 was revised to state that if there is more than one property owner, a single rescission notice may be sent to each consumer if electronic communication is used, that each co-owner must consent to electronic disclosures, and that each must designate an electronic (e-mail) address to be used for this purpose. The Board believes, as discussed above, that provisions requiring the use of e-mail are no longer appropriate; comment 23(b)-1 would be revised accordingly. The Board also proposes to delete the statement that each co-owner must consent to electronic disclosures. The proposed revisions are consistent with the proposed revisions to comment 15(b)-1, discussed above, which relates to rescission in the context of open-end credit. Section 226.24 Advertising Section 226.24 contains requirements for advertisements for closed-end credit and requires that if an advertisement includes certain “trigger terms” (such as the payment amount), the advertisement must also include certain required disclosures (such as the APR, the amount or percentage of any downpayment, and the terms of repayment, as applicable). Section 226.24(d) relates to catalogs and other multiple-page advertisements and to electronic advertisements. The Board is proposing to add a new paragraph

(3)to § 226.24(d) (comparable to proposed new paragraph

(3)to § 226.16(c) for open-end credit advertising) to clarify that if a consumer accesses an advertisement for closed-end credit in electronic form, the disclosures required on or with the closed-end credit advertisement must be provided to the consumer in electronic form on or with the advertisement. A consumer accesses an advertisement in electronic form when, for example, the consumer views the advertisement on his or her home computer. On the other hand, if a consumer receives a written advertisement in the mail, the creditor would *not* satisfy its obligation to provide § 226.24 disclosures at that time by including a reference in the advertisement to the web site where the disclosures are located. Comment 24(d)-5 would be added to clarify this point. Section 226.24(d) provides that in a catalog or other multiple-page advertisement, the required disclosures need not be shown on each page where a “trigger term” appears, as long as each such page includes a cross-reference to the page where the required disclosures appear. As it did for open-end credit advertising, the 2001 interim final rule clarified that the multiple-page rule for closed-end credit advertising also applies to credit advertisements in electronic form. For example, if a “trigger term” appears on a particular Web page, the additional disclosures may appear in a table or schedule on another Web page and still be considered part of a single advertisement if there is a clear reference to the page or location where the table or schedule begins (which may be accomplished, for example, by including a link). The Board proposes to retain the rule (in § 226.24(d)(1) and (2)) allowing the use of links or other cross-references in electronic credit advertisements to provide guidance on how the advertising rules apply to Web sites. The 2001 interim final rule revised comment 24(d)-2 and added comment 24(d)-4 to provide guidance on multiple-page advertisements in electronic form. Because the Board is proposing to retain the changes to § 226.24(d) with minor wording changes, the Board is also proposing to retain comments 24(d)-2 and 24(d)-4 as revised by the 2001 interim final rule with corresponding wording changes. Section 226.24(b) permits creditors to state a simple annual rate of interest or periodic rate in addition to the APR, as long as the rate is stated in conjunction with, but not more conspicuously than, the APR. In the 2001 interim final rule, comment 24(b)-6 was added to state that in an advertisement using electronic communication, the consumer must be able to view both rates simultaneously, and that this requirement is not satisfied if the consumer can view the APR only by use of a link that takes the consumer to another Web location. The Board proposes to delete comment 24(b)-6 as unnecessary. The requirement to state the simple annual rate or periodic rate in conjunction with, and not more conspicuously than, the APR, applies to electronic advertisements no less than to advertisements in other media. Requiring the consumer to scroll to another part of the page, or access a link, in order to view the APR would likely not satisfy this requirement. Subpart E Special Rules for Certain Home Mortgage Transactions Section 226.31 General Rules Subpart E implements the Home Ownership and Equity Protection Act (HOEPA) and sets forth special rules, including disclosure requirements, for certain mortgage loans with rates or fees above specified thresholds (HOEPA loans) and for reverse mortgage loans. Section 226.31(b) prescribes the form of disclosures required under subpart E. Section 226.31(b)(1) requires creditors to provide the HOEPA and reverse mortgage disclosures in writing and in a form that the consumer may keep. Section 226.31(b)(1) would be renumbered as § 226.31(b) and revised to clarify that the HOEPA and reverse mortgage disclosures may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. Some creditors may provide the HOEPA and reverse mortgage disclosures to consumers both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those creditors, the duplicate electronic form of the HOEPA and reverse mortgage disclosures may be provided to consumers without regard to the consumer consent and other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's HOEPA and reverse mortgage disclosure requirements. Section 226.31(b)(2) in the interim final rule cross-references § 226.36, the section of the interim final rule setting forth general rules for electronic disclosures. Because the Board is proposing to delete § 226.36, as discussed further below, the Board also proposes to delete § 226.31(b)(2). Subpart F Electronic Communication Section 226.36 Requirements for Electronic Communication Section 226.36 was added by the 2001 interim final rule to address the general requirements for electronic communications. The Board proposes to delete § 226.36 (which constitutes all of subpart F) from Regulation Z and the accompanying sections of the staff commentary. In the interim rule, § 226.36(a) defines the term “electronic communication” to mean a message transmitted electronically that can be displayed on equipment as visual text, such as a message displayed on a personal computer monitor screen. The deletion of § 226.36(a) would not change applicable legal requirements under the E-Sign Act. Sections 226.36(b),

(c)and

(f)incorporate by reference provisions of the E-Sign Act, such as the provision allowing disclosures to be provided in electronic form, the requirement to obtain the consumer's affirmative consent before providing disclosures in electronic form, and the provision allowing electronic signatures. The deletion of these provisions will have no impact on the general applicability of the E-Sign Act to Regulation Z disclosures. Sections 226.36(d) and

(e)address specific timing and delivery requirements for electronic disclosures under Regulation Z, such as the requirement to send disclosures to a consumer's e-mail address (or post the disclosures on a Web site and send a notice alerting the consumer to the disclosures). The Board no longer believes that these additional provisions are necessary or appropriate. Electronic disclosures have evolved since 2001, as industry and consumers have gained experience with them. Although many institutions offer e-mail alert notices to consumers in connection with online services, some consumers may choose not to receive notifications by e-mail and the Board sees no reason to require e-mail alert notices in all cases. In addition, the Board has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and phishing that have become more pronounced since 2001. With regard to the requirement to attempt to redeliver returned electronic disclosures, as the commenters noted, creditors would be required to search their files for an additional e-mail address to use, and might be required to use a postal mail address for redelivery if no additional e-mail address was available. The Board believes that both requirements would likely be unduly burdensome. In addition, the concerns that have been raised about the requirement to use e-mail for the initial delivery of a disclosure or notice apply equally to the use of e-mail for an attempted redelivery. Under the proposed rule, the Board would not require creditors to maintain disclosures posted on a Web site for at least 90 days as provided in the 2001 interim final rule for several reasons. First, based on a review of industry practices, it appears that many institutions maintain disclosures posted on an Internet web site for several months, and, in a number of cases, for more than a year. For example, it appears that credit card issuers that offer online periodic statements to consumers typically make those statements available without charge for six months or longer in electronic form. This practice has developed even though Regulation Z does not currently require institutions to maintain disclosures for any specific period of time. Second, the Board believes that an appropriate time period consumers may want electronic disclosures to be available may vary depending upon the type of disclosure, and is reluctant to establish specific time periods depending on the disclosures. Nevertheless, while the Board is not proposing to require disclosures to be maintained on an Internet web site for any specific time period, the general requirements of Regulation Z continue to apply to electronic disclosures, such as the requirement to provide disclosures to consumers at certain specified times and in a form that the consumer may keep. Although these general requirements apply to electronic disclosures, the Board does not believe that the 90-day time period set out in § 226.36(d) of the 2001 interim final rule is needed to ensure that creditors satisfy these requirements when they provide electronic disclosures. The Board, however, will monitor creditors' electronic disclosure practices with regard to the ability of consumer to retain Regulation Z disclosures and will consider further regulatory action if it appears necessary. The official staff commentary to § 226.36 of the interim final rule provides guidance on the provisions set forth in § 226.36 such as delivery of disclosures or alert notices by e-mail, redelivery if disclosures or a notice is returned undelivered, and retention of disclosures on a Web site for 90 days. As noted above, because the Board is proposing to delete § 226.36 (which constitutes all of subpart F) of the regulation, the Board also proposes to delete the accompanying provisions of the official staff commentary. IV. Solicitation of Comments Regarding the Use of “Plain Language” Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand. V. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* )

(8)of the Freedom of Information Act (5 U.S.C. 522(b)). Transaction- or account-specific disclosures and billing error allegations are not publicly available and are confidential between the creditor and the consumer. General disclosures of credit terms that appear in advertisements or take-one applications are available to the public. TILA and Regulation Z ensure adequate disclosure of the costs and terms of credit to consumers. For open-end credit, creditors are required to disclose information about the initial costs and terms and to provide periodic statements of account activity, notices of changes in terms, and statements of rights concerning billing error procedures. The regulation also requires specific types of disclosures for credit and charge card accounts, and home-equity plans. For closed-end loans, such as mortgage and installment loans, cost disclosures are required to be provided prior to consummation. Special disclosures are required of certain products, such as reverse mortgages, certain variable-rate loans, and certain mortgages with rates and fees above specified thresholds. TILA and Regulation Z also contain rules concerning credit advertising. To ease the burden and cost of complying with Regulation Z (particularly for small entities), the Federal Reserve provides model forms, which are appended to the regulation. Creditors are required to retain evidence of compliance for twenty-four months (subpart D, section 226.25), but the regulation does not specify the types of records that must be retained. Under the PRA, the Federal Reserve accounts for the paperwork burden associated with Regulation Z for the State member banks and other creditors supervised by the Federal Reserve that engage in lending covered by Regulation Z and, therefore, are respondents under the PRA. Appendix I of Regulation Z defines the Federal Reserve-regulated institutions as: State member banks, branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act. Other Federal agencies account for the paperwork burden on other creditors. The annual burden is estimated to be 552,398 hours for the 1,172 Federal Reserve-regulated institutions that are deemed to be respondents for the purposes of the PRA. As mentioned in the Preamble, § 226.5 would be revised to clarify the disclosure requirements in §§ 226.5a and 226.5b. The Federal Reserve estimates that 279 respondents would take approximately 8 hours per month to comply with the existing disclosure requirements in § 226.5a and estimates the annual burden to be 26,784 hours; and 632 respondents would take approximately 4.5 minutes per transaction to comply with the existing disclosure requirements in § 226.5b and estimates the annual burden to be 12,798 hours. Sections 226.17 and 226.19 would be revised to clarify the existing disclosure requirements in §§ 226.17(g) and 226.19(b). The Federal Reserve estimates that 1,172 respondents would take approximately 6.5 minutes per transaction to comply with the existing disclosure requirements in §§ 226.17(g) and 226.19(b), and estimates the annual burden to be 313,765 hours. Sections 226.5 and 226.17 would also be revised to clarify the disclosure requirements in §§ 226.16 and 226.24 respectively. The Federal Reserve estimates that 1,172 respondents would take approximately 25 minutes per transaction to comply with the existing disclosure requirements in § 226.16 and 226.24, and estimates the annual burden to be 2,442 hours, collectively. The Federal Reserve requests specific comment on whether the revisions in this proposed rule would change the burden on respondents. Comments are invited on:

(a)Whether the collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility;

(b)the accuracy of the Federal Reserve's estimate of the burden of the information collection, including the cost of compliance;

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

(d)ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0199), Washington, DC 20503. List of Subjects in 12 CFR Part 226 Advertising, Federal Reserve System, Mortgages, Reporting and recordkeeping requirements, Truth in Lending. Text of Proposed Revisions Certain conventions have been used to highlight the proposed changes to Regulation Z. New language is shown inside bold-faced arrows, while language that would be removed is set off with bold-faced brackets. For the reasons set forth in the preamble, the Board proposes to amend Regulation Z, 12 CFR part 226, as set forth below: PART 226—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 226 continues to read as follows: Authority: 12 U.S.C. 3806; 15 U.S.C. 1604 and 1637(c)(5). Subpart B—Open-End Credit 2. Section 226.5 would be amended by revising paragraph (a)(1) and removing paragraph (a)(5), to read as follows: § 226.5 General disclosure requirements.

(a)*Form of disclosures* .

(1)The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, 7 in a form that the consumer may keep. 8 ▸The disclosures required by this subpart may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The disclosures required by §§ 226.5a, 226.5b, and 226.16 may be provided to the consumer in electronic form without regard to the consumer consent or other provisions of the E-Sign Act in the circumstances set forth in those sections.◂ 7 The disclosure required by section 226.9(d) when a finance charge is imposed at the time of a transaction need not be written. 8 The disclosures required under § 226.5a for credit and charge card applications and solicitations, the home equity disclosures required under § 226.5b(d), the alternative summary billing rights statement provided for in § 226.9(a)(2), the credit and charge card renewal disclosures required under § 226.9(e), and the disclosures made under § 226.10(b) about payment requirements need not be in a form that the consumer can keep. [(5) *Electronic communication.* For rules governing the electronic delivery of disclosures, including the definition of electronic communication, see § 226.36.] 3. Section 226.5a would be amended by adding a new paragraph (a)(2)(v), removing paragraphs (b)(1)(ii) and (b)(1)(iii), revising paragraph (c), and adding new paragraph (e)(5), to read as follows: § 226.5a Credit and charge card applications and solicitations.

(a)*General rules.* * * *

(2)*Form of disclosures.* * * * ▸(v) For an application or a solicitation that is accessed by the consumer in electronic form, the disclosures required under this section must be provided to the consumer in electronic form on or with the application or solicitation.◂

(b)*Required disclosures.* * * *

(1)*Annual percentage rate.* * * * [(ii) When variable rate disclosures are provided under paragraph

(c)of this section, an annual percentage rate disclosure is accurate if the rate was in effect within 60 days before mailing the disclosures. When variable rate disclosures are provided under paragraph

(e)of this section, an annual percentage rate disclosure is accurate if the rate was in effect within 30 days before printing the disclosures. Disclosures provided by electronic communication are subject to paragraph (b)(1)(iii) of this section.] [(iii) When variable rate disclosures are provided by electronic communication, an annual percentage rate disclosure is accurate if the rate was in effect within 30 days before mailing the disclosures to a consumer's electronic mail address. If disclosures are made available at another location such as the card issuer's Internet Web site, the annual percentage rate must be one in effect within the last 30 days.]

(c)*Direct-mail and electronic applications and solicitations.* ▸(1) *General.* ◂ The card issuer shall disclose the applicable items in paragraph

(b)of this section on or with an application or solicitation that is mailed to consumers [or provided by electronic communication] ▸or provided to consumers in electronic form◂. ▸(2) *Accuracy* .

(i)Disclosures in direct mail applications and solicitations must be accurate as of the time the disclosures are mailed. An accurate variable annual percentage rate is one in effect within 60 days before mailing.

(ii)Disclosures provided in electronic form must be accurate as of the time they are sent, in the case of disclosures sent to a consumer's electronic mail address, or as of the time they are viewed by the public, in the case of disclosures made available at a location such as a card issuer's Internet Web site. An accurate variable annual percentage rate provided in electronic form is one in effect within 30 days before it is sent to a consumer's electronic mail address, or viewed by the public, as applicable.◂

(e)*Applications and solicitations made available to general public.* * * * ▸(5) *Accuracy.* The disclosures given pursuant to paragraph (e)(1) of this section must be accurate as of the date of printing. An accurate annual percentage rate is one in effect within 30 days before printing.◂ 4. Section 226.5b would be amended by adding a new paragraph (a)(3), removing the heading for paragraph (c)(1), redesignating paragraph (c)(1) as paragraph (c), and removing paragraph (c)(2), to read as follows: § 226.5b Requirements for home equity plans.

(a)*Form of disclosures.* * * * ▸(3) For an application that is accessed by the consumer in electronic form, the disclosures required under this section must be provided to the consumer in electronic form on or with the application.◂

(c)*Duties of third parties* . [(1) *General* .] * * * [(2) *Electronic communication* . Persons other than the creditor that are required to comply with paragraphs

(d)and

(e)of this section may use electronic communication in accordance with the requirements of § 226.36, as applicable.] 5. Section 226.15 would be amended by revising the first sentence of the introductory text of paragraph (b), to read as follows: § 226.15 Right of rescission.

(b)*Notice of right to rescind.* In any transaction or occurrence subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered ▸in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act◂ [by electronic communication as provided in § 226.36(b)]). * * * 6. Section 226.16 would be amended by revising paragraph

(c)to read as follows: § 226.16 Advertising.

(c)*Catalogs or other multiple-page advertisements; electronic advertisements.*

(1)If a catalog or other multiple-page advertisement, or an ▸electronic◂ advertisement ▸(such as an advertisement appearing on an Internet web site)◂ [using electronic communication], gives information in a table or schedule in sufficient detail to permit determination of the disclosures required by paragraph

(b)of this section, it shall be considered a single advertisement if:

(i)The table or schedule is clearly and conspicuously set forth; and

(ii)Any statement of terms set forth in § 226.6 appearing anywhere else in the catalog or advertisement clearly refers to the page or location where the table or schedule begins.

(2)A catalog or other multiple-page advertisement or an ▸electronic◂ advertisement ▸(such as an advertisement appearing on an Internet Web site)◂ [using electronic communication] complies with this paragraph if the table or schedule of terms includes all appropriate disclosures for a representative scale of amounts up to the level of the more commonly sold higher-priced property or services offered. ▸(3) For an advertisement that is accessed by the consumer in electronic form, the disclosures required under this section must be provided to the consumer in electronic form on or with the advertisement.◂ Subpart C—Closed-End Credit 7. Section 226.17 would be amended by revising paragraph (a)(1), removing paragraph (a)(3), and revising paragraph

(g)introductory text, to read as follows: § 226.17 General disclosure requirements.

(a)*Form of disclosures.*

(1)The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. ▸The disclosures required by this subpart may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The disclosures required by §§ 226.17(g), 226.19(b), and 226.24 may be provided to the consumer in electronic form without regard to the consumer consent or other provisions of the E-Sign Act in the circumstances set forth in those sections.◂ The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related 37 to the disclosures required under § 226.18. 38 The itemization of the amount financed under § 226.18(c)(1) must be separate from the other disclosures under that section. 37 The disclosures may include an acknowledgment of receipt, the date of the transaction, and the consumer's name, address, and account number. 38 The following disclosures may be made together with or separately from other required disclosures: The creditor's identity under § 226.18(a), the variable rate example under § 226.18(f)(1)(iv), insurance or debt cancellation under § 226.18(n), and certain security interest charges under § 226.18(o). [(3) *Electronic communication.* For rules governing the electronic delivery of disclosures, including a definition of electronic communication, see § 226.36.]

(g)*Mail or telephone orders—delay in disclosures.* If a creditor receives a purchase order or a request for an extension of credit by mail, telephone, or facsimile machine without face-to-face or direct telephone solicitation, the creditor may delay the disclosures until the due date of the first payment, if the following information for representative amounts or ranges of credit is made available in written form ▸or in electronic form◂ to the consumer or to the public before the actual purchase order or request: 8. Section 226.19 would be amended by adding a new paragraph (c), to read as follows: § 226.19 Certain residential mortgage and variable-rate transactions. ▸(c) *Electronic disclosures.* For an application that is accessed by the consumer in electronic form, the disclosures required by paragraph

(b)of this section must be provided to the consumer in electronic form on or with the application.◂ 9. Section 226.23 would be amended by revising the first sentence of paragraph (b)(1), to read as follows: § 226.23 Right of rescission. (b)(1) *Notice of right to rescind.* In a transaction subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered ▸in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act◂ [by electronic communication as provided in § 226.36(b)]). * * * 10. Section 226.24 would be amended by revising paragraphs (d)(1) and (d)(2) and adding a new paragraph (d)(3), to read as follows: § 226.24 Advertising.

(d)*Catalogs or other multiple-page advertisements; electronic advertisements.*

(1)If a catalog or other multiple-page advertisement, or an ▸electronic◂ advertisement ▸(such as an advertisement appearing on an Internet Web site)◂ [using electronic communication], gives information in a table or schedule in sufficient detail to permit determination of the disclosures required by paragraph (c)(2) of this section, it shall be considered a single advertisement if:

(i)The table or schedule is clearly and conspicuously set forth; and

(ii)Any statement of terms of the credit terms in paragraph (c)(1) of this section appearing anywhere else in the catalog or advertisement clearly refers to the page or location where the table or schedule begins.

(2)A catalog or other multiple-page advertisement or an ▸electronic◂ advertisement ▸(such as an advertisement appearing on an Internet Web site)◂ [using electronic communication] complies with paragraph (c)(2) of this section if the table or schedule of terms includes all appropriate disclosures for a representative scale of amounts up to the level of the more commonly sold higher-priced property or services offered. ▸(3) For an advertisement that is accessed by the consumer in electronic form, the disclosures required under this section must be provided to the consumer in electronic form on or with the advertisement.◂ Subpart E—Special Rules for Certain Home Mortgage Transactions 11. Section 226.31 would be amended by revising paragraph

(b)to read as follows: § 226.31 General rules.

(b)*Form of disclosures.* [(1) *General.* ] The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. ▸The disclosures required by this subpart may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 *et seq.* ).◂ [(2) *Electronic communication.* For rules governing the electronic delivery of disclosures, including a definition of electronic communication, see § 226.36.] 12. Subpart F to part 226 would be removed. 13. In Supplement I to part 226, the following amendments would be made: a. In *Section 226.5—General Disclosure Requirements* , under *Paragraph 5(b)(2)(ii)* , paragraph 3. would be revised. b. In *Section 226.5a—Credit and Charge Card Applications and Solicitations* , under *5a(a)(2) Form of Disclosures* , paragraph 8. would be revised and new paragraph 9. would be added. c. In *Section 226.5a—Credit and Charge Card Applications and Solicitations* , under *5a(c) Direct Mail Applications or Solicitations* , the heading would be revised to read *5a(c) Direct Mail and Electronic Applications or Solicitations* , paragraph 1. would be removed, and paragraph 2. would be redesignated as paragraph 1. d. In *Section 226.5b—Requirements for Home Equity Plans* , under *5b(a) Form of Disclosures* , under *Paragraph 5b(a)(1)* , new paragraph 5. would be added. e. In *Section 226.5b—Requirements for Home Equity Plans* , under *5b(a) Form of Disclosures* , new heading *Paragraph 5b(a)(3)* and new paragraph 1. would be added. f. In *Section 226.5b—Requirements for Home Equity Plans* , under *5b(b) Time of Disclosures* , paragraph 7. would be removed. g. In *Section 226.15—Right of Rescission* , under *15(b) Notice of Right to Rescind.* , paragraph 1. would be revised. h. In *Section 226.16—Advertising* , under *Paragraph 16(c)(1)* , paragraphs 1. and 2. would be revised. i. In *Section 226.16—Advertising* , new heading *Paragraph 16(c)(3)* and new paragraph 1. would be added. j. In *Section 226.19—Certain Residential Mortgage and Variable-Rate Transactions* , under *19(b) Certain variable-rate transactions.* , paragraph 2.v. would be revised. k. In *Section 226.19—Certain Residential Mortgage and Variable-Rate Transactions* , new heading *19(c) Electronic disclosures* and new paragraph 1. would be added. l. In *Section 226.23—Right of Rescission* , under *23(b) Notice of Right to Rescind.* , paragraph 1. would be revised. m. In *Section 226.24—Advertising* , under *24(b) Advertisement of Rate of Finance Charge* , paragraph 6. would be removed. n. In *Section 226.24—Advertising* , under *24(d)* , paragraphs 2. and 4. would be revised, and new paragraph 5. would be added. o. Subpart F would be removed. The amendments read as follows: Supplement I To Part 226—Official Staff Interpretations Subpart B—Open-End Credit Section 226.5—General Disclosure Requirements *5(b)(2) Periodic statements.* *Paragraph 5(b)(2)(ii).* 3. *Calling for periodic statements.* When the consumer initiates a request, the creditor may permit, but may not require, consumers to pick up their periodic statements. If the consumer wishes to pick up the statement and the plan has a free-ride period, the statement must be made available in accordance with the 14-day rule. [If the consumer wishes to receive the statement by electronic communication, the creditor must comply with the consumer consent requirements as provided in § 226.36(b).] Section 226.5a—Credit and Charge Card Applications and Solicitations *5a(a) General rules.* *5a(a)(2) Form of disclosures.* 8. [ *Timing of disclosures for* ]▸ *Form of electronic disclosures provided on or with◂ electronic applications or solicitations.* ▸Card issuers must provide the disclosures required by this section on or with a blank application or reply form that is made available to the consumer in electronic form, such as on a card issuer's Internet web site. Card issuers have flexibility in satisfying this requirement. For example, the disclosures could automatically appear on the screen when the application or reply form appears. Alternatively, the disclosures could be located on the same web “page” as the application or reply form without necessarily appearing on the initial screen, if the application or reply form contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable. Or, card issuers could provide a link to the electronic disclosures on or with the application (or reply form) as long as consumers cannot bypass the disclosures before submitting the application or reply form. Whatever method is used, a card issuer need not confirm that the consumer has read the disclosures. For disclosures required to be provided in tabular form, card issuers must satisfy the requirements with respect to electronic disclosures set forth in comment 5a(a)(2)-2(ii).◂ [In all cases, a consumer must be able to access the disclosures at the time the blank application or reply form is made available by electronic communication such as on a card issuer's Internet web site. Card issuers have flexibility in satisfying this requirement. For example, if a link is not used, the application or reply form must clearly and conspicuously refer to the fact that rate, fee, and other cost information either precedes or follows the application or reply form. Alternatively, card issuers may provide a link to electronic disclosures on or with the application (or reply form) as long as consumers cannot bypass the disclosures before submitting the application or reply form. Or the disclosures could automatically appear on the screen when the application or reply form appears. A card issuer need not confirm that the consumer has read the disclosures.] ▸9. *Form of disclosures.* If a consumer accesses an application or solicitation in electronic form, the required disclosures must be provided to the consumer in electronic form on or with the application or solicitation; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer is provided with a paper application or solicitation, the required disclosures must be provided in paper form on or with the application or solicitation. For example, if a consumer receives an application or solicitation in the mail, the creditor would *not* satisfy its obligation to provide § 226.5a disclosures at that time by including a reference in the application or solicitation to the web site where the disclosures are located.◂ 5a(c) Direct-Mail ▸and Electronic◂ Applications and Solicitations [1. *Accuracy.* In general, disclosures in direct mail applications and solicitations must be accurate as of the time of mailing. (An accurate variable annual percentage rate is one in effect within 60 days before mailing.)] [2.] ▸1.◂ *Mailed publications.* Applications or solicitations contained in generally available publications mailed to consumers (such as subscription magazines) are subject to the requirements applicable to “take-ones” in § 226.5a(e), rather than the direct mail requirements of § 226.5a(c). However, if a primary purpose of a card issuer's mailing is to offer credit or charge card accounts—for example, where a card issuer “prescreens” a list of potential cardholders using credit criteria, and then mails to the targeted group its catalog containing an application or a solicitation for a card account—the direct mail rules apply. In addition, a card issuer may use a single application form as a “take-one” (in racks in public locations, for example) and for direct mailings, if the card issuer complies with the requirements of § 226.5a(c) even when the form is used as a “take-one”—that is, by presenting the required § 226.5a disclosures in a tabular format. When used in a direct mailing, the credit term disclosures must be accurate as of the mailing date whether or not the § 226.5a(e)(1)

(ii)and

(iii)disclosures are included; when used in a take-one, the disclosures must be accurate for as long as the take-one forms remain available to the public if the § 226.5a(e)(1)

(ii)and

(iii)disclosures are omitted. (If those disclosures are included in the take-one, the credit term disclosures need only be accurate as of the printing date) Section 226.5b—Requirements for Home Equity Plans *5b(a) Form of disclosures.* *5b(a)(1) General.* ▸5. *Form of electronic disclosures provided on or with electronic applications.* Creditors must provide the disclosures required by this section (including the brochure) on or with a blank application that is made available to the consumer in electronic form, such as on a creditor's Internet Web site. Creditors have flexibility in satisfying this requirement. For example, the disclosures could automatically appear on the screen when the application appears. Alternatively, the disclosures could be located on the same Web “page” as the application without necessarily appearing on the initial screen, if the application contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable. Or, creditors could instead provide a link to the electronic disclosures as long as consumers cannot bypass the disclosures before submitting the application. Whatever method is used, a creditor need not confirm that the consumer has read the disclosures or brochure.◂ ▸ *Paragraph 5b(a)(3).* 1. *Form of disclosures.* If a consumer accesses an application in electronic form, the required disclosures must be provided to the consumer in electronic form on or with the application; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer is provided with a paper application, the required disclosures must be provided in paper form on or with the application. For example, if a consumer receives an application in the mail, the creditor would not satisfy its obligation to provide § 226.5b disclosures at that time by including a reference in the application to the Web site where the disclosures are located.◂ *5b(b) Time of disclosures.* [7. *Applications available by electronic communication.* In all cases, a consumer must be able to access the disclosures (including the brochure) at the time the blank application or reply form is made available by electronic communication, such as on a creditor's Internet web site. Creditors have flexibility in satisfying this requirement. For example, if a link is not used, the application or reply form must clearly and conspicuously refer the consumer to the fact that rate, fee, and other cost information either precedes or follows the application or reply form. Alternatively, creditors may provide a link to electronic disclosures as long as consumers cannot bypass the disclosures before submitting the application or reply form. Or the disclosures could automatically appear on the screen when the application or reply form appears. A creditor need not confirm that the consumer has read the disclosures or brochure.] Section 226.15—Right of Rescission *15(b) Notice of right to rescind.* 1. *Who receives notice.* Each consumer entitled to rescind must be given: • Two copies of the rescission notice. • The material disclosures. In a transaction involving joint owners, both of whom are entitled to rescind, both must receive the notice of the right to rescind and disclosures. For example, if both spouses are entitled to rescind a transaction, each must receive two copies of the rescission notice ▸(one copy if the notice is provided in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act)◂ and one copy of the disclosures. [If e-mail is used, the creditor complies with § 226.15(b)(1) if one notice is sent to each co-owner. Each co-owner must consent to receive electronic disclosures and each must designate an electronic address for receiving the disclosure.] Section 226.16—Advertising *16(c) Catalogs or other multiple-page advertisements; electronic advertisements.* *Paragraph 16(c)(1).* 1. *General.* Section 226.16(c)(1) permits creditors to put credit information together in one place in a catalog or other multiple-page advertisement or an electronic advertisement ▸(such as an advertisement appearing on an Internet Web site)◂. The rule applies only if the advertisement contains one or more of the triggering terms from § 226.16(b). 2. *Electronic* ▸ *advertisement* ◂ [ *communication* ]. If an ▸electronic advertisement (such as an advertisement appearing on an Internet Web site)◂ [advertisement using electronic communication] contains the table or schedule permitted under § 226.16(c)(1), any statement of terms set forth in § 226.6 appearing anywhere else in the advertisement must clearly direct the consumer to the location where the table or schedule begins. For example, a term triggering additional disclosures may be accompanied by a link that directly takes the consumer to the additional information. ▸ *Paragraph 16(c)(3).* 1. *Form of disclosures.* If a consumer accesses an advertisement in electronic form, the required disclosures must be provided to the consumer in electronic form on or with the advertisement; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer views a paper advertisement, the required disclosures must be provided in paper form on or with the advertisement. For example, if a consumer receives an advertisement in the mail, the creditor would *not* satisfy its obligation to provide § 226.16 disclosures at that time by including a reference in the advertisement to the Web site where the disclosures are located.◂ Subpart C—Closed-End Credit Section 226.19—Certain Residential Mortgage and Variable-Rate Transactions *19(b) Certain variable-rate transactions.* 2. *Timing.* * * * v. [ *Electronic applications.* ] ▸ *Form of electronic disclosures provided on or with electronic applications.* Creditors must provide the disclosures required by this section (including the brochure) on or with a blank application that is made available to the consumer in electronic form, such as on a creditor's Internet Web site. Creditors have flexibility in satisfying this requirement. For example, the disclosures could automatically appear on the screen when the application appears. Alternatively, the disclosures could be located on the same Web “page” as the application without necessarily appearing on the initial screen, if the application contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable. Or, creditors could instead provide a link to the electronic disclosures as long as consumers cannot bypass the disclosures before submitting the application. Whatever method is used, a creditor need not confirm that the consumer has read the disclosures or brochure.◂ [In all cases, a consumer must be able to access the disclosures (including the brochure) at the time the blank application form is made available by electronic communication, such as on a creditor's Internet Web site. Creditors have flexibility in satisfying this requirement. For example, if a link is not used, the application form must clearly and conspicuously refer the consumer to the fact that rate, fee, and other cost information either precedes or follows the application or reply form. Alternatively, creditors may provide a link to electronic disclosures as long as consumers cannot bypass the disclosures before submitting the application form. Or the disclosures could automatically appear on the screen when the application form appears. A creditor need not confirm that the consumer has read the disclosures or brochure.] ▸ *19(c) Electronic disclosures.* 1. *Form of disclosures.* If a consumer accesses an ARM application in electronic form, the required disclosures must be provided to the consumer in electronic form on or with the application; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer is provided with a paper ARM application, the required disclosures must be provided in paper form on or with the application. For example, if a consumer receives an application in the mail, the creditor would *not* satisfy its obligation to provide the ARM disclosures at that time by including a reference in the application to the Web site where the disclosures are located.◂ Section 226.23—Right of Rescission *23(b) Notice of right to rescind.* 1. *Who receives notice.* Each consumer entitled to rescind must be given: • Two copies of the rescission notice. • The material disclosures. In a transaction involving joint owners, both of whom are entitled to rescind, both must receive the notice of the right to rescind and disclosures. For example, if both spouses are entitled to rescind a transaction, each must receive two copies of the rescission notice ▸(one copy if the notice is provided in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act)◂ and one copy of the disclosures. [If e-mail is used, the creditor complies with § 226.23(b)(1) if one notice is sent to each co-owner. Each co-owner must consent to receive electronic disclosures and each must designate an electronic address for receiving the disclosure.] Section 226.24—Advertising *24(b) Advertisement of rate of finance charge.* [6. *Electronic communication.* A simple annual rate or periodic rate that is applied to an unpaid balance may be stated only if it is provided in conjunction with an annual percentage rate. In an advertisement using electronic communication, the consumer must be able to view both rates simultaneously. This requirement is not satisfied if the consumer can view annual percentage rate only by use of a link that takes the consumer to information appearing at another location.] *24(d) Catalogs or other multiple-page advertisements; electronic advertisements.* 2. *General.* Section 226.24(d) permits creditors to put credit information together in one place in a catalog or other multiple-page advertisement, or in an electronic advertisement ▸(such as an advertisement appearing on an Internet Web site)◂. The rule applies only if the advertisement contains one or more of the triggering terms from § 226.24(c)(1). A list of different annual percentage rates applicable to different balances, for example, does not trigger further disclosures under § 226.24(c)(2) and so is not covered by § 226.24(d). 4. *Electronic* ▸ *advertisement* ◂ [ *communication* ]. If an ▸electronic advertisement (such as an advertisement appearing on an Internet Web site)◂ [advertisement using electronic communication] contains the table or schedule permitted under § 226.24(d)(1), any statement of terms set forth in § 226.24(c)(1) appearing anywhere else in the advertisement must clearly direct the consumer to the location where the table or schedule begins. For example, a term triggering additional disclosures may be accompanied by a link that directly takes the consumer to the additional information [(but see comment 24(b)-6)]. ▸5. *Form of disclosures.* If a consumer accesses an advertisement in electronic form, the required disclosures must be provided to the consumer in electronic form on or with the advertisement; providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer views a paper advertisement, the required disclosures must be provided in paper form on or with the advertisement. For example, if a consumer receives an advertisement in the mail, the creditor would not satisfy its obligation to provide § 226.16 disclosures at that time by including a reference in the advertisement to the Web site where the disclosures are located.◂ By order of the Board of Governors of the Federal Reserve System, April 20, 2007. Jennifer J. Johnson, Secretary of the Board. [FR Doc. E7-7878 Filed 4-27-07; 8:45 am] BILLING CODE 6210-01-P FEDERAL RESERVE SYSTEM 12 CFR Part 230 [Regulation DD; Docket No. R-1285] Truth in Savings AGENCY: Board of Governors of the Federal Reserve System. ACTION: Proposed rule; request for comments. SUMMARY: The Board is proposing to amend Regulation DD, which implements the Truth in Savings Act, to withdraw portions of the interim final rules for the electronic delivery of disclosures issued March 30, 2001. The interim final rules address the timing and delivery of electronic disclosures, consistent with the requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign Act). Compliance with the 2001 interim final rules is not mandatory. Thus, removing the interim rules from the *Code of Federal Regulations* would reduce confusion about the status of the provisions and simplify the regulation. The Board is also proposing to amend Regulation DD to provide that certain disclosures may be provided to a consumer in electronic form without regard to the consumer consent and other provisions of the E-Sign Act; and that, when an advertisement is accessed by the consumer in electronic form, the disclosures must be provided in electronic form on or with the advertisement. Similar rules are being proposed under other consumer fair lending and financial services regulations administered by the Board. DATES: Comments must be received on or before June 29, 2007. ADDRESSES: You may submit comments, identified by Docket No. R-1285, by any of the following methods: • *Agency Web site:* *http://www.federalreserve.gov* . Follow the instructions for submitting comments at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* . • *Federal eRulemaking Portal:* *http://www.regulations.gov* . Follow the instructions for submitting comments. • *E-mail:* *regs.comments@federalreserve.gov* . Include the docket number in the subject line of the message. • *FAX:*

(202)452-3819 or

(202)452-3102. • *Mail:* Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at *http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm* as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays. FOR FURTHER INFORMATION CONTACT: John C. Wood or David A. Stein, Counsels, Division of Consumer and Community Affairs, at

(202)452-2412 or

(202)452-3667. For users of Telecommunications Device for the Deaf

(TDD)only, contact

(202)263-4869. SUPPLEMENTARY INFORMATION: I. Background The purpose of the Truth in Savings Act (TISA), 12 U.S.C. 4301 *et seq.* , is to enable consumers to make informed decisions about accounts at depository institutions. The act requires depository institutions to disclose yields, fees, and other terms concerning deposit accounts to consumers at account opening, upon request, when changes in terms occur, and in periodic statements. It also includes rules about advertising for deposit accounts. The Board's Regulation DD (12 CFR part 230) implements the act. Credit unions are governed by a substantially similar regulation issued by the National Credit Union Administration. TISA and Regulation DD require a number of disclosures to be provided in writing. Board Proposals Regarding Electronic Disclosures On May 2, 1996, the Board proposed to amend Regulation E (Electronic Fund Transfers) to permit financial institutions to provide disclosures by sending them electronically (61 FR 19696). Based on comments received, in 1998 the Board published an interim rule permitting the electronic delivery of disclosures under Regulation E (63 FR 14528, March 25, 1998) and proposals under Regulations B (Equal Credit Opportunity), M (Consumer Leasing), Z (Truth in Lending), and DD (Truth in Savings) (63 FR 14552, 14538, 14548, and 14533, respectively, March 25, 1998). Based on comments received on the 1998 proposals, in September 1999 the Board published revised proposals under Regulations B, E, M, Z, and DD (64 FR 49688, 49699, 49713, 49722 and 49740, respectively, September 14, 1999). At the same time, the Board published an interim rule under Regulation DD allowing depository institutions to deliver disclosures on periodic statements in electronic form if the consumer agreed (64 FR 49846, September 14, 1999). While these rulemakings were pending, Federal legislation was enacted addressing the use of electronic documents and records, including consumer disclosures. Federal Legislation Addressing Electronic Commerce On June 30, 2000, the President signed into law the Electronic Signatures in Global and National Commerce Act (the E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The E-Sign Act provides that electronic documents and electronic signatures have the same validity as paper documents and handwritten signatures. The E-Sign Act contains special rules for the use of electronic disclosures in consumer transactions. Under the E-Sign Act, consumer disclosures required by other laws or regulations to be provided or made available in writing may be provided or made available, as applicable, in electronic form if the consumer affirmatively consents after receiving a notice that contains certain information specified in the statute, and if certain other conditions are met. The E-Sign Act, including the special consumer notice provisions, became effective October 1, 2000, and did not require implementing regulations. Thus, financial institutions are currently permitted to provide in electronic form any disclosures that are required to be provided or made available to the consumer in writing under Regulations B, E, M, Z, and DD if the consumer affirmatively consents to receipt of electronic disclosures in the manner required by section 101(c) of the E-Sign Act. The Interim Final Rules On March 30, 2001, the Board published for comment interim final rules to establish uniform standards for the electronic delivery of disclosures required under Regulation DD (66 FR 17795). Similar interim final rules for Regulations B, E, M, and Z were published on March 30, 2001 (66 FR 17322 (M)) and April 4, 2001 (66 FR 17779 (B), 66 FR 17786 (E), and 66 FR 17329 (Z)). The interim final rules incorporated most of the provisions that were part of the 1999 proposals. Each of the interim final rules incorporated, but did not interpret, the requirements of the E-Sign Act. Depository institutions, creditors, and other persons, as applicable, generally were required to obtain consumers' affirmative consent to provide disclosures electronically, consistent with the requirements of the E-Sign Act. The 2001 interim final rule for Regulation DD established uniform requirements for the timing and delivery of electronic disclosures. Under the interim rule, disclosures could be sent to an e-mail address designated by the consumer, or could be made available at another location, such as an Internet Web site. If the disclosures were not sent by e-mail, institutions would have to provide a notice to consumers alerting them to the availability of the disclosures. Disclosures posted on a Web site would have to be available for at least 90 days to allow consumers adequate time to access and retain the information. Institutions also would be required to make a good faith attempt to redeliver electronic disclosures that were returned undelivered, using the address information available in their files. Similar provisions were included in the interim final rules adopted under Regulations B, E, M, and Z. Commenters on the interim final rules identified significant operational and information security concerns with respect to the requirement to send the disclosure or an alert notice to an e-mail address designated by the consumer. For example, commenters stated that some consumers do not have e-mail addresses or may not want personal financial information sent to them by e-mail. Commenters also noted that e-mail is not a secure medium for delivering confidential information and that consumers' e-mail addresses frequently change. The commenters also opposed the requirement for redelivery in the event a disclosure was returned undelivered. In addition, many commenters asserted that making the disclosures available for at least 90 days, as required by the interim final rule, would increase costs and would not be necessary for consumer protection. In August 2001, in response to comments received, the Board lifted the previously established October 1, 2001 mandatory compliance date for all of the interim final rules. (66 FR 41439, August 8, 2001.) Thus, institutions are not required to comply with the interim final rules. Since that time, the Board has not taken further action with respect to the interim final rules on electronic disclosures in order to allow electronic commerce, including electronic disclosure practices, to continue to develop without regulatory intervention and to allow the Board to gather further information about such practices. II. The Proposed Rules The Board is proposing to amend Regulation DD and the official staff commentary by

(1)withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act and accordingly are unnecessary;

(2)withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and

(3)retaining the substance of certain provisions of the interim final rule that provide regulatory relief or guidance regarding electronic disclosures. (Similar amendments are also being proposed by the Board, in today's issue of the **Federal Register** , under Regulations B, E, M, and Z.) Because compliance with the 2001 interim final rules is not mandatory, removing most portions of the interim rules from the *Code of Federal Regulations* , while finalizing other provisions, would reduce confusion about the status of the electronic disclosure provisions and simplify the regulation. The Board is proposing to adopt certain provisions that are identical or similar to provisions in the 2001 interim final rules in order to enhance the ability of consumers to shop for deposit account products online, minimize the information-gathering burdens on consumers, and provide guidance or eliminate a substantial burden on the use of electronic disclosures, as discussed further below. Since 2001, industry and consumers have gained considerable experience with electronic disclosures. During that period, the Board has received no indication that consumers have been harmed by the fact that compliance with the interim final rules is not mandatory. The Board also has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and “phishing” (i.e., prompting consumers to reveal confidential personal or financial information through fraudulent e-mail requests that appear to originate from a financial institution, government agency, or other trusted entity) that have become more pronounced since 2001. Finally, the Board is proposing to eliminate certain aspects of the 2001 interim final rule, such as provisions regarding the availability and retention of electronic disclosures, as unnecessary in light of current industry practices. The 2001 interim final rule allowed depository institutions to provide certain disclosures to consumers electronically without regard to the consumer consent or other provisions of the E-Sign Act. These included disclosures in connection with advertisements and disclosures about deposit accounts that are provided upon request. The Board reasoned that these disclosures, which would be available to the general public while shopping for deposit products, did not “relate to a transaction,” which is a prerequisite for triggering the E-Sign consumer consent provisions, and thus were not subject to those provisions. Some commenters on the interim final rules did not agree with the Board's rationale. Upon further consideration, the Board does not believe it is necessary to determine whether or not these disclosures are related to a transaction. This proposal does not make such determinations. Instead, pursuant to the Board's authority under section 269 of TISA, as well as under section 104(d) of the E-Sign Act, 1 the Board is proposing to specify the circumstances under which certain disclosures may be provided to a consumer in electronic form, rather than in writing as generally required by Regulation DD, without obtaining the consumer's consent under section 101(c) of the E-Sign Act. The proposed rule would also clarify, as discussed in detail below, that certain disclosures must be provided to the consumer in electronic form on or with an advertisement that is accessed by the consumer in electronic form. 1 Section 269 of TISA provides that regulations prescribed by the Board under TISA “may provide for such adjustments and exceptions * * * as, in the judgment of the Board, are necessary or proper to carry out the purposes of [TISA], * * * or to facilitate compliance with the requirements of [TISA].” Section 104(d) of the E-Sign Act authorizes federal agencies to adopt exemptions for specified categories of disclosures from the E-Sign notice and consent requirements, “if such exemption is necessary to eliminate a substantial burden on electronic commerce and will not increase the material risk of harm to consumers.” For the reasons stated in this **Federal Register** notice, the Board believes that these criteria are met in the case of the advertising disclosures and the disclosures provided to a consumer upon request. In addition, the Board believes TISA section 269 authorizes the Board to permit institutions to provide disclosures electronically, rather than in paper form, independent of the E-Sign Act. The Board continues to believe that depository institutions should not be required to obtain the consumer's consent in order to provide advertising disclosures to the consumer in electronic form if the consumer accesses the advertisement containing those disclosures in electronic form, such as at an Internet Web site. Similarly, the Board continues to believe that institutions should not be required to follow the E-Sign consent requirements in order to provide account disclosures upon request to consumers electronically (although under the proposal, the institution could provide the disclosures in electronic form only if the consumer agrees). The Board believes that consumers would not be harmed, and in fact would benefit, by having timely access to disclosures in electronic form when they are shopping for deposit account products online or viewing online deposit account advertising. The Board also believes that consumers' ability to shop for deposit accounts online and compare the terms of various offers could be substantially diminished if consumers had to consent in accordance with the E-Sign Act in order to access advertisements or obtain account disclosures. Applying the consumer consent provisions of the E-Sign Act to these disclosures could impose substantial burdens on electronic commerce and make it more difficult for consumers to gather information and shop for deposit accounts. At the same time, the Board recognizes that consumers who shop or apply for deposit accounts online may not want to receive other disclosures electronically. Therefore, with respect to, for example, account-opening disclosures, periodic statements, and change-in-terms notices, depository institutions would be required to provide written disclosures or obtain the consumer's consent in accordance with the E-Sign Act to provide such disclosures in electronic form. Finally, the Board is proposing to delete, as unnecessary, certain provisions that restate or cross-reference the E-Sign Act's general rules regarding electronic disclosures (including the consumer consent provisions) and electronic signatures because the E-Sign Act is a self-effectuating statute. The proposed revisions to Regulation DD and the official staff commentary are described more fully below in the Section-by-Section Analysis. The Board solicits comment on all aspects of this proposal. Specifically, the Board seeks comment on the appropriateness of eliminating certain provisions and retaining other provisions contained in the 2001 interim final rule. III. Section-by-Section Analysis 12 CFR Part 230 (Regulation DD) Section 230.3 General Disclosure Requirements Section 230.3(a) prescribes the form of disclosures required for deposit accounts, and generally requires depository institutions to provide the disclosures in writing and in a form that the consumer may keep. The Board proposes to revise § 230.3(a) to clarify that institutions may provide disclosures to consumers in electronic form, subject to compliance with the consumer consent and other applicable provisions of the E-Sign Act. Some institutions may provide disclosures to consumers both in paper and electronic form and rely on the paper form of the disclosures to satisfy their compliance obligations. For those institutions, the duplicate electronic form of the disclosures may be provided to consumers without regard to the consumer consent or other provisions of the E-Sign Act because the electronic form of the disclosure is not used to satisfy the regulation's disclosure requirements. Section 230.3(a) would also be revised to provide that the disclosures required by §§ 230.4(a)(2) (disclosures provided upon request) and 230.8 (advertising) may be provided to the consumer in electronic form, under the circumstances set forth in those sections, without regard to the consumer consent or other provisions of the E-Sign Act. Section 230.8 requires that if certain information is stated in a deposit account advertisement, or if an advertisement promotes the payment of overdrafts, the advertisement must also include specified disclosures. The Board believes that, for a deposit account advertisement accessed by the consumer in electronic form, permitting institutions to provide the required disclosures in electronic form without regard to the consumer consent and other provisions of the E-Sign Act will eliminate a potential significant burden on electronic commerce without increasing the risk of harm to consumers. This approach will facilitate shopping for deposit products by enabling consumers to receive important disclosures at the same time they access an advertisement without first having to provide consent in accordance with the requirements of the E-Sign Act. Requiring consumers to follow the consent procedures set forth in the E-Sign Act in order to access an online advertisement is potentially burdensome and could discourage consumers from shopping for deposit products online. Moreover, because these consumers are viewing the advertisement online, there appears to be little, if any, risk that the consumer will be unable to view the disclosures online as well. Similarly, § 230.4(a)(2) requires that depository institutions provide account disclosures, containing account terms, to consumers upon request. If a consumer is not present at the depository institution and requests the account disclosures, it would appear unnecessary and burdensome to require the consumer to go through the E-Sign consent procedures before the request could be satisfied, as long as the consumer requests that the disclosures be provided electronically. Applying the E-Sign consent procedures in this context could discourage consumers from requesting account disclosures. Section 230.3(g) in the 2001 interim final rule refers to § 230.10, the section of the interim final rule setting forth general rules for electronic disclosures. Because the Board is proposing to delete § 230.10, as discussed further below, the Board also proposes to delete § 230.3(g). Section 230.4 Account Disclosures Depository institutions generally must provide account-opening disclosures to consumers before an account is opened or a service is provided. Depository institutions may delay delivering the disclosures if the consumer is not present at the institution when the account is opened (or service is provided). Section 230.4(a)(1) provides that in such cases, account-opening disclosures must be mailed or delivered within ten business days. The rationale underlying the ten-day delay is that the institution cannot provide written disclosures when, for example, an account is opened by telephone. The 2001 interim final rule provided that depository institutions opening accounts by electronic communication (for example, on the Internet) may not delay providing disclosures under § 230.4(a)(1). The difficulties in providing disclosures for accounts opened by mail or telephone are not present for requests to open accounts received by electronic communication using visual text. Thus, specific disclosures must be provided before accounts are opened using electronic communication. The interim final rule added new paragraph

(ii)to § 230.4(a)(1) to effectuate this requirement. The Board continues to believe that the rationale underlying § 230.4(a)(1)(ii) is valid; accordingly, the Board proposes to retain the provision as added by the interim final rule, with minor wording changes. Depository institutions must also provide account disclosures to a consumer upon request. Section 230.4(a)(2)(i) provides that if a consumer is not present at the institution when a request for account disclosures is made, the institution must mail or deliver the disclosures within a reasonable time after the institution receives the request; ten days is deemed to be a reasonable time. The 2001 interim final rule extended these provisions to requests for disclosures made by electronic communication. Specifically, the interim final rule revised § 230.4(a)(2)(i) to allow institutions to mail or deliver disclosures in either paper form or electronically to consumers who are not present at the institution when they make their request. Under the interim final rule, to provide the requested disclosures electronically, the institution must send the disclosures to the consumer's e-mail address, or send a notice alerting the consumer to the location of the disclosures, such as on the institution's Internet web site. Comment 4(a)(2)(i)-3 was revised and comment 4(a)(2)(i)-4 was added to provide guidance. The Board continues to believe that it is appropriate to allow institutions to respond by paper mail, or by electronic means provided the consumer agrees, if the consumer is not present at the institution when the request is made, without following the E-Sign consent provisions. Accordingly, the Board proposes to retain the changes made to § 230.4(a)(2)(i) and the accompanying commentary by the interim final rule, with some revisions for clarification and to provide greater flexibility for both institutions and consumers. Section 230.8 Advertising Section 230.8 contains requirements for advertisements for deposit accounts, including the requirement that if an advertisement includes certain “trigger terms” (such as a bonus or the annual percentage yield), the advertisement must also include certain disclosures. The Board proposes to add new comment 8(a)-11, to clarify that if a consumer accesses an advertisement for deposit accounts in electronic form, the disclosures required on or with the advertisement must be provided to the consumer in electronic form on or with the advertisement. A consumer accesses an advertisement in electronic form when, for example, the consumer views the advertisement on his or her home computer. On the other hand, if a consumer receives a written advertisement in the mail, the institution would *not* satisfy its obligation to provide § 230.8 disclosures at that time by including a reference in the advertisement to the Web site where the disclosures are located. Comment 8(a)-9, as added by the interim final rule, provides that in an electronic advertisement, the required disclosures need not be shown on each page where a “trigger term” appears, as long as each such page includes a cross-reference to the page where the required disclosures appear. For example, if a “trigger term” appears on a particular web page, the additional disclosures may appear in a table or schedule on another web page if there is a clear reference to the page or location where the table or schedule begins (which may be accomplished, for example, by including a link). The Board proposes to retain comment 8(a)-9, allowing the use of links or other cross-references in electronic deposit account advertisements, with minor wording changes. The Board proposes to add new comment 8(a)-12 to clarify that the rules regarding advertising disclosures provided in electronic form also apply to the disclosures described in § 230.11(b), which are incorporated by reference in § 230.8(f). Section 230.8(b) permits institutions to state an interest rate in addition to the APY, as long as the rate is stated in conjunction with, but not more conspicuously than, the APY. In the 2001 interim final rule, comment 8(b)-4 was added to state that in an advertisement using electronic communication, the consumer must be able to view both rates simultaneously, and that this requirement is not satisfied if the consumer can view the APY only by use of a link that takes the consumer to another web location. The Board proposes to delete comment 8(b)-4 as unnecessary. The requirement to state the simple annual rate or periodic rate in conjunction with, and not more conspicuously than, the APY, continues to apply to electronic advertisements no less than to advertisements in other media. Requiring the consumer to scroll to another part of the page, or access a link, in order to view the APY would likely not satisfy this requirement. Section 230.8(e) exempts from some disclosure requirements advertisements made through broadcast or electronic media, such as television and radio or outdoor billboards. The interim final rule added comment 8(e)(1)(i)-1 to provide that this exemption would not apply to advertisements using electronic communication, such as Internet advertisements, which do not have the same time and space constraints as radio or television advertisements. The Board continues to believe that space constraints for advertisements on Internet web sites are not significantly different than those for a print advertisement (a newspaper, for example). Thus, requiring advertisements provided by electronic means to comply with the regulation's advertising requirements is not overly burdensome. Accordingly, the Board proposes to retain comment 8(e)(1)(i)-1 with minor wording changes. Section 230.10 Electronic Communication Section 230.10 was added by the 2001 interim final rule to address the general requirements for electronic communications. The Board proposes to delete § 230.10 from Regulation DD and the accompanying sections of the staff commentary. In the interim rule, § 230.10(a) defines the term “electronic communication” to mean a message transmitted electronically that can be displayed on equipment as visual text, such as a message displayed on a personal computer monitor screen. The deletion of § 230.10(a) would not change applicable legal requirements under the E-Sign Act. Sections 230.10(b) and

(c)incorporate by reference provisions of the E-Sign Act, such as the provision allowing disclosures to be provided in electronic form and the requirement to obtain the consumer's affirmative consent before providing disclosures in electronic form. The deletion of these provisions will have no impact on the general applicability of the E-Sign Act to Regulation DD disclosures. Section 230.10(f) was added in the interim final rule to clarify that persons, other than depository institutions, that are required to comply with Regulation DD may use electronic disclosures. This provision is unnecessary because the E-Sign Act is a self-effectuating statute and permits any person to use electronic records subject to the conditions set forth in the Act. Sections 230.10(d) and

(e)address specific timing and delivery requirements for electronic disclosures under Regulation DD, such as the requirement to send disclosures to a consumer's e-mail address (or post the disclosures on a Web site and send a notice alerting the consumer to the disclosures), and to make a good faith attempt to redeliver an e-mailed disclosure or notice returned undelivered. The Board no longer believes that these additional provisions are necessary or appropriate. Electronic disclosures have evolved since 2001, as industry and consumers have gained experience with them. Although many institutions offer e-mail alert notices to consumers in connection with online services, some consumers may choose not to receive notifications by e-mail and the Board sees no reason to require e-mail alert notices in all cases. In addition, the Board has reconsidered certain aspects of the interim final rules, such as sending disclosures by e-mail, in light of concerns about data security, identity theft, and phishing that have become more pronounced since 2001. With regard to the requirement to attempt to redeliver returned electronic disclosures, as the commenters noted, institutions would be required to search their files for an additional e-mail address to use, and might be required to use a postal mail address for redelivery if no additional e-mail address was available. The Board believes that both requirements would likely be unduly burdensome. In addition, the concerns that have been raised about the requirement to use e-mail for the initial delivery of a disclosure or notice apply equally to the use of e-mail for an attempted redelivery. Under the proposed rule, the Board would not require depository institutions to maintain disclosures posted on a Web site for at least 90 days as provided in the 2001 interim final rule for several reasons. First, based on a review of industry practices, it appears that many institutions maintain disclosures posted on an Internet Web site for several months, and, in a number of cases, for more than a year. For example, it appears that institutions that offer online periodic statements to consumers typically make those statements available without charge for six months or longer in electronic form. This practice has developed even though Regulation DD does not currently require institutions to maintain disclosures for any specific period of time. Second, the Board believes that an appropriate time period consumers may want electronic disclosures to be available may vary depending upon the type of disclosure, and is reluctant to establish specific time periods depending on the disclosures. Nevertheless, while the Board is not proposing to require disclosures to be maintained on an Internet Web site for any specific time period, the general requirements of Regulation DD continue to apply to electronic disclosures, such as the requirement to provide disclosures to consumers at certain specified times and in a form that the consumer may keep. Although these general requirements apply to electronic disclosures, the Board does not believe that the 90-day time period set out in § 230.10(d) of the 2001 interim final rule is needed to ensure that institutions satisfy these requirements when they provide electronic disclosures. The Board, however, will monitor institutions' electronic disclosure practices with regard to the ability of consumer to retain Regulation DD disclosures and will consider further regulatory action if it appears necessary. The official staff commentary to § 230.10 of the interim final rule provides guidance on the provisions set forth in § 230.10 such as delivery of disclosures or alert notices by e-mail, redelivery if disclosures or a notice is returned undelivered, and retention of disclosures on a web site for 90 days. As noted above, because the Board is proposing to delete § 230.10 of the regulation, the Board also proposes to delete the accompanying provisions of the official staff commentary. IV. Solicitation of Comments Regarding the Use of “Plain Language” Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the Board to use “plain language” in all proposed and final rules published after January 1, 2000. The Board invites comments on whether the proposed rules are clearly stated and effectively organized, and how the Board might make the proposed text easier to understand. V. Initial Regulatory Flexibility Analysis The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* )

(PRA)(44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the rule under the authority delegated to the Board by the Office of Management and Budget (OMB). The collection of information that is required by this proposed rule is found in 12 CFR part 230. The Federal Reserve may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number is 7100-0271. Section 269 of the Truth in Savings Act (TISA)(12 U.S.C. 4308) authorizes the Board to issue regulations to carry out the provisions of TISA. TISA and Regulation DD require depository institutions to disclose yields, fees, and other terms concerning deposit accounts to consumers at account opening, upon request, and when changes in terms occur. Depository institutions that provide periodic statements are required to include information about fees imposed, interest earned, and the annual percentage yield earned during those statement periods. The act and regulation mandate the methods by which institutions determine the account balance on which interest is calculated. They also contain rules about advertising deposit accounts. To ease the compliance cost (particularly for small entities), model clauses and sample forms are appended to the regulation. Depository institutions are required to retain evidence of compliance for twenty-four months, but the regulation does not specify types of records that must be retained. This information collection is mandatory. Since the Federal Reserve does not collect any information, no issue of confidentiality arises. Regulation DD applies to all depository institutions except credit unions. Credit unions are covered by a substantially similar rule issued by the National Credit Union Administration. The Federal Reserve accounts for the paperwork burden associated with Regulation DD only for Federal Reserve-regulated institutions. Federal Reserve-regulated institutions are defined by Regulation DD as: State member banks, branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act. Other Federal agencies account for the paperwork burden imposed on the depository institutions for which they have administrative enforcement authority. The annual burden is estimated to be 232,443 hours for 1,172 Federal Reserve-regulated institutions that are deemed respondents for purposes of the PRA. As mentioned in the Preamble, §§ 230.4 and 230.8 would be revised to clarify the disclosure requirements. The Federal Reserve estimates that 1,172 respondents would take approximately 1.5 minutes per transaction to comply with the existing disclosure requirements in § 230.4 and estimates the annual burden to be 14,650 hours. The Federal Reserve estimates that 1,172 respondents would take approximately 30 minutes per month to comply with the existing disclosure requirements in § 230.8 and estimates the annual burden to be 7,032 hours. The Federal Reserve requests specific comment on whether the revisions in this proposed rule would change the burden on respondents. Comments are invited on: a. Whether the collection of information is necessary for the proper performance of the Federal Reserve's functions; including whether the information has practical utility; b. the accuracy of the Federal Reserve's estimate of the burden of the information collection, including the cost of compliance; c. ways to enhance the quality, utility, and clarity of the information to be collected; and d. ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collections of information should be sent to Secretary, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments to be sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0271), Washington, DC 20503. List of Subjects in 12 CFR Part 230 Advertising, Banks, banking, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements, Truth in Savings. Text of Proposed Revisions Certain conventions have been used to highlight the proposed changes to Regulation DD. New language is shown inside bold-faced arrows, while language that would be removed is set off with bold-faced brackets. For the reasons set forth in the preamble, the Board proposes to amend Regulation DD, 12 CFR part 230, as set forth below: PART 230—TRUTH IN SAVINGS (REGULATION DD) 1. The authority citation for part 230 continues to read as follows: Authority: 12 U.S.C. 4301 *et seq.* 2. Section 230.3 would be amended by revising paragraph

(a)and removing paragraph (g), to read as follows: § 230.3 General disclosure requirements.

(a)*Form.* Depository institutions shall make the disclosures required by §§ 230.4 through 230.6 and § 230.10 of this part, as applicable, clearly and conspicuously, in writing, and in a form the consumer may keep. ▸The disclosures required by this part may be provided to the consumer in electronic form, subject to compliance with the consumer consent and other applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-Sign Act) (15 U.S.C. 7001 *et seq.* ). The disclosures required by §§ 230.4(a)(2) and 230.8 may be provided to the consumer in electronic form without regard to the consumer consent or other provisions of the E-Sign Act in the circumstances set forth in those sections.◂ Disclosures for each account offered by an institution may be presented separately or combined with disclosures for the institution's other accounts, as long as it is clear which disclosures are applicable to the consumer's account. [(g) *Electronic communication.* For rules governing the electronic delivery of disclosures, including the definition of electronic communication, see § 230.10.] 3. Section 230.4 would be amended by revising paragraphs (a)(1)(ii) and (a)(2)(i), to read as follows: § 230.4 Account disclosures.

(a)* * *

(1)* * *

(ii)▸ *Timing of disclosures where electronic means are used* ◂ *[Electronic communication].* If a consumer who is not present at the institution uses ▸electronic means (for example, an Internet Web site)◂[electronic communication (as defined in § 230.10)] to open an account or request a service, the disclosures required under paragraph (a)(1) of this section must be provided before ▸the◂ [an] account is opened or ▸the◂ [a] service is provided.

(2)*Requests.*

(i)A depository institution shall provide account disclosures to a consumer upon request. If a consumer who is not present at the institution makes a request, the institution shall mail or deliver the disclosures within a reasonable time after it receives the request and may provide the disclosures in paper form, or electronically if the consumer ▸agrees◂ [provides an electronic mail address]. § 230.10 [Removed and Reserved] 4. Section 230.10 would be removed and reserved. 5. In Supplement I to Part 230, the following amendments would be made: a. In *Section 230.4—Account disclosures* , under *(a)(2)(i)* , paragraphs 3. and 4. would be revised. b. In *Section 230.8—Advertising* , under *(a) Misleading or inaccurate advertisements* , paragraph 9. would be revised and new paragraphs 11. and 12. would be added. c. In *Section 230.8—Advertising* , under *(b) Permissible rates* , paragraph 4. would be removed. d. In *Section 230.8—Advertising* , under *(e)(1)(i)* , paragraph 1. would be revised. e. Section 230.10 would be removed and reserved. The amendments read as follows: Supplement I to Part 230—Official Staff Interpretations Section 230.4—Account Disclosures

(a)Delivery of Account Disclosures (a)(2) Requests (a)(2)(i) 3. *Timing for response.* Ten business days is a reasonable time for responding to requests for account information that consumers do not make in person, including requests made by electronic [communication]▸means (such as by electronic mail)◂. 4. [ *Requests by electronic communication* ] *▸Use of electronic means◂.* [Posting disclosures on a depository institution's Web site generally does not relieve the institution's duty to provide disclosures upon request. If the consumer provides an e-mail address, the institution may provide the disclosures electronically, but the institution must either send the disclosures by e-mail or send a notice to the consumer's e-mail address pursuant to § 230.10(d)(2)(i) to inform the consumer where the disclosures are posted.] ▸If a consumer who is not present at the institution makes a request for account disclosures, including a request made by telephone, e-mail, or via the institution's web site, the institution may send the disclosures in paper form or, if the consumer agrees, may provide the disclosures electronically, such as to an e-mail address that the consumer provides for that purpose, or on the institution's Web site, without regard to the consumer consent or other provisions of the E-Sign Act. The regulation does not require an institution to provide, nor a consumer to agree to receive, disclosures in electronic form.◂ Section 230.8—Advertising

(a)Misleading or Inaccurate Advertisements 9. *Electronic advertising.* If an ▸electronic advertisement (such as an advertisement appearing on an Internet Web site)◂ [advertisement using electronic communication] displays a triggering term (such as a bonus or annual percentage yield) the advertisement must clearly refer the consumer to the location where the additional required information begins. For example, an advertisement that includes a bonus or annual percentage yield may be accompanied by a link that directly takes the consumer to the additional information. ▸11. *Electronic form of disclosures.* For an advertisement that is accessed by the consumer in electronic form, the disclosures required under this section must be provided to the consumer in electronic form on or with the advertisement. Providing the disclosures at a different time or place, or in paper form, would not comply. Conversely, if a consumer views a paper advertisement, the required disclosures must be provided in paper form on or with the advertisement. For example, if a consumer receives an advertisement in the mail, the creditor would *not* satisfy its obligation to provide the disclosures at that time by including a reference in the advertisement to the web site where the disclosures are located. 12. *Additional disclosures in connection with the payment of overdrafts.* The rule in § 230.3(a), providing that disclosures required by § 230.8 may be provided to the consumer in electronic form without regard to E-Sign Act requirements, applies to the disclosures described in § 230.11(b), which are incorporated by reference in § 230.8(f).◂

(b)Permissible rates [4. *Electronic communication.* An interest rate may be stated only if it is provided in conjunction with, but not more conspicuously than, the annual percentage yield to which it relates. In an advertisement using electronic communication, the consumer must be able to view both rates simultaneously. This requirement is not satisfied if the consumer can view the annual percentage yield only by use of a link that connects the consumer to information appearing at another location.] (e)(1) Certain Media (e)(1)(i) 1. *Internet advertisements.* The exemption for advertisements made through broadcast or electronic media does not extend to [advertisements made by electronic communication, such as] advertisements posted on the Internet or sent by e-mail. By order of the Board of Governors of the Federal Reserve System, April 20, 2007. Jennifer J. Johnson, Secretary of the Board. [FR Doc. E7-7873 Filed 4-27-07; 8:45 am] BILLING CODE 6210-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. NM375 Special Conditions No. 25-07-10-SC] Special Conditions: Boeing Model 787-8 Airplane; Lithium Ion Battery Installation AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed special conditions. SUMMARY: This notice proposes special conditions for the Boeing Model 787-8 airplane. This airplane will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. The Boeing Model 787-8 airplanes will use high capacity lithium ion battery technology in on-board systems. For this design feature, the applicable airworthiness regulations do not contain adequate or appropriate safety standards. These proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. Additional special conditions will be issued for other novel or unusual design features of the Boeing Model 787-8 airplanes. DATES: Comments must be received on or before June 14, 2007. ADDRESSES: Comments on this proposal may be mailed in duplicate to: Federal Aviation Administration, Transport Airplane Directorate, Attention: Rules Docket (ANM-113), Docket No. NM375, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; or delivered in duplicate to the Transport Airplane Directorate at the above address. All comments must be marked Docket No. NM375. Comments may be inspected in the Rules Docket weekdays, except Federal holidays, between 7:30 a.m. and 4 p.m. FOR FURTHER INFORMATION CONTACT: Nazih Khaouly, FAA, Airplane & Flight Crew Interface Branch, ANM-111, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-2432; facsimile

(425)227-1149. SUPPLEMENTARY INFORMATION: Comments Invited The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments. We will file in the docket all comments we receive as well as a report summarizing each substantive public contact with FAA personnel concerning these proposed special conditions. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this notice between 7:30 a.m. and 4 p.m., Monday through Friday, except Federal holidays. We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change the proposed special conditions based on comments we receive. If you want the FAA to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it back to you. Background On March 28, 2003, Boeing applied for an FAA type certificate for its new Boeing Model 787-8 passenger airplane. The Boeing Model 787-8 airplane will be an all-new, two-engine jet transport airplane with a two-aisle cabin. The maximum takeoff weight will be 476,000 pounds, with a maximum passenger count of 381 passengers. Type Certification Basis Under provisions of 14 CFR 21.17, Boeing must show that Boeing Model 787-8 airplanes (hereafter referred to as “the 787”) meet the applicable provisions of 14 CFR part 25, as amended by Amendments 25-1 through 25-117, except §§ 25.809(a) and 25.812, which will remain at Amendment 25-115. If the Administrator finds that the applicable airworthiness regulations do not contain adequate or appropriate safety standards for the 787 because of a novel or unusual design feature, special conditions are prescribed under provisions of 14 CFR 21.16. In addition to the applicable airworthiness regulations and special conditions, the 787 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of part 36. In addition, the FAA must issue a finding of regulatory adequacy pursuant to section 611 of Public Law 92-574, the “Noise Control Act of 1972.” Special conditions, as defined in § 11.19, are issued in accordance with § 11.38 and become part of the type certification basis in accordance with § 21.17(a)(2). Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, the special conditions would also apply to the other model under the provisions of § 21.101. Novel or Unusual Design Features The 787 will incorporate a number of novel or unusual design features. Because of rapid improvements in airplane technology, the applicable airworthiness regulations do not contain adequate or appropriate safety standards for these design features. These proposed special conditions for the 787 contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. The 787 design includes planned use of lithium ion batteries for the following applications: • Main and Auxiliary Power Unit

(APU)Battery/Battery Charger System • Flight Control Electronics • Emergency Lighting System • Recorder Independent Power Supply Large, high capacity, rechargeable lithium ion batteries are a novel or unusual design feature in transport category airplanes. This type of battery has certain failure, operational, and maintenance characteristics that differ significantly from those of the nickel-cadmium and lead-acid rechargeable batteries currently approved for installation on large transport category airplanes. The FAA is proposing this special condition to require that

(1)All characteristics of the lithium ion battery and its installation that could affect safe operation of the 787 are addressed, and

(2)appropriate maintenance requirements are established to ensure the availability of electrical power from the batteries when needed. Background The current regulations governing installation of batteries in large transport category airplanes were derived from Civil Air Regulations

(CAR)part 4b.625(d) as part of the re-codification of CAR 4b that established 14 CFR part 25 in February, 1965. The new battery requirements, 14 CFR 25.1353(c)(1) through (c)(4), basically reworded the CAR requirements. Increased use of nickel-cadmium batteries in small airplanes resulted in increased incidents of battery fires and failures. This led to additional rulemaking affecting large transport category airplanes as well as small airplanes. On September 1, 1977, and March 1, 1978, respectively the FAA issued 14 CFR 25.1353c(5) and c(6), governing nickel-cadmium battery installations on large transport category airplanes. The proposed use of lithium ion batteries for the emergency lighting system on the 787 has prompted the FAA to review the adequacy of these existing regulations. Our review indicates that existing regulations do not adequately address several failure, operational, and maintenance characteristics of lithium ion batteries that could affect the safety and reliability of the 787's lithium ion battery installation. At present, there is limited experience with use of rechargeable lithium ion batteries in applications involving commercial aviation. However, other users of this technology, ranging from wireless telephone manufacturing to the electric vehicle industry, have noted safety problems with lithium ion batteries. These problems include overcharging, over-discharging, and flammability of cell components. 1. Overcharging In general, lithium ion batteries are significantly more susceptible to internal failures that can result in self-sustaining increases in temperature and pressure (thermal runaway) than their nickel-cadmium or lead-acid counterparts. This is especially true for overcharging, which causes heating and destabilization of the components of the cell, leading to formation (by plating) of highly unstable metallic lithium. The metallic lithium can ignite, resulting in a self-sustaining fire or explosion. Finally, the severity of thermal runaway from overcharging increases with increasing battery capacity, because of the higher amount of electrolytes in large batteries. 2. Over-Discharging Discharge of some types of lithium ion batteries beyond a certain voltage (typically 2.4 volts) can cause corrosion of the electrodes of the cell, resulting in loss of battery capacity that cannot be reversed by recharging. This loss of capacity may not be detected by the simple voltage measurements commonly available to flightcrews as a means of checking battery status. This is a problem shared with nickel-cadmium batteries. 3. Flammability of Cell Components Unlike nickel-cadmium and lead-acid batteries, some types of lithium ion batteries use liquid electrolytes that are flammable. The electrolytes can serve as a source of fuel for an external fire, if there is a breach of the battery container. These problems experienced by users of lithium ion batteries raise concern about use of these batteries in commercial aviation. The intent of these proposed special conditions is to establish appropriate airworthiness standards for lithium ion battery installations in the 787 and to ensure, as required by 14 CFR 25.601, that these battery installations are not hazardous or unreliable. To address these concerns, these proposed special conditions adopt the following requirements: • Those sections of 14 CFR 25.1353 that are applicable to lithium ion batteries. • The flammable fluid fire protection requirements of 14 CFR 25.863. In the past, this rule was not applied to batteries of transport category airplanes, since the electrolytes used in lead-acid and nickel-cadmium batteries are not flammable. • New requirements to address the hazards of overcharging and over-discharging that are unique to lithium ion batteries. • New maintenance requirements to ensure that batteries used as spares are maintained in an appropriate state of charge. These proposed special conditions are similar to special conditions adopted for the Airbus A380 (71 FR 74755); December 13, 2006). Applicability As discussed above, these proposed special conditions are applicable to the 787. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design features, these proposed special conditions would apply to that model as well under the provisions of § 21.101. Conclusion This action would affect only certain novel or unusual design features of the 787. It is not a rule of general applicability, and it would affect only the applicant that applied to the FAA for approval of these features on the airplane. List of Subjects in 14 CFR Part 25 Aircraft, Aviation safety, Reporting and recordkeeping requirements. The authority citation for these Special Conditions is as follows: Authority: 49 U.S.C. 106(g), 40113, 44701, 44702, 44704. The Proposed Special Conditions Accordingly, the Administrator of the Federal Aviation Administration

(FAA)proposes the following special conditions as part of the type certification basis for the Boeing Model 787-8 airplane. In lieu of the requirements of 14 CFR 25.1353(c)(1) through (c)(4), the following special conditions apply. Lithium ion batteries on the Boeing Model 787-8 airplane must be designed and installed as follows:

(1)Safe cell temperatures and pressures must be maintained during any foreseeable charging or discharging condition and during any failure of the charging or battery monitoring system not shown to be extremely remote. The lithium ion battery installation must preclude explosion in the event of those failures.

(2)Design of the lithium ion batteries must preclude the occurrence of self-sustaining, uncontrolled increases in temperature or pressure.

(3)No explosive or toxic gases emitted by any lithium ion battery in normal operation, or as the result of any failure of the battery charging system, monitoring system, or battery installation not shown to be extremely remote, may accumulate in hazardous quantities within the airplane.

(4)Installations of lithium ion batteries must meet the requirements of 14 CFR 25.863(a) through (d).

(5)No corrosive fluids or gases that may escape from any lithium ion battery may damage surrounding structure or any adjacent systems, equipment, or electrical wiring of the airplane in such a way as to cause a major or more severe failure condition, in accordance with 14 CFR 25.1309(b) and applicable regulatory guidance.

(6)Each lithium ion battery installation must have provisions to prevent any hazardous effect on structure or essential systems caused by the maximum amount of heat the battery can generate during a short circuit of the battery or of its individual cells.

(7)Lithium ion battery installations must have a system to control the charging rate of the battery automatically, so as to prevent battery overheating or overcharging, and,

(i)A battery temperature sensing and over-temperature warning system with a means for automatically disconnecting the battery from its charging source in the event of an over-temperature condition, or,

(ii)A battery failure sensing and warning system with a means for automatically disconnecting the battery from its charging source in the event of battery failure.

(8)Any lithium ion battery installation whose function is required for safe operation of the airplane must incorporate a monitoring and warning feature that will provide an indication to the appropriate flight crewmembers whenever the state-of-charge of the batteries has fallen below levels considered acceptable for dispatch of the airplane.

(9)The Instructions for Continued Airworthiness required by 14 CFR 25.1529 must contain maintenance requirements for measurements of battery capacity at appropriate intervals to ensure that batteries whose function is required for safe operation of the airplane will perform their intended function as long as the battery is installed in the airplane. The Instructions for Continued Airworthiness must also contain procedures for the maintenance of lithium ion batteries in spares storage to prevent the replacement of batteries whose function is required for safe operation of the airplane with batteries that have experienced degraded charge retention ability or other damage due to prolonged storage at a low state of charge. Note: These special conditions are not intended to replace 14 CFR 25.1353(c) in the certification basis of the Boeing 787-8 airplane. These special conditions apply only to lithium ion batteries and their installations. The requirements of 14 CFR 25.1353(c) remain in effect for batteries and battery installations of the Boeing 787-8 airplane that do not use lithium ion batteries. Issued in Renton, Washington, on April 23, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-8186 Filed 4-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28036; Directorate Identifier 2006-NM-278-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Model A330 and A340 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to adopt a new airworthiness directive

(AD)for the products listed above. This proposed AD results from mandatory continuing airworthiness information

(MCAI)issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as failure of an evacuation slide raft to inflate, which could delay the evacuation of passengers in case of an emergency. The proposed AD would require actions that are intended to address the unsafe condition described in the MCAI. DATES: We must receive comments on this proposed AD by May 30, 2007. ADDRESSES: You may send comments by any of the following methods: • *DOT Docket Web Site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Fax:*

(202)493-2251. • *Mail:* Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-0001. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal Rulemaking Portal:* *http://www.regulations.gov* . Follow the instructions for submitting comments. Examining the AD Docket You may examine the AD docket on the Internet at *http://dms.dot.gov* ; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone

(800)647-5227) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer, ANM-116, International Branch, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-2797; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: Streamlined Issuance of AD The FAA is implementing a new process for streamlining the issuance of ADs related to MCAI. This streamlined process will allow us to adopt MCAI safety requirements in a more efficient manner and will reduce safety risks to the public. This process continues to follow all FAA AD issuance processes to meet legal, economic, Administrative Procedure Act, and **Federal Register** requirements. We also continue to meet our technical decision-making responsibilities to identify and correct unsafe conditions on U.S.-certificated products. This proposed AD references the MCAI and related service information that we considered in forming the engineering basis to correct the unsafe condition. The proposed AD contains text copied from the MCAI and for this reason might not follow our plain language principles. Comments Invited We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2007-28036; Directorate Identifier 2006-NM-278-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD. Discussion The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2006-0354, dated November 28, 2006 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states that several operators have reported non-automatic deployment of slide rafts during ground operational testing. In all cases, the slide raft released correctly from the door but did not inflate automatically. Pulling the manual backup handle correctly inflated the slide raft. Investigation conducted by the slide raft manufacturer showed that non-automatic deployments have two potential root causes: • Non-opening of the lacing; and • Stiffness and stiction (static friction) on the painted inflatable material. This situation, if not corrected, could delay the evacuation of passengers in case of an emergency. A new design solution has been developed to ensure the automatic slide raft deployment, which consists of: • Continuous “speed lacing” cord and new soft covers with rounded grommets (this modification ensures that the lacing opens); • A new shorter firing cable, a new anchor block for the slide raft packboard and a new folding procedure (this modification ensures automatic deployment regardless of the inflatable paint condition). Both modifications together ensure the automatic deployment function. The MCAI requires accomplishment of the set of modifications. You may obtain further information by examining the MCAI in the AD docket. Relevant Service Information Airbus has issued Service Bulletins A330-25-3173, A340-25-4191, and A340-25-5004, all Revision 01, all dated August 2, 2006; and Service Bulletins A330-25-3301, A340-25-4273, and A340-25-5110, all dated March 24, 2006. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI. FAA's Determination and Requirements of This Proposed AD This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all information provided by the State of Design Authority and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design. Differences Between This AD and the MCAI or Service Information We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information. We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are described in a separate paragraph of the proposed AD. These requirements, if ultimately adopted, will take precedence over the actions copied from the MCAI. Costs of Compliance Based on the service information, we estimate that this proposed AD would affect about 28 products of U.S. registry. We also estimate that it would take about 66 work-hours per product to comply with this proposed AD. The average labor rate is $80 per work-hour. Required parts would cost about $3,860 per product. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $255,920, or $9,140 per product. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify this proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by adding the following new AD: **Airbus:** Docket No. FAA-2007-28036; Directorate Identifier 2006-NM-278-AD. Comments Due Date

(a)We must receive comments by May 30, 2007. Affected ADs

(b)The requirements of this AD relate to those specified in AD 2006-04-03, amendment 39-14484. Applicability

(c)This AD applies to Airbus Model A330 and A340 airplanes, certificated in any category; except those with the European Aviation Safety Agency

(EASA)specified modifications installed in production, or the equivalent service bulletins installed in service (as specified in Tables 1 and 2 of this AD), provided no slide has been replaced since either airplane delivery or service bulletin installation, as applicable. Table 1.—Exceptions to Applicability Airplane model Configuration Airbus modifications installed in production A330, A340-200, -300 With Modification 40161 (optional Type A door 3) 50806, 50807, 55071, and 55072. A330, A340-200, -300 Without Modification 40161 (Type 1 door 3) 50806 and 55071. A340-500 Either 50806, 50807, and 55071, or 50806 and 55071. A340-600 50806, 50808, 55071, and 55073. Table 2.—Exceptions to Applicability Airplane model Airbus Service Bulletins installed in service A330 A330-25-3173, Revision 01, dated August 2, 2006; and A330-25-3301, dated March 24, 2006. A340-200, -300 A340-25-4191, Revision 01, dated August 2, 2006; and A340-25-4273, dated March 24, 2006. A340-500, -600 A340-25-5004, Revision 01, dated August 2, 2006; and A340-25-5110, dated March 24, 2006. Reason

(d)The mandatory continuing airworthiness information

(MCAI)states that several operators have reported non-automatic deployment of slide rafts during ground operational testing. In all cases, the slide raft released correctly from the door but did not inflate automatically. Pulling the manual backup handle correctly inflated the slide raft. Investigation conducted by the slide raft manufacturer showed that non-automatic deployments have two potential root causes: Non-opening of the lacing; and stiffness and stiction (static friction) on the painted inflatable material. This situation, if not corrected, could delay the evacuation of passengers in case of an emergency. A new design solution has been developed to ensure the automatic slide raft deployment, which consists of: continuous “speed lacing” cord and new soft covers with rounded grommets (this modification ensures that the lacing opens); and a new shorter firing cable, a new anchor block for the slide raft packboard and a new folding procedure (this modification ensures automatic deployment regardless of the inflatable paint condition). Both modifications together ensure the automatic deployment function. The MCAI requires accomplishment of the set of modifications. Actions and Compliance

(e)Unless already done, do the following actions.

(1)For slide raft P/Ns 7A1508-003/-005/-007/-023/-025/-027/-029/-115; P/Ns 7A1539-003/-004/-005/-006/-007/-008/-023/-024/-025/-026/-027/-028/-029/-030/-115/ -116; P/Ns 7A1510-003/-004/-005/-006/-007/-008/-023/-024/-025/-026/-027/-028/-029/ -030/-115/-116; and P/Ns 4A3934-1/-2/-001/-002: No later than 36 months after the effective date of this AD, modify the slide raft in accordance with the instructions given in Airbus Service Bulletin A330-25-3173, A340-25-4191, or A340-25-5004, all Revision 01, all dated August 2, 2006; as applicable; and modify the slide raft assembly of each door in accordance with the instructions given in Airbus Service Bulletin A330-25-3301, A340-25-4273, or A340-25-5110, all dated March 24, 2006; as applicable.

(2)For slide raft P/Ns 7A1508-033/-035/-037/-119/-121; P/Ns 7A1539-033/-034/ -035/-036/-037/-038/-119/-120/-121/-122; P/Ns 7A1510-033/-034/-035/-036/-037/-038/ -119/-120/-121/-122; and P/Ns 4A3934-5/-6/-7/-8: No later than 36 months after the effective date of this AD, modify the slide raft assembly of each door in accordance with the instructions given in Airbus Service Bulletin A330-25-3301, A340-25-4273, or A340-25-5110, all dated March 24, 2006; as applicable. FAA AD Differences Note: This AD differs from the MCAI and/ or service information as follows: No differences. Other FAA AD Provisions

(f)The following provisions also apply to this AD:

(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, ATTN: Tim Backman, Aerospace Engineer, 1601 Lind Avenue, SW., Renton, Washington 98057-3356, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office.

(2)*Airworthy Product:* For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

(3)*Reporting Requirements:* For any reporting requirement in this AD, under the provisions of the Paperwork Reduction Act, the Office of Management and Budget

(OMB)has approved the information collection requirements and has assigned OMB Control Number 2120-0056. Related Information

(g)Refer to MCAI EASA Airworthiness Directive 2006-0354, dated November 28, 2006; and the Airbus Service Bulletins specified in Table 3 of this AD for related information. Table 3.—Airbus Service Bulletins Service Bulletin Revision level Date A330-25-3173 01 August 2, 2006. A340-25-4191 01 August 2, 2006. A340-25-5004 01 August 2, 2006. A330-25-3301 Original March 24, 2006. A340-25-4273 Original March 24, 2006. A340-25-5110 Original March 24, 2006. Issued in Renton, Washington, on April 23, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-8172 Filed 4-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-28035; Directorate Identifier 2006-NM-293-AD] RIN 2120-AA64 Airworthiness Directives; Boeing Model 767 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: The FAA proposes to adopt a new airworthiness directive

(AD)for certain Boeing Model 767 airplanes. This proposed AD would require sealing certain fasteners and stiffeners in the fuel tank, and changing certain wire bundle clamp configurations on the fuel tank walls. This proposed AD results from fuel system reviews conducted by the manufacturer. We are proposing this AD to prevent possible ignition sources in the auxiliary fuel tank, main fuel tanks, and surge tanks caused by a wiring short or lightning strike, which could result in fuel tank explosions and consequent loss of the airplane. DATES: We must receive comments on this proposed AD by June 14, 2007. ADDRESSES: Use one of the following addresses to submit comments on this proposed AD. • *DOT Docket Web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL-401, Washington, DC 20590. • *Fax:*

(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for the service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: Judy Coyle, Aerospace Engineer, Propulsion Branch, ANM-140S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6497; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this proposed AD. Send your comments to an address listed in the ADDRESSES section. Include the docket number “FAA-2007-28035; Directorate Identifier 2006-NM-293-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this proposed AD. Using the search function of that web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level of the Nassif Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion The FAA has examined the underlying safety issues involved in fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (66 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83). Among other actions, SFAR 88 requires certain type design ( *i.e.* , type certificate

(TC)and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews. In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: single failures, single failures in combination with a latent condition(s), and in-service failure experience. For all four criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action. We have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane. A safety assessment by Boeing identified a certain fastener type in the fuel tank walls that has an insufficient bond to the structure. These fasteners can be a path for electrical energy to enter the fuel tank if a wiring short occurs in a wire bundle installed along the fuel tank boundary structure, or if lightning strikes a wing surface. If energy from a wiring short or lightning strike goes through these fasteners, arcing can occur at the ends of the fasteners in the fuel tank. The ends of the fasteners in the fuel tank do not have sufficient electrical insulation to contain the energy from the arcs. This condition, if not corrected, could result in a potential ignition source inside a fuel tank. Relevant Service Information We have reviewed Boeing Alert Service Bulletin 767-57A0100, dated August 21, 2006. The service bulletin describes procedures for sealing the ends of the fasteners on the brackets that hold the vortex generators, and, for certain airplanes, sealing the ends of fasteners on certain stiffeners on the rear spar. We have also reviewed Boeing Alert Service Bulletin 767-57A0102, dated October 25, 2006. The service bulletin describes procedures for changing the wire bundle clamp configurations at specified locations on the fuel tank walls, and sealing the fasteners and certain stiffeners at specified locations in the fuel tank. Accomplishing the actions specified in the service information is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously. Costs of Compliance There are about 925 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this proposed AD. There are no U.S.-registered airplanes in Group 3 of Service Bulletin 767-57A0102. The average labor rate is $80 per work hour. Estimated Costs Service bulletin Group Work hours Parts Cost per airplane Number of U.S.- registered airplanes Fleet cost 767-57A0100 1 6 ( 1 ) $480 341 $163,680 2 114 ( 1 ) 9,120 21 191,520 767-57A0102 1 246 $1,632 21,312 341 7,267,392 2 874 1,304 71,224 21 1,495,704 3 24 338 2,258 0 0

(1)Minimal. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **Boeing:** Docket No. FAA-2007-28035; Directorate Identifier 2006-NM-293-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by June 14, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to Model 767-200, -300, -300F, and -400ER series airplanes; certificated in any category; as identified in Boeing Alert Service Bulletin 767-57A0100, dated August 21, 2006; and Boeing Alert Service Bulletin 767-57A0102, dated October 25, 2006. Unsafe Condition

(d)This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent possible ignition sources in the auxiliary fuel tank, main fuel tanks, and surge tanks caused by a wiring short or lightning strike, which could result in fuel tank explosions and consequent loss of the airplane. Compliance

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

(f)For airplanes identified in Boeing Alert Service Bulletin 767-57A0100, dated August 21, 2006: Within 60 months after the effective date of this AD, seal the ends of the fasteners on the brackets that hold the vortex generators, and seal the ends of the fasteners on certain stiffeners on the rear spar, as applicable. Do the actions in accordance with the Accomplishment Instructions of the service bulletin. Wire Bundle Sleeve and Clamp Installation and Fastener Sealant Application

(g)For airplanes identified in Boeing Alert Service Bulletin 767-57A0102, dated October 25, 2006: Within 60 months after the effective date of this AD, change the wire bundle clamp configurations at specified locations on the fuel tank walls, and seal the fasteners and certain stiffeners at specified locations on the fuel tank. Do the actions in accordance with the Accomplishment Instructions of the service bulletin. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Issued in Renton, Washington, on April 17, 2007. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-8175 Filed 4-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-24978; Directorate Identifier 2006-NM-108-AD] RIN 2120-AA64 Airworthiness Directives; McDonnell Douglas Model 717-200 Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Supplemental notice of proposed rulemaking (NPRM); reopening of comment period. SUMMARY: The FAA is revising an earlier proposed airworthiness directive

(AD)for certain McDonnell Douglas Model 717-200 airplanes. The original NPRM would have required modifying the fuel boost pump container of the center tank. The original NPRM resulted from fuel system reviews conducted by the manufacturer. This action revises the original NPRM by adding airplanes to the applicability. We are proposing this supplemental NPRM to prevent exposing the fuel pump container vapor area to electrical arcing during a fuel pump motor case or connector burn through, which could result in a fuel tank explosion. DATES: We must receive comments on this supplemental NPRM by May 25, 2007. ADDRESSES: Use one of the following addresses to submit comments on this supplemental NPRM. • *DOT Docket web site:* Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Government-wide rulemaking Web site:* Go to *http://www.regulations.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590. • *Fax:*

(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. Contact Boeing Commercial Airplanes, Long Beach Division, 3855 Lakewood Boulevard, Long Beach, California 90846, Attention: Data and Service Management, Dept. C1 L5A (D800-0024), for service information identified in this proposed AD. FOR FURTHER INFORMATION CONTACT: William Bond, Aerospace Engineer, Propulsion Branch, ANM-140L, FAA, Los Angeles Aircraft Certification Office, 3960 Paramount Boulevard, Lakewood, California 90712-4137; telephone

(562)627-5253; fax

(562)627-5210. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to submit any relevant written data, views, or arguments regarding this supplemental NPRM. Send your comments to an address listed in the ADDRESSES section. Include the docket number “Docket No. FAA 2006-24978; Directorate Identifier 2006-NM-108-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this supplemental NPRM. We will consider all comments received by the closing date and may amend this supplemental NPRM in light of those comments. We will post all comments submitted, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this supplemental NPRM. Using the search function of that web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc.). You may review the DOT's complete Privacy Act Statement in the **Federal Register** published on April 11, 2000 (65 FR 19477-78), or you may visit *http://dms.dot.gov.* Examining the Docket You may examine the AD docket on the Internet at *http://dms.dot.gov,* or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone

(800)647-5227) is located on the plaza level in the Nassif Building at the DOT street address stated in ADDRESSES . Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We proposed to amend 14 CFR part 39 with a notice of proposed rulemaking

(NPRM)for an AD (the “original NPRM”) for certain McDonnell Douglas Model 717-200 airplanes. The original NPRM was published in the **Federal Register** on June 8, 2006 (71 FR 33262). The original NPRM proposed to require modifying the fuel boost pump container of the center tank. Comments We have considered the following comments on the original NPRM. Support for the NPRM AirTran Airways supports the proposed actions specified in the NPRM. Request To Refer to Latest Revision of Service Bulletin AirTran Airways and Boeing request that we reference Boeing Service Bulletin 717-28-0013, Revision 1, dated April 7, 2006, in the NPRM (we referred to Boeing Service Bulletin 717-28-0013, dated July 28, 2004, as the appropriate source of service information for doing the actions specified in the NPRM). AirTran Airways also requests that we give credit for actions done in accordance with the original issue. Boeing commented that there was additional work required by Revision 1, but in a subsequent comment Boeing states that this was in error and that no additional work was needed. Boeing also notes that Revision 2 of the service bulletin is being drafted. We agree to revise this AD to refer to the latest revision of the service bulletin as the appropriate source of service information. We have reviewed Boeing Service Bulletin 717-28-0013, Revision 1, dated April 7, 2006; and Boeing Service Bulletin 717-28-0013, Revision 2, dated September 13, 2006. The service bulletins contain essentially the same actions as described in the original issue of the service bulletin. However, Revision 1 of the service bulletin adds new airplanes to the effectivity (fuselages number 5136 through 5146), clarifies the configuration table, and clarifies the installation of the hat and cover assembles. Revision 2 of the service bulletin revises the parts pricing and clarifies the notes in the figures. We have revised this AD to refer to Revision 2 of the service bulletin. We have also revised the parts cost from $1,145 to $1,180 in the “Costs of Compliance” paragraph of this AD. We have also added paragraph

(g)to this AD to allow the original issue and Revision 1 of the service bulletin to be considered acceptable for compliance with the modification specified in this supplemental NPRM. Operators should note that we have not revised the 78-month compliance time specified in this supplemental NPRM to match the “10 years after release date of the service bulletin” compliance time specified in Revision 2 of the service bulletin. In developing an appropriate compliance time for this action, we considered the urgency associated with the subject unsafe condition, the manufacturer's recommendation, the availability of required parts, and the practical aspect of accomplishing the proposed modification within a period of time that corresponds to the normal scheduled maintenance for most affected operators. Boeing concurs with the 78-month compliance time. However, according to the provisions of paragraph

(h)of the supplemental NPRM, we may approve requests to adjust the compliance time if the request includes data that prove that the new compliance time would provide an acceptable level of safety FAA's Determination and Proposed Requirements of the Supplemental NPRM Certain changes discussed above expand the scope of the original NPRM; therefore, we have determined that it is necessary to reopen the comment period to provide additional opportunity for public comment on this supplemental NPRM. Costs of Compliance There are about 145 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs for U.S. operators to comply with this supplemental NPRM. Estimated Costs Action Work hours Average labor rate per hour Parts Cost per airplane Number of U.S.- registered airplanes Fleet cost Modification 2 $80 $1,180 $1,340 114 $152,760 Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this supplemental NPRM and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by adding the following new airworthiness directive (AD): **McDonnell Douglas:** Docket No. FAA 2006-24978; Directorate Identifier 2006-NM-108-AD. Comments Due Date

(a)The FAA must receive comments on this AD action by May 25, 2007. Affected ADs

(b)None. Applicability

(c)This AD applies to McDonnell Douglas Model 717-200 airplanes, certificated in any category; as identified in Boeing Service Bulletin 717-28-0013, Revision 2, dated September 13, 2006. Unsafe Condition

(d)This AD results from fuel system reviews conducted by the manufacturer. We are issuing this AD to prevent exposing the fuel pump container vapor area to electrical arcing during a fuel pump motor case or connector burn through, which could result in a fuel tank explosion. Compliance

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

(f)Within 78 months after the effective date of this AD, modify the fuel boost pump container of the center tank by doing all the actions specified in the Accomplishment Instructions of Boeing Service Bulletin 717-28-0013, Revision 2, dated September 13, 2006. Actions Accomplished According to Previous Issue of Service Bulletin

(g)Modifications accomplished before the effective date of this AD in accordance with Boeing Service Bulletin 717-28-0013, dated July 28, 2004; or Boeing Service Bulletin 717-28-0013, Revision 1, dated April 7, 2006; are considered acceptable for compliance with the corresponding action specified in this AD. Alternative Methods of Compliance (AMOCs) (h)(1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)Before using any AMOC approved in accordance with § 39.19 on any airplane to which the AMOC applies, notify the appropriate principal inspector in the FAA Flight Standards Certificate Holding District Office. Issued in Renton, Washington, on April 23, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-8176 Filed 4-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2006-25927; Directorate Identifier 2006-CE-52-AD] RIN 2120-AA64 Airworthiness Directives; M7 Aerospace LP SA226 and SA227 Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: We propose to supersede Airworthiness Directive

(AD)98-19-15 R1 and AD 2000-03-17, which apply to M7 Aerospace LP SA226 and SA227 series airplanes equipped with certain pitch trim actuators. AD 98-19-15 R1 currently requires you to incorporate changes into the Limitations Section of the FAA-approved Airplane Flight Manual

(AFM)if certain part number (P/N) pitch trim actuators are installed. AD 2000-03-17 requires repetitive inspections and repetitive replacements of the pitch trim actuator. The repetitive inspection and repetitive replacement times vary depending on the combination of airplane model and pitch trim actuator P/N installed. We are proposing this AD because we have determined that reliance on critical repetitive inspections on aging commuter-class airplanes carries an unnecessary safety risk when a design change exists that could eliminate or, in certain instances, reduce the number of those critical inspections. Consequently, this proposed AD would retain all of the actions of the previously referenced ADs, place life limits on certain P/N pitch trim actuators, and require the replacement of certain P/N pitch trim actuators with one of an improved design. Once installed, the improved design pitch trim actuator would terminate the AFM limitations in this proposed AD and reduce the repetitive inspection and repetitive replacement requirements. We are proposing this AD to detect excessive freeplay or rod slippage in the pitch trim actuator, which, if not detected and corrected, could result in pitch trim actuator failure. We are also proposing this AD to lessen the severity of pitch upset if a pitch trim actuator mechanical failure occurs. These conditions could lead to possible loss of control. DATES: We must receive comments on this proposed AD by June 29, 2007. ADDRESSES: Use one of the following addresses to comment on this proposed AD: • DOT Docket web site: Go to *http://dms.dot.gov* and follow the instructions for sending your comments electronically. • *Mail:* Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-0001. • *Fax:*

(202)493-2251. • *Hand Delivery:* Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the instructions for submitting comments. For service information identified in this proposed AD, contact M7 Aerospace LP, P.O. Box 790490, San Antonio, Texas 78279-0490; *telephone:*

(210)824-9421, extension 7294. FOR FURTHER INFORMATION CONTACT: Werner Koch, Aerospace Engineer, 2601 Meacham Blvd, Fort Worth, Texas 76137-4298; *telephone:*

(817)222-5133; *fax:*

(817)222-5960. SUPPLEMENTARY INFORMATION: Comments Invited We invite you to send any written relevant data, views, or arguments regarding this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include the docket number “FAA-2006-25927; Directorate Identifier 2006-CE-52-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to *http://dms.dot.gov,* including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive concerning this proposed AD. Discussion History of AD Actions Failure of a Barber-Coleman pitch trim actuator, which allowed the horizontal stabilizer to move to a full aircraft nose up position on an M7 Aerospace LP Model SA227 airplane, caused us to issue AD 98-19-15 R1, Amendment 39-11507 (65 FR 1540, January 11, 2000). AD 98-19-15 R1 currently requires you to revise the Limitations Section of the FAA-approved AFM to limit the maximum indicated airspeed and increase the minimum crew size if a Barber-Coleman pitch trim actuator P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005 is installed. To avoid the above limitations, AD 98-19-15 R1 allows installation of a Barber-Coleman P/N 27-19008-006, Barber Coleman P/N 27-19008-007, Simmonds-Precision P/N DL5040M5, Simmonds-Precision P/N DL5040M6, or Simmonds-Precision P/N DL5040M8 pitch trim actuator. All airplane models are eligible for any of these installations. The applicable service bulletin depends on the airplane model and pitch trim actuator. The FAA also issued AD 2000-03-17, Amendment 39-11576 (65 FR 8037, February 17, 2000), to establish inspection and replacement intervals for the pitch trim actuators. Inspection times and replacement times vary depending on the model of the airplane and the P/N of the pitch trim actuator installed. Events Since Previous AD Actions Since we issued ADs 98-19-15 R1 and 2000-03-17, the FAA has determined that the actions fall within the FAA's aging commuter-class aircraft policy, which briefly states that reliance on critical repetitive inspections carries an unnecessary safety risk when a design change exists that could eliminate or, in certain instances, reduce the number of those critical inspections. We also determined that the number of repetitive replacements could be reduced in these AD actions because of pitch trim actuator design changes. The FAA has identified installation of Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or Simmonds-Precision P/N DL5040M8 pitch trim actuators on all SA226 and SA227 series airplanes or installation of Simmonds-Precision P/N DL5040M6 pitch trim actuators on all SA226 and SA227 series airplanes (except Models SA227-CC and SA227-DC) will significantly reduce the number of repetitive inspections and repetitive replacements currently required by AD 2000-03-17. Relevant Service Information We have reviewed the following Fairchild Aircraft service information: • Fairchild Aircraft SA226 Series Service Letter

(SL)226-SL-005, Revised: August 3, 1999; • Fairchild Aircraft SA227 Series SL 227-SL-011, Revised August 3, 1999; • Fairchild Aircraft SA227 Series SL CC7-SL-028, Issued: August 12, 1999; • Fairchild Aircraft SA226 Series SL 226-SL-014, Revised: February 1, 1999; • Fairchild Aircraft SA227 Series SL 227-SL-031, Revised: February 1, 1999; and • Fairchild Aircraft SA227 Series SL CC7-SL-021, Revised: February 1, 1999. The service information describes procedures for inspecting the various pitch trim actuators that can be installed in SA226 and SA227 series airplanes. This service information is currently referenced in the existing ADs. FAA's Determination and Requirements of the Proposed AD We are proposing this AD because we evaluated all information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design. This proposed AD would supersede AD 98-19-15 R1 and AD 2000-03-17 with a new AD that would retain all of the actions of the previously referenced ADs, but limit the part numbers of the pitch trim actuators that can be used for replacement. This proposed AD would also place a life limit on Barber-Coleman P/N 27-19008-001, Barber-Coleman P/N 27-19008-002, Barber-Coleman P/N 27-19008-004, and Barber-Coleman P/N 27-19008-005 pitch trim actuators. This proposed AD would require you to use the service information described previously to perform these actions. Costs of Compliance We estimate that this proposed AD would affect 307 airplanes in the U.S. registry. This proposed AD requires pitch trim actuators to either be inspected or overhauled. We have no way of determining the number of airplanes that may need the inspection or overhaul. We have presented the fleet cost as the lowest cost based on all airplanes needing the inspection and the highest cost based on all airplanes needing the overhaul. The actual fleet cost will be somewhere between the lowest and highest fleet cost presented. We estimate the following costs to do the proposed inspection or overhaul: Labor cost Parts cost Total cost per airplane Total cost on U.S. operators 4 work-hours × $80 per hour = $320 None $320 $98,240 4 work-hours × $80 per hour = $320 $9,000 9,320 2,861,240 We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection or proposed mandatory replacement. We have no way of determining the number of airplanes that may need this replacement: Labor cost Parts cost Total cost per airplane 4 work-hours × $80 per hour = $320 $64,000 $64,320 The replacement estimate is based on replacing the pitch trim actuator with a new Simmonds-Precision P/N DL5040M8 pitch trim actuator. If the pitch trim actuator is replaced with a different P/N FAA-approved pitch trim actuator or a zero-timed FAA-approved pitch trim actuator the cost to the owner/operator could be less. The estimated costs represented in the above actions include the costs associated with AD 98-19-15 R1, AD 2000-03-17, and the costs of this proposed AD. The added cost impact this AD imposes upon an owner/operator over that already required by AD 98-19-15 R1 and AD 2000-03-17 is the eventual replacement of the pitch trim actuator if the airplane currently has a Barber-Coleman P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005 installed. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the proposed regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket. Examining the AD Docket You may examine the AD docket that contains the proposed AD, the regulatory evaluation, any comments received, and other information on the Internet at *http://dms.dot.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Office (telephone

(800)647-5227) is located at the street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Safety. The Proposed Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The FAA amends § 39.13 by removing Airworthiness Directive

(AD)98-19-15 R1, Amendment 39-11507 (65 FR 1540, January 11, 2000), and AD 2000-03-17, Amendment 39-11576 (65 FR 8037, February 17, 2000); and by adding the following new AD: **M7 Aerospace LP (Type Certificate No. A5SW, A8SW, and A18SW formerly held by Fairchild Aircraft Incorporated):** Docket No. FAA-2006-25927; Directorate Identifier 2006-CE-52-AD. Comments Due Date

(a)We must receive comments on this airworthiness directive

(AD)action by June 29, 2007. Affected ADs

(b)This AD supersedes the following ADs:

(1)AD 98-19-15 R1, Amendment 39-11507; and

(2)AD 2000-03-17, Amendment 39-11576. Applicability

(c)This AD applies to all Models SA226-AT, SA226-T, SA226-T(B), SA226-TC, SA227-AC (C-26A), SA227-AT, SA227-BC (C-26A), SA227-CC, SA227-DC (C-26B), SA227-PC, and SA227-TT airplanes, all serial numbers, that:

(1)are certificated in any category; and

(2)are equipped with pitch trim actuator Barber-Coleman part number (P/N) 27-19008-001, Barber-Coleman P/N 27-19008-002, Barber-Coleman P/N 27-19008-004, Barber-Coleman P/N 27-19008-005, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, Simmonds-Precision P/N DL5040M5, Simmonds-Precision P/N DL5040M6, or Simmonds-Precision P/N DL5040M8. Unsafe Condition

(d)This AD results from reports of mechanical failure of the pitch trim actuator causing the horizontal stabilizer to move to full aircraft nose up. We are proposing this AD to detect excessive freeplay or rod slippage in the pitch trim actuator, which, if not detected and corrected, could result in pitch trim actuator failure. We are also proposing this AD to lessen the severity of pitch upset if a pitch trim actuator mechanical failure occurs. These conditions could lead to possible loss of control. In addition, we are proposing this AD to eliminate the use of certain pitch trim actuators that require frequent critical inspections or replacements. Compliance

(e)To address this problem, you must do the following, unless already done:

(1)*For airplanes with a Barber-Coleman pitch trim actuator, P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005:* Before further flight after September 25, 1998 (the effective date of AD 98-19-15), incorporate the text in paragraphs (e)(1)(i) and (e)(1)(ii) of this AD into the Limitations Section of the FAA-approved Airplane Flight Manual (AFM). The owner/operator holding at least a private pilot certificate as authorized by section 43.7 of the Federal Aviation Regulations (14 CFR 43.7) may insert the information specified in paragraphs (e)(1)(i) and (e)(1)(ii) of this AD into the AFM Limitations Section. This may be done by inserting a copy of this AD into the AFM. Make an entry into the aircraft records showing compliance with this portion of the AD in accordance with section 43.9 of the Federal Aviation Regulations (14 CFR 43.9).

(i)“Limit the maximum indicated airspeed to maneuvering airspeed

(Va)as shown in the appropriate airplane flight manual (AFM)”; and

(ii)“The minimum crew required is two pilots.” Note 1: Fairchild Service Letter 226-SL-017, Fairchild Service Letter 227-SL-033, and Fairchild Service Letter CC7-SL-023, all FAA Approved: August 26, 1998; Revised: September 2, 1998, address the subject matter of this AD. Note 2: The before further flight compliance time of paragraph (e)(1) of this AD is retained from AD 98-19-15 R1. Note 3: Installation of any FAA-approved pitch trim actuator other than the Barber-Coleman P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005 terminates the requirements of paragraph (e)(1) of this AD.

(2)*For all airplanes:* Do the following initial inspection or overhaul and repetitive inspection or overhaul at the times specified in the table in paragraph

(4)of this AD:

(i)*For airplanes equipped with a Simmonds-Precision pitch trim actuator P/N DL5040M5, P/N DL5040M6, or P/N DL5040M8:* Measure the freeplay of the pitch trim actuator and inspect the pitch trim actuator for rod slippage using the INSTRUCTIONS section of Fairchild Aircraft SA226 Series Service Letter

(SL)226-SL-005 or Fairchild Aircraft SA227 Series SL 227-SL-011, both Revised: August 3, 1999; or Fairchild Aircraft SA227 Series Service Letter CC7-SL-028, Issued: August 12, 1999, as applicable.

(ii)*For airplanes equipped with Barber-Coleman pitch trim actuators, P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005:* Do a functional inspection of the pitch trim actuator using the INSTRUCTIONS section of Fairchild Aircraft SA226 Series SL 226-SL-014, Fairchild Aircraft SA227 Series SL 227-SL-031, or Fairchild Aircraft SA227 Series SL CC7-SL-021; all Revised: February 1, 1999; as applicable. Note 4: The actions in paragraphs (e)(2)(i) and (e)(2)(ii) of this AD are the same as the actions in AD 2000-03-17. The only difference between this AD and AD 2000-03-17 is the addition of life limits to Barber-Coleman pitch trim actuators P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005.

(iii)*For airplanes equipped with Barber-Coleman pitch trim actuators, P/N 27-19008-006 or P/N 27-19008-007:* Overhaul the pitch trim actuator following the applicable maintenance manual.

(3)*For all airplanes:* Before further flight replace the pitch trim actuator following the applicable maintenance manual when any of the following occurs:

(i)The pitch trim actuator is inspected following paragraphs (e)(2)(i) and (e)(2)(ii) of this AD and the freeplay limitations are exceeded, rod slippage is found, or a ratching sound occurs, as specified in the applicable service letters; or

(ii)The installed pitch trim actuator reaches its repetitive replacement time as specified in the table in paragraph (e)(4) of this AD.

(4)The table below presents the pitch trim actuators that could be installed and the compliance times for the initial inspections or overhaul, repetitive inspections or overhaul, and repetitive replacements required by this AD: Table—Inspection/Overhaul and Replacement Requirements for Pitch Trim Actuators. Condition Initial inspection or overhaul Repetitive inspection or overhaul Repetitive replacement

(i)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have an original Simmonds-Precision pitch trim actuator, P/N DL5040M5, installed Inspect following paragraph (e)(2)(i) of this AD before accumulating 3,000 hours time-in-service

(TIS)on the pitch trim actuator or within 50 hours TIS after April 17, 1995 (the effective date of AD 93-15-02 R1), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 250 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 250 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(i) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 5,000 hours TIS on the pitch trim actuator, 500 hours TIS after the initial inspection, or within 30 days after the effective date of this AD, whichever occurs later.

(ii)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have a replacement Simmonds-Precision pitch trim actuator, P/N DL5040M5, installed Inspect following paragraph (e)(2)(i) of this AD before accumulating 5,000 hours TIS on the pitch trim actuator or within 50 hours TIS after April 17, 1995 (the effective date of AD 93-15-02 R1), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(ii) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 6,500 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(iii)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have a replacement Simmonds-Precision pitch trim actuator, P/N DL5040M6, installed. This part can be new, modified from a P/N DL5040M5 pitch trim actuator, or overhauled and zero-timed Inspect following paragraph (e)(2)(i) of this AD before accumulating 7,500 hours TIS on the pitch trim actuator or within 50 hours TIS after April 17, 1995 (the effective date of AD 93-15-02 R1), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(iii) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 9,900 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(iv)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have a replacement Simmonds-Precision pitch trim actuator, P/N DL5040M5, installed that was overhauled and zero-timed where both nut assemblies, P/N AA56142, were replaced with new assemblies during overhaul Inspect following paragraph (e)(2)(i) of this AD before accumulating 5,000 hours TIS on the pitch trim actuator or within 50 hours TIS after April 17, 1995 (the effective date of AD 93-15-02 R1), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(iv) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 6,500 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(v)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have a replacement Simmonds-Precision P/N DL5040M5 pitch trim actuator installed that was overhauled and zero-timed where both nut assemblies, P/N AA56142, were not replaced with new assemblies during overhaul Inspect following paragraph (e)(2)(i) of this AD before accumulating 3,000 hours TIS on the pitch trim actuator or within 50 hours TIS after April 17, 1995 (the effective date of AD 93-15-02 R1), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 250 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 250 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(v) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 5,000 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(vi)For all affected airplane models (except for the Models SA227-CC and SA227-DC) that have a newly fabricated or over-hauled and zero-timed Barber-Colman pitch trim actuator, P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005 Inspect following paragraph (e)(2)(ii) of this AD before accumulating 500 hours total TIS on the pitch trim actuator or within 50 hours TIS after December 1, 1997 (the effective date of AD 97-23-01), whichever occurs later Inspect following paragraph (e)(2)(ii) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(vi) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M6, Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 5,000 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(vii)For the Models SA227-CC and SA227-DC that have a Simmonds-Precision pitch trim actuator, P/N DL5040M5 or P/N DL5040M6, installed None None Replace the pitch trim actuator with a Simmonds-Precision pitch trim actuator P/N DL5040M8, a Barber-Coleman P/N 27-19008-006 or P/N 27-19008-007, or an FAA-approved equivalent before accumulating 1,500 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(viii)For the Models SA227-CC and SA227-DC that have a newly fabricated or over-hauled and zero-timed Barber-Colman pitch trim actuator, P/N 27-19008-001, P/N 27-19008-002, P/N 27-19008-004, or P/N 27-19008-005 Inspect following paragraph (e)(2)(ii) of this AD before accumulating 500 hours total TIS on the pitch trim actuator or within 50 hours TIS after December 1, 1997 (the effective date of AD 97-23-01), whichever occurs later Inspect following paragraph (e)(2)(ii) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in the paragraph (e)(4)(viii) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision P/N DL5040M8, Barber-Coleman P/N 27-19008-006, Barber-Coleman P/N 27-19008-007, or an FAA-approved equivalent pitch trim actuator before accumulating 5,000 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(ix)For all affected airplanes with a Simmonds-Precision pitch trim actuator, P/N DL5040M8, installed Inspect following paragraph (e)(2)(i) of this AD before accumulating 7,500 hours TIS on the pitch trim actuator or within the next 50 hours TIS after April 10, 2000 (the effective date of AD 2000-03-17), whichever occurs later Inspect following paragraph (e)(2)(i) of this AD before accumulating 300 hours TIS after the initial inspection and repetitively thereafter at intervals not to exceed 300 hours TIS until accumulating the hours TIS specified in paragraph (e)(4)(ix) Repetitive Replacement column of this AD Replace the pitch trim actuator with a Simmonds-Precision pitch trim actuator P/N DL5040M8, a Barber-Coleman P/N 27-19008-006 or P/N 27-19008-007, or an FAA-approved equivalent before accumulating 9,900 hours TIS on the pitch trim actuator or within 30 days after the effective date of this AD, whichever occurs later.

(x)For all affected airplanes with a Barber-Colman P/N 27-19008-006 or 27-19008-007 pitch trim actuator installed Overhaul following paragraph (e)(2)(iii) of this AD before accumulating 2,000 hours TIS on the pitch trim actuator Overhaul following paragraph (e)(2)(iii) of this AD before accumulating 2,000 hours TIS on the pitch trim actuator No replacement requirements.

(5)*For all airplane models except Models SA227-CC and SA227-DC:* As of the effective date of this AD, do not install as a replacement any of the following pitch trim actuators or FAA-approved equivalent P/N:

(i)Barber-Colman P/N 27-19008-001;

(ii)Barber-Colman P/N 27-19008-002;

(iii)Barber-Colman P/N 27-19008-004;

(iv)Barber-Colman P/N 27-19008-005; or

(v)Simmonds-Precision P/N DL5040M5.

(6)*For all airplane Models SA227-CC and SA227-DC:* As of the effective date of this AD, do not install as a replacement any of the following pitch trim actuators or FAA-approved equivalent P/N:

(i)Barber-Colman P/N 27-19008-001;

(ii)Barber-Colman P/N 27-19008-002;

(iii)Barber-Colman P/N 27-19008-004;

(iv)Barber-Colman P/N 27-19008-005;

(v)Simmonds-Precision P/N DL5040M5; or

(vi)Simmonds-Precision P/N DL5040M6. Alternative Methods of Compliance (AMOCs)

(f)The Manager, Fort Worth Airplane Certification Office (ACO), FAA, ATTN: Werner Koch, Aerospace Engineer, 2601 Meacham Blvd, Fort Worth, Texas 76137-4298, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

(PI)in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO. Related Information

(g)To get copies of the service information referenced in this AD, contact M7 Aerospace LP, 10823 N. E. Entrance, San Antonio, Texas 78216. To view the AD docket, go to the Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC, or on the Internet at *http://dms.dot.gov* . The docket number is Docket No. FAA-2006-25927; Directorate Identifier 2006-CE-52-AD. Issued in Kansas City, Missouri, on April 20, 2007. Charles L. Smalley, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-8163 Filed 4-27-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF THE INTERIOR Office of Surface Mining Reclamation and Enforcement 30 CFR Part 935 [OH-252-FOR] Ohio Regulatory Program AGENCY: Office of Surface Mining Reclamation and Enforcement (OSM), Interior. ACTION: Proposed rule; public comment period and opportunity for public hearing on proposed amendment. SUMMARY: We

(OSM)are announcing receipt of a proposed amendment to the Ohio regulatory program (the “Ohio program”) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). Ohio proposes to revise the Ohio Revised Code

(ORC)regarding changes to the State's alternate bonding system (bond pool), funding for its regulatory and abandoned mine land programs and its bond pool, permitting procedures for determining the potential that proposed mine sites may or may not produce acid-mine drainage, and authorizes rule-making if Ohio becomes covered by a State programmatic general permit issued by the U.S. Army Corps of Engineers for the discharge of dredged or fill material into waters of the United States by coal mining operations. The amendment is primarily intended to satisfy a program condition codified in the Federal regulations. This amendment replaces the State's bond pool amendment that the State previously submitted and that OSM announced, and requested public comments on, in the **Federal Register** dated February 13, 2006 (71 FR 7480). This document gives the times and locations that the Ohio program and proposed amendment to that program are available for your inspection, the comment period during which you may submit written comments on the amendment, and the procedures that we will follow for the public hearing, if one is requested. DATES: We will accept written comments on this amendment until 4 p.m. (local time), May 30, 2007. If requested, we will hold a public hearing on the amendment on May 25, 2007. We will accept requests to speak at a hearing until 4 p.m., local time, on May 15, 2007. ADDRESSES: You may submit comments, identified by OH-252-FOR, by any of the following methods: • E-mail: *grieger@osmre.gov.* Include OH-252-FOR in the subject line of the message; • Mail/Hand Delivery: Mr. George Rieger, Chief, Pittsburgh Field Division, Office of Surface Mining Reclamation and Enforcement, 4605 Morse Road, Room 102, Columbus, OH 43230. Telephone: 614-416-2238. • Federal eRulemaking Portal: *http://www.regulations.gov.* Follow the instructions for submitting comments. *Instructions:* All submissions received must include the agency docket number for this rulemaking. For detailed instructions on submitting comments and additional information on the rulemaking process, see the “Public Comment Procedures” heading in the SUPPLEMENTARY INFORMATION section of this document. You may also request to speak at a public hearing by any of the methods listed above or by contacting the individual listed under FOR FURTHER INFORMATION CONTACT. *Docket:* You may review copies of the Ohio program, this amendment, a listing of any scheduled public hearings, and all written comments received in response to this document at the addresses listed below during normal business hours, Monday through Friday, excluding holidays. You may also receive one free copy of this amendment by contacting OSM's Pittsburgh Field Division listed below: Mr. George Rieger, Chief, Pittsburgh Field Division, Office of Surface Mining Reclamation and Enforcement 4605 Morse Road, Room 102, Columbus, OH 43230 614-416-2238. E-mail: *grieger@osmre.gov.* Mr. Scott Kell, Acting Chief, Division of Mineral Resources Management, Ohio Department of Natural Resources, 2045 Morse Road, Bldg. H-2, Columbus, Ohio 43229, Telephone:

(614)265-6633. FOR FURTHER INFORMATION CONTACT: Mr. George Rieger, Chief, Pittsburgh Field Division, Telephone:

(717)782-4849, extension 11; or 614-416-2238; or 412-937-2153. E-mail: *grieger@osmre.gov.* SUPPLEMENTARY INFORMATION: I. Background on the Ohio Program II. Description of the Proposed Amendment III. Public Comment Procedures IV. Procedural Determinations I. Background on the Ohio Program Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act * * * and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Ohio program on August 16, 1982. You can find background information on the Ohio program, including the Secretary's findings, the disposition of comments, and conditions of approval of the Ohio program in the August 16, 1982, **Federal Register** (47 FR 34687). You can also find later actions concerning Ohio's program and program amendments at 30 CFR 935.11, 935.15, and 935.16. II. Description of the Proposed Amendment By letter dated March 6, 2007, Ohio sent us a proposed amendment to its program (Administrative Record Number OH-2185-28) under SMCRA (30 U.S.C. 1201 *et seq.* ). In its letter, Ohio stated that in December of 2006, the Ohio legislature passed House Bill 443, which is intended to address many of the issues of concern relative to Ohio's bond pool. Ohio proposes to revise the Ohio Revised Code

(OAC)will be needed in order to ensure that the final program amendment, in whole, is consistent with the relevant Federal regulations. To that end, Ohio stated, the Division of Mineral Resources Management

(DMRM)has chartered several workgroups made up of internal and external stakeholders to develop final procedures and policies that will be used as a basis for revising the OAC to implement the provisions of HB 443. Ohio has requested OSM's technical assistance on these workgroups. The current amendment provides the following specific revisions. In the descriptions below, we have not identified the numerous paragraph re-numbering and citation referencing changes that result from the substantive changes proposed in this amendment. 1. ORC 1513.01(W) Definition of “Performance Security” This definition is new, and provides as follows:

(W)“Performance security” means a form of financial assurance, including, without limitation, a surety bond issued by a surety licensed to do business in this state; an annuity; cash; a negotiable certificate of deposit; an irrevocable letter of credit that automatically renews; a negotiable bond of the United States, this state, or a municipal corporation in this state; a trust fund of which the state is named a conditional beneficiary; or other form of financial guarantee or financial assurance that is acceptable to the chief. In addition to the change quoted above, the State has amended or deleted terms throughout ORC Chapter 1513 in which the word “bond” appears, such as in the terms “performance bond” and “bond coverage,” and has replaced those terms with the term “performance security.” 2. ORC 1513.02(E)(3) Responsibilities of the DMRM This provision is being amended by deleting the phrase “coal mining administration and reclamation reserve fund created in section 1513.181 of the Revised Code” and revising that phrase to read: “Reclamation forfeiture fund created in section 1513.18 of the Revised Code.” 3. ORC 1513.02(J) Responsibilities of DMRM This provision is new, and provides as follows:

(J)If this state becomes covered by a state programmatic general permit issued by the United States Army Corps of engineers for the discharge of dredged or fill material into the waters of the United States by operations that conduct surface and underground coal mining and reclamation operations and the restoration of abandoned mine lands, the chief may establish programs and adopt rules and procedures designed to implement the terms, limitations, and conditions of the permit. The purpose of the programs, rules, and procedures shall be to enable the state to reduce or eliminate duplicative state and federal project evaluation, simplify the regulatory approval process, provide environmental protection for aquatic resources that is equivalent to Federal protection, and satisfy the requirements of the United States Army Corps of Engineers regulatory program under which the permit is issued and that is established under section 404 of the “Federal Water Pollution Control Act,” 86 Stat. 48 (1972), 33 U.S.C. 1344, as amended by the “Clean Water Act of 1977,” 91 Stat. 1600, 33 U.S.C. 1344; section 10 of the “Rivers and Harbors Act of 1899,” 30 Stat. 1151, 33 U.S.C. 403; and section 103 of the “Marine Protection, Research, and Sanctuaries Act of 1972,” 86 Stat. 1055, 33 U.S.C. 1413. In its submittal, Ohio stated that “if” a General Permit is issued for Ohio by the U.S. Army Corps of Engineers regarding discharges into jurisdictional waters of United States from surface/underground coal mining operations and abandoned mine land reclamation

(AML)projects, then DMRM “may” establish programs, adopt rules and develop procedures to implement the General Permit. 4. ORC 1513.07(B)(1) Permit Application; Permit Fee Paragraph (B)(1) is proposed to be deleted in its entirety, and provides as follows. (B)(1) Each application for a coal mining and reclamation permit or renewal of such a permit shall be accompanied by a permit or renewal fee in an amount equal to the product of seventy-five dollars multiplied by the number of acres, estimated in the application, that will comprise the area of land to be affected within the permit or renewal period by the coal mining operation for which the permit or renewal is requested. 5. ORC 1513.07(B)(1)(o) Permit Application; Statement of Acid Generating Potential and Acid Neutralizing Potential The following new language is added at the end of this existing paragraph: If the test borings or core samplings from the permit area indicate the existence of potentially acid forming or toxic forming quantities of sulfur in the coal or overburden to be disturbed by mining, the application also shall include a statement of the acid generating potential and the acid neutralizing potential of the rock strata to be disturbed as calculated in accordance with the calculation method established under section 1513.075 of the Revised Code or with another calculation method. In its submittal, Ohio stated that this new provision directs applicants to provide an Acid Base Accounting statement pursuant to methodology prescribed in ORC 1513.075, or another method. 6. ORC 1513.07(E)(8) Permit Application; Monitoring and Recordkeeping Related to Potential Acidity and Neutralization Potential This paragraph is new and provides as follows:

(8)In the case of the issuance of a permit that involves a conflict of results between various methods of calculating potential acidity and neutralization potential for purposes of assessing the potential for acid mine drainage to occur at a mine site, the permit shall include provisions for monitoring and record keeping to identify the creation of unanticipated acid water at the mine site. If the monitoring detects the creation of acid water at the site, the permit shall impose on the permittee additional requirements regarding mining practices and site reclamation to prevent the discharge of acid mine drainage from the mine site. As used in division (E)(8) of this section, “potential acidity” and “neutralization potential” have the same meanings as in section 1513.075 of the Revised Code. In its submittal, Ohio stated that this new paragraph provides for additional monitoring for Acid Mine Drainage if there is a conflict concerning the assessment of the potential for a mine to discharge AMD. In the event unanticipated AMD occurs during mining and reclamation, additional mining practices and reclamation shall be required in order to prevent AMD discharges. 7. ORC 1513.075 Definitions and Calculating Potential Acidity and Neutralization Potential This provision is new and provides as follows: Sec. 1513.075.

(A)As used in this section:

(1)“Potential acidity” means a laboratory measurement of the amount of acidity that could be produced by material in a rock strata proposed to be disturbed by mining and that is expressed by a numeral indicating the number of tons of that acidity that would be present in one thousand tons of disturbed overburden.

(2)“Neutralization potential” means a laboratory measurement of the alkalinity of a rock strata expressed as the amount of acidity that would be neutralized by material proposed to be disturbed by mining and that is expressed by a numeral indicating the number of tons of that alkalinity that would be present in one thousand tons of disturbed overburden.

(3)“Test borings or core samplings” refer to test borings or core samplings performed on rock strata in an area proposed to be covered by a permit for a coal mining operation, the results of which must be stated in the permit application in accordance with division (B)(1)(o) of section 1513.07 of the Revised Code.

(B)For purposes of the determination of the chief of the division of mineral resources management regarding whether to approve an application for a permit for a coal mining operation based on criteria established in divisions (E)(2)(a) and

(c)of section 1513.07 of the Revised Code and related performance standards established in division (A)(10) of section 1513.16 of the Revised Code, the potential acidity and the neutralization potential of the rock strata that would be disturbed under the permit may be calculated in accordance with this section.

(C)The measurement of potential acidity may be based on laboratory analyses of the sulfur content of the coal and overburden to be disturbed by mining. If the results of test borings or core samplings include laboratory analyses of the pyritic form of sulfur, the applicant may base the calculation of the potential acidity for the area on the pyritic sulfur content of the coal and overburden to be disturbed by mining rather than on the total sulfur content.

(D)The tons of rock in the area represented by each core hole resulting from test boring or core sampling may be estimated and used to calculate the tons of potential acidity and tons of neutralization potential for each rock stratum. The sum of those values across the proposed permit area may be used to calculate the site's overall neutralization potential and potential acidity.

(E)The proposed permit area may not be considered to have the potential to create acid or other toxic mine drainage if either of the following applies:

(1)The numeral that indicates the site's overall neutralization potential divided by the numeral that indicates the site's overall potential acidity results in a quotient that is equal to or greater than two.

(2)The numeral that indicates the neutralization potential subtracted from the numeral that indicates the potential acidity results in a remainder that is equal to or less than either of the following:

(a)Negative five in the case that the total sulfur content of rock strata is used to calculate potential acidity;

(b)Negative ten in the case that the pyritic sulfur content of rock strata is used to calculate potential acidity. In its submittal, Ohio stated that this new provision defines certain terms relative to potential acidity and neutralization potential of strata overlying the coal to be mined. The provision also provides for calculation of proposed mining operations' potential to create acid or toxic drainage based on specific criteria and indicates that proposed mining areas not meeting certain numeric criteria “may” not be considered as potential acid/toxic producers. 8. ORC 1513.08 Requirement to File a Performance Security This provision is amended by deleting, adding and rearranging language relating to performance security. Much new language is added to this provision, and the provision is reorganized to accommodate the new language. As amended this section provides as follows: Sec. 1513.08.

(A)After a coal mining and reclamation permit application has been approved, but before the permit is issued, the applicant shall file with the chief of the division of mineral resources management, on a form prescribed and furnished by the chief, the performance security required under this section.

(B)Using the information contained in the permit application; the requirements contained in the approved permit and reclamation plan; and, after considering the topography, geology, hydrology, and revegetation potential of the area of the approved permit, the probable difficulty of reclamation; the chief shall determine the estimated cost of reclamation under the initial term of the permit if the reclamation has to be performed by the division of mineral resources management in the event of forfeiture of the performance security by the applicant. The chief shall send written notice of the amount of the estimated cost of reclamation by certified mail to the applicant. The applicant shall send written notice to the chief indicating the method by which the applicant will provide the performance security pursuant to division

(C)of this section.

(C)The applicant shall provide the performance security in an amount using one of the following:

(1)If the applicant elects to provide performance security without reliance on the reclamation forfeiture fund created in section 1513.18 of the Revised Code, the amount of the estimated cost of reclamation as determined by the chief under division

(B)of this section for the increments of land on which the operator will conduct a coal mining and reclamation operation under the initial term of the permit as indicated in the application;

(2)If the applicant elects to provide performance security together with reliance on the reclamation forfeiture fund through payment of the additional tax on the severance of coal that is levied under division (A)(8) of section 5749.02 of the Revised Code, an amount of twenty-five hundred dollars per acre of land on which the operator will conduct coal mining and reclamation under the initial term of the permit as indicated in the application. However, in order to be eligible to provide performance security in accordance with division (C)(2) of this section, an applicant shall have held a permit issued under this chapter for any coal mining and reclamation operation for a period of not less than five years. In the event of forfeiture of performance security that was provided in accordance with division (C)(2) of this section, the difference between the amount of that performance security and the estimated cost of reclamation as determined by the chief under division

(B)of this section shall be obtained from money in the reclamation forfeiture fund as needed to complete the reclamation. The performance security provided under division

(C)of this section for the entire area to be mined under one permit issued under this chapter shall not be less than ten thousand dollars. The performance security shall cover areas of land affected by mining within or immediately adjacent to the permitted area, so long as the total number of acres does not exceed the number of acres for which the performance security is provided. However, the authority for the performance security to cover areas of land immediately adjacent to the permitted area does not authorize a permittee to mine areas outside an approved permit area. As succeeding increments of coal mining and reclamation operations are to be initiated and conducted within the permit area, the permittee shall file with the chief additional performance security to cover the increments in accordance with this section. If a permittee intends to mine areas outside the approved permit area, the permittee shall provide additional performance security in accordance with this section to cover the areas to be mined. An applicant shall provide performance security in accordance with division (C)(1) of this section in the full amount of the estimated cost of reclamation as determined by the chief for a permitted coal preparation plant or coal refuse disposal area that is not located within a permitted area of a mine. A permittee shall provide the performance security not later than one year after the effective date of this amendment for a permitted coal preparation plant or coal refuse disposal area that is in existence on the effective date of this amendment and that is not located within a permitted area of a mine.

(D)A permittee's liability under the performance security shall be limited to the obligations established under the permit, which include completion of the reclamation plan in order to make the land capable of supporting the postmining land use that was approved in the permit. The period of liability under the performance security shall be for the duration of the coal mining and reclamation operation and for a period coincident with the operator's responsibility for revegetation requirements under section 1513.16 of the Revised Code.

(E)The amount of the estimated cost of reclamation determined under division

(B)of this section and the amount of a permittee's performance security provided in accordance with division (C)(1) of this section may be adjusted by the chief as the land that is affected by mining increases or decreases or if the cost of reclamation increases or decreases. If the performance security was provided in accordance with division (C)(2) of this section and the chief has issued a cessation order under division (D)(2) of section 1513.02 of the Revised Code for failure to abate a violation of the contemporaneous reclamation requirement under division (A)(15) of section 1513.16 of the Revised Code, the chief may require the permittee to increase the amount of performance security from twenty-five hundred dollars per acre of land to five thousand dollars per acre of land. The chief shall notify the permittee, each surety, and any person who has a property interest in the performance security and who has requested to be notified of any proposed adjustment to the performance security. The permittee may request an informal conference with the chief concerning the proposed adjustment, and the chief shall provide such an informal conference. If the chief increases the amount of performance security under this division, the permittee shall provide additional performance security in an amount determined by the chief. If the chief decreases the amount of performance security under this division, the chief shall determine the amount of the reduction of the performance security and send written notice of the amount of reduction to the permittee. The permittee may reduce the amount of the performance security in the amount determined by the chief.

(F)A permittee may request a reduction in the amount of the performance security by submitting to the chief documentation proving that the amount of the performance security provided by the permittee exceeds the estimated cost of reclamation if the reclamation would have to be performed by the division in the event of forfeiture of the performance security. The chief shall examine the documentation and determine whether the permittee's performance security exceeds the estimated cost of reclamation. If the chief determines that the performance security exceeds that estimated cost, the chief shall determine the amount of the reduction of the performance security and send written notice of the amount to the permittee. The permittee may reduce the amount of the performance security in the amount determined by the chief. Adjustments in the amount of performance security under this division shall not be considered release of performance security and are not subject to section 1513.16 of the Revised Code.

(G)If the performance security is a bond, it shall be executed by the operator and a corporate surety licensed to do business in this state. If the performance security is a cash deposit or negotiable certificates of deposit of a bank or savings and loan association, the bank or savings and loan association shall be licensed and operating in this state. The cash deposit or market value of the securities shall be equal to or greater than the amount of the performance security required under this section. The chief shall review any documents pertaining to the performance security and approve or disapprove the documents. The chief shall notify the applicant of the chief's determination.

(H)If the performance security is a bond, the chief may accept the bond of the applicant itself without separate surety when the applicant demonstrates to the satisfaction of the chief the existence of a suitable agent to receive service of process and a history of financial solvency and continuous operation sufficient for authorization to self-insure or bond the amount.

(I)Performance security provided under this section may be held in trust, provided that the state is the conditional beneficiary of the trust and the custodian of the performance security held in trust is a bank, trust company, or other financial institution that is licensed and operating in this state. The chief shall review the trust document and approve or disapprove the document. The chief shall notify the applicant of the chief's determination.

(J)If a surety, bank, savings and loan association, trust company, or other financial institution that holds the performance security required under this section becomes insolvent, the permittee shall notify the chief of the insolvency, and the chief shall order the permittee to submit a plan for replacement performance security within thirty days after receipt of notice from the chief. If the permittee provided performance security in accordance with division (C)(1) of this section, the permittee shall provide the replacement performance security within ninety days after receipt of notice from the chief. If the permittee provided performance security in accordance with division (C)(2) of this section, the permittee shall provide the replacement performance security within one year after receipt of notice from the chief, and, for a period of one year after the permittee's receipt of notice from the chief or until the permittee provides the replacement performance security, whichever occurs first, money in the reclamation forfeiture fund shall be the permittee's replacement performance security in an amount not to exceed the estimated cost of reclamation as determined by the chief.

(K)A permittee's responsibility for repairing material damage and replacement of water supply resulting from subsidence may be satisfied by liability insurance required under this chapter in lieu of the permittee's performance security if the liability insurance policy contains terms and conditions that specifically provide coverage for repairing material damage and replacement of water supply resulting from subsidence.

(L)If the performance security provided in accordance with this section exceeds the estimated cost of reclamation, the chief may authorize the amount of the performance security that exceeds the estimated cost of reclamation together with any interest or other earnings on the performance security to be paid to the permittee. In its submittal, Ohio summarized the amendments at ORC 1513.08 as follows. Ohio stated that ORC 1513.08(B) requires the Chief of DMRM to determine the cost of reclamation, on a case by case basis, for all permit applications submitted. The cost of such reclamation shall be determined as if forfeiture of the performance security had occurred and DMRM is required to perform the reclamation. This determination shall be a basis for the amount of performance security, and shall be made subsequent to application approval, but prior to permit issuance. DMRM notifies the applicant via certified mail of the cost of performance security. Ohio stated that the applicant then responds and indicates the method of providing performance security at ORC 1513.08(C): (C)(1) Full cost, incrementally, under the initial permit term, or (C)(2) $2,500/acre on land under initial permit term. If choosing option (C)(2), the company will pay additional tax into the bond pool in the amount provided by ORC 5749.02(A)(8). Ohio stated that if performance security is forfeited, the bond pool may be used to supplement the $2,500/acre flat bond rate up to the Chief's determination of cost pursuant to ORC1513.08(B). Only applicants holding permits in Ohio for at least 5 years have option (C)(2). The minimum performance security shall be $10,000 for any one permit. Existing (permitted) coal prep plants/refuse disposal facilities not within a permit of a mine must provide full cost performance security within one year of the effective date of the law. Ohio stated that under ORC 1513.08(D), performance security liability is limited to obligations established under the permit. Ohio stated that under ORC 1513.08(E), the Chief's estimated cost of reclamation and amount of performance security may be adjusted by DMRM based upon cost increases/decreases. Operators choosing the flat rate/bond pool option may have the bond rate increased to $5,000/acre if a failure to abate cession order is issued due to non-contemporaneous reclamation. Ohio stated that performance security adjustments require notification to permittee, surety and any person who has a property interest in the performance security upon request. A permittee may request an informal conference regarding a proposed rate adjustment. Ohio stated that ORC 1513.08(F), provides for a permittee to request reduction in performance security based upon documentation proving actual cost of reclamation to the Division is less than the amount posted. Ohio stated that under ORC 1513.08 (G), if performance security is issued in the form of a bond, the surety must be licensed to conduct business in Ohio. If the performance security is cash deposit or a certificate of deposit of a bank or savings and loan association, that business shall be licensed and operating in Ohio. Ohio further stated that the Chief is required to review performance security documents and approve of their use. Ohio stated that ORC 1513.08(I) provides criteria for performance security held in trust. The Chief must review and approve trust documents. Ohio stated that ORC 1513.08

(J)provides the following procedures for holder of performance security insolvency: Permittee notification to DMRM; Plan for replacement of performance; security; Replacement of full cost performance security in 90 days; Replacement of flat rate performance security in one year. Ohio stated that ORC 1513.08(K) provides that subsidence damages and replacement of subsidence damaged water supplies may be satisfied by liability insurance in lieu of performance security. Such insurance specifically must address such damages. Ohio stated that ORC 1513.08(L) provides that performance security exceeding the cost of reclamation may be returned to the operator along with interest or other earnings. 9. ORC 1513.081 DMRM Priority Lien This provision is new and provides as follows: Sec. 1513.081.

(A)If an operator becomes insolvent, the division of mineral resources management shall have a priority lien in front of all other interested creditors against the assets of that operator for the amount of any reclamation that is required as a result of the operator's mining activities. The chief of the division of mineral resources management shall file a statement in the office of the county recorder of each county in which the mined land lies of the estimated cost to reclaim the land. The estimated cost to reclaim the land shall include the direct and indirect costs of the development, design, construction, management, and administration of the reclamation. The statement shall constitute a lien on the assets of the operator as of the date of the filing. The lien shall continue in force so long as any portion of the lien remains unpaid or until the chief issues a certificate of release of the lien. If the chief issues a certificate of release of the lien, the chief shall file the certificate of release in the office of each applicable county recorder.

(B)The chief promptly shall issue a certificate of release of a lien under any of the following circumstances:

(1)Upon the repayment in full of the money that is necessary to complete the reclamation;

(2)Upon the transfer of an existing permit that includes the areas of the operation for which reclamation was not completed to a different operator;

(3)Any other circumstance that the chief determines to be in the best interests of the state.

(C)The chief may modify the amount of a lien under this section. If the chief modifies a lien, the chief shall file a statement in the office of the county recorder of each applicable county of the new amount of the lien.

(D)The chief may authorize an agent to hold a certificate of release in escrow for a period not to exceed one hundred eighty days for the purpose of facilitating the transfer of unreclaimed mine land.

(E)All money from the collection of liens under this section shall be deposited in the state treasury to the credit of the reclamation forfeiture fund created in section 1513.18 of the Revised Code. In its submittal, Ohio stated that ORC 1513.081(A) provides for DMRM's priority lien ahead of other creditors in event of operator insolvency. Lien can be used to recover the cost of reclamation including all associated administrative costs. Lien must be filed by DMRM in the appropriate county recorder's office. Ohio stated that subsection

(B)provides for the release of a filed lien and/or adjustment. 10. ORC 1513.16(F)(8)(a) Alternative Financial Security

(AFS)This provision is new and provides as follows: (8)(a) Except as provided in division (F)(8)(c) of this section, if the chief determines that a permittee is responsible for mine drainage that requires water treatment after reclamation is completed under the terms of the permit or that a permittee must provide an alternative water supply after reclamation is completed under the terms of the permit, the permittee shall provide alternative financial security in an amount determined by the chief prior to the release of the remaining portion of performance security under division (F)(3)(c) of this section. The alternative financial security shall be in an amount that is equal to or greater than the present value of the estimated cost over time to develop and implement mine drainage plans and provide water treatment or in an amount that is necessary to provide and maintain an alternative water supply, as applicable. The alternative financial security shall include a contract, trust, or other agreement or mechanism that is enforceable under law to provide long-term water treatment or a long-term alternative water supply, or both.

(b)The chief shall adopt rules in accordance with Chapter 119 of the Revised Code that are necessary for the administration of division (F)(8)(a) of this section.

(c)Division (F)(8)(a) of this section does not apply while the chief's determination of a permittee's responsibility under that division is the subject of a good faith administrative or judicial appeal contesting the validity of the determination. If after completion of the appeal there is an enforceable administrative or judicial decision affirming or modifying the chief's determination, the permittee shall provide the alternative financial security in an amount established in the administrative or judicial decision. In its submittal, Ohio stated that ORC 1513.16(F)(8) provides provisions for an Alternative Financial Security

(AFS)to address mine drainage treatment or alternative water supply replacement after reclamation is completed. An AFS is to be provided prior to release of remaining bond in the form of a contract, trust or other agreements enforceable under law to provide long-term water treatment or alternative supply. Subsection

(b)requires the Chief to adopt new rules to administer the AFS. 11. ORC 1513.16(F)(9) Termination of Jurisdiction This provision is new and provides as follows:

(9)Final release of the performance security in accordance with division (F)(3)(c) of this section terminates the jurisdiction of the chief under this chapter over the reclaimed site of a surface coal mining and reclamation operation or applicable portion of an operation. However, the chief shall reassert jurisdiction over such a site if the release was based on fraud, collusion, or misrepresentation of a material fact and the chief, in writing, demonstrates evidence of the fraud, collusion, or misrepresentation. Any person with an interest that is or may be adversely affected by the chief's determination may appeal the determination to the reclamation commission in accordance with section 1513.13 of the Revised Code. In its submittal, Ohio stated that this provision provides for the final release of performance security and terminates the Division's jurisdiction unless certain specific issues are subsequently found to be present. 12. ORC 1513.171 Coal Reclamation Tax Credit This provision is new, and provides as follows: Sec. 1513.171.

(A)For the purpose of claiming a credit under section 5749.11 of the Revised Code, an operator with a valid permit issued under section 1513.07 of the Revised Code may submit an application to the chief of the division of mineral resources management to perform reclamation on land or water resources that are not within the area of the applicant's permit and that have been adversely affected by past coal mining for which the performance security was forfeited. The chief shall provide the application form. The application shall include all of the following:

(1)The operator's name, address, and telephone number;

(2)The valid permit number of the operator;

(3)An identification of the area or areas to be reclaimed;

(4)An identification of the owner of the land;

(5)A reclamation plan that describes the work to be done to reclaim the land or water resources. The plan shall include a description of how the plan is consistent with local physical, environmental, and climatological conditions and the measures to be taken during the reclamation to ensure the protection of water systems.

(6)An estimate of the total cost of the reclamation;

(7)An estimate of the timetables for accomplishing the reclamation;

(8)Any other requirements that the chief prescribes by rule. The chief shall approve, disapprove, or approve with modifications the application concerning the proposed reclamation work. If the chief approves the application, the applicant may commence reclamation in accordance with the timetables included in the application. Upon the completion of the reclamation to the satisfaction of the chief, the chief shall issue a numbered reclamation tax credit certificate showing the amount of the credit and the identity of the recipient. Prior to the close of the fiscal quarter in which the tax credit certificate is issued, the chief shall certify to the tax commissioner the amount of the credit and the identity of the recipient.

(B)The chief shall determine the amount of the credit in accordance with this section and rules adopted under it. The amount of the credit shall be equal to the cost that the division of mineral resources management would have expended from the reclamation forfeiture fund created in section 1513.18 of the Revised Code to complete the reclamation.

(C)The chief shall adopt rules in accordance with Chapter 119. of the Revised Code that are necessary to administer this section. The rules shall establish all of the following:

(1)A procedure that the chief shall use to determine the amount of the credit issued under this section;

(2)A procedure by which the chief may obtain consent of the owners of land or water resources to allow reclamation work for purposes of this section;

(3)A procedure for delivery of notice to the owners of land or water resources on which the reclamation work is to be performed. The rules shall require the notice to include the date on which the reclamation work is scheduled to begin. In its submittal, Ohio stated that this provision establishes procedures for claiming tax credit pursuant to section 5749.11 of the ORC. A coal mine operator may submit an application to reclaim another mined area with forfeited bond. Once reclamation is completed, the Chief shall issue numbered tax credits in the amount of the credit. Under subsection (B), the Chief shall determine the amount of the credit, equivalent to the cost of reclamation to the division if the work had been completed by the state. Subsection

(C)requires the Chief to adopt rules to administer and establish procedures to address: Amount of tax credit; Consent of landowner or owner of the water resources to conduct reclamation; and Notification to landowner of reclamation work and schedule. 13. ORC 1513.18 Reclamation Forfeiture Fund Subsection

(B)is amended in the first sentence by deleting the phrase “any moneys transferred to it under this division from the unreclaimed lands fund created in section 1513.30.” In place of that deleted language, the following phrase is added: “All money from the collection of liens under section 1513.081.” The first sentence in subsection

(B)is also amended by identifying that funds derived from certain fines will be added to the reclamation forfeiture fund. Language concerning the Chief's management of the fund is deleted. Language concerning the transfer of funds from the unreclaimed lands fund is deleted. Language concerning use of money from the reclamation forfeiture fund to cover administrative expenses has been added. As amended, subsection

(B)provides as follows:

(B)The fund also shall consist of all money from the collection of liens under section 1513.081 of the Revised Code, any moneys transferred to it under section 1513.181 of the Revised Code from the coal mining and reclamation reserve fund created in that section, fines collected under division

(E)of section 1513.02 and section 1513.99 of the Revised Code, fines collected for a violation of section 2921.31 of the Revised Code that, prior to July 1, 1996, would have been a violation of division

(G)of section 1513.17 of the Revised Code as it existed prior to that date, and moneys collected and credited to it pursuant to section 5749.02 of the Revised Code. Disbursements from the fund shall be made by the chief in accordance with division

(D)of this section for the purpose of reclaiming areas that an operator has affected by mining and failed to reclaim under a coal mining and reclamation permit issued under this chapter or under a surface mining permit issued under Chapter 1514. of the Revised Code. The chief may expend moneys from the fund to pay necessary administrative costs, including engineering and design services, incurred by the division of mineral resources management in reclaiming these areas. The chief also may expend moneys from the fund to pay necessary administrative costs of the reclamation forfeiture fund advisory board created in section 1513.182 of the Revised Code as authorized by the board under that section. Expenditures from the fund to pay such administrative costs need not be made under contract. Subsection

(C)is amended by adding the phrase “or trustee, if the performance security is held in trust,” immediately following the words “or a contractor hired by the surety.” Subsection

(D)is amended by amending the existing language, codifying the existing language as paragraph (1), and by adding three new paragraphs. As amended, subsection

(D)provides as follows: (D)(1) The chief shall expend money credited to the reclamation forfeiture fund from the forfeiture of the performance security applicable to an area of land or under section 1513.181 of the Revised Code the amount of money to pay for the cost of the reclamation of the land.

(2)If the performance security for the area of land was provided under division (C)(1) of section 1513.08 of the Revised Code, the chief shall use the money from the forfeited performance security to complete the reclamation that the operator failed to do under the operator's applicable coal mining and reclamation permit issued under this chapter.

(3)If the performance security for the area of land was provided under division (C)(2) of section 1513.08 of the Revised Code, the chief shall use the money from the forfeited performance security to complete the reclamation that the operator failed to do under the operator's applicable coal mining and reclamation permit issued under this chapter. If the money credited to the reclamation forfeiture fund from the forfeiture of the performance security provided under division (C)(2) of section 1513.08 of the Revised Code is not sufficient to complete the reclamation, the chief shall notify the reclamation forfeiture fund advisory board of the amount of the insufficiency. The chief may expend money credited to the reclamation forfeiture fund under section 5749.02 of the Revised Code or transferred to the fund under section 1513.181 of the Revised Code to complete the reclamation. The chief shall not expend money from the fund in an amount that exceeds the difference between the amount of the performance security provided under division (C)(2) of section 1513.08 of the Revised Code and the estimated cost of reclamation as determined by the chief under divisions

(B)and

(E)of that section.

(4)Money from the reclamation forfeiture fund shall not be used for reclamation of land or water resources affected by material damage from subsidence, mine drainage that requires extended water treatment after reclamation is completed under the terms of the permit, or coal preparation plants or coal refuse disposal areas not located within a permitted area of a mine if performance security for the area of land was provided under division (C)(2) of section 1513.08 of the Revised Code. Subsection

(F)is amended in the first sentence by adding the following proviso to the beginning of the sentence: “Except as otherwise provided in division

(H)of this section.” New subsection

(H)is added to provide as follows:

(H)All investment earnings of the fund shall be credited to the fund and shall be used only for the reclamation of land for which performance security was provided under division (C)(2) of section 1513.08 of the Revised Code. 14. ORC 1513.181 Coal Mining Administration and Reclamation Reserve Fund This provision is amended by deleting from the first paragraph, third sentence, the following phrase: “Or by surface mining under a surface mining permit issued under Chapter 1514 of the Revised Code.” Also, the second paragraph, concerning the identification of fines collected that would be added to the coal mining administration and reclamation reserve fund is deleted. That deleted paragraph is replaced by the following new paragraph: If the director of natural resources determines it to be necessary, the director may request the controlling board to transfer an amount of money from the coal mining administration and reclamation reserve fund to the unreclaimed lands fund created in section 1513.30 of the Revised Code. 15. ORC 1513.182 Reclamation Forfeiture Fund Advisory Board This provision is new, and provides as follows: Sec. 1513.182.

(A)There is hereby created the reclamation forfeiture fund advisory board consisting of the director of natural resources, the director of insurance, and seven members appointed by the governor with the advice and consent of the senate. Of the governor's appointments, one shall be a certified public accountant, one shall be a registered professional engineer with experience in reclamation of mined land, two shall represent agriculture, agronomy, or forestry, one shall be a representative of operators of coal mining operations that have valid permits issued under this chapter and that have provided performance security under division (C)(1) of section 1513.08 of the Revised Code, one shall be a representative of operators of coal mining operations that have valid permits issued under this chapter and that have provided performance security under division (C)(2) of section 1513.08 of the Revised Code, and one shall be a representative of the public. Of the original members appointed by the governor, two shall serve an initial term of two years, three an initial term of three years, and two an initial term of four years. Thereafter, terms of appointed members shall be for four years, with each term ending on the same date as the original date of appointment. An appointed member shall hold office from the date of appointment until the end of the term for which the member was appointed. Vacancies shall be filled in the same manner as original appointments. A member appointed to fill a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall hold office for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until the member's successor takes office or until a period of sixty days has elapsed, whichever occurs first. The governor may remove an appointed member of the board for misfeasance, nonfeasance, or malfeasance. The directors of natural resources and insurance shall not receive compensation for serving on the board, but shall be reimbursed for the actual and necessary expenses incurred in the performance of their duties as members of the board. The members appointed by the governor shall receive per diem compensation fixed pursuant to division

(J)of section 124.15 of the Revised Code and reimbursement for the actual and necessary expenses incurred in the performance of their duties.

(B)The board annually shall elect from among its members a chairperson, a vice-chairperson, and a secretary to record the board's meetings.

(C)The board shall hold meetings as often as necessary as the chairperson or a majority of the members determines.

(D)The board shall establish procedures for conducting meetings and for the election of its chairperson, vice-chairperson, and secretary.

(E)The board shall do all of the following:

(1)Review the deposits into and expenditures from the reclamation forfeiture fund created in section 1513.18 of the Revised Code;

(2)Retain periodically a qualified actuary to perform an actuarial study of the reclamation forfeiture fund;

(3)Based on an actuarial study and as determined necessary by the board, adopt rules in accordance with Chapter 119. of the Revised Code to adjust the rate of the tax levied under division (A)(8) of section 5749.02 of the Revised Code and the balance of the reclamation forfeiture fund that pertains to that rate;

(4)Evaluate any rules, procedures, and methods for estimating the cost of reclamation for purposes of determining the amount of performance security that is required under section 1513.08 of the Revised Code; the collection of forfeited performance security; payments to the reclamation forfeiture fund; reclamation of sites for which operators have forfeited the performance security; and the compliance of operators with their reclamation plans;

(5)Provide a forum for discussion of issues related to the reclamation forfeiture fund and the performance security that is required under section 1513.08 of the Revised Code;

(6)Submit a report biennially to the governor that describes the financial status of the reclamation forfeiture fund and the adequacy of the amount of money in the fund to accomplish the purposes of the fund and that may discuss any matter related to the performance security that is required under section 1513.08 of the Revised Code;

(7)Make recommendations to the governor, if necessary, of alternative methods of providing money for or using money in the reclamation forfeiture fund and issues related to the reclamation of land or water resources that have been adversely affected by past coal mining for which the performance security was forfeited;

(8)Adopt rules in accordance with Chapter 119. of the Revised Code that are necessary to administer this section. In its submittal, Ohio stated that ORC 1513.182 creates the reclamation forfeiture fund advisory board, establishes specific terms of appointments and per diem compensation, and establishes the duties of the board. 16. ORC 1513.29 Council on Unreclaimed Strip Mined Lands This existing provision is amended in the third paragraph by deleting the requirement to hold “at least four regular quarterly meetings each year,” and amending the provision to authorize meetings “as necessary.” The fourth paragraph is amended by deleting reference to the “strip mining reclamation fund,” and in its place, adding reference to the “reclamation forfeiture fund created in section 1513.18 of the Revised Code.” The fifth paragraph is amended by deleting the phrase “of the division of mineral resources management.” 17. ORC 1513.30 Unreclaimed Strip Mined Lands Fund This provision is amended by deleting the following requirement to provide public notice: At least two weeks before any meeting of the council on unreclaimed strip mined lands at which the chief will submit a project proposal, a project area will be selected, or the boundaries of a project area will be determined, the chief shall mail notice by first class mail to the board of county commissioners of the county and the board of township trustees of the township in which the proposed project lies and the chief executive and the legislative authority of each municipal corporation within the proposed project area. The chief also shall give reasonable notice to the news media in the county where the proposed project lies. ORC 1513.30 is also amended by deleting a paragraph that authorized the controlling board to transfer excess funds from the oil and gas well fund. ORC 1513.30 is amended by adding a new paragraph to authorize the controlling board to transfer money from the fund to the coal mining administration and reclamation reserve fund. The new paragraph provides as follows: If the director of natural resources determines it to be necessary, the director may request the controlling board to transfer an amount of money from the fund to the coal mining administration and reclamation reserve fund created in section 1513.181 of the Revised Code. 18. ORC 1513.37 Abandoned Mine Reclamation Fund This provision is amended at subsection (C)(3) by adding the words “performance security, or other form of financial guarantee” in three places following the word “bond.” 19. ORC 1513.371 Mined Land Set Aside Fund This provision is new and provides as follows: There is hereby created in the state treasury the mined land set aside fund consisting of grants made by the United States secretary of the interior from the federal abandoned mine reclamation fund pursuant to section 402 of the “Surface Mining Control and Reclamation Act of 1977,” 91 Stat. 445, 30 U.S.C. 1232. The chief of the division of mineral resources management shall administer the fund. Money in the fund shall be used solely for the purposes specified in divisions (B)(1) to

(4)of section 1513.37 of the Revised Code. All investment earnings of the fund shall be credited to the fund. 20. ORC 5749.02 Excise Tax on Severance of Natural Resources Subsection

(A)is amended at paragraph (A)(1) by increasing the severance tax levied on coal from “Seven” cents to “Ten” cents. Subsection

(A)is further amended by adding new paragraphs

(8)and (9). New paragraph (A)(8) levies a tax of 14 cents per ton of coal to fund the bond pool, and paragraph (A)(9) levies a tax of one and two tenths cents per ton of coal. New paragraphs (A)(8) and (A)(9) provide as follows:

(8)Except as otherwise provided in this division or in rules adopted by the reclamation forfeiture fund advisory board under section 1513.182 of the Revised Code, an additional fourteen cents per ton of coal produced from an area under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code for which the performance security is provided under division (C)(2) of section 1513.08 of the Revised Code. If at the end of a fiscal biennium the balance of the reclamation forfeiture fund created in section 1513.18 of the Revised Code is equal to or greater than ten million dollars, the rate levied shall be twelve cents per ton. If at the end of a fiscal biennium the balance of the fund is at least five million dollars, but less than ten million dollars, the rate levied shall be fourteen cents per ton. If at the end of a fiscal biennium the balance of the fund is less than five million dollars, the rate levied shall be sixteen cents per ton. Not later than thirty days after the close of a fiscal biennium, the chief of the division of mineral resources management shall certify to the tax commissioner the amount of the balance of the reclamation forfeiture fund as of the close of the fiscal biennium. Any necessary adjustment of the rate levied shall take effect on the first day of the following January and shall remain in effect during the calendar biennium that begins on that date.

(9)An additional one and two-tenths cents per ton of coal mined by surface mining methods. In its submittal, Ohio stated that ORC 5749.02(A) has been amended by increasing the coal severance tax from seven cents to 10 cents per ton. New paragraph

(8)provides that if performance security is provided by way of the bond pool and $2,500 flat rate bond, then an additional 14 cents per ton is required by those operations. If the forfeiture fund balance exceeds $10 million at the end of a fiscal biennium, the rate is reduced to 12 cents per ton. If the balance is greater than $5 million but less than $10 million, 14 cents per ton is required. If the balance is less than $5 million, 16 cents per ton is required. Ohio stated that paragraph

(9)provides for an additional one and two tenths cents per ton at all surface coal mines. Subsection

(B)is amended by changing the allocation values of the moneys received under the taxes levied under ORC 5749.02(A)(1), specifying that all of the moneys received under paragraph (A)(8) will be credited to the reclamation forfeiture fund, and specifying that all of the moneys received under paragraph (A)(9) will be credited to the unreclaimed lands fund. Paragraph (C), concerning a tax levied for the purpose of crediting moneys to the reclamation forfeiture fund is deleted. Paragraph

(D)is amended by deleting the first paragraph (including its designation as (D)) concerning a tax levied for the purpose of crediting moneys to the reclamation forfeiture fund, and revising the second paragraph by adding language concerning adjustments to be made to the tax levied under paragraph (A)(8) based upon the balance of the reclamation forfeiture fund at the close of any fiscal year. As amended, ORC 5749.02(B) provides as follows:

(B)Of the moneys received by the treasurer of state from the tax levied in division (A)(1) of this section, four and seventy-six-hundredths per cent shall be credited to the geological mapping fund created in section 1505.09 of the Revised Code, eighty and ninety-five-hundredths per cent shall be credited to the coal mining administration and reclamation reserve fund created in section 1513.181 of the Revised Code, and fourteen and twenty-nine-hundredths per cent shall be credited to the unreclaimed lands fund created in section 1513.30 of the Revised Code. Fifteen per cent of the moneys received by the treasurer of state from the tax levied in division (A)(2) of this section shall be credited to the geological mapping fund and the remainder shall be credited to the unreclaimed lands fund. Of the moneys received by the treasurer of state from the tax levied in divisions (A)(3) and

(4)of this section, seven and five-tenths per cent shall be credited to the geological mapping fund, forty-two and five-tenths per cent shall be credited to the unreclaimed lands fund, and the remainder shall be credited to the surface mining fund created in section 1514.06 of the Revised Code. Of the moneys received by the treasurer of state from the tax levied in divisions (A)(5) and

(6)of this section, ninety per cent shall be credited to the oil and gas well fund created in section 1509.02 of the Revised Code and ten per cent shall be credited to the geological mapping fund. All of the moneys received by the treasurer of state from the tax levied in division (A)(7) of this section shall be credited to the surface mining fund. All of the moneys received by the treasurer of state from the tax levied in division (A)(8) of this section shall be credited to the reclamation forfeiture fund. All of the moneys received by the treasurer of state from the tax levied in division (A)(9) of this section shall be credited to the unreclaimed lands fund. When, at the close of any fiscal year, the chief finds that the balance of the reclamation forfeiture fund, plus estimated transfers to it from the coal mining administration and reclamation reserve fund under section 1513.181 of the Revised Code, plus the estimated revenues from the tax levied by division (A)(8) of this section for the remainder of the calendar year that includes the close of the fiscal year, are sufficient to complete the reclamation of lands for which the performance security has been provided under division (C)(2) of section 1513.08 of the Revised Code, the purposes for which the tax under division (A)(8) of this section is levied shall be deemed accomplished at the end of that calendar year. The chief, within thirty days after the close of the fiscal year, shall certify those findings to the tax commissioner, and the tax levied under division (A)(8) of this section shall cease to be imposed after the last day of that calendar year on coal produced under a coal mining and reclamation permit issued under Chapter 1513. of the Revised Code if the permittee has made tax payments under division (A)(8) of this section during each of the preceding five full calendar years. Not later than thirty days after the close of a fiscal year, the chief shall certify to the tax commissioner the identity of any permittees who accordingly no longer are required to pay the tax levied under division (A)(8) of this section. Ohio stated that subsection ORC 5749.02(B) is amended to provide that the moneys received from the ten-cent tax per ton of coal tax levied in ORC 5749.02(A)(1) is allocated as follows: 0.476 cents per ton to the geological mapping fund; 8.095 cents per ton to the coal mining administration fund; and 1.429 cents per ton to the State AML fund. Ohio also stated that all of the moneys received from the 1.2 cents per ton of on coal tax levied in ORC 5749.02(A)(9) is allocated to the State AML fund. Ohio stated that subsection ORC 5749.02(C) is deleted to eliminate the tax levied at the rate of one cent per ton of coal, the moneys of which were allocated to reclaiming bond forfeiture lands. Ohio stated that subsection ORC 5749.02(D) is amended to eliminate the one cent per ton of coal that was allocated to bond forfeited permits issued between April 10, 1972 and September 1, 1981. Subsection

(D)also provides for cessation of the subsection (A)(8) tax (14 cents/ton) upon finding by Chief that funds in the reclamation forfeiture fund are adequate to address bond pool reclamation on a permit by permit basis; upon such finding operators listed as having provided adequate performance security shall no longer be required to pay the (A)(8) tax (14 cents/ton), provided such operators have made such payments during the preceding five years. 21. ORC 5749.11 Nonrefundable Credit This provision is new, and provides for a nonrefundable credit against the taxes imposed under ORC 5749.02(A)(8). This new provision provides as follows: Sec. 5749.11.

(A)There is hereby allowed a nonrefundable credit against the taxes imposed under division (A)(8) of section 5749.02 of the Revised Code for any severer to which a reclamation tax credit certificate is issued under section 1513.171 of the Revised Code. The credit shall be claimed in the amount shown on the certificate. The credit shall be claimed by deducting the amount of the credit from the amount of the first tax payment due under section 5749.06 of the Revised Code after the certificate is issued. If the amount of the credit shown on a certificate exceeds the amount of the tax otherwise due with that first payment, the excess shall be claimed against the amount of tax otherwise due on succeeding payment dates until the entire credit amount has been deducted. The total amount of credit claimed against payments shall not exceed the total amount of credit shown on the certificate.

(B)A severer claiming a credit under this section shall retain a reclamation tax credit certificate for not less than four years following the date of the last tax payment against which the credit allowed under that certificate was applied. Severers shall make tax credit certificates available for inspection by the tax commissioner upon the tax commissioner's request. 22. Section 3 of the Amendment Submittal Provides as Follows Section 3. It is the intent of the General Assembly to appropriate five million dollars for the reclamation of land affected by the surface mining of coal. Of that five million dollars, not more than fifty thousand dollars shall be used to study the management of the financial resources of the coal mining regulatory program of the Division of Mineral Resources Management in the Department of Natural Resources. The Chief of the Division of Mineral Resources Management, in consultation with a statewide association representing the coal mining industry and a statewide association representing environmental advocacy, shall develop an outline of the subjects for the study. The Chief shall select an objective third party that has knowledge in the management of finances to conduct the study. Upon completion of the study, the third party shall prepare a report of its findings and submit the report to the Director of [the Department of] Natural Resources. 23. Section 6 of the Amendment Submittal Provides That Section 5749.02 of the Revised Code as Amended by This Act Shall Take Effect on April 1, 2007 III. Public Comment Procedures Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the Ohio program. Written Comments Send your written comments to OSM at the address given above. Your written comments should be specific, pertain only to the issues proposed in this rulemaking, and include explanations in support of your recommendations. We will not consider or respond to your comments when developing the final rule if they are received after the close of the comment period (see DATES ). We will make every attempt to log all comments into the administrative record, but comments delivered to an address other than the Appalachian Region office identified above may not be logged in. Electronic Comments Please submit Internet comments as an e-mail or Word file avoiding the use of special characters and any form of encryption. Please also include “Attn: SATS No. OH-252-FOR,” your name and return address in your Internet message. If you do not receive a confirmation that we have received your Internet message, contact the Appalachian Region office at:

(614)416-2238 . Availability of Comments Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Public Hearing If you wish to speak at the public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT by 4 p.m., local time, on May 15, 2007. We will arrange the location and time of the hearing with those persons requesting the hearing. If no one requests an opportunity to speak, we will not hold the hearing. To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at a public hearing provide us with a written copy of his or her comments. The public hearing will continue on the specified date until everyone scheduled to speak has been given an opportunity to be heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after everyone scheduled to speak and others present in the audience who wish to speak, have been heard. If you are disabled and need a special accommodation to attend a public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT . Public Meeting If only one person requests an opportunity to speak, we may hold a public meeting rather than a public hearing. If you wish to meet with us to discuss the amendment, please request a meeting by contacting the person listed under FOR FURTHER INFORMATION CONTACT . All such meetings are open to the public and, if possible, we will post notices of meetings at the locations listed under ADDRESSES . We will make a written summary of each meeting a part of the administrative record. IV. Procedural Determinations Executive Order 12630—Takings This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulations. Executive Order 12866—Regulatory Planning and Review This rule is exempted from review by the Office of Management and Budget

(OMB)under Executive Order 12866. Executive Order 12988—Civil Justice Reform The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that, to the extent allowable by law, this rule meets the applicable standards of subsections

(a)and

(b)of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments since each such program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR Parts 730, 731, and 732 have been met. Executive Order 13132—Federalism This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA. Section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA. Executive Order 13175—Consultation and Coordination With Indian Tribal Governments In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally-recognized Indian tribes and have determined that the rule does not have substantial direct effects 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. The basis for this determination is that our decision is on a State regulatory program and does not involve a Federal program involving Indian lands. Executive Order 13211—Regulations That Significantly Affect the Supply, Distribution, or Use of Energy On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is

(1)considered significant under Executive Order 12866, and

(2)likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required. National Environmental Policy Act Section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that a decision on a proposed State regulatory program provision does not constitute a major Federal action within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)). A determination has been made that such decisions are categorically excluded from the NEPA process (516 DM 8.4.A). Paperwork Reduction Act This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 *et seq.* ). Regulatory Flexibility Act The Department of the Interior has determined 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.* ). The State submittal that is the subject of this rule is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. Accordingly, this rule will ensure that existing requirements previously promulgated by OSM will be implemented by the State. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations. Small Business Regulatory Enforcement Fairness Act This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

(a)Does not have an annual effect on the economy of $100 million;

(b)Will not cause a major increase in costs or prices for consumers, individual industries, geographic regions, or Federal, State or local governmental agencies; and

(c)Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule. Unfunded Mandates This rule will not impose a cost of $100 million or more in any given year on any governmental entity or the private sector. List of Subjects in 30 CFR Part 935 Intergovernmental relations, Surface mining, Underground mining. Dated: March 21, 2007. H. Vann Weaver, Acting Regional Director Appalachian Region. [FR Doc. E7-8171 Filed 4-27-07; 8:45 am] BILLING CODE 4310-05-P DEPARTMENT OF THE INTERIOR Office of Surface Mining Reclamation and Enforcement 30 CFR Part 943 [Docket No. TX-057-FOR] Texas Regulatory Program and Abandoned Mine Land Reclamation Plan AGENCY: Office of Surface Mining Reclamation and Enforcement, Interior. ACTION: Proposed rule; public comment period and opportunity for public hearing on proposed amendment. SUMMARY: We, the Office of Surface Mining Reclamation and Enforcement (OSM), are announcing receipt of a proposed amendment to the Texas regulatory program (Texas program) and the Texas abandoned mine land plan (Texas plan) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). Texas proposes revisions to its regulations regarding postmining land uses; terms and conditions of the bond; topsoil redistribution; standards for revegetation success; public hearings; review of notice of violation or cessation order; determination of amount of penalty; assessment of separate violation for each day; request for hearing; and liens. Texas also proposes revisions to its statute regarding liens and administrative penalties for violation of permit conditions. Texas intends to revise its program to be consistent with the corresponding Federal regulations and/or SMCRA, to clarify ambiguities, and to improve operational efficiency. This document gives the times and locations that the Texas program and Texas plan and the proposed amendment are available for your inspection, the period during which you may submit written comments on the amendment, and the procedures that we will follow for the public hearing, if one is requested. DATES: We will accept written comments on this amendment until 4 p.m., c.t. May 30, 2007. If requested, we will hold a public hearing on the amendment on May 25, 2007. We will accept requests to speak at a hearing until 4 p.m., c.t. on May 15, 2007. ADDRESSES: You may submit comments, identified by Docket No. TX-057-FOR, by any of the following methods: • *E-mail: athomas@osmre.gov.* Include “Docket No. TX-057-FOR” in the subject line of the message. • *Mail/Hand Delivery:* A. Dwight Thomas, Acting Director, Tulsa Field Office, Office of Surface Mining Reclamation and Enforcement, 1645 South 101st East Avenue, Suite 145, Tulsa, Oklahoma 74128 • Fax:

(918)581-6419 • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. *Instructions:* All submissions received must include the agency name and docket number for this rulemaking. For detailed instructions on submitting comments and additional information on the rulemaking process, see the “Public Comment Procedures” heading of the SUPPLEMENTARY INFORMATION section of this document. *Docket:* For access to the docket to review copies of the Texas program and Texas plan, this amendment, a listing of any scheduled public hearings, and all written comments received in response to this document, you must go to the address listed below during normal business hours, Monday through Friday, excluding holidays. You may receive one free copy of the amendment by contacting OSM's Tulsa Field Office. A. Dwight Thomas, Acting Director, Tulsa Field Office, Office of Surface Mining Reclamation and Enforcement, 1645 South 101st East Avenue, Suite 145, Tulsa, Oklahoma 74128, *Telephone:*

(918)581-6430, *E-mail: athomas@osmre.gov.* In addition, you may review a copy of the amendment during regular business hours at the following location: Surface Mining and Reclamation Division, Railroad Commission of Texas, 1701 North Congress Avenue, Austin, Texas 78711-2967, *Telephone:*

(512)463-6900. FOR FURTHER INFORMATION CONTACT: A. Dwight Thomas, Acting Director, Tulsa Field Office. *Telephone:*

(918)581-6430. *E-mail: athomas@osmre.gov.* SUPPLEMENTARY INFORMATION: I. Background on the Texas Program and Texas Plan II. Description of the Proposed Amendment III. Public Comment Procedures IV. Procedural Determinations I. Background on the Texas Program and Texas Plan Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of this Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to this Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior (Secretary) conditionally approved the Texas program effective February 16, 1980. You can find background information on the Texas program, including the Secretary's findings, the disposition of comments, and the conditions of approval of the Texas program in the February 27, 1980, **Federal Register** (45 FR 12998). You can also find later actions concerning the Texas program and program amendments at 30 CFR 943.10, 943.15 and 943.16. The Abandoned Mine Land Reclamation Program was established by Title IV of the Act (30 U.S.C. 1201 *et seq.* ) in response to concerns over extensive environmental damage caused by past coal mining activities. The program is funded by a reclamation fee collected on each ton of coal that is produced. The money collected is used to finance the reclamation of abandoned coal mines and for other authorized activities. Section 405 of the Act allows States and Indian Tribes to assume exclusive responsibility for reclamation activity within the State or on Indian lands if they develop and submit to the Secretary of the Interior (Secretary) for approval, a program (often referred to as a plan) for the reclamation of abandoned coal mines. On the basis of these criteria, the Secretary approved the Texas plan on June 23, 1980. You can find background information on the Texas plan, including the Secretary's findings, the disposition of comments, and the approval of the plan in the June 23, 1980, **Federal Register** (45 FR 41937). You can find later actions concerning the Texas plan and amendments to the plan at 30 CFR 943.25. II. Description of the Proposed Amendment By letter dated February 14, 2007 (Administrative Record No. TX-662), and at its own initiative, Texas sent us an amendment to its program under SMCRA (30 U.S.C. 1201 *et seq.* ). Below is a summary of the changes proposed by Texas. The full text of the program amendment is available for you to read at the locations listed above under ADDRESSES . A. Revisions to Texas' Regulations, Title 16 Texas Administrative Code

(TAC)1. Section 12.147 Reclamation Plan: Postmining Land Uses Texas proposes to delete paragraph (a)(2) that requires permit applicants to submit a detailed management plan if the postmining land use is to be range or grazing. Texas also proposes to redesignate paragraphs (a)(3) and (a)(4) as paragraphs (a)(2) and (a)(3). 2. Section 12.309 Terms and Conditions of the Bond Texas proposes to add to paragraph (g)(2) a requirement that a letter of credit used as security in areas requiring continuous bond coverage must be forfeited and collected by the Railroad Commission of Texas if it is not replaced by other suitable bond or letter of credit at least 30 days before it expires. 3. Section 12.337 Topsoil: Redistribution Texas proposes to revise subsections

(a)and

(b)to read as follows:

(a)After final grading and before the replacement of topsoil, topsoil substitutes and other materials segregated in accordance with § 12.335 of this title (relating to Topsoil: Removal), regraded land shall be scarified or otherwise treated as required by the Commission to eliminate slippage surfaces and to promote root penetration. If the person who conducts the surface mining activities shows, through appropriate tests, and the Commission approves, that no harm will be caused to the topsoil and vegetation, scarification may be conducted after topsoiling.

(b)Topsoil material, and topsoil substitutes and other supplements shall be redistributed in a manner that:

(1)Achieves an approximate uniform, stable thickness consistent with the approved postmining land uses, contours, and surface water drainage system. Soil thickness may also be varied to the extent such variations help meet the specific revegetation goals identified in the permit;

(2)Prevents excess compaction of the topsoil, topsoil substitutes and supplements; and

(3)Protects the topsoil, topsoil substitutes and supplements from wind and water erosion before and after it is seeded and planted. 4. Section 12.395 Revegetation: Standards for Success a. Texas proposes to revise paragraph (a)(1) to require standards for success and statistically valid sampling techniques for measuring success to be described in writing and made available to the public. b. Texas proposes to revise paragraph (b)(1) to read as follows:

(1)For areas developed as grazingland or pastureland, the ground cover and production of living plants on the revegetated area shall be at least equal to that of a reference area or such other success standards approved by the Commission; c. Paragraph (b)(3) lists the kinds of areas whose success of vegetation is to be determined on the basis of tree and shrub stocking and vegetative ground cover. Texas proposes to revise this paragraph by adding “undeveloped land” as an area requiring this determination and by removing “shelter belts.” d. For areas to be developed for fish and wildlife habitat, recreation, undeveloped land, or forest products, Texas proposes to revise paragraph (b)(3)(A) to allow consultation with and approval by the State agencies responsible for the administration of forestry and wildlife programs to occur on either a program-wide or permit-specific basis. e. Texas proposes to revise paragraph (b)(3)(B) by adding instructions explaining how to meet the requirements for determining the success of stocking and the adequacy of the planting arrangement for trees and shrubs. f. Texas proposes to revise paragraph (c)(3) to read as follows:

(3)In areas of 26.0 inches or less average annual precipitation, the period of responsibility shall continue for a period of not less than 10 full years. Vegetation parameters identified in § 12.395(b) of this title (relating to Revegetation: Standards for Success) for grazingland, pastureland, or cropland shall equal or exceed the approved success standard during the growing season of any two years after year six of the responsibility period. Areas approved for the other uses identified in § 12.395(b) of this title (relating to Revegetation: Standards for Success) shall equal or exceed the applicable success standard during the growing season of the last year of the responsibility period. g. Texas proposes to revise paragraph (c)(4) by clarifying that selective husbandry practices may be approved if the discontinuance of the practice “after the liability period expires” will not reduce the probability of permanent revegetation success. Texas also proposes to clarify that the unmined land, for which the selective husbandry practices are normal, must be land that has a land use similar to that of the approved postmining land use of the disturbed land. 5. Section 12.681 Public Hearing a. Texas proposes to revise the title of this section to read “Informal Public Hearing.” b. Texas proposes to revise subsection

(a)so that a notice of violation or cessation order which requires cessation of mining will expire within 30 days after it is served unless an informal public hearing has been held within that time. Texas also proposes to clarify that the expiration of the notice or order will not affect the Commission's right to assess civil penalties with respect to the period during which the notice or order was in effect. In addition, Texas proposes that no hearing will be required where the condition, practice, or violation has been abated or the hearing has been waived. Furthermore, Texas proposes to clarify, for the purpose of this section, what is included in “mining.” c. Texas proposes to revise subsection

(b)to clarify that a notice of violation or cessation order will not expire as provided in subsection

(a)if the informal public hearing has been waived or if, with the consent of the person to whom the notice or order was issued, the informal public hearing is held later than 30 days after the notice or order is served. Texas also proposes to set forth the conditions under which the informal public hearing is deemed to be waived. d. Texas proposes to revise subsections (c), (e), (f), and

(g)to change the name of the “public hearing” to “informal public hearing.” Also, Texas proposes to revise subsection

(g)to clarify that the “review” mentioned in this subsection is a “formal review.” e. Texas proposes to add new subsection

(h)to read as follows:

(h)The person conducting the informal hearing for the Commission shall determine whether or not the mine site should be viewed during the hearing. In making this determination the only consideration shall be whether a view of the mine site will assist the persons conducting the hearing in reviewing the appropriateness of the enforcement action or of the required remedial action. 6. Section 12.682 Review of Notice of Violation or Cessation Order a. Texas proposes to revise the title of this section to read, “Formal Review of Notice of Violation or Cessation Order.” b. Texas proposes to revise subsection

(a)and to add new subsection

(b)to read as follows:

(a)A person issued a notice of violation or cessation order under § 12.677 or § 12.678 of this title, or a person having an interest which may be adversely affected by the issuance, modification, vacation or termination of a notice or order, may request review of that action by filing an application for review and request for a hearing pursuant to the requisites of §§ 134.168-134.172 of the Act and the APA, within 30 days after receiving notice of the action.

(b)The filing of an application for review and request for a hearing under this section shall not operate as a stay of any notice or order, or any modification, termination or vacation, of either. 7. Section 12.688 Determination of Amount of Penalty Texas' penalty schedule currently begins with a minimum penalty of $20 and increases to a maximum penalty of $5,000. Texas proposes to change the penalty schedule so that it starts with a minimum penalty of $550 and increases to a maximum penalty of $13,000. Texas proposes to increase the penalties to reflect the decreased value in the dollar since the penalty schedule was promulgated in 1979. 8. Section 12.689 Assessment of Separate Violation for Each Day Texas proposes to revise subsection

(b)to increase the per day civil penalty from $750 to $1,025 and to make additions and/or corrections regarding regulatory and statutory citations. Texas also proposes to add new paragraph (b)(3) to clarify that the daily penalty will not be assessed for more than 30 days and that if the permittee has not abated the violation within the 30-day period, it will take appropriate action to ensure that abatement occurs or that there will not be a reoccurrence of the failure to abate. 9. Section 12.693 Request for Hearing Texas proposes to revise this section to read as follows: The person charged with the violation may contest the proposed penalty or the fact of the violation by submitting a petition and an amount equal to the proposed penalty or, if an assessment conference has been held, the reassessed or affirmed penalty to the Commission, to be held in escrow, within 30 days from receipt of the proposed assessment or reassessment or 30 days from the date of service of the assessment conference examiner's action, whichever is later. The fact of the violation may not be contested if it has been decided in a review proceeding commenced under § 12.682 of this title. 10. Section 12.816 Liens Texas proposes to revise subsection

(c)to remove the requirement that the landowner must own the surface before May 2, 1977, before he or she is exempt from having a lien placed against his or her property because reclamation resulted in a significant increase in the fair market value of the property. B. Revisions to Texas' Statute, Chapter 134 Texas Natural Resources Code 1. Section 134.150 Lien Texas proposes to revise subsection

(c)to read as follows:

(c)A lien may not be filed under this section against the property of a person who did not consent to, participate in, or exercise control over the mining operation that necessitated the reclamation performed under this chapter. 2. Section 134.174 Administrative Penalty for Violation of Permit Condition of This Chapter Texas proposes to revise subsection

(b)to read as follows:

(b)The penalty may not exceed $13,000 for each violation. Each day a violation continues may be considered a separate violation for purposes of penalty assessments. III. Public Comment Procedures Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the State program. Written Comments Send your written or electronic comments to OSM at the address given above. Your written comments should be specific, pertain only to the issues proposed in this rulemaking, and include explanations in support of your recommendations. We will not consider or respond to your comments when developing the final rule if they are received after the close of the comment period (see DATES ). We will make every attempt to log all comments into the administrative record, but comments delivered to an address other than the Tulsa Field Office may not be logged in. Electronic Comments Please submit Internet comments as an ASCII or Word file, avoiding the use of special characters and any form of encryption. Please also include “Attn: Docket No. TX-057-FOR” and your name and return address in your Internet message. If you do not receive a confirmation that we have received your Internet message, contact the Tulsa Field Office at

(918)581-6430. Public Availability of Comments Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. Public Hearing If you wish to speak at the public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT by 4 p.m., c.t. on May 15, 2007. If you are disabled and need special accommodations to attend a public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT . We will arrange the location and time of the hearing with those persons requesting the hearing. If no one requests an opportunity to speak, we will not hold a hearing. To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at the public hearing provide us with a written copy of his or her comments. The public hearing will continue on the specified date until everyone scheduled to speak has been given an opportunity to be heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after everyone scheduled to speak and others present in the audience who wish to speak, have been heard. Public Meeting If only one person requests an opportunity to speak, we may hold a public meeting rather than a public hearing. If you wish to meet with us to discuss the amendment, please request a meeting by contacting the person listed under FOR FURTHER INFORMATION CONTACT . All such meetings are open to the public and, if possible, we will post notices of meetings at the locations listed under ADDRESSES . We will make a written summary of each meeting a part of the administrative record. IV. Procedural Determinations Executive Order 12630—Takings This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation. Executive Order 12866—Regulatory Planning and Review This rule is exempted from review by the Office of Management and Budget

(OMB)under Executive Order 12866. Executive Order 12988—Civil Justice Reform The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections

(a)and

(b)of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR parts 730, 731, and 732 have been met. Executive Order 13132—Federalism This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA. Executive Order 13175—Consultation and Coordination With Indian Tribal Governments In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally-recognized Indian tribes and have determined that the rule does not have substantial direct effects 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. This determination is based on the fact that the Texas program does not regulate coal exploration and surface coal mining and reclamation operations on Indian lands. Therefore, the Texas program has no effect on Federally-recognized Indian tribes. Executive Order 13211—Regulations That Significantly Affect the Supply, Distribution, or Use of Energy On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is

(1)considered significant under Executive Order 12866, and

(2)likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required. National Environmental Policy Act This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)). Paperwork Reduction Act This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 *et seq.* ). Regulatory Flexibility Act The Department of the Interior 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.* ). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations. Small Business Regulatory Enforcement Fairness Act This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

(a)Does not have an annual effect on the economy of $100 million;

(b)Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and

(312)886-5824. 4. *Mail:* Pamela Blakley, Chief, Air Permits Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* Pamela Blakley, Chief, Air Permits Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such deliveries are only accepted during the Regional Office normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m. excluding Federal holidays. Please see the direct final rule which is located in the Rules section of this **Federal Register** for detailed instructions on how to submit comments. FOR FURTHER INFORMATION CONTACT: Constantine Blathras, Air Permits Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,

(312)886-0671, *Blathras.constantine@epa.gov.* SUPPLEMENTARY INFORMATION: In the Final Rules section of this **Federal Register** , EPA is approving the State's SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives an adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the Rules section of this **Federal Register** . Dated: April 6, 2007. Walter W. Kovalick, Acting Regional Administrator, Region 5. [FR Doc. E7-8102 Filed 4-27-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 761 [EPA-HQ-OPPT-2005-0042; FRL-8120-6] RIN 2070-AB20 Polychlorinated Biphenyls; Manufacturing (Import) Exemption AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: With certain exceptions, section 6(e)(3) of the Toxic Substances Control Act

(TSCA)bans the manufacture, processing, and distribution in commerce of polychlorinated biphenyls (PCBs). For purposes of TSCA, “manufacture” is defined to include import into the Customs Territory of the United States. One of these exceptions is TSCA section 6(e)(3)(B), which gives EPA authority to grant petitions to perform these activities for a period of up to 12 months, provided EPA can make certain findings by rule. On July 21, 2005, the U.S. Defense Logistics Agency (DLA), a component of the Department of Defense (DOD), submitted a petition to EPA to import foreign-manufactured PCBs that DOD currently owns in Japan for disposal in the United States. In this document, EPA is proposing to grant DLA's petition and is soliciting public comment on this decision; if finalized, this decision to grant the petition would allow DLA to manufacture (i.e., import) certain PCBs for disposal. DATES: Comments must be received on or before May 30, 2007. If a hearing is requested on or before May 24, 2007, an informal hearing will be held in Washington, DC on a date to be announced in a future **Federal Register** . ADDRESSES: Submit your comments, identified by docket identification

(ID)number HQ-EPA-OPPT-2005-0042, by one of the following methods: • *Federal eRulemaking Portal* : *http://www.regulations.gov* . Follow the on-line instructions for submitting comments. • *Mail* : Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. • *Hand Delivery* : OPPT Document Control Office (DCO), EPA East Bldg., Rm. 6428, 1201 Constitution Ave., NW., Washington, DC. Attention: Docket ID Number HQ-EPA-OPPT-2005-0042. The DCO is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the DCO is

(202)564-8930. Such deliveries are only accepted during the DOC’s normal hours of operation, and special arrangements should be made for deliveries of boxed information. *Instructions* : Direct your comments to docket ID number EPA-HQ-OPPT-2005-0042. EPA's policy is that all comments received will be included in the docket without change and may be made available on-line at *http://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 regulations.gov or e-mail. The regulations.gov website 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 regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the 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. For additional information about EPA’s public docket, visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm. *Docket* : All documents in the docket are listed in the docket index available in regulations.gov. To access the electronic docket, go to *http://www.regulations.gov* , select “Advanced Search,” then “Docket Search.” Insert the docket ID number where indicated and select the “Submit” button. Follow the instructions on the regulations.gov web site to view the docket index or access available documents. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information

(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 electronically at *http://www.regulations.gov* , or, if only available in hard copy, at the OPPT Docket. The OPPT Docket is located in the EPA Docket Center (EPA/DC) at Rm. 3334, EPA West Bldg., 1301 Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room hours of operation are 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal holidays. The telephone number of the EPA/DC Public Reading Room is

(202)566-1744, and the telephone number for the OPPT Docket is

(202)566-0280. Docket visitors are required to show photographic identification, pass through a metal detector, and sign the EPA visitor log. All visitor bags are processed through an X-ray machine and subject to search. Visitors will be provided an EPA/DC badge that must be visible at all times in the building and returned upon departure. FOR FURTHER INFORMATION CONTACT: *For general information contact* : Colby Lintner, Regulatory Coordinator, Environmental Assistance Division (7408M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number:

(202)554-1404; e-mail address: *TSCA-Hotline@epa.gov* . *For technical information contact* : Tom Simons, National Program Chemicals Division (7404T), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone number:

(202)566-0517; e-mail address: *simons.tom@epa.gov* . SUPPLEMENTARY INFORMATION: I. General Information A. Does this Action Apply to Me? This action primarily applies to the petitioner, the DLA. However, you may be potentially affected by this action if you process, distribute in commerce, or dispose of PCB waste generated by others, i.e., you are an EPA-permitted PCB waste handler. Potentially affected categories and entities include, but are not necessarily limited to: • Waste Treatment and Disposal (NAICS code 5622), e.g., Facilities that store or dispose of PCB waste. • Materials Recovery Facilities (NAICS code 56292), e.g., Facilities that process and/or recycle metals. • Public Administration (NAICS code 92), e.g., the Petitioning Agency (i.e., the Defense Logistics Agency). This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the applicability provisions in 40 CFR part 761. If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT . B. What Should I Consider as I Prepare My Comments for EPA? 1. *Submitting CBI* . Do not submit this information to EPA through regulations.gov or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comments that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. 2. *Tips for preparing your comments* . When submitting comments, remember to: i. Identify the document by docket ID number and other identifying information (subject heading, **Federal Register** date and page number). ii. Follow directions. The Agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations

(CFR)part or section number. iii. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. iv. Describe any assumptions and provide any technical information and/or data that you used. v. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. vi. Provide specific examples to illustrate your concerns and suggest alternatives. vii. Explain your views as clearly as possible, avoiding the use of profanity or personal threats. viii. Make sure to submit your comments by the comment period deadline identified. II. Background A. What Action is the Agency Proposing to Take? In this notice of proposed rulemaking, the Agency is proposing to grant a petition submitted by DLA to import PCB waste for disposal. In the absence of an exemption, import of this waste would be banned by section 6(e)(3) of TSCA. The petition, dated July 21, 2005, is for an exemption to import certain foreign-generated PCBs owned by DOD that are currently in use or storage in Japan. (The term “foreign-generated PCBs” is used to identify those PCBs that DOD acquired from foreign sources and that are subject to the TSCA ban on import.) On April 16, 2001, DLA submitted a similar petition to import over four million pounds of foreign-generated PCB waste. EPA granted that petition in a final rule document published in the **Federal Register** of January 31, 2003 (Ref. 1). B. What is the Agency’s Statutory Authority for Taking this Action? Section 6(e) of TSCA, 15 U.S.C. 2605(e), generally prohibits the manufacture (which includes import) of PCBs after January 1, 1979, the processing and distribution in commerce of PCBs after July 1, 1979, and most uses of PCBs after October 11, 1977. Section 6(e)(3)(A) of TSCA prohibits the manufacture, processing, and distribution in commerce of PCBs except for the distribution in commerce of PCBs that were sold for purposes other than resale before July 1, 1979. Section 6(e)(1) of TSCA also authorizes EPA to regulate the disposal of PCBs consistent with the provisions in TSCA section 6(e)(2) and (3). Section 6(e)(3)(B) of TSCA provides that any person may petition the Administrator for an exemption from the prohibition on the manufacture, processing, and distribution in commerce of PCBs. The Administrator may by rule grant an exemption if the Administrator finds that: i. an unreasonable risk of injury to health or the environment would not result, and ii. good faith efforts have been made to develop a chemical substance which does not present an unreasonable risk of injury to health or the environment and which may be substituted for such polychlorinated biphenyl. (15 U.S.C. 2605(e)(3)(B)(i)-(ii)). The Administrator may prescribe terms and conditions for an exemption and may grant an exemption for a period of not more than 1 year from the date the petition is granted. In addition, TSCA section 6(e)(4) requires that a rule under TSCA section 6(e)(3)(B) be promulgated in accordance with TSCA section 6(c)(2), (3), and (4), which provide for a proposed rule, the opportunity for an informal public hearing, and a final rule. EPA's procedures for rulemaking under TSCA section 6 are found under 40 CFR part 750. This part includes Subpart B—Interim Procedural Rules for Manufacturing Exemptions, which describes the required content for manufacturing exemption petitions and the procedures EPA follows in rulemaking on these petitions. These rules are codified at 40 CFR 750.10 through 750.21. III. Findings Necessary to Grant Petitions A. No Unreasonable Risk Finding Before granting an exemption petition, TSCA section 6(e)(3)(B)(i) requires the Administrator to find that granting an exemption would not result in an unreasonable risk of injury to health or the environment in the United States. EPA has interpreted this provision to require a petitioner to demonstrate that the activity will not pose an unreasonable risk. (See 40 CFR 750.11.) To determine whether a risk is unreasonable, EPA balances the probability that harm will occur to health or the environment against the benefits to society from granting or denying each petition. See generally, 15 U.S.C. 2605(c)(1). Specifically, EPA considers the following factors: 1. *Effects of PCBs on human health and the environment* . In deciding whether to grant an exemption, EPA considers the magnitude of exposure and the effects of PCBs on humans and the environment. The following discussion summarizes EPA's assessment of these factors. A more complete discussion of these factors is provided in the preamble to the 1988 PCB proposed rule document published in the **Federal Register** of August 24, 1988 (Ref. 2). i. *Health effects* . EPA has determined that PCBs cause significant human health effects including cancer, immune system suppression, liver damage, skin irritation, and endocrine disruption. PCBs exhibit neurotoxicity as well as reproductive and developmental toxicity. PCBs are readily absorbed through the skin and are absorbed at even faster rates when inhaled. Because PCBs are stored in animal fatty tissue, humans are also exposed to PCBs through ingestion of animal products. ii. *Environmental effects* . Certain PCB congeners are among the most stable chemicals known, and decompose very slowly once they are released in the environment. PCBs are absorbed and stored in the fatty tissue of higher organisms as they bioaccumulate up the food chain through invertebrates, fish, and mammals. Significantly, bioaccumulated PCBs appear to be even more toxic than those found in the ambient environment, since the more toxic PCB congeners are more persistent and thus more likely to be retained. PCBs also have reproductive and other toxic effects in aquatic organisms, birds, and mammals. iii. *Risks* . Toxicity and exposure are the two basic components of risk. EPA has concluded that any exposure of humans or the environment to PCBs may be significant, depending on such factors as the quantity of PCBs involved in the exposure, the likelihood of exposure to humans and the environment, and the effect of exposure. Minimizing exposure to PCBs should minimize any eventual risk. EPA has previously determined that some activities, including the disposal of PCBs in accordance with 40 CFR part 761, pose no unreasonable risks. Other activities, such as long-term storage of PCB waste, are generally considered by EPA to pose unreasonable risks. 2. *Benefits and costs* . The benefits to society of granting an exemption vary, depending on the activity for which the exemption is requested. The reasonably ascertainable costs of denying an exemption vary, depending on the individual petition. As discussed in Unit IV., EPA has taken benefits and costs into consideration when evaluating this exemption petition. B. Good Faith Efforts Finding Section 6(e)(3)(B)(ii) of TSCA also requires the Administrator to find that “good faith efforts have been made to develop a chemical substance which does not present an unreasonable risk of injury to health or the environment and which may be substituted for [PCBs].” EPA has interpreted this provision to require that a petitioner has the burden of demonstrating that it has made the requisite good faith efforts. (40 CFR 750.11) EPA considers several factors in determining whether good faith efforts have been made. For each petition, EPA considers the kind of exemption the petitioner is requesting and whether the petitioner expended time and effort to develop or search for a substitute. In each case, the burden is on the petitioner to show specifically what they did to substitute non-PCB material for PCBs or to show why it was not feasible to substitute non-PCBs for PCBs. To satisfy this finding for requests for an exemption to import PCBs for disposal, a petitioner must show why such activity must occur in the United States. and what steps will be taken to eliminate the need to import PCBs in the future. While requiring a petitioner to demonstrate that good faith efforts to develop a substitute for PCBs makes sense when dealing with traditional manufacture and distribution exemption petitions, the issue of the development of substitute chemicals seems to have little bearing on whether to grant a petition for exemption that would allow the import into the United States for disposal of waste generated by the Department of Defense overseas. EPA believes the more relevant “good faith” issue for such an exemption request is whether the disposal of the waste could and/or should occur outside the United States. IV. Proposed Disposition of Pending Exemption Petition A. The Petition: July 21, 2005 Petition to Import PCBs Located in Japan On July 21, 2005, DLA submitted a petition seeking a 1-year exemption to import PCBs and PCB Items currently in temporary storage at U.S. military installations in Japan. In revised figures provided in November 2006 (Ref. 4), DLA estimates that as much as 1,328,482 pounds of waste contaminated with PCBs could be generated in Japan through the calendar year 2008. Exactly how much of this waste would be imported under this exemption would depend on the date when the final exemption would be in effect, as the exemption is limited to a 1-year maximum. The final exemption would be limited to the specific portion (amount and type) of such waste as provided by DLA prior to publication of the final rule. The material in Japan consists of liquids, electrical transformers, capacitors, switches, circuit breakers, other miscellaneous items and debris (rags, gaskets, and personal protective equipment). PCB concentrations of the waste include amounts in all regulatory concentrations (i.e., <50 parts per million (ppm), 50-499 ppm, and >500 ppm); however, 88% of the waste is at concentrations below 50 ppm PCB and less than 5% of the total shipment is liquid PCBs greater than 50 ppm. Details of the particular amounts and concentrations DLA petitioned to import are provided in Refs. 3 and 4. DLA proposes to package and transport, treat and dispose of this PCB waste in the same manner as waste identified in its previous petitions (Ref. 1), which EPA granted in 2003 to allow the import of over 4,000,000 pounds of waste contaminated with PCBs; DLA notes that compliance is required with the International Maritime Dangerous Goods Code/International Maritime Organization, the International Civil Aviation Organization Technical Instructions, the International Air Transport Association Dangerous Goods Code, the United Nations Recommendations on the Transport of Dangerous Goods Code, and 49 CFR parts 100-199. DLA further notes that proper handling and shipping will include blocking, bracing, over packing, and inclusion of spill containment devices, as required by applicable transportation regulations. DLA states that it will handle and dispose of all PCBs in conformance with the PCB regulations at 40 CFR part 761. DLA notes that it has “considerable experience and expertise in awarding and administering disposal contracts for PCB waste in the U.S.” and that it will only “award contracts for treatment and disposal services with commercial firms. Contracts will be awarded in accordance with all applicable federal procurement statutes and the Federal Acquisition Regulations (FAR).” On October 12, 2005, DLA selected Clean Harbors Environmental Services

(CHES)in Coffeyville, Kansas to dispose of the PCB waste to be removed from Japan. CHES has disposed of PCBs returning from Japan at the Coffeyville facility on four separate occasions since 2003 without incident. In addition, DLA will use shippers approved by the U.S. Department of Transportation when the waste materials are transported from the California port to the Coffeyville disposal facility. The surface commercial transport trucks and the sea vessels themselves are approved and contracted for use by the DOD Surface Deployment and Distribution Command. 1. *Information regarding no unreasonable risk provided by the petitioner* . DLA notes that the materials in question would be managed in accordance with all applicable laws and regulations. Once in the United States, the PCB waste would be transported, handled, treated and disposed of in compliance with the PCB regulations at 40 CFR part 761. DLA states that it would only contract with companies with the required Federal and State-permitted storage, treatment, and disposal facilities for dealing with PCBs and PCB items. DLA notes that it and its contractors “have extensive experience in safely returning U.S.-manufactured PCBs and PCB items to the U.S. for disposal,” and that “prior to safely returning and disposing of 2.7 million pounds of foreign-generated PCB containing waste under the previously granted exemption, DLA returned 2.4 million pounds of U.S.-manufactured PCBs and PCB Items from Japan since 1991 for compliant disposal without incident.” In contrast, DLA notes that the continued storage of PCBs at U.S. facilities in Japan is problematic. DOD currently has a considerable amount of PCB waste in storage at its facilities in Japan, and more will accumulate over the coming years as equipment is retired from use and contaminated sites are cleaned up. DLA notes that due to the unavailability of disposal capacity in Japan, much of DLA's foreign-manufactured PCB waste inventory in Japan has been in storage for years and movement of PCB waste presently in storage is frequently necessary to accommodate additional PCBs taken out of service. DLA summarizes the risks of this situation as follows: Continued accumulation over extended time periods increases the risk of exposure to U.S. military personnel, to people living in and around the U.S. installations where the PCBs are stored, and to the environment should releases occur due to human error, or unforeseen severe weather, or seismic events. In addition, storage containers will deteriorate with time, increasing the likelihood that personnel who must monitor such items and repack them if they suspect leakage are exposed to the PCBs. Long-term storage may increase the DOD’s liability for cleanup costs if spills occur. This would increase exposure to U.S. personnel and local citizens and could potentially result in ground and water contamination. Each time an item is handled, another opportunity for a spill or exposure is created. The storage situation is exacerbated in Japan because the installations where these materials are located are relatively small, storage space is at a premium, and the surrounding civilian communities are located in very close proximity to the stored PCBs. Moreover, the situation for the DOD is further complicated because of the perceptions of the local communities regarding PCBs. DLA further notes that EPA expressed concerns about long-term storage in the PCB Import for Disposal Rule (Ref. 5): EPA believes that PCB wastes which are not disposed of for extended periods of time or which are not disposed of in facilities providing equivalent protection from release to the environment may pose an unreasonable risk of injury to health and the environment. (61 FR 11096) The same rule also underscored the benefit of prompt disposal in the United States (Ref. 5): Based on the persistence of PCBs in the global environment and EPA’s finding that any exposure to human beings or the environment may be significant, EPA believes that the safe disposal of PCBs in approved U.S. facilities poses less risk of injury to health or the environment in the United States than the continued presence of PCBs in other countries, since proper disposal in this country provides protection against possible hazards from improper disposal elsewhere. (61 FR 11096) Beyond the immediate environmental risk, DLA describes other benefits to the United States that it believes would result from the granting of its petition: In 1968, a tragic human poisoning episode in Western Japan affected over 1,000 people causing 22 deaths. The “Yusho” or “rice oil disease” was attributed to the consumption of rice bran oil contaminated with PCBs and served as a catalyst for current PCB prohibitions such as those imposed by TSCA, the Stockholm Convention, and Japanese domestic law. As a result of this highly publicized incident, Japanese citizens exhibit particular sensitivity to PCB issues. Delicate U.S.-Japan relations over the presence and operation of U.S. military installations could be adversely affected by denial of this petition. The presence of PCBs on U.S. military bases in Japan has in the past attracted significant adverse attention from Japanese politicians, the Japanese press, Japanese environmental groups, and local citizens. There has been constant local surveillance of U.S. military PCB storage in Sagamihara and demands for inspections and sampling for PCBs since at least 1992, when a member of Congress released a report outlining the storage and presence of PCBs and other hazardous materials on U.S. bases in Japan. Any perception that the United States would return to stockpiling and long term storage of these materials invites unwarranted claims that the U.S. military is neglecting its environmental responsibilities. DLA concludes: Allowing PCB material to remain in storage indefinitely may lead to degradation of storage containers and releases of PCBs into the environment from the materials located at temporary or permanent storage facilities. PCBs released into the environment as a result of disasters, accidents, container degradation or other events can present significant exposure risks. This material is currently stored, or will need to be stored, on crowded DOD facilities in close proximity to where U.S. military and civilian personnel and the local community live and work. Since there are no permitted PCB disposal facilities available to U.S. forces in Japan, and because of the unique environmental conditions in Japan, as noted above, the potential for PCB contamination via leaks from aging containers or accidental spills is higher at these locations than at EPA- permitted disposal facilities in the DOD civilian employees, U.S. military personnel, and contractors employed by the U.S. Government are at greatest risk. 2. *Information regarding good faith efforts provided by the petitioner* . DLA argues in its petition that disposal of its PCBs in Japan is not an available disposal option: As DLA noted in its previous exemption requests, there are significant impediments to disposal on DOD military installations in Japan. To be properly processed, PCB materials should be separated into three streams:

(1)metallic components to be decontaminated and recycled;

(2)used oils to be treated/dechlorinated and recycled or burned for energy recovery; and

(3)non-recyclable material to be treated and disposed of as residual solid wastes. Although certain portable treatment technologies are becoming available in Japan, the domestic regulatory standards are very stringent and would require PCB decontamination levels to be less than 0.5 ppm without dilution to qualify an item as being non PCB. Complicating the situation further is that any transfer or sale of property from the U.S. military installations into Japanese commerce is considered an “import” of property. Japan has banned the importation of PCBs at any detectable concentration including concentrations below the very stringent 0.5 ppm level at which Japan regulates domestic PCBs. DLA is not aware of any available technologies that are permitted in Japan that would treat all PCBs items to the level that PCBs are completely removed or that could be acquired at a cost that is economically feasible. Moreover, if such technology were to become available, it would not resolve the issue of the residual “non-recyclable” waste that would remain or result from the treatment process. There are no permitted commercial disposal facilities currently available to the U.S. military for PCB disposal in Japan; hence, treatment outside of Japan would still be required for the residual wastes resulting from any “on-installation” treatment process. DLA further argues that disposal of this waste in another country is not a viable option. DLA cites its 1999 Report to Congress as background on the difficulty it faces in finding suitable disposal alternatives for PCB waste generated by DOD overseas. In particular, DLA discusses the difficulty of shipping waste from Japan to other countries posed by the Basel Convention: Prior to submitting its previous request to EPA for an exemption from the TSCA PCB import ban, DLA and its primary disposal contractor made contacts over a period of several years with Japanese officials and with disposal facilities located outside the U.S. in an effort to identify firms that could dispose of waste PCB items overseas while satisfying Basel Convention requirements. The DOD also consulted with State Department officials in Japan and the U. S. whose responsibilities included international environmental matters. These consultations resulted in a consensus that use of existing facilities in other developed countries was not a reasonable alternative. Even if other countries would accept these wastes, non-governmental organizations could be expected to oppose disposal of its U.S. waste in third countries, principally because the U. S. already has the technical capability to dispose of PCBs. DLA concludes that it has made every reasonable effort to locate appropriate disposal sites outside the United States and that it has accordingly satisfied the good faith efforts criteria necessary for an exemption. B. EPA’s Proposed Decision on the Petition: July 21, 2005 Petition; EPA Proposes to Grant this Petition 1. *No unreasonable risk determination* . EPA finds generally that the disposal of imported PCB waste at an EPA-approved PCB disposal facility poses no unreasonable risks as these facilities have been approved on the basis of that standard. In addition, the risks to human health and the environment associated with long-term storage of this waste far outweigh the risks associated with the transportation of this waste from Japan to an approved disposal facility in the United States. As with the previous petition, EPA concurs with DLA's assessment that transportation of this waste will pose no unreasonable risk if conducted in accordance with all applicable laws and regulations. EPA permits the domestic processing and distribution in commerce of PCBs and PCB Items for disposal in compliance with 40 CFR part 761, and in issuance of the PCB Import for Disposal rule EPA investigated and sought comment on the risks inherent in transportation of imported PCB waste, and determined those risks to be insignificant (Ref. 5). For the following reasons, EPA finds that there is no unreasonable risk from the transport of this waste to the United States for disposal: i. PCBs are hazardous and pose a potential risk to health and the environment. Proper disposal would reduce PCB-associated risks. ii. Risk results from a combination of exposure (likelihood, magnitude and duration) and the probability of effects occurring under the conditions of exposure. Because the probability of a transport accident occurring is low, the likelihood of exposure to PCBs is commensurately low. Consequently, the risk of adverse effects to human health or the environment is minimal. iii. The PCB-containing materials would be packaged in a manner consistent with federal, state, and local regulations addressing the storage and transport of hazardous materials. In addition, PCB waste would be continuously monitored during the water transport from Japan to the U.S. Contingency plans are required by the International Maritime Dangerous Goods Code and the Department of Transportation to be in place before and after the import of PCB-containing items to the United States. Moreover, the PCB items that would be transported to the United States are not combustible, which would make the probability of fires low. Together, these contingency measures would minimize exposure to humans and the environment in the event of an accident or emergency during ocean transport. iv. Given the aforementioned information, the exposure likelihood, frequency, and duration are so low that even though PCBs are considered to be highly hazardous, risk (combined exposure and hazard) would not be unreasonable to human health or the environment. v. The potential for human health risks are further mitigated by duration of exposure. PCBs are most hazardous following long-term (chronic) exposures. Under the transport scenario proposed, any exposures to humans (i.e., accidental or emergency situation) would be of very short duration. Hence, the low probability of exposure occurring combined with the short-term duration of exposure, should one occur, further supports a qualitative conclusion that there is no unreasonable risk to human health. vi. The long-term concern is the potential for accumulation in the ecological environment. Under a worst case scenario where all of the PCBs were released due to an unforeseen and highly unlikely catastrophic event during transport, PCB-exposed biological receptors could be adversely affected. However, this scenario is highly unlikely because it would require a complete failure of all safeguards that would be in place. The DLA analyses indicate that there would be a low probability of a complete failure. The alternative of storing the PCBs indefinitely seems to pose more risk than transport. Further, should an accident occur, emergency response authorities at least within U.S. waters, would be invoked to mitigate and/or remediate exposures. 2. *Good faith efforts to find substitutes met* . Section 6(e)(3(B)(ii) of TSCA requires the Administrator to make an additional finding, that “good faith efforts have been made to develop a chemical substance that does not present an unreasonable risk of injury to health or the environment and which may be substituted for such polychlorinated biphenyl.” EPA has interpreted this provision to require that a petitioner has the burden of demonstration that it has made the requisite good faith efforts. (See 40 CFR 750.11.) EPA believes that DLA has demonstrated good faith efforts to find alternatives to disposal of this PCB waste in the United States. EPA is aware of the lack of adequate PCB disposal capacity in Japan. DLA has explored exporting this waste to other countries as an alternative but since this is waste owned by the United States, the waste may not be shipped to other countries in the area because the United States is not a party to the Basel Convention and does not have bilateral agreements with countries in the area. EPA also acknowledges the peculiar circumstances of DOD's PCBs, which, while present in one country, are owned by another country’s government, leading to significant difficulty in providing Basel notification to third countries. Given these difficulties, EPA concurs with DLA's conclusion that disposal in a third country is not a viable alternative for this waste. 3 . *Benefits of granting the petition* —i. *Avoiding the risks of long-term storage* . EPA believes that granting the petition to import 1,328,482 pounds of waste contaminated with PCBs (88% is less than 50 ppm and less than 5% is liquid PCBs greater than 50 ppm) will benefit the United States and the environment in general in several ways. As DLA notes, the continued long term storage of PCB waste on U.S. military facilities in Japan poses risks of exposure to U.S. personnel and the environment—risks that can be eliminated through the action proposed in the petition. ii. *Ensuring proper and safe disposal* . Granting the petition would allow the U.S. to accept responsibility for the toxic waste it generates by assuring proper and safe disposal in domestic permitted disposal facilities. iii . *Ensuring the safety of Japanese citizens* . EPA considers the reduction of risk to Japanese citizens to be advantageous, especially in light of the heightened concerns over PCBs in that country and the sensitivities surrounding the U.S. military's presence in Japan. Granting the petition is the only practical mechanism to remove this waste from Japan. Otherwise the U.S. military is in the awkward position of explaining to its Japanese hosts that it cannot remove its own toxic waste from their country because U.S. law does not allow the waste to be sent to the United States. For these reasons EPA finds DLA has satisfied the exemption criteria of TSCA section 6(e)(3)(B) and proposes to grant the petition. V. References 1. EPA, OPPT. Polychlorinated Biphenyls; Manufacturing (Import) Exemptions. Final Rule. OPPT-2002-0013. **Federal Register** (68 FR 4934, January 31, 2003) (FRL-7288-6). Available at *http://www.epa.gov/fedrgstr* . 2. EPA, Office of Toxic Substances (OTS). Polychlorinated Biphenyls; Manufacturing, Processing, Distribution in Commerce Exemptions. Proposed Rule. OPTS-66008F. **Federal Register** (53 FR 32326, August 24, 1988). 3. DOD, DLA. Petition from Keith W. Lippert, Vice Admiral, SC, USN, Director to Stephen L. Johnson, Administrator, EPA. Subject: Petition to the Administrator, United Sates Environmental Protection Agency, For an Exemption Under the Toxic Substances Control Act to Import Polychlorinated Biphenyls

(PCB)and PCB Items for Disposal. July 21, 2005. 13 pp. with attachments. 4. DOD, DLA. Electronic mail dated November 2, 2006 from Miriam Alonso, Hazardous Programs, to Tom Simons, National Program Chemicals Division, OPPT, EPA. Subject: Updated Petition Data for EPA for petition submitted July 21, 2005. 2 pp. 5. EPA, OPPTS. Disposal of Polychlorinated Biphenyls; Import for Disposal. Final Rule. **Federal Register** (61 FR 11096, March 18, 1996) (FRL-5354-8). Available at *http://www.epa.gov/fedrgstr* . VI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866, entitled *Regulatory Planning and Review* (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” subject to review by the Office of Management and Budget (OMB), because this action is not likely to result in a rule that meets any of the criteria for a “significant regulatory action” provided in section 3(f) of the Executive order. B. Paperwork Reduction Act Pursuant to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 *et seq* ., 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 are listed in 40 CFR part 9 and 48 CFR chapter 15. This proposed rule would not impose any new information collection burden. EPA is proposing to grant the petition by DLA to import PCBs for disposal. DLA would then be subject to the existing EPA regulations regarding the disposal of PCBs in 40 CFR part 761. OMB has previously approved the information collection requirements contained in 40 CFR part 761 under the provisions of PRA, 44 U.S.C. 3501 *et seq* ., and has assigned OMB control numbers 2070-0003 (EPA ICR No. 1000.06), 2070-0008 (EPA ICR No. 1001.06), 2070-0011 (EPA ICR No. 1012.06), 2070-0021 (EPA ICR No. 0857.07), 2070-0112 (EPA ICR No. 1446.06), and 2070-0159 (EPA ICR No. 1729.02). Copies of these ICR documents may be obtained by mail at the Office of Environmental Information, Collection Strategies Division (2822), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001, by e-mail at *auby.susan@epa.gov* or by calling

(202)566-1672. Copies may also be downloaded from the Internet at *http://www.epa.gov/icr* . Include the ICR and/or OMB numbers in any correspondence. As defined by PRA and 5 CFR 1230.3(b), “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. C. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 *et seq* ., 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 government jurisdictions. For purposes of assessing the impacts of this proposed rule on small entities, small entity is defined as: 1. A small business that meets the Small Business Administration size standards codified 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. 3. A small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominant in its field. After considering the impacts of this proposed rule on small entities, EPA certifies that this action will not have a significant economic impact on a substantial number of small entities. This proposed rule will not impose any requirements on small entities. EPA is proposing to grant this petition by DLA to import PCBs for disposal. Only DLA, which is not a small entity, would be regulated by this proposed rule. D. Unfunded Mandates Reform Act Pursuant to Title II of the Unfunded Mandates Reform Act of 1995, (UMRA), Public Law 104-4, EPA has determined that this proposal 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. EPA is proposing to grant a petition by DLA to import PCBs for disposal. If the petition is granted, and DLA imports PCBs for disposal, DLA would be required to comply with the existing regulations on PCB disposal at 40 CFR part 761. The only mandate that would be imposed by this proposal would be imposed on DLA. In addition, EPA has determined that this proposal would not significantly or uniquely affect small governments. The DLA petition states that the PCBs will be disposed of in PCB-approved facilities. No new facilities, which could affect small government resources if a permit is required, are contemplated. EPA believes that the disposal of PCBs in previously approved facilities in the amounts specified in this proposal would have little, if any, impact on small governments. Thus, this proposed rule is not subject to the requirements of UMRA sections 202, 203, 204, or 205. E. Executive Order 13132: Federalism This action will not have a substantial direct effect on 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, entitled *Federalism* (64 FR 43255, August 10, 1999). 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 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This proposed rule does not have tribal implications, as specified in Executive Order 13175. EPA’s proposal would grant a petition from DLA to import PCBs and dispose of them in PCB-approved disposal facilities in accordance with existing regulations. EPA does not believe that this activity will have any impacts on the communities of Indian tribal governments. Thus, Executive Order 13175 does not apply to this proposed rule. However, in the spirit of Executive Order 13175, EPA specifically solicits comment on this proposed rule from tribal officials. G. Executive Order 13045: Children’s Health Executive Order 13045, entitled *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. 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 proposed rule is not subject to the Executive order because it is not economically significant as defined in Executive Order 12866, and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. EPA is proposing to grant the petition from DLA to import PCBs and dispose of them in approved PCB disposal facilities in accordance with existing regulations. EPA believes that the import and disposal of the amount of PCBs specified in the exemption petitions will present little, if any, additional risk to persons living in the vicinity of the approved disposal facilities or in the communities through which the PCBs may be transported. H. Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use This proposed rule is not subject to Executive Order 13211, entitled *Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use* (66 FR 28355 (May 22, 2001), because it is not a significant regulatory action under Executive Order 12866. I. The National Technology Transfer and Advancement Act This action does not involve any technical standards; therefore, section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113 (15 U.S.C. 272 note), does not apply to this action. J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled *Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations* (59 FR 7629, February 16, 1994). K. Executive Order 12630: Governmental Actions and Interference with Constitutionally Protected Property Rights EPA has complied with Executive Order 12630, entitled Governmental Actions and Interference with Constitutionally Protected Property Rights (53 FR 8859, March 15, 1988), by examining the takings implications of this proposed rule in accordance with the *Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings* issued under the Executive order. L. Executive Order 12988: Civil Justice Reform In issuing this proposed rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct, as required by section 3 of Executive Order 12988, entitled *Civil Justice Reform* (61 FR 4729, February 7, 1996). Lists of Subjects in 40 CFR Part 761 Environmental protection, Hazardous substances, Labeling, Polychlorinated biphenyls, Reporting and recordkeeping requirements. Dated: April 19, 2007. James B. Gulliford, Assistant Administrator, Office of Prevention, Pesticides and Toxic Substances. Therefore, it is proposed that 40 CFR chapter I be amended as follows: PART 761—[AMENDED] 1. The authority citation for part 761 would continue to read as follows: Authority: 15 U.S.C. 2605, 2607, 2611, 2614, and 2616. 2. Section 761.80 is amended by adding a new paragraph

(j)to read as follows: § 761.80 Manufacturing, processing and distribution in commerce exemptions.

(j)The Administrator grants the United States Defense Logistics Agency's July 21, 2005 petition for an exemption for 1 year to import 1,328,482 pounds of PCBs and PCB items stored or in use in Japan as identified in its petition, as amended, for disposal. [FR Doc. E7-8182 Filed 4-27-07; 8:45 am] BILLING CODE 6560-50-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 622 [I.D. 042307F] Gulf of Mexico Fishery Management Council; Scoping Hearings AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notification of scoping hearings. SUMMARY: The Gulf of Mexico Fishery Management Council (Council) will convene Public Hearings on Reef Fish Amendment 27/Shrimp Amendment 14. DATES: The public hearings will held from May 14 - 24, 2007 at 13 locations throughout the Gulf of Mexico. For specific dates and times see SUPPLEMENTARY INFORMATION . ADDRESSES: *Meeting addresses:* The public hearings will be held in the following locations: Brownsville, Port Aransas, Palacios, and Galveston, TX, New Orleans, Chauvin, and Abbeville, LA, Destin, Tampa, and Ft. Myers., FL, Foley and Mobile, AL and Biloxi, MS. For specific dates and times see SUPPLEMENTARY INFORMATION . *Council address:* Gulf of Mexico Fishery Management Council, 2203 North Lois Avenue, Suite 1100, Tampa, Florida 33607. FOR FURTHER INFORMATION CONTACT: Dr. Richard Leard, Deputy Executive Director; telephone: 813-348-1630. SUPPLEMENTARY INFORMATION: The Gulf of Mexico Fishery Management Council (Council) has scheduled a series of public hearings to receive comments on Draft Amendment 27 to the Reef Fish Fishery Management Plan and Amendment 14 to the Shrimp Fishery Management Plan. This amendment contains potential management measures to modify the rebuilding plan for red snapper in order to end overfishing and recover this overfished stock. These measures would further reduce the directed red snapper harvest as well as bycatch from both the directed fishery and the shrimp fishery. The public hearings will begin at 6 pm and conclude at the end of public testimony or no later than 10 pm at each of the following locations: *Monday, May 14, 2007,* Holiday Inn Brownsville, 3777 N. Expressway, Brownsville, TX 78520, 956-547-1500; *Tuesday, May 15, 2007,* Four Points Sheraton New Orleans Airport, 6401 Veterans Memorial Blvd., Metairie, LA 70003, 504-885-5700; *Tuesday, May 15, 2007,* Plantation Suites, 1909 Hwy 361, Port Aransas, TX 78373, 361-749-3866; *Wednesday, May 16, 2007,* Chauvin Parish Recreation Center, 215 Angel St., Chauvin, LA 70345, 985-594-2020; *Wednesday, May 16, 2007,* Palacios Rec Center, 2401 Perryman Ave, Palacios, TX 77465, 361-972-2387; *Thursday, May 17, 2007,* LSU Agricultural Center, 1105 W. Port St., Abbeville, LA 70510, 337-898-4335; *Thursday, May 17, 2007,* San Luis Resort, 5222 Seawall Boulevard, Galveston, Texas 77550, 409-744-1500; *Monday, May 21, 2007,* Embassy Suites Hotel, 570 Scenic Gulf Drive, Destin, FL 32550, 850-337-7000; *Monday, May 21, 2007,* Clarion Hotel, 12635 S. Cleveland Ave., Ft. Myers, FL 33907, 239-936-0931; *Tuesday, May 22, 2007,* Quorum Hotel, 700 N. Westshore Blvd., Tampa, FL 33609, 813-289-8200; *Tuesday, May 22, 2007,* Foley Community Center, 407 E. Laurel Ave., Foley, AL 36535, 251-943-1545; *Wednesday, May 23, 2007,* Riverview Plaza Hotel, 64 S. Water St., Mobile, AL 36602, 251-438-4000; *Thursday, May 24, 2007,* Donal Snyder Parks & Rec Center, 2520 Pass Road, Biloxi, MS 39531, 228-435-6281. Copies of the Amendment can be obtained by calling the Council office at 813-348-1630. These hearings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Tina Trezza at the Council (see ADDRESSES ) at least five working days prior to the meeting. Dated: April 24, 2007. James P. Burgess, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E7-8189 Filed 4-27-07; 8:45 am] BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [I.D. 042307E] Mid-Atlantic Fishery Management Council; Public Hearings AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notice of public hearings. SUMMARY: The Mid-Atlantic Fishery Management Council (MAFMC) will hold hearings to allow for public input on Amendment 9 to the Fishery Management Plan for the Atlantic Mackerel, Squid, and Butterfish Fishery (FMP). DATES: Written comments will be accepted until May 27, 2007. All meetings begin at 7 a.m. For specific dates and locations of the hearings see SUPPLEMENTARY INFORMATION . ADDRESSES: Comments may be submitted through any of the following methods: • Mail: Daniel T. Furlong, Executive Director, Mid-Atlantic Fishery Management Council, Room 2115 Federal Building, 300 South New Street, Dover, Delaware 19904. • FAX: 302-674-5399. • E-mail: *info@mafmc.org* . Please indicate the subject as SMB 9 Comments. • Federal e-Rulemaking Portal: *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Daniel T. Furlong, Executive Director, Mid-Atlantic Fishery Management Council, Room 2115 Federal Building, 300 South New Street, Dover, Delaware 19904, 302-674-2331, ext. 19. SUPPLEMENTARY INFORMATION: Background The purpose of the hearings is to receive public input on management actions under consideration in Amendment 9 to the Atlantic Mackerel, Squid, and Butterfish FMP. The proposed management actions could:

(1)Allow multi-year specifications for all four species managed through the FMP,

(2)Extend or eliminate the moratorium on entry into the directed *Illex* squid fishery,

(3)Revise the current overfishing definition for *Loligo* squid,

(4)Designate EFH for *Loligo* eggs,

(5)Implement area closures to reduce damage to habitat from squid-mackerel-butterfish fisheries,

(6)Increase the minimum codend mesh size requirement in the *Loligo* fishery,

(7)Modify the exemption of the *Illex* fishery from the minimum codend mesh size requirement of the *Loligo* fishery,

(8)Modify the *Loligo* incidental catch limit in the *Illex* fishery during *Loligo* fishery closures,

(9)Establish a requirement for electronic daily reporting in the directed *Illex* fishery,

(10)Establish gear restricted areas that are seasonally closed to small-mesh gear. Dates and Locations of the Hearings Monday May 14, 2007: Hilton Garden Inn Providence Airport, One Thuber Street, Warwick, RI 02886. Tuesday, May 15, 2007: Holiday Inn Express East End, 1707 Old Country Road, Riverhead, NY 11901. Wednesday, May 16, 2007: The Grand Hotel, 1045 Beach Ave., Cape May, NJ 08204. Thursday, May 17, 2007: Days Inn Norfolk Airport, 5708 Northampton Blvd., Virginia Beach, VA 23455. Special Accommodations The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to M. Jan Bryan at the Mid-Atlantic Council Office

(302)674-2331 extension 18 at least five days prior to the meeting date. Dated: April 24, 2007. James P. Burgess, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E7-8197 Filed 4-27-07; 8:45 am] BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [I.D. 041 307D] RIN 0648-AU68 Fisheries of the Exclusive Economic Zone Off Alaska; Allocating Bering Sea/Aleutian Islands Fishery Resources; American Fisheries Act Sideboards AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notification of availability; request for comments. SUMMARY: The North Pacific Fishery Management Council (Council) has submitted Amendment 80 to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area

(FMP)to NMFS for review. If approved, Amendment 80 would allocate several Bering Sea and Aleutian Islands

(BSAI)non-pollock trawl groundfish species among trawl fishing sectors, and facilitate the formation of harvesting cooperatives in the non-American Fisheries Act

(AFA)trawl catcher/processor sector. Amendment 80 is necessary to increase resource conservation and improve economic efficiency for harvesters who participate in the BSAI groundfish fisheries. This proposed amendment also is necessary to implement recent changes to the Magnuson-Stevens Fishery Conservation and Management Act

(MSA)that modify the allocation of groundfish resources in the BSAI to the Western Alaska Community Development Quota

(CDQ)Program, and statutory mandates that define who is eligible to harvest fish in the non-AFA catcher/processor sector for a defined list of non-pollock groundfish species in the BSAI. This action is intended to promote the goals and objectives of the MSA, the FMP, and other applicable laws. The amendment is available for public review and comment. DATES: Comments on Amendment 80 must be received on or before June 29, 2007. ADDRESSES: Send written comments to Sue Salveson, Assistant Regional Administrator, Sustainable Fisheries Division, Alaska Region, NMFS, Attn: Ellen Sebastian, Records Officer. Comments may be submitted by: • Hand delivery: 709 West 9th Street, Room 420A, Juneau, AK; • E-mail: *0648-AU68NOA80@noaa.gov* . Include in the subject line the following document identifier: Amendment 80 RIN 0648-AU68. E-mail comments, with or without attachments, are limited to 5 megabytes; • Fax: 907-586-7557; • Mail: P.O. Box 21668, Juneau, AK 99802-1668; or • Webform at the Federal eRulemaking Portal: *http://www.regulations.gov* . Follow the instructions at that site for submitting comments. Copies of the Amendment 80 Environmental Assessment/Regulatory Impact Review/Initial Regulatory Flexibility Analysis (EA/RIR/IRFA) prepared for this action are available from the NMFS Alaska Region website at *www.fakr.noaa.gov* or from the mailing and street addresses listed above. FOR FURTHER INFORMATION CONTACT: Glenn Merrill, 907-586-7228 or *glenn.merrill@noaa.gov* . SUPPLEMENTARY INFORMATION: The MSA requires that each regional fishery management council submit any FMP or FMP amendment it prepares to NMFS for review and approval, disapproval, or partial approval by the Secretary. The MSA also requires that NMFS, upon receiving an FMP amendment, immediately publish a notice in the **Federal Register** that the FMP or amendment is available for public review and comment. This requirement is satisfied by this notice of availability for Amendment 80. Amendment 80 and Bycatch Reduction Efforts in the BSAI Amendment 80 and its implementing regulations would continue initiatives by the Council and NMFS to reduce bycatch of fish species in the BSAI non-pollock trawl groundfish fisheries. Amendment 80 would reduce the amount of halibut and crab bycatch, known as prohibited species catch (PSC), that may be taken while non-AFA trawl catcher/processors are fishing for groundfish in the BSAI. These measures would consider efficiency in utilization of fishery resources, minimize costs, and further minimize bycatch to the extent practicable, thereby meeting the objectives of National Standards 5, 7, and 9 of the MSA. Amendment 80 would facilitate this and other bycatch reductions through specific economic incentives provided by a limited access privilege program (LAPP). This LAPP would encourage improved retention and utilization of fishery resources by allocating specific amounts of certain species of non-pollock groundfish, and halibut and crab PSC, to non-AFA trawl catcher processors; and authorize the formation of cooperatives that would receive exclusive harvest privileges for a portion of these fishery resources. One of the primary reasons for the relatively high discard rates of groundfish by non-AFA trawl catcher/processors is the nature of the fisheries in which those vessels participate. The non-AFA trawl catcher/processor sector primarily participates in non-pollock groundfish fisheries. The non-pollock groundfish fisheries are primarily comprised of groups of species that share similar habitat (e.g., flatfish fisheries such as rock sole, flathead sole, and yellowfin sole). Because these species occur together, they are typically harvested together. When a non-AFA trawl catcher/processor retrieves its net, very often multiple species of fish are present. If a vessel operator is targeting only one species of fish, and other species are retrieved along with the desired catch, the vessel operator may have an incentive to discard the less valuable species and retain only the higher value species. The multi-species nature of these fisheries makes it difficult for vessel operators to target only one species, and an economic incentive exits to discard less valuable fish. NMFS establishes a total allowable catch

(TAC)for each groundfish species based on the species's annual biomass with the goal of providing a conservatively managed sustainable yield. In the non-pollock groundfish fisheries, harvesters compete for the TAC, resulting in a “race for fish,” wherein vessels attempt to maximize their harvest in as little time as possible, in order to claim a larger share of the available TAC. This race for fish only increases the economic incentive to discard less valuable species in a multi-species harvest, and accelerate the harvest rate for the more valuable species. Because vessel operators are competing with each other for shares of a common quota, a vessel operator has little economic incentive to undertake actions to reduce unwanted incidental catch, such as searching for fishing grounds with lower incidental catch rates, or use gear modifications that may reduce bycatch but have a lower harvest rate, if those actions would limit the ability of that vessel to effectively compete with other vessels. Additionally, a vessel operator has little incentive to process and store less valuable species if by doing so, he loses an opportunity to use that processing or storage capacity for more valuable catch. Therefore, an individual vessel operator has strong incentives to harvest fish as quickly as possible, and discard less valuable species, before the TAC limit is reached because all vessel operators are competing for a limited TAC. Additionally, non-pollock groundfish fisheries are constrained by catch limits for non-target species, such as halibut, red king crab, *Chinocetes bairdi* crab, and *C. opilio* crab. Halibut and crab are harvested in other fisheries and cannot be retained by vessels using trawl gear. NMFS establishes prohibited species catch

(PSC)limits for halibut in the entire BSAI, and red king crab, *C. opilio* crab, and *C. bairdi* crab in specific areas of the BSAI to limit the adverse impact of harvesting operations on the long-term productivity of those species. NMFS monitors these PSC limits, and may close or otherwise restrict trawl harvests if PSC limits are projected to be reached. Fishery closures due to reaching PSC limits can limit harvest of the groundfish TAC and reduce overall revenue to vessel operators and crew. As vessel operators seek to maximize harvest of TAC, they may accelerate fishing operations to maximize harvest before a crab or halibut PSC limit is reached. A “race for PSC” further exacerbates competition and the incentives to harvest rapidly, resulting in greater potential waste and higher discard rates of less valuable groundfish species. The multi-species nature of non-pollock groundfish fisheries further limits the ability of a fisherman to specifically target valuable groundfish species as they race with their competitors. Vessel operators may discard considerable portions of their catch to maximize harvests of more valuable species even though the discarded species may have considerable market value if competition did not create such a strong incentive to maximize harvests of the more valuable species in as short a time as possible. LAPP Management The primary method to offset the economic incentives that lead to a race for fish and relatively high discard rates is to reduce the impact of those incentives through a LAPP. LAPPs have been used extensively in the North Pacific as a means to encourage economic efficiency and less wasteful harvest methods, and to resolve allocation disputes among harvesters by providing a group of harvesters with exclusive harvest privileges that can be traded. North Pacific LAPPs include

(1)the halibut and sablefish individual fishing quota

(IFQ)Program (November 9, 1993, 58 FR 59375);

(2)the AFA (December 30, 2002, 67 FR 69692);

(3)the BSAI Crab Rationalization Program (March 2, 2005; 70 FR 10174); and

(4)the Central GOA Rockfish Program (November 20, 2006; 71 FR 67210). An extensive discussion of LAPPs can be found in the EA/RIR/IRFA prepared for this action (see ADDRESSES ). Based on experience with past LAPPs, and after weighing potential advantages and disadvantages, the Council adopted Amendment 80 to create economic incentives that provide additional opportunities to reduce bycatch while increasing the potential for greater economic returns to persons holding the harvest privileges. Amendment 80 would provide an incentive for non-AFA trawl catcher/processors to harvest non-pollock groundfish in a less wasteful manner by granting an exclusive harvest privilege to a limited number of harvesters. Amendment 80 would encourage participants to harvest more efficiently and less wastefully by allowing them to choose to

(1)form one or more harvesting cooperatives with other harvesters that would receive an exclusive annual harvest privilege of specific groundfish species and PSC; or

(2)fish in a limited access fishery comprised of fishery participants that choose not to join a cooperative. The principal benefits from Amendment 80 would be realized by harvesters that choose to join a cooperative. Overview of Amendment 80 The Council adopted Amendment 80 to meet the broad goals of:

(1)improving retention and utilization of fishery resources by the non-AFA trawl catcher/processor fleet;

(2)allocating fishery resources among BSAI trawl harvesters in consideration of historic and present harvest patterns and future harvest needs;

(3)authorizing the allocation of groundfish species to harvesting cooperatives and establishing a LAPP for the non-AFA trawl catcher/processors to reduce potential bycatch reduction costs, encourage fishing practices with lower discard rates, and improve the opportunity for increasing the value of harvested species; and

(4)limiting the ability of non-AFA trawl catcher/processors to expand their harvesting capacity into other fisheries not managed under a LAPP. As with all other LAPPs in the North Pacific, the extensive changes to existing management of BSAI non-pollock trawl fisheries proposed by Amendment 80 would affect a wide range of fishing practices and regulations. Amendment 80 would affect management of the non-AFA trawl catcher/processors, and all other BSAI trawl fishery participants. As such, Amendment 80 proposes a complex suite of measures to ensure the goals of Amendment 80 are met and to minimize potential adverse impacts on other affected fishery participants. The following section provides an overview of the suite of measures Amendment 80 proposes to implement. 1. Community Development Quota

(CDQ)Program Amendment 80 would incorporate statutory mandates in the MSA as amended by Section 416 of the Coast Guard and Maritime Transportation Act of 2006 (Public Law 109-241; July 11, 2006), and the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act (Public Law 109-479, January 12, 2007). The proposed rule would modify the percentage of the total allowable catch

(TAC)for directed fisheries that are allocated to the CDQ Program, and the percentage of halibut, crab, and salmon prohibited species catch

(PSC)allocated to the CDQ Program as prohibited species quota. Also proposed are other provisions necessary to bring Amendment 80 and the CDQ Program into compliance with applicable law. 2. Amendment 80 Sector and Amendment 80 Vessels Eligible Amendment 80 sector participants would be defined by applicable legislation and the implementing regulations. Amendment 80 would incorporate statutory mandates in section 219 of the Consolidated Appropriations Act of 2005 (Public Law 108-447; December 8, 2004) which defines who is eligible to harvest fish in the non-AFA catcher/processor sector for a defined list of non-pollock groundfish species. Amendment 80 would define the “Amendment 80 sector” as non-AFA trawl catcher/processor harvesters eligible to fish under this statutory mandate. The list of non-AFA trawl catcher/processor vessels that may be used to fish in the Amendment 80 sector are called “Amendment 80 vessels.” 3. Amendment 80 Species Amendment 80 would allocate a specific portion of six non-pollock groundfish species among trawl fishery sectors. These six species would be the “Amendment 80 species,” and include Aleutian Islands Pacific ocean perch, BSAI Atka mackerel, BSAI flathead sole, BSAI Pacific cod, BSAI rock sole, and BSAI yellowfin sole. These Amendment 80 species would be allocated between the Amendment 80 sector and all other BSAI trawl fishery participants. These other trawl fishery participants include AFA catcher/processors, AFA catcher vessels, and non-AFA catcher vessels. Collectively, this group of trawl fishery participants comprises the “BSAI trawl limited access sector.” These six species are economically valuable and have historically been targeted by non-AFA trawl catcher/processors, but fisheries associated with these species have high rates of discard of other groundfish species. 4. Allocations of TAC and PSC in the BSAI Trawl Fisheries Each year, NMFS would allocate an amount of Amendment 80 species available for harvest, and crab and halibut PSC to two defined groups of trawl fishery participants:

(1)the Amendment 80 sector; and

(2)the BSAI trawl limited access sector. The amount of Amendment 80 species TAC assigned to each sector would be based on the amount of TAC remaining after allocation to the CDQ Program and for incidental catch allowance requirements in other fisheries as necessary. This allocation amount is termed the initial TAC (ITAC). Allocations made to one sector would not be subject to harvest by participants in the other fishery sector except under a specific condition. Fish that are allocated to the BSAI trawl limited access sector and projected to be unharvested could be reallocated to Amendment 80 cooperatives. Amendment 80 would further address the Council's goals of reducing bycatch and discard of groundfish species by reducing the total amount of crab and halibut PSC allocated to the Amendment 80 sector. 5. BSAI Trawl Limited Access Sector Amendment 80 would provide a specific allocation of Amendment 80 species and crab and halibut PSC to this sector. Amendment 80 would modify the calculation of AFA sideboard limits for Amendment 80 species and crab and halibut PSC limits as necessary to allow the efficient operation of AFA vessels. 6. Amendment 80 Quota Share Amendment 80 would assign Amendment 80 quota share

(QS)for Amendment 80 species to the owners of Amendment 80 vessels. Amendment 80 QS could be used to yield an exclusive harvest privilege for a portion of the Amendment 80 sector ITAC. Amendment 80 would establish criteria for harvesters in the Amendment 80 sector to apply for and receive QS, criteria for initially allocating QS, and criteria for the transfer of QS. Amendment 80 would assign Amendment 80 QS based on historic catch patterns of an Amendment 80 vessel during 1998 through 2004. Amendment 80 would assign QS based on the relative proportion of an Amendment 80 species harvested by an Amendment 80 vessel compared to all other Amendment 80 vessels. Amendment 80 would assign Amendment 80 QS only to members of the Amendment 80 sector who submit a complete application for Amendment 80 QS. In most cases, Amendment 80 would assign the Amendment 80 QS to an Amendment 80 vessel owner. In specific cases where an Amendment 80 vessel has been lost or is otherwise permanently ineligible to fish in U.S. waters, the Amendment 80 QS would be assigned to the holder of the license limitation Amendment 80

(LLP)license originally assigned to that Amendment 80 vessel. Once Amendment 80 QS is assigned based on the historic catch patterns of an Amendment 80 vessel, it could not be divided or transferred separately from that Amendment 80 vessel. If Amendment 80 QS is assigned to the LLP license originally issued for that Amendment 80 vessel, it could not be transferred separately from that LLP license. 7. Amendment 80 Cooperatives Persons who receive Amendment 80 QS would be able to join a cooperative to receive an exclusive harvest privilege for a portion of the ITAC. Amendment 80 QS holders would be able to form a cooperative with other Amendment 80 QS holders on an annual basis, provided they meet specific criteria. Each Amendment 80 cooperative would receive an annual cooperative quota (CQ), an amount of Amendment 80 species ITAC that would be for the exclusive use by that cooperative for harvest in a given year. Amendment 80 would establish requirements for forming an Amendment 80 cooperative with other Amendment 80 QS holders, the allocation of annual CQ to a cooperative, and transfers of CQ among cooperatives. A cooperative would receive an amount of CQ equivalent to the proportion of QS held by all of the members of the cooperative relative to the total QS held by all Amendment 80 QS holders. Each Amendment 80 cooperative would receive an annual CQ with an exclusive limit on the amount of crab and halibut PSC the cooperative can use while harvesting in the BSAI. This halibut and crab PSC CQ would be assigned to a cooperative proportional to the amount of Amendment 80 QS held by the members, and would not be based on the amount of crab or halibut PSC historically used by the cooperative members. Amendment 80 would provide opportunities for Amendment 80 sector participants to trade harvest privileges among cooperatives to further encourage efficient fishing operations. An Amendment 80 cooperative would not be able to transfer CQ to the Amendment 80 limited access fishery, or to the BSAI trawl limited access sector. A cooperative structure may allow Amendment 80 vessel operators to manage PSC rates more efficiently than vessels who must race to harvest fish as quickly as possible before a PSC limit is reached and a fishery is subject to closure. By reducing PSC through more efficient cooperative operations, such as through gear modifications that reduce PSC use, Amendment 80 vessel operators may also increase the harvest of valuable targeted groundfish species and improve revenues that would otherwise be foregone if a fishery were closed due to reaching PSC limits. Amendment 80 would allow Amendment 80 cooperatives to receive a rollover of an additional amount of CQ, if a portion of the Amendment 80 species or crab or halibut PSC allocated to the BSAI trawl limited access sector is projected to go unharvested. This rollover to the Amendment 80 cooperatives would be at the discretion of NMFS based on projected harvest rates in the BSAI trawl limited access sector and other criteria. Each Amendment 80 cooperative would receive an additional amount of CQ that is based on the proportion of the Amendment 80 QS held by that Amendment 80 cooperative compared to all other Amendment 80 cooperatives. Fishery participants in a cooperative could consolidate fishing operations on a specific Amendment 80 vessel or subset of Amendment 80 vessels, thereby reducing monitoring and enforcement (M&E) and other operational costs, and harvest fish in a manner more likely to be economically efficient and less wasteful. 8. Amendment 80 Limited Access Fishery Amendment 80 QS holders that choose not to join an Amendment 80 cooperative would be able to participate in the Amendment 80 limited access fishery. Amendment 80 would assign the Amendment 80 limited access fishery the amount of the Amendment 80 sector's allocation of Amendment 80 species ITAC and halibut and crab PSC that remains after allocation to all of the Amendment 80 cooperatives. Participants fishing in the Amendment 80 limited access fishery would continue to compete with each other; would not realize the same potential benefits from consolidation and coordination; and would not receive an exclusive harvest privilege that accrues to members of an Amendment 80 cooperative. 9. Use Caps The Council considered the effect of consolidation with the allocation of an excessive share of harvest privileges to Amendment 80 cooperatives. In response, Amendment 80 would implement use caps to limit the amount of Amendment 80 QS a person could hold, the amount of CQ they could use, and the amount of ITAC an Amendment 80 vessel could harvest. These use caps would moderate some of the potentially adverse effects of excessive consolidation of fishing operations on fishery participants, such as lost employment opportunities for fishing crew while providing economic efficiencies to Amendment 80 QS holders. 10. Gulf of Alaska Sideboard Limits Catch limits, commonly known as sideboards, would limit the ability of Amendment 80 vessel operators to expand their harvest efforts in the Gulf of Alaska (GOA). Amendment 80 is designed to provide certain economic advantages to participants. Amendment 80 participants could use this economic advantage to increase their participation in other fisheries, primarily in the GOA fisheries, adversely affecting the participants in those fisheries. GOA groundfish and halibut PSC sideboards would limit the catch by Amendment 80 vessels to historic levels in the GOA. 11. Economic Data Report

(EDR)Amendment 80 would implement an economic data collection program to assess the impacts of Amendment 80 on various components of the fishery, including skippers and crew. Amendment 80 would establish a process for collecting and reviewing economic data generated under Amendment 80 by requiring the annual submission of an EDR from each Amendment 80 QS holder. Other management measures necessary to implement Amendment 80 would be provided in the proposed rule that accompanies Amendment 80. These measures include an expansion of the groundfish retention standard to all vessels in the Amendment 80 sector and monitoring and enforcement provisions necessary to support Amendment 80 and its implementing regulations. Public comments are being solicited on proposed Amendment 80 through the end of the comment period stated (see DATES ). A proposed rule to implement Amendment 80 will be published in the **Federal Register** for public comment, following NMFS' evaluation under MSA procedures. Public comments on the proposed rule must be received by the end of the comment period on Amendment 80 to be considered in the approval/disapproval decision on the amendment. All comments received by the end of the comment period on Amendment 80, whether specifically directed to the amendment or the proposed rule, will be considered in the decision to approve, partially approve, or disapprove the proposed amendment. Comments received after the comment period for the amendment will not be considered in that decision. To be considered, written comments must be received by NMFS, not just postmarked or otherwise transmitted, by the close of business on the last day of the comment period. Authority: 16 U.S.C. 773 *et seq.* ; 1540(f); 1801 *et seq.* ; 1851 note; 3631 *et seq.* Dated: April 24, 2007. James P. Burgess Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E7-8190 Filed 4-27-07; 8:45 am] BILLING CODE 3510-22-S 72 82 Monday, April 30, 2007 Notices DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request April 25, 2007. The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding

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

(b)the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used;

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

(d)ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), *OIRA_Submission@OMB.EOP.GOV* or fax

(202)395-5806 and to Departmental Clearance Office, USDA, OCIO, Mail Stop 7602, Washington, DC 20250-7602. Comments regarding these information collections are best assured of having their full effect if received within 30 days of this notification. Copies of the submission(s) may be obtained by calling

(202)720-8958. An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number. Animal and Plant Health Inspection Service *Title:* Importation of Mangoes from the Philippines. *OMB Control Number:* 0579-0172. *Summary of Collection:* The United States Department of Agriculture is responsible for preventing plant pests and noxious weeds from entering the United States. Under the Plant Protection Act (7 U.S.C. 7711-7714), the Secretary of Agriculture, either independently or in cooperation with the States, is authorized to carry out operations or measures to detect, eradicate, suppress, control, prevent, or retard the spread of plant pests new to the United States or not known to be widely distributed throughout the United States. The regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56 through 319.56-8) allow the importation of mangoes from Guimaras Island in the Republic of the Philippines into the United States under certain conditions. The regulations require the use of box marking to indicate the origin of the fruit, phytosanitary certificate to confirmed that the fruit has been grown and treated in accordance with the regulations and a trust fund agreement between the Republic of the Philippines Department of Agriculture and the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS) to cover the Agency's participation in the treatment and inspection activities in the Philippines that are required for the importation of mangoes. *Need and Use of the Information:* APHIS will collect information to verify that the commodity was treated adequately with heat to eliminate the pest risk and to verify that the temperature remained at the appropriate level for the entire treatment period, thereby destroying any fruit flies present in the commodity. *Description of Respondents:* Business or other for-profit; Farms; Federal Government. *Number of Respondents:* 1,827. *Frequency of Responses:* Reporting: On occasion. *Total Burden Hours:* 121. Animal and Plant Health Inspection Service *Title:* Importation of Unshu Oranges. *OMB Control Number:* 0579-0173. *Summary of Collection:* The Plant Protection Act (7 U.S.C. 7701-7772) authorizes the Secretary of Agriculture to regulate the importation of plants, plant products, and other articles into the United States to prevent the introduction of plant pest and noxious weeds. The regulations in “Subpart-Citrus Fruit” (7 CFR 319.28) allow the importation of unshu oranges from Kyushu Island and Honshu Island, Japan, into the United States under certain conditions. A certificate must accompany the unshu oranges from the Japanese plant protection service certifying that the fruit is apparently free of citrus canker. *Need and Use of the Information:* The Animal and Plant Health Inspection (APHIS) will collect information using form PPQ 203, Foreign Site Certificate of Inspection and/or Treatment. The information from the form will be used to certify that unshu oranges from Japan are free of citrus canker and to also ensure that the oranges are not imported into citrus-producing areas of the United States such as Florida and California. *Description of Respondents:* State, Local or Tribal Government. *Number of Respondents:* 23. *Frequency of Responses:* Reporting: On occasion. *Total Burden Hours:* 5,535. Ruth Brown, Departmental Information Collection Clearance Officer. [FR Doc. E7-8153 Filed 4-27-07; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request April 25, 2007. The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding

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

(b)the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used;

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

(202)720-8681. An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number. Agricultural Marketing Service *Title:* Federal Seed Act Program. *OMB Control Number:* 0581-0026. *Summary of Collection:* The Federal Seed Act

(FSA)(7 U.S.C. 1551-1611) regulates agricultural and vegetable seeds in interstate commerce. Agricultural and vegetable seeds shipped in interstate commerce are required to be labeled with certain quality information such as the name of the seed, the purity, the germination, and the noxious-weed seeds of the state into which the seed is being shipped. State seed regulatory agencies refer to the Agricultural Marketing Service

(AMS)complaints involving seed found to be mislabeled and to have moved in interstate commerce. AMS investigates the alleged violations and if the violation is substantiated, takes regulatory action ranging from letters of warning to monetary penalties. AMS will collect information from records of each lot of seed and make them available for inspection by agents of the Secretary. *Need and Use of the Information:* The information collected consists of records pertaining to interstate shipments of seed which have been alleged to be in violation of the FSA. The shipper's records pertaining to a complaint are examined by FSA program specialists and are used to determine if a violation of the FSA occurred. The records are also used to determine the precautions taken by the shipper to assure that the seed was accurately labeled. The FSA program would be ineffective without the ability to examine pertinent records as necessary to resolve complaints of violations. *Description of Respondents:* Business or other for-profit; Farm. *Number of Respondents:* 2,880. *Frequency of Responses:* Recordkeeping; Reporting: On occasion. *Total Burden Hours:* 40,263. Charlene Parker, Departmental Information Collection Clearance Officer. [FR Doc. E7-8154 Filed 4-27-07; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Forest Service Wild and Scenic River Suitability Study for National Forest System Lands in Utah; Ashley, Dixie, Fishlake, Manti-La Sal, Uinta, and Wasatch-Cache National Forests; Utah AGENCY: Forest Service, USDA. ACTION: Notice of intent to prepare a legislative environmental impact statement. SUMMARY: The Forest Service, in cooperation with the State of Utah, will prepare a draft and final legislative environmental impact statement

(LEIS)to complete the process for giving consideration to potential national wild, scenic, and recreational river areas on the National Forests in Utah under the Wild and Scenic Rivers Act. Portions of those National Forests extend into Colorado and Wyoming, and those areas will be included in the study. The Forest Service has evaluated river segments on these National Forests to determine which ones meet criteria for eligibility for inclusion in the National Wild and Scenic Rivers System. The purpose of the LEIS is to determine which eligible river segments are suitable for inclusion in the National Wild and Scenic Rivers System. More information including: the full text of the proposal, a list of eligible river segments by county and forest, and a map showing eligible river segments is posted on the web at: *http://www.fs.fed.us/r4/rivers/* . The Forest Service invites written comments and suggestions on the suitability of eligible river segements for designation as wild, scenic, or recreational rivers. The Forest Service gives notice of the environmental analysis and determinations that will occur as a result of this study so that interested and affected people are aware of how they may participate and contribute to the final determination of suitability for inclusion in the National Wild and Scenic Rivers System. DATES: Comments concerning the scope of the analysis will be most useful if submitted on or before June 30, 2007. The draft legislative environmental impact statement is expected in November 2007 and the final legislative environmental impact statement is expected to be completed by the summer of 2008. ADDRESSES: Send written comments concerning the suitability of the river segments to: Catherine Kahlow, USFS WSR Team Leader, Attention: WSR, P.O. Box 68, Kamas, UT 84036. Comments can also be hand delivered Monday through Friday 8:00 am to 4:30 pm at: 50 East Center Street in Kamas, Utah. In addition, comments can be submitted electronically to: *r4_utah_rivers@fs.fed.us* on or before June 30, 2007. FOR FURTHER INFORMATION CONTACT: Visit the website for up-to-date information at: *http://www.fs.fed.us/r4/rivers/* or contact Catherine Kahlow, USFS WSR Team Leader (see previous address information). For information regarding meetings or media inquiries contact: Loyal Clark, USFS Public Affairs Officer (Northern Utah) at

(801)342-5117 or Kenton Call, USFS Public Affairs Officer (Southern Utah) at

(435)865-3730. SUPPLEMENTARY INFORMATION: Purpose and Need for Action This Forest Service proposes to complete the process for considering potential national wild, scenic, and recreational river areas on the National Forest System lands in Utah under the Wild and Scenic Rivers Act. The purpose of and need for this study is to assess whether or not eligible river segments should be recommended to Congress for inclusion in the National Wild and Scenic Rivers System. Proposed Action The Forest Service is proposing to conduct an environmental analysis to complete the process for considering potential national wild, scenic, and recreational river areas on the National Forests in Utah under the Wild and Scenic Rivers Act. This action is conducted pursuant to the Wild and Scenic Rivers Act of 1968 (Public Law 90-542) and complies with the National Environmental Policy Act

(NEPA)of 1969. The final record of decision may also include amendments to the Land and Resource Management Plans for the Utah National Forests to provide direction for management of river segments determined to be suitable for inclusion in the National Wild and Scenic Rivers System. *Background:* Over the past decade, National Forests in Utah have evaluated river segments on the National Forest for potential eligibility for designation under the National Wild and Scenic Rivers System. The majority of the eligibility inventory and tentative classification took place during forest land and resource management plan revision processes. However, eight river segments on the Dixie National Forest were analyzed in conjunction with the Bureau of Land Management

(BLM)in the Grand Staircase Escalante National Monument Management Plan. In order to be eligible, a river segment must be free-flowing and must possess at least one outstandingly remarkable value. River segments determined to be eligible were assigned a potential classification as wild, scenic, or recreational based on the level of development and access along the river corridor. Forest Supervisors proposed interim direction for the management of activities and uses that have the potential to affect the outstandingly remarkable values and/or the wild, scenic, or recreational classification of the eligible river segments until such a time that the suitability studies are completed and a new management emphasis is developed. The eligibility process has largely been completed for all National Forests in Utah. The purpose of this study is to further evaluate the suitability of eligible river segements for inclusion in the National Wild and Scenic Rivers System. A suitability study is the final administrative step before a recommendation is made to Congress. Evaluation of suitability will provide an opportunity to determine if it will be appropriate to pursue Congressional designation for specific river segments. The Forest Service and State of Utah will consider, but not be limited to, the following: “worthy additions” to the National System; tradeoffs in management scenarios other than designation; land ownership status; existing and potential uses of that segment; interest expressed by the public, and tribal, Federal, State, and local agencies; estimated costs for management and protection of identified outstandingly remarkable values; ability of agency to manage and/or protect the river; and, historical and existing uses which could be affected. The Wild and Scenic Rivers Team will evaluate the suitability of the eligible river segments together in one analysis to maintain consistency and to complete the work efficiently. Possible Alternatives A range of alternatives will be considered. The range of alternatives will include, as required be NEPA, a no action alternative that does not recommend any eligible river segment for designation into the National Wild and Scenic Rivers System, and may include an alternative that recommends designation of all eligible rivers (All Suitable). Additional alternatives may be developed from information analyzed during the suitability study, including public comments received during the scoping process. Cooperating Agencies The State of Utah is a Cooperating Agency. Responsible Officials Kevin B. Elliott, Ashley National Forest, 355 North Vernal Avenue, Vernal, Utah 84078; Rob MacWhorter, Dixie National Forest, 1789 North Wedgewood Lane, Cedar City, Utah 84720; Mary C. Erickson, Fishlake National Forest, 115 East 900 North, Richfield, Utah 84701; Alice B. Carlton, Manti-La Sal National Forest, 599 West Price River Dr., Price, Utah 84501; Brian A. Ferebee, Uinta National Forest, 88 West 100 North, Provo, Utah 84601; Faye L. Krueger, Wasatch-Cache National Forest, 125 South State Street, Salt Lake City, Utah 84138. Nature of Decision To Be Made The record of decision will answer the following question: Which, if any, of the eligible river segments under consideration should be recommended to the Congress of the United States for inclusion in the National Wild and Scenic Rivers System? Scoping Process Public participation is especially important at several points in the study process. The first is the scoping process. The Forest Service is seeking information and comments from Federal, State, and local agencies, Tribes, organizations, and individuals who may be interested in or affected by the proposed action. Public input will be considered during preparation of the Draft LEIS. Scoping meetings will be held around the State of Utah and in Paradox, Colorado and Lyman, Wyoming during May and June of 2007. For a list of meeting dates and locations, please check the WSR Web site at: *http://www.fs.fed.us/r4/rivers* . Comment Requested This notice of intent initiates the scoping process which guides the development of the environmental impact statement. This suitability study is driven by suitability factors that will shape the analysis of each river segment. These suitability factors are used to identify and evaluate the trade-offs between competing uses and need for potential designation of these rivers to the Wild and Scenic River System. Suitability factors are noted on the website at *http://www.fs.fed.us/r4/rivers* . Comment on the application of existing suitability factors, additional factors for the agency to consider, potential alternatives to analyze and other related specific comments is requested. Early Notice of Importance of Public Participation in Subsequent Environmental Review A draft environmental impact statement will be prepared for comment. The comment period on the draft environmental impact statement will be 45 days from the date the Environmental Protection Agency publishes the notice of availability in the **Federal Register** . The Forest Service believes, at this early stage, it is important to give reviewers notice of several court rulings related to public participation in the environmental review process. First, reviewers of draft environmental impact statements must structure their participation in the environmental review of the proposal so that it is meaningful and alerts an agency to the reviewer's position and contentions. *Vermont Yankee Nuclear Power Corp.* v. *NRDC* , 435 U.S. 519, 553 (1978). Also, environmental objections that could be raised at the draft environmental impact statement stage but that are not raised until after completion of the final environmental impact statement may be waived or dismissed by the courts. *City of Angoon* v. *Hodel* , 803 F.2d 1016, 1022 (9th Cir. 1986) and *Wisconsin Heritages, Inc.* v. *Harris* , 490 F. Supp. 1334, 1338 (E.D. Wis. 1980). Because of these court rulings, it is very important that those interested in this proposed action participate by the close of the 45 day comment period so that comments and objections are made available to the Forest Service at a time when it can meaningfully consider them and respond to them in the final environmental impact statement. To assist the Forest Service in identifying and considering issues and concerns on the proposed action, comments on the draft environmental impact statement should be as specific as possible. It is also helpful if comments refer to specific pages or chapters of the draft statement. Comments may also address the adequacy of the draft environmental impact statement or the merits of the alternatives formulated and discussed in the statement. Reviewers may wish to refer to the Council on Environmental Quality Regulations for implementing the procedural provisions of the National Environmental Policy Act at 40 CFR 1503.3 in addressing these points. Comments received, including the names and addresses of those who comment, will be considered part of the public record on this proposal and will be available for public inspection. (Authority: 40 CFR 1501.7 and 1508.22; Forest Service Handbook 1909.15, Section 21) Dated: April 24, 2007. Faye L. Krueger, Wasatch-Cache Forest Supervisor. [FR Doc. E7-8149 Filed 4-27-07; 8:45 am] BILLING CODE 3410-11-P DEPARTMENT OF AGRICULTURE Forest Service Pacific Southwest Region, Regional Office, California, Sierra Nevada Forests—Management Indicator Species Amendment AGENCY: Forest Service, USDA. ACTION: Notice of intent to prepare an environmental impact statement. SUMMARY: The Pacific Southwest Region of the U.S. Forest Service proposes to adopt a common list of Management Indicator Species

(MIS)and associated monitoring strategies by amending the Land and Resource Management Plans (LRMPs) for the Eldorado, Inyo, Lassen, Modoc, Plumas, Sequoia, Sierra, Stanislaus, and Tahoe National Forests and Lake Tahoe Basin Management Unit. These will likely be non-significant forest plan amendments. DATES: To be most effective, comments concerning the scope of the analysis should be received by May 21, 2007. Public scoping for this analysis, originally expected to be documented in an Environmental Assessment, began on February 21, 2007. Unless response to this notice raises concerns not yet expressed, the draft environmental impact statement is expected in late May 2007 and the final environmental impact statement is expected in July 2007. ADDRESSES: Send comments to the Forest Service at the following addresses. Hardcopy mail: U.S. Forest Service, 1323 Club Drive, Vallejo, CA 94592, ATTN: Brenda Kendrix. Electronic mail: *comments-pacificsouthwest-regional-office@fs.fed.us* , Subject Line: Sierra Nevada Forests MIS Amendment. Use Rich Text Format (.rtf) or Word (.doc). FOR FURTHER INFORMATION CONTACT: For further information contact Diana Craig, Interdisciplinary Team Leader, at U.S. Forest Service, 1323 Club Drive, Vallejo, CA, or at the e-mail address above. SUPPLEMENTARY INFORMATION: Purpose and Need for Action This proposed action responds to a need for a more suitable and manageable list of MIS, while maintaining a sufficient number of species to cover the range of habitats in the Sierra Nevada affected by Forest Service management activities. Monitoring and recent judicial interpretations have led to the conclusion that the Forest plan provisions related to MIS and MIS monitoring are in need of reconsideration. Specifically, some MIS currently identified in the LRMPs are problematic because

(1)no tested monitoring methodology exists or the methodology is prohibitively expensive,

(2)some MIS currently identified in the LRMPs are not strongly linked to habitats or ecosystem components that are affected by national forest management activities, or

(3)some MIS do not occur on or occur only incidentally on a Forest and, therefore, neither populations nor habitat relationships can be monitored for MIS objectives. In addition, the current lists provide no coordination or standardization across the Sierra Nevada Forests. Each national forest has a different, and often unrelated, MIS list. Often forest scale information does not provide the most meaningful biological data. Maintaining a monitoring program on each individual forest is not strategic and is an inefficient use of money and resources. The purpose of this action is to improve the ability of the national forests to provide for the diversity of plant and animal communities, as identified in the National Forest Management Act (NFMA). This will be accomplished by identifying MIS for the 10 national forests

(1)that are clearly linked to habitats or ecosystem components that are affected by national forest management activities, and

(2)for which population or habitat status and change can be effectively and affordably monitored and evaluated. Proposed Action The Forest Service proposes to adopt common list of MIS and associated monitoring strategies by amending, via non-significant forest plan amendment, the LRMPs for the ten Sierra Nevada National Forests in the Pacific Southwest Region (Eldorado, Inyo, Lassen, Modoc, Plumas, Sequoia, Sierra, Stanislaus, and Tahoe National Forests and Lake Tahoe Basin Management Unit). These ten national forests occur in Alpine, Amador, Butte, Calaveras, El Dorado, Fresno, Inyo, Kern, Lassen, Madera, Mariposa, Modoc, Mono, Nevada, Placer, Plumas, Shasta, Sierra, Siskiyou, Tulare, Tuolumne, Yuba, and Douglas Counties in California and Esmeralda and Mineral Counties in Nevada. This action will replace the existing MIS lists and associated monitoring strategies identified in the LRMPs for each of the 10 national forests. Other MIS-related parts of the LRMPs (e.g., habitat objectives, desired conditions, standards and guidelines) will NOT be changed by this proposal; therefore, habitat and species-specific protection measures will continue for all current MIS. The proposed action will have the following components:

(1)Major habitats or ecosystem components that are affected by national forest management activities on the ten national forests;

(2)suitability and feasability criteria to assess whether a species meets the identified need;

(3)MIS for major habitats or ecosystem components identified in component 1; and

(4)appropriate monitoring strategies for each identified MIS (habitat or population monitoring, including the specific type of population monitoring). Possible Alternatives Public comment has suggested an alternative analyzing all species identified as MIS in Appendix E of the 2001 Final Environmental Impact Statement for the Sierra Nevada Forest Plan Amendment (2001 SNFPA FEIS) and associated monitoring. We will analyze this alternative, called SNFPA Appendix E, in detail. Responsible Official Bernard Weingardt, Regional Forester, Pacific Southwest Region, U.S. Forest Service, 1323 Club Drive, Vallejo, California 94592, is the Responsible Official. Nature of Decision To Be Made The Responsible Official will decide whether to amend by adopting a common list of MIS and associated monitoring strategies for each of the 10 LRMPs as proposed, to amend with an alternative MIS list and associated strategies, or retain the existing MIS lists and associated monitoring strategies. Although non-significant Forest Plan amendments are normally signed by Forest Supervisors, the Regional Forester for the Pacific Southwest Region will be the Deciding Officer for this decision. Scoping Process The analysis of this proposed action was originally expected to be documented in an Environmental Assessment (EA). Formal scoping for this analysis began on February 21, 2007 when a scoping letter was sent to over 4,000 addresses. The Forest Service used the last known distribution list of the 2004 Sierra Nevada Forests Plan Amendment Record of Decision because the current amendment covers roughly the same area and communities of interest. An open house was held on March 23, 2007. The proposed action was first published in the Schedules of Proposed Actions for each of the ten Forests for the Second Quarter of Fiscal Year 2007. An Internet Web site ( *http://www.fs.fed.us/r5/snfmisa* ) displays comprehensive information about the project. This notice of intent offers the opportunity to comment to a larger audience. Preliminary Issues Comments about implementing the existing monitoring requirements in the Sierra Nevada Forests Plan Amendment and concerns that those requirements should not be weakened will drive development of an alternative as described above in the Possible Alternatives section. Comment Requested This notice of intent continues the scoping process which now guides the development of an environmental impact statement. *Early Notice of Importance of Public Participation in Subsequent Environmental Review:* A draft environmental impact statement will be prepared for comment. The comment period on the draft environmental impact statement will be 45 days from the date the Environmental Protection Agency publishes the notice of availability in the **Federal Register** . The Forest Service believes, at this early stage, it is important to give reviewers notice of several court rulings related to public participation in the environmental review process. First, reviewers of draft environmental impact statements must structure their participation in the environmental review of the proposal so that it is meaningful and alerts an agency to the reviewer's position and contentions. *Vermont Yankee Nuclear Power Corp.* v. *NRDC* , 435 U.S. 519, 553 (1978). Also, environmental objections that could be raised at the draft environmental impact statement stage but that are not raised until after completion of the final environmental impact statement may be waived or dismissed by the courts. *City of Angoon* v. *Hodel* , 803 F.2d 1016, 1022 (9th Cir. 1986) and *Wisconsin Heritages, Inc.* v. *Harris* , 490 F. Supp. 1334, 1338 (E.D. Wis. 1980). Because of these court rulings, it is very important that those interested in this proposed action participate by the close of the 45 day comment period so that comments and objections are made available to the Forest Service at a time when it can meaningfully consider them and respond to them in the final environmental impact statement. To assist the Forest Service in identifying and considering issues and concerns on the proposed action, comments on the draft environmental impact statement should be as specific as possible. It is also helpful if comments refer to specific pages or chapters of the draft statement. Comments may also address the adequacy of the draft environmental impact statement or the merits of the alternatives formulated and discussed in the statement. Reviewers may wish to refer to the Council on Environmental Quality Regulations for implementing the procedural provisions of the National Environmental Policy Act at 40 CFR 1503.3 in addressing these points. Comments received, including the names and addresses of those who comment, will be considered part of the public record on this proposal and will be available for public inspection. (Authority: 40 CFR 1501.7 and 1508.22; Forest Service Handbook 1909.15, Section 21) Dated: April 24, 2007. Beth G. Pendleton, Deputy Regional Forester, Pacific Southwest Region. [FR Doc. E7-8160 Filed 4-27-07; 8:45 am] BILLING CODE 3410-11-P DEPARTMENT OF AGRICULTURE Forest Service Notice of New Fee Site; Federal Lands Recreation Enhancement Act (Title VIII, Pub. L. 108-447) AGENCY: Tonto National Forest, USDA Forest Service ACTION: Notice of new fee site (Reference to previously published **Federal Register** document, Vol. 772, No. 12, Page 2490, January 19, 2007). SUMMARY: The Tonto National Forest plans to implement a $6 per vehicle fee for overnight camping and day-use at Haigler Canyon Recreation Site. This site is undergoing major improvements which will increase facilities and services available to the public once completed. Fees paid at similar recreation sites on the Tonto National Forest demonstrate that the public appreciates and enjoys the availability of developed recreation sites and is willing to pay reasonable fees for use of such sites. Funds from the fee revenue will be used for the continued operation and maintenance of Haigler Canyon Recreation Site. DATES: Haigler Canyon will become available for recreation use in August, 2007. ADDRESSES: Forest Supervisor, Tonto National Forest, 2324 E. McDowell Road, Phoenix, AZ 85006 FOR FURTHER INFORMATION CONTACT: Dave Killebrew, Recreation Fee Coordinator, 602-225-5239 SUPPLEMENTARY INFORMATION: The Federal Recreation Lands Enhancement Act (Title VIII, Pub. L. 108-447) directed the Secretary of Agriculture to publish a six month advance notice in the **Federal Register** whenever new recreation fee areas are established. This new fee will be reviewed by a Recreation Resource Advisory Committee prior to a final decision and implementation. The Arizona Bureau of Land Management Resource Advisory Council serves as the Recreation Resource Advisory Committee for this project. The Tonto National Forest currently has over 50 recreation sites where use fees are charged. A business analysis has shown that people desire having this sort of recreation experience on the Tonto National Forest. A market analysis indicates that the $6 per vehicle fee is both reasonable and acceptable for camping and day-use at Haigler Canyon. Once the site is complete, visitors wanting to use facilities at Haigler Canyon Recreation Site can obtain self-validating passes at more than 150 commercial vendors in central Arizona including at least three locations in Payson, Arizona or at any Tonto National Forest administrative office including the Payson and Pleasant Valley ranger stations. An on-site fee payment option may also be provided. Details about the Tonto fee program can be found at the Tonto National Forest Web site, *http://www.fs.fed.us/r3/tonto* or by calling 602-225-5200. Dated: April 24, 2006. Gene Blankenbaker, Forest Supervisor. [FR Doc. 07-2099 Filed 4-27-07; 8:45 am]

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