Proposed Rules. Proposed rule
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/register/2007/09/13/07-4494A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 3510-22-S 72 177 Thursday, September 13, 2007 Proposed Rules FARM CREDIT ADMINISTRATION 12 CFR Part 652 RIN 3052-AC36 Federal Agricultural Mortgage Corporation Funding and Fiscal Affairs; Risk-Based Capital Requirements AGENCY: Farm Credit Administration. ACTION: Proposed rule. SUMMARY: The Farm Credit Administration (FCA, Agency, us, or we) adopts a proposed rule that would amend regulations governing the Federal Agricultural Mortgage Corporation (Farmer Mac or the Corporation).
We propose to update the model in response to recent additions to Farmer Mac's program operations that are not addressed in the current version of the model. We propose to amend the current model's assumption regarding the carrying cost of nonperforming loans to better reflect Farmer Mac's actual business practices. We further propose to add a new component to the model to recognize counterparty risk on nonprogram investments through application of discounts or “haircuts” to the yields of those investments and to make technical amendments to the layout of the model's Credit Loss Module.
The effect of the rule is to update the model so that it continues to appropriately reflect risk in a manner consistent with statutory requirements for calculating Farmer Mac's regulatory minimum capital level. DATES: You may send us comments by October 29, 2007. ADDRESSES: We offer several methods for the public to submit comments. For accuracy and efficiency reasons, commenters are encouraged to submit comments by e-mail or through the Agency's Web site or the Federal eRulemaking Portal.
Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods: • *E-mail:* Send us an e-mail at *reg-comm@fca.gov* . • *Agency Web site: http://www.fca.gov.* Select “Legal Info,” then “Pending Regulations and Notices.” • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. • *Mail:* Robert Coleman, Director, Office of Secondary Market Oversight, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA 22102-5090. • *FAX:*
(703)883-4477. Posting and processing of faxes may be delayed, as faxes are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act. Please consider another means to comment, if possible. You may review copies of comments we receive at our office in McLean, Virginia, or on our Web site at *http://www.fca.gov* . Once you are in the Web site, select “Legal Info,” and then select “Public Comments.” We will show your comments as submitted, but for technical reasons we may omit items such as logos and special characters. Identifying information that you provide, such as phone numbers and addresses, will be publicly available. However, we will attempt to remove e-mail addresses to help reduce Internet spam. FOR FURTHER INFORMATION CONTACT: Joseph T. Connor, Associate Director for Policy and Analysis, Office of Secondary Market Oversight, Farm Credit Administration, McLean, VA 22102-5090,
(703)883-4280, TTY
(703)883-4434; or Rebecca Orlich, Senior Counsel, Office of the General Counsel, Farm Credit Administration, McLean, VA 22102-5090,
(703)883-4420, TTY
(703)883-4020. SUPPLEMENTARY INFORMATION: I. Purpose It is the Agency's objective that the risk-based capital stress test (RBCST) continue to determine regulatory capital requirements consistent with statutory requirements and constraints. The purpose of this proposed rule is to revise the risk-based capital
(RBC)regulations that apply to Farmer Mac to more accurately reflect changes in Farmer Mac's operations or business practices. The substantive issues addressed in this proposed rule are treatment of program loan volume with certain credit enhancement features ( *e.g.* , Off-Balance Sheet AgVantage volume, subordinated interests, and program loan collateral pledged in excess of Farmer Mac's guarantee obligation (hereafter, “overcollateral”)), counterparty risk on nonprogram investments, and the resolution timing for nonperforming loans and associated carrying costs. We also propose minor formatting changes to the structure of the Credit Loss Module that are in the nature of technical changes. II. Background and Summary of Revisions In 2006, Farmer Mac initiated a program to guarantee timely repayment of principal and interest on notes that are collateralized by Farmer Mac-eligible agricultural real estate mortgage assets and are also secured by an obligation of the mortgage lender. We will refer to this product as Off-Balance Sheet AgVantage. The first such transaction was a guarantee of $500 million in guaranteed notes announced by Farmer Mac on January 23, 2006. Subsequently, Farmer Mac announced similarly structured transactions for $1 billion each on July 13, 2006, and April 11, 2007. The current version of the RBCST lacks a component to recognize the credit enhancement provided by the lender's obligation and, consequently, this volume is excluded from the modeled loan portfolio. We propose to begin including this product in the RBCST model. Further, in the event that Farmer Mac introduces products that include a subordinated interest retained by the primary lender, we propose a modeling treatment of such structures. We proposed revisions to the treatment of nonprogram investments and the carrying cost of nonperforming loans in our rule published in November 2005. 1 We did not adopt those proposed revisions in the final rule that amended other parts of the model. 2 We now propose revisions to these two components that differ somewhat from those proposed in November 2005. We propose to account for counterparty risk on nonprogram investments by applying a discount (or “haircut”) to the yields of nonprogram investments scaled according to credit ratings, with a 10-year phase-in. We propose a method of calculating the carrying cost of nonperforming loans over a period we refer to as the Loan Loss Resolution Time period, or “LLRT”, that will include a quarterly update of the LLRT estimate. 1 70 FR 69692 (November 17, 2005). 2 71 FR 77247 (December 26, 2006). Finally, we propose other technical changes to improve formatting and clarity of labeling in certain cells of the Credit Loss Module worksheets. III. Issues, Options Considered, and Proposed Revisions A. Treatment of Off-Balance Sheet AgVantage Program Volume In 2006, Farmer Mac initiated a program to guarantee the timely repayment of principal and interest on notes that, in addition to being collateralized by Farmer Mac-eligible agricultural real estate mortgages, are also secured by an obligation of the primary lender of those mortgages. The current version of the model lacks a component to recognize the credit enhancement provided by the issuer's general obligation and any contractually required loan collateral in excess of the face value of the guaranteed notes. We propose to revise the model to include this program volume by modeling all loans in guaranteed note portfolios in the same manner as all other program volume, with two differences. The first difference would recognize the risk mitigation provided by the general obligation by reducing the age-adjusted dollar losses estimated on the subject loans by an adjustment factor derived from historical default rates by the whole letter credit ratings of corporate bond issuers as reported by a nationally recognized statistical rating organization (NRSRO). The second difference would address the risk-reducing effects of contractually required overcollaterization of the subject portfolio, if any. The derivation and application of the general obligation adjustment factor would be as follows. We would define five levels of credit ratings from “AAA” to “below BBB and unrated.” We would assign each of the NRSRO-rating categories to one of the five general whole-letter rating categories we define. The adjustment factors applied would be equal to the average cumulative issuer-weighted, 10-year corporate default rates from 1920 through the most recent year as published by Moody's Investor Services. 3 For issuers that are rated below BBB or are unrated, the model would apply a factor equal to the 10-year corporate default rates on Speculative-Grade bonds published in the same report. This rate would then be further adjusted to obtain an estimated loss rate related only to a general obligation of the corporate issuer/Off-Balance Sheet AgVantage counterparty with a given credit rating by considering the loss-severity rate as implied by recovery rates published in the same annual Moody's report (i.e., 1 minus recovery rate). In this case, because recovery rates are not published by whole-letter credit rating categories in the Moody's report, we would apply a loss severity implied by Moody's average Defaulted Bond Recovery Rates by Lien Position for as long a period as the Moody's report provides. Moody's 2006 report includes a table of data on recovery rates from 1982 to 2006. We propose to adopt a severity rate adjustment to historical corporate default rates based on the published long-term recovery rate for senior unsecured bonds. We considered using the recovery rates of the “All Bonds” category to calculate implied loss-severity rate factors but rejected that approach because we believe that the senior unsecured category is likely to reflect a more accurate analog of a general obligation than a “catch-all” category like “All Bonds” that would include senior secured bond and subordinated bond categories in addition to the senior unsecured category. We believe that neither of these bond lien position categories reflects the nature of a general obligation as accurately as the senior unsecured category. 3 Hamilton, D., Ou S., Kim R., Cantor R., “Corporate Default and Recovery Rates, 1920—2006,” published by Moody's Investors Service, February 2007—the most recent edition as of April 2007. We considered whether the senior secured category might be more applicable, given the mortgage loans that collateralize this obligation. However, we believe our proposed application is justified because, in the RBCST's Credit Loss Module, we target an estimate of the ultimate loss rate associated with the occurrence of what are assumed to be independent events (a corporate default and agricultural mortgage loan pool defaults). For example, suppose that a counterparty utilizing Farmer Mac's Off-Balance Sheet AgVantage product goes bankrupt. We assume that the default event is uncorrelated with the occurrence of worst-case stress in the agricultural lending sector. Therefore, we treat the estimated loss rate calculation on the general obligation separately from the estimated loss rate calculation on the program loan collateral. Thus, we believe the estimation of a counterparty default/severity rate should be done separately from and without regard to the loan collateral and, therefore, that the senior unsecured severity rate is most appropriate. The following table sets forth the proposed credit loss adjustment factors and their components (Adjustment Factor = Default Rate × Severity Rate). 4 4 Ibid; Default Rates, page 22, Recovery Rates (Severity Rate = 1 minus Senior Unsecured Average Recovery Rate) page 18. Whole letter rating Default rate (percent) Severity rate (percent) General obligation adjustment factor (percent) AAA 0.89 55 0.49 AA 2.31 55 1.26 A 2.90 55 1.58 BBB 7.29 55 3.98 Below BBB and Unrated 27.39 55 15.16 The adjustment factors would be updated quarterly as the updated Moody's report on Default and Recovery Rates of Corporate Bond Issuers becomes available. In the event that there is an interruption of Moody's publication of this annual report, or FCA informs Farmer Mac it has determined that the report has changed so much that it prevents or calls into question the identification of suitable updated factors, the prior year's factors would remain in effect until FCA revises the process through rulemaking. In addition, the loan portfolio collateral underlying Off-Balance Sheet AgVantage volume may contain loan collateralization in excess of the face value of the note. This overcollateral may be contractually required or it may be provided by the issuer of the guaranteed note to reduce administrative expense associated with monitoring the eligibility of the collateral, or both. We view overcollateral in excess of contractually required amounts as solely an administrative convenience for the lender in question. When there is excess overcollateral, any loan in the overcollateral can automatically be deemed to replace a loan that might become ineligible under the AgVantage contract without the need for additional action on the part of either party. However, when it is discretionary and not contractually required, the amount of excess overcollateral provided by Farmer Mac's counterparty is subject to change at any time. Therefore, we believe that overcollateral that is required by contract and is not simply an administrative convenience should be recognized in the model for the risk mitigation it provides, but that the additional collateral provided solely for administrative convenience should not. Whenever overcollateral exists, we model a portfolio that is larger than the dollar amount of Farmer Mac's guarantee obligation because there is no direct means to segregate a specific set of loans in the total collateral portfolio that could be considered to comprise 100 percent of the face value of the guaranteed notes. We then need an adjustment to reduce the amount of submitted loan collateral for purposes of estimating credit losses in the Credit Loss Module
(CLM)in order to avoid the model's recognition of the credit risk on loan volume that is in excess of the contractually required volume. Given the above considerations, we propose the following treatment. The Off-Balance Sheet AgVantage volume will be modeled using separate worksheets of the CLM with added features to:
(1)Scale the estimated losses to be commensurate with losses associated with the contractually required minimum collateral. To achieve this, we multiply the estimated dollar losses of each loan after age adjustment by the ratio of the guaranteed amount to total submitted loan collateral; and
(2)Recognize the risk mitigation provided by the contractually required overcollateralization. To do so, expected losses after the adjustment in “(1)” above are compared to the dollar amount of contractually required overcollateral, and any estimated credit loss dollars in excess of the contractually required overcollateral are input in the model as loss rates applied to that pool's underlying portfolio volume.
(3)Recognize the risk mitigation provided by the counterparty's general obligation. This is accomplished by multiplying any remaining losses after the adjustments in “(1)” and “(2)” above by the appropriate general obligation adjustment factor according to the counterparty's whole-letter issuer credit rating (set forth in the table above) to reflect the likelihood of exhausting the capacity of the issuer to maintain adequate collateral. We acknowledge that the order of these adjustments may seem incongruous with the legal structure of a given transaction, but we believe the proposed order makes sense from a modeling perspective. For example, the counterparty's general obligation might legally be first in terms of the security provided in support of Farmer Mac's risk position—followed by access to the loan collateral after an event of default by the counterparty. However, we adjust for the risk-mitigation of the contractually required overcollateralization first, followed by the adjustment for the general obligation. As a practical matter, we believe that Farmer Mac, to make itself whole on any losses after the counterparty defaults, would first work through the overcollateral, which would be held by a bankruptcy-remote vehicle. Only after that overcollateral proved insufficient to make Farmer Mac whole, would it need to pursue further recovery from the counterparty. B. Add a Treatment for Products that Could Include a Subordinated Interest Retained by the Primary Lender or Seller In the event Farmer Mac introduces new products that include the specific retention of a portion of the credit risk at either a loan level or a pool level by the primary lender or seller, this loan volume would also be modeled in separate worksheets of the CLM. The model would recognize the subordinated interest by multiplying the age-adjusted dollar losses in the subject portfolio by one minus the percentage of the subordinated interest in order to isolate the portion of estimated loss that Farmer Mac would incur. To the extent that such structures include further stratification of losses, such as a cap on the exposure to losses assumed by Farmer Mac, such stratification would be treated in a similar manner. C. Add Haircuts on Nonprogram Investments Currently, the RBCST does not include a component to reflect counterparty risk on Farmer Mac's portfolio of nonprogram investments or its derivatives. We propose adopting a system of haircuts to the yields on investment securities scaled according to credit ratings, with larger haircuts applied to cash flows from investments from issuers with lower credit ratings. We previously proposed haircuts in our November 2005 proposed rule but did not include them in our final rule published on December 26, 2006. The previously proposed rule based investment haircuts on the risk-based capital regulations of the Office of Federal Housing Enterprise Oversight (OFHEO) (12 CFR part 1750). OFHEO's haircut levels were based on worst-case corporate bond default rates using Depression-era default rates and recovery rates, expanded to a 10-year period. For all counterparties, the default rates used were 5 percent for AAA, 12.5 percent for AA, 20 percent for A, 40 percent for BBB and 100 percent for below BBB or unrated. Severity rates used were 70 percent for nonderivative securities, yielding net haircuts of 3.5 percent, 8.75 percent, 14.0 percent, and 28.0 percent for ratings AAA through BBB, respectively. One hundred percent (100%) haircuts were applied to the “BBB or unrated” category. Our November 2005 proposal contained the same haircut levels as in OFHEO's regulations. We decided not to adopt the November 2005 haircut proposal out of concern that the worst-case perspective on historical default rates is not as appropriate for Farmer Mac as it is for the housing Government-sponsored enterprises (GSEs). While it is plausible that worst-case stress in the housing markets could be highly correlated with worst-case conditions throughout the economy as exhibited by corporate bond defaults, we believe that worst-case agricultural credit conditions would likely be far less correlated with events of major stress in financial markets generally. Therefore, we have based the haircuts in this proposed rule on average bond default rates rather than worst-case historical corporate defaults. In addition, we have chosen not to follow a similar method for expansion of the worst case interval to the 10-year time interval. Instead, we propose a more direct reliance on empirical evidence and base the haircuts on Moody's Average 10-year cumulative issuer-weighted corporate default rates by whole letter rating, adjusted by the average implied long-term severity rate for Senior Unsecured bonds. The weighted-average yields of non-program investment categories would be reduced by the haircut percentage phased in linearly over the 10-year modeling horizon. The haircut levels are the same as the loss rate adjustment factors proposed above for application on loans underlying guaranteed notes, and like those factors these will be updated as new information becomes available. The proposed investment haircuts to recognize counterparty risk are as follows: Whole letter credit rating Haircut (percent) AAA 0.49 AA 1.26 A 1.58 BBB 3.98 Below BBB and Unrated 15.16 We propose to phase in the haircuts over the 10-year modeling horizon, based on our assumption that defaults on investments in response to a general downturn in the economy would not be instantaneous but rather spread through time. Furthermore, consistent with the OFHEO rule, we would not assign the rating of a parent company to its unrated subsidiary because NRSROs will not impute a corporate parent's rating to a derivative or credit enhancement counterparty in the context of a securities transaction, and because extending that rating to the unrated subsidiary would be tantamount to the regulator rating the subsidiary. 5 However, when an investment is structured as a collateralized obligation backed by the issuer's general obligation and, in turn, a pool of collateral, we accept the issuer rating of that issuer as the credit rating applicable to the security. Unrated securities that are fully guaranteed by GSEs receive the same treatment as AAA securities. Unrated securities backed by the full faith and credit of the U.S. Government do not receive a haircut. 5 66 FR 47730, 47777 (September 13, 2001). In the event that FCA approves the purchase of an unrated investment, and portions of that investment with specific risk characteristics are later sold by Farmer Mac, the Director will take reasonable measures to adjust the haircut level applied to the investment to recognize the change in the risk characteristics of the retained portion. In taking these measures, the Director will consider the approaches taken to address capital requirements related to similar investments that have been adopted by other Federal financial institution regulators. We propose to apply the haircuts to yields on a weighted-average basis by investment categories established in the “Data Inputs” worksheet of the RBCST, e.g., commercial paper, corporate debt and asset-backed securities, agency mortgaged-backed securities and collateralized mortgage obligations. This treatment would require Farmer Mac to calculate the weighted-average haircut by investment category to be applied to the weighted-average yields for each investment category and to input the haircuts into the “Data Inputs” worksheet. The proposed haircuts are set forth in the table in paragraph e. of section 4.1 in the appendix A, subpart B of part 652. We considered proposing a similar haircut on derivative securities, on the ground that credit stress that impacts Farmer Mac's nonprogram investment portfolio would reasonably be expected to affect its derivatives counterparties and its terms of access to the swap market. 6 We believe a more appropriate approach to haircutting derivatives may be to reflect lost payments on defaulted derivative securities in a net-receive position, as well as the “replacement cost”—i.e., the additional expense associated with the replacement of derivative positions when the counterparty defaults and the market value of the derivative has increased since the date the defaulted derivative contract was executed. Such an increased market value would be to Farmer Mac's benefit when the counterparty does not default, but to its detriment when it does default. The Agency plans to address this issue in future revisions of the RBCST and specifically requests comment on the most appropriate approach to incorporate into the RBCST such “replacement cost” risk relating to derivative securities. 6 The term “derivative” refers to over-the-counter financial derivative instruments used by Farmer Mac to hedge interest rate risk and synthetically extend the term structure of its debt to reduce funding costs. D. Improve the Estimate of Carrying Costs of Nonperforming Loans by Revising LLRT Assumptions The RBCST was originally developed with a loss-severity estimate that assumes it would take Farmer Mac 1 year to work through problem loans from the point of default through final disposition. An estimate was used because, at the time of development of the RBCST, historical nonperforming loan resolution timing data from Farmer Mac were not sufficient. Farmer Mac data collected since that time indicate that an adjustment to the 1-year assumption to recognize Farmer Mac's actual historical experience is appropriate. If the actual historical time interval is longer than the current model's assumption, the capital needs for carrying nonperforming assets are likely understated in the model. Therefore, we propose amendments to the model to reflect costs associated with any additional time period over which Farmer Mac has carried nonperforming loans on average throughout its history. The LLRT is the weighted average time in fractions of 1 year that Farmer Mac has carried nonperforming loans from the date of the last interest payment, the Interest Paid-Through Date
(ITPD)and the date the loan is finally resolved. This proposed LLRT differs from that proposed in November 2005 in the method used to estimate the LLRT period, as described in detail below. In the final rule preamble to RBCST Version 2.0 published December 26, 2006, we discussed our intent to review further the scaling factor used to estimate the unpaid premium balance associated with estimated loan loss dollar volume. After further review, we believe that basing the scaling factor on the total current portfolio average relationship between origination loan amount and current outstanding loan amounts, as originally proposed, is more appropriate than basing the scaling factor on that same relationship among the small universe of loans that have been through the default and resolution process historically. Our view is based on the small size of the latter data set. This proposed rule also clarifies the calculation of the LLRT period and incorporates additional information provided by Farmer Mac regarding its actual historical LLRT experience. With the exception of the 1-year period assumed in the loss-severity rate, the current RBCST under a steady-state scenario requires backfilling of loan loss volume with like assets, without recognizing any of the costs associated with carrying loans as non-earning, but funded, assets. Under the proposed rule, the RBCST would reflect additional costs associated with carrying the unpaid principal balance of nonperforming loans during the portion of the LLRT period that exceeds the 1-year assumption. The change would be incorporated into the RBCST as follows. Off-balance sheet loans with estimated losses are assumed to be purchased from the off-balance sheet portfolio and fully funded at the short-term cost of funds rate used in the model, and any associated guarantee fee income is reversed. The short-term cost of funds (adjusted to incorporate interest rate shock effects) is used to estimate this additional funding cost in recognition of Farmer Mac's actual business practices. On-balance sheet loans generating losses are also removed from the interest earnings calculations and continue to generate interest expense at the blended cost of long- and short-term funds for the portion of the LLRT period that exceeds 1 year. In response to a comment on the original proposed rule, the rates are not adjusted to incorporate interest rate shock effects in this proposed rule, in contrast to the original proposal of this revision, in recognition that these rates would be in place at the time of the onset of the stress. The model would continue to backfill new loans at the point of loan resolution to retain its steady-state specification. The proposed revisions involve two principal changes from the current RBCST. First, the date of backfill would be moved to a point in time that more accurately reflects Farmer Mac's actual experience. The model would then capture the additional costs of carrying loans in a non-interest earning category on the balance sheet. Second, the guarantee fee income would be reduced by the weighted average guarantee fee in the portfolio multiplied by the relevant off-balance sheet loan volume over the portion of the LLRT period that exceeds one year. The LLRT would become a data input to be updated with each quarterly submission of the model. When we first proposed to revise this component in November 2005, we received several comments that noted the need for greater clarity in the LLRT's calculation formula. We have attempted to provide greater clarity in the proposed LLRT calculation as follows:
(1)Assemble in a spreadsheet individual loan level data for all historical nonperforming loans that migrated from the program loan portfolio into nonaccrual status. Identify the “resolution type,” i.e., whether the loan resolved by the borrower bringing the loan current or paying off the loan in full, or whether the loan was foreclosed and liquidated prior to being placed in real estate owned (REO), or placed in REO. For each of these resolution types, include the associated dates (e.g., the date the loan was brought current, paid off, liquidated prior to REO, or placed in REO);
(2)Include the following data elements: Loan Number Origination Date Original Balance Payment Frequency Interest Paid Through Date
(ITPD)Non-Accrual Date Unpaid Principal Balance
(UPB)at Non-Accrual Date Accrued Interest Through Non-Accrual Date Resolution-type Code (assign numerical code to each type listed in the paragraph above) Resolution Date Net Gain/Loss Amount
(3)Remove loan records with missing data elements in “(2)” above from the database for purposes of the LLRT calculation;
(4)Calculate the number of days between the ITPD and the Resolution Date for each loan;
(5)Divide that number of days by 365. The quotient is the LLRT for each loan. Calculate the weighted-average LLRT using weights based on the total obligation at the Non-Accrual Date (Unpaid Principal Balance at Non-Accrual) and input the resulting weighted-average LLRT into the model's Data Inputs worksheet.
(6)For nonperforming loans that have not resolved, include these loans in the calculation using the quarter end “as of” date of each model submission in place of the resolution date, but include them only if the calculated time interval to the “as of” date is longer than the calculated average LLRT when these records are excluded. In other words, if the carrying time interval is not longer than the calculated LLRT using the data set excluding these records, the records should be excluded from the final LLRT calculation. This will prevent loan records that have not gone completely through the resolution process from exerting a downward influence on the LLRT but allow them to have an upward influence if the unresolved loans' LLRTs are greater than the calculated average before inclusion of such loans. Farmer Mac commented on our November 2005 proposal that the application of funding rates to the calculation of the carrying cost of nonperforming loans is inconsistent with its actual practice and that the proposed change should be withdrawn. Farmer Mac's comment focused on three aspects of the proposed LLRT change. We will summarize those three and then provide a discussion of each with our response. In this discussion, we refer to liabilities due in 1 year or less as short-term liabilities and to liabilities due after 1 year as “long-term” debt. The comment's three points were:
(a)Farmer Mac does not fund nonperforming loans using a certain tenor of debt with perfect consistency,
(b)Farmer Mac can effectively change the cost of funds of any nonperforming on-balance sheet loan by employing a “cross-funding” strategy, and
(c)the model should not fund on-balance sheet, nonperforming loans at the shocked interest rates under the interest rate risk stress component in the model because these loans would, by having been on the balance sheet at the point in time when rates are shocked, have already been funded at pre-shock rates. Farmer Mac acknowledged that purchases of nonperforming, off-balance sheet loans would be done at short-term rates in the preponderance of cases, which is consistent with this proposed rule. However, Farmer Mac stated that, in actual practice, it uses a mix of short- and long-term debt because it decides on the appropriate funding term for such purchases based on the existing yield curve conditions and REO disposition expectations. While we accept the premise that in certain cases Farmer Mac might fund such purchases using longer term debt, we believe these cases are likely to be rare exceptions (e.g., steeply inverted yield curves) and do not create a sufficiently compelling reason to add more complexity to the model such as, for example, a new data input for average off-balance sheet nonperforming loan funding rates. Therefore, we made no change to this specific aspect of the model in this proposed rule. Farmer Mac commented that it could employ a cross-funding strategy to effectively fund on-balance sheet non-performing loans at the short-term debt rates such as it uses in most cases of purchases of off-balance sheet nonperforming loans. While we agree that such opportunities could occur, we believe that assuming that Farmer Mac would always have the opportunity to purchase new program assets with the same size and expected life characteristics as on-balance sheet nonperforming loans is too broad an assumption to incorporate into the model. While it is possible that Farmer Mac could execute a similar rebalancing and reassignment of debt tenors among its program assets by adjustments to its ongoing daily funding selections, we would also view such a potentially complex incorporation of this contingent scenario into the model as unjustified for the added level of accuracy it might provide in certain cases. Therefore, we have made no change to the funding rates applied to calculate carrying cost of on-balance sheet nonperforming loans in this proposed rule. Finally, Farmer Mac commented that the model should not fund on-balance sheet, nonperforming loans at shocked interest rate levels established by statute because these loans would, by having been already on the balance sheet at the point in time when rates are shocked, have been funded at pre-shocked rates. We agree with the comment and have revised the cost of funds applied to on-balance sheet nonperforming loans during the LLRT to pre-shock blended long- and short-term cost of funds rates in this proposed rule. The proposed LLRT revisions are forward-looking only. In other words, actual loans that defaulted in year zero and are in their second year of nonperforming status in year one of the model's 10-year time horizon are not included in the proposed LLRT revision, and therefore no adjustment to restate current balance sheet amounts is needed. We considered an approach involving such a restatement but rejected it as unnecessarily complex. We note that our proposed revision to more accurately reflect the carrying cost of nonperforming loans results in less additional stress in a down-rate interest rate risk environment. This result is appropriate, as it would be less costly to fund nonperforming loans when interest rates are relatively low. We propose one further adjustment to complete the LLRT revision. The RBCST is sometimes referred to as an “origination loan model” because it performs its loss estimation based on origination loan amounts and dates. The model does not incorporate loan interest rates or amortization of the loan portfolio. However, implementation of the LLRT revision would require us to make an estimate of loan amortization because it would be inaccurate to estimate the additional carrying cost associated with the LLRT period by applying the appropriate cost of funds to a loan's origination amount. We propose to use the portfolio average principal amortization to make this adjustment (i.e., total portfolio current scheduled principal balance divided by total origination balance). We would also incorporate into the blended rate used to calculate the carrying cost of nonperforming on-balance sheet loans an increment of interest expense associated swap expense according to Farmer Mac's practice of combining debt and swap contracts to fund loans. E. Technical Changes to Improve Formatting and Clarity of Cell Labeling and Submission Deadlines In the RBCST spreadsheet, we have relocated the quarter-end date selection pull-down menu from the Assumptions and Relationships page to the Capital worksheet for convenience. We have also made line item labeling changes to enhance clarity in both the CLM and the RBC modules. We have also revised § 652.85 to update submission deadlines to be the same as the filing deadlines of Farmer Mac's public disclosures on Forms 10-Q and 10-K required by the Securities and Exchange Commission. IV. Impact of Proposed Changes on Required Capital We have evaluated the impact of the proposed changes to the currently active version of the model, Version 2.0. Our tests indicate that changes related to the LLRT would have the most significant impact on risk-based capital calculated by the model. The table below provides an indication of the impact of the revisions in the quarter ended March 31, 2007. The lines labeled “General Obligation Adjustment”, “Investment Haircuts”, and “Carrying Costs of Nonperforming Loans” present the impacts if only that revision were made to the current version, and the column labeled “Difference” calculates the impact of that individual change for the quarter ended March 31, 2007, compared to the requirement calculated using the currently active Version 2.0. The bottom line presents the impact of all proposed revisions in Version 3.0. As the table shows, the individual estimated impacts do not have an additive relationship to the total impact on the model output. This is due to the interrelationship of the changes with one another when they are combined in Version 3.0. Calculated regulatory capital ($ in thousands) 3/31/2007 Difference RBCST Version 2.0 80,831 Treatment of Loans Backed by an Obligation of the Counterparty and Contractually Required Overcollateral 73,244 −7,587 Investment Haircuts 83,922 3,091 Carrying Cost of Nonperforming Loans 105,170 24,340 RBCST Version 3.0 Change Impacts 100,079 19,249 V. Regulatory Flexibility Act Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ), FCA hereby certifies the rule will not have a significant economic impact on a substantial number of small entities. Farmer Mac has assets and annual income over the amounts that would qualify it as a small entity. Therefore, Farmer Mac is not considered a “small entity” as defined in the Regulatory Flexibility Act. List of Subjects in 12 CFR Part 652 Agriculture, Banks, banking, Capital, Investments, Rural areas. For the reasons stated in the preamble, part 652 of chapter VI, title 12 of the Code of Federal Regulations is proposed to be amended to read as follows: PART 652—FEDERAL AGRICULTURAL MORTGAGE CORPORATION FUNDING AND FISCAL AFFAIRS 1. The authority citation for part 652 continues to read as follows: Authority: Secs. 4.12, 5.9, 5.17, 8.11, 8.31, 8.32, 8.33, 8.34, 8.35, 8.36, 8.37, 8.41 of the Farm Credit Act (12 U.S.C. 2183, 2243, 2252, 2279aa-11, 2279bb, 2279bb-1, 2279bb-2, 2279bb-3, 2279bb-4, 2279bb-5, 2279bb-6, 2279cc); sec. 514 of Pub. L. 102-552, 106 Stat. 4102; sec. 118 of Pub. L. 104-105, 110 Stat. 168. Subpart B—Risk-Based Capital Requirements 2. Amend § 652.65 by redesignating paragraph (b)(5) as new paragraph (b)(6) and adding a new paragraph (b)(5) to read as follows: § 652.65 Risk-based capital stress test.
(b)* * *
(5)You will further adjust losses for loans that collateralize the general obligation of Off-Balance Sheet AgVantage volume, and for loans where the program loan counterparty retains a subordinated interest in accordance with Appendix A to this subpart. 3. Amend § 652.85 by revising paragraph
(d)to read as follows: § 652.85 When to report the risk-based capital level.
(d)You must submit your quarterly risk-based capital report for the last day of the preceding quarter by the earlier of the reporting deadlines for Securities and Exchange Commission Forms 10-K and 10-Q, or the 40th day after each of the quarter's ending March 31st, June 30th, and September 30th, and the 75th day after the quarter ending on December 31st. 4. Appendix A of subpart B, part 652 is amended by: a. Revising the table of contents; b. Revising the first and second sentences of section 2.0; c. Redesignating existing section 2.4 as new section 2.5; d. Adding a new section 2.4; e. Revising section 4.1 e.; f. Revising the last sentence of section 4.2 b.(3) introductory text; g. Redesignating existing section 4.2 b.(3)(C) and
(D)as new paragraph (3)(F) and (G); h. Adding new section 4.2 b. (3)(C), (D), and (E); i. Revising section 4.4; j. Revising section 4.5 a.; k. Removing the word “unretained” and adding in its place, the word “retained” in the ninth sentence of section 4.6 b. Appendix A—Subpart B of Part 652—Risk-Based Capital Stress Test 1.0 Introduction. 2.0 Credit Risk. 2.1 Loss-Frequency and Loss-Severity Models. 2.2 Loan-Seasoning Adjustment. 2.3 Example Calculation of Dollar Loss on One Loan. 2.4 Treatment of Loans Backed by an Obligation of the Counterparty and Loans for which Pledged Loan Collateral Volume Exceeds Farmer Mac-Guaranteed Volume. 2.5 Calculation of Loss Rates for Use in the Stress Test. 3.0 Interest Rate Risk. 3.1 Process for Calculating the Interest Rate Movement. 4.0 Elements Used in Generating Cashflows. 4.1 Data Inputs. 4.2 Assumptions and Relationships. 4.3 Risk Measures. 4.4 Loan and Cashflow Accounts. 4.5 Income Statements. 4.6 Balance Sheets. 4.7 Capital. 5.0 Capital Calculations. 5.1 Method of Calculation. 2.0 Credit Risk. Loan loss rates are determined by applying the loss-frequency equation and the loss-severity factor to Farmer Mac loan-level data. Using this equation and severity factor, you must calculate loan losses under stressful economic conditions assuming Farmer Mac's portfolio remains at a “steady state.” * * * 2.4 Treatment of Loans Backed by an Obligation of the Counterparty, and Loans for which Pledged Loan Collateral Volume Exceeds Farmer Mac-Guaranteed Volume. You must calculate the age-adjusted loss rates for these loans that includes adjustments to scale losses according to the proportion of total submitted collateral to the guaranteed amount as provided for in the “Dollar Losses” column of the transformed worksheets in the Credit Loss Module based on new data inputs required in the “Coefficients” worksheet of the Credit Loss Module. Then, you must adjust the calculated loss rates as follows. a. For loans in which the seller retains a subordinated interest, subtract from the total estimated age-adjusted dollar losses on the pool the amount equal to current unpaid principal times the subordinated interest percentage. b. Some pools of loans underlying specific transactions could include loan collateral volume pledged to Farmer Mac in excess of Farmer Mac's guarantee amount (“overcollateral”). Overcollateral can be either:
(i)Contractually required according to the terms of the transaction, or
(ii)not contractually required, but pledged in addition to the contractually required amount at the discretion of the counterparty, often for purposes of administrative convenience regarding the collateral substitution process, or
(iii)both
(i)and (ii). 1. If a pool of loans includes collateral pledged in excess of the guaranteed amount, you must adjust the age-adjusted, loan-level dollar losses by a factor equal to the ratio of the guarantee amount to total submitted collateral. For example, consider a pool of two loans serving as security for a Farmer Mac guarantee on a note with a total issuance face value of $2 million and on which the counterparty has submitted 10-percent overcollateral. The two loans in the example have the following characteristics and adjustments. Loan Origination balance Age-adjusted loss rate (percent) Estimated age-adjusted losses Guarantee amount scaling adjustment (2/2.2) (percent) Losses adjusted for overcollateral 1 $1,080,000 7.0 $75,600 90.91 $68,727 2 1,120,000 5.0 56,000 90.91 50,909 2. If a pool of loans includes collateral pledged in excess of the guaranteed amount that is required under the terms of the transaction, you must further adjust the dollar losses as follows. Calculate the total losses on the subject portfolio of loans after age adjustments and any adjustments related to total submitted overcollateral as described in “1.” above. Calculate the total dollar amount of contractually required overcollateral in the subject pool. Subtract the total dollars of contractually required overcollateral from the adjusted total losses on the subject pool. If the result is less than or equal to zero, input a loss rate of zero for this transaction pool in the Data Inputs worksheet of the RBCST. A new category must be created for each such transaction in the RBCST. If the loss rate after subtracting contractually required overcollateral is greater than zero, proceed to additional adjustment for the risk-reducing effects of the counterparty's general obligation described in “3.” below. 3. Loans with a positive loss estimate remaining after adjustments in “1.” and “2.” above, are further adjusted for the security provided by the general obligation of the counterparty. To make this adjustment, multiply the estimated dollar losses remaining after adjustments in “1.” and “2.” above by the appropriate general obligation adjustment factor based on the counterparty's whole-letter issuer credit rating by a nationally recognized statistical rating organization (NRSRO). The following table sets forth the general obligation adjustment factors and their components by whole-letter credit rating (Adjustment Factor = Default Rate x Severity Rate). 15 15 Hamilton, D., Ou S., Kim R., Cantor R., “Corporate Default and Recovery Rates, 1920-2006,” published by Moody's Investors Service, February 2007—the most recent edition as of April 2007; Default Rates, page 22, Recovery Rates (Severity Rate = 1 minus Senior Unsecured Average Recovery Rate) page 18. Whole-letter rating Default rate (percent) Severity rate (percent) General obligation adjustment factor (percent) AAA 0.89 55 0.49 AA 2.31 55 1.26 A 2.90 55 1.58 BBB 7.29 55 3.98 Below BBB and Unrated 27.39 55 15.16 The adjustment factors will be updated annually as Moody's annual report on Default and Recovery Rates of Corporate Bond Issuers becomes available, normally in January or February of each year. In the event that there is an interruption of Moody's publication of this annual report, or FCA determines that the format of the report has changed enough to prevent or call into question the identification of updated factors, the prior year's factors will remain in effect until FCA revises the process through rulemaking. 4. Continuing the previous example, the pool contains two loans on which Farmer Mac is guaranteeing a total of $2 million and with total submitted collateral of 110 percent of the guaranteed amount. Of the 10-percent total overcollateral, 5 percent is contractually required under the terms of the transaction. The pool consists of two loans of slightly over $1 million. Total overcollateral is $200,000, of which $100,000 is contractually required. The counterparty has a single “A” credit rating, and after adjusting for contractually required overcollateral, estimated losses are greater than zero. The net loss rate is calculated as described in the steps in the table below. Loan A Loan B 1 Guaranteed Volume $2,000,000 2 Origination Balance of 2-Loan Portfolio $1,080,000 $1,120,000 3 Age-adjusted Loss Rate 7% 5% 4 Estimated Age-adjusted Losses $75,600 $56,000 5 Guarantee Volume Scaling Factor 90.91% 90.91% 6 Losses Adjusted for Total Overcollateral $68,727 $50,909 7 Contractually required Overcollateral on Pool (5%) $100,000 8 Net Losses on Pool Adjusted for Contractually Required Overcollateral $19,636 9 General Obligation Adjustment Factor for “A” Issuer 1.58% 10 Losses Adjusted for “A” General Obligation $310 11 Loss Rate Input in the RBCST for this Pool 0.02% The net, fully adjusted losses are distributed over time on a straight-line basis. When a transaction reaches maturity within the 10-year modeling horizon, the losses are distributed on a straightline over a timepath that ends in the year of the transaction's maturity. 4.1 Data Inputs. e. *Weighted Haircuts for Non-Program Investments.* For non-program investments, the stress test adjusts the weighted average yield data referenced in section 4.1 b. to reflect counterparty risk. Non-program investments are defined in § 652.5. The Corporation must calculate the haircut to be applied to each investment based on the lowest whole-letter credit rating the investment received from a NRSRO using the haircut levels in the following two tables. The first table provides the mappings of NRSRO ratings to whole-letter ratings for purposes of applying haircuts. Any “+” or “−” signs appended to NRSRO ratings that are not shown in the table should be ignored for purposes of mapping NRSRO ratings to FCA whole-letter ratings. The second table provides the haircut levels by whole-letter rating category. FCA Whole-Letter Credit Ratings Mapped to Rating Agency Credit Ratings FCA Ratings Category AAA AA A BBB Below BBB and Unrated. Standard & Poor's Long-Term AAA AA A BBB Below BBB and Unrated. Fitch Long-Term AAA AA A BBB Below BBB and Unrated. Moody's Long-Term Aaa Aa A Baa Below Baa and Unrated. Standard & Poor's Short-Term A-1+ SP-1+ A-1 SP-1 A-2 SP-2 A-3 SP-3, B, or Below and Unrated. Fitch Short-Term F-1+ F-1 F-2 F-3 Below F-3 and Unrated. Moody's Prime-1 MIG1 VMIG1 Prime-2 MIG2 VMIG2 Prime-3 MIG3 VMIG3 Not Prime, SG and Unrated. Fitch Bank Ratings A B A/B C B/C D C/D E D/E. Moody's Bank Financial Strength Rating A B C D E. FARMER MAC RBCST Maximum Haircut by Ratings Classification Ratings classification Non-program investment counterparties (excluding derivatives) (percent) Cash 0.00 AAA 0.49 AA 1.26 A 1.58 BBB 3.98 Below BBB and Unrated 15.16 Certain special cases will receive the following treatment. For an investment structured as a collateralized obligation backed by the issuer's general obligation and, in turn, a pool of collateral, reference the Issuer Rating or Financial Strength Rating of that issuer as the credit rating applicable to the security. Unrated securities that are fully guaranteed by Government-sponsored enterprises
(GSE)such as the Federal National Mortgage Corporation (Fannie Mae) will receive the same treatment as AAA securities. Unrated securities backed by the full faith and credit of the U.S. Government will not receive a haircut. If FCA approves the purchase of an unrated investment, and portions of that investment are later sold by Farmer Mac according to their specific risk characteristics, the Director will take reasonable measures to adjust the haircut level applied to the investment to recognize the change in the risk characteristics of the retained portion. The Director will consider similar methods for dealing with capital requirements adopted by other Federal financial institution regulators in similar situations. Individual investment haircuts must then be aggregated into weighted-average haircuts by investment category and submitted in the “Data Inputs” worksheet. The spreadsheet uses these inputs to reduce the weighted-average yield on the investment category to account for counterparty insolvency according to a 10-year linear phase-in of the haircuts. Each asset account category identified in this data requirement is discussed in section 4.2, “Assumptions and Relationships.” 4.2 Assumptions and Relationships b. * * *
(3)*Elements related to income and expense assumptions.* * * * These parameters are the gain on agricultural mortgage-backed securities
(AMBS)sales, miscellaneous income, operating expenses, reserve requirement, guarantee fees and loan loss resolution timing.
(C)The stress test assumes that short-term cost of funds is incurred in relation to the amount of defaulting loans purchased from off-balance sheet pools. The remaining unpaid principal balance on this loan volume is the origination amount reduced by the proportion of the total portfolio that has amortized as of the end of the most recent quarter. This volume is assumed to be funded at the short-term cost of funds and this expense continues for a period equal to the loan loss resolution timing period
(LLRT)period minus 1. We will calculate the LLRT period from Farmer Mac data. In addition, during the LLRT period, all guarantee income associated with the loan volume ceases.
(D)The stress test generates no interest income on the estimated volume of defaulted on-balance sheet loan volume required to be carried during the LLRT period, but continues to accrue funding costs during the remainder of the LLRT period.
(E)You must update the LLRT period in response to changes in the Corporation's actual experience with each quarterly submission. 4.4 Loan and Cashflow Accounts The worksheet labeled “Loan and Cashflow Data” contains the categorized loan data and cashflow accounting relationships that are used in the stress test to generate projections of Farmer Mac's performance and condition. As can be seen in the worksheet, the steady-state formulation results in account balances that remain constant except for the effects of discontinued programs, maturing Off-Balance Sheet AgVantage positions, and the LLRT adjustment. For assets with maturities under 1 year, the results are reported for convenience as though they matured only one time per year with the additional convention that the earnings/cost rates are annualized. For the pre-1996 Act assets, maturing balances are added back to post-1996 Act account balances. The liability accounts are used to satisfy the accounting identity, which requires assets to equal liabilities plus owner equity. In addition to the replacement of maturities under a steady state, liabilities are increased to reflect net losses or decreased to reflect resulting net gains. Adjustments must be made to the long- and short-term debt accounts to maintain the same relative proportions as existed at the beginning period from which the stress test is run with the exception of changes associated with the funding of defaulted loans during the LLRT period. The primary receivable and payable accounts are also maintained on this worksheet, as is a summary balance of the volume of loans subject to credit losses. 4.5 Income Statements a. Information related to income performance through time is contained on the worksheet named “Income Statements.” Information from the first period balance sheet is used in conjunction with the earnings and cost-spread relationships from Farmer Mac supplied data to generate the first period's income statement. The same set of accounts is maintained in this worksheet as “Loan and Cashflow Accounts” for consistency in reporting each annual period of the 10-year stress period of the test with the exception of the line item labeled “Interest reversals to carry loan losses” which incorporates the LLRT adjustment to earnings from the “Risk Measures” worksheet. Loans that defaulted do not earn interest or guarantee any commitment fees during LLRT period. The income from each interest-bearing account is calculated, as are costs of interest-bearing liabilities. In each case, these entries are the associated interest rate for that period multiplied by the account balances. Dated: September 7, 2007. Roland E. Smith, Secretary, Farm Credit Administration Board. [FR Doc. E7-18014 Filed 9-12-07; 8:45 am] BILLING CODE 6705-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-29170; Directorate Identifier 2007-NM-075-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Model A319 and A320 Series Airplanes AGENCY: Federal Aviation Administration (FAA), 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)originated 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: Some taperlocks used in the wing-to-fuselage junction at rib 1 were found to be non-compliant with the applicable specification, resulting in a loss of pre-tension in the fasteners. In such conditions, the structural integrity of the aircraft could be affected. 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 October 15, 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:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. • *Hand Delivery:* Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal eRulemaking 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 Operations office 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 Operations office (telephone
(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Tim Dulin, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone
(425)227-2141; fax
(425)227-1149. SUPPLEMENTARY INFORMATION: 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-2007-29170; Directorate Identifier 2007-NM-075-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 based on 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 2007-0067R1, dated June 7, 2007 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states: Some taperlocks used in the wing-to-fuselage junction at rib 1 were found to be non-compliant with the applicable specification, resulting in a loss of pre-tension in the fasteners. In such conditions, the structural integrity of the aircraft could be affected. This Airworthiness Directive mandates a repetitive internal inspection of the lower stiffeners, and a repetitive external inspection of the lower panels in center and outer wing box at level of rib 1 junction. The corrective action includes contacting Airbus for repair instructions and repair if any crack is found. You may obtain further information by examining the MCAI in the AD docket. Relevant Service Information Airbus has issued Service Bulletins A320-57-1129 and A320-57-1130, both Revision 01, both dated July 28, 2006. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI. Depending on airplane configuration, the compliance times specified in Service Bulletin A320-57-1129 range from between 37,500 and 42,000 flight cycles and 96,100 and 107,300 flight hours, whichever occurs first, from AD effective date; the repetitive intervals range from between 6,100 and 6,500 flight cycles and 15,700 and 16,800 flight hours, whichever occurs first; the grace period is 6,100 flight cycles or 15,600 flight hours, whichever occurs first. Depending on airplane configuration, the compliance times specified in Service Bulletin A320-57-1130 range from between 23,600 and 45,000 flight cycles and 60,400 and 101,000 flight hours, whichever occurs first, from AD effective date; the repetitive intervals range from between 6,100 and 10,000 flight cycles and 15,600 and 22,500 flight hours, whichever occurs first; the grace period is 6,100 flight cycles or 15,600 flight hours, whichever occurs first. 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, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an 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 highlighted in a **Note** within the proposed AD. Costs of Compliance Based on the service information, we estimate that this proposed AD would affect about 583 products of U.S. registry. We also estimate that it would take about between 16 and 77 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be between $746,240 and $3,591,280, or between $1,280 and $6,160 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-2007-29170; Directorate Identifier 2007-NM-075-AD. Comments Due Date
(a)We must receive comments by October 15, 2007. Affected ADs
(b)None. Applicability
(c)This AD applies to Airbus Model A319 and A320 series airplanes, certificated in any category, all certified models, all serial numbers (MSN); except airplanes identified in paragraphs (c)(1) and (c)(2) of this AD. Model A320 series airplanes MSN 2164 through MSN 2688 that have partially received Airbus Modification 33421 in production are affected by the requirements of this AD.
(1)Model A319 series airplanes that have received Airbus Modifications 28238, 28162, and 28342 in production, or Airbus Modification 33421 in production.
(2)Model A320 series airplanes that have received Airbus Modification 33421 fully embodied in production. Subject
(d)Air Transport Association
(ATA)of America Code 57: Wings. Reason
(e)The mandatory continuing airworthiness information
(MCAI)states: Some taperlocks used in the wing-to-fuselage junction at rib 1 were found to be non-compliant with the applicable specification, resulting in a loss of pre-tension in the fasteners. In such conditions, the structural integrity of the aircraft could be affected. This Airworthiness Directive mandates a repetitive internal inspection of the lower stiffeners, and a repetitive external inspection of the lower panels in center and outer wing box at level of rib 1 junction. The corrective action includes contacting Airbus for repair instructions and repair if any crack is found. Actions and Compliance
(f)Unless already done, do the following actions.
(1)For A320-200 aircraft: Before the defined threshold or within the defined grace period after the effective date of this AD, whichever occurs later, as listed in paragraph 1.E., “Compliance,” of Airbus Service Bulletin A320-57-1129, Revision 01, dated July 28, 2006, and following the instructions given in the service bulletin, perform an internal ultrasonic inspection of the lower stiffeners in the center and outer wing box at the level of the rib 1 junction to detect cracks, and if any crack is found, before further flight contact Airbus for repair instructions and repair. Repeat this inspection at the intervals defined in paragraph 1.E., “Compliance,” of the service bulletin.
(2)For all aircraft: Before the defined threshold or within the defined grace period after the effective date of this AD, whichever occurs later, as listed in paragraph 1.E., “Compliance,” of Airbus Service Bulletin A320-57-1130, Revision 01, dated July 28, 2006, and following the instructions given in the service bulletin, perform an external ultrasonic inspection of the lower stiffeners in the center and outer wing box at the level of the rib 1 junction to detect cracks, and if any crack is found, before further flight contact Airbus for repair instructions and repair. Repeat this inspection at the intervals defined in paragraph 1.E., “Compliance,” of the service bulletin. Aircraft that have already accomplished Airbus Service Bulletin A320-57-1130, dated September 10, 2004, are compliant with this paragraph.
(3)Modification of the aircraft in accordance with the instructions contained in Airbus Service Bulletins A320-57-1131, A320-57-1137, or A320-57-1140, all dated November 21, 2006; terminates the repetitive inspection requirements of this AD. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: Although the MCAI or service information does not specify a compliance time for corrective action (repair of cracks), paragraphs (f)(1) and (f)(2) of this AD require that the corrective action be done before further flight. Although the MCAI and/or service information specify a compliance time for accomplishing the inspections after the effective date on the MCAI, this AD requires compliance within the specified compliance time after the effective date of this AD. Other FAA AD Provisions
(g)The following provisions also apply to this AD:
(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tim Dulin, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone
(425)227-2141; fax
(425)227-1149. 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.
(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
(h)Refer to MCAI EASA Airworthiness Directive 2007-0067R1, dated June 7, 2007; and Airbus Service Bulletins A320-57-1129 and A320-57-1130, both Revision 01, both dated July 28, 2006; for related information. Issued in Renton, Washington, on September 4, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-18046 Filed 9-12-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-29175; Directorate Identifier 2007-NM-134-AD] RIN 2120-AA64 Airworthiness Directives; Dassault Model Mystere-Falcon 50, Mystere-Falcon 900, Falcon 900EX, Falcon 2000, and Falcon 2000EX Airplanes AGENCY: Federal Aviation Administration (FAA), 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)originated 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: A rotating rod in the trailing edge flap control linkage broke in flight. Investigations revealed that the rotating rod had been installed in the wrong side during a maintenance operation. This incorrect installation caused a contact between the rotating rod and its retaining bracket leading, after some time in operation, to the rod breakage and flap asymmetry situation. The consequence on the airplane of the flap asymmetry combined with a latent failure of the asymmetry detection system is classified as a catastrophic failure condition. The unsafe condition is failure of the rotating rod in the control linkage of the trailing edge flap and consequent flap asymmetry during the approach to landing, which could result in reduced controllability of the airplane. 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 October 15, 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:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • *Federal eRulemaking 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 Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, comments received and other information. The street address for the Docket Operations office (telephone
(800)647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone
(425)227-1137; fax
(425)227-1149. SUPPLEMENTARY INFORMATION: 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-2007-29175; Directorate Identifier 2007-NM-134-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 based on 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 2006-0115, dated May 10, 2006 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states: A rotating rod in the trailing edge flap control linkage broke in flight. Investigations revealed that the rotating rod had been installed in the wrong side during a maintenance operation. This incorrect installation caused a contact between the rotating rod and its retaining bracket leading, after some time in operation, to the rod breakage and flap asymmetry situation. The consequence on the airplane of the flap asymmetry combined with a latent failure of the asymmetry detection system is classified as a catastrophic failure condition. The unsafe condition is failure of the rotating rod in the control linkage of the trailing edge flap and consequent flap asymmetry during the approach to landing, which could result in reduced controllability of the airplane. The corrective actions include the following: Verifying the correct assembly of the flap rotating rods and associated brackets and installing the rod and bracket with correct orientation/positioning if necessary; and inspecting the rod for damage and replacing the rod if any damage is found. You may obtain further information by examining the MCAI in the AD docket. Relevant Service Information Dassault has issued the following service information: Airplane model Service Bulletin No. Date Mystere-Falcon 50 F50-468 March 29, 2006. Mystere-Falcon 900 F900-367 March 29, 2006. Falcon 900EX F900EX-269 March 29, 2006. Falcon 2000 F2000-326 March 29, 2006. Falcon 2000EX F2000EX-83 March 29, 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, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an 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 highlighted in a **Note** within the proposed AD. Costs of Compliance Based on the service information, we estimate that this proposed AD would affect about 739 products of U.S. registry. We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $80 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $118,240, or $160 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: **Dassault Aviation:** Docket No. FAA-2007-29175; Directorate Identifier 2007-NM-134-AD. Comments Due Date
(a)We must receive comments by October 15, 2007. Affected ADs
(b)None. Applicability
(c)This AD applies to the airplanes identified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD; certificated in any category.
(1)Dassault Model Mystere-Falcon 50 airplanes on which Dassault Modification M2996 has not been implemented.
(2)Dassault Model Mystere-Falcon 900 airplanes on which Dassault Modification M5007 has not been implemented.
(3)Dassault Model Falcon 900EX airplanes on which Dassault Modification M5007 has not been implemented (including serial number 601 and subsequent, also known as “DX” airplanes).
(4)Dassault Model Falcon 2000 and Falcon 2000EX airplanes on which Dassault Modification M2465 has not been implemented. Subject
(d)Air Transport Association
(ATA)of America Code 27: Flight controls. Reason
(e)The mandatory continuing airworthiness information
(MCAI)states: A rotating rod in the trailing edge flap control linkage broke in flight. Investigations revealed that the rotating rod had been installed in the wrong side during a maintenance operation. This incorrect installation caused a contact between the rotating rod and its retaining bracket leading, after some time in operation, to the rod breakage and flap asymmetry situation. The consequence on the airplane of the flap asymmetry combined with a latent failure of the asymmetry detection system is classified as a catastrophic failure condition. The unsafe condition is failure of the rotating rod in the control linkage of the trailing edge flap and consequent flap asymmetry during the approach to landing, which could result in reduced controllability of the airplane. The corrective actions include the following: Verifying the correct assembly of the flap rotating rods and associated brackets and installing the rod and bracket with correct orientation/positioning if necessary; and inspecting the rod for damage and replacing the rod if any damage is found. Actions and Compliance
(f)Unless already done, within 330 flight hours or 7 months after the effective date of this AD, whichever occurs first, do the following actions.
(1)Verify the correct assembly of the flap rotating rods and associated retaining brackets installed in the LH (left-hand)/RH (right-hand) wing root compartment and in the LH and RH main landing gear compartment and inspect the rod for damage, in accordance with the applicable Dassault Service Bulletin given in Table 1 of this AD.
(2)If a rod is found damaged, replace this rod prior to next flight in accordance with the applicable Dassault Service Bulletin given in Table 1 of this AD. If the rod orientation or bracket positioning is not correct, correct the orientation or positioning, as applicable, prior to next flight in accordance with the applicable Dassault Service Bulletin given in Table 1 of this AD.
(3)Label the rods and associated retaining brackets in accordance with the applicable Dassault Service Bulletin given in Table 1 of this AD. Table 1.—Dassault Service Bulletins Airplane Model Service Bulletin No. Date Mystere-Falcon 50 F50-468 March 29, 2006. Mystere-Falcon 900 F900-367 March 29, 2006. Falcon 900EX F900EX-269 March 29, 2006. Falcon 2000 F2000-326 March 29, 2006. Falcon 2000EX F2000EX-83 March 29, 2006. FAA AD Differences Note: This AD differs from the MCAI and/or service information as follows: No differences. Other FAA AD Provisions
(g)The following provisions also apply to this AD:
(1)*Alternative Methods of Compliance (AMOCs):* The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone
(425)227-1137; fax
(425)227-1149. 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.
(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
(h)Refer to MCAI European Aviation Safety Agency Airworthiness Directive 2006-0115, dated May 10, 2006; and the Dassault Service Bulletins listed in Table 1 of this AD, for related information. Issued in Renton, Washington, on August 31, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-18045 Filed 9-12-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-29174; Directorate Identifier 2007-NM-125-AD] RIN 2120-AA64 Airworthiness Directives; Boeing Model 737-100, -200, -200C, -300, -400, and -500 Series 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 737-100, -200, -200C, -300, -400, and -500 series airplanes. This proposed AD would require repetitive inspections to detect cracking of the body station 303.9 frame, and corrective action if necessary. This proposed AD also provides for optional terminating action for the repetitive inspections. This proposed AD results from reports of cracks found at the cutout in the web of body station frame 303.9 inboard of stringer 16L. We are proposing this AD to detect and correct such cracking, which could prevent the left forward entry door from sealing correctly, and could cause in-flight decompression of the airplane. DATES: We must receive comments on this proposed AD by October 29, 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:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Fax:*
(202)493-2251. • *Hand Delivery:* Room W12-140 on the ground floor of the West Building, 1200 New Jersey Avenue, SE., 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: Howard Hall, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone
(425)917-6430; 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-2007-29174; Directorate Identifier 2007-NM-125-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 Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Operations office (telephone
(800)647-5527) is located on the ground floor of the West Building at the DOT street address stated in the ADDRESSES section. Comments will be available in the AD docket shortly after the Docket Management System receives them. Discussion We have received reports of cracks found at the cutout in the web of the body station 303.9 frame inboard of stringer 16L on seven Boeing Model 737 “classic” airplanes. The cracks were found on airplanes that had accumulated between 37,562 and 64,000 total flight cycles. Such cracking, if not corrected, could prevent the left forward entry door from sealing correctly, and could cause in-flight decompression of the airplane. Relevant Service Information We have reviewed two service bulletins related to this action. The service bulletins are similar but affect different groups of airplanes. Boeing Alert Service Bulletin 737-53A1188, Revision 2, dated May 9, 2007, for certain Model 737-300, -400, and -500 series airplanes, describes the following actions: • Repetitive high-frequency eddy current
(HFEC)and detailed inspections to detect cracking in the station 303.9 web and doubler around the cutouts for door stop straps at stringers 15L and 16L. • A repair/preventive change, which includes installing a new web, doubler, and stop fitting assemblies; changing the shape of the web cutout; and doing an eddy current inspection. Service Bulletin 737-53A1188 specifies a threshold for the initial inspection of 10,000 total flight cycles and a grace period of 2,250 flight cycles. Boeing Alert Service Bulletin 737-53A1197, dated August 25, 2006, for certain Model 737-100, -200, -200C, -300, -400, and -500 series airplanes, describes the following actions: • Repetitive ultrasound inspections of the slot-shaped cutout in the web for the door stop strap at stringer 16L. • Repetitive HFEC inspections of the web along the upper edge and lower edge of the doubler around the doorstop strap at stringer 16L. • Repetitive detailed inspections of the web around the doubler for the cutout at stringer 16. • A repair/preventive change, which involves installing a new web and doubler. Service Bulletin 737-53A1197 specifies a threshold for the initial inspection of 30,000 total flight cycles and a grace period of 2,250 flight cycles. For both service bulletins, a repair/preventive change eliminates the need for the repetitive inspections. For airplanes on which the repair/preventive change was previously done according to the original version or Revision 1 of Alert Service Bulletin 737-53A1188, replacing the existing kit with a new kit (in accordance with Revision 2) is necessary to eliminate the need for the repetitive inspections. Accomplishing the actions specified in the service bulletins is intended to adequately address the unsafe condition. FAA's Determination and Requirements of the Proposed AD We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other airplanes of this same type design. For this reason, we are proposing this AD, which would require accomplishing the actions specified in the service information described previously, except as discussed below. Difference Between Proposed AD and Service Information The service bulletins specify to contact the manufacturer for instructions on how to repair certain conditions, but this proposed AD would require repairing those conditions in one of the following ways: • Using a method that we approve; or • Using data that meet the certification basis of the airplane, and that have been approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization whom we have authorized to make those findings. Costs of Compliance There are about 2,765 airplanes of the affected design in the worldwide fleet. The following table provides the estimated costs, depending on airplane configuration, for U.S. operators to comply with this proposed AD. Estimated Costs Action Work hours Average labor rate per hour Parts Cost per airplane Number of U.S.-registered airplanes Fleet cost Inspection 1 to 4 $80 None $80 to $320, per inspection cycle 1,154 $92,320 to $369,280, per inspection cycle. Repair/preventive change, if done 12 to 30 80 $564 to $2,236 $1,524 to $4,636 Up to 1,154 Up to $5,349,944. 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-2007-29174; Directorate Identifier 2007-NM-125-AD. Comments Due Date
(a)The FAA must receive comments on this AD action by October 29, 2007. Affected ADs
(b)None. Applicability
(c)This AD applies to the airplanes, certificated in any category, identified in Table 1 of this AD. Table 1.—Applicability Boeing model— As identified in Boeing Alert Service Bulletin— 737-100, -200, and -200C series airplanes 737-53A1197, dated August 25, 2006. 737-300, -400, and -500 series airplanes 737-53A1188, Revision 2, dated May 9, 2007, or 737-53A1197, dated August 25, 2006. Unsafe Condition
(d)This AD results from reports of cracks found at the cutout in the web of body station frame 303.9 inboard of stringer 16L. We are issuing this AD to detect and correct such cracking, which could prevent the left forward entry door from sealing correctly, and could cause in-flight decompression of the airplane. Compliance
(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Repetitive Inspections: Service Bulletin 737-53A1188
(f)For airplanes identified in Boeing Alert Service Bulletin 737-53A1188, Revision 2, dated May 9, 2007, including airplanes modified by the repair/preventive change specified in the original version, dated April 9, 1998, or Revision 1, dated March 18, 1999, of the service bulletin: Do detailed and high frequency eddy current
(HFEC)inspections in the web and doubler around the slotted holes in the frame web at stringers 15L and 16L, in accordance with the Accomplishment Instructions of the service bulletin. Do the inspections at the applicable time specified in paragraph 1.E. of the service bulletin, except as provided by paragraph
(h)of this AD. Do all applicable corrective actions before further flight in accordance with the service bulletin, except as provided by paragraph
(i)of this AD. Repeat the inspections at intervals not to exceed 4,500 flight cycles until accomplishment of the repair/preventive change in accordance with the service bulletin, which terminates the repetitive inspection requirements. A repair/preventive change done in accordance with the original version or Revision 1 of the service bulletin does not terminate the repetitive inspections, but the repetitive inspections may be terminated after the existing kit is replaced with a new kit in accordance with Revision 2 of the service bulletin, paragraph 3.B., Part II, step 3, or Part III, step 3. Repetitive Inspections: Service Bulletin 737-53A1197
(g)For airplanes identified in Boeing Alert Service Bulletin 737-53A1197, dated August 25, 2006: Do an ultrasound inspection of the slot-shaped cutout in the web for the door stop strap at stringer 16L, an HFEC inspection of the web along the upper and lower edges of the doubler around the doorstop strap at stringer 16L, and a detailed inspection of the web around the doubler for the cutout at stringer 16L, in accordance with the Accomplishment Instructions of the service bulletin. Do the inspections at the applicable time specified in paragraph 1.E. of the service bulletin, except as provided by paragraph
(h)of this AD. Do all applicable corrective actions before further flight in accordance with the service bulletin, except as provided by paragraph
(i)of this AD. Repeat the inspections at intervals not to exceed 4,500 flight cycles, until accomplishment of the repair/preventive change in accordance with the service bulletin, which terminates the repetitive inspections. Exceptions to Service Bulletin Specifications
(h)Where Boeing Alert Service Bulletin 737-53A1188, Revision 2, dated May 9, 2007; and Boeing Alert Service Bulletin 737-53A1197, dated August 25, 2006, specify a compliance time after release of the service bulletin, this AD requires compliance within the specified time after the effective date of this AD.
(i)Where Boeing Alert Service Bulletin 737-53A1188, Revision 2, dated May 9, 2007; and Boeing Alert Service Bulletin 737-53A1197, dated August 25, 2006, specify to contact Boeing for appropriate action, including repair of damage outside the scope of the service bulletin, repair using a method approved in accordance with the procedures specified in paragraph
(j)of this AD. Alternative Methods of Compliance (AMOCs) (j)(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)To request a different method of compliance or a different compliance time for this AD, follow the procedures 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.
(3)An AMOC that provides an acceptable level of safety may be used for any repair required by this AD, if it is approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization who has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD. Issued in Renton, Washington, on August 31, 2007. Stephen P. Boyd, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E7-18049 Filed 9-12-07; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF COMMERCE Bureau of Economic Analysis 15 CFR Part 806 [Docket No. 07 0301041-7043-02] RIN 0691-AA63 Direct Investment Surveys: BE-11, Annual Survey of U.S. Direct Investment Abroad AGENCY: Bureau of Economic Analysis, Commerce. ACTION: Notice of proposed rulemaking. SUMMARY: This proposed rule would amend regulations concerning the reporting requirements for the BE-11, Annual Survey of U.S. Direct Investment Abroad. The BE-11 survey is conducted annually and is a sample survey that obtains financial and operating data covering the overall operations of U.S. parent companies and their foreign affiliates. Currently, banks are excluded from coverage. BEA proposes to expand the reporting requirements on the BE-11 annual survey so that U.S. parent companies that are banks, foreign affiliates of bank parents, and bank foreign affiliates of nonbank parents will be reportable. A few minor changes will be required to the instructions on Form BE-11A, Report for U.S. Reporter, so it can be used to collect bank as well as nonbank data. BEA is now implementing a new, specialized Form BE-11B for foreign affiliates of bank parents and bank foreign affiliates of nonbank parents. DATES: Comments on this proposed rule will receive consideration if submitted in writing on or before 5 p.m. November 13, 2007. ADDRESSES: You may submit comments, identified by RIN 0691-AA63, and referencing the agency name (Bureau of Economic Analysis), by any of the following methods: • *Federal eRulemaking Portal: http://www.regulations.gov.* Follow the instructions for submitting comments. For agency, select “Commerce Department—all.” • *E-mail: David.Galler@bea.gov.* • *Fax:* Office of the Chief, Direct Investment Division,
(202)606-5318. • *Mail:* Office of the Chief, Direct Investment Division, U.S. Department of Commerce, Bureau of Economic Analysis, BE-50, Washington, DC 20230. • *Hand Delivery/Courier:* Office of the Chief, Direct Investment Division, U.S. Department of Commerce, Bureau of Economic Analysis, BE-50, Shipping and Receiving, Section M100, 1441 L Street, NW., Washington, DC 20005. Public Inspection: Comments may be inspected at BEA's offices, 1441 L Street, NW., Room 7005, between 8:30 a.m. and 5 p.m., Eastern Time Monday through Friday. FOR FURTHER INFORMATION CONTACT: David H. Galler, Chief, Direct Investment Division (BE-50), Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20230; phone
(202)606-9835. SUPPLEMENTARY INFORMATION: This proposed rule would amend 15 CFR Part 806.14 to set forth the reporting requirements for the BE-11, Annual Survey of U.S. Direct Investment Abroad. The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. Description of Changes The BE-11 survey is a mandatory survey and is conducted annually by BEA under the International Investment and Trade in Services Survey Act (22 U.S.C. 3101-3108), hereinafter, “the Act.” BEA will send the survey to potential respondents in March of each year; responses will be due by May 31. BEA proposes to collect data on bank and nonbank U.S. parent companies and their bank and nonbank foreign affiliates on the BE-11 annual survey. Currently, collection of data on the BE-11 annual survey is limited to that of nonbank U.S. parent companies and their nonbank foreign affiliates. Data for bank U.S. parent companies and their bank and nonbank foreign affiliates and data for bank affiliates of nonbank U.S. parent companies have been collected only once every five years on BEA's BE-10, Benchmark Survey of U.S. Direct Investment Abroad. To collect data for a U.S. Reporter that is a bank, BEA is proposing to use the BE-11A, Report for U.S. Reporter, that is used for nonbank U.S. parents. BEA is proposing that a new, specialized form, Form BE-11B(FN), be provided for foreign affiliates of bank U.S. parents and bank affiliates of nonbank U.S. parents. The items proposed to be collected on this form would include most of those collected on the form used for bank affiliates on the BE-10 benchmark survey and a few additional items, including sales of services by destination and employment by broad occupational structure, that would make the data more useful for studies of offshoring and more comparable with the data collected for nonbank affiliates of nonbank parents. Because affiliates of bank parents and bank affiliates of nonbank parents tend to be quite large, BEA is proposing to set the exemption level for reporting on the proposed Form BE-11B(FN) at $250 million. (In comparison, the exemption level for other foreign affiliates would be $40 million.) Foreign affiliates of bank U.S. parents and bank affiliates of nonbank U.S. parents with total assets, sales or gross operating revenues, and net income of $250 million or less (positive or negative) would not be required to be reported on the annual survey. Instructions on the forms and in the instruction booklet will be modified to include banks. Survey Background The Bureau of Economic Analysis (BEA), U.S. Department of Commerce, conducts the BE-11 survey under the authority of the International Investment and Trade in Services Survey Act (22 U.S.C. 3101-3108), hereinafter, “the Act.” Section 4(a) of the Act requires that with respect to United States direct investment abroad, the President shall, to the extent he deems necessary and feasible, conduct a regular data collection program to secure current information on international financial flows and other information related to international investment and trade in services, including (but not limited to) such information as may be necessary for computing and analyzing the United States balance of payments, the employment and taxes of United States parents and affiliates, and the international investment and trade in services position of the United States. In Section 3 of Executive Order 11961, as amended by Executive Orders 12318 and 12518, the President delegated the responsibility for performing functions under the Act concerning direct investment to the Secretary of Commerce, who has redelegated it to BEA. The annual survey of U.S. direct investment abroad is a sample survey that collects information on a variety of measures of the overall operations of U.S. parent companies and their foreign affiliates, including total assets, sales, net income, employment and employee compensation, research and development expenditures, and exports and imports of goods. The sample data are used to derive universe estimates in nonbenchmark years from similar data reported in the BE-10, Benchmark Survey of U.S. Direct Investment Abroad, which is taken every five years. The data are needed to measure the size and economic significance of direct investment abroad, measure changes in such investment, and assess its impact on the U.S. and foreign economies. The data are disaggregated by country and industry of the foreign affiliate and by industry of the U.S. parent. Executive Order 12866 This proposed rule has been determined to be not significant for purposes of E.O. 12866. Executive Order 13132 This proposed rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under E.O. 13132. Paperwork Reduction Act This proposed rule contains a collection-of-information requirement subject to review and approval by the Office of Management and Budget
(OMB)under the Paperwork Reduction Act (PRA). The requirement has been submitted to the OMB for approval as a revision to a collection currently approved under OMB control number 0608-0053. BEA proposes to expand the reporting requirements on the BE-11 annual survey so that U.S. parent companies that are banks and their foreign affiliates and bank foreign affiliates of nonbank U.S. parent companies will now be reportable. Minor changes will be required to the instructions on Form BE-11A, Report for U.S. Reporter, so it can be used to collect bank as well as nonbank data. A new, sepialized form, Form BE-11B(FN), will be provided for foreign affiliates of bank parents and bank affiliates of nonbank parents. Notwithstanding any other provisions of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection-of-information subject to the requirements of the Paperwork Reduction Act unless that collection displays a currently valid OMB control number. The BE-11 survey, as proposed, is expected to result in the filing of reports from approximately 1,550 respondents. The respondent burden for this collection of information will vary from one company to another, but is estimated to average 79.3 hours per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Thus the total respondent burden of the survey is estimated at 122,900 hours (1,550 respondents times 79.3 hours average burden). This estimate is slightly above the burden of 117,600 hours currently requested for this survey in the OMB inventory. The increase in the burden is due to proposed changes in reporting requirements. Comments are requested concerning:
(a)Whether the proposed 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 burden estimate;
(c)ways to enhance the quality, utility, and clarity of the information collected; and
(d)ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Comments should be addressed to: Director, Bureau of Economic Analysis (BE-1), U.S. Department of Commerce, Washington, DC 20230; FAX: 202-606-5311; and to the Office of Management and Budget, O.I.R.A., Paperwork Reduction Project 0608-0053, Attention PRA Desk Officer for BEA, via e-mail at *pbugg@omb.eop.gov,* or by Fax at 202-395-7245. Regulatory Flexibility Act The Chief Counsel for Regulation, Department of Commerce, has certified to the Chief Counsel for Advocacy, Small Business Administration, under the provisions of the Regulatory Flexibility Act (5 U.S.C. 605(b)), that this proposed rulemaking, if adopted, will not have a significant economic impact on a substantial number of small entities. Few small U.S. businesses are subject to the reporting requirements of this survey. U.S. companies that have direct investments abroad tend to be quite large, thereby excluding them from the definition of small entity. The proposed changes to the BE-11 annual survey would not increase the burden on small businesses. The exemption level for the BE-11 survey is set in terms of the size of a U.S. company's foreign affiliates (foreign companies owned 10 percent or more by the U.S. company); if a foreign affiliate has total assets, sales, or net income
(loss)greater than the exemption level, it must be reported on Form BE-11B(LF), BE-11B(SF), BE-11B(FN), BE-11B(EZ), or BE-11C. The exemption level for the BE-11 survey for nonbank affiliates of nonbank U.S. Reporters is unchanged at $40 million. Because affiliates of bank parents and bank affiliates of nonbank parents tend to be quite large and to keep respondent burden as low as possible, the proposed exemption level for reporting on the proposed Form BE-11B(FN) is $250 million. Affiliates of bank parents and bank affiliates of nonbank parents with total assets, sales or gross operating revenues, and net income
(loss)of $250 million or less would not be required to be reported on the annual survey. To further ease the reporting burden on smaller businesses, U.S. Reporters with total assets, sales or gross operating revenues, and net income
(loss)less than or equal to $150 million are required to report only selected items on the BE-11A form for U.S. Reporters in addition to forms they may be required to file for their foreign affiliates. Because few small businesses are impacted by this rule, and because those small businesses that are impacted are subject to only minimal recordkeeping burdens, the Chief Counsel for Regulation certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. List of Subjects in 15 CFR Part 806 U.S. investment abroad, Multinational corporations, Economic statistics, Penalties, Reporting and recordkeeping requirements. Dated: August 2, 2007. Rosemary D. Marcuss, Acting Director, Bureau of Economic Analysis. For the reasons set forth in the preamble, BEA proposes to amend 15 CFR part 806 as follows: PART 806—DIRECT INVESTMENT SURVEYS 1. The authority citation for 15 CFR part 806 continues to read as follows: Authority: 5 U.S.C. 301; 22 U.S.C. 3101-3108; E.O. 11961 (3 CFR, 1977 Comp., p. 86), as amended by E.O. 12318 (3 CFR, 1981 Comp., p. 173) and E.O. 12518 (3 CFR, 1985 Comp., p. 348). 2. Section 806.14(f)(3) is revised to read as follows: § 806.14 U.S. direct investment abroad.
(f)* * *
(3)BE-11—Annual survey of U.S. Direct Investment Abroad: A report, consisting of Form BE-11A and Form(s) BE-11B(LF) (Long Form), BE-11B(SF) (Short Form), BE-11B(FN), BE-11B(EZ), and/or BE-11C, is required of each U.S. Reporter that, at the end of the Reporter's fiscal year, had a foreign affiliate reportable on Form BE-11B(LF), (SF), (FN), (EZ), or BE-11C. Forms required and the criteria for reporting on each are as follows:
(i)Form BE-11A (Report for U.S. Reporter) must be filed by each U.S. person having a foreign affiliate reportable on Form BE-11B(LF), (SF), (FN), (EZ), or BE-11C. If the U.S. Reporter is a corporation, Form BE-11A is required to cover the fully consolidated U.S. domestic business enterprise. However, where a U.S. Reporter's primary line of business is not in banking (or related financial activities), but the Reporter also has ownership in a bank, the bank, including all of its domestic subsidiaries or units, must file on a separate Form BE-11A. The nonbanking U.S. operations not owned by the bank must also file on a Form BE-11A.
(A)If for a U.S. Reporter any one of the following three items—total assets, sales or gross operating revenues excluding sales taxes, or net income after provision for U.S. income taxes—was greater than $150 million (positive or negative) at the end of, or for, the Reporter's fiscal year, the U.S. Reporter must file a complete Form BE-11A. It must also file a Form BE-11B(LF), (SF), (FN), (EZ), or BE-11C as applicable, for each nonexempt foreign affiliate.
(B)If for a U.S. Reporter no one of the three items listed in paragraph (f)(3)(i)(A) of this section was greater than $150 million (positive or negative) at the end of, or for, the Reporter's fiscal year, the U.S. Reporter is required to file on Form BE-11A only items 1 through 31 and Part IV. It must also file a Form BE-11B(LF), (SF), (FN), (EZ), or BE-11C as applicable, for each nonexempt foreign affiliate.
(ii)Forms BE-11B(LF), (SF), and
(EZ)(Report for Majority-owned Nonbank Foreign Affiliate of Nonbank U.S. Reporter).
(A)A BE-11B(LF)(Long Form) must be filed for each majority-owned nonbank foreign affiliate of a nonbank U.S. Reporter for which any one of the three items—total assets, sales or gross operating revenues excluding sales taxes, or net income after provision for foreign income taxes—was greater than $150 million (positive or negative) at the end of, or for, the affiliate's fiscal year, unless the nonbank foreign affiliate is selected to be reported on Form BE-11B(EZ).
(B)A BE-11B(SF)(Short Form) must be filed for each majority-owned nonbank foreign affiliate of a nonbank U.S. Reporter for which any one of the three items listed in paragraph (f)(3)(ii)(A) of this section was greater than $40 million (positive or negative), but for which no one of these items was greater than $150 million (positive or negative), at the end of, or for, the affiliate's fiscal year, unless the nonbank foreign affiliate is selected to be reported on Form BE-11B(EZ).
(C)A BE-11B(EZ) must be filed for each nonbank foreign affiliate of a nonbank U.S. Reporter that is selected to be reported on this form in lieu of Form BE-11B(LF) or Form BE-11B(SF).
(iii)Form BE-11B(FN) (Report for Foreign Affiliate of Bank U.S. Reporter and Bank Affiliate of Nonbank U.S. Reporter) must be filed for
(1)each foreign affiliate (bank and nonbank) of a bank U.S. Reporter for which any one of the three items listed in paragraph (f)(3)(ii)(A) of this section was greater than $250 million (positive or negative) at the end of, or for, the affiliate's fiscal year and
(2)each bank foreign affiliate of a nonbank U.S. Reporter for which any one of the three items listed in paragraph (f)(3)(ii)(A) of this section was greater than $250 million (positive or negative) at the end of, or for, the affiliate's fiscal year.
(iv)Form BE-11C (Report for Minority-owned Nonbank Foreign Affiliate of Nonbank U.S. Reporter) must be filed for each minority-owned nonbank foreign affiliate of a nonbank U.S. Reporter that is owned at least 20 percent, but not more than 50 percent, directly and/or indirectly, by all U.S. Reporters of the affiliate combined, and for which any one of the three items listed in paragraph (f)(3)(ii)(A) of this section was greater than $40 million (positive or negative) at the end of, or for, the affiliate's fiscal year. In addition, for the report covering fiscal year 2007 only, a Form BE-11C must be filed for each minority-owned nonbank foreign affiliate that is owned, directly or indirectly, at least 10 percent by one nonbank U.S. Reporter, but less than 20 percent by all nonbank U.S. Reporters of the affiliate combined, and for which any one of the three items listed in paragraph (f)(3)(ii)(A) of this section was greater than $100 million (positive or negative) at the end of, or for, the affiliate's fiscal year.
(v)Based on the preceding, an affiliate is exempt from being reported if it meets any one of the following criteria:
(A)For nonbank affiliates of nonbank U.S. Reporters, none of the three items listed in paragraph (f)(3)(ii)(A) of this section exceeds $40 million (positive or negative). However, affiliates that were established or acquired during the year and for which at least one of these items was greater than $10 million but not over $40 million must be listed, and key data items reported, on a supplement schedule on Form BE-11A.
(B)For affiliates of bank U.S. Reporters and bank affiliates of nonbank U.S. Reporters, none of the three items listed in paragraph (f)(3)(ii)(A) of this section exceeds $250 million (positive or negative). However, affiliates that were established or acquired during the year and for which at least one of these items was greater than $10 million but not over $250 million must be listed, and key data items reported, on a supplement schedule on Form BE-11A.
(C)For nonbank foreign affiliates of nonbank U.S. Reporters, for fiscal year 2007 only, it is less than 20 percent owned, directly or indirectly, by all U.S. Reporters of the affiliate combined and none of the three items listed in paragraph (f)(3)(ii)(A) of this section exceeds $100 million (positive or negative).
(D)For fiscal years other than 2007, it is less than 20 percent owned, directly or indirectly, by all U.S. Reporters of the affiliate combined.
(vi)Notwithstanding paragraph (f)(3)(v) of this section, a Form BE-11B(LF), (SF), (FN),
(EZ)or BE-11C must be filed for a foreign affiliate of the U.S. Reporter that owns another non-exempt foreign affiliate of that U.S. Reporter, even if the foreign affiliate parent is otherwise exempt. That is, all affiliates upward in the chain of ownership must be reported. [FR Doc. E7-18036 Filed 9-12-07; 8:45 am] BILLING CODE 3510-06-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-143797-06] RIN 1545-BF97 Employer Comparable Contributions to Health Savings Accounts Under Section 4980G; Hearing Cancellation AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Cancellation of notice of public hearing on proposed rulemaking. SUMMARY: This document cancels a public hearing on proposed regulations providing guidance on employer comparable contributions to Health Savings Accounts (HSAs). DATES: The public hearing, originally scheduled for September 28, 2007 at 10 a.m. is cancelled. FOR FURTHER INFORMATION CONTACT: Kelly Banks of the Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration) at
(202)622-0392 (not a toll-free number). SUPPLEMENTARY INFORMATION: A notice of proposed rulemaking and notice of public hearing that appeared in the **Federal Register** on Friday, June 1, 2007 (72 FR 30501), announced that a public hearing was scheduled for September 28, 2007, at 10 a.m. in the IRS Auditorium, Internal Revenue Service, 1111 Constitution Avenue, NW., Washington, DC. The subject of the public hearing is under section 4980G of the Internal Revenue Code. The public comment period for these regulations expired on August 30, 2007. The notice of proposed rulemaking and notice of public hearing instructed those interested in testifying at the public hearing to submit a request to speak and an outline of the topics to be addressed by August 28, 2007. As of September 6, 2007, no one has requested to speak and therefore, the public hearing scheduled for September 28, 2007, is cancelled. La Nita VanDyke, Branch Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration). [FR Doc. E7-18037 Filed 9-12-07; 8:45 am] BILLING CODE 4830-01-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R04-OAR-2006-0650-200705(b); FRL-8464-1] Approval and Promulgation of Implementation Plans Kentucky: Volatile Organic Compound Definition Updates AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve a revision to the Kentucky State Implementation Plan
(SIP)submitted by the Kentucky Environmental and Public Protection Cabinet on December 14, 2006. The revision includes changes to the definitions section of Kentucky's Air Quality Regulations regarding the definition of “volatile organic compounds,” which was updated to be consistent with the federal definition. In the Final Rules Section of this **Federal Register** , the EPA is approving Kentucky's SIP revision 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 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. The EPA will not institute a second comment period on this document. Any parties interested in commenting on this document should do so at this time. DATES: Written comments must be received on or before October 15, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. “EPA-R04-OAR-2006-0650,” by one of the following methods: 1. *www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail:* *lesane.heidi@epa.gov* . 3. *Fax:* 404-562-9019. 4. *Mail:* “EPA-R04-OAR-2006-0650,” Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. 5. *Hand Delivery or Courier:* Heidi LeSane, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are only accepted during the Regional Office's normal hours of operation. The Regional Office's official hours of business are Monday through Friday, 8:30 to 4:30, 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: Heidi LeSane, Regulatory Development Section, Air Planning Branch, Air, Pesticides and Toxics Management Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303-8960. The telephone number is
(404)562-9074. Ms. LeSane can also be reached via electronic mail at *lesane.heidi@epa.gov* . SUPPLEMENTARY INFORMATION: For additional information see the direct final rule which is published in the Rules Section of this **Federal Register** . Dated: August 27, 2007. Russell L. Wright, Jr., Acting Regional Administrator, Region 4. [FR Doc. E7-17630 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2007-0293; FRL-8464-5] Approval and Promulgation of Air Quality Implementation Plans; Indiana; VOC Emissions From Fuel Grade Ethanol Production Operations AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve a March 30, 2007, request from the Indiana Department of Environmental Management
(IDEM)to revise the Indiana State Implementation Plan
(SIP)by adding a volatile organic compound
(VOC)rule for fuel grade ethanol production at dry mills. This rule revision creates an industry-specific Best Available Control Technology
(BACT)standard for new fuel grade ethanol production dry mills that replaces the otherwise required case-by-case BACT determination for new facilities with the potential to emit 25 tons or more of VOC per year. The benefit of this rule is that establishing specific standards in place of a case-by-case analysis improves the clarity, predictability, and timeliness of permit decisions. DATES: Comments must be received on or before October 15, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-OAR-2007-0293, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail: mooney.john@epa.gov.* 3. *Fax:* (312)886-5824. 4. *Mail:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* John M. Mooney, Chief, Criteria Pollutant 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: Steven Rosenthal, Environmental Engineer, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,
(312)886-6052, *rosenthal.steven@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 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: August 24, 2007. Richard C. Karl, Acting Regional Administrator, Region 5. [FR Doc. E7-17880 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2006-0976; FRL-8467-4] Approval and Promulgation of Air Quality Implementation Plans; Ohio; Oxides of Nitrogen Budget Trading Program AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve Ohio's request to permanently retire 240 oxides of nitrogen (NO <sup>X</sup> ) allowances from the State's 2005 new source set aside, which would otherwise have been distributed to existing sources that are required participants in the State of Ohio's NO <sup>X</sup> budget. Under the Federal NO <sup>X</sup> Budget Trading Program, each participating state receives a main pool of ‘allowances’, which are credits that permit a source to emit one ton of NO <sup>X</sup> per allowance. Allowances are apportioned state-wide to electricity generating units and other large NO <sup>X</sup> sources which are subject to the budget trading program. Each year, a certain number of allowances are set aside from the main pool by the State, specifically for use by any new sources subject to the trading program which may come on-line during that year. If no new sources are created, and no new source set aside allowances are used, the new source set aside allowances are returned to the main pool of allowances for use the following year. Retiring 240 new source set aside allowances will provide surplus emission reductions to help compensate for the discontinuation of Ohio’s ‘E-Check’ motor vehicle inspection and maintenance (I/M) program in the Cincinnati and Dayton areas for the year 2006 (Ohio is in the process of seeking approval of the removal of E-Check from the State Implementation Plan (SIP), which will be addressed in a separate action). Withholding and permanently retiring 240 new source set aside allowances from the year 2006 control period will provide 240 tons of surplus NO <sup>X</sup> emission reductions that are creditable for replacing reductions that otherwise would have occurred from the E-Check program during the 2006 ozone season. DATES: Comments must be received on or before October 15, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-OAR-2006-0976, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail: mooney.john@epa.gov.* 3. *Fax:*
(312)886-5824. 4. *Mail:* John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR-18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. *Hand Delivery:* John M. Mooney, Chief, Criteria Pollutant 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. *Instructions:* Direct your comments to Docket ID No. EPA-R05-OAR-2006-0976. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *www.regulations.gov,* including any personal information provided, unless the comment includes information claimed to be Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *www.regulations.gov* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional instructions on submitting comments, go to Section I of the SUPPLEMENTARY INFORMATION section of this document. *Docket:* All documents in the docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy at the Environmental Protection Agency, Region 5, Air and Radiation Division, 77 West Jackson Boulevard, Chicago, Illinois 60604. This Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. We recommend that you telephone Anthony Maietta, Life Scientist, at
(312)353-8777 before visiting the Region 5 office. FOR FURTHER INFORMATION CONTACT: Anthony Maietta, Life Scientist, Criteria Pollutant Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604,
(312)353-8777, *maietta.anthony@epa.gov* . SUPPLEMENTARY INFORMATION: Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows: I. What should I consider as I prepare my comments for EPA? II. Does this proposed rule apply to me? III. Background A. Why has the State requested revisions to this rule? B. When did the State submit the requested rule revisions to EPA? C. When did the State adopt these rule revisions, and have they become effective? D. When were public hearings held? E. What comments did the State receive, and how did the State respond? IV. Review of the State's Submittal V. What action is EPA taking? VI. Statutory and Executive Order Reviews I. What should I consider as I prepare my comments for EPA? When submitting comments, remember to: 1. Identify the rulemaking by docket number and other identifying information (subject heading, **Federal Register** date and page number). 2. Follow directions—The EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations
(CFR)part or section number. 3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. 4. Describe any assumptions and provide any technical information and/or data that you used. 5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. 6. Provide specific examples to illustrate your concerns, and suggest alternatives. 7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats. 8. Make sure to submit your comments by the comment period deadline identified. II. Does this proposed rule apply to me? This proposed rule affects electrical generation units
(EGUs)as well as large boilers which are subject to Ohio's NO <sup>X</sup> budget trading program and are not considered to be “new” units under the guidelines of the trading program. Affected units will not receive certain excess new unit set aside allowances for the year 2006. III. Background A. Why has the State requested revisions to this rule? On December 31, 2005, Ohio discontinued the motor vehicle inspection and maintenance (I/M) programs, otherwise known as E-Check, in the Cincinnati and Dayton areas. According to section 110(l) of the Clean Air Act, EPA may not approve the discontinuation of this program unless the State can demonstrate that the revision will not interfere with attainment of the health-based National Ambient Air Quality Standards. For this purpose, Ohio is providing emission reductions that compensate for the emission increase expected to result from discontinuation of E-Check. It should be noted that Ohio is currently seeking approval of the removal of E-Check from the SIP, which will be addressed in a separate rulemaking. As compensation for the emissions reductions lost through the discontinuation of E-Check, Ohio adopted requirements for low-volatility gasoline and requirements for lower emissions from gas cans, solvent degreasing, and automobile refinishing. EPA approved the gas can, solvent degreasing, and automobile refinishing measures in a rulemaking action published on March 30, 2007, (72 FR 15045). The lower-volatility gasoline requirement was originally intended to be implemented in 2006, but was delayed until June 2008. (For more information see rulemaking published on May 25, 2007, at 72 FR 29269). Without the low-volatility gasoline program to compensate for emissions in 2006 resulting from discontinuation of E-Check, Ohio asked EPA, in a May 6, 2005, letter, if emission control devices that were installed on various power plants around the Cincinnati-Dayton area could provide the compensatory NO <sup>X</sup> emissions reduction. In our response, dated September 20, 2005, EPA noted that, while the reductions clearly occurred and clearly provide both local and regional air quality benefits, these actions would not be considered surplus emission reductions because these reductions would have occurred anyway through regular implementation of the Regional NO <sup>X</sup> Budget Trading Program, otherwise known as the NO <sup>X</sup> SIP Call. The NO <sup>X</sup> SIP Call created a market-based cap and trade program to reduce NO <sup>X</sup> emissions from power plants and other large sources across the Eastern half of the United States. The program is designed to allow states to have greater flexibility to achieve state-wide emission reductions with local as well as regional benefits. Because the NO <sup>X</sup> SIP Call garners reductions which are not source-specific, Ohio does not have the ability to decide exactly where reductions will take place. However, we noted that if Ohio were to withdraw and retire new source set aside allowances, this action would yield surplus reductions. By retiring new source set aside allowances that would otherwise have been redistributed the following year for use by existing sources subject to the trading program, Ohio has mandated a reduction in emissions that EPA considers surplus reductions beyond the reductions of the existing NO <sup>X</sup> SIP Call. Ohio adopted changes to Ohio Administrative Code
(OAC)Chapters 3745-72-01 and 3745-14-05, and submitted them for approval on October 11, 2006. These rules provide a revised start date for the use of low-volatility gasoline and provide the necessary quantity of interim, surplus NO <sup>X</sup> emission reductions through the permanent retirement of new source set aside allowances from the State's NO <sup>X</sup> budget trading program. Withholding and retiring new source set aside allowances from the year 2005 ensured that these allowances would not return to existing NO <sup>X</sup> budget trading program sources in 2006, therefore providing surplus emission reductions for 2006. As indicated above, the portion of the submittal concerning low-volatility gasoline has been addressed by EPA in a separate rulemaking action. B. When did the State submit the requested rule revisions to EPA? The Director of the Ohio Environmental Protection Agency (Ohio EPA) submitted a request for EPA to approve revisions to OAC 3745-14-05 (NO <sup>X</sup> allowance allocations) in a letter dated October 11, 2006. C. When did the State adopt these rule revisions, and have they become effective? The proposed rule language was filed as an emergency rule on April 24, 2006. A proposed permanent adoption package for this rule was filed the same day. The Director of the Ohio Environmental Protection Agency issued an order of adoption for permanent revisions to OAC 3745-14-05 on July 10, 2006. The effective date of this order was July 17, 2006. EPA is rulemaking on the permanent rule revisions and is not acting on the emergency rules. D. When were public hearings held? A public hearing on revisions to OAC 3745-14-05 was held on June 2, 2006, in Columbus, Ohio. E. What comments did the State receive, and how did the State respond? A commenter questioned the necessity of amending OAC rule 3745-14-05; the commenter stated that the Cincinnati/Dayton area had already monitored attainment, so meeting anti-backsliding regulations is not necessary. Ohio EPA disagreed with the commenter, noting that the Cincinnati area may still be monitoring nonattainment air quality at four sites. Also, OEPA noted that the anti-backsliding elements of the areas' 1-hour ozone nonattainment requirements cannot be removed; therefore the State's proposed rule revisions are, in fact, necessary. A commenter representing Buckeye Power, Inc., Columbus Southern Power Company, Dayton Power & Light Company, Duke Energy, Ohio Power Company, and Ohio Valley Electric Corporation (hereafter described as the ‘Utilities') objected to the proposed rule revisions because local reductions were being realized by applying regional reductions to NO <sup>X</sup> budgets, which wouldn't necessarily have local benefit to the Cincinnati/Dayton areas. Ohio EPA responded by noting that air quality modeling indicates that the optimum scenario for reducing ozone in the Cincinnati/Dayton areas is a combination of regional NO <sup>X</sup> reductions coupled with local VOC reductions. Ohio EPA also noted that EPA had commented on the regionalism of the retired new source set aside allowances. The ‘Utilities' believe that withdrawal and retirement of 240 new source set aside allowances undermines the stability of the regional NO <sup>X</sup> trading program. Ohio EPA disagreed, and noted that the retired allowances were set aside, and unused, by new sources in the specified time period, and that such a small amount of retired new source set aside allowances would not have an impact on the budget trading program. The ‘Utilities' commented that they believe the retirement of NO <sup>X</sup> allowances is unlawful under Ohio statute, and that the Ohio EPA has no authority to retire or otherwise remove allowances from the pool. Ohio EPA disagreed, noting that they have indeed had the authority to retire or remove allowances since the program's inception in 2002. Additionally, Ohio EPA found it important to make clear that a NO <sup>X</sup> budget allowance does not constitute a property right. The ‘Utilities' commented that they believe retiring allowances will not create emission reductions because sources can simply purchase more allowances from anywhere in the U.S. at the end of the ozone season. Ohio EPA responded by noting that the point of the NO <sup>X</sup> Budget Trading Program is not to limit individual sources, but to limit regional emissions, which-as they had already stated-will benefit Cincinnati and Dayton. The ‘Utilities' comment that they had provided Ohio EPA with an alternative proposal for emission reductions in 2005, but Ohio EPA chose not to adopt the proposal. Ohio EPA responded by noting that the utilities' proposal to reduce emissions through compliance with the NO <sup>X</sup> Budget Trading Program could not be considered to garner surplus emissions unless allowances were retired to make those reductions surplus. Ohio EPA noted that the utilities did not appear to be willing to retire the associated allowances. A commenter representing American Municipal Power
(AMP)Ohio stated that Ohio EPA had not demonstrated that low-RVP gasoline was not available for the 2006 ozone season. Ohio EPA responded by noting the multitude of issues which caused it to conclude that institution of 7.8 RVP fuel was not an option for the 2006 ozone season. The reasons included a U.S. EPA survey indicating that refinery production capabilities for 7.8 RVP gasoline would fall short for the Cincinnati and Dayton areas, as well as lack of a preemption waiver from U.S. EPA allowing the adoption of low-RVP fuel. Additionally, Ohio EPA noted that if it were to allow noncompliant fuel into the area, compliant suppliers providing low-RVP fuel would be at a disadvantage. A commenter representing AMP Ohio stated that the Ohio EPA targeted NO <sup>X</sup> budget sources for NO <sup>X</sup> reductions without fully evaluating other appropriate reduction sources. Ohio EPA disagreed, noting that prior to establishing the RVP fuel program for Cincinnati and Dayton, they fully evaluated numerous control strategies to offset the emissions reduction shortfall that resulted from closing the E-Check program. A commenter representing the Ohio Manufacturers' Association
(OMA)stated that Ohio's manufacturing sector only represents 7% of the state's total NO <sup>X</sup> emissions, yet the manufacturing sector is being called on to, in their own words, “solve the problem”. Ohio EPA noted that the effect of retiring 240 allowances on non-EGU's would be very small for a one-time allocation adjustment. Ohio EPA noted that 15 non-EGU's are participating in Ohio's NO <sup>X</sup> trading program, and two of those units are shut down. Furthermore, of the 240 allowances being retired, non-EGU's represent 19 of the 240 allowances spread across the 15 non-EGU facilities whether still in operation or not. IV. Review of the State's Submittal The State of Ohio has adopted revisions to its NO <sup>X</sup> budget trading program regulations. On October 11, 2006, the State requested that EPA approve these rule revisions for incorporation into Ohio's SIP. Specifically, Ohio's revisions to this rule are: *OAC 3745-14-05 (C)(7):* Ohio inserted this new paragraph which withholds and permanently retires 240 new source set aside allowances from the 2005 control period to offset emission increases associated with the termination of the E-Check program in Cincinnati and Dayton. These withheld and retired allowances would normally have been allocated to existing Ohio NO <sup>X</sup> budget sources in 2006. On February 23, 2007, Ohio supplemented its submittal with information regarding NO <sup>X</sup> emission reductions that have occurred in the Cincinnati/Dayton area. This letter identifies several actions that substantially reduced NO <sup>X</sup> emissions starting from before the 2006 ozone season, which include installation of selective catalytic reduction controls at 3 units and installation of low NO <sup>X</sup> burners at 9 other units. Ohio estimates that the total emission reduction from these actions is over 10,000 tons per ozone season. In ordinary circumstances, an emission limit can be imposed on a specific source, and the surplus emission reduction clearly occurs at the location of that source. However, a different relationship between regulatory action and resulting emission reductions applies to power plants and other sources regulated under the NO <sup>X</sup> SIP Call. The NO <sup>X</sup> SIP Call provides a restricted set of allowances that allow a reduced quantity of NO <sup>X</sup> emissions across the entire NO <sup>X</sup> SIP Call region, while maximizing the flexibility of participants in the program to decide where these reductions will occur. In particular, allowances may be bought and sold and used anywhere in the NO <sup>X</sup> SIP Call region. Since the allowances are not assigned to particular locations, Ohio posed the question to EPA of how best to pursue utility emission reductions in the Cincinnati/Dayton area to obtain creditable reductions. EPA responded that reductions at utilities could not be considered surplus to the NO <sup>X</sup> SIP Call unless Ohio provided for retirement of allowances, but EPA added that Ohio had substantial flexibility in what allowances to retire. Ohio's action creates a surplus reduction of 240 tons of NO <sup>X</sup> emissions. This action fully conforms with EPA regulations concerning the NO <sup>X</sup> SIP Call and other relevant regulations, and so this action is fully approvable. More at issue is whether this action may be treated as fully offsetting the loss of 240 tons of NO <sup>X</sup> emission reductions (or its VOC equivalent) from the discontinuation of E-Check in the Cincinnati and Dayton areas. An important underpinning of the NO <sup>X</sup> SIP Call is the interchangeability of emission reductions, *i.e.* a finding that the impacts of the emissions are sufficiently regional in nature and sufficiently insensitive to the spatial distribution of the emission reductions that EPA need not restrict where allowances are used. This finding underlying the NO <sup>X</sup> SIP Call has important implications for Ohio's action in retiring allowances. EPA believes that Ohio's retirement of 240 allowances may be credited to make 240 tons of the actual emission reductions occurring in the Cincinnati/Dayton area surplus. We find that the retirement benefits Cincinnati/Dayton air quality, and is reasonable under the circumstances, including the actual emissions reductions in the area. EPA believes that Ohio may reasonably assign the surplus reductions it has mandated to actual emission reductions that have occurred in the Cincinnati/Dayton area. Allowances have no inherent geographic location. That is, the allowances have no inherent properties that dictate the location of the emission reduction that is attributed to a particular retirement of a particular allowance. Substantial emission reductions have occurred in the Cincinnati/Dayton area. While most of the reductions would be attributable to the NO <sup>X</sup> SIP Call, EPA believes that Ohio has latitude to attribute 240 tons of the 2006 NO <sup>X</sup> emission reductions in the Cincinnati/Dayton area to its retirement of 240 allowances. Furthermore, even if Ohio or EPA were to associate the allowance retirement with emission reductions in a geographically broader area, EPA believes that the corresponding air quality benefit in the Cincinnati/Dayton area would be similar to the benefit of 240 tons of NO <sup>X</sup> emission reductions within the Cincinnati/Dayton area. Indeed, the regional influence of NO <sup>X</sup> emissions is the fundamental basis for EPA to establish the NO <sup>X</sup> trading program as a regional program without restriction on where (within the trading area) allowances may be used. EPA views Ohio as having made surplus 240 tons of the emission reductions in 2006. The surplus reductions that result from this retirement provide significant benefit to the Cincinnati/Dayton area, and it is reasonable to assign 240 tons of NO <sup>X</sup> emission reductions credit to the Cincinnati/Dayton area, and to count 240 tons of the area's actual reductions as attributable to the retirement of 240 allowances. Therefore, EPA proposes to approve this rule change, and to conclude that Ohio has provided compensatory emissions decreases for discontinuing the E-Check program in this area in the amount of 240 tons of NO <sup>X</sup> emission reduction for the year 2006. EPA received a January 12, 2007, letter commenting on this issue from a law firm on behalf of the Environmental Committee of the Ohio Electric Utility Institute. This law firm submitted additional comments on February 15, 2007, and on March 13, 2007. EPA views these letters as commenting on the action being proposed here. EPA will review these comments, and address any comments it receives during the comment period, as we prepare final rulemaking on Ohio's submittal. *OAC 3745-14-05 (C)(8) through (C)(10):* Ohio renumbered the existing paragraphs (C)(7) through (C)(9) to (C)(8) through (C)(10), in order to accommodate the inclusion of the new paragraph (C)(7). As the addition of a new paragraph (C)(7) necessitates renumbering the existing paragraphs, we find this rule change to be acceptable and approvable. V. What action is EPA taking? EPA is proposing to approve the addition of paragraph (C)(7) to OAC 3745-14-05, and its incorporation into the Ohio SIP, as adopted by the State of Ohio, as defined in Ohio's October 11, 2006, submittal. EPA is also proposing to approve the renumbering of the original OAC 3745-14-05 paragraphs (C)(7) through (C)(9) to (C)(8) through (C)(10), respectively. If EPA takes final action as proposed here, EPA would then retire 240 allowances from Ohio's new source set aside as instructed in this rule. EPA proposes to conclude that Ohio has thereby provided compensatory emissions decreases for discontinuing the E-Check program in this area in the amount of 240 tons of NO <sup>X</sup> emission reduction for the year 2006. VI. Statutory and Executive Order Reviews Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866 (58 FR 51735, September 30, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget. Paperwork Reduction Act This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). Regulatory Flexibility Act This proposed action merely proposes to approve state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed 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.* ). Unfunded Mandates Reform Act Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 13132: Federalism This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Executive Order 13045: Protection of Children From Environmental Health and Safety Risks This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use Because it is not a “significant regulatory action” under Executive Order 12866 or a “significant regulatory action,” this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). National Technology Transfer Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), 15 U.S.C. 272, requires Federal agencies to use technical standards that are developed or adopted by voluntary consensus to carry out policy objectives, so long as such standards are not inconsistent with applicable law or otherwise impractical. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Absent a prior existing requirement for the state to use voluntary consensus standards, EPA has no authority to disapprove a SIP submission for failure to use such standards, and it would thus be inconsistent with applicable law for EPA to use voluntary consensus standards in place of a program submission that otherwise satisfies the provisions of the Clean Air Act. Therefore, the requirements of section 12(d) of the NTTA do not apply. List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Reporting and recordkeeping requirements. Dated: September 4, 2007. Bharat Mathur, Acting Regional Administrator, Region 5. [FR Doc. E7-18061 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 97 [EPA-R03-OAR-2007-0448; FRL-8465-7] Approval and Promulgation of Air Quality Implementation Plans; West Virginia; Clean Air Interstate Rule AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA proposes to approve the State Implementation Plan
(SIP)revision submitted on June 8, 2007 by the State of West Virginia for the Clean Air Interstate Rule
(CAIR)Nitrogen Oxides (NO <sup>X</sup> ) Annual and NO <sup>X</sup> Ozone Season Abbreviated SIP. The abbreviated SIP revision EPA is proposing to approve includes West Virginia's methodology for allocation of annual NO <sup>X</sup> and ozone season NO <sup>X</sup> allowances for Phase 1 of CAIR, which is comprised of control periods 2009 through 2014. EPA is not proposing to make any changes to the CAIR Federal Implementation Plan currently in effect in West Virginia, but is proposing, to the extent EPA approves West Virginia's SIP revision, to amend the appropriate appendices in the CAIR FIP trading rules simply to note that approval. The intended effect of this action is to reduce NO <sup>X</sup> emissions in West Virginia that are contributing to nonattainment of the 8 hour ozone and PM <sup>2.5</sup> National Ambient Air Quality Standard (NAAQS) in downwind states. This action is being taken under section 110 of the Clean Air Act. 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. If no adverse comments are received in response to this action, 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. DATES: Comments must be received in writing by October 15, 2007. ADDRESSES: Submit your comments, identified by Docket ID Number EPA-R03-OAR-2007-0448 by one of the following methods: A. *www.regulations.gov.* Follow the on-line instructions for submitting comments. B. *E-mail:* *powers.marilyn@epa.gov.* C. *Mail:* EPA-R03-OAR-2007-0448, Marilyn Powers, Acting Branch Chief, Air Quality Planning Branch, Mailcode 3AP21, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. D. *Hand Delivery:* At the previously-listed EPA Region III address. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R03-OAR-2007-0448. EPA's policy is that all comments received will be included in the public docket without change, and may be made available online at *www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *www.regulations.gov* or e-mail. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* , your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. *Docket:* All documents in the electronic docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy during normal business hours at the Air Protection Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal are available at the West Virginia Department of Environmental Protection, Division of Air Quality, 601 57th Street, SE. FOR FURTHER INFORMATION CONTACT: Marilyn Powers,
(215)814-2308, or by e-mail at *powers.marilyn@epa.gov.* SUPPLEMENTARY INFORMATION: For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this **Federal Register** publication. Please note that if EPA receives 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. Dated: August 30, 2007. Donald S. Welsh, Regional Administrator, Region III. [FR Doc. E7-17876 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 62 [EPA-R03-OAR-2007-0345; FRL-8467-8] Approval of Plan of the Commonwealth of Pennsylvania; Clean Air Mercury Rule AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to approve a State Plan submitted by the Commonwealth of Pennsylvania (Pennsylvania) which addresses the requirements of EPA's Clean Air Mercury Rule (CAMR), which EPA promulgated on May 18, 2005 and subsequently revised on June 9, 2006. EPA is proposing to determine that the submitted State Plan fully implements the CAMR requirements for Pennsylvania. CAMR requires States to regulate emissions of mercury
(Hg)from large coal-fired electric generating units (EGUs). CAMR establishes State budgets for annual EGU mercury emissions and requires States to submit State Plans that ensure that annual EGU mercury emissions will not exceed the applicable State budget. States have the flexibility to choose which control measures to adopt to achieve the budgets, including participating in the EPA-administered CAMR cap-and-trade program. Pennsylvania chose to adopt a State-specific plan for the control of mercury emissions from EGUs within the State instead of participating in the EPA-administered CAMR cap-and-trade program. Pennsylvania's plan includes a Pennsylvania-specific mercury control regulation for coal-fired EGUs and other elements which the State intends to implement to ensure that Pennsylvania meets its mercury budget. Pennsylvania's state-specific mercury control regulation establishes annual mercury emission limitations for EGUs as part of a Statewide nontradable mercury allowance program; sets mercury emissions standards for EGUs; and includes monitoring, recordkeeping, reporting and other provisions. DATES: Comments must be received on or before October 15, 2007. ADDRESSES: Submit your comments, identified by Docket ID Number EPA-R03-OAR-2007-0345, by one of the following methods: 1. *http://www.regulations.gov:* Follow the on-line instructions for submitting comments. 2. *E-mail:* *Campbell.Dave@epa.gov* . 3. *Mail:* EPA-R03-OAR-2007-0345, Dave Campbell, Chief, Permits and Technical Assessment Branch, Mailcode 3AP11, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. 4. *Hand Delivery or Courier:* At the previously-listed EPA Region III address. Such deliveries are only accepted during the Regional Office's normal hours of operation. *Instructions:* Direct your comments to Docket ID No. EPA-R03-OAR-2007-0345. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Do not submit through *www.regulations.gov* or e-mail, information that you consider to be CBI or otherwise protected. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* , your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters and any form of encryption and should 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 electronic docket are listed in the *www.regulations.gov* index. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy during normal business hours at the Air Protection Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal are also available at the Pennsylvania Department of Environmental Resources, Bureau of Air Quality Control, P.O. Box 8468, 400 Market Street, Harrisburg, Pennsylvania 17105. FOR FURTHER INFORMATION CONTACT: Mr. Ray Chalmers at 215-814-2061, or by e-mail at *chalmers.ray@epa.gov* . SUPPLEMENTARY INFORMATION: Table of Contents I. What Action Is EPA Proposing To Take? II. What Is the Regulatory History of CAMR? III. What Are the General Requirements of CAMR? IV. How Can States Comply With CAMR? V. Analysis of Pennsylvania's CAMR State Plan Submittal A. EPA Is Proposing To Find That Pennsylvania's State Plan Meets All CAMR Budget Related and Other Requirements for Approval B. Summary of State Plan VI. Statutory and Executive Order Reviews I. What Action Is EPA Proposing To Take? EPA is proposing to approve Pennsylvania's State Plan for the control of mercury emissions from coal-fired EGUs, as submitted by Pennsylvania on November 6, 2006, and as subsequently revised by Pennsylvania on March 16, 2007. EPA is proposing to determine that the State Plan will meet the applicable requirements of CAMR. In its State Plan, Pennsylvania would meet CAMR requirements by implementing a Pennsylvania-specific mercury control regulation for coal-fired EGUs, rather than through participation in the EPA-administered CAMR cap-and-trade program. Pennsylvania's state-specific regulation establishes annual emission limitations as part of a Statewide mercury nontradable allowance program; sets mercury emissions standards; and includes other requirements for the purpose of controlling mercury emissions from coal-fired EGUs. II. What Is the Regulatory History of CAMR? CAMR was published by EPA on May 18, 2005 (70 FR 28606, “Standards of Performance for New and Existing Stationary Sources: Electric Utility Steam Generating Units; Final Rule”). In this rule, acting pursuant to its authority under section 111(d) of the Clean Air Act (CAA), 42 U.S.C. 7411(d), EPA required that all States and the District of Columbia (all of which are referred to herein as States) meet Statewide annual budgets limiting mercury emissions from coal-fired EGUs (as defined in 40 CFR 60.24(h)(8)) under Clean Air Act
(CAA)section 111(d). EPA required all States to submit State Plans with control measures that ensure that total, annual mercury emissions from the coal-fired EGUs located in the respective States do not exceed the applicable Statewide annual EGU mercury budget. Under CAMR, States may implement and enforce these reduction requirements by participating in the EPA-administered cap-and-trade program or by adopting any other effective and enforceable control measures. CAA section 111(d) requires States, and, along with CAA section 301(d) and the Tribal Air Rule (40 CFR part 49), allows Tribes granted treatment as States (TAS), to submit State Plans to EPA that implement and enforce the standards of performance. CAMR explains what must be included in State Plans to address the requirements of CAA section 111(d). The State Plans were due to EPA by November 17, 2006. Under 40 CFR 60.27(b), the Administrator will approve or disapprove the State Plans. III. What Are the General Requirements of CAMR State Plans? CAMR establishes Statewide annual EGU mercury emission budgets and is to be implemented in two Phases. The first Phase of reductions starts in 2010 and continues through 2017. The second Phase of reductions starts in 2018 and continues thereafter. CAMR requires States to implement the budgets by either:
(1)Requiring coal-fired EGUs to participate in the EPA-administered cap-and-trade program; or
(2)adopting other coal-fired EGU control measures of the respective State's choosing and demonstrating that such control measures will result in compliance with the applicable State annual EGU mercury budget. Each State Plan must require coal-fired EGUs to comply with the monitoring, recordkeeping, and reporting provisions of 40 CFR part 75 concerning mercury mass emissions. Each State Plan must also show that the State has the legal authority to adopt emission standards and compliance schedules necessary for attainment and maintenance of the State's annual EGU mercury budget and to require the owners and operators of coal-fired EGUs in the State to meet the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. IV. How Can States Comply With CAMR? Each State Plan must impose control requirements that the State demonstrates will limit Statewide annual mercury emissions from new and existing coal-fired EGUs to the amount of the State's applicable annual EGU mercury budget. States have the flexibility to choose the type of EGU control measures they will use to meet the requirements of CAMR. EPA anticipates that many States will choose to meet the CAMR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAMR cap-and-trade program. EPA also anticipates that many States may choose to control Statewide annual mercury emissions for new and existing coal-fired EGUs through an alternative mechanism other than the EPA-administered CAMR cap-and-trade program. Each State that chooses an alternative mechanism must include with its plan a demonstration that the State Plan will ensure that the State will meet its assigned State annual EGU mercury emission budget. A State submitting a State Plan that requires coal-fired EGUs to participate in the EPA-administered CAMR cap-and-trade program may either adopt regulations that are substantively identical to the EPA model mercury trading rule (40 CFR part 60, subpart HHHH) or incorporate by reference the model rule. CAMR provides that States may only make limited changes to the model rule if the States want to participate in the EPA-administered trading program. A State Plan may change the model rule only by altering the allowance allocation provisions to provide for State-specific allocation of mercury allowances using a methodology chosen by the State. A State's alternative allowance allocation provisions must meet certain allocation timing requirements and must ensure that total allocations for each calendar year will not exceed the State's annual EGU mercury budget for that year. V. Analysis of Pennsylvania's CAMR State Plan Submittal A. EPA Is Proposing To Find That Pennsylvania's State Plan Meets All CAMR Budget Related and Other Requirements for Approval In today's action, EPA is proposing to approve Pennsylvania's State Plan as assuring that mercury emissions from the State's EGUs will not exceed the levels specified in the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3), i.e., 1.779 tons per year for EGU mercury emissions in Phase 1 and 0.702 tons per year for EGU mercury emissions in Phase 2. The State Plan includes a State-specific regulation which requires owners or operators of affected new or existing coal-fired EGUs 1 to comply with a Statewide mercury nontradable allowance program among other provisions. Pennsylvania assured that the regulation would apply to all of the EGUs which have emissions required to be accounted for under the CAMR budget for Pennsylvania by using in the regulation a definition of EGU consistent with the definition specified in CAMR at 40 CFR 60.24(h)(8). Pennsylvania's Statewide mercury nontradable allowance program, limits total mercury emissions from EGUs in the State to the same Phase 1 and Phase 2 amounts as are set forth in the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3). Pennsylvania's mercury nontradeable allowance program requires its Phase 1 reductions to be achieved starting January 1, 2010, the same date as the Phase 1 reductions are required to be achieved under the CAMR, but requires its Phase 2 reductions to be achieved starting January 1, 2015, earlier than the required Phase 2 reductions under CAMR. 1 EPA notes that Pennsylvania's definitions of “existing EGU” and “new EGU” overlap in that an EGU that “commenced construction, modification, or reconstruction” on January 1, 2004 would be covered by both definitions. EPA believes that this technical problem with the rule will likely have no practical consequence since it is unlikely that there will be such a unit and Pennsylvania can resolve this if and when a problem arises. Therefore, EPA's proposed approval includes these definitions. Pennsylvania's State-specific regulation implements the annual limits on total mercury emissions of EGUs in the State by setting aside for each EGU an amount of nontradable allowances that comprises the annual emission limitation (in ounces of mercury emissions) for that EGU. The amount set aside may include allowances requested by the owner or operator and provided from an annual emission limitation supplement pool. Further, the regulation states, in § 123.207(p), that an owner or operator must demonstrate compliance with annual emission limitation on a unit-by-unit, facility-wide, or system-wide basis and explains, in § 123.207(q) and (r), that, under facility-wide or system-wide compliance, the total annual emissions from the EGUs involved must be less than the total amount of allowable annual emissions for such EGUs. However, the regulation also provides, in §§ 123.207(j)(5) and 123.209, that each ounce of emissions by an EGU, facility, or system, as applicable, in excess of the amount of allowances set aside for the EGU, facility, or system, including any set aside under § 123.209, constitutes a violation. EPA interprets § 123.207(j)(5) and
(p)through
(r)and § 123.209 as requiring that the total mercury emissions from an EGU, or from the appropriate group of EGUs where compliance is on a facility-wide or system-wide basis, determined in accordance with §§ 123.210-123.215, must not exceed the total amount of allowances set aside for the EGU or the appropriate group of EGUs, including any allowances set aside from the annual emission limitation supplement pool, for the year. It should be noted that Pennsylvania's mercury reduction regulation also restricts the emissions of mercury from existing and new coal-fired EGUs through the imposition of emission standards. These standards, established in § 123.205, are to be achieved in addition to the Statewide mercury nontradeable allowance program provisions described above. The CAMR does not establish or require similar emissions standards to be applied to individual emission units. As discussed above, CAMR requires a demonstration that the State Plan will ensure that the State will meet its assigned State annual EGU mercury emission budget. Pennsylvania meets this requirement through the establishment of its Statewide nontradeable mercury allowance program and not through the emission limitations required by § 123.205. In addition, EPA is proposing to approve Pennsylvania's Plan, interpreted as discussed below, as meeting the CAMR provision that State plans must require owners and operators of coal-fired EGUs to meet the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. The provisions of the regulation included in the State's plan concerning monitoring, recordkeeping, and reporting, found at §§ 123.210-123.215, are intended to be consistent with the monitoring, reporting, and recordkeeping requirements for mercury mass emissions in 40 CFR part 75, Subpart I and in EPA's CAMR model rule, which is based on and references 40 CFR part 75, Subpart I. Section 123.210(a) and
(b)states that, for purposes of compliance with 12-month rolling average mercury emission requirements in § 123.205 and annual mercury mass emission requirements in § 123.207, the monitoring, reporting, and recordkeeping requirements of §§ 123.210-123.215 and 139.101, 40 CFR part 75, Subpart I, and Pennsylvania's Continuous Source Monitoring Manual (DEP 274-0300-001) apply. The manual (at 1), in turn, states that part 75 applies to “monitoring systems required pursuant to only” part 75 (e.g., mercury mass monitoring systems) and that “[a]pproval for compliance with [part 75] must be obtained from” EPA. In addition, § 123.210(k) states that an owner or operator may not use any alternative to a part 75 requirement unless the alternative is approved by the Administrator in writing. EPA therefore interprets the monitoring, reporting, and recordkeeping requirements in Pennsylvania's regulation as requiring owners and operators to meet the requirements of 40 CFR part 75, Subpart I and providing that, if there is any conflict between those requirements and any other requirements set forth in §§ 123.210-123.215, the part 75 provisions will take precedence for the purpose of compliance with annual mercury mass emission requirements. Specifically, Pennsylvania's regulation includes provisions, in § 123.210(n)(1), allowing discontinuation of use of an approved monitoring system when the owner or operator is using another certified monitoring system for the appropriate parameter that is approved by the department in accordance with §§ 123.210-123.215 and Chapter 139, Subchapter C. In light of the other provisions of Pennsylvania's regulation discussed above, EPA interprets § 123.210(n)(1) as allowing discontinuation of an approved monitoring system used for determining compliance with the annual mercury mass emission requirements in § 123.207 only if another monitoring system for the appropriate parameter is approved in accordance with part 75, subpart I. 2 2 EPA notes that § 123.210(j) incorrectly references “subsections (f)-(h)” (rather than just subsection (h)) and that the provision only makes sense where a certified monitoring system already exists and a new stack or flue or new control device is added, which is addressed only in subsection (h). In any event, that § 123.210(j) is based on a provision in § 60.4170(c)(2) that EPA has proposed to remove. See 71 FR 77100, 77117 (2006). EPA interprets § 123.210(j) to apply only with regard to subsection (h), and, if EPA finalizes removal of § 60.4170(c)(2), § 123.210(j ) will no longer apply at all for the purpose of compliance with the annual mercury mass emission limitation under § 123.207. Further, Pennsylvania's regulation includes provisions, in § 123.211(a)(5)(iii), requiring the substitution of alternative data in cases where the State “issues a notice of disapproval of a certification application or a notice of disapproval of certification status” and allowing the substitution of either data values as specified in part 75 or “an alternative emission value that is more representative of actual emissions that occurred during the period.” In light of the other provisions of Pennsylvania's regulation discussed above, EPA interprets § 123.211(a)(5)(iii) as giving Pennsylvania the authority to approve substitute data values other than those specified by part 75 only in cases where those data values would be used solely for the purpose of showing compliance with the mercury emission requirements in § 123.205 and not for any data required for the purpose of showing compliance with the annual mercury mass emission limitation in § 123.207. Similarly, § 123.212(a) of Pennsylvania's regulations requires the use of substitute data based on the Continuous Source Monitoring Manual if a monitoring system fails to meet certain quality-assurance, quality-control, or data validation requirements. As discussed above, the manual requires mercury mass emission monitoring systems to meet the requirements of part 75. Further, § 123.212(a) also states that a mercury mass emission monitoring system failing to meet quality-assurance or quality-control requirements must use substitute data under part 75. EPA therefore interprets § 123.212(a) to require the use of substitute data as prescribed in part 75 for the purpose of showing compliance with the annual mercury mass emission limitation in § 123.207. EPA is also proposing to approve the Plan as meeting the requirements of CAMR, and also of 40 CFR Subpart B, entitled, “Adoption and Submittal of State Plans for Designated Facilities,” for a demonstration of legal authority. The State's Plan includes an opinion by the Chief Counsel of the Pennsylvania Department of Environmental Protection which demonstrates that the State has the required legal authority to adopt emission standards and compliance schedules necessary for attainment and maintenance of the State's annual EGU mercury budget and to require the owners and operators of coal-fired EGUs in the State to meet the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. Finally, EPA is proposing to approve the State's Plan as meeting the other applicable general requirements for approval under 40 CFR part 60, subpart B. The State's Plan requires owners and operators of affected coal-fired EGUs in Pennsylvania to comply with emission limitations (expressed as nontradable mercury allowances) that ensure that total emissions from the affected coal-fired EGUs in Pennsylvania will not exceed the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3). The State's Plan also requires owners or operators of affected coal-fired EGUs to achieve mercury emission reductions on a schedule that is equivalent to, or more rapid than, the schedule under CAMR. The State's Plan includes evidence that three public hearings were held, and also that public notice of these hearings was provided. The State's Plan also includes an emissions inventory of the State's EGUs. EPA describes the State's Plan in more detail below. B. Summary of State Plan Pennsylvania's State Plan includes a State regulation at 25 Pa. Code, Chapter 123, Standards for Contaminants; Mercury, Annex A. Pennsylvania's state-specific mercury control regulation establishes annual mercury emission limitations for EGUs as part of a Statewide mercury nontradable allowance program, sets mercury emissions standards for EGUs, and includes monitoring, recordkeeping, reporting and other provisions. Pennsylvania's State-specific regulation is applicable to all of the EGUs which have emissions required to be accounted for under the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3). Pennsylvania assured that the regulation would apply to all of the EGUs which have emissions required to be accounted for under the CAMR budget for Pennsylvania by using in the regulation a definition of EGU consistent with the definition specified in CAMR at 40 CFR 60.24(h)(8). The Statewide mercury nontradable allowance program ensures that the mercury emissions from new and existing EGUs in the State will not exceed the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3) by limiting total mercury emissions from EGUs in the State to the same Phase 1 and Phase 2 amounts as specified in the CAMR budget for the State. Under the Statewide mercury nontradable mercury allowance program the total amount of mercury emissions allowed to be emitted from affected coal-fired EGUs is 56,928 ounces (3,558 lbs or 1.779 tons) per year during Phase 1 extending from January 1, 2010 through December 31, 2014, and 22,464 ounces (1,404 pounds or 0.702 tons) per year during Phase 2 starting January 1, 2015 (rather than January 1, 2018, as specified in the CAMR budget for Pennsylvania found at 40 CFR 60.24(h)(3)) and continuing in subsequent years. The Statewide mercury nontradable allowance program provides that of the total of 56,928 ounces per year of mercury emissions available for emission limitation set-asides during Phase 1, 54,080 ounces will be allocated to existing affected EGUs and the remaining five
(5)percent will be set-aside for use by new affected EGUs. The Statewide mercury nontradable allowance program further provides that of the 22,464 ounces per year of mercury emissions available for emission limitation set-asides during Phase 2, 21,790 ounces will be allocated to existing affected coal-fired EGUs and the remaining three
(3)percent will be set aside for new affected coal-fired EGUs. The Statewide mercury nontradable allowance program provides that the annual nontradeable allowances set aside for owners and operators of new affected coal-fired EGUs shall be placed in an annual emission limitation supplement pool administered by the State. Upon petition by owners or operators of new affected EGUs, Pennsylvania may grant annual nontradeable allowances for the new affected coal-fired EGUs from this annual emission limitation supplement pool. Under the Statewide mercury nontradable allowance program owners or operators of new affected coal-fired EGUs that do not yet have a baseline heat input will be allocated allowances in accordance with the requirements of an approved State permit. The Statewide mercury nontradable allowance program specifies that after a new affected coal-fired EGU has commenced operation and completed three control periods of operation, the EGU will become an existing EGU. The Statewide mercury nontradable allowance program provides that a new affected EGU will continue to receive annual nontradeable mercury allowances from the new unit set-aside until the new affected EGU is eligible for annual nontradable mercury allowances allocated from the set-aside for existing EGUs. Under the allowance program when a new affected EGU is eligible to receive annual nontradable mercury allowances from the set-aside for existing affected EGUs, new maximum allowance levels for all existing affected EGUs will be established, and the State will publish these new allocation levels in the Pennsylvania Bulletin for comment by May 31 of the year that is two years prior to the affected control period. The Statewide mercury nontradable allowance program provides for determining the maximum number of annual nontradeable allowances set aside for the owners or operators of all existing affected coal-fired EGUs, except for owners or operators of existing circulating fluidized bed
(CFB)units, by multiplying the EGU's baseline heat input fraction of the State's total baseline annual heat input from all affected EGUs by the State's annual mercury allowance set-aside for existing affected EGUs for each Phase. The Statewide mercury nontradable allowance program provides for determining the maximum number of annual nontradable mercury allowances set aside for owners or operators of existing affected CFB units by multiplying the affected CFB's baseline heat input fraction of the State's total baseline annual heat input for all EGUs by the State's Phase 2 annual mercury allowance for existing EGUs. The Statewide mercury nontradable allowance program provides that the State will publish for comment in the *Pennsylvania Bulletin,* by May 31, 2008, the maximum number of annual nontradeable allowances set aside for “the owner or operator of each existing affected CFB and EGU other than CFB for Phase 1 of the Statewide mercury allowance program,” and that it will publish for comment in the *Pennsylvania Bulletin,* by May 31, 2013, the maximum number of annual nontradeable allowances set aside for “the owner or operator of each existing affected CFB and EGU other than CFB for Phase 2 of the Statewide mercury allowance program.” The Statewide mercury nontradable allowance program specifies that the actual number of annual nontradable mercury allowances awarded to the owner or operator of the EGU, facility, or system shall be based on the actual emissions reported to the State. The Statewide mercury nontradable allowance program further specifies that the actual number of annual nontradable mercury allowances awarded to the owner or operator of the EGU, facility, or system may not exceed the maximum number of annual nontradeable mercury allowances assigned to the owner or operator of the EGU, facility, or system, except in cases where the owner or operator has petitioned for and been granted supplemental allowances. Under the Statewide mercury nontradable allowance program the State could provide such allowances from its annual emission limitation supplement pool. The Statewide mercury nontradable allowance program provides that by March 31 of the year following each reporting year, Pennsylvania will notify the owner or operator of each affected EGU, facility, or system, in writing, of the actual number of annual nontradable mercury allowances awarded to the owner or operator of the affected EGU, facility, or system for the control period. The Statewide mercury nontradable allowance program provides that the owner or operator of one or more affected mercury allowance program EGUs shall demonstrate compliance either on:
(1)A unit-by-unit basis,
(2)a facility-wide basis, or
(3)a system-wide basis. Under the Statewide mercury nontradable allowance program, each ounce of mercury emitted in excess of the maximum number of annual nontradable mercury allowances set aside for the owner or operator of an EGU, facility, or system constitutes a violation of the program and of Pennsylvania's Air Pollution Control Act, unless the owner or operator has petitioned for and has been granted supplemental allowances. Under the Statewide mercury nontradable allowance program if the actual emissions of mercury reported to the State for an EGU, facility, or system are less than the maximum number of annual nontradeable mercury allowances set aside for the owner or operator of the EGU, facility, or system, the State will place the unused portion of the allowances in its annual emission limitation supplement pool. The Statewide mercury nontradable allowance program specifies that the unused portion of annual nontradeable mercury emission allowances assigned to the owner or operator of an affected EGU, facility, or system for any year may not be added to the maximum number of annual nontradable mercury allowances assigned to the owner or operator of the affected EGU, facility, or system for use in future years. Under the Statewide mercury nontradable allowance program annual nontradable mercury allowances may not be banked for use in future years. The Statewide mercury nontradable allowance program does not apply to the owner or operator of an EGU that will be permanently shutdown no later than December 31, 2009. The allowance program provides that annual nontradable mercury allowances will not be set aside for the owner or operator of an existing affected EGU that is already shut down or scheduled for shutdown unless the owner or operator of the EGU obtains a plan approval for the construction of a new EGU, or is on “standby” as of the effective date of each set-aside Phase. When a standby unit is ready for normal operation, the owner or operator may petition the State for annual nontradeable allowances. Under the regulation's allowance program the State could provide such allowances from its annual emission limitation supplement pool. The Statewide mercury nontradable allowance program specifies that an owner or operator of an existing affected EGU who enters into an enforceable agreement with the State, by December 31, 2007, to shutdown that existing EGU and to replace it, by December 31, 2012, with a new Integrated Gasification Combined Cycle
(IGCC)unit, is eligible to request annual nontradable mercury allowances from the annual emission limitation supplement pool. The Statewide mercury nontradable allowance program provides that the State may revise the percentage of set-aside used to determine the number of ounces of mercury set-aside for future annual mercury emission limitations to accommodate the emissions from new EGUs, or changes in the calculation of baseline heat input, so that the total number of ounces of mercury emissions in the Statewide mercury nontradable allowance program is not exceeded. Pennsylvania's regulation requires owners or operators of EGUs not only to keep the emissions of their EGUs at or below levels consistent with their allowances for their EGUs, but also to meet emission limits. The emission limits for EGUS vary depending upon whether or not the EGU qualifies as a new or existing unit and on the type of EGU. The regulation defines a new EGU as “[a]n EGU which commenced construction modification, or reconstruction, as defined under 40 CFR Part 60 (relating to standards of performance for new stationary sources), on or after January 30, 2004, and has less than three complete control periods of heat input data as of December 31 of the preceding control period.” The regulation defines an existing EGU as “[a]n EGU which commenced construction, modification or reconstruction on or before January 30, 2004, or which has three complete control periods of heat input data as of December 31 or the preceding control period.” For new EGUs, Pennsylvania's regulation requires the owner or operator to comply at the commencement of operation on a rolling 12 month basis with one of the following standards:
(1)Pulverized Coal Fired
(PCF)EGU. The owner or operator of a PCF EGU shall comply with either or the following:
(i)A mercury emission standard of 0.011 pound of mercury per Gigawatt-hour (GWh).
(ii)A minimum 90% control of total mercury as measured from the mercury content in the coal, either as fired or as approved in writing by Pennsylvania.
(2)Circulating Fluidized Bed
(CFB)EGU. The owner or operator of a CFB EGU shall comply with the following applicable provisions:
(i)CFB EGUs burning 100% coal refuse as the only solid fossil fuel shall comply with either of the following:
(A)A mercury emission standard of 0.0096 pound of mercury per GWh.
(B)A minimum 95% control of total mercury as measured from the mercury content in the coal refuse, either as fired or as approved in writing by the State.
(ii)CFB EGU's burning 100% coal as the only solid fossil fuel shall comply with either of the following:
(A)A mercury emission standard of 0.011 pound of mercury per GWh.
(B)A minimum 90% control of total mercury as measured from the mercury content in the coal refuse, either as fired or as approved in writing by the State.
(iii)CFB EGUs burning multiple fuels shall comply with a prorated emission standard based on the percentage of heat input from the coal and the percentage of heat input from the coal refuse.
(3)Integrated Gasification Combined Cycle
(IGCC)EGU. The owner or operator of an IGCC EGU shall comply with one of the following:
(i)A mercury emission standard of 0.0048 pound of mercury per GWh.
(ii)A minimum 95% control of total mercury as measured from the mercury content in the coal, either as processed or as approved in writing by the State. Pennsylvania's regulation notifies owners or operators of new EGUs that they are also required to comply with the New Source Performance Standards
(NSPS)found at 40 CFR Part 60, Subpart Da. In addition, the regulation indicates that the State's emission standards will serve as the baseline the State uses for review and approval of case-by-case best available technology determinations in accordance with the State's requirements relating to construction, modification, reactivation and operation of sources. For existing EGUs, the regulation requires the owner or operator to comply on a rolling 12-month basis with one of the following standards:
(1)Phase 1—Effective from January 1, 2010 through December 31, 2014:
(i)PCF EGU—The owner or operator of a PCF shall comply with one of the following:
(A)A mercury emission standard of 0.024 pound of mercury per GWh.
(B)A minimum 80% control of total mercury as measured from the mercury content in the coal, either as fired or as approved in writing by the State.
(ii)CFB EGU—The owner or operator of a CFB burning coal refuse shall comply with one of the following:
(A)A mercury emission standard of 0.0096 pound of mercury per GWh.
(B)A minimum 95% control of total mercury as measured from the mercury content in the coal refuse, either as fired or as approved in writing by the State.
(2)Phase 2—Effective beginning January 1, 2015, and each subsequent year:
(i)PCF EGU—The owner or operator of a PCF shall comply with one of the following:
(A)A mercury emission standard of 0.012 pound of mercury per GWh.
(B)A minimum 90% control of total mercury as measured from the mercury content in the coal, either as fired or as approved in writing by the State.
(ii)CFB EGU—The owner or operator of a CFB burning coal refuse shall comply with one of the following:
(A)A mercury emission standard of 0.0096 pound of mercury per GWh.
(B)A minimum 95% control of total mercury as measured from the mercury content in the coal refuse, either as fired or as approved in writing by the State. The regulation also provides that the owner or operator of an EGU may request, in writing, credit for the mercury removal efficiency resulting from the pretreatment of coal or coal refuse towards the minimum specified percent control efficiency of the total mercury requirements. The regulation provides that the owner or operator of one or more EGUs subject to the mercury emissions standards shall demonstrate compliance on:
(1)A unit-by-unit basis, or
(2)a facility-wide basis. Pennsylvania's regulation requires owners or operators of coal-fired EGUs to comply with the monitoring, recordkeeping, and reporting provisions of 40 CFR part 75 concerning mercury mass emissions. The regulation provides that the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75 Subpart I (relating to mercury mass emission provisions) apply, as well as other monitoring, recordkeeping and reporting provisions which are Pennsylvania-specific, as discussed in detail above. The regulation further indicates that Pennsylvania has adopted by reference the provisions entitled “Mercury Designated Representative for Mercury Budget Sources,” found in EPA's model rule, 40 CFR part 60, Subpart HHHH, at sections 60.4110 through 60.4114. In addition, the regulation provides that, for purposes of complying with its requirements, the definitions in 40 CFR 72.2 shall apply. The regulation also includes provisions pertaining to initial certification and recertification procedures for emissions reporting, provisions for out-of-control periods for emissions monitors, provisions pertaining to monitoring of gross electrical output, provisions pertaining to coal sampling and analysis for input mercury levels, and provisions pertaining to general recordkeeping and reporting. The regulation provides that owners or operators of new or existing affected EGUs will be issued a State plan approval or operating permit (including Title V permits) in which the applicable mercury control requirements will be specified. The regulation specifies that these plan approvals or permits will be issued before the later of January 1, 2010 or the date on which the affected EGU commences operation. The regulation further provides, at § 123.206, that the State's Department of Environmental Protection (the Department) “may approve in a plan approval or operating permit, or both, an alternate mercury emission standard or compliance schedule, or both, if the owner or operator of an EGU subject to the emission standards of § 123.205 demonstrates in writing to the Department's satisfaction that the mercury reduction requirements are economically or technologically infeasible. The Department's approval of such an alternative emission standard or compliance schedule does not relieve the owner or operator of the EGU from complying with the other requirements of §§ 123.201-123.205 and 123.207-123.215.” The State Plan also contains required non-regulatory elements. The State Plan includes an inventory of the existing designated coal-fired EGUs in the State, and provides data regarding the mercury emissions of these EGUs. The Plan also provides documentation of the State's public participation process, including copies of public notices announcing public hearings and the opportunity to comment, a certification that three public hearings were held, and a summary of comments received by the State and of the State's responses. Further, the Plan includes a legal opinion of the Chief Counsel of the Pennsylvania Department of Environmental Protection which demonstrates that the State has the legal authority to adopt emission standards and compliance schedules necessary for attainment and maintenance of the State's annual EGU mercury budget and to require the owners and operators of coal-fired EGUs in the State to meet the monitoring, recordkeeping, and reporting requirements of 40 CFR part 75. VI. Statutory and Executive Order Reviews Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely proposes to approve State law as meeting Federal requirements and would impose no additional requirements beyond those imposed by State law. Accordingly, the Administrator certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this action proposes to approve pre-existing requirements under State law and would not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This proposal also does not have Tribal implications because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This proposed action also does not have Federalism implications because it would not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a State rule implementing a Federal standard. It does not alter the relationship or the distribution of power and responsibilities established in the CAA. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard. Executive Order 12898, “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations,” requires Federal agencies to consider the impact of programs, policies, and activities on minority populations and low-income populations. EPA guidance 3 states that EPA is to assess whether minority or low-income populations face risk or a rate of exposure to hazards that is significant and that “appreciably exceed[s] or is likely to appreciably exceed the risk or rate to the general population or to the appropriate comparison group.” (EPA, 1998) Because this rule merely proposes to approve a state rule implementing the Federal standard established by CAMR, EPA lacks the discretionary authority to modify today's regulatory decision on the basis of environmental justice considerations. However, EPA has already considered the impact of CAMR, including this Federal standard, on minority and low-income populations. In the context of EPA's CAMR published in the **Federal Register** on May 18, 2005, in accordance with EO 12898, the Agency has considered whether CAMR may have disproportionate negative impacts on minority or low income populations and determined it would not. 3 U.S. Environmental Protection Agency, 1998. Guidance for Incorporating Environmental Justice Concerns in EPA's NEPA Compliance Analyses. Office of Federal Activities, Washington, DC, April, 1998. In reviewing State Plan submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a State Plan for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a State Plan submission, to use VCS in place of a State Plan submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule proposing to approve Pennsylvania's State Plan submittal for the CAMR requirements would not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). List of Subjects in 40 CFR Part 62 Environmental protection, Air pollution control, Electric utilities, Intergovernmental relations, Mercury, Reporting and recordkeeping requirements. Authority: 42 U.S.C. 7401 *et seq.* Dated: September 4, 2007. Donald S. Welsh, Regional Administrator, Region III. [FR Doc. E7-18057 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 82 [EPA-HQ-OAR-2007-0384; FRL-8467-3] RIN 2060-AO28 Protection of Stratospheric Ozone: Extension of Global Laboratory and Analytical Use Exemption for Essential Class I Ozone-Depleting Substances AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMARY: EPA is proposing to extend the global laboratory and analytical use exemption for production and import of class I ozone-depleting substances beyond December 31, 2007, contingent upon and consistent with future anticipated actions by the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer. The exemption allows persons in the United States to produce and import controlled substances for laboratory and analytical uses that have not been already identified by EPA as nonessential. EPA also is proposing to add, for specific laboratory uses, the applicability of the laboratory and analytical use exemption to production and import of methyl bromide. DATES: Written comments on this proposed rule must be received by the EPA Docket on or before November 13, 2007. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2007-0384, by one of the following methods: • *http://www.regulations.gov* . Follow the on-line instructions for submitting comments. • *E-mail:* *A-and-R-docket@epa.gov* . • *Fax:* 202-343-2338, attn: Staci Gatica. • *Mail:* Air Docket, Environmental Protection Agency, Mailcode 6102T, 1200 Pennsylvania Ave., NW., Washington, DC 20460. • *Hand Delivery or Courier:* Deliver your comments to: EPA Air Docket, EPA West 1301 Constitution Avenue, NW., Room B108, Mail Code 6102T, Washington, DC 20460. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-HQ-OAR -2007-0384. EPA's policy is that all comments received by the docket will be included in the public docket without change and may be made available online at *www.regulations.gov* , including any personal information provided, unless the comment includes information claimed to be Confidential Business Information
(CBI)or other information whose disclosure is restricted by statute. Do not submit information through *www.regulations.gov* or e-mail that you consider to be CBI or otherwise protected. If you would like the Agency to consider comments that include CBI, EPA recommends that you submit the comments to the docket that exclude the CBI portion but that you provide a complete version of your comments, including the CBI, to the person listed under ADDRESSES above. The *www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through *www.regulations.gov* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. 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 *www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *www.regulations.gov* or in hard copy at the Air Docket, EPA/DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC. This Docket Facility is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is
(202)566-1744, and the telephone number for the Air Docket is
(202)566-1742. FOR FURTHER INFORMATION CONTACT: Staci Gatica by regular mail: U.S. Environmental Protection Agency, Stratospheric Protection Division (6205J), 1200 Pennsylvania Avenue, NW., Washington, DC, 20460; by courier service or overnight express: 1301 L Street, NW., Washington, DC 20005, Workstation 1047B, by telephone: 202-343-9469; or by e-mail: *gatica.staci@epa.gov* . SUPPLEMENTARY INFORMATION: Table of Contents I. General Information A. What should I consider when preparing my comments? II. Extension of the Global Laboratory and Analytical Use Exemption III. Applicability of the Global Laboratory and Analytical Use Exemption to Methyl Bromide IV. Minor Technical Corrections V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations I. General Information A. What should I consider when preparing my comments? 1. *Confidential Business Information* . Do not submit this information to EPA through www.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 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 comment 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: • Identify the rulemaking by docket number and other identifying information (subject heading, **Federal Register** date and page number). • 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. • Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. • Describe any assumptions and provide any technical information and/or data that you used. • If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. • Provide specific examples to illustrate your concerns, and suggest alternatives. • Explain your views as clearly as possible, avoiding the use of profanity or personal threats. • Make sure to submit your comments by the comment period deadline identified. II. Extension of the Global Laboratory and Analytical Use Exemption The *Montreal Protocol on Substances that Deplete the Ozone Layer* (Montreal Protocol) is the international agreement to reduce and eventually eliminate the production and consumption 1 of all stratospheric ozone-depleting substances (ODSs). The elimination of production and consumption of ODSs has been accomplished through adherence to phaseout schedules for specific ODSs. Section 604 of the Clean Air Act, as amended in 1990 and 1998, requires EPA to promulgate regulations implementing the Montreal Protocol's phaseout schedules in the United States. Those regulations are codified at 40 CFR part 82 Subpart A. As of January 1, 1996, production and import of most class I ODSs—including chlorofluorocarbons (CFCs), halons, carbon tetrachloride, and methyl chloroform 2 —were phased out in developed countries, including the United States. 1 “Consumption” is defined as the amount of a substance produced in the United States, plus the amount imported into the United States, minus the amount exported to Parties to the Montreal Protocol ( *see* Section 601(6) of the Clean Air Act). 2 Class I ozone depleting substances are listed at 40 CFR part 82 subpart A, appendix A. However, the Montreal Protocol provides exemptions that allow for the continued import and/or production of ODSs for specific uses. Under the Montreal Protocol, for most class I ODSs, the Parties may collectively grant exemptions to the ban on production and import of ODSs for uses that they determine to be “essential.” For example, with respect to CFCs, Article 2A(4) provides that the phaseout will apply “save to the extent that the Parties decide to permit the level of production or consumption that is necessary to satisfy uses agreed by them to be essential.” Similar language appears in the control provisions for halons (Art. 2B), carbon tetrachloride (Art. 2D), methyl chloroform (Art. 2E), hydrobromofluorocarbons (Art. 2G), and chlorobromomethane (Art. 2I). As defined by Decision IV/25 of the Parties, use of a controlled substance is essential only if
(1)it is necessary for the health, safety or is critical for the functioning of society (encompassing cultural and intellectual aspects), and
(2)there are no available technically and economically feasible alternatives or substitutes that are acceptable from the standpoint of environment and health. Decision X/19 (taken in 1998) allowed a general exemption for essential laboratory and analytical uses through December 31, 2005. EPA included this exemption in our regulations at 40 CFR part 82, subpart A. While the Clean Air Act does not specifically provide for this exemption, EPA determined that an exemption for essential laboratory and analytical uses was allowable under the Act as a *de minimis* exemption. EPA addressed the *de minimis* exemption in the final rule of March 13, 2001 (66 FR 14760-14770). Decision X/19 also requested the Montreal Protocol's Technology and Economic Assessment Panel (TEAP), a group of technical experts from various Parties, to report annually to the Parties to the Montreal Protocol on procedures that could be performed without the use of controlled substances. It further stated that at future Meetings of the Parties (MOPs), the Parties would decide whether such procedures should no longer be eligible for exemptions. Based on the TEAP's recommendation, the Parties to the Montreal Protocol decided in 1999 (Decision XI/15) that the general exemption no longer applied to the following uses: Testing of oil and grease and total petroleum hydrocarbons in water; testing of tar in road-paving materials; and forensic finger-printing. EPA incorporated this exclusion at Appendix G to Subpart A of 40 CFR part 82 on February 11, 2002 (67 FR 6352). Most recently, in its 2006 Assessment Report, the Chemicals Technical Options Committee
(CTOC)(a subgroup that reports to the TEAP), explained that while it was brought to their attention that some opportunities for substitution exist, there has been only slow progress in replacing ODSs that are being used in laboratory and analytical procedures with substances that are less harmful to the ozone layer (p. 31, Air Docket EPA-HQ-OAR-2007-0384). The TEAP has not recommended any additional procedures to exclude from the exemption for existing approved ODSs. Members of the CTOC will continue to monitor possible alternatives and report back to the Parties. However, at the Eighteenth MOP the Parties acknowledged the need for methyl bromide for laboratory and analytical procedures, and added methyl bromide to the approved ODSs under the essential laboratory and analytical use exemption. Decision XVIII/15 outlines specific uses and exclusions for methyl bromide under the exemption. Section III of this preamble provides further discussion of the inclusion of methyl bromide in the essential laboratory and analytical use exemption. Based on
(1)The CTOC's recognition that new non-ODS methods are not available for existing exempted laboratory and analytical uses and
(2)the recent decision by the Parties to include methyl bromide under the exemption, EPA believes it is very likely that the Parties plan to extend the existing exemption, which is currently set to expire on December 31, 2007. EPA expects this decision to be made during the nineteenth MOP in September 2007, as the current agenda includes the discussion to extend the essential laboratory and analytical use exemption. Anticipating extension of the essential laboratory and analytical use exemption, EPA is proposing in this rulemaking to extend the applicability of the exemption beyond December 31, 2007. Specifically, EPA is proposing to extend the exemption through December 31, 2015; however, based on comments and the anticipated Decision by the Parties to the Protocol, EPA would amend the date in the final rule to be consistent with the Parties' Decision if a date other than December 31, 2015 is chosen. Until a Decision is adopted by the Parties the Agency does not know exactly what date will be decided upon by the Parties. EPA considered proposing an extension date of 2009, since the previous extension for this exemption was two years, from December 31, 2005 through December 31, 2007. But based on recent discussions by technical experts, such as the CTOC (p. 31, Air Docket EPA-HQ-OAR-2007-0384), EPA believes that the exemption for essential laboratory and analytical uses will be necessary for some time longer than two years and that the Parties may decide upon an extension beyond two years. Therefore, EPA is proposing to extend the exemption through December 31, 2015 based on when it may be reasonable to assume that an exemption would no longer be necessary. EPA intends to finalize this rulemaking using the actual extension date decided upon by the Parties to ensure consistency, noting that the Parties will have considered the most recent technical review and analysis conducted by the CTOC and the TEAP. Furthermore, the overall finalization of the rule is contingent upon the Parties' extension of the exemption under the Montreal Protocol. EPA is interested in any comments the public may have on the proposed extension date, including our rationale for finalizing a date different from the proposed date of December 31, 2015, based on the anticipated future decision by the Parties of the Montreal Protocol. EPA's regulations regarding this exemption at 40 CFR 82.8(b) currently state, “A global exemption for class I controlled substances for essential laboratory and analytical uses shall be in effect through December 31, 2007 subject to the restrictions in appendix G of this subpart, and subject to the record keeping and reporting requirements at Sec. 82.13(u) through (x). There is no amount specified for this exemption.” Because certain laboratory procedures continue to require the use of class I substances in the United States, because non-ODS replacements for the class I substances have not been identified for all uses, and because EPA anticipates the Parties will extend this exemption under the Montreal Protocol, EPA is proposing to revise 40 CFR 82.8(b) to reflect the extension of the exemption to December 31, 2015. For a more detailed discussion of the reasons for the exemption, refer to the March 13, 2001, **Federal Register** notice. As discussed in the March 2001 notice, the controls in place for laboratory and analytical uses provide adequate assurance that very little, if any, environmental damage will result from the handling and disposal of the small amounts of class I ODS used in such applications. In addition, the 2006 CTOC Assessment Report shows a general decrease from 2002 through 2005 in the amount of phased-out class I substances being supplied to laboratories under this exemption (p. 33, EPA-HQ-OAR-2007-0384). III. Applicability of the Global Laboratory and Analytical Use Exemption to Methyl Bromide As of January 1, 2005, production and import of methyl bromide has been disallowed in the United States, except for limited exemptions (40 CFR 82.4(d)). Methyl bromide is a class I controlled substance used chiefly as a fumigant for soil treatment and pest control. EPA created a system of allowances to permit continued production and import of methyl bromide for critical uses after January 1, 2005 (see 69 FR 76981, December 23, 2004). This exemption does not include provisions for continued production of methyl bromide to supply laboratories. However, the phaseout of methyl bromide production and import does not currently restrict inventories of methyl bromide produced prior to January 1, 2005, from being used for laboratory and analytical applications, as described in the Framework rule (69 FR 76982). Methyl bromide (also known as bromomethane) does have laboratory uses, for example, as a chemical intermediate and methylating agent. EPA regulations allow for methyl bromide to be produced after the January 1, 2005, phaseout date if production is covered by “essential use allowances or exemptions.” (40 CFR 82.4(b)(1)) The regulations list the laboratory and analytical use exemption as a “global exemption for class I controlled substances,” subject to the restrictions in appendix G (40 CFR 82.4(n)(1)(iii), 82.8(b)). EPA did not originally address the issue of whether the exemption should apply to methyl bromide, but EPA did propose to include methyl bromide in the 2005 rulemaking that extended the exemption through December 31, 2007 (see 70 FR 25727). EPA received one comment on the proposed inclusion of methyl bromide, and it was general in nature. Nonetheless, EPA recognized that further discussion of whether the global laboratory exemption should include methyl bromide might occur at a future MOP and deferred final action on the issue. In November of 2006, during the meeting of the Parties to the Montreal Protocol, the Parties included methyl bromide in the essential laboratory and analytical use exemption via Decision XVIII/15. Specifically, the Decision XVIII/15 allows methyl bromide be used:
(1)As a reference or standard
(a)to calibrate equipment which uses methyl bromide;
(b)to monitor methyl bromide emission levels;
(c)to determine methyl bromide residue levels in goods, plants, and commodities;
(2)in laboratory toxicological studies;
(3)to compare the efficacy of methyl bromide and its alternatives inside a laboratory;
(4)as a laboratory agent which is destroyed in a chemical reaction in the manner of feedstock. Furthermore, Decision XVIII/15 specifically disallows classifying field trials using methyl bromide as essential laboratory and analytical uses and indicates that entities wishing to carry out such field trials could submit critical use nominations for that purpose (p. 43, EPA-HQ-OAR-2007-0384). Furthermore, we believe that extending the essential laboratory and analytical uses exemption to include methyl bromide is fully consistent with allowing this exemption under the Clean Air Act as a *de minimis* exemption. EPA addressed the *de minimis* exemption in a final rule dated March 13, 2001 (66 FR 14760-14770). EPA believes only a very small amount of methyl bromide will produced under the laboratory and analytical use exemption. To date, very few companies have approached EPA about extending the laboratory and analytical use exemption to include methyl bromide. EPA does not believe that there is a large demand for methyl bromide for laboratory and analytical uses, and there is no indication that there has been significant use of the pre-phaseout inventories (that is, methyl bromide produced prior to January 1, 2005) for such uses. One interested company provided EPA with an estimate of annual methyl bromide sales for laboratory and analytical use, if allowed under the current exemption. That company anticipated only 0.14 metric tons in sales. Considering that 27 metric tons of ODSs were produced in 2005 and reported to the UNEP under the current laboratory and analytical use exemption, and considering that EPA has no reason to believe that large amounts of methyl bromide will be demanded and produced under the laboratory and analytical exemption, EPA, in accordance with Decision XVIII/15, proposes to add language regarding methyl bromide inclusion under the global laboratory exemption rule in Appendix G to Subpart A of Part 82. EPA is seeking public comment on the proposed inclusion of methyl bromide in the essential laboratory and analytical use exemption. IV. Minor Technical Correction EPA is proposing to revise three paragraphs in the reporting requirements at § 82.13 to correct two sets of minor typographical errors. The first set addresses incorrect paragraph references. Under § 82.13(v), distributors of laboratory supplies who purchased controlled substances under the essential global laboratory and analytical use exemption must report on a quarterly basis the quantity of each controlled substance purchased by each laboratory customer whose certification was previously provided to the distributor, and refers to the provisions of paragraph (y). The reference to paragraph
(y)is erroneous and should be a reference to paragraph (w), which describes annual certifications provided by laboratory customers. The same paragraph (§ 82.13(v)) also refers to § 82.4(z), but should actually reference § 82.13(x). Similarly, § 82.13(x) (applicable to distributors who only sell controlled substances as reference standards for calibrating laboratory analytical equipment) incorrectly refers to paragraph
(y)and should refer to paragraph (w). Further, the reference to reports required under paragraph
(x)should be corrected to refer to reports required under (v). The second set of corrections addresses the inaccurate terminology that is used to refer to the essential laboratory and analytical use exemption. In § 82.13(v), (w), and (x), the exemption is referred to as the “global laboratory essential-use exemption.” This is not consistent with the rest of the regulation. EPA proposes to replace the reference to “global laboratory essential-use exemption” with “global essential laboratory and analytical use exemption” found in § 82.13(v), (w), and (x). EPA seeks comment on these proposed corrections. V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review This action is not a “significant regulatory action” under the terms of Executive Order
(EO)12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under the EO. B. Paperwork Reduction Act This action does not propose any new information collection burden. The recordkeeping and reporting requirements included in this action are already included in an existing information collection burden and this action does not propose any changes that would affect the burden. However, the Office of Management and Budget
(OMB)has previously approved the information collection requirements contained in the existing regulations at 40 CFR 82.8(a) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 *et seq.* and has assigned OMB control number 2060-0170, EPA ICR number 1432.25. A copy of the OMB approved Information Collection Request
(ICR)may be obtained from Susan Auby, Collection Strategies Division; U.S. Environmental Protection Agency (2822T); 1200 Pennsylvania Ave., NW., Washington, DC 20460 or by calling
(202)566-1672. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. C. Regulatory Flexibility Act The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impact of today's proposed rule on small entities, small entity is defined as:
(1)Pharmaceutical preparations manufacturing businesses (NAICS code 325412) that have less than 750 employees;
(2)a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and
(3)a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant *adverse* economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the rule on small entities.” 5 U.S.C. 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. This action, once finalized, will provide an otherwise unavailable benefit to those companies that obtain ozone-depleting substances under the essential laboratory and analytical use exemption. We have therefore concluded that today's proposed rule will relieve regulatory burden for all small entities. We continue to be interested in the potential impact of the proposed rule on small entities and welcome comments on issues related to such impacts. D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative, if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed a small government agency plan under section 203 of the UMRA. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. Today's proposed rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector, since it merely provides an essential laboratory and analytical use exemption from the 1996 and 2005 phase outs of Class I ODSs (including methyl bromide). Similarly, EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments, because this rule merely extends the essential laboratory and analytical use exemption. E. Executive Order 13132: Federalism Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This proposed rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, Executive Order 13132 does not apply to this rule. 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. Today's proposed rule affects only the companies that requested essential use allowances. Thus, Executive Order 13175 does not apply to this rule. G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks Executive Order 13045: “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997) applies to any rule that:
(1)Is determined to be “economically significant” under E.O. 12866, and
(2)concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. EPA interprets E.O. 13045 as applying only to those regulatory actions that are based on health or safety risks, such as the analysis required under section 5-501 of the Order has the potential to influence the regulation. This proposed rule is not subject to E.O. 13045 because it implements Section 604(d)(2) of the Clean Air Act which states that the Agency shall authorize essential use exemptions should the Food and Drug Administration determine that such exemptions are necessary. H. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use This proposed rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 Fed. Reg. 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The rule affects only the pharmaceutical companies that requested essential use allowances. I. National Technology Transfer and Advancement Act Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law No. 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards. This proposed rule does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards. J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations Executive Order
(EO)12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. EPA has determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. The controls in place for laboratory and analytical uses provide adequate assurance that very little, if any, environmental damage will result from the handling and disposal of the small amounts of class I ODS used in such applications. Furthermore, the 2006 CTOC Assessment Report shows a general decrease from 2002 through 2005 in the amount of phased-out class I substances being supplied to laboratories under this exemption. List of Subjects in 40 CFR Part 82 Environmental protection, Administrative practice and procedure, Air pollution control, Chemicals, Chlorofluorocarbons, Imports, Methyl chloroform, Ozone, Reporting and recordkeeping requirements. Dated: September 7, 2007. Stephen L. Johnson, Administrator. 40 CFR part 82 is proposed to be amended as follows: PART 82—PROTECTION OF STRATOSPHERIC OZONE 1. The authority citation for part 82 continues to read as follows: Authority: 42 U.S.C. 7414, 7601, 7671-7671q. Subpart A—Production and Consumption Controls 2. Section 82.8 is amended by revising paragraph
(b)to read as follows: § 82.8 Grant of essential use allowances and critical use allowances.
(b)A global exemption for class I controlled substances for essential laboratory and analytical uses shall be in effect through December 31, 2015, subject to the restrictions in appendix G of this subpart, and subject to the record keeping and reporting requirements at § 82.13(u) through (x). There is no amount specified for this exemption. 3. Section 82.13 is amended by revising paragraphs (v),
(w)introductory text, and
(x)to read as follows: § 82.13 Recordkeeping and reporting requirements for class I controlled substances.
(v)Any distributor of laboratory supplies who purchased controlled substances under the global essential laboratory and analytical use exemption must submit quarterly (except distributors following procedures in paragraph
(x)of this section) the quantity of each controlled substance purchased by each laboratory customer whose certification was previously provided to the distributor pursuant to paragraph
(w)of this section.
(w)A laboratory customer purchasing a controlled substance under the global essential laboratory and analytical use exemption must provide the producer, importer or distributor with a one-time-per-year certification for each controlled substance that the substance will only be used for essential laboratory and analytical uses (defined at appendix G of this subpart) and not be resold or used in manufacturing. The certification must also include:
(x)Any distributor of laboratory supplies, who purchased class I controlled substances under the global essential laboratory and analytical use exemption, and who only sells the class I controlled substances as reference standards for calibrating laboratory analytical equipment, may write a letter to the Administrator requesting permission to submit the reports required under paragraph
(v)of this section annually rather than quarterly. The Administrator will review the request and issue a notification of permission to file annual reports if, in the Administrator's judgment, the distributor meets the requirements of this paragraph. Upon receipt of a notification of extension from the Administrator, the distributor must submit annually the quantity of each controlled substance purchased by each laboratory customer whose certification was previously provided to the distributor pursuant to paragraph
(w)of this section. 4. Appendix G to Subpart A of Part 82 is amended by adding paragraph 5 to read as follows: Appendix G to Subpart A of Part 82—UNEP Recommendations for Conditions Applied to Exemptions and Essential Laboratory and Analytical Uses 5. Pursuant to Decision XVIII/15 of the Parties to the Montreal Protocol, effective November 2006, Methyl Bromide is exempted for the following approved essential laboratory and analytical purposes: a. As a reference standard to calibrate equipment which uses methyl bromide, to monitor methyl bromide emission levels, to determine methyl bromide residue levels in goods, plants and commodities; b. In laboratory toxicological studies; c. To compare the efficacy of methyl bromide and its alternatives inside a laboratory; and d. As a laboratory agent which is destroyed in a chemical reaction in the manner of feedstock. Use of methyl bromide for field trials is not an approved use under the global laboratory and analytical use exemption. The provisions of Appendix G, paragraphs (1), (2), (3), and (4), regarding purity, mixing, container, and reporting requirements for other exempt ODSs, also apply to the use of methyl bromide under this exemption. [FR Doc. E7-18095 Filed 9-12-07; 8:45 am] BILLING CODE 6560-50-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [DA 07-3622; MB Docket No. 07-175; RM-11380] Radio Broadcasting Services; Cuba, IL AGENCY: Federal Communications Commission. ACTION: Proposed rule. SUMMARY: This document requests comments on a petition for rule making filed by KM Communications, Inc. (“Petitioner”) proposing:
(1)To substitute Channel 252A for vacant Channel 292A at Cuba, Illinois at current reference coordinates 40-25-50 NL and 90-14-05 WL with a site restriction of 7.9 km (4.9 miles) southwest of the community and
(2)as already reflected in the Media Bureau Consolidated Data Base System, change the reference coordinates of vacant Channel 253A at Augusta, Illinois to 40-08-34 NL and 91-02-51 WL with a site restriction of 12.8 km (7.9 miles) southwest of the community. Petitioner proposes the channel substitution at Cuba to accommodate its pending construction permit application (file no. BNPH-20070502AAU) to substitute Channel 291A for Channel 252A at Abingdon, Illinois which will be considered separately. DATES: Comments must be filed on or before October 15, 2007, and reply comments on or before October 30, 2007. ADDRESSES: Federal Communications Commission, 445 Twelfth Street, SW., Washington, DC 20554. In addition to filing comments with the FCC, interested parties should serve the Petitioner's counsel, as follows: Jeffrey L. Timmons, Esquire, 1400 Buford Highway, Suite G-5, Sugar Hill, Georgia 30518-8727. FOR FURTHER INFORMATION CONTACT: Helen McLean, Media Bureau,
(202)418-2738. SUPPLEMENTARY INFORMATION: This is a summary of the Commission's *Notice of Proposed Rule Making* , MB Docket No. 07-175, adopted August 22, 2007, and released August 24, 2007. The full text of this Commission decision is available for inspection and copying during normal business hours in the Commission's Reference Center, 445 Twelfth Street, SW., Washington, DC 20554. This document may also be purchased from the Commission's duplicating contractors, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or *http://www.BCPIWEB.com* . This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(c)(4). The Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all *ex parte* contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. *See* 47 CFR 1.1204(b) for rules governing permissible *ex parte* contact. For information regarding proper filing procedures for comments, *see* 47 CFR 1.415 and 1.420. List of Subjects in 47 CFR Part 73 Radio, Radio broadcasting. For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows: PART 73—RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, 336. § 73.202 [Amended] 2. Section 73.202(b), the Table of FM Allotments under Illinois, is amended by removing Channel 292A and by adding Channel 252A at Cuba. Federal Communications Commission. John A. Karousos, Assistant Chief, Audio Division, Media Bureau. [FR Doc. E7-17866 Filed 9-12-07; 8:45 am] BILLING CODE 6712-01-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [DA 07-2855; MB Docket No. 07-124; RM-11378] Radio Broadcasting Services; Dallas and Waldport, OR AGENCY: Federal Communications Commission. ACTION: Proposed rule. SUMMARY: This document sets forth a proposal to amend the FM Table of Allotments, Section 73.202(b) of the Commission's rules, 47 CFR 73.202(b). The Commission requests comment on a petition filed by Radio Beam, LLC. Petitioner proposes the allotment of Channel 253A at Waldport, Oregon, as a first local service. In order to accommodate the proposed allotment, petitioner further requests the substitution of noncommercial educational Channel 236C3 for vacant noncommercial educational Channel 252C3 at Dallas, Oregon. In order to accommodate those two proposed changes in the FM Table of Allotments, petitioner also proposes the substitution of Channel 252C3 for Channel 236C3 at Monmouth, Oregon, and the modification of the license for Station KSND
(FM)accordingly. Channel 253A can be allotted at Waldport in compliance with the Commission's minimum distance separation requirements with a site restriction of 8.3 km (5.2 miles) north of Waldport. The proposed coordinates for Channel 253A at Waldport are 44-30-06 North Latitude and 124-04-30 West Longitude. Channel 236C3 can be allotted at Dallas in compliance with the Commission's minimum distance separation requirements with a site restriction of 16.9 km (10.5 miles) southwest of Dallas. The proposed coordinates for Channel 236C3 at Dallas are 44-50-43 North Latitude and 123-30-07 West Longitude. *See* SUPPLEMENTARY INFORMATION *infra.* DATES: Comments must be filed on or before October 22, 2007, and reply comments on or before November 6, 2007. ADDRESSES: Federal Communications Commission, Washington, DC 20554. In addition to filing comments with the FCC, interested parties should serve the designated petitioner as follows: Earnest R. Hopseker, Member and Manager, Radio Beam, LLC, 4524 132nd Avenue, SE., Bellevue, Washington 98006. FOR FURTHER INFORMATION CONTACT: Deborah A. Dupont, Media Bureau
(202)418-7072. SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 07-124, adopted June 27, 2007, released June 29, 2007, and corrected August 31, 2007. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Information Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554. The complete text of this decision may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
(800)378-3160, or via the company's Web site, *http://www.bcpiweb.com.* This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, *see* 44 U.S.C. 3506(C)(4). The Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all *ex parte* contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. *See* 47 CFR 1.1204(b) for rules governing permissible *ex parte* contacts. For information regarding proper filing procedures for comments, *see* 47 CFR 1.415 and 1.420. List of Subjects in 47 CFR Part 73 Radio, Radio broadcasting. For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows: PART 73—RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, 336. § 73.202 [Amended] 2. Section 73.202(b), the Table of FM Allotments under Oregon, is amended by removing Channel *252C3 and by adding Channel *236C3 at Dallas, and adding Channel 253A at Waldport. Federal Communications Commission. John A. Karousos, Assistant Chief, Audio Division, Media Bureau. [FR Doc. E7-17892 Filed 9-12-07; 8:45 am] BILLING CODE 6712-01-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 216 [Docket No. 070809454-7459-01] RIN 0648-AV82 Marine Mammals; Advance Notice of Proposed Rulemaking AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Advance notice of proposed rulemaking (ANPR); request for comments. SUMMARY: NMFS is considering proposing changes to its implementing regulations, and criteria governing the issuance of permits for scientific research and enhancement activities under section 104 of the Marine Mammal Protection Act (MMPA), and is soliciting public comment to better inform the process. Permits to take marine mammal species are governed by the MMPA and NMFS implementing regulations at 50 CFR part 216. For threatened and endangered marine mammal species, permits are also governed by the Endangered Species Act
(ESA)and 50 CFR part 222. On May 10, 1996, a final rule was published establishing requirements for issuing permits to take, import, or export marine mammals (including endangered and threatened marine mammals) and marine mammal parts under NMFS jurisdiction for purposes of scientific research and enhancement, photography, and public display (for captures and initial imports), and providing procedures for determining the disposition of rehabilitated stranded marine mammals. NMFS intends to streamline and clarify general permitting requirements and requirements for scientific research and enhancement permits, simplify procedures for transferring marine mammal parts, possibly apply the General Authorization
(GA)to research activities involving Level A harassment of non-ESA listed marine mammals, and implement a 'permit application cycle' for application submission and processing of all marine mammal permits. NMFS intends to write regulations for photography permits and is considering whether this activity should be covered by the GA. Any other recommendations received in response to this ANPR regarding regulations at 50 CFR part 216 will be considered prior to proposed rulemaking. DATES: Written comments must be received at the appropriate address or facsimile
(fax)number (see ADDRESSES ) no later than 5 p.m. local time on November 13, 2007. ADDRESSES: Written comments should be sent to: Chief, Permits, Conservation and Education Division, Attn: Permit Regulations ANPR, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910. Comments may also be submitted by facsimile at (301)427-2521, provided the facsimile is confirmed by hard copy submitted by mail and postmarked no later than the closing date of the comment period. Comments may also be submitted by e-mail. The mailbox address for providing e-mail comments is *NMFS.Pr1Comments@noaa.gov* . Include in the subject line of the e-mail comment the following document identifier: Permit Regulations ANPR, or The Federal e-Rulemaking Portal: *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Amy Sloan, Fishery Biologist, Office of Protected Resources, NMFS, at
(301)713-2289. SUPPLEMENTARY INFORMATION: NMFS has authority, delegated from the Secretary of Commerce, to issue permits for research and enhancement activities under Section 104 of the MMPA (16 U.S.C. 1361 *et seq.* ) and section 10(a)(1)(A) of the ESA (16 U.S.C. 1531 *et seq.* ). Permits to take marine mammal species are governed by the MMPA, ESA, and NMFS implementing regulations at 50 CFR parts 216 and 222. As a Federal agency, issuance of permits by NMFS is also governed by the procedural requirements and provisions of the Administrative Procedure Act
(APA)and the National Environmental Policy Act (NEPA). The APA is the law under which federal regulatory agencies, including NMFS, create the rules and regulations necessary to implement and enforce major legislative acts such as the MMPA and ESA. Under the APA, NMFS is required to publish in the **Federal Register** descriptions of rules of procedure, substantive rules of general applicability, and make available to the public statements of policy and interpretation, administrative staff manuals and instructions. NEPA requires Federal agencies to integrate environmental values into their decision making processes by considering the environmental impacts of their proposed actions and reasonable alternatives to those actions. The requirements of NEPA apply to NMFS “decision-making process” for issuance of permits. The NOAA Administrative Order No. 216-6 (NAO 216-6), Environmental Review Procedures for Implementing the National Environmental Policy Act, is also an agency guidance document for applying the requirements of NEPA to agency actions, including permit issuance. The following paragraphs provide some possible regulatory changes being considered by NMFS. The changes being considered are found in 50 CFR part 216, most in subpart D, although comments or recommendations regarding any of the subparts will be considered. The sections identified are either followed by recommendations from NMFS on possible alternatives or changes to the current language, or a general solicitation by NMFS to the public for comments pertaining to that section. Several of the regulatory changes would require an amendment or change to the MMPA before implementation could be effective. Part 216, Regulations Governing the Taking and Importing of Marine Mammals Subpart A - Introduction NMFS does not have any recommended changes for § 216.1 (Purpose) or 216.2 (Scope). Do either of these sections require further consideration or clarification? *§ 216.3 Definitions:* Are there existing definitions relevant to the marine mammal permitting process that need clarification? Are there any other definitions that need clarification, or definitions that need to be added to these regulations? Are there any other sections in Subpart A whose language requires further consideration or clarification? Subpart B - Prohibitions *§ 216.14 Marine mammals taken before the MMPA:* Should we add provisions to authorize export in addition to import under § 216.14 (c)? *§ 216.15 Depleted species:* Should we clarify that any species or population stock listed as endangered or threatened under the ESA is automatically listed as depleted under the MMPA? Do any of the remaining sections in Subpart B require further consideration or clarification? Subpart C - General Exceptions Several regulatory changes are being considered by NMFS in this subpart and include, but are not limited to, the following: *§ 216.23 Native exceptions:* Does NMFS need to clarify sections regarding transfer of marine mammal parts? Do we need to include provisions for authorizing transfers of marine mammal parts for research purposes? If so, be explicit on how this should occur and whether this should be combined with transfers of other marine mammal parts legally taken, or kept under this section. *§ 216.25 Exempted marine mammals and marine mammal products:* Should this section be consolidated with other sections (e.g., incorporate this § 216.25 into §§ 216.14 and 216.12; remove § 216.25)? Do we then reserve this section (or use another section) for a consolidated parts transfer section (for parts taken legally under §§ 216.22, 216.26, and 216.37) if possible? Subpart C is a substantial component of part 216. Therefore, any comments or recommendations regarding whether the language in other sections in subpart C require further consideration or clarification would be appreciated. Subpart D - Special Exceptions *§ 216.31 Definitions:* Are there any definitions relevant to marine mammal permitting procedures that need to be added? *§ 216.32 Scope* : Does the scope of this subpart need to be modified or clarified in any manner? *§ 216.33 Permit application submission, review, and decision procedures:* Generally, NMFS is considering reorganizing and/or consolidating permitting regulation §§ 216.33 (Permit application, submission, review, and decision procedures), 216.34 (Issuance criteria), 216.35 (Permit restrictions), 216.36 (Permit conditions), and 216.41 (Permits for scientific research and enhancement) where possible. We have included some specific recommendations; however any recommendations where regulations need consolidation or simplification in the following sections, and how this might be achieved, would be considered. *§ 216.33
(c)Initial review:* NMFS regulations currently require the agency to determine that a proposed permit is categorically excluded from the need to prepare further environmental documentation, or to prepare an environmental assessment
(EA)with a finding of no significant impact (FONSI) or a final environmental impact statement (EIS), during initial review of the application and prior to making it available for public comment and review pursuant to § 216.33(d). This sequence precludes public input on the application that may influence NMFS' determination regarding whether the activity requires an EA or EIS. Therefore, NMFS is considering a revision to this section, and the corresponding language at 216.33(d) such that NEPA documentation is not required at the time an application is made available for public review and comment. NMFS Administrative Order 216-6 stipulates that issuance of scientific research, enhancement, photography, and public display permits pursuant to the MMPA and issuance of research permits pursuant to the ESA are, in general, categorically excluded from the need to prepare further environmental documentation because, as a class, they do not have significant environmental impacts. With this recommended change NMFS would continue to evaluate the potential environmental impacts of permits, but could conduct this assessment after the close of the comment period on the application, when comments from the public and other agencies could be considered in that assessment. *§ 216.33(d) Notice of receipt and application review:* Consistent with the proposed changes to § 216.33(c) regarding NEPA, NMFS proposes to revise the requirements for including a NEPA statement in the notice of receipt of an application. Where NMFS believes a permit would be categorically excluded from the need to prepare further environmental documentation, the notice will so state. If that determination is based on information in an existing EA/FONSI or Final EIS, that document will be referenced in the notice and made available simultaneously with the application. When no previous NEPA documentation relevant to the proposed activity is available, the notice will solicit public input on the appropriate level of NEPA documentation concurrent with review of the application. After the close of the comment period on the application, NMFS would determine the appropriate level of NEPA documentation for the activity, in consideration of comments received, information presented in the application, and the best available information. NMFS' final NEPA determination on a specific application would be published in the **Federal Register** prior to or concurrent with notice of permit issuance or denial pursuant to § 216.33(e). *§ 216.33(e) Issuance or denial procedures:* Consistent with MMPA section 104(d), the current regulations state that “within 30 days of the close of the public comment period the Office Director will issue or deny a special exception permit.” NMFS is considering revising this section to reconcile the ESA section 7 and NEPA compliance timelines with statutory requirements for when permit decisions must be made relative to the close of the comment period. For example, when NMFS determines, subsequent to the public comment period on an application, that issuance of a proposed permit requires preparation of an EA or EIS, processing of the application cannot be completed within 30 days of the close of the comment period. Under the current regulations, NMFS would have to deny the permit because the appropriate NEPA documentation could not be completed in time to support a decision to issue. Rather than deny such permits, NMFS proposes to defer a decision on the application until the appropriate NEPA documentation is completed. Similarly, when formal consultation is required under section 7 of the ESA, which allows 135 days or more for consultation and completion of a Biological Opinion, processing of the application cannot be completed within 30 days of the close of the comment period. Rather than deny such permits, NMFS proposes to defer a decision on the application until the section 7 consultation is completed. In both cases NMFS would publish a notice in the FR within 30 days of the close of the comment period announcing that a decision on the specific application has been deferred pending completion of the appropriate NEPA and ESA section 7 analyses. *§ 216.33(e)(4):* For permits involving marine mammals listed as endangered or threatened under the ESA, NMFS is required to determine whether the permit is consistent with the requirements of section 10(d) of the ESA. NMFS would appreciate comments on how to determine whether an applicant has applied for a permit “in good faith” and whether the permit “will operate to the disadvantage of such endangered or threatened species.” *§ 216.34 Issuance criteria:* NMFS would appreciate any recommendations on whether or how this section should be clarified or consolidated with other sections. In support of the applicant's demonstration that the proposed activity is humane, NMFS is considering requiring proof of Institutional Animal Care and Use Committee approval of the proposed activity where such approval would be required pursuant to the Animal Welfare Act. Any comments on this would be appreciated. *§ 216.35 Permit restrictions:* One consideration by NMFS is to provide for only minor amendments to original permits (see § 216.39), not major vs. minor as currently exists, which would require modifying language in this section. Any proposed change resulting in the need for an increased level of take or risk of adverse impact above those authorized in the original permit would no longer be considered under an amendment, and would require a new permit application. Since the current regulatory process for reviewing and issuing major amendments requires a public comment and review period, the time it takes to issue a major amendment is consistent with the time it takes to process a new application. Amendments would be issued that only covered those activities that are currently consistent with a minor amendment. One exception to this would be that proposed changes in location, species, and numbers where no take is involved (e.g., import of parts or specimens legally acquired by a foreign institution) would be a minor amendment. Similarly, NMFS is considering removing the part in § 216.35(b) that provides for a 1 year extension of the original permit. If this change were implemented neither the life of the original permit nor any subsequent amendment would exceed five years from the effective date of the permit. NMFS would appreciate any comments on this recommendation. The regulations require individuals conducting permitted activities to possess qualifications commensurate with their duties and responsibilities, or be under the direct supervision of a person with such qualifications. NMFS is seeking input on whether it should promulgate regulations specifying minimum standards for such qualifications or specific criteria by which applicants' qualifications and those of other personnel listed in the application could be evaluated. *§ 216.36 Permit conditions:* NMFS is considering consolidating this section with other sections of permit regulations (e.g., § 216.35, Permit restrictions) that also contain conditions pertinent to marine mammal permits. NMFS would appreciate any recommendations on how this might best be achieved. *§ 216.37 Marine mammal parts:* This section of the regulations is the subject of much confusion in interpretation and implementation. This section is similar to the transfer requirements in § 216.22. NMFS is interested in clarifying and consolidating this section with other sections (§§ 216.22 and 216.26) involving the transfer of parts legally taken, such that the same provisions would apply to the subsequent transfer of any marine mammal part that was already legally taken under the MMPA and/or ESA. Should there be different requirements for the transfer of parts legally taken from an ESA-listed versus a non ESA-listed marine mammal? Does there need to be any clarification on how to apply or receive authorization for a transfer, and for determining who can be authorized to receive marine mammal parts and what documentation is required? Are the reporting requirements adequate and necessary, and should they be modified in any way? Does the language in § 216.37(d) regarding export and re-import need to be clarified, and if so, how? NMFS seeks recommendations for developing regulatory language to streamline and govern the issuance of research permits involving collection, receipt, import, export, and archiving marine mammal parts for future opportunistic research. Currently marine mammal parts taken or obtained under permit may be transferred to another person pursuant to this section of the regulations, but there is no mechanism for facilitating the initial collection of marine mammal parts by institutions for eventual use for research purposes where the bona fide criteria required in section 104(c)(3) of the MMPA cannot be met for each and every part obtained by the institution. We are considering establishing guidelines in this section for determining when such activities would satisfy the bona fide scientific purpose requirement when the purpose of the initial receipt of the part may be unknown. We are also considering establishing standardized documentation and reporting requirements for permits involving marine mammal parts to demonstrate that the parts are taken legally and in a humane manner and that all requirements for applicable domestic and foreign laws have been met regarding importation and exportation. NMFS is also considering adding to this section requirements and procedures governing the development, use, distribution or transfer, and prohibited sale of cell lines derived from marine mammal tissues. We are also considering similar regulations pertaining to gametes used by the public display industry and research community in assisted reproductive techniques of captive marine mammals. Any recommendations or comments on these topics would be appreciated. *§ 216.39 Permit amendments:* One consideration already mentioned (in § 216.35) is to provide for only one amendment type, not major vs. minor. This would require consolidating this section considerably. Under this change the language in this section would be consistent with the following:
(a)General. Special exception permits may be amended by the Office Director. Amendments may be made to permits in response to, or independent of, a request from the permit holder. Amendments must be consistent with the Acts and comply with the applicable provisions of this subpart. Special exception permits may be amended by the Office Director without need for further public review or comment.
(1)An amendment means any change to the permit specific conditions under Sec. 216.36(a) provided that the amendment does not result in any of the following:
(i)An increase in the number and species of marine mammals that are authorized to be taken, imported, exported, or otherwise affected;
(ii)A change in the manner in which these marine mammals may be taken, imported, exported, or otherwise affected, where such change would result in an increased level of take or risk of adverse impact; and
(iii)A change in the location(s) in which the marine mammals may be taken, from which they may be imported, and to which they may be exported, as applicable.
(2)A request involving changes to the location, species, and number of marine mammal parts or specimens received, imported, or exported, where no take is involved, would qualify as an amendment.
(b)Amendment requests and proposals.
(1)Requests by a permit holder for an amendment must be submitted in writing and include the following:
(i)The purpose and nature of the amendment;
(ii)Information, not previously submitted as part of the permit application or subsequent reports, necessary to determine whether the amendment satisfies all issuance criteria set forth at Sec. 216.34, and, as appropriate, Sec. 216.41, Sec. 216.42, and Sec. 216.43.
(iii)Any additional information required by the Office Director for purposes of reviewing the proposed amendment.
(2)If an amendment is proposed by the Office Director, the permit holder will be notified of the proposed amendment, together with an explanation.
(c)Review of proposed amendments.
(i)After reviewing all appropriate information, the Office Director will provide the permit holder with written notice of the decision on a proposed or requested amendment, together with an explanation for the decision.
(ii)An amendment will be effective upon a final decision by the Office Director. *§ 216.40 Penalties and permit sanctions:* NMFS is considering specifying criteria and procedures for the suspension, revocation, modification, and denial of scientific research or enhancement permits, in addition to, but consistent with, the provisions of subpart D of 15 CFR part 904. For example, NMFS is considering promulgating specific regulations for suspension, revocation, modification, and denial of scientific research and enhancement permits for reasons not related to enforcement actions. *§ 216.41 Permits for scientific research and enhancement* : Should NMFS attempt to streamline, clarify and consolidate this large section with existing general permitting requirements? If so, any specific language toward that end would be considered. One change we are considering is the requirements for public display of marine mammals held under a scientific research permit in § 216.41(c)(1)(vi)(A) such that marine mammals may be on display if necessary to address the research objectives or if authorized by the Office Director, in addition to the existing requirements in § 216.41(c)(1)(vi)(B) and (C). We would appreciate any comments on if this should be changed. We are also considering adding a new section, § 216.41(c)(3), to authorize via an enhancement permit the long-term captive maintenance and incidental public display of ESA-listed species originally obtained under a research or enhancement permit when such activities have been completed or are not able to be carried out and the animals cannot be returned to the wild. Such permits would require that an appropriate educational program is established and approved by Office Director and that the animals are made available for research or enhancement activities at the request of the Office Director. In addition, if we implemented the General Authorization changes (see § 216.45), then those changes would also apply to this section for non-strategic marine mammals. *§ 216.42 Photography [Reserved]* : NMFS may propose regulations similar to those for the General Authorization (§ 216.45). We are also considering limiting the number of personnel that may be involved in order to eliminate potential problems with permit holders using such authorization for ecotourism, since the MMPA does not provide exemptions for harassment of marine mammals via ecotourism permits. Any specific recommendations as to what these regulations should or should not include would be considered. *§ 216.45 General Authorization for Level B harassment for scientific research* : NMFS is considering modifications to this section that would make General Authorizations
(GAs)available based on the status of the target stock, rather than strictly based on the level of harassment. The recommended change would make a GA available for all Level A and Level B research on all non-strategic stocks of MMPA species. A GA would also be available for stocks defined as strategic under the MMPA, but only for Level B research activities. Under this suggested change a GA would not be appropriate for Level A research on ESA listed species, or depleted and strategic stocks under the MMPA. A number of paragraphs throughout this section would have to change as a result of this recommendation. This change, prior to implementation, would require a similar change in section 104(c)(3)(C) of the MMPA. Regardless of whether changes are made to allow the GA to apply to level A harassment, NMFS proposes to modify this section to clarify that the description of methods in the letter of intent must specify the number of marine mammals, by species or stock, that would be taken, including a justification for such sample sizes. NMFS is also considering revising the terms and conditions of the GA regulations to clarify that any activity conducted incidental to the research, such as commercial or educational filming or photography, would require prior written approval from NMFS, and such activities would be subject to the same conditions as those specified at § 216.41(c)(1)(vii) for scientific research and enhancement permits, i.e., the conduct of such incidental activities must not involve any taking of marine mammals beyond what is necessary to conduct the research. *Other considerations:* NMFS is also considering adding new sections to the regulations. One such consideration would place the permit application and amendment process on a cycle. One option would be to accept permit applications and amendment requests quarterly (i.e., during any one of four three-month cycles per year). Applicants would have firmly established deadlines (made known through FR notification, mailings, and web site) to assist them in planning the submission of their application relative to the proposed start of their research. Another option would be to accept applications and amendments only twice a year, during one of two six-month cycles One possible disadvantage for applicants under either alternative is that if a submission deadline were missed an applicant would have to wait three (option 1) to six (option 2) additional months for their permit. Applicants are used to requesting amendments at any time. They too would be affected by this modification and a request for an amendment could only happen once a permit cycle. However, a permit cycle ultimately makes receipt of permits predictable and helps researchers plan the submission of their applications with respect to proposed initiation of their work. For applications to conduct research on non-ESA listed species, NMFS would aim for an average processing time of 90 days such that processing an application submitted by the deadline for one cycle could be completed by the end of the next cycle (three months later). Another advantage to this is that the average processing time of applications involving ESA-listed marine mammal species would likely be reduced because we would be able to conduct batched consultations and analyses under the ESA and NEPA. In cases where programmatic NEPA documents and corresponding ESA section 7 consultations have been completed, an average processing time of 90 to 120 days could be possible for those research activities covered by the documents. Public Involvement NMFS invites the public to submit comments on the current regulations, recommended changes to the current regulations that might be considered in a new set of proposed regulations, and any relevant issues pertaining to the permitting process that might be considered as part of future proposed rulemaking. Be as specific as possible including providing draft language if appropriate. NMFS does not intend to convene public meetings under this ANPR. Comments and recommendations received under this ANPR will be reviewed as part of a proposed rulemaking which will be the next step in this regulatory process. Dated: September 7, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. [FR Doc. E7-18106 Filed 9-12-07; 8:45 am] BILLING CODE 3510-22-S 72 177 Thursday, September 13, 2007 Notices DEPARTMENT OF AGRICULTURE Forest Service Notice of Proposed New Fee Sites on the Shasta-Trinity National Forest Federal Lands Recreation Enhancement Act (Title VIII, Pub. L. 108-447) AGENCY: USDA Forest Service, Shasta-Trinity National Forest. ACTION: Notice of new fee sites on the Shasta-Trinity National Forest. SUMMARY: The Shasta-Trinity National Forest is proposing to charge fees for overnight camping at three campgrounds and eight popular day use sites in 2008. The proposed fees include: Overnight Camping 1. Big Bar Campground: $8.00/night/site plus a $5.00/night extra vehicle fee. 2. Ripstein Campground: $10.00/night/site plus a $5.00/night extra vehicle fee. 3. Scott Flat Campground: $10.00/night/site plus a $5.00/night extra vehicle fee. Extra vehicle fees are being proposed at several campgrounds where space is at a premium. If all camp sites at these locations are full and everyone brings an extra vehicle, there isn't enough room to park and resources are impacted. Day Use Sites 1. Fisherman's Point: $3.00/vehicle/day. 2-8. Day use sites within the following seven campgrounds: Big Bar, Big Flat, Burnt Ranch, Hayden Flat, Pigeon Point, Ripstein and Skunk Point: $5.00/vehicle/day or $50.00 annually for the use of any of the day use sites at these seven campgrounds. The proposed fees are based on the level of amenities and services provided, an operational analysis identifying the cost of operating and maintaining these sites and market research. Visitors appreciate and enjoy the availability of these outdoor opportunities with a scenic backdrop on the Shasta-Trinity National Forest. The overall goal of charging fees is to provide better services for the recreating public and to protect the investments that have been made at these sites. Fee revenue would be used to repair and improve facilities, including replacing some restrooms; installing bear-proof receptacles to facilitate recycling glass, aluminum and plastic; improving water systems and roads; replacing degraded picnic tables; reducing fuels; and increasing the frequency of restroom cleanings and garbage collection activities. DATES: New fees will be implemented after March 1, 2008. ADDRESSES: J. Sharon Heywood, Forest Supervisor, Shasta-Trinity National Forest, 3644 Avtech Parkway, Redding, California 96002. FOR FURTHER INFORMATION CONTACT: Brenda Tracy, Assistant Public Use Staff Officer, at 3644 Avtech Parkway, Redding, CA 96002. Information about proposed fees can also be found on the Shasta-Trinity National Forest Web site: *http://www.fs.fed.us/r5/shastatrinity/.* SUPPLEMENTARY INFORMATION: The Federal Recreation Lands Enhancement Act (Title VII, 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. These new fees will be reviewed by a Recreation Resource Advisory Committee prior to a final decision and implementation. Dated: September 6, 2007. Scott G. Armentrout, Deputy Forest Supervisor, Shasta-Trinity National Forest. [FR Doc. 07-4494 Filed 9-12-07; 8:45 am]
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- Departmental regulations§ 301
- Purposes§ 3501
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register
37 references not yet in our index
- 12 CFR 652
- 12 CFR 1750
- Pub. L. 102-552
- 106 Stat. 4102
- Pub. L. 104-105
- 110 Stat. 168
- 14 CFR 39
- 15 CFR 806
- 15 CFR 806.14
- 22 USC 3101-3108
- 26 CFR 1
- 40 CFR 52
- Pub. L. 104-4
- 40 CFR 62
- 40 CFR 49
- 40 CFR 75
- 40 CFR 60
- 40 CFR 72.2
- 40 CFR 82
- 40 CFR 2
- 40 CFR 82.8(b)
- 40 CFR 82.4(d)
- 40 CFR 82.4(b)(1)
- 40 CFR 82.4(n)(1)(iii)
- 40 CFR 82.8(a)
- 40 CFR 9
- Pub. L. 104-113
- 47 CFR 73
- Pub. L. 104-13
- Pub. L. 107-198
- 47 CFR 1.1204(b)
- 47 CFR 1.415
- 47 CFR 73.202(b)
- 50 CFR 216
- 50 CFR 222
- 15 CFR 904
- Pub. L. 108-447
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