Rules and Regulations. Direct final rule
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/register/2007/12/31/07-6252A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 3410-05-C NUCLEAR REGULATORY COMMISSION 10 CFR Part 72 RIN 3150-AI24 List of Approved Spent Fuel Storage Casks: HI-STORM 100 Revision 5 AGENCY: Nuclear Regulatory Commission. ACTION: Direct final rule. SUMMARY: The Nuclear Regulatory Commission
(NRC)is amending its spent fuel storage cask regulations by revising the Holtec International HI-STORM 100 cask system listing within the “List of Approved Spent Fuel Storage Casks” to include Amendment No. 5 to Certificate of Compliance
(CoC)Number 1014. Amendment No. 5 includes deletion of the requirement to perform thermal validation tests on thermal systems; an increase in the design basis maximum decay heat loads, namely, to 34 kilowatts
(kW)for uniform loading and 36.9 kW for regionalized loading, and introduction of a new decay heat regionalized scheme; an increase in the maximum fuel assembly weight for boiling water reactor fuel in the Multi-Purpose Canister (MPC)-68 from 700 to 730 pounds; an increase in the maximum fuel assembly weight of up to 1,720 pounds for assemblies not requiring spacers, otherwise 1,680 pounds; changes to the assembly characteristics of 16 × 16 pressurized water reactor fuel assemblies to be qualified for storage in the HI-STORM 100 cask system; a change in the fuel storage locations in the MPC-32 for fuel with axial power shaping rod assemblies and in the fuel storage locations in the MPC-24, MPC-24E, and the MPC-32 for fuel with control rod assemblies, rod cluster control assemblies, and control element assemblies; elimination of the restriction that fuel debris can only be loaded into the MPC-24EF, MPC-32F, MPC-68F, and MPC-68FF canisters; introduction of a requirement that all MPC confinement boundary components and any MPC components exposed to spent fuel pool water or the ambient environment be made of stainless steel or, for MPC internals, neutron absorber or aluminum; the addition of a threshold heat load below which operation of the Supplemental Cooling System would not be required and modification of the design criteria to simplify the system; minor editorial changes to include clarification of the description of anchored casks, correction of typographical/editorial errors, clarification of the definitions of loading operations, storage operations, transport operations, unloading operations, cask loading facility, and transfer cask in various locations throughout the CoC and Final Safety Analysis Report; and modification of the definition of non-fuel hardware to include the individual parts of the items defined as non-fuel hardware. DATES: The final rule is effective March 17, 2008, unless significant adverse comments are received by January 30, 2008. A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. If the rule is withdrawn, timely notice will be published in the **Federal Register** . ADDRESSES: You may submit comments by any one of the following methods. Please include the following number (RIN 3150-AI24) in the subject line of your comments. Comments on rulemakings submitted in writing or in electronic form will be made available for public inspection. Because your comments will not be edited to remove any identifying or contact information, the NRC cautions you against including personal information such as social security numbers and birth dates in your submission. Mail comments to: Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, ATTN: Rulemakings and Adjudications Staff. E-mail comments to: *SECY@nrc.gov.* If you do not receive a reply e-mail confirming that we have received your comments, contact us directly at
(301)415-1966. Comments can also be submitted via the Federal eRulemaking Portal *http://www.regulations.gov.* Hand deliver comments to: 11555 Rockville Pike, Rockville, Maryland 20852, between 7:30 am and 4:15 pm Federal workdays [telephone
(301)415-1966]. Fax comments to: Secretary, U.S. Nuclear Regulatory Commission at
(301)415-1101. Publicly available documents related to this rulemaking may be viewed electronically on the public computers at the NRC's Public Document Room (PDR), O-1F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland. Publicly available documents created or received at the NRC after November 1, 1999, are available electronically at the NRC's Electronic Reading Room at *http://www.nrc.gov/NRC/ADAMS/index.html.* From this site, the public can gain entry into the NRC's Agencywide Document Access and Management System (ADAMS), which provides text and image files of NRC's public documents. If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC PDR Reference staff at 1-800-397-4209, 301-415-4737, or by e-mail to *pdr@nrc.gov.* An electronic copy of the CoC No. 1014, the revised Technical Specifications (TS), and the preliminary safety evaluation report
(SER)for Amendment No. 5 can be found in a package under ADAMS Accession No. ML072540157. CoC No. 1014, the revised TS, the preliminary SER for Amendment No. 5, and the environmental assessment are available for inspection at the NRC PDR, 11555 Rockville Pike, Rockville, MD. Single copies of these documents may be obtained from Jayne M. McCausland, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone
(301)415-6219, e-mail *jmm2@nrc.gov.* FOR FURTHER INFORMATION CONTACT: Jayne M. McCausland, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone
(301)415-6219, e-mail *jmm2@nrc.gov.* SUPPLEMENTARY INFORMATION: Background Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended (NWPA), requires that “[t]he Secretary [of the Department of Energy (DOE)] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under Section 218(a) for use at the site of any civilian nuclear power reactor.” To implement this mandate, the NRC approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule in 10 CFR Part 72, which added a new Subpart K within 10 CFR Part 72, entitled “General License for Storage of Spent Fuel at Power Reactor Sites” (55 FR 29181; July 18, 1990). This rule also established a new Subpart L within 10 CFR Part 72, entitled “Approval of Spent Fuel Storage Casks,” which contains procedures and criteria for obtaining NRC approval of spent fuel storage cask designs. The NRC subsequently issued a final rule on May 1, 2000 (65 FR 25241) that approved the HI-STORM 100 cask system design and added it to the list of NRC-approved cask designs in 10 CFR 72.214 as CoC No. 1014. Discussion On December 30, 2004, the certificate holder, Holtec International (Holtec) submitted an application to the NRC that requested an amendment to CoC No. 1014. The amendment principally included changes to increase the design basis maximum decay heat loads of the HI-STORM 100 cask system and add a new underground storage configuration, designated the HI-STORM 100U, to the CoC. On November 29, 2006, Holtec withdrew the portion of the application that added the HI-STORM 100U to the CoC. The application, as modified by the December 22, 2006, Revision 2, submittal, and as supplemented on March 20, 2007, March 30, 2007, May 4, 2007, May 22, 2007, June 15, 2007, July 17, 2007, and September 6, 2007, requested changes to the CoC, the TS, and the Final Safety Analysis Report (FSAR), to modify the HI-STORM 100 cask system. Specifically, the proposed changes included deletion of the requirement to perform thermal validation tests on thermal systems; an increase in the design basis maximum decay heat loads, namely, to 34 kW for uniform loading and 36.9 kW for regionalized loading, and introduction of a new decay heat regionalized scheme; increase in the maximum fuel assembly weight for boiling water reactor fuel in the MPC-68 from 700 to 730 pounds; an increase in the maximum fuel assembly weight of up to 1,720 pounds for assemblies not requiring spacers, otherwise 1,680 pounds; changes to the assembly characteristics of 16 × 16 pressurized water reactor
(PWR)fuel assemblies to be qualified for storage in the HI-STORM 100 cask system; a change in the fuel storage locations in the MPC-32 for fuel with axial power shaping rod assemblies (APSRAs) and in the fuel storage locations in the MPC-24, MPC-24E, and the MPC-32 for fuel with control rod assemblies (CRAs), rod cluster control assemblies (RCCAs), and control element assemblies (CEAs); elimination of the restriction that fuel debris can only be loaded into the MPC-24EF, MPC-32F, MPC-68F, and MPC-68FF canisters; introduction of a requirement that all MPC confinement boundary components and any MPC components exposed to spent fuel pool water or the ambient environment be made of stainless steel or, for MPC internals, neutron absorber or aluminum; the addition of a threshold heat load below which operation of the Supplemental Cooling System
(SCS)would not be required and modification of the design criteria to simplify the system; minor editorial changes to include clarification of the description of anchored casks, correction of typographical/editorial errors, clarification of the definitions of loading operations, storage operations, transport operations, unloading operations, cask loading facility, and transfer cask in various locations throughout the CoC and the FSAR; and modification of the definition of non-fuel hardware to include the individual parts of the items defined as non-fuel hardware. No other changes to the Holtec HI-STORM 100 cask system were requested in this application. As documented in the SER, the NRC staff performed a detailed safety evaluation of the proposed CoC amendment request and found that an acceptable safety margin is maintained. In addition, the NRC staff has determined that there continues to be reasonable assurance that public health and safety and the environment will be adequately protected. This direct final rule revises the HI-STORM 100 cask system listing in 10 CFR 72.214 by adding Amendment No. 5 to CoC No. 1014. The amendment consists of the changes described above, as set forth in the revised CoC and TS. The particular TS which are changed are identified in the SER. The amended HI-STORM 100 cask design, when used under the conditions specified in the CoC, the TS, and NRC regulations, will meet the requirements of Part 72; thus, adequate protection of public health and safety will continue to be ensured. After this direct final rule becomes effective, persons who hold a general license under 10 CFR 72.210 may load spent nuclear fuel into HI-STORM 100 casks that meet the criteria of Amendment No. 5 to CoC No. 1014, in accordance with 10 CFR 72.212. Discussion of Amendments by Section Section 72.214 List of approved spent fuel storage casks. Certificate No. 1014 is revised by adding the effective date of Amendment No. 5. Procedural Background This rule is limited to the changes contained in Amendment No. 5 to CoC No. 1014 and does not include other aspects of the HI-STORM 100 dry storage cask system. The NRC is using the “direct final rule procedure” to issue this amendment because it represents a limited and routine change to an existing CoC that is expected to be noncontroversial. Adequate protection of public health and safety continues to be ensured. The amendment to the rule will become effective on March 17, 2008. However, if the NRC receives significant adverse comments on this direct final rule by January 30, 2008, then the NRC will publish a document that withdraws this action and will subsequently address the comments received in a final rule as a response to the companion proposed rule published elsewhere in this issue of the **Federal Register** . Absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period on this action. A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:
(1)The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:
(a)The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;
(b)The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or
(c)The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.
(2)The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.
(3)The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or TS. Voluntary Consensus Standards The National Technology Transfer and Advancement Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this direct final rule, the NRC will revise the HI-STORM 100 cask design listed in § 72.214 (List of NRC-approved spent fuel storage cask designs). This action does not constitute the establishment of a standard that contains generally applicable requirements. Agreement State Compatibility Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the **Federal Register** on September 3, 1997 (62 FR 46517), this rule is classified as Compatibility Category “NRC.” Compatibility is not required for Category “NRC” regulations. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended (AEA), or the provisions of Title 10 of the Code of Federal Regulations. Although an Agreement State may not adopt program elements reserved to NRC, it may wish to inform its licensees of certain requirements via a mechanism that is consistent with the particular State's administrative procedure laws but does not confer regulatory authority on the State. Plain Language The Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883), directed that the Government's documents be in clear and accessible language. The NRC requests comments on this direct final rule specifically with respect to the clarity and effectiveness of the language used. Comments should be sent to the address listed under the heading ADDRESSES , above. Finding of No Significant Environmental Impact: Availability Under the National Environmental Policy Act of 1969, as amended, and the NRC regulations in Subpart A of 10 CFR Part 51, the NRC has determined that this rule, if adopted, would not be a major Federal action significantly affecting the quality of the human environment and, therefore, an environmental impact statement is not required. The NRC has prepared an environmental assessment and, on the basis of this environmental assessment, has made a finding of no significant impact. This rule will amend the CoC for the HI-STORM 100 cask design within the list of approved spent fuel storage casks that power reactor licensees can use to store spent fuel at reactor sites under a general license. The amendment will include deletion of the requirement to perform thermal validation tests on thermal systems; an increase in the design basis maximum decay heat loads, namely, to 34 kW for uniform loading and 36.9 kW for regionalized loading, and introduction of a new decay heat regionalized scheme; an increase in the maximum fuel assembly weight for BWR fuel in the MPC-68 from 700 to 730 pounds; an increase in the maximum fuel assembly weight of up to 1,720 pounds for assemblies not requiring spacers, otherwise 1,680 pounds; changes to the assembly characteristics of 16 × 16 pressurized water reactor fuel assemblies to be qualified for storage in the HI-STORM 100 cask system; a change in the fuel storage locations in the MPC-32 for fuel with APSRAs and in the fuel storage locations in the MPC-24, MPC-24E, and the MPC-32 for fuel with CRAs, RCCAs, and CEAs; elimination of the restriction that fuel debris can only be loaded into the MPC-24EF, MPC-32F, MPC-68F, and MPC-68FF canisters; introduction of a requirement that all MPC confinement boundary components and any MPC components exposed to spent fuel pool water or the ambient environment be made of stainless steel or, for MPC internals, neutron absorber or aluminum; the addition of a threshold heat load below which operation of the SCS would not be required and modification of the design criteria to simplify the system; minor editorial changes to include clarification of the description of anchored casks, correction of typographical/editorial errors, clarification of the definitions of loading operations, storage operations, transport operations, unloading operations, cask loading facility, and transfer cask in various locations throughout the CoC and FSAR; and modification of the definition of non-fuel hardware to include the individual parts of the items defined as non-fuel hardware. The environmental assessment and finding of no significant impact on which this determination is based are available for inspection at the NRC Public Document Room, 11555 Rockville Pike, Rockville, MD. Single copies of the environmental assessment and finding of no significant impact are available from Jayne M. McCausland, Office of Federal and State Materials and Environmental Management Programs, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone
(301)415-6219, e-mail *jmm2@nrc.gov.* Paperwork Reduction Act Statement This direct final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, *et seq.* ). Existing requirements were approved by the Office of Management and Budget, Approval Number 3150-0132, 10 CFR Part 72. Public Protection Notification The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid OMB control number. Regulatory Analysis On July 18, 1990 (55 FR 29181), the NRC issued an amendment to 10 CFR Part 72 to provide for the storage of spent nuclear fuel under a general license in cask designs approved by the NRC. Any nuclear power reactor licensee can use NRC-approved cask designs to store spent nuclear fuel if it notifies the NRC in advance, spent fuel is stored under the conditions specified in the cask's CoC, and the conditions of the general license are met. A list of NRC-approved cask designs is contained in 10 CFR 72.214. On May 1, 2000 (65 FR 25241), the NRC issued an amendment to Part 72 that approved the HI-STORM 100 cask design by adding it to the list of NRC-approved cask designs in 10 CFR 72.214. On December 30, 2004, the certificate holder, Holtec, submitted an application to the NRC that requested an amendment to CoC No. 1014. The amendment principally included changes to increase the design basis maximum decay heat loads of the HI-STORM 100 cask system and add a new underground storage configuration, designated the HI-STORM 100U, to the CoC. On November 29, 2006, Holtec withdrew the portion of the application that would have added the HI-STORM 100U to the CoC. The application, as modified on December 22, 2006 (Revision 2), and as supplemented on March 20, 2007, March 30, 2007, May 4, 2007, May 22, 2007, June 15, 2007, July 17, 2007, and September 6, 2007, requested changes to the CoC, the TS, and the FSAR to modify the HI-STORM 100 cask system. Specifically, the proposed changes included deletion of the requirement to perform thermal validation tests on thermal systems; an increase in the design basis maximum decay heat loads, namely, to 34 kW for uniform loading and 36.9 kW for regionalized loading, and introduction of a new decay heat regionalized scheme; increase in the maximum fuel assembly weight for BWR fuel in the MPC-68 from 700 to 730 pounds; an increase in the maximum fuel assembly weight of up to 1,720 pounds for assemblies not requiring spacers, otherwise 1,680 pounds; changes to the assembly characteristics of 16x16 pressurized water reactor fuel assemblies to be qualified for storage in the HI-STORM 100 cask system; a change in the fuel storage locations in the MPC-32 for fuel with APSRAs and in the fuel storage locations in the MPC-24, MPC-24E, and the MPC-32 for fuel with CRAs, RCCAs, and CEAs; elimination of the restriction that fuel debris can only be loaded into the MPC-24EF, MPC-32F, MPC-68F, and MPC-68FF canisters; introduction of a requirement that all MPC confinement boundary components and any MPC components exposed to spent fuel pool water or the ambient environment be made of stainless steel or, for MPC internals, neutron absorber or aluminum; the addition of a threshold heat load below which operation of the SCS would not be required and modification of the design criteria to simplify the system; minor editorial changes to include clarification of the description of anchored casks, correction of typographical/editorial errors, clarification of the definitions of loading operations, storage operations, transport operations, unloading operations, cask loading facility, and transfer cask in various locations throughout the CoC and the FSAR; and modification of the definition of non-fuel hardware to include the individual parts of the items defined as non-fuel hardware. The alternative to this action is to withhold approval of Amendment No. 5 and to require any Part 72 general licensee, seeking to load spent fuel into HI-STORM 100 casks under the changes described in Amendment No. 5, to request an exemption from the requirements of 10 CFR 72.212 and 72.214. Under this alternative, each interested Part 72 licensee would have to prepare, and the NRC would have to review, a separate exemption request, thereby increasing the administrative burden upon the NRC and the costs to each licensee. Approval of the direct final rule is consistent with previous NRC actions. Further, as documented in the SER and the environmental assessment, the direct final rule will have no adverse effect on public health and safety. This direct final rule has no significant identifiable impact or benefit on other Government agencies. Based on this regulatory analysis, the NRC concludes that the requirements of the direct final rule are commensurate with the NRC's responsibilities for public health and safety and the common defense and security. No other available alternative is believed to be as satisfactory, and thus, this action is recommended. Regulatory Flexibility Certification Under the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)), the NRC certifies that this rule will not, if issued, have a significant economic impact on a substantial number of small entities. This direct final rule affects only nuclear power plant licensees and Holtec. These entities do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the size standards established by the NRC (10 CFR 2.810). Backfit Analysis The NRC has determined that the backfit rule (10 CFR 72.62) does not apply to this direct final rule because this amendment does not involve any provisions that would impose backfits as defined in 10 CFR Chapter I. Therefore, a backfit analysis is not required. Congressional Review Act Under the Congressional Review Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs, Office of Management and Budget. List of Subjects in 10 CFR Part 72 Administrative practice and procedure, Criminal penalties, Manpower training programs, Nuclear materials, Occupational safety and health, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing. For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; the Nuclear Waste Policy Act of 1982, as amended; and 5 U.S.C. 552 and 553; the NRC is adopting the following amendments to 10 CFR Part 72. PART 72—LICENSING REQUIREMENTS FOR THE INDEPENDENT STORAGE OF SPENT NUCLEAR FUEL, HIGH-LEVEL RADIOACTIVE WASTE, AND REACTOR-RELATED GREATER THAN CLASS C WASTE 1. The authority citation for Part 72 continues to read as follows: Authority: Secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183, 184, 186, 187, 189, 68 Stat. 929, 930, 932, 933, 934, 935, 948, 953, 954, 955, as amended, sec. 234, 83 Stat. 444, as amended (42 U.S.C. 2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2232, 2233, 2234, 2236, 2237, 2238, 2282); sec. 274, Pub. L. 86-373, 73 Stat. 688, as amended (42 U.S.C. 2021); sec. 201, as amended, 202, 206, 88 Stat. 1242, as amended, 1244, 1246 (42 U.S.C. 5841, 5842, 5846); Pub. L. 95-601, sec. 10, 92 Stat. 2951 as amended by Pub. L. 102-486, sec. 7902, 106 Stat. 3123 (42 U.S.C. 5851); sec. 102, Pub. L. 91-190, 83 Stat. 853 (42 U.S.C. 4332); secs. 131, 132, 133, 135, 137, 141, Pub. L. 97-425, 96 Stat. 2229, 2230, 2232, 2241, sec. 148, Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10151, 10152, 10153, 10155, 10157, 10161, 10168); sec. 1704, 112 Stat. 2750 (44 U.S.C. 3504 note); sec. 651(e), Pub. L. 109-58, 119 Stat. 806-10 (42 U.S.C. 2014, 2021, 2021b, 2111). Section 72.44(g) also issued under secs. 142(b) and 148(c), (d), Pub. L. 100-203, 101 Stat. 1330-232, 1330-236 (42 U.S.C. 10162(b), 10168(c), (d)). Section 72.46 also issued under sec. 189, 68 Stat. 955 (42 U.S.C. 2239); sec. 134, Pub. L. 97-425, 96 Stat. 2230 (42 U.S.C. 10154). Section 72.96(d) also issued under sec. 145(g), Pub. L. 100-203, 101 Stat. 1330-235 (42 U.S.C. 10165(g)). Subpart J also issued under secs. 2(2), 2(15), 2(19), 117(a), 141(h), Pub. L. 97-425, 96 Stat. 2202, 2203, 2204, 2222, 2244 (42 U.S.C. 10101, 10137(a), 10161(h)). Subparts K and L are also issued under sec. 133, 98 Stat. 2230 (42 U.S.C. 10153) and sec. 218(a), 96 Stat. 2252 (42 U.S.C. 10198). 2. In § 72.214, Certificate of Compliance 1014 is revised to read as follows: § 72.214 List of approved spent fuel storage casks. Certificate Number: 1014. Initial Certificate Effective Date: May 31, 2000. Amendment Number 1 Effective Date: July 15, 2002. Amendment Number 2 Effective Date: June 7, 2005. Amendment Number 3 Effective Date: May 29, 2007. Amendment Number 4 Effective Date: January 8, 2008. Amendment Number 5 Effective Date: March 17, 2008. SAR Submitted by: Holtec International. SAR Title: Final Safety Analysis Report for the HI-STORM 100 Cask System. Docket Number: 72-1014. Certificate Expiration Date: June 1, 2020. Model Number: HI-STORM 100. Dated at Rockville, Maryland, this 11th day of December, 2007. For the Nuclear Regulatory Commission. Luis A. Reyes, Executive Director for Operations. [FR Doc. E7-25403 Filed 12-28-07; 8:45 am] BILLING CODE 7590-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 30585; Amdt. No. 3249] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Final rule. SUMMARY: This rule establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports. DATES: This rule is effective December 31, 2007. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of December 31, 2007. ADDRESSES: Availability of matters incorporated by reference in the amendment is as follows: *For Examination* — 1. FAA Rules Docket, FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; 2. The FAA Regional Office of the region in which the affected airport is located; 3. The National Flight Procedures Office, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or, 4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: *http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html* . *Availability* —All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit nfdc.faa.gov to register. Additionally, individual SIAP and Takeoff Minimums and ODP copies may be obtained from: 1. FAA Public Inquiry Center (APA-200), FAA Headquarters Building, 800 Independence Avenue, SW., Washington, DC 20591; or 2. The FAA Regional Office of the region in which the affected airport is located. FOR FURTHER INFORMATION CONTACT: Harry. J. Hodges, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) telephone:
(405)954-4164. SUPPLEMENTARY INFORMATION: This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or revoking SIAPs, Takeoff Minimums and/or ODPs. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A. The large number of SIAPs, Takeoff Minimums and ODPs, in addition to their complex nature and the need for a special format make publication in the **Federal Register** expensive and impractical. Furthermore, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA forms is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs and the effective dates of the SIAPs, the associated Takeoff Minimums, and ODPs. This amendment also identifies the airport and its location, the procedure, and the amendment number. The Rule This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as contained in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center
(FDC)Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided. Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure before adopting these SIAPs, Takeoff Minimums and ODPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days. Conclusion The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866;
(2)is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and
(3)does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. List of Subjects in 14 CFR Part 97 Air Traffic Control, Airports, Incorporation by reference, and Navigation (Air). Issued in Washington, DC on December 14, 2007. James J. Ballough, Director, Flight Standards Service. Adoption of the Amendment Accordingly, pursuant to the authority delegated to me, under Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and/or Takeoff Minimums and/or Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows: PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority: 49 U.S.C. 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722. 2. Part 97 is amended to read as follows: Effective 17 JAN 2008 Macon, GA, Macon Downtown, LOC RWY 10, Amdt 6A Effective 14 FEB 2008 Andalusia/OPP, AL, South Alabama Rgnl at Bill Benton Field, RNAV
(GPS)RWY 11, Amdt 1B Andalusia/OPP, AL, South Alabama Rgnl at Bill Benton Field, RNAV
(GPS)RWY 29, Amdt 1C Page, AZ, Page Muni, RNAV
(GPS)RWY 15, Orig Page, AZ, Page Muni, RNAV
(GPS)RWY 33, Orig Page, AZ, Page Muni, GPS RWY 15, Orig-A, (CANCELLED) Page, AZ, Page Muni, Takeoff Minimums and Obstacle DP, Amdt 2 Fort Myers, FL, Southwest Florida Intl, ILS OR LOC RWY 6, Amdt 6 West Palm Beach, FL, Palm Beach Intl, ILS OR LOC RWY 27R, Amdt 2 Blackfoot, ID, McCarley Field, RNAV (GPS)-A, Orig Blackfoot, ID, McCarley Field, RNAV (GPS)-B, Orig Blackfoot, ID, McCarley Field, VOR/DME-C, Orig Blackfoot, ID, McCarley Field, RNAV
(GPS)RWY 1, Orig, (CANCELLED) Blackfoot, ID, McCarley Field, RNAV
(GPS)RWY 19, Orig, (CANCELLED) Blackfoot, ID, McCarley Field, VOR/DME RWY 1, Orig, (CANCELLED) Greencastle, IN, Putnam County, RNAV
(GPS)RWY 18, Amdt 1 Greencastle, IN, Putnam County, RNAV
(GPS)RWY 36, Amdt 1 Greencastle, IN, Putnam County, Takeoff Minimums and Obstacle DP, Orig Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 5L, ILS RWY 5L (CAT II), ILS RWY 5L (CAT III), Amdt 3 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 5R, ILS 5R (CAT II), ILS RWY 5R (CAT III), Amdt 5 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 23L, Amdt 5 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 23R, Amdt 3 Indianapolis, IN, Indianapolis Intl, RNAV
(GPS)RWY 5L, Amdt 1 Indianapolis, IN, Indianapolis Intl, RNAV
(GPS)RWY 5R, Amdt 1 Indianapolis, IN, Indianapolis Intl, RNAV
(GPS)RWY 23L, Amdt 1 Indianapolis, IN, Indianapolis Intl, RNAV
(GPS)RWY 23R, Amdt 1 Valparaiso, IN, Porter County Muni, RNAV
(GPS)RWY 9, Orig Valparaiso, IN, Porter County Muni, RNAV
(GPS)RWY 18, Orig Valparaiso, IN, Porter County Muni, RNAV
(GPS)RWY 27, Orig Valparaiso, IN, Porter County Muni, GPS RWY 9, Amdt 1, (CANCELLED) Valparaiso, IN, Porter County Muni, GPS RWY 27, Orig, (CANCELLED) Valparaiso, IN, Porter County Muni, Takeoff Minimums and Obstacle DP, Orig Boyne Falls, MI, Boyne Mountain, RNAV
(GPS)RWY 17, Orig Boyne Falls, MI, Boyne Mountain, RNAV
(GPS)RWY 35, Orig Boyne Falls, MI, Boyne Mountain, NDB OR GPS-A, Amdt 6A, (CANCELLED) Plymouth, MI, Canton-Plymouth-Mettetal, RNAV
(GPS)RWY 18, Orig Plymouth, MI, Canton-Plymouth-Mettetal, VOR-A, Amdt 12 Sturgis, MI, Kirsch Muni, RNAV
(GPS)RWY 18, Orig Sturgis, MI, Kirsch Muni, GPS RWY 18, Orig, (CANCELLED) Hinckley, MN, Field of Dreams, RNAV
(GPS)RWY 6, Orig Hinckley, MN, Field of Dreams, RNAV
(GPS)RWY 24, Orig Hinckley, MN, Field of Dreams, Takeoff Minimums and Obstacle DP, Orig Minneapolis, MN, Flying Cloud, ILS OR LOC RWY 10R, Amdt 2C Morris, MN, Morris Muni-Charlie Schmidt Fld, RNAV
(GPS)RWY 32, Orig Morris, MN, Morris Muni-Charlie Schmidt Fld, VOR RWY 32, Amdt 5 Morris, MN, Morris Muni-Charlie Schmidt Fld, GPS RWY 32, Orig, (CANCELLED) Morris, MN, Morris Muni-Charlie Schmidt Fld, Takeoff Minimums and Obstacle DP, Orig Pipestone, MN, Pipestone Muni, RNAV
(GPS)RWY 18, Orig Pipestone, MN, Pipestone Muni, RNAV
(GPS)RWY 36, Orig Pipestone, MN, Pipestone Muni, NDB RWY 36, Amdt 7 Pipestone, MN, Pipestone Muni, Takeoff Minimums and Obstacle DP, Orig Dayton, OH, James M Cox Dayton Intl, ILS OR LOC RWY 24R, Amdt 7 Bend, OR, Bend Muni, RNAV
(GPS)Y RWY 16, Amdt 1A Bend, OR, Bend Muni, RNAV
(GPS)Z RWY 16, Orig Bend, OR, Bend Muni, RNAV
(GPS)RWY 34, Orig Hartsville, SC, Hartsville Regional, Takeoff Minimums and Obstacle DP, Orig Bremerton, WA, Bremerton National, ILS OR LOC RWY 19, Amdt 15 Bremerton, WA, Bremerton National, RNAV
(GPS)RWY 1, Orig Bremerton, WA, Bremerton National, RNAV
(GPS)RWY 19, Orig Bremerton, WA, Bremerton National, GPS RWY 1, Amdt 1A, (CANCELLED) Bremerton, WA, Bremerton National, Takeoff Minimums and Obstacle DP, Amdt 3 Seattle, WA, Boeing Field/King County Intl, RNAV
(GPS)Y RWY 13R, Orig-B Rice Lake, WI, Rice Lake Regional-Carl's Field, RNAV
(GPS)RWY 19, Amdt 2 Wausau, WI, Wausau Downtown, RNAV
(GPS)RWY 12, Orig Wausau, WI, Wausau Downtown, VOR/DME OR GPS RWY 12, Amdt 3, (CANCELLED) Effective 13 MAR 2008 Lynchburg, VA, Lynchburg Rgnl/Preston Glenn Fld, Takeoff Minimums and Obstacle DP, Amdt 8 Effective 10 APR 2008 Ionia, MI, Ionia County, VOR-A, Amdt 1 [FR Doc. E7-24992 Filed 12-28-07; 8:45 am] BILLING CODE 4910-13-P SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 211 [Release No. SAB 110] Staff Accounting Bulletin No. 110 AGENCY: Securities and Exchange Commission. ACTION: Publication of Staff Accounting Bulletin. SUMMARY: This staff accounting bulletin (“SAB”) expresses the views of the staff regarding the use of a “simplified” method, as discussed in SAB No. 107 (“SAB 107”), in developing an estimate of expected term of “plain vanilla” share options in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), *Share-Based Payment.* In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior ( *e.g.* , employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. DATES: Effective December 21, 2007. FOR FURTHER INFORMATION CONTACT: Sandie E. Kim or Mark J. Barrysmith, Office of the Chief Accountant
(202)551-5300, or Craig C. Olinger, Division of Corporation Finance
(202)551-3400, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549. SUPPLEMENTARY INFORMATION: The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws. Dated: December 21, 2007. Florence Harmon, Deputy Secretary. PART 211—[AMENDED] Accordingly, Part 211 of Title 17 of the Code of Federal Regulations is amended by adding Staff Accounting Bulletin No. 110 to the table found in Subpart B. Staff Accounting Bulletin No. 110 Effective January 1, 2008, the staff hereby amends and replaces Question 6 of Section D.2 of Topic 14, *Share-Based Payment* , of the Staff Accounting Bulletin Series. Question 6 of Topic 14: D.2 (as amended) expresses the views of the staff regarding the use of a “simplified” method in developing an estimate of expected term of “plain vanilla” share options in accordance with Statement of Financial Accounting Standards No. 123 (revised 2004), *Share-Based Payment.* Note: The text of SAB 110 will not appear in the Code of Federal Regulations. TOPIC 14: SHARE-BASED PAYMENT D. Certain Assumptions Used in Valuation Methods 2. Expected Term *Facts:* Company E grants equity share options to its employees that have the following basic characteristics: 75 75 Employee share options with these features are sometimes referred to as “plain vanilla” options. • The share options are granted at-the-money; • Exercisability is conditional only on performing service through the vesting date; 76 76 76 In this fact pattern the requisite service period equals the vesting period. • If an employee terminates service prior to vesting, the employee would forfeit the share options; • If an employee terminates service after vesting, the employee would have a limited time to exercise the share options (typically 30-90 days); and • The share options are nontransferable and nonhedgeable. Company E utilizes the Black-Scholes-Merton closed-form model for valuing its employee share options. *Question 6:* As share options with these “plain vanilla” characteristics have been granted in significant quantities by many companies in the past, is the staff aware of any “simple” methodologies that can be used to estimate expected term? *Interpretive Response:* As noted above, the staff understands that an entity that is unable to rely on its historical exercise data may find that certain alternative information, such as exercise data relating to employees of other companies, is not easily obtainable. As such, some companies may encounter difficulties in making a refined estimate of expected term. Accordingly, if a company concludes that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term, the staff will accept the following “simplified” method for “plain vanilla” options consistent with those in the fact set above: expected term = ((vesting term + original contractual term) / 2). Assuming a ten year original contractual term and graded vesting over four years (25% of the options in each grant vest annually) for the share options in the fact set described above, the resultant expected term would be 6.25 years. 77 Academic research on the exercise of options issued to executives provides some general support for outcomes that would be produced by the application of this method. 78 77 Calculated as [[[1 year vesting term (for the first 25% vested) plus 2 year vesting term (for the second 25% vested) plus 3 year vesting term (for the third 25% vested) plus 4 year vesting term (for the last 25% vested)] divided by 4 total years of vesting] plus 10 year contractual life] divided by 2; that is, (((1+2+3+4)/4) + 10) /2 = 6.25 years. 78 J.N. Carpenter, “The exercise and valuation of executive stock options,” *Journal of Financial Economics* , 1998, pp. 127-158 studies a sample of 40 NYSE and AMEX firms over the period 1979-1994 with share option terms reasonably consistent to the terms presented in the fact set and example. The mean time to exercise after grant was 5.83 years and the median was 6.08 years. The “mean time to exercise” is shorter than expected term since the study's sample included only exercised options. Other research on executive options includes (but is not limited to) J. Carr Bettis; John M. Bizjak; and Michael L. Lemmon, “Exercise behavior, valuation, and the incentive effects of employee stock options,” forthcoming in the *Journal of Financial Economics* . One of the few studies on nonexecutive employee options the staff is aware of is S. Huddart, “Patterns of stock option exercise in the United States,” in: J. Carpenter and D. Yermack, eds., *Executive Compensation and Shareholder Value: Theory and Evidence* (Kluwer, Boston, MA, 1999), pp. 115-142. Examples of situations in which the staff believes that it may be appropriate to use this simplified method include the following: • A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded. • A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. • A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The staff understands that a company may have sufficient historical exercise data for some of its share option grants but not for others. In such cases, the staff will accept the use of the simplified method for only some but not all share option grants. The staff also does not believe that it is necessary for a company to consider using a lattice model before it decides that it is eligible to use this simplified method. Further, the staff will not object to the use of this simplified method in periods prior to the time a company's equity shares are traded in a public market. If a company uses this simplified method, the company should disclose in the notes to its financial statements the use of the method, the reason why the method was used, the types of share option grants for which the method was used if the method was not used for all share option grants, and the periods for which the method was used if the method was not used in all periods. Companies that have sufficient historical share option exercise experience upon which to estimate expected term may not apply this simplified method. In addition, this simplified method is not intended to be applied as a benchmark in evaluating the appropriateness of more refined estimates of expected term. Also, as noted above in Question 5, the staff believes that more detailed external information about exercise behavior will, over time, become readily available to companies. As such, the staff does not expect that such a simplified method would be used for share option grants when more relevant detailed information becomes widely available. [FR Doc. E7-25178 Filed 12-28-07; 8:45 am] BILLING CODE 8011-01-P DEPARTMENT OF STATE 22 CFR Parts 22 and 51 [Public Notice: 6044] Card Format Passport; Changes to Passport Fee Schedule AGENCY: Department of State. ACTION: Final rule. SUMMARY: This rule finalizes the proposed rule published on October 17, 2006, and implements certain provisions of Section 7209 of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA). The IRTPA provides that United States citizens and nonimmigrant aliens may enter the United States only with passports or such alternative documents as the Secretary of Homeland Security may designate as satisfactorily establishing identity and citizenship. The statute requires that the Secretary of Homeland Security, in consultation with the Secretary of State, develop and implement a plan to require virtually all travelers entering the United States to present a passport or other document or combination of documents that are deemed by the Secretary of Homeland Security to be sufficient to denote identity and citizenship. The legislation also requires that the Department of Homeland Security
(DHS)and the Department of State seek to facilitate the frequent travel of those living in border communities. This final rule takes into account the amendment to section 7209 by the 2007 Department of Homeland Security Appropriations Act calling for the availability of a passport card for land and sea travel between the United States and Canada, Mexico, the Caribbean and Bermuda. The Administration's proposal to address the remainder of the legislative requirements in section 7209, called the Western Hemisphere Travel Initiative (WHTI), is being addressed in separate rulemakings. DATES: This rule is effective February 1, 2008. FOR FURTHER INFORMATION CONTACT: Consuelo Pachon, Office of Legal Affairs and Law Enforcement Liaison, Bureau of Consular Affairs, 2100 Pennsylvania Avenue, NW., Suite 3000, Washington, DC, telephone number 202-663-2431. SUPPLEMENTARY INFORMATION: The Department of State published an Advanced Notice of Proposed Rule Making (ANPRM) in September 2005, which received approximately 2,000 comments. Many of these comments from border resident communities expressed a desire for a less expensive and more portable alternative to the traditional passport book. To be responsive to the needs and concerns of the border communities and to facilitate the travel of border community residents, consistent with Section 7209, the Department of State issued a Notice of Proposed Rulemaking
(NPRM)in October 2006, at 71 FR 60928, proposing to develop and issue a card format passport as a less expensive and more portable alternative to the passport book. The comment period closed on January 7, 2007. This final rule implements provisions of Section 7209 of the IRTPA, Public Law 108-458, 118 Stat. 3638, 3823 (Dec. 17, 2004), as amended. The Administration's proposal to address the remainder of the legislative requirements of section 7209 is being addressed in separate rulemakings. The rule was discussed in detail in Public Notice 5558, as were the Department of State's reasons for making the proposals. The Department of State is now promulgating a final rule with limited changes to clarify the proposed rule. Primarily, the final rule explains that the passport card does not need to be signed in order to be valid, whereas the passport book requires a signature to be valid. In addition, it makes clear that those requesting and eligible for a no-fee passport will receive a passport in book form only. The new Passport Card charges are summarized as follows: 9. Passport Card Services:
(a)Application fee for applicants age 16 or over (including renewals) [Adult Passport Card] $20
(b)Application fee for applicants under age 16 [Minor Passport Card] 10
(c)Passport card execution fee, (first time applicants only) 25 Total first time adult 45 Total first time child 35 Total renewal (adult) 20 Total renewal child 10 The Department is making additional changes to the passport regulations at 22 CFR part 51 in a separate rulemaking. Those changes were published in the **Federal Register** on Monday November 19, 2007, will be effective February 1, 2008, and are contained in Public Notice 5991, Vol. 22 **Federal Register** No. 222, pages 64930-64939. Analysis of Comments Over 4000 comments were received regarding this proposed rule. Among those submitting comments were: four Members of Congress, Senators Hillary Clinton and Charles Schumer of New York, Senator Patrick Leahy of Vermont, and Representative Louise Slaughter of New York; the governments of Canada and two of its provinces (Manitoba and New Brunswick); a Native American government (Haudenosaunee Confederation, New York); and dozens of city, county, and municipal governments. Also represented are the United States Postal Service (USPS), the Air Transport Association, over two dozen technology companies and privacy interest groups, five tourism interest groups, and three offshore drilling concerns. The vast majority of the comments were generated from an e-petition launched by Citizens Against Government Waste opposing the choice of technology. Independent of the e-petition, we received an additional 28 comments regarding technology. In addition, over 150 comments voiced opposition to the change in the amount of the passport execution fee. Other key topics include security issues (21), privacy issues (18), and potential negative economic implications, including a decrease in tourism on both sides of the border (14). Only a small number of comments opposed the idea of the passport card itself, and over 20 comments specifically voiced support for the passport card. Comments not specifically focused on the passport card are not discussed in this rule. Technology All four Members of Congress, as well as technology, security, and privacy groups, are concerned with the choice of “vicinity read” radio frequency identification
(RFID)technology for the passport card. While the majority of commenters opposed vicinity read technology, there were some commenters who supported the technology. The opinion expressed by many commenters is that vicinity read technology is not as secure as the proximity read technology currently used in the United States e-Passport. In their opinion the use of vicinity read technology could result in the unauthorized reading of information that would lead to identity theft and tracking of United States citizens by terrorists (security groups) and the government (privacy groups). In addition, commenters asserted that employing two different technologies at the same border crossing is redundant, inefficient, and unnecessarily costly. Several comments mention a 2006 Government Accountability Office review of the US-VISIT program, which reported a low read rate using this type of technology and a statement in the report that it should not be used for identification of people, only for the tracking of goods. All four Members of Congress also question the use of RFID vicinity read technology. Two members of Congress expressed concern that the passport card had not received National Institute of Standards and Technology
(NIST)certification in accordance with Section 546 of the Homeland Security Appropriations Act of 207 (Pub. L. 109-295). The two comments that best represent the overall nature of comments regarding choice of technology come from the private sector. One industry association, whose members produce both vicinity read and proximity read technology, argues that vicinity read RFID technology is inappropriate for implementing a secure card that is used to verify a citizen's identity. A private company that designs, manufactures and markets both vicinity and proximity read technology chips commented that the choice of vicinity read technology could have the unexpected result of compromising the security of our borders while severely impacting the personal privacy of United States citizens. They also questioned whether vicinity read technology would necessarily improve border crossing times. While State and DHS appreciate the comments received, the vast majority reflected an improper understanding of the business model that WHTI is designed to meet and how the technology selected would actually be implemented. DHS remains committed to vicinity-read radio frequency identification
(RFID)as the most appropriate technological solution to facilitate document processing at land and sea ports-of-entry. Vicinity-read RFID technology should allow CBP officers to quickly obtain information about the border crosser and perform terrorist watch list checks while they are still awaiting a personal inspection and to read multiple cards simultaneously. Therefore, to ensure compatibility and interoperability with the DHS border management system, and to secure significant travel facilitation advantages, the Department of State will produce the passport card utilizing vicinity RFID technology. The operational concept that this rule promulgates should enable information about a border crosser to be queued while they are awaiting their interviews with the border officers, rather than waiting until they are face to face with the officer to provide their personal information. This approach is designed to substantially reduce wait times at the border, which was the key driver in development of the WHTI passport card business case. The vicinity RFID electronic chip contains only one item of information—a unique identifying number that has meaning only inside the secure CBP computer system. No other form of personally identifiable information, such as name, date of birth, SSN, place of birth etc., will be electronically stored on the passport card or transmitted through RFID. All personal information will be contained in DHS systems and will only be accessible by authorized personnel through secure networks. Upon receipt of the passport card number, the border crosser's personal information will be downloaded from the CBP system and provided to the CBP officer. The CBP officer will then interview the individual, verify their identities, and determine the appropriate action to take. The WHTI passport card approach was not designed to be an automated system, and the use of vicinity RFID technology in this final rule reflects this reality. Rather, the RFID-based approach allows the CBP officers to do their jobs better and faster. While the passport card will transmit only the card's unique identifying number, which is meaningless outside the secure CBP computer system, the Department of State and DHS nonetheless take the submitted privacy concerns seriously. All card holders will also be issued a protective sleeve for the card, which prevents transmission of the card's unique identifying number. Additionally, use of the passport card is not mandatory. Those border crossers that would prefer to use traditional passports may continue to do so. Many comments also discussed the technology solution in the e-passport, whose business model is vastly different than that of WHTI. In the e-passport case, a different technology solution was selected that enables transfer of actual personal information in a secure, encrypted, manner. The technology solution for e-passports does not meet the business model for the specific WHTI application, so it was not selected. Section 546 of the Homeland Security Appropriations Act of 2007 (Pub. L. 109-295) requires the National Institute of Standards and Technology
(NIST)to certify that “the Departments of Homeland Security and State have selected a card architecture that meets or exceeds ISO security standards and meets or exceeds best available practices for protection of personal identification documents.” NIST certified the proposed passport card on May 1, 2007. Both the House and Senate Appropriations Subcommittees on Homeland Security received notice of the certification on May 3, 2007. Passport Application Fees A limited number of commenters, most notably Senator Leahy, believe that the passport application fee, not just the execution fee, should be reduced. Senator Leahy also suggests that consideration should be given to waiving all fees to citizens with low incomes. The collection of passport application and execution fees is required by 22 U.S.C. 214. This section of the law mandates fee exemptions for specified groups, but does not allow the Department to establish an income-based waiver. The possibility of shorter periods of passport validity and less expensive passports for individuals, such as low-income applicants, has been proposed in the past. However, to date, Congress has not promulgated law that would give the Department of State authority to reduce or waive the passport fee for low-income citizens. Thus, a no-fee passport, regardless of format, for low-income citizens is not an option that is legally available. As established by OMB Circular A-25, fees for government services are to be based on the costs of service, in order to ensure that such services be self-sustaining to the extent possible. Thus, passport application fees are determined on a cost recovery basis and are intended to recover, to the extent possible, the costs of providing passport adjudication and production as well as consular services to citizen travelers abroad. The Department of State did not include the cost of consular services in determining the cost of the passport card, since travelers using the card are likely to be on cross border trips generally of short duration, and most emergencies would be handled by travelers relying on family members and services in the United States. Passport Execution Fee We received comments from dozens of municipal and county governments, as well as the USPS, questioning the reduction of the execution fee from $30 to $25. USPS's comments acknowledge the positive relationship it shares with the Department of State and make clear that it will work with the Department to continue to offer passport acceptance services if the execution fee is lowered. USPS suggests that should the fee be lowered, the Department of State, in consultation with USPS, should provide both a more streamlined application process and conduct periodic reviews to ensure that the execution fee covers the cost of service. Comments also requested clarification of exactly when the execution fee is required. We note that only first-time applicants or those individuals required to appear personally at passport acceptance facilities are required to pay the execution fee. Individuals applying for renewal of a passport by mail, or those who have a passport book and are applying for a passport card, are not required to pay the execution fee. We also note that in the United States, the largest numbers of first-time passport applications are made by those who appear in person at a local United States Post Office or government office (most often county, township, municipal, or clerk of the court). The execution fee is retained by these designated passport application acceptance facilities to cover the costs of providing this service. We base the fee on a cost of service study designed to reimburse on an average basis, and conduct such studies regularly to ensure their accuracy in recovering relevant costs. The Department of State is committed to providing a low-cost alternative to the passport book to assist residents of border communities. Based on the considerations expressed in the NPRM, including our cost of service study, the Department of State will reduce the execution fee to $25.00 for the passport card. The Department of State values its significant national partnership with USPS and is also committed to working with USPS regarding any implementation issues that may be encountered with establishing this rate for the passport card execution fee. The Department of State is not proposing to lower the execution fee for the passport book at this time. Changes to the passport book fee schedule will be addressed in separate rulemakings. First Nation Concerns The Department received one comment from the Haudenosaunee, a Six National Confederacy made up of the Mohawk, Oneida, Onondaga, Cayuga, Seneca, and Tuscarora Nations. They expressed concern that the proposed rule would unnecessarily and unintentionally interfere with and undermine the ability of the Haudenosaunee to determine how to document the identity and citizenship of its people. They also expressed concern that the proposed rule would interfere with aboriginal and treaty rights to freely pass the international border without burdensome costly documentation requirements. These issues will be addressed as part of the final WHTI joint rule making process by DHS and the Department of State. The Department of State is sensitive to the issues of documenting members of all United States Native American Nations. We would like to emphasize that the passport card will be issued on the same basis as the traditional passport book to Native Americans who wish to apply. Washington State The Department of Licensing for the State of Washington commented that it strongly believes that enhanced driver's licenses would “better serve the economic and convenience needs” of United States citizens at border crossings. The Department of State has participated in discussions between DHS and Washington State regarding the development of the Washington State Enhanced Driver's License Project, but is not a partner in the program. DHS has the authority to determine what documents or combination of documents it will deem sufficient to denote citizenship and identity for the purposes of cross border travel. The issue of alternative documentation will be addressed in the final rule implementing the land and sea portion of the Western Hemisphere Travel Initiative. Canadian Comments The Government of Canada The Government of Canada submitted official comments encouraging the movement of legitimate travelers across the shared border while still complying with WHTI. However, it expressed concern that unless the public is properly informed, there could be significant disruption to the tourism and service industries as well as to trade between the two countries. The Government of Canada encourages a high-profile outreach campaign regarding WHTI and the release of the passport card. It also urges that the implementation of WHTI be postponed until June 1, 2009, and suggests that the use of the passport card be expanded to the air environment to increase its versatility, thus making it a more attractive option. The Department of State appreciates the comments expressed by the Government of Canada. For the past year, the Department of State and DHS have conducted an extensive public service campaign to educate the public on the requirements of WHTI. The success of this campaign is evidenced by the surge in passport applications through May 2007. We anticipate that this momentum will continue as we get closer to full implementation. We note that the passport card, as currently designed and conceived, is for use at land and sea borders only. The passport card will be available to United States citizens nationwide, but its primary purpose is to facilitate the travel of those living in the border region. It is not a globally interoperable document. The Department of State continues to believe that it is a valuable low-cost alternative to the traditional book format passport. Governments of Manitoba and New Brunswick The Government of Manitoba recommends
(1)a delay in the implementation of WHTI;
(2)development and funding for a public awareness campaign;
(3)expansion of the trusted traveler and commercial traffic programs;
(4)affordable documents;
(5)flexibility of documentation, especially for minors under age 16; and,
(6)exploration of the use of enhanced drivers' licenses as alternative travel documents provided for under WHTI. The Government of New Brunswick expressed concern about the implementation dates for WHTI and the lack of availability of NEXUS and FAST crossing sites at the Maine-New Brunswick border. They call for launching unspecified required technologies and infrastructure at all border crossings. The Department of State welcomes comments from the Canadian provinces and shares their commitment to ensuring safe, affordable and efficient travel across common borders. We note, however, that the comments received are more directed toward the WHTI concept rather than the passport card. We will continue to work with DHS, Canadian provinces and the Canadian central government to assist in the implementation of WHTI and in the introduction of the passport card. Global Interoperability of the Passport Card Several comments suggested that the passport card should not be restricted for use only at land borders but should be available for use in the air environment for travel between the United States, Canada, Mexico and the Caribbean. The passport card was specifically designed to respond to the concerns expressed by border communities in regard to the requirements of WHTI. The passport card is designed specifically to address the unique circumstances of land border crossings and is not intended to be a globally interoperable travel document. Therefore, passport cards will not be designed to meet the International Civil Aviation Organization
(ICAO)standards and recommendations for globally interoperable passports. Because the passport card will be specifically designed to facilitate land and sea border crossings, it is not compatible with the global air environment, which is already set up for passport books. In addition, extending the use of the passport card to the air environment could create confusion with the traveling public should they attempt to use the passport card for travel to a country other than Mexico, Canada or the Caribbean. Offshore Drilling Concerns Three offshore drilling concerns suggested that the passport card be made available for return to the United States by helicopter from a mobile offshore drilling unit (MODU). After careful consideration, the Department of State believes that even a limited use of the passport card in the air environment, such as helicopter travel from a MODU from outside the United States, back to the United States, would not be warranted. Travel of individuals working on a MODU attached to the Outer Continental Shelf is being addressed in the WHTI land and sea rulemaking. Regulatory Findings Administrative Procedure Act In accordance with provisions of the Administrative Procedure Act governing rules promulgated by federal agencies that affect the public (5 U.S.C. 552), the Department of State published a proposed rule and invited and received public comment. Regulatory Flexibility Act The Department of State, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities because only individuals can apply for the passport card. Unfunded Mandates Act of 1995 This rule does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. Small Business Regulatory Enforcement Fairness Act of 1996 This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and import markets. Executive Order 12866 The Department of State has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866. The Department of State does not consider the proposed rule to be an economically significant regulatory action within the scope of section 3(f)
(1)of the Executive Order since it is not likely to have an annual effect on the economy of $100 million or more or to adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. However, the final rule implements Department of State decisions that require coordination with action taken or planned by another agency, in particular the Department of Homeland Security. Accordingly, the rule has been provided to the Office of Management and Budget
(OMB)for review. Executive Order 13132 This regulation 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. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. Paperwork Reduction Act This rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. List of Subjects 22 CFR Part 22 Passports and visas. 22 CFR Part 51 Passports. Accordingly, 22 CFR Parts 22 and 51 are amended as follows: PART 22—[AMENDED] 1. The authority citation for part 22 continues to read as follows: Authority: 8 U.S.C. 1153 note, 1351, 1351 note; 10 U.S.C. 2602(c); 22 U.S.C. 214, 2504(a), 4201, 4206, 4215, 4219; 31 U.S.C. 9701; Pub. L. 105-277, 112 Stat. 2681 *et seq.* ; Pub. L. 108-447, 118 Stat. 2809 *et seq.* ; E.O. 10718, 22 FR 4632, 3 CFR, 1954-1958 Comp., p. 382; E.O. 11295, 31 FR 10603, 3 CFR, 1966-1970 Comp., p. 570. 2. Section 22.1 is revised to read as follows: § 22.1 Schedule of fees. Schedule of Fees for Consular Services Item No. Fee Passport and Citizenship Services * * * * * 9. Passport Card Services:
(a)Application fee for applicants age 16 or over (including renewals) [Adult Passport Card] $20
(b)Application fee for applicants under age 16 [Minor Passport Card] 10
(c)Execution fee, (first time applicant only) [Passport Card] 25 10. [Reserved] * * * * * PART 51—PASSPORTS— 3. The authority citation for part 51 is revised to read as follows: Authority: 8 U.S.C. 1504; 18 U.S.C. 1621; 22 U.S.C. 211a, 212, 213, 213n (Pub. L. 106-113 Div. B, Sec. 1000(a)(7) [Div. A, Title II, Sec. 236], 113 Stat. 1536, 1501A-430); 214, 214a, 217a, 218, 2651a, 2671(d)(3), 2705, 2714, 2721, & 3926; 26 U.S.C. 6039E; 31 U.S.C. 9701; 42 U.S.C. 652(k) [Div. B, Title V of Pub. L. 103-317, 108 Stat. 1760]; E.O. 11295, Aug. 6, 1966, FR 10603, 3 CFR, 1966-1970 Comp., p. 570; Sec. 1 of Pub. L. 109-210, 120 Stat. 319; Sec. 2 of Pub. L. 109-167, 119 Stat. 3578; Sec. 5 of Pub. L. 109-472, 120 Stat. 3554; Pub. L. 108-447, Div. B, Title IV, Dec. 8, 2004, 118 Stat. 2809; Pub. L. 108-458, 118 Stat. 3638, 3823 (Dec. 17, 2004). 4. Amend § 51.3 by adding a new paragraph
(d)to read as follows: § 51.3 Types of passports.
(d)*Passport card.* A passport card is issued to a national of the United States on the same basis as a regular passport. It is valid only for departure from and entry to the United States through land and sea ports of entry between the United States and Mexico, Canada, the Caribbean and Bermuda. It is not a globally interoperable international travel document. 5. Section 51.4, paragraphs
(a)and
(b)are revised to read as follows: § 51.4 Validity of passports.
(a)*Signature of bearer.* A passport book is valid only when signed by the bearer in the space designated for signature, or, if the bearer is unable to sign, signed by a person with legal authority to sign on his or her behalf. A passport card is valid without the signature of the bearer.
(b)*Period of validity of a regular passport and a passport card.*
(1)A regular passport or passport card issued to an applicant 16 years of age or older is valid for ten years from date of issue unless the Department limits the validity period to a shorter period.
(2)A regular passport or passport card issued to an applicant under 16 years of age is valid for five years from date of issue unless the Department limits the validity period to a shorter period.
(3)A regular passport for which payment of the fee has been excused is valid for a period of five years from the date issued unless limited by the Department to a shorter period. 6. Section 51.52 is revised to read as follows: § 51.52 Exemption from payment of passport fees.
(a)A person who is exempt from the payment of passport fees under this section may obtain a passport book only for no charge. A passport card will not be issued for no charge to the individuals exempt from the payment of passport fees under this section.
(b)The following persons are exempt from payment of passport fees except for the passport execution fee, unless their applications are executed before a federal official, in which case they are also exempt from payment of the passport execution fee:
(1)An officer or employee of the United States traveling on official business and the members of his or her immediate family. The applicant must submit evidence of the official purpose of the travel and, if applicable, authorization for the members of his or her immediate family to accompany or reside with him or her abroad.
(2)An American seaman who requires a passport in connection with his or her duties aboard a United States flag vessel.
(3)A widow, widower, child, parent, brother or sister of a deceased member of the United States Armed Forces proceeding abroad to visit the grave of such service member or to attend a funeral or memorial service for such member.
(4)Other persons whom the Department determines should be exempt from payment of passport fees for compelling circumstances, pursuant to guidance issued by the Department; or
(5)Other categories of persons exempted by law. Dated: December 21, 2007. Patrick Kennedy, Under Secretary for Management, Department of State. [FR Doc. E7-25422 Filed 12-28-07; 8:45 am] BILLING CODE 4710-06-P DEPARTMENT OF STATE 22 CFR Part 41 [Public Notice 6045] Visas: Documentation of Non-immigrants Under the Immigration and Nationality Act AGENCY: Department of State. ACTION: Final rule. SUMMARY: This rule amends 22 CFR Part 41 in order to reflect increased security measures requiring fingerprinting and name checks of all visa applicants, with certain narrow exceptions, and to be consistent with an amendment to the Schedule of Fees for Consular Services including the cost of such checks in fees for non-immigrant and immigrant visas and border crossing cards. DATES: This final rule becomes effective January 1, 2008. FOR FURTHER INFORMATION CONTACT: Barbara J. Kennedy, Legislation and Regulations Division, Visa Services, Department of State; 2401 E Street, NW., Room L-603, Washington, DC 20520-0106,
(202)663-1206, e-mail *KennedyBJ@State.gov.* SUPPLEMENTARY INFORMATION: Background What Is the Authority for This Action? The Secretary of State is charged with the administration and enforcement of the provisions of the Immigration and Nationality Act
(INA)and all other immigration and nationality laws relating to, *inter alia* , the powers, duties and functions of consular officers. 8 U.S.C. 1104. The Secretary is also authorized to establish regulations necessary for carrying out these duties. *Id.* In 2004, Congress found that existing procedures allowed many individuals to enter the United States showing only minimal identification and that greater security measures were necessary to protect the United States from terrorist attacks. Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA), Pub. L. 108-458 (Dec. 17, 2004), section 7209. In order to more effectively carry out its duties to administer and enforce the INA, and to respond to the congressional mandate in the IRTPA to increase the nation's border security, the Department has begun performing fingerprint and name checks on all visa applicants except those falling within a narrow range of exceptions. Fingerprints are now required of all visa applicants except those under 14 years of age or over 79 years of age, and certain diplomats and officials. The expansion of fingerprint and name checks to include the vast majority of visa applicants is a critical component of the Department's efforts to enhance the nation's border security. Why is the Department Amending Part 41 at This Time? The deletion of Part 22, section 41.105(b) is necessary at this time because the Department is conducting fingerprint checks and name checks on all visa applicants who do not fall within the exceptions noted above, and because beginning on January 1, 2008, the cost of such checks will be included in visa fees, including the fees for non-immigrant visas. In contrast, section 41.105(b) prescribes fingerprint and name checks of non-immigrant visa applicants only in certain circumstances, and provides that a fee for fingerprint checks will only be charged when a name check indicates the possibility of a criminal history. 22 CFR 41.105(b) should be deleted in order to ensure that the Department's regulations concerning fingerprint and name checks of non-immigrant visa applicants are consistent. In order to prevent any confusion as to when fingerprint and name checks are required of non-immigrant visa applicants and what fees for these services must be paid by visa applicants, the provision must be deleted effective January 1, 2008, simultaneously with the effective date of the amendment to the Schedule of Fees for Consular Services. Regulatory Findings Administrative Procedure Act This regulation involves a foreign affairs function of the United States and, therefore, in accordance with 5 U.S.C. 553(a)(1), is not subject to the rule making procedures set forth at 5 U.S.C. 533. *Regulatory Flexibility Act/Executive Order 13272:* Small Business. Because this final rule is exempt from notice and comment rulemaking under 5 U.S.C. 553, it is exempt from the regulatory flexibility analysis requirements set forth at sections 603 and 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604). Nonetheless, consistent with section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. The Unfunded Mandates Reform Act of 1995 Section 202 of the Unfunded Mandates Reform Act of 1995 (UFMA), Pub. L. 104-4, 109 Stat. 48, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This rule will not result in any such expenditure, nor will it significantly or uniquely affect small governments. Small Business Regulatory Enforcement Fairness Act of 1996 This rule is not a major rule as defined by 5 U.S.C. 804, for purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. 104-121. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign based companies in domestic and import markets. Executive Order 12866 The Department of State does not consider this rule to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. In addition, this rule is exempt from review under E.O. 12866. The Department has nevertheless reviewed it to ensure its consistency with the regulatory philosophy and principles set forth in that Executive Order. Executive Orders 12372 and 13132: Federalism This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Nor will the rule have federalism implications warranting the application of Executive Orders No. 12372 and No. 13132. Paperwork Reduction Act This rule does not impose information collection requirements under the provisions of the Paperwork Reduction Act, 44 U.S.C., Chapter 35. List of Subjects in 22 CFR Part 41 Visas, Nonimmigrants, Passports and Visas, Fees, Surcharge. Accordingly, 22 CFR part 41 is amended as follows: PART 41—[AMENDED] 1. The authority citation for Part 41 continues to read as follows: Authority: 8 U.S.C. 1104; Pub. L. 105-277, 112 Stat. 2681-795 through 2681-801; 8 U.S.C. 1185 note (section 7209 of Pub. L. 108-458). 2. Section 41.105 is amended by removing paragraph (b). Dated: December 21, 2007. Maura Harty, Assistant Secretary for Consular Affairs, Department of State. [FR Doc. E7-25417 Filed 12-28-07; 8:45 am] BILLING CODE 4710-06-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1 and 602 [TD 9374] RIN 1545-BF09 Nuclear Decommissioning Funds AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and Temporary regulation. SUMMARY: This document contains final and temporary regulations under section 468A of the Internal Revenue Code relating to deductions for contributions to trusts maintained for decommissioning nuclear power plants. The temporary regulations affect most taxpayers that own an interest in a nuclear power plant and reflect recent statutory changes. The text of these temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the **Federal Register** . DATES: *Effective Date:* These regulations are effective on December 31, 2007. *Applicability Dates:* For dates of applicability, see § 1.468A-9T. FOR FURTHER INFORMATION CONTACT: Patrick S. Kirwan,
(202)622-3110 (not a toll-free number). SUPPLEMENTARY INFORMATION: Paperwork Reduction Act These temporary regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collections of information contained in these regulations have been approved by the Office of Management and Budget on a temporary basis under control number 1545-2091 and pending receipt and review of comments, may be approved for a period of three years. Responses to these collections of information are required to obtain a tax benefit. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. For further information concerning this collection of information, and where to submit comments on the collection of information and the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble of the cross-referencing notice of proposed rulemaking published in the Proposed Rules section in this issue of the **Federal Register** . Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103. Background This document contains amendments to 26 CFR part 1 providing temporary regulations under section 468A of the Internal Revenue Code of 1986 (Code). Section 468A was amended by section 1310 of the Energy Policy Act of 2005 (the Energy Policy Act), Public Law 109-58 (119 Stat. 594). Explanation of Provisions Section 468A provides a deduction for amounts contributed to a qualified nuclear decommissioning reserve fund. Under prior law, the deduction was limited to the lesser of the amount included in the utility's cost of service for ratemaking purposes or the ruling amount. As a result, only regulated utilities could take advantage of section 468A. The Energy Policy Act amendment of section 468A eliminated the cost-of-service limitation. Accordingly, decommissioning costs of an unregulated nuclear power plant may now be funded by deductible contributions to a qualified nuclear decommissioning fund. Under prior law, deductible contributions were also limited to the amount necessary to fund the plant's post-1983 nuclear decommissioning costs (determined as if decommissioning costs accrued ratably over the estimated useful life of the plant). The Energy Policy Act amendment of section 468A also eliminated this limitation. Accordingly, taxpayers may now fund the entire cost of decommissioning a plant through a qualified nuclear decommissioning fund. A plant's pre-1984 nuclear decommissioning costs can be funded by increasing the annual deductible contributions over the remaining useful life of the plant. In addition, however, the Energy Policy Act amendments to section 468A permit more rapid funding of the pre-1984 costs. A taxpayer may contribute, in a single taxable year, all or any portion of the amount needed to fund pre-1984 nuclear decommissioning costs that have not been previously funded (a “special transfer”). A special transfer is not deductible in full in the year the contribution is made. Instead, the deduction is allowed ratably over the remaining useful life of the nuclear plant. Gain or loss is not recognized on any special transfer, and the transferred assets have a carryover basis. Section 468A allows a deduction only if the Internal Revenue Service has given the taxpayer a schedule of ruling amounts (that is, a schedule specifying the maximum deductible contribution that can be made in each taxable year). The Energy Policy Act amendments provide that the taxpayer must obtain a new schedule of ruling amounts when the Nuclear Regulatory Commission
(NRC)extends the operating license of the plant. Useful Life The schedule of ruling amounts may not provide for more rapid than level funding over the estimated useful life of the nuclear power plant. Also, as noted above, deductions for special transfers are allowed ratably over the plant's remaining useful life. Under the current regulations, the useful life of the plant begins on the first day of the taxable year that includes the date that the nuclear power plant begins commercial operations, and ends on the last day of the taxable year that includes the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes. The proposed and temporary regulations retain this general framework for plants that were regulated by a public utility commission
(PUC)before January 1, 2006, and permit the use of any reasonable method to determine the end of the estimated useful life for all other plants. The current regulations require adjustments to the estimated useful life to reflect changes in PUC assumptions regarding useful life. The proposed and temporary regulations eliminate this requirement. Taxpayers will, however, be permitted to establish that a change in the plant's useful life is appropriate and may use the assumptions used in the most recent ratemaking proceeding as support for such a change. Previously Excluded Amount Section 468A(f) provides that the amount of the special transfer with respect to a nuclear power plant may not exceed “the present value of the portion of the total nuclear decommissioning costs with respect to such nuclear power plant previously excluded for such nuclear power plant under section 468A(d)(2)(A) as in effect immediately before the date of the enactment of [the Energy Policy Act].” The legislative history (footnote 15 of H. Rep. 109-45) provides the following explanation of this rule: For example, if $100 is the present value of the total decommissioning costs of a nuclear powerplant, and if under present law the qualified fund is only permitted to accumulate $75 of decommissioning costs over such plant's estimated life (because the qualified fund was not in existence during 25 percent of the useful life of the nuclear powerplant), a taxpayer could contribute $25 to the qualified fund under this component of the provision. The proposed and temporary regulations permit taxpayers to compute the maximum special transfer amount by
(i)calculating the present value of the future decommissioning liability and
(ii)reducing that present value by the amount of decommissioning costs that, under the law in effect before the enactment of the Energy Policy Act, could have been funded through a qualified fund. For this purpose, the amount of decommissioning costs that could have been funded through a qualified fund is determined by multiplying the present value of the future decommissioning liability by the qualifying percentage that, under the law in effect before the enactment of the Energy Policy Act, was used to determine the amount of decommissioning costs that could be funded through a qualified fund. Special Transfers of Property Taxpayers may make special transfers of property other than cash. The legislative history (footnote 16 of H. Rep. 109-45) includes the following discussion relating to such transfers: A taxpayer recognizes no gain or loss on the contribution of property to a qualified fund under this special rule. The qualified fund will take a transferred (carryover) basis in such property. Correspondingly, a taxpayer's deduction (over the estimated life of the powerplant) is to be based on the adjusted tax basis of the property contributed rather than the fair market value of such property. Although the deduction for contributed property is limited to the adjusted basis of the property, the regulations provide that the limitation on the amount of the special transfer is applied using the fair market value of the contributed property rather than its basis. This rule is necessary to prevent overfunding of the qualified fund. Transfers to Related Persons Although deductions for special transfers are generally allowed ratably over the plant's remaining useful life, a special rule applies if the fund is transferred before the end of the remaining useful life. In that case, the entire remaining deduction for the special transfer is allowed in the year the fund is transferred. This acceleration allows the taxpayer to close its books on the asset. We have been asked to provide guidance on whether this acceleration would apply in the case of a transaction that qualifies for nonrecognition treatment (for example, under section 351). The IRS and Treasury believe that the acceleration applies but provides an inappropriate benefit to a taxpayer that directly or indirectly retains an interest in the plant. Consequently, in the case of a transfer of a qualified nuclear decommissioning fund to a related person, the regulations provide that the transferee's ruling amounts will be adjusted to the extent necessary to offset the inappropriate benefit provided by the acceleration of deductions. Special Transfers in Multiple Taxable Years It may be necessary (for example, if assets are held in funds with penalties for early withdrawal) for taxpayers to spread the special transfer across more than one taxable year. The regulations provide that contributions in multiple years are permissible and include an example describing a special transfer spread across multiple years. New Schedules of Ruling Amounts Under prior law, only regulated utilities could take advantage of section 468A and the IRS could rely upon the PUC with regulatory jurisdiction over the taxpayer to ensure that accurate and reasonable assumptions were used in calculating decommissioning cost of service for purposes of rate orders. Accordingly, the existing regulations require the taxpayer to use the PUC's assumptions in calculating the taxpayer's schedule of ruling amounts and to submit as part of the request for a schedule of ruling amounts “a description of the assumptions, estimates, and other factors that were used” by “each public utility commission that has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes.” Under current law, any taxpayer with an interest in a nuclear power plant may maintain a qualified nuclear decommissioning fund with respect to that interest, without regard to whether the taxpayer is, or ever has been, regulated by a PUC. The temporary and proposed regulations provide that, in the case of a plant that is currently subject to PUC regulation, the assumptions used by the PUC in determining decommissioning costs for the plant must be provided in the submission of the proposed schedule of ruling amounts. The taxpayer submitting the proposed schedule is not required to use the PUC's assumptions in calculating the proposed schedule, but is required to base the schedule upon reasonable assumptions. Under the temporary and proposed regulations, the electing taxpayer bears the burden of demonstrating that the requested schedule is based upon reasonable assumptions and is consistent with the principles and provisions of the applicable regulatory provisions. A taxpayer that remains subject to the ratemaking jurisdiction of a PUC and that calculates its schedule of ruling amounts using the assumptions described by the PUC in its most recent rate order will generally satisfy this burden of proof. In addition, a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a PUC that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer's proposed schedule of ruling amounts, with the understanding that the PUC assumptions may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer. The use of other industry standards, such as the assumptions underlying the taxpayer's most recent financial assurance filing with the NRC, is an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis. On the other hand, consistency with financial accounting statements is not sufficient, in the absence of other supporting evidence, to meet the taxpayer's burden of proof. Additional Provisions and Changes The regulations follow the statute in requiring taxpayers to request a new schedule of ruling amounts in any taxable year that the NRC extends the operating license for the plant. In addition, the regulations provide that a separate schedule of ruling amounts (a “schedule of deduction amounts”) must be obtained from the Secretary before deductions may be claimed with respect to a special transfer. Finally, many conforming amendments have been made to the existing regulations reflecting the elimination of the cost-of-service limitation and the post-1983 decommissioning cost limitation, and to eliminate obsolete provisions. Effective/Applicability Date The temporary regulations are applicable on December 31, 2007, and apply with respect to taxable years ending on or after such date. During the period between January 1, 2006, and December 31, 2007. a taxpayer may use any reasonable method consistent with the principles and provisions of section 468A to determine the schedule of ruling amounts or the schedule of deduction amounts. A taxpayer may apply the provisions of §§ 1.468A-1T through 1.468A-8T to taxable years ending on or after January 1, 2006, and before December 31, 2007, provided that the taxpayer applies all provisions in §§ 1.468A-1T through 1.468A-8T to the taxable year. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) and
(d)of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking published in the Proposed Rules section in this issue of the **Federal Register** . Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. Drafting Information The principal author of these regulations is Patrick S. Kirwan, Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements 26 CFR Part 602 Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR parts 1 and 602 are amended as follows: PART 1—INCOME TAXES **Paragraph 1.** The authority citation for part 1 is amended by adding an entry in numerical order to read in part as follows: Authority: 26 U.S.C. 7805 * * * Section 1.468A-5T also issued under 26 U.S.C. 468A(e)(5). * * * §§ 1.468A-0 through 1.468A-8 [Removed] **Par. 2.** Sections 1.468A-0 through 1.468A-8 are removed. **Par. 3.** Sections 1.468A-0T through 1.468A-9T are added to read as follows: § 1.468A-0T Nuclear decommissioning costs; table of contents. This section lists the paragraphs contained in §§ 1.468A-1T through 1.468A-9T. § 1.468A-1T Nuclear decommissioning costs; general rules (temporary).
(a)Introduction.
(b)Definitions.
(c)Special rules applicable to certain experimental nuclear facilities. § 1.468A-2T Treatment of electing taxpayer (temporary).
(a)In general.
(b)Limitation on payments to a nuclear decommissioning fund.
(1)In general.
(2)Excess contributions not deductible.
(c)Deemed payment rules.
(d)Treatment of distributions.
(1)In general.
(2)Exceptions to inclusion in gross income.
(i)Payment of administrative costs and incidental expenses.
(ii)Withdrawals of excess contributions.
(iii)Actual distributions of amounts included in gross income as deemed distributions.
(e)Deduction when economic performance occurs. § 1.468A-3T Ruling amount (temporary).
(a)In general.
(b)Level funding limitation.
(c)Funding period.
(d)Decommissioning costs allocable to a fund.
(1)General rule.
(2)Total estimated cost of decommissioning.
(3)Taxpayer's share.
(e)Manner of requesting schedule of ruling amounts.
(1)In general.
(2)Information required.
(3)Administrative procedures.
(f)Review and revision of schedule of ruling amounts.
(1)Mandatory review.
(2)Elective review.
(3)Determination of revised schedule of ruling amounts.
(g)Special rule permitting payments to a nuclear decommissioning fund before receipt of an initial or revised ruling amount applicable to a taxable year. § 1.468A-4T Treatment of nuclear decommissioning fund (temporary).
(a)In general.
(b)Modified gross income.
(c)Special rules.
(1)Period for computation of modified gross income.
(2)Gain or loss upon distribution of property by a fund.
(3)Denial of credits against tax.
(4)Other corporate taxes inapplicable.
(d)Treatment as corporation for purposes of subtitle F. § 1.468A-5T Nuclear decommissioning fund—miscellaneous provisions (temporary).
(a)Qualification requirements.
(1)In general.
(2)Limitation on contributions.
(3)Limitation on use of fund.
(i)In general.
(ii)Definition of administrative costs and expenses.
(4)Trust provisions.
(b)Prohibitions against self-dealing.
(1)In general.
(2)Self-dealing defined.
(3)Disqualified person defined.
(c)Disqualification of nuclear decommissioning fund.
(1)In general.
(2)Exception to disqualification.
(i)In general.
(ii)Excess contribution defined.
(iii)Taxation of income attributable to an excess contribution.
(3)Effect of disqualification.
(4)Further effects of disqualification.
(d)Termination of nuclear decommissioning fund upon substantial completion of decommissioning.
(1)In general.
(2)Additional rules.
(3)Substantial completion of decommissioning defined. § 1.468A-6T Disposition of an interest in a nuclear power plant (temporary).
(a)In general.
(b)Requirements.
(c)Tax consequences.
(1)The transferor and its Fund.
(2)The transferee and its Fund.
(3)Basis.
(d)Determination of proportionate amount.
(e)Calculation of schedule of ruling amounts and schedule of deduction amounts for dispositions described in this section.
(1)Transferor.
(i)Taxable year of disposition.
(ii)Taxable years after the disposition.
(2)Transferee.
(i)Taxable year of disposition.
(ii)Taxable years after the disposition.
(3)Example.
(f)Anti-abuse provision. § 1.468A-7T Manner of and time for making election (temporary).
(a)In general.
(b)Required information. § 1.468A-8T Special transfers to qualified funds pursuant to section 468A(f) (temporary).
(a)General rule.
(1)In general.
(2)Previously excluded amount.
(3)Transfers in multiple years.
(4)Contributions of property.
(b)Deduction for amounts transferred.
(1)In general.
(2)Denial of deduction for previously deducted amounts.
(3)Transfers of qualified nuclear decommissioning funds.
(4)Special rules.
(i)Gain or loss not recognized on transfers to fund.
(ii)Transfers of appreciated property to fund.
(c)New ruling amount required.
(1)In general.
(2)Transfers in multiple taxable years.
(d)Manner of requesting schedule of deduction amounts.
(1)In general.
(2)Information required.
(3)Statement required.
(4)Administrative procedures. § 1.468A-9T Effective/applicability date and transitional rules (temporary).
(a)Effective date.
(b)Transitional rules.
(1)Schedules of ruling amounts based on prior regulations.
(2)Nuclear decommissioning fund qualification requirements.
(3)Use of formula method. § 1.468A-1T Nuclear decommissioning costs; general rules (temporary).
(a)*Introduction.* Section 468A provides an elective method for taking into account nuclear decommissioning costs for Federal income tax purposes. In general, an eligible taxpayer that elects the application of section 468A pursuant to the rules contained in § 1.468A-7T is allowed a deduction (as determined under § 1.468A-2T) for the taxable year in which the taxpayer makes a cash payment to a nuclear decommissioning fund. Taxpayers using an accrual method of accounting that do not elect the application of section 468A are not allowed a deduction for nuclear decommissioning costs prior to the taxable year in which economic performance occurs with respect to such costs (see section 461(h)).
(b)*Definitions.* The following terms are defined for purposes of section 468A and the regulations:
(1)The term *eligible taxpayer* means any taxpayer that possesses a qualifying interest in a nuclear power plant (including a nuclear power plant that is under construction).
(2)The term *qualifying interest* means—
(i)A direct ownership interest; and
(ii)A leasehold interest in any portion of a nuclear power plant if—
(A)The holder of the leasehold interest is primarily liable under Federal or State law for decommissioning such portion of the nuclear power plant; and
(B)No other person establishes a nuclear decommissioning fund with respect to such portion of the nuclear power plant.
(3)A *direct ownership interest* includes an interest held as a tenant in common or joint tenant, but does not include stock in a corporation that owns a nuclear power plant or an interest in a partnership that owns a nuclear power plant. Thus, in the case of a partnership that owns a nuclear power plant, the election under section 468A must be made by the partnership and not by the partners. In the case of an unincorporated organization described in § 1.761-2(a)(3) that elects under section 761(a) to be excluded from the application of subchapter K, each taxpayer that is a co-owner of the nuclear power plant is eligible to make a separate election under section 468A.
(4)The terms *nuclear decommissioning fund* and *qualified nuclear decommissioning fund* mean a fund that satisfies the requirements of § 1.468A-5T. The term *nonqualified fund* means a fund that does not satisfy those requirements.
(5)The term *nuclear power plant* means any nuclear power reactor that is used predominantly in the trade or business of the furnishing or sale of electric energy. Each unit (that is, nuclear reactor) located on a multi-unit site is a separate nuclear power plant. The term *nuclear power plant* also includes the portion of the common facilities of a multi-unit site allocable to a unit on that site.
(6)The term *nuclear decommissioning costs* or *decommissioning costs* means all otherwise deductible expenses to be incurred in connection with the entombment, decontamination, dismantlement, removal and disposal of the structures, systems and components of a nuclear power plant that has permanently ceased the production of electric energy. Such term includes all otherwise deductible expenses to be incurred in connection with the preparation for decommissioning, such as engineering and other planning expenses, and all otherwise deductible expenses to be incurred with respect to the plant after the actual decommissioning occurs, such as physical security and radiation monitoring expenses. Such term does not include otherwise deductible expenses to be incurred in connection with the disposal of spent nuclear fuel under the Nuclear Waste Policy Act of 1982 (Pub. L. 97-425). An expense is otherwise deductible for purposes of this paragraph (b)(6) if it would be deductible under chapter 1 of the Internal Revenue Code without regard to section 280B.
(7)The term *public utility commission* means any State or political subdivision thereof, any agency, instrumentality or judicial body of the United States, or any judicial body, commission or other similar body of the District of Columbia or of any State or any political subdivision thereof that establishes or approves rates for the furnishing or sale of electric energy.
(8)The term *ratemaking proceeding* means any proceeding before a public utility commission in which rates for the furnishing or sale of electric energy are established or approved. Such term includes a generic proceeding that applies to two or more taxpayers that are subject to the jurisdiction of a single public utility commission.
(9)The term *special transfer* means any transfer of funds to a qualified nuclear decommissioning fund pursuant to § 1.468A-8T.
(c)*Special rules applicable to certain experimental nuclear facilities.*
(1)The owner of a qualifying interest in an experimental nuclear facility possesses a qualifying interest in a nuclear power plant for purposes of paragraph
(b)of this section if such person is engaged in the trade or business of the furnishing or sale of electric energy.
(2)An owner of stock in a corporation that owns an experimental nuclear facility possesses a qualifying interest in a nuclear power plant for purposes of paragraph (b)(1) of this section if—
(i)Such stockholder satisfies the conditions of paragraph (c)(1) of this section; and
(ii)The corporation that directly owns the facility is not engaged in the trade or business of the furnishing or sale of electric energy.
(3)For purposes of this paragraph (c), an experimental nuclear facility is a nuclear power reactor that is used predominantly for the purpose of conducting experimentation and research. § 1.468A-2T Treatment of electing taxpayer (temporary).
(a)*In general.* An eligible taxpayer that elects the application of section 468A pursuant to the rules contained in § 1.468A-7T (an electing taxpayer) is allowed a deduction for the taxable year in which the taxpayer makes a cash payment (or is deemed to make a cash payment as provided in paragraph
(c)of this section) to a nuclear decommissioning fund and for any taxable year in which a deduction is allowed for a special transfer described in § 1.468A-8T. The amount of the deduction for any taxable year equals the total amount of cash payments made (or deemed made) by the electing taxpayer to a nuclear decommissioning fund (or nuclear decommissioning funds) during such taxable year under this section, plus any amount allowable as a deduction in that taxable year for a special transfer described in § 1.468A-8T. The amount of a special transfer permitted under § 1.468A-8T is not treated as a cash payment for purposes of this paragraph (a), and a taxpayer making a special transfer is allowed a ratable deduction in each taxable year during the remaining useful life of the nuclear power plant for the special transfer. A payment may not be made (or deemed made) to a nuclear decommissioning fund before the first taxable year in which all of the following conditions are satisfied:
(1)The construction of the nuclear power plant to which the nuclear decommissioning fund relates has commenced.
(2)A ruling amount is applicable to the nuclear decommissioning fund (see § 1.468A-3T).
(b)*Limitation on payments to a nuclear decommissioning fund—*
(1)*In general.* For purposes of paragraph
(a)of this section, the maximum amount of cash payments made (or deemed made) to a nuclear decommissioning fund under paragraph
(a)of this section during any taxable year shall not exceed the ruling amount applicable to the nuclear decommissioning fund for such taxable year (as determined under § 1.468A-3T).
(2)*Excess contributions not deductible.* If the amount of cash payments made (or deemed made) to a nuclear decommissioning fund during any taxable year exceeds the limitation of paragraph (b)(1) of this section, the excess is not deductible by the electing taxpayer. In addition, see § 1.468A-5T(c) for rules which provide that the Internal Revenue Service may disqualify a nuclear decommissioning fund if the amount of cash payments made (or deemed made) to a nuclear decommissioning fund during any taxable year exceeds the limitation of paragraph (b)(1) of this section.
(3)*Special transfer disregarded.* The amount of a special transfer permitted under § 1.468A-8T is not treated as a cash payment for purposes of this paragraph (b).
(c)*Deemed payment rules.*
(1)The amount of any cash payment made by an electing taxpayer to a nuclear decommissioning fund on or before the 15th day of the third calendar month after the close of any taxable year (the deemed payment deadline date) shall be deemed made during such taxable year if the electing taxpayer irrevocably designates the amount as relating to such taxable year on its timely filed Federal income tax return for such taxable year (see § 1.468A-7T(b)(4)(iv) for rules relating to such designation).
(2)The amount of any cash payment made by a customer of an electing taxpayer to a nuclear decommissioning fund of such electing taxpayer shall be deemed made by the electing taxpayer if the amount is included in the gross income of the electing taxpayer in the manner prescribed by section 88 and § 1.88-1.
(d)*Treatment of distributions—*
(1)*In general.* Except as otherwise provided in paragraph (d)(2) of this section, the amount of any actual or deemed distribution from a nuclear decommissioning fund shall be included in the gross income of the electing taxpayer for the taxable year in which the distribution occurs. The amount of any distribution of property equals the fair market value of the property on the date of the distribution. See § 1.468A-5T(c) and
(d)for rules relating to the deemed distribution of the assets of a nuclear decommissioning fund in the case of a disqualification or termination of the fund. A distribution from a nuclear decommissioning fund shall include an expenditure from the fund or the use of the fund's assets—
(i)To satisfy, in whole or in part, the liability of the electing taxpayer for decommissioning costs of the nuclear power plant to which the fund relates; and
(ii)To pay administrative costs and other incidental expenses of the fund.
(2)*Exceptions to inclusion in gross income—*
(i)*Payment of administrative costs and incidental expenses.* The amount of any payment by a nuclear decommissioning fund for administrative costs or other incidental expenses of such fund (as defined in § 1.468A-5T(a)(3)(ii)) shall not be included in the gross income of the electing taxpayer unless such amount is paid to the electing taxpayer (in which case the amount of the payment is included in the gross income of the electing taxpayer under section 61).
(ii)*Withdrawals of excess contributions.* The amount of a withdrawal of an excess contribution (as defined in § 1.468A-5T(c)(2)(ii)) by an electing taxpayer pursuant to the rules of § 1.468A-5T(c)(2) shall not be included in the gross income of the electing taxpayer. See paragraph (b)(2) of this section, which provides that the payment of such amount to the nuclear decommissioning fund is not deductible by the electing taxpayer.
(iii)*Actual distributions of amounts included in gross income as deemed distributions.* If the amount of a deemed distribution is included in the gross income of the electing taxpayer for the taxable year in which the deemed distribution occurs, no further amount is required to be included in gross income when the amount of the deemed distribution is actually distributed by the nuclear decommissioning fund. The amount of a deemed distribution is actually distributed by a nuclear decommissioning fund as the first actual distributions are made by the nuclear decommissioning fund on or after the date of the deemed distribution.
(e)*Deduction when economic performance occurs.* An electing taxpayer using an accrual method of accounting is allowed a deduction for nuclear decommissioning costs no earlier than the taxable year in which economic performance occurs with respect to such costs (see section 461(h)(2)). The amount of nuclear decommissioning costs that is deductible under this paragraph
(e)is determined without regard to section 280B (see § 1.468A-1T(b)(6)). A deduction is allowed under this paragraph
(e)whether or not a deduction was allowed with respect to such costs under section 468A(a) and paragraph
(a)of this section for an earlier taxable year. § 1.468A-3T Ruling amount (temporary).
(a)*In general.*
(1)Except as otherwise provided in paragraph
(g)of this section or in § 1.468A-8T (relating to deductions for special transfers into a nuclear decommissioning fund), an electing taxpayer is allowed a deduction under section 468A(a) for the taxable year in which the taxpayer makes a cash payment (or is deemed to make a cash payment) to a nuclear decommissioning fund only if the taxpayer has received a schedule of ruling amounts for the nuclear decommissioning fund that includes a ruling amount for such taxable year. Except as provided in paragraph (a)(4) or
(5)of this section, a schedule of ruling amounts for a nuclear decommissioning fund ( *schedule of ruling amounts* ) is a ruling (within the meaning of § 601.201(a)(2) of this chapter) specifying the annual payments (ruling amounts) that, over the taxable years remaining in the funding period as of the date the schedule first applies, will result in a projected balance of the nuclear decommissioning fund as of the last day of the funding period equal to (and in no event greater than) the amount of decommissioning costs allocable to the fund. The projected balance of a nuclear decommissioning fund as of the last day of the funding period shall be calculated by taking into account the fair market value of the assets of the fund as of the first day of the first taxable year to which the schedule of ruling amounts applies and the estimated rate of return to be earned by the assets of the fund after payment of the estimated administrative costs and incidental expenses to be incurred by the fund (as defined in § 1.468A-5T(a)(3)(ii)), including all Federal, State and local income taxes to be incurred by the fund (the after-tax rate of return). See paragraph
(c)of this section for a definition of funding period and paragraph
(d)of this section for guidance with respect to the amount of decommissioning costs allocable to a fund.
(2)Each schedule of ruling amounts must be consistent with the principles and provisions of this section and must be based on reasonable assumptions concerning—
(i)The after-tax rate of return to be earned by the amounts collected for decommissioning;
(ii)The total estimated cost of decommissioning the nuclear power plant (see paragraph (d)(2) of this section); and
(iii)The frequency of contributions to a nuclear decommissioning fund for a taxable year (for example, monthly, quarterly, semi-annual or annual contributions).
(3)The Internal Revenue Service
(IRS)shall provide a schedule of ruling amounts that is identical to the schedule of ruling amounts proposed by the taxpayer in connection with the taxpayer's request for a schedule of ruling amounts (see paragraph (e)(2)(viii) of this section), but no schedule of ruling amounts shall be provided unless the taxpayer's proposed schedule of ruling amounts is consistent with the principles and provisions of this section and is based on reasonable assumptions. If a proposed schedule of ruling amounts is not consistent with the principles and provisions of this section or is not based on reasonable assumptions, the taxpayer may propose an amended schedule of ruling amounts that is consistent with such principles and provisions and is based on reasonable assumptions.
(4)The taxpayer bears the burden of demonstrating that the proposed schedule of ruling amounts is consistent with the principles and provisions of this section and is based on reasonable assumptions. If a public utility commission established or approved the currently applicable rates for the furnishing or sale by the taxpayer of electricity from the plant, the taxpayer can generally satisfy this burden of proof by demonstrating that the schedule of ruling amounts is calculated using the assumptions used by the public utility commission in its most recent order. In addition, a taxpayer that owns an interest in a deregulated nuclear plant may submit assumptions used by a public utility commission that formerly had regulatory jurisdiction over the plant as support for the assumptions used in calculating the taxpayer's proposed schedule of ruling amounts, with the understanding that the assumptions used by the public utility commission may be given less weight if they are out of date or were developed in a proceeding for a different taxpayer. The use of other industry standards, such as the assumptions underlying the taxpayer's most recent financial assurance filing with the NRC, are an alternative means of demonstrating that the taxpayer has calculated its proposed schedule of ruling amounts on a reasonable basis. Consistency with financial accounting statements is not sufficient, in the absence of other supporting evidence, to meet the taxpayer's burden of proof under this paragraph (a)(4).
(5)The IRS will approve, at the request of the taxpayer, a formula or method for determining a schedule of ruling amounts (rather than providing a schedule specifying a dollar amount for each taxable year) if the formula or method is consistent with the principles and provisions of this section and is based on reasonable assumptions. See paragraph (f)(1)(ii) of this section for a special rule relating to the mandatory review of ruling amounts that are determined pursuant to a formula or method.
(6)The IRS may, in its discretion, provide a schedule of ruling amounts that is determined on a basis other than the rules of paragraphs
(a)through
(d)of this section if—
(i)In connection with its request for a schedule of ruling amounts, the taxpayer explains the need for special treatment and sets forth an alternative basis for determining the schedule of ruling amounts; and
(ii)The IRS determines that special treatment is consistent with the purpose of section 468A.
(b)*Level funding limitation.*
(1)Except as otherwise provided in paragraph (b)(3) of this section, the ruling amount specified in a schedule of ruling amounts for any taxable year in the funding period (as defined in paragraph
(c)of this section) shall not be less than the ruling amount specified in such schedule for any earlier taxable year.
(2)The ruling amount specified in a schedule of ruling amounts for a taxable year after the end of the funding period may be less than the ruling amount specified in such schedule for an earlier taxable year.
(3)The ruling amount specified in a schedule of ruling amounts for the last taxable year in the funding period may be less than the ruling amount specified in such schedule for an earlier taxable year if, when annualized, the amount specified for the last taxable year is not less than the amount specified for such earlier taxable year. The amount specified for the last taxable year is annualized by—
(i)Determining the number of days between the beginning of the taxable year and the end of the plant's estimated useful life;
(ii)Dividing the amount specified for the last taxable year by such number of days; and
(iii)Multiplying the result by the number of days in the last taxable year (generally 365).
(c)*Funding period—*
(1)*In general.* For purposes of this section, the funding period for a nuclear decommissioning fund is the period that—
(i)Begins on the first day of the first taxable year for which a deductible payment is made (or deemed made) to such nuclear decommissioning fund (see § 1.468A-2T(a) for rules relating to the first taxable year for which a payment may be made (or deemed made) to a nuclear decommissioning fund); and
(ii)Ends on the last day of the taxable year that includes the last day of the estimated useful life of the nuclear power plant to which the nuclear decommissioning fund relates.
(2)*Estimated useful life.* The last day of the estimated useful life of a nuclear power plant is determined under the following rules:
(i)Except as provided in paragraph (c)(2)(ii) of this section—
(A)The last day of the estimated useful life of a nuclear power plant that has been included in rate base for ratemaking purposes in any ratemaking proceeding that established rates for a period before January 1, 2006, is the date used in the first such ratemaking proceeding as the estimated date on which the nuclear power plant will no longer be included in the taxpayer's rate base for ratemaking purposes;
(B)The last day of the estimated useful life of a nuclear power plant that is not described in paragraph (c)(2)(i)(A) of this section is the last day of the estimated useful life of the plant determined as of the date it is placed in service;
(C)A taxpayer with an interest in the plant that is not described in paragraph (c)(2)(i)(A) of this section may use any reasonable method for determining the last day of such estimated useful life; and
(D)A reasonable method for purposes of paragraph (c)(2)(i)(C) of this section may include use of the period for which a public utility commission has included a comparable nuclear power plant in rate base for ratemaking purposes.
(ii)If it can be established that the estimated useful life of the nuclear power plant will end on a date other than the date determined under paragraph (c)(2)(i) of this section, the taxpayer may use such other date as the last day of the estimated useful life but is not required to do so. If the last day of the estimated useful life was determined under paragraph (c)(2)(i)(A) of this section and the most recent ratemaking proceeding used an alternative date as the estimated date on which the nuclear power plant will no longer be included rate base, the most recent ratemaking proceeding will generally be treated as establishing such alternative date as the last day of the estimated useful life.
(d)*Decommissioning costs allocable to a fund.* The amount of decommissioning costs allocable to a nuclear decommissioning fund is determined for purposes of this section by applying the following rules and definitions:
(1)*General rule.* The amount of decommissioning costs allocable to a nuclear decommissioning fund is the taxpayer's share of the total estimated cost of decommissioning the nuclear power plant to which the fund relates.
(2)*Total estimated cost of decommissioning.* Under paragraph (a)(2) of this section, the taxpayer must demonstrate the reasonableness of the assumptions concerning the total estimated cost of decommissioning the nuclear power plant.
(3)*Taxpayer's share.* The taxpayer's share of the total estimated cost of decommissioning a nuclear power plant equals the total estimated cost of decommissioning such nuclear power plant multiplied by the percentage of such nuclear power plant that the qualifying interest of the taxpayer represents (see § 1.468A-1T(b)(2) for circumstances in which a taxpayer possesses a qualifying interest in a nuclear power plant).
(e)*Manner of requesting schedule of ruling amounts—*
(1)*In general.*
(i)In order to receive a ruling amount for any taxable year, a taxpayer must file a request for a schedule of ruling amounts that complies with the requirements of this paragraph (e), the applicable procedural rules set forth in § 601.201(e) of this chapter (Statement of Procedural Rules) and the requirements of any applicable revenue procedure that is in effect on the date the request is filed.
(ii)A separate request for a schedule of ruling amounts is required for each nuclear decommissioning fund established by a taxpayer (see paragraph
(a)of § 1.468A-5T for rules relating to the number of nuclear decommissioning funds that a taxpayer can establish).
(iii)Except as provided by §§ 1.468A-5T(a)(1)(iv) (relating to certain unincorporated organizations that may be taxable as corporations) and 1.468A-8T (relating to a special transfer under section 468A(f)(1)), a request for a schedule of ruling amounts must not contain a request for a ruling on any other issue, whether the issue involves section 468A or another section of the Internal Revenue Code.
(iv)In the case of an affiliated group of corporations that join in the filing of a consolidated return, the common parent of the group may request a schedule of ruling amounts for each member of the group that possesses a qualifying interest in the same nuclear power plant by filing a single submission with the IRS.
(v)The IRS shall not provide or revise a ruling amount applicable to a taxable year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date (as defined in § 1.468A-2T(c)(1)) for such taxable year. In determining the date when a request is filed, the principles of sections 7502 and 7503 shall apply.
(vi)Except as provided in paragraph (e)(1)(vii) of this section, a request for a schedule of ruling amounts shall be considered filed only if such request complies substantially with the requirements of this paragraph (e).
(vii)If a request does not comply substantially with the requirements of this paragraph (e), the IRS will notify the taxpayer of that fact. If the information or materials necessary to comply substantially with the requirements of this paragraph
(e)are provided to the IRS within 30 days after this notification, the request will be considered filed on the date of the original submission. In addition, the request will be considered filed on the date of the original submission in a case in which the information and materials are provided more than 30 days after the notification if the IRS determines that the electing taxpayer made a good faith effort to provide the applicable information or materials within 30 days after notification and also determines that treating the request as filed on the date of the original submission is consistent with the purposes of section 468A. In any other case in which the information or materials necessary to comply substantially with the requirements of this paragraph
(e)are not provided within 30 days after the notification, the request will be considered filed on the date that all information or materials necessary to comply with the requirements of this paragraph
(e)are provided.
(2)*Information required.* A request for a schedule of ruling amounts must contain the following information:
(i)The taxpayer's name, address, and taxpayer identification number.
(ii)Whether the request is for an initial schedule of ruling amounts, a mandatory review of the schedule of ruling amounts (see paragraph (f)(1) of this section), or an elective review of the schedule of ruling amounts (see paragraph (f)(2) of this section).
(iii)The name and location of the nuclear power plant with respect to which a schedule of ruling amounts is requested.
(iv)A description of the taxpayer's qualifying interest in the nuclear power plant and the percentage of such nuclear power plant that the qualifying interest of the taxpayer represents.
(v)Where applicable, an identification of each public utility commission that establishes or approves rates for the furnishing or sale by the taxpayer of electric energy generated by the nuclear power plant, and, for each public utility commission identified—
(A)Whether the public utility commission has determined the amount of decommissioning costs to be included in the taxpayer's cost of service for ratemaking purposes;
(B)The amount of decommissioning costs that are to be included in the taxpayer's cost of service for each taxable year under the current determination and amounts that otherwise are required to be included in the taxpayer's income under section 88 and the regulations;
(C)A description of the assumptions, estimates and other factors used by the public utility commission to determine the amount of decommissioning costs;
(D)A copy of such portions of any order or opinion of the public utility commission as pertaining to the public utility commission's most recent determination of the amount of decommissioning costs to be included in cost of service; and
(E)A copy of each engineering or cost study that was relied on or used by the public utility commission in determining the amount of decommissioning costs to be included in the taxpayer's cost of service under the current determination.
(vi)A description of the assumptions, estimates and other factors that were used by the taxpayer to determine the amount of decommissioning costs, including each of the following if applicable:
(A)A description of the proposed method of decommissioning the nuclear power plant (for example, prompt removal/dismantlement, safe storage entombment with delayed dismantlement, or safe storage mothballing with delayed dismantlement).
(B)The estimated year in which substantial decommissioning costs will first be incurred.
(C)The estimated year in which the decommissioning of the nuclear power plant will be substantially complete (see § 1.468A-5T(d)(3) for a definition of substantial completion of decommissioning).
(D)The total estimated cost of decommissioning expressed in current dollars (that is, based on price levels in effect at the time of the current determination).
(E)The total estimated cost of decommissioning expressed in future dollars (that is, based on anticipated price levels when expenses are expected to be paid).
(F)For each taxable year in the period that begins with the year specified in paragraph (e)(2)(vi)(B) of this section (the estimated year in which substantial decommissioning costs will first be incurred) and ends with the year specified in paragraph (e)(2)(vi)(C) of this section (the estimated year in which the decommissioning of the nuclear power plant will be substantially complete), the estimated cost of decommissioning expressed in future dollars.
(G)A description of the methodology used in converting the estimated cost of decommissioning expressed in current dollars to the estimated cost of decommissioning expressed in future dollars.
(H)The assumed after-tax rate of return to be earned by the amounts collected for decommissioning.
(I)A copy of each engineering or cost study that was relied on or used by the taxpayer in determining the amount of decommissioning costs.
(vii)A proposed schedule of ruling amounts for each taxable year remaining in the funding period as of the date the schedule of ruling amounts will first apply.
(viii)A description of the assumptions, estimates and other factors that were used in determining the proposed schedule of ruling amounts, including each of the following if applicable—
(A)The funding period (as such term is defined in paragraph
(c)of this section);
(B)The assumed after-tax rate of return to be earned by the assets of the nuclear decommissioning fund;
(C)The fair market value of the assets (if any) of the nuclear decommissioning fund as of the first day of the first taxable year to which the schedule of ruling amounts will apply;
(D)The amount expected to be earned by the assets of the nuclear decommissioning fund (based on the after-tax rate of return applicable to the fund) over the period that begins on the first day of the first taxable year to which the schedule of ruling amounts will apply and ends on the last day of the funding period;
(E)The amount of decommissioning costs allocable to the nuclear decommissioning fund (as determined under paragraph
(d)of this section);
(F)The total estimated cost of decommissioning (as determined under paragraph (d)(2) of this section); and
(G)The taxpayer's share of the total estimated cost of decommissioning (as such term is defined in paragraph (d)(3) of this section).
(ix)If the request is for a revised schedule of ruling amounts, the after-tax rate of return earned by the assets of the nuclear decommissioning fund for each taxable year in the period that begins with the date of the initial contribution to the fund and ends with the first day of the first taxable year to which the revised schedule of ruling amounts applies.
(x)If applicable, an explanation of the need for a schedule of ruling amounts determined on a basis other than the rules of paragraphs
(a)through
(d)of this section and a description of an alternative basis for determining a schedule of ruling amounts (see paragraph (a)(5) of this section).
(xi)A chart or table, based upon the assumed after-tax rate of return to be earned by the assets of the nuclear decommissioning fund, setting forth the years the fund will be in existence, the annual contribution to the fund, the estimated annual earnings of the fund and the cumulative total balance in the fund.
(xii)If the request is for a revised schedule of ruling amounts, a copy of the schedule of ruling amounts that the revised schedule would replace.
(xiii)If the request for a schedule of ruling amounts contains a request, pursuant to § 1.468A-5T(a)(1)(iv), that the IRS rule whether an unincorporated organization through which the assets of the fund are invested is an association taxable as a corporation for Federal tax purposes, a copy of the legal documents establishing or otherwise governing the organization.
(xiv)Any other information required by the IRS that may be necessary or useful in determining the schedule of ruling amounts.
(3)*Administrative procedures.* The IRS may prescribe administrative procedures that supplement the provisions of paragraph (e)(1) and
(2)of this section. In addition, the IRS may, in its discretion, waive the requirements of paragraph (e)(1) and
(2)of this section under appropriate circumstances.
(f)*Review and revision of schedule of ruling amounts* —(1) *Mandatory review.*
(i)Any taxpayer that has obtained a schedule of ruling amounts pursuant to paragraph
(e)of this section must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 10th taxable year that begins after the taxable year in which the most recent schedule of ruling amounts was received. If the taxpayer calculated its most recent schedule of ruling amounts on any basis other than an order issued by a public utility commission, the taxpayer must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline date for the 5th taxable year that begins after the taxable year in which the most recent schedule of ruling amounts was received. (ii)(A) Any taxpayer that has obtained a formula or method for determining a schedule of ruling amounts for any taxable year under paragraph (a)(4) of this section must file a request for a revised schedule on or before the earlier of the deemed payment deadline for the 5th taxable year that begins after its taxable year in which the most recent formula or method was approved or the deemed payment deadline for the first taxable year that begins after a taxable year in which there is a substantial variation in the ruling amount determined under the most recent formula or method. There is a substantial variation in the ruling amount determined under the formula or method in effect for a taxable year if the ruling amount for the year and the ruling amount for any earlier year since the most recent formula or method was approved differ by more than 50 percent of the smaller amount.
(B)Any taxpayer that has determined its ruling amount for any taxable year under a formula prescribed by § 1.468A-6T (which prescribes ruling amounts for the taxable year in which there is a disposition of a qualifying interest in a nuclear power plant) must file a request for a revised schedule of ruling amounts on or before the deemed payment deadline for its first taxable year that begins after the disposition.
(iii)A taxpayer requesting a schedule of deduction amounts for a nuclear decommissioning fund under § 1.468A-8T must also request a revised schedule of ruling amounts for the fund. The revised schedule of ruling amounts must apply beginning with the first taxable year for which a deduction is allowed under the schedule of deduction amounts.
(iv)If the operating license of the nuclear power plant to which a nuclear decommissioning fund relates is renewed, the taxpayer maintaining the fund must request a revised schedule of ruling amounts. The request for the revised schedule must be submitted on or before the deemed payment deadline for the taxable year that includes the date on which the operating license is renewed.
(v)A request for a schedule of ruling amounts required by this paragraph (f)(1) must be made in accordance with the rules of paragraph
(e)of this section. If a taxpayer does not properly file a request for a revised schedule of ruling amounts by the date provided in paragraph (f)(1) (i),
(ii)or
(iv)of this section (whichever is applicable), the taxpayer's ruling amount for the first taxable year to which the revised schedule of ruling amounts would have applied and for all succeeding taxable years until a new schedule is obtained shall be zero dollars, unless, in its discretion, the IRS provides otherwise in such new schedule of ruling amounts. Thus, if a taxpayer is required to request a revised schedule of ruling amounts under any provision of this section, and each ruling amount in the revised schedule would equal zero dollars, the taxpayer may, instead of requesting a new schedule of ruling amounts, begin treating the ruling amounts under its most recent schedule as equal to zero dollars.
(2)*Elective review.* Any taxpayer that has obtained a schedule of ruling amounts pursuant to paragraph
(e)of this section can request a revised schedule of ruling amounts. Such a request must be made in accordance with the rules of paragraph
(e)of this section; thus, the IRS will not provide a revised ruling amount applicable to a taxable year in response to a request for a schedule of ruling amounts that is filed after the deemed payment deadline date for such taxable year (see paragraph (e)(1)(vi) of this section).
(3)*Determination of revised schedule of ruling amounts.* A revised schedule of ruling amounts for a nuclear decommissioning fund shall be determined under this section without regard to any schedule of ruling amounts for such nuclear decommissioning fund that was issued prior to such revised schedule. Thus, a ruling amount specified in a revised schedule of ruling amounts for any taxable year in the funding period can be less than one or more ruling amounts specified in a prior schedule of ruling amounts for a prior taxable year.
(g)*Special rule permitting payments to a nuclear decommissioning fund before receipt of an initial or revised ruling amount applicable to a taxable year.*
(1)If an electing taxpayer has filed a timely request for an initial or revised ruling amount for a taxable year beginning on or after January 1, 2006, and does not receive the ruling amount on or before the deemed payment deadline date for such taxable year, the taxpayer may make a payment to a nuclear decommissioning fund on the basis of the ruling amount proposed in the taxpayer's request. Thus, under the preceding sentence, an electing taxpayer may make a payment to a nuclear decommissioning fund for such taxable year that does not exceed the ruling amount proposed by the taxpayer for such taxable year in a timely filed request for a schedule of ruling amounts.
(2)If an electing taxpayer makes a payment to a nuclear decommissioning fund for any taxable year pursuant to paragraph (g)(1) of this section and the ruling amount that is provided by the IRS is greater than the ruling amount proposed by the taxpayer for such taxable year, the taxpayer is not allowed to make an additional payment to the fund for such taxable year after the deemed payment deadline date for such taxable year.
(3)If the payment that an electing taxpayer makes to a nuclear decommissioning fund for any taxable year pursuant to paragraph (g)(1) of this section exceeds the ruling amount that is provided by the IRS for such taxable year, the following rules apply:
(i)The amount of the excess is an excess contribution (as defined in § 1.468A-5T(c)(2)(ii)) for such taxable year.
(ii)The amount of the excess contribution is not deductible (see § 1.468A-2T(b)(2)) and must be withdrawn by the taxpayer pursuant to the rules of § 1.468A-5T(c)(2)(i).
(iii)The taxpayer must withdraw the after-tax earnings on the excess contribution.
(iv)If the taxpayer claimed a deduction for the excess contribution, the taxpayer should file an amended return for the taxable year. § 1.468A-4T Treatment of nuclear decommissioning fund (temporary).
(a)*In general.* A nuclear decommissioning fund is subject to tax on all of its modified gross income (as defined in paragraph
(b)of this section). The rate of tax is 20 percent for taxable years beginning after December 31, 1995. This tax is in lieu of any other tax that may be imposed under subtitle A of the Internal Revenue Code
(Code)on the income earned by the assets of the nuclear decommissioning fund.
(b)*Modified gross income.* For purposes of this section, the term *modified gross income* means gross income as defined under section 61 computed with the following modifications:
(1)The amount of any payment or special transfer to the nuclear decommissioning fund with respect to which a deduction is allowed under section 468A(a) or section 468A(f) is excluded from gross income.
(2)A deduction is allowed for the amount of administrative costs and other incidental expenses of the nuclear decommissioning fund (including taxes, legal expenses, accounting expenses, actuarial expenses and trustee expenses, but not including decommissioning costs) that are otherwise deductible and that are paid by the nuclear decommissioning fund to any person other than the electing taxpayer. An expense is otherwise deductible for purposes of this paragraph (b)(2) if it would be deductible under chapter 1 of the Code in determining the taxable income of a corporation. For example, because Federal income taxes are not deductible under chapter 1 of the Code in determining the taxable income of a corporation, the tax imposed by section 468A(e)(2) and paragraph
(a)of this section is not deductible in determining the modified gross income of a nuclear decommissioning fund. Similarly, because certain expenses allocable to tax-exempt interest income are not deductible under section 265 in determining the taxable income of a corporation, such expenses are not deductible in determining the modified gross income of a nuclear decommissioning fund.
(3)A deduction is allowed for the amount of an otherwise deductible loss that is sustained by the nuclear decommissioning fund in connection with the sale, exchange or worthlessness of any investment. A loss is otherwise deductible for purposes of this paragraph (b)(3) if such loss would be deductible by a corporation under section 165(f) or
(g)and sections 1211(a) and 1212(a).
(4)A deduction is allowed for the amount of an otherwise deductible net operating loss of the nuclear decommissioning fund. For purposes of this paragraph (b), the net operating loss of a nuclear decommissioning fund for a taxable year is the amount by which the deductions allowable under paragraphs (b)(2) and
(3)of this section exceed the gross income of the nuclear decommissioning fund computed with the modification described in paragraph (b)(1) of this section. A net operating loss is otherwise deductible for purposes of this paragraph (b)(4) if such a net operating loss would be deductible by a corporation under section 172(a).
(c)*Special rules* —(1) *Period for computation of modified gross income.* The modified gross income of a nuclear decommissioning fund must be computed on the basis of the taxable year of the electing taxpayer. If an electing taxpayer changes its taxable year, each nuclear decommissioning fund of the electing taxpayer must change to the new taxable year. See section 442 and section 1.442-1 for rules relating to the change to a new taxable year.
(2)*Gain or loss upon distribution of property by a fund.* A distribution of property by a nuclear decommissioning fund (whether an actual distribution or a deemed distribution) shall be considered a disposition of property by the nuclear decommissioning fund for purposes of section 1001. In determining the amount of gain or loss from such disposition, the amount realized by the nuclear decommissioning fund shall be the fair market value of the property on the date of disposition.
(3)*Denial of credits against tax.* The tax imposed on the modified gross income of a nuclear decommissioning fund under paragraph
(a)of this section is not to be reduced or offset by any credits against tax provided by part IV of subchapter A of chapter 1 of the Code other than the credit provided by section 31(c) for amounts withheld under section 3406 (back-up withholding).
(4)*Other corporate taxes inapplicable.* Although the modified gross income of a nuclear decommissioning fund is subject to tax at the rate specified by section 468A(e)(2) and paragraph
(a)of this section, a nuclear decommissioning fund is not subject to the other taxes imposed on corporations under subtitle A of the Code. For example, a nuclear decommissioning fund is not subject to the alternative minimum tax imposed by section 55, the accumulated earnings tax imposed by section 531, the personal holding company tax imposed by section 541, and the alternative tax imposed on a corporation under section 1201(a).
(d)*Treatment as corporation for purposes of subtitle F.* For purposes of subtitle F of the Code and the regulations, a nuclear decommissioning fund is to be treated as if it were a corporation and the tax imposed by section 468A(e)(2) and paragraph
(a)of this section is to be treated as a tax imposed by section 11. Thus, for example, the following rules apply:
(1)A nuclear decommissioning fund must file a return with respect to the tax imposed by section 468A(e)(2) and paragraph
(a)of this section for each taxable year (or portion thereof) that the fund is in existence even though no amount is included in the gross income of the fund for such taxable year. The return is to be made on Form 1120-ND in accordance with the instructions relating to such form. For purposes of this paragraph (d)(1), a nuclear decommissioning fund is in existence for the period that—
(i)Begins on the date that the first deductible payment is actually made to such nuclear decommissioning fund; and
(ii)Ends on the date of termination (see § 1.468A-5T(d)), the date that the entire fund is disqualified (see § 1.468A-5T(c)), or the date that the electing taxpayer disposes of its entire qualifying interest in the nuclear power plant to which the nuclear decommissioning fund relates (other than in connection with the transfer of the entire fund to the person acquiring such interest), whichever is applicable.
(2)For each taxable year of the nuclear decommissioning fund, the return described in paragraph (d)(1) of this section must be filed on or before the 15th day of the third month following the close of such taxable year unless the nuclear decommissioning fund is granted an extension of time for filing under section 6081. If such an extension is granted for any taxable year, the return for such taxable year must be filed on or before the extended due date for such taxable year.
(3)A nuclear decommissioning fund must provide its employer identification number on returns, statements and other documents as required by the forms and instructions relating thereto. The employer identification number is obtained by filing a Form SS-4, Application for Employer Identification Number, in accordance with the instructions relating thereto.
(4)A nuclear decommissioning fund must deposit all payments of tax imposed by section 468A(e)(2) and paragraph
(a)of this section (including any payments of estimated tax) with an authorized government depositary in accordance with § 1.6302-1.
(5)A nuclear decommissioning fund is subject to the addition to tax imposed by section 6655 in case of a failure to pay estimated income tax. For purposes of section 6655 and this section—
(i)The tax with respect to which the amount of the underpayment is computed in the case of a nuclear decommissioning fund is the tax imposed by section 468A(e)(2) and paragraph
(a)of this section; and
(ii)The taxable income with respect to which the nuclear decommissioning fund's status as a large corporation is measured is modified gross income (as defined by paragraph
(b)of this section). § 1.468A-5T Nuclear decommissioning fund qualification requirements; prohibitions against self-dealing; disqualification of nuclear decommissioning fund; termination of fund upon substantial completion of decommissioning (temporary).
(a)*Qualification requirements* —(1) *In general.*
(i)A nuclear decommissioning fund must be established and maintained at all times in the United States pursuant to an arrangement that qualifies as a trust under State law. Such trust must be established for the exclusive purpose of providing funds for the decommissioning of one or more nuclear power plants, but a single trust agreement may establish multiple funds for such purpose. Thus—
(A)Two or more nuclear decommissioning funds can be established and maintained pursuant to a single trust agreement; and
(B)One or more funds that are to be used for the decommissioning of a nuclear power plant and that do not qualify as nuclear decommissioning funds under this paragraph
(a)can be established and maintained pursuant to a trust agreement that governs one or more nuclear decommissioning funds.
(ii)A separate nuclear decommissioning fund is required for each electing taxpayer and for each nuclear power plant with respect to which an electing taxpayer possesses a qualifying interest. The Internal Revenue Service
(IRS)will issue a separate schedule of ruling amounts with respect to each nuclear decommissioning fund and each nuclear decommissioning fund must file a separate income tax return even if other nuclear decommissioning funds or nonqualified funds are established and maintained pursuant to the trust agreement governing such fund or the assets of other nuclear decommissioning funds or nonqualified funds are pooled with the assets of such fund.
(iii)An electing taxpayer can maintain only one nuclear decommissioning fund for each nuclear power plant with respect to which the taxpayer elects the application of section 468A. If a nuclear power plant is subject to the ratemaking jurisdiction of two or more public utility commissions and any such public utility commission requires a separate fund to be maintained for the benefit of ratepayers whose rates are established or approved by the public utility commission, the separate funds maintained for such plant (whether or not established and maintained pursuant to a single trust agreement) shall be considered a single nuclear decommissioning fund for purposes of section 468A and §§ 1.468A-1T through 1.468A-4T, this section and §§ 1.468A-7T through 1.468A-9T. Thus, for example, the IRS will issue one schedule of ruling amounts with respect to such nuclear power plant, the nuclear decommissioning fund must file a single income tax return (see § 1.468A-4T(d)(1)), and, if the IRS disqualifies the nuclear decommissioning fund, the assets of each separate fund are treated as distributed on the date of disqualification (see paragraph (c)(3) of this section).
(iv)If assets of a nuclear decommissioning fund are (or will be) invested through an unincorporated organization, within the meaning of § 301.7701-2 of this chapter, the IRS will rule, if requested, whether the organization is an association taxable as a corporation for Federal tax purposes. A request for this ruling may be made by the electing taxpayer as part of its request for a schedule of ruling amounts or as part of a request under § 1.468A-8T for a schedule of deduction amounts.
(2)*Limitation on contributions.* Except as otherwise provided in § 1.468A-8T (relating to special transfers under section 468A(f)), a nuclear decommissioning fund is not permitted to accept any contributions in cash or property other than cash payments with respect to which a deduction is allowed under section 468A(a) and § 1.468A-2T(a). Thus, for example, except in the case of a special transfer pursuant to § 1.468A-8T, securities may not be contributed to a nuclear decommissioning fund even if the taxpayer or a fund established by the taxpayer previously held such securities for the purpose of providing funds for the decommissioning of a nuclear power plant.
(3)*Limitation on use of fund* —(i) *In general.* The assets of a nuclear decommissioning fund are to be used exclusively—
(A)To satisfy, in whole or in part, the liability of the electing taxpayer for decommissioning costs of the nuclear power plant to which the nuclear decommissioning fund relates;
(B)To pay administrative costs and other incidental expenses of the nuclear decommissioning fund; and
(C)To the extent that the assets of the nuclear decommissioning fund are not currently required for the purposes described in paragraph (a)(3)(i)(A) or
(B)of this section, to make investments.
(ii)*Definition of administrative costs and expenses.* For purposes of paragraph (a)(3)(i) of this section, the term *administrative costs and other incidental expenses of a nuclear decommissioning fund* means all ordinary and necessary expenses incurred in connection with the operation of the nuclear decommissioning fund. Such term includes the tax imposed by section 468A(e)(2) and § 1.468A-4T(a), any State or local tax imposed on the income or the assets of the fund, legal expenses, accounting expenses, actuarial expenses and trustee expenses. Such term does not include decommissioning costs or the payment of insurance premiums on a policy to pay for the nuclear decommissioning costs of a nuclear power plant. Such term also does not include the excise tax imposed on the trustee or other disqualified person under section 4951 or the reimbursement of any expenses incurred in connection with the assertion of such tax unless such expenses are considered reasonable and necessary under section 4951(d)(2)(C) and it is determined that the trustee or other disqualified person is not liable for the excise tax.
(4)*Trust provisions.* Each qualified nuclear decommissioning fund trust agreement must provide that assets in the fund must be used as authorized by section 468A and the regulations and that the agreement may not be amended so as to violate section 468A or the regulations.
(b)*Prohibitions against self-dealing* —(1) *In general.* Except as otherwise provided in this paragraph (b), the excise taxes imposed by section 4951 shall apply to each act of self-dealing between a disqualified person and a nuclear decommissioning fund.
(2)*Self-dealing defined.* For purposes of this paragraph (b), the term “self-dealing” means any act described in section 4951(d), except—
(i)A payment by a nuclear decommissioning fund for the purpose of satisfying, in whole or in part, the liability of the electing taxpayer for decommissioning costs of the nuclear power plant to which the nuclear decommissioning fund relates;
(ii)A withdrawal of an excess contribution by the electing taxpayer pursuant to the rules of paragraph (c)(2) of this section;
(iii)A withdrawal by the electing taxpayer of amounts that have been treated as distributed under paragraph (c)(3) of this section;
(iv)A payment of amounts remaining in a nuclear decommissioning fund to the electing taxpayer after the termination of such fund (as determined under paragraph
(d)of this section);
(v)Any act described in section 4951(d)(2)(B) or (C);
(vi)Any act that is described in § 53.4951-1(c) of this chapter and is undertaken to facilitate the temporary investment of assets or the payment of reasonable administrative expenses of the nuclear decommissioning fund; or
(vii)A payment by a nuclear decommissioning fund for the performance of trust functions and certain general banking services by a bank or trust company that is a disqualified person if the banking services are reasonable and necessary to carry out the purposes of the fund and the compensation paid to the bank or trust company for such services, taking into account the fair interest rate for the use of the funds by the bank or trust company, is not excessive.
(3)*Disqualified person defined.* For purposes of this paragraph (b), the term “disqualified person” includes each person described in section 4951(e)(4) and § 53.4951-1(d).
(4)*General banking services.* The general banking services allowed by paragraph (b)(2)(vii) of this section are—
(i)Checking accounts, as long as the bank does not charge interest on any overwithdrawals;
(ii)Savings accounts, as long as the fund may withdraw its funds on no more than 30 days' notice without subjecting itself to a loss of interest on its money for the time during which the money was on deposit; and
(iii)Safekeeping activities (see § 53.4941(d)-3(c)(2), *Example 3,* of this chapter).
(c)*Disqualification of nuclear decommissioning fund* —(1) *In general* —(i) *Disqualification events.* Except as otherwise provided in paragraph (c)(2) of this section, the IRS may, in its discretion, disqualify all or any portion of a nuclear decommissioning fund if at any time during a taxable year of the fund—
(A)The fund does not satisfy the requirements of paragraph
(a)of this section; or
(B)The fund and a disqualified person engage in an act of self-dealing (as defined in paragraph (b)(2) of this section).
(ii)*Date of disqualification.*
(A)Except as otherwise provided in this paragraph (c)(1)(ii), the date on which a disqualification under this paragraph
(c)will take effect (date of disqualification) is the date that the fund does not satisfy the requirements of paragraph
(a)of this section or the date on which the act of self-dealing occurs, whichever is applicable.
(B)If the IRS determines, in its discretion, that the disqualification should take effect on a date subsequent to the date specified in paragraph (C)(1)(ii)(A) of this section, the date of disqualification is such subsequent date.
(iii)*Notice of disqualification.* The IRS will notify the electing taxpayer of the disqualification of a nuclear decommissioning fund and the date of disqualification by registered or certified mail to the last known address of the electing taxpayer (the notice of disqualification). For further guidance regarding the definition of last known address, see § 301.6212-2 of this chapter.
(2)*Exception to disqualification* —(i) *In general.* A nuclear decommissioning fund will not be disqualified under paragraph (c)(1) of this section by reason of an excess contribution or the withdrawal of such excess contribution by an electing taxpayer if the amount of the excess contribution is withdrawn by the electing taxpayer on or before the date prescribed by law (including extensions) for filing the return of the nuclear decommissioning fund for the taxable year to which the excess contribution relates. In the case of an excess contribution that is the result of a payment made pursuant to § 1.468A-3T(g)(1), a nuclear decommissioning fund will not be disqualified under paragraph (c)(1) of this section if the amount of the excess contribution is withdrawn by the electing taxpayer on or before the later of—
(A)The date prescribed by law (including extensions) for filing the return of the nuclear decommissioning fund for the taxable year to which the excess contribution relates; or
(B)The date that is 30 days after the date that the taxpayer receives the ruling amount for such taxable year.
(ii)*Excess contribution defined.* For purposes of this section, an excess contribution is the amount by which cash payments made (or deemed made) to a nuclear decommissioning fund during any taxable year exceed the payment limitation contained in section 468A(b) and § 1.468A-2T(b). The amount of a special transfer permitted under § 1.468A-8T is not treated as a cash payment for this purpose.
(iii)*Taxation of income attributable to an excess contribution.* The income of a nuclear decommissioning fund attributable to an excess contribution is required to be included in the gross income of the nuclear decommissioning fund under § 1.468A-4T(b).
(3)*Disqualification treated as distribution.* If all or any portion of a nuclear decommissioning fund is disqualified under paragraph (c)(1) of this section, the portion of the nuclear decommissioning fund that is disqualified is treated as distributed to the electing taxpayer on the date of disqualification. Such a distribution shall be treated for purposes of section 1001 as a disposition of property held by the nuclear decommissioning fund (see § 1.468A-4T(c)(2)). In addition, the electing taxpayer must include in gross income for the taxable year that includes the date of disqualification an amount equal to the fair market value of the distributable assets of the nuclear decommissioning fund multiplied by the fraction of the nuclear decommissioning fund that was disqualified under paragraph (c)(1) of this section. For this purpose, the fair market value of the distributable assets of the nuclear decommissioning fund is equal to the fair market value of the assets of the fund determined as of the date of disqualification, reduced by—
(i)The amount of any excess contribution that was not withdrawn before the date of disqualification if no deduction was allowed with respect to such excess contribution;
(ii)The amount of any deemed distribution that was not actually distributed before the date of disqualification (as determined under § 1.468A-2T(d)(2)(iii)) if the amount of the deemed distribution was included in the gross income of the electing taxpayer for the taxable year in which the deemed distribution occurred; and
(iii)The amount of any tax that—
(A)Is imposed on the income of the fund;
(B)Is attributable to income taken into account before the date of disqualification or as a result of the disqualification; and
(C)Has not been paid as of the date of disqualification.
(4)*Further effects of disqualification.* Contributions made to a disqualified fund after the date of disqualification are not deductible under section 468A(a) and § 1.468A-2T(a), or, if the fund is disqualified only in part, are deductible only to the extent provided in the notice of disqualification. In addition, if any assets of the fund that are deemed distributed under paragraph (c)(3) of this section are held by the fund after the date of disqualification (or if additional assets are acquired with nondeductible contributions made to the fund after the date of disqualification), the income earned by such assets after the date of disqualification must be included in the gross income of the electing taxpayer (see section 671) to the extent that such income is otherwise includible under chapter 1 of the Internal Revenue Code (Code). An electing taxpayer can establish a nuclear decommissioning fund to replace a fund that has been disqualified in its entirety only if the IRS specifically consents to the establishment of a replacement fund in connection with the issuance of an initial schedule of ruling amounts for such replacement fund.
(d)*Termination of nuclear decommissioning fund upon substantial completion of decommissioning* —(1) *In general.* Upon substantial completion of the decommissioning of a nuclear power plant to which a nuclear decommissioning fund relates, such nuclear decommissioning fund shall be considered terminated and treated as having distributed all of its assets on the date the termination occurs (the termination date). Such a distribution shall be treated for purposes of section 1001 as a disposition of property held by the nuclear decommissioning fund (see § 1.468A-4T(c)(2)). In addition, the electing taxpayer shall include in gross income for the taxable year in which the termination occurs an amount equal to the fair market value of the assets of the fund determined as of the termination date, reduced by—
(i)The amount of any deemed distribution that was not actually distributed before the termination date if the amount of the deemed distribution was included in the gross income of the electing taxpayer for the taxable year in which the deemed distribution occurred; and
(ii)The amount of any tax that—
(A)Is imposed on the income of the fund;
(B)Is attributable to income taken into account before the termination date or as a result of the termination; and
(C)Has not been paid as of the termination date.
(2)*Additional rules.* Contributions made to a nuclear decommissioning fund after the termination date are not deductible under section 468A(a) and § 1.468A-2T(a). In addition, if any assets are held by the fund after the termination date, the income earned by such assets after the termination date must be included in the gross income of the electing taxpayer (see section 671) to the extent that such income is otherwise includible under chapter 1 of the Code. Finally, an electing taxpayer using an accrual method of accounting is allowed a deduction for nuclear decommissioning costs that are incurred during any taxable year (see § 1.468A-2T(e)) even if such costs are incurred after substantial completion of decommissioning (for example, expenses incurred to monitor or safeguard the plant site).
(3)*Substantial completion of decommissioning and termination date.*
(i)The substantial completion of the decommissioning of a nuclear power plant occurs on the date that the maximum acceptable radioactivity levels mandated by the Nuclear Regulatory Commission with respect to a decommissioned nuclear power plant are satisfied (the substantial completion date). Except as otherwise provided in paragraph (d)(3)(ii) of this section, the substantial completion date is also the termination date.
(ii)If a significant portion of the total estimated decommissioning costs with respect to a nuclear power plant are not incurred on or before the substantial completion date, an electing taxpayer may request, and the IRS will issue, a ruling that designates a date subsequent to the substantial completion date as the termination date. The termination date designated in the ruling will not be later than the last day of the third taxable year after the taxable year that includes the substantial completion date. The request for a ruling under this paragraph (d)(3)(ii) must be filed during the taxable year that includes the substantial completion date and must comply with the procedural rules in effect at the time of the request. § 1.468A-6T Disposition of an interest in a nuclear power plant (temporary).
(a)*In general.* This section describes the Federal income tax consequences of a transfer of the assets of a nuclear decommissioning fund
(Fund)within the meaning of § 1.468A-1T(b)(4) in connection with a sale, exchange, or other disposition by a taxpayer (transferor) of all or a portion of its qualifying interest in a nuclear power plant to another taxpayer (transferee). This section also explains how a schedule of ruling amounts will be determined for the transferor and transferee. For purposes of this section, a nuclear power plant includes a plant that previously qualified as a nuclear power plant and that has permanently ceased to produce electricity.
(b)*Requirements.* This section applies if—
(1)Immediately before the disposition, the transferor maintained a Fund with respect to the interest disposed of; and
(2)Immediately after the disposition—
(i)The transferee maintains a Fund with respect to the interest acquired;
(ii)The interest acquired is a qualifying interest of the transferee in the nuclear power plant;
(3)In connection with the disposition, either—
(i)The transferee acquires part or all of the transferor's qualifying interest in the plant and a proportionate amount of the assets of the transferor's Fund (all such assets if the transferee acquires the transferor's entire qualifying interest in the plant) is transferred to a Fund of the transferee; or
(ii)The transferee acquires the transferor's entire qualifying interest in the plant and the transferor's entire Fund is transferred to the transferee; and
(4)The transferee continues to satisfy the requirements of § 1.468A-5T(a)(1)(iii), which permits an electing taxpayer to maintain only one Fund for each plant.
(c)*Tax consequences.* A disposition that satisfies the requirements of paragraph
(b)of this section will have the following tax consequences at the time it occurs:
(1)*The transferor and its Fund.*
(i)Except as provided in paragraph (c)(1)(ii) of this section, neither the transferor nor the transferor's Fund will recognize gain or loss or otherwise take any income or deduction into account by reason of the transfer of a proportionate amount of the assets of the transferor's Fund to the transferee's Fund (or by reason of the transfer of the transferor's entire Fund to the transferee). For purposes of the regulations under section 468A, this transfer (or the transfer of the transferor's Fund) will not be considered a distribution of assets by the transferor's Fund.
(ii)Notwithstanding paragraph (c)(1)(i) of this section, if the transferor has made a special transfer under § 1.468A-8T prior to the transfer of the Fund or Fund assets, any deduction with respect to that special transfer allowable under section 468A(f)(2) for a taxable year ending after the date of the transfer of the Fund or Fund assets (the *unamortized special transfer deduction* ) is allowed under section 468A(f)(2)(C) for the taxable year that includes the date of the transfer of the Fund or Fund assets. If the taxpayer transfers only a portion of its interest in a nuclear power plant, only the corresponding portion of the unamortized special transfer deduction qualifies for the acceleration under section 468A(f)(2)(C).
(2)*The transferee and its Fund.* Neither the transferee nor the transferee's Fund will recognize gain or loss or otherwise take any income or deduction into account by reason of the transfer of a proportionate amount of the assets of the transferor's Fund to the transferee's Fund (or by reason of the transfer of the transferor's Fund to the transferee). For purposes of the regulations under section 468A, this transfer (or the transfer of the transferor's Fund) will not constitute a payment or a contribution of assets by the transferee to its Fund.
(3)*Basis.* Transfers of assets of a Fund to which this section applies do not affect basis. Thus, the transferee's Fund will have a basis in the assets received from the transferor's Fund that is the same as the basis of those assets in the transferor's Fund immediately before the disposition.
(d)*Determination of proportionate amount.* For purposes of this section, a transferor of a qualifying interest in a nuclear power plant is considered to transfer a proportionate amount of the assets of its Fund to a Fund of a transferee of the interest if, on the date of the transfer of the interest, the percentage of the fair market value of the Fund's assets attributable to the assets transferred equals the percentage of the transferor's qualifying interest that is transferred.
(e)*Calculation of schedule of ruling amounts and schedule of deduction amounts for dispositions described in this section* —(1) *Transferor.* If a transferor disposes of all or a portion of its qualifying interest in a nuclear power plant in a transaction to which this section applies, the transferor's schedule of ruling amounts with respect to the interests disposed of and retained (if any) and, if applicable, the amount allowable as a deduction for a special transfer under § 1.468A-8T will be determined under the following rules:
(i)*Taxable year of disposition; ruling amount.* If the transferor does not file a request for a revised schedule of ruling amounts on or before the deemed payment deadline for the taxable year of the transferor in which the disposition of its interest in the nuclear power plant occurs (that is, the date that is two and one-half months after the close of that year), the transferor's ruling amount with respect to that plant for that year will equal the sum of—
(A)The ruling amount contained in the transferor's current schedule of ruling amounts with respect to that plant for that taxable year multiplied by the portion of the qualifying interest that is retained (if any); and
(B)The ruling amount contained in the transferor's current schedule of ruling amounts with respect to that plant for that taxable year multiplied by the product of— ( *1* ) The portion of the transferor's qualifying interest that is disposed of; and ( *2* ) A fraction, the numerator of which is the number of days in that taxable year that precede the date of disposition, and the denominator of which is the number of days in that taxable year.
(ii)*Taxable year of disposition; deduction under § 1.468A-8T.* If the transferor has elected to make a special transfer under section 468A(f), the amount allowable as a deduction under § 1.468A-8T for the taxable year in which it transfers a portion of its interest in the nuclear plant is equal to the deduction amount for that taxable year from its existing schedule of deduction amounts multiplied by the percentage of its interest that it retains. This deduction is in addition to the deduction described in paragraph (c)(1)(ii) of this section.
(iii)*Taxable years after the year of disposition.* A transferor that retains a qualifying interest in a nuclear power plant must file a request for a revised schedule of ruling amounts (and, if applicable, a revised schedule of deduction amounts) with respect to that interest on or before the deemed payment deadline for the first taxable year of the transferor beginning after the disposition. See § 1.468A-3T(f)(1)(ii)(B) and § 1.468A-8T(c)(3). If the transferor does not timely file such a request, the transferor's ruling amount and the transferor's deduction amount under § 1.468A-8T with respect to that interest for the affected year or years will be zero, unless the Internal Revenue Service
(IRS)waives the application of this paragraph (e)(1)(iii) upon a showing of good cause for the delay.
(2)*Transferee.* If a transferee acquires all or a portion of a transferor's qualifying interest in a nuclear power plant in a transaction to which this section applies, the transferee's schedule of ruling amounts with respect to the interest acquired will be determined under the following rules:
(i)*Taxable year of disposition.* If the transferee does not file a request for a schedule of ruling amounts on or before the deemed payment deadline for the taxable year of the transferee in which the disposition occurs (that is, the date that is two and one-half months after the close of that year), the transferee's ruling amount with respect to the interest acquired in the nuclear power plant for that year is equal to the amount contained in the transferor's current schedule of ruling amounts for that plant for the taxable year of the transferor in which the disposition occurred, multiplied by the product of—
(A)The portion of the transferor's qualifying interest that is transferred; and
(B)A fraction, the numerator of which is the number of days in the taxable year of the transferor including and following the date of disposition, and the denominator of which is the number of days in that taxable year.
(ii)*Taxable years after the year of disposition.* A transferee of a qualifying interest in a nuclear power plant must file a request for a revised schedule of ruling amounts with respect to that interest on or before the deemed payment deadline for the first taxable year of the transferee beginning after the disposition. See § 1.468A-3T(f)(1)(ii)(B). If the transferee does not timely file such a request, the transferee's ruling amount with respect to that interest for the affected year or years will be zero, unless the IRS waives the application of this paragraph (e)(2)(ii) upon a showing of good cause for the delay.
(3)*Examples.* The following examples illustrate the provisions of this paragraph (e): Example 1.
(i)X Corporation is a calendar year taxpayer engaged in the sale of electric energy generated by a nuclear power plant. The plant is owned entirely by X. On May 27, 2007, X transfers a 60-percent qualifying interest in the plant to Y Corporation, a calendar year taxpayer. Before the transfer, X had received a schedule of ruling amounts containing an annual ruling amount of $10 million for the taxable years 2005 through 2025. For 2007, neither X nor Y files a request for a revised schedule of ruling amounts.
(ii)Under paragraph (e)(1)(i) of this section, X's ruling amount for 2007 is calculated as follows: ($10,000,000 × .40) + ($10,000,000 × .60 × 146/365)=$6,400,000. Under paragraph (e)(2)(i) of this section, Y's ruling amount for 2007 is calculated as follows: $10,000,000 × .60 × 219/365=$3,600,000. Under paragraphs (e)(1)(iii) and (e)(2)(ii) of this section, X and Y must file requests for revised schedules of ruling amounts by March 15, 2009. *Example 2.* Y Corporation, the sole owner of a nuclear power plant, is a calendar year taxpayer. In year 1, Y elects to make a special transfer under section 468A(f)(1) to the nuclear decommissioning fund Y maintains with respect to the plant. The amount of the special transfer is $100×, and the remaining useful life of Plant is 20 years. Y obtains a schedule of deduction amounts under § 1.468A-8T(c) permitting a $5× deduction each year over the 20-year remaining useful life, and deducts $5× of the special transfer amount in year 1, year 2, year 3, and year 4. On the first day of year 5, Y transfers a 25% interest in Plant to an unrelated party. Under paragraph (c)(1)(ii) of this section, Y may deduct in year 5 the unamortized special transfer deduction corresponding to the portion of the plant transferred (25 percent of $80× or $20×). In addition, under paragraph (e)(1)(ii) of this section, Y may deduct the portion of the deduction amount for year 5 from the schedule of deduction amounts corresponding to its retained interest in the plant (75 percent of $5× or $3.75×). Pursuant to paragraph (e)(1)(iii) of this section, Y must file a request for a revised schedule of ruling amounts by March 15 of year 6.
(f)*Anti-abuse provision.* The IRS may treat a disposition as satisfying the requirements of this section if the IRS determines that this treatment is necessary or appropriate to carry out the purposes of section 468A and the regulations. § 1.468A-7T Manner of and time for making election (temporary).
(a)*In general.* An eligible taxpayer is allowed a deduction for the taxable year in which the taxpayer makes a cash payment (or is deemed to make a cash payment) to a nuclear decommissioning fund only if the taxpayer elects the application of section 468A. A separate election is required for each nuclear decommissioning fund and for each taxable year with respect to which payments are to be deducted under section 468A. In the case of an affiliated group of corporations that join in the filing of a consolidated return for a taxable year, the common parent must make a separate election on behalf of each member whose payments to a nuclear decommissioning fund during such taxable year are to be deducted under section 468A. The election under section 468A for any taxable year is irrevocable and must be made by attaching a statement (Election Statement) and a copy of the schedule of ruling amounts provided pursuant to the rules of § 1.468A-3T to the taxpayer's Federal income tax return (or, in the case of an affiliated group of corporations that join in the filing of a consolidated return, the consolidated return) for such taxable year. The return to which the Election Statement and a copy of the schedule of ruling amounts is attached must be filed on or before the time prescribed by law (including extensions) for filing the return for the taxable year with respect to which payments are to be deducted under section 468A.
(b)*Required information.* The Election Statement must include the following information:
(1)The legend “Election Under Section 468A” typed or legibly printed at the top of the first page.
(2)The electing taxpayer's name, address and taxpayer identification number (or, in the case of an affiliated group of corporations that join in the filing of a consolidated return, the name, address and taxpayer identification number of each electing taxpayer).
(3)The taxable year for which the election is made.
(4)For each nuclear decommissioning fund for which an election is made—
(i)The name and location of the nuclear power plant to which the fund relates;
(ii)The name and employer identification number of the nuclear decommissioning fund;
(iii)The total amount of actual cash payments made to the nuclear decommissioning fund during the taxable year that were not treated as deemed cash payments under § 1.468A-2T(c)(1) for a prior taxable year;
(iv)The total amount of cash payments deemed made to the nuclear decommissioning fund under § 1.468A-2T(c)(1) for the taxable year; and
(v)The total amount of any special transfers made under § 1.468A-8T during the taxable year. § 1.468A-8T Special transfers to qualified funds pursuant to section 468A(f) (temporary).
(a)*General rule* —(1) *In general.* Under section 468A(f), a taxpayer maintaining a qualified nuclear decommissioning fund with respect to a nuclear power plant may transfer cash or property into the fund (a special transfer). The special transfer is not subject to the ruling amount limitation in section 468A(b) and is not treated as a cash payment for purposes of that limitation. Thus, a taxpayer may, in the same taxable year, pay the ruling amount and make a special transfer into the fund. A special transfer may be made in cash, property, or both cash and property. The amount of a special transfer (that is, the amount of cash and the fair market value of property transferred) may not exceed the present value of the pre-2005 nonqualifying amount of nuclear decommissioning costs with respect to the nuclear power plant. The taxpayer is entitled to a deduction against income for a special transfer, as described in paragraph
(b)of this section. A special transfer may not be made to a nuclear decommissioning fund before the first taxable year in which a deduction amount is applicable to the nuclear decommissioning fund (see paragraph
(c)of this section).
(2)*Pre-2005 nonqualifying amount.* The present value of the pre-2005 nonqualifying amount of nuclear decommissioning costs with respect to a nuclear power plant is the amount equal to the pre-2005 nonqualifying percentage of the present value of the estimated future decommissioning costs (as defined in § 1.468A-1T(b)(6)) with respect to the nuclear power plant as of the first day of the taxable year of the taxpayer in which the special transfer is made. For this purpose, the pre-2005 nonqualifying percentage for the plant is 100 percent reduced by the sum of—
(i)The qualifying percentage (within the meaning of § 1.468A-3(d)(4) as in effect on December 31, 2005) used in determining the taxpayer's last schedule of ruling amounts for the nuclear decommissioning fund under the law in effect before the enactment of the Energy Policy Act of 2005 (that is, the percentage of the plant's total nuclear decommissioning costs that were permitted to be funded through the fund under the law in effect before the enactment of the Energy Policy Act of 2005); and
(ii)The percentage of decommissioning costs transferred in any previous special transfer (that is, the amount transferred as a percentage of the present value of the estimated future costs of decommissioning as of the first day of the taxable year in which such previous transfer was made).
(3)*Transfers in multiple years.* A taxpayer making a special transfer is not required to transfer the entire eligible amount in a single year. The requirements of paragraph
(c)of this section apply separately to each year in which a special transfer is made. In calculating the amount of any subsequent transfer, the taxpayer must reduce the pre-2005 nonqualifying percentage under paragraph (a)(2) of this section to take into account all previous transfers. For example, if a taxpayer has a pre-2005 nonqualifying percentage of 40 percent, and transfers half of the eligible amount in a special transfer, any subsequent transfer must be calculated on the basis of a pre-2005 nonqualifying percentage of 20 percent.
(b)*Deduction for amounts transferred* —(1) *In general.*
(i)Except as provided in this paragraph (b), the deduction for any special transfer is allowed ratably over the remaining useful life of the nuclear power plant.
(ii)For purposes of this paragraph (b), the remaining useful life of the nuclear power plant is the period beginning on the first day of the taxable year during which the transfer is made and ending on the last day of the taxable year that includes the last day of the estimated useful life of the nuclear power plant. The last day of the estimated useful life of the nuclear power plant is determined for this purpose under the rules of § 1.468A-3T(c)(2).
(iii)The deduction for property contributed in a special transfer is limited to the lesser of the fair market value of the property contributed or the taxpayer's basis in that property.
(2)*Denial of deduction for previously deducted amounts.* If a deduction (other than a deduction under section 468A) has been allowed to the taxpayer (or a predecessor) on account of expected decommissioning costs for a nuclear power plant (a nonconforming deduction) or an amount otherwise includible in income has been excluded from the gross income of the taxpayer (or a predecessor) on account of such expected decommissioning costs (a nonconforming exclusion), the deduction allowed for a special transfer to the nuclear decommissioning fund maintained with respect to the plant is reduced. In the case of a single special transfer of the full eligible amount, the reduction is equal to the aggregate amount of all nonconforming deductions and nonconforming exclusions. In the case of a transfer of less than the full eligible amount, the reduction is a ratable portion of such aggregate amount.
(3)*Transfers of qualified nuclear decommissioning funds.*
(i)If a special transfer is made to any qualified nuclear decommissioning fund, there is a subsequent transfer of the fund or the assets of the fund (a fund transfer), and § 1.468-6T applies to the fund transfer, any amount of the deduction under paragraph
(b)of this section allocable to taxable years ending after the date of the fund transfer will be allowed as a current deduction to the transferor for the taxable year that includes the date of the fund transfer. See § 468A-6T(c) for additional rules concerning transfers of decommissioning funds, including the transfer of a portion of the taxpayer's interest in a nuclear power plant. If a taxpayer transfers of only part of the fund or the fund's assets, the rules in this paragraph (b)(3) apply only to the corresponding portion of the deduction under paragraph
(b)of this section.
(ii)If a deduction is allowed to the transferor under paragraph (b)(3)(i) of this section and the transferee is related to the transferor, the Internal Revenue Service
(IRS)will not approve the transferee's schedule of ruling amounts for taxable years beginning after the date of the transfer unless the ruling amounts are deferred in a manner that results in recapture of the acceleration amount. For this purpose—
(A)The acceleration amount is the difference between the deduction allowed under this paragraph (b)(3) and the present value as of the beginning of the acceleration period of the deductions that, but for the transfer, would have been allowed under this paragraph
(b)for taxable years during the acceleration period;
(B)The acceleration amount is recaptured if the aggregate present value of the ruling amounts at the beginning of the acceleration period is equal to the amount by which the aggregate present value of the ruling amounts that would have been approved but for this paragraph (b)(3)(ii) exceeds the acceleration amount;
(C)The acceleration period is the period from the first day of the transferor's first taxable year beginning after the date of the transfer until the end of the plant's remaining useful life;
(D)Present values will be determined using the assumptions that are used in determining the transferee's first schedule of ruling amounts; and
(E)A transferor and a transferee are related if their relationship is specified in section 267(b) or section 707(b)(1) or they are treated as a single taxpayer under section 41(f)(1)(A) or (B).
(4)*Special rules* —(i) *Gain or loss not recognized on transfers to fund.* No gain or loss will be recognized on any special transfer.
(ii)*Taxpayer basis in fund.* Notwithstanding any other provision of the Internal Revenue Code
(Code)and regulations, the taxpayer's basis in the fund is not increased by reason of the special transfer.
(iii)*Fund basis in transferred property.* The fund's basis in any property transferred in a special transfer is the same as the transferor's basis in the property immediately before the transfer.
(c)*Schedule of deductions required* —(1) *In general.* A taxpayer may not make a special transfer to a qualified nuclear decommissioning fund unless the taxpayer requests from the IRS a schedule of deduction amounts in connection with such transfer. A schedule of deduction amounts for a nuclear decommissioning fund (schedule of deduction amounts) is a ruling (within the meaning of § 601.201(a)(2) of this chapter) specifying the annual deductions (deduction amounts) that, over the taxable years in the remaining useful life of the nuclear power plant, will result in the deduction of the entire amount of the special transfer. Such a request may be combined with a request for a schedule of ruling amounts under § 1.468A-3T(a). In the case of a combined request, the schedule of deduction amounts requested under this paragraph (c)(1) must be stated separately from the schedule of ruling amounts requested under § 1.468A-3T(a) and approval of the schedule of deduction amounts under this section will constitute a separate ruling. A request for a schedule of deduction amounts must comply with all provisions of paragraph
(d)of this section.
(2)*Transfers in multiple taxable years.* A taxpayer making a special transfer in more than one taxable year pursuant to paragraph (a)(3) of this section must request a new schedule of deduction amounts in connection with each special transfer.
(3)*Transfer of partial interest in fund.* If a taxpayer transfers part of a fund or a fund's assets and is allowed a deduction under paragraph (b)(3) of this section, the taxpayer must request a new schedule of deduction amounts in connection with the transfer.
(d)*Manner of requesting schedule of deduction amounts* —(1) *In general.*
(i)In order to receive a deduction amount for any taxable year, a taxpayer must file a request for a schedule of deduction amounts that complies with the requirements of this paragraph (d), the applicable procedural rules set forth in § 601.201(e) of this chapter (Statement of Procedural Rules) and the requirements of any applicable revenue procedure that is in effect on the date the request is filed.
(ii)A separate request for a schedule of deduction amounts is required for each nuclear decommissioning fund established by a taxpayer (see § 1.468A-5T(a) for rules relating to the number of nuclear decommissioning funds that a taxpayer can establish).
(iii)Except as provided by § 1.468A-5T(a)(1)(iv) (relating to certain unincorporated organizations that may be taxable as corporations) and § 1.468A-3T (relating to a request for a schedule of ruling amounts), a request for a schedule of deduction amounts must not contain a request for a ruling on any other issue, whether the issue involves section 468A or another section of the Code.
(iv)In the case of an affiliated group of corporations that join in the filing of a consolidated return, the common parent of the group may request a schedule of deduction amounts for each member of the group that possesses a qualifying interest in the same nuclear power plant by filing a single submission with the IRS.
(v)The IRS shall not provide or revise a deduction amount applicable to a taxable year in response to a request for a schedule of deduction amounts that is filed after the deemed payment deadline date (as defined in § 1.468A-2T(c)(1)) for such taxable year. In determining the date when a request is filed, the principles of sections 7502 and 7503 shall apply.
(vi)Except as provided in paragraph (d)(1)(vii) of this section, a request for a schedule of deduction amounts shall be considered filed only if such request complies substantially with the requirements of this paragraph (d).
(vii)If a request does not comply substantially with the requirements of this paragraph (d), the IRS will notify the taxpayer of that fact. If the information or materials necessary to comply substantially with the requirements of this paragraph
(d)are provided to the IRS within 30 days after this notification, the request will be considered filed on the date of the original submission. In addition, the request will be considered filed on the date of the original submission in a case in which the information and materials are provided more than 30 days after the notification if the IRS determines that the electing taxpayer made a good faith effort to provide the applicable information or materials within 30 days after notification and also determines that treating the request as filed on the date of the original submission is consistent with the purposes of section 468A. In any other case in which the information or materials necessary to comply substantially with the requirements of this paragraph
(d)are not provided within 30 days after the notification, the request will be considered filed on the date that all information or materials necessary to comply with the requirements of this paragraph
(d)are provided.
(2)*Information required.* A request for a schedule of deduction amounts must contain the following information:
(i)The taxpayer's name, address and taxpayer identification number.
(ii)Whether the request is for an initial schedule of deduction amounts or a schedule of deduction amounts for a subsequent special transfer.
(iii)The name and location of the nuclear power plant with respect to which a schedule of deduction amounts is requested.
(iv)A description of the taxpayer's qualifying interest in the nuclear power plant and the percentage of such nuclear power plant that the qualifying interest of the taxpayer represents.
(v)The present value of the estimated future decommissioning costs (as defined in § 1.468A-1T(b)(6)) with respect to the taxpayer's qualifying interest in the nuclear power plant as of the first day of the taxable year of the taxpayer in which a transfer is made under this section.
(vi)A description of the assumptions, estimates and other factors that were used by the taxpayer to determine the amount of decommissioning costs, including each of the following if applicable:
(A)A description of the proposed method of decommissioning the nuclear power plant (for example, prompt removal/dismantlement, safe storage entombment with delayed dismantlement, or safe storage mothballing with delayed dismantlement).
(B)The estimated year in which substantial decommissioning costs will first be incurred.
(C)The estimated year in which the decommissioning of the nuclear power plant will be substantially complete (see § 1.468A-5T(d)(3) for a definition of substantial completion of decommissioning).
(D)The total estimated cost of decommissioning expressed in current dollars (that is, based on price levels in effect at the time of the current determination).
(E)The total estimated cost of decommissioning expressed in future dollars (that is, based on anticipated price levels when expenses are expected to be paid).
(F)For each taxable year in the period that begins with the year specified in paragraph (d)(2)(vi)(B) of this section (the estimated year in which substantial decommissioning costs will first be incurred) and ends with the year specified in paragraph (d)(2)(vi)(C) of this section (the estimated year in which the decommissioning of the nuclear power plant will be substantially complete), the estimated cost of decommissioning expressed in future dollars.
(G)A description of the methodology used in converting the estimated cost of decommissioning expressed in current dollars to the estimated cost of decommissioning expressed in future dollars.
(H)The assumed after-tax rate of return to be earned by the amounts collected for decommissioning.
(I)A copy of each engineering or cost study that was relied on or used by the taxpayer in determining the amount of decommissioning costs.
(vii)The taxpayer's pre-2005 nonqualifying percentage (as defined in paragraph (a)(2) of this section).
(viii)The estimated useful life of the nuclear power plant (as such term is defined in paragraph (b)(1)(ii) or
(iii)of this section).
(ix)If the request is for a subsequent schedule of deduction amounts, the amount of the previous special transfer and the present value of the estimated future decommissioning costs (as defined in § 1.468A-1T(b)(6)) with respect to the taxpayer's qualifying interest in the nuclear power plant as of the first day of the taxable year of the taxpayer in which the previous special transfer was made.
(x)If the request is for a subsequent schedule of deduction amounts, a copy of all schedules of deduction amounts that relate to the nuclear power plant to which the request relates and that were previously issued to the taxpayer making the request.
(xi)If the request for a schedule of deduction amounts contains a request, pursuant to § 1.468A-5T(a)(1)(iv), that the IRS rule whether an unincorporated organization through which the assets of the fund are invested is an association taxable as a corporation for federal tax purposes, a copy of the legal documents establishing or otherwise governing the organization.
(xii)Any other information required by the IRS that may be necessary or useful in determining the schedule of deduction amounts.
(3)*Statement required.* A taxpayer requesting a schedule of deduction amounts under this paragraph
(d)must submit a statement that any nonconforming deductions and nonconforming exclusions have reduced the deduction allowed for the special transfer in accordance with paragraph (b)(2) of this section.
(4)*Administrative procedures.* The IRS may prescribe administrative procedures that supplement the provisions of paragraphs (d)(1) and
(2)of this section. In addition, the IRS may, in its discretion, waive the requirements of paragraphs (d)(1) and
(2)of this section under appropriate circumstances. § 1.468A-9T Effective/applicability date and transitional rules (temporary).
(a)*Effective date.* Sections 1.468A-1T through 1.468A-8T are effective December 31, 2007, and apply with respect to taxable years ending on or after such date.
(b)*Transitional rule.* For a taxable year ending on or after January 1, 2006, and before December 31, 2007—
(1)A taxpayer may use any reasonable method consistent with the principles and provisions of section 468A to determine the schedule of ruling amounts or the schedule of deduction amounts;
(2)Application of the provisions of §§ 1.468A-1T through 1.468A-8T will be treated as a reasonable method if, except as otherwise permitted by paragraph (b)(4) of this section, the taxpayer applies all provisions in §§ 1.468A-1T through 1.468A-8T to the taxable year;
(3)The Internal Revenue Service will issue schedules of ruling amounts based on the regulations in effect prior to January 1, 2006, if a taxpayer so requests and if the Internal Revenue Service finds the request to be consistent with the principles and purposes of section 468A; and
(4)The taxpayer's request for a schedule of ruling amounts or a schedule of deduction amounts applicable to the taxable year will be treated as timely if the request is filed before January 1, 2008. PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT **Par. 4.** The authority citation for part 602 continues to read as follows: Authority: 26 U.S.C. 7805. **Par. 5.** In § 602.101, paragraph
(b)is amended by adding the following entries in numerical order to the table to read as follows: § 602.101 OMB control numbers.
(b)* * * CFR part or section where identified and described Current OMB Control No. * * * * * 1.468A-3T 1545-1269 1545-1378 1545-1511 * * * * * 1.468A-4T 1545-0954 * * * * * 1.468A-7T 1545-0954 1545-1511 * * * * * 1.468A-3T(h), 1.468A-7T, and 1.468A-8T(d) 1545-2091 * * * * * Approved: November 27, 2007. Kevin M. Brown, Deputy Commissioner for Services and Enforcement. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E7-25223 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 301 [TD 9373] RIN 1545-BH30 Disclosure of Return Information to the Bureau of the Census AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Temporary regulation. SUMMARY: This document contains a temporary regulation that adds an additional item of return information that may be disclosed to the Bureau of the Census (Bureau). The regulation adds one item of return information for use in the Bureau's annual Survey of Industrial Research and Development. The temporary regulation provides guidance to IRS personnel responsible for disclosing the information. This regulation facilitates the assistance of the IRS to the Bureau in its statistics programs and requires no action by taxpayers and has no effect on their tax liabilities. The text of the temporary regulation also serves as the text of the proposed regulation (REG-147832-07) set forth in the Proposed Rules section in this issue of the **Federal Register.** DATES: *Effective Date:* This regulation is effective on December 31, 2007. *Applicability Date:* For dates of applicability, see § 301.6103(j)(1)-1T(e). FOR FURTHER INFORMATION CONTACT: Glenn Melcher,
(202)622-4570 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background Under section 6103(j)(1)(A), upon written request from the Secretary of Commerce, the Treasury Secretary is to furnish to the Bureau of the Census (Bureau) return information as may be prescribed by Treasury regulations for the purpose of, but only to the extent necessary in, structuring censuses and conducting related statistical activities authorized by law. Section 301.6103(j)(1)-1 of the regulations further defines such purposes by reference to 13 U.S.C. chapter 5 and provides an itemized description of the return information authorized to be disclosed for such purposes. This document adopts a temporary regulation that authorizes the IRS to disclose an additional item of return information, which has been requested by the Secretary of Commerce, that is necessary for the Bureau's annual Survey of Industrial Research and Development. The temporary regulation in this issue of the **Federal Register** amends the Procedure and Administration Regulations (26 CFR part 301) relating to Internal Revenue Code
(Code)section 6103(j)(1)(A). This amendment to the regulation contains rules relating to the disclosure of return information reflected on returns to officers and employees of the Department of Commerce for structuring censuses and conducting related statistical activities authorized by law. Explanation of Provisions By letter dated February 6, 2006, the Secretary of Commerce requested that an additional item of return information be disclosed to the Bureau for purposes related to the Bureau's annual Survey of Industrial Research and Development. Specifically, the Secretary of Commerce requested categorical information on total qualified research expenses in three ranges: Greater than zero, but less than $1 million; greater than or equal to $1 million, but less than $3 million; and, greater than or equal to $3 million. The request indicates that because of the small number of companies with research and development expenses it is difficult to design an efficient sample that produces reliable estimates. Data on total qualified research expenses from the Form 6765, Credit for Increasing Research Activities, will assist the Bureau in identifying companies that are actively engaged in research and development activities for the annual Survey of Industrial Research and Development. Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the cross-referenced notice of proposed rulemaking published elsewhere in this issue of the **Federal Register.** Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of this temporary regulation is Glenn Melcher, Office of the Associate Chief Counsel (Procedure & Administration). List of Subjects in 26 CFR Part 301 Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 301 is amended as follows: PART 301—PROCEDURE AND ADMINISTRATION **Paragraph 1.** The authority citation for part 301 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * **Par. 2.** Section 301.6103(j)(1)-1T is amended by revising paragraphs (a), (b), and
(e)and removing paragraph
(f)to read as follows: § 301.6103(j)(1)-1T Disclosure of return information reflected on returns to officers and employees of the Department of Commerce for certain statistical purposes and related activities (temporary). *(a) through (b)(3)(xxiv) [Reserved]. For further guidance, see § 301.6103(j)(1)-1(a) and (b)(1) through (b)(3)(xxiv)* .
(xxv)From Form 6765 (when filed with corporation income tax returns)—total qualified research expenses.
(e)*Effective/applicability date.* This section is applicable to disclosures to the Bureau of Economic Analysis on or after July 6, 2006. The amendment to paragraph (b)(3)(xxv) of this section is applicable to disclosures to the Bureau of the Census on or after December 31, 2007. The applicability of the amendment to paragraph (b)(3)(xxv) expires on or before December 28, 2010. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. Approved: December 18, 2007. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E7-25129 Filed 12-28-07; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF TRANSPORTATION Federal Railroad Administration 49 CFR Part 219 [Docket No. 2001-11213, Notice No. 11] RIN 2130-AA81 Alcohol and Drug Testing: Determination of Minimum Random Testing Rates for 2008 AGENCY: Federal Railroad Administration (FRA), DOT. ACTION: Notice of Determination. SUMMARY: Using data from Management Information System annual reports, FRA has determined that the 2006 rail industry random testing positive rates were 0.60 percent for drugs and 0.13 percent for alcohol. Because the industry-wide random drug testing positive rate has remained below 1.0 percent for the last two years, the Federal Railroad Administrator (Administrator) has determined that the minimum annual random drug testing rate for the period January 1, 2008, through December 31, 2008, will remain at 25 percent of covered railroad employees. In addition, because the industry-wide random alcohol testing violation rate has remained below 0.5 percent for the last two years, the Administrator has determined that the minimum random alcohol testing rate will remain at 10 percent of covered railroad employees for the period January 1, 2008, through December 31, 2008. DATES: This notice is effective upon publication. FOR FURTHER INFORMATION CONTACT: Lamar Allen, Alcohol and Drug Program Manager, Office of Safety Enforcement, Mail Stop 25, Federal Railroad Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590, (telephone 202 493-6313); or Kathy Schnakenberg, FRA Alcohol/Drug Program Specialist, (telephone 816 561-2714). SUPPLEMENTARY INFORMATION: Administrator's Determination of 2008 Minimum Random Drug and Alcohol Testing Rates In a final rule published on December 2, 1994 (59 FR 62218), FRA announced that it will set future minimum random drug and alcohol testing rates according to the rail industry's overall positive rate, which is determined using annual railroad drug and alcohol program data taken from FRA's Management Information System. Based on this data, the Administrator publishes a **Federal Register** notice each year, announcing the minimum random drug and alcohol testing rates for the following year. *See* 49 CFR 219.602, 608. Under this performance-based system, FRA may lower the minimum random drug testing rate to 25 percent of covered railroad employees whenever the industry-wide random drug positive rate is less than 1.0 percent for two calendar years while testing at a 50 percent minimum rate. For both drugs and alcohol, FRA reserves the right to consider other factors, such as the number of positives in its post-accident testing program, before deciding whether to lower annual minimum random testing rates. If the industry-wide random drug positive rate is 1.0 percent or higher in any subsequent calendar year, FRA will return the minimum random drug testing rate to 50 percent of covered railroad employees. If the industry-wide random alcohol violation rate is less than 1.0 percent but greater than 0.5 percent, the minimum random alcohol testing rate will be 25 percent of covered railroad employees. FRA will raise the minimum random rate to 50 percent of covered railroad employees if the industry-wide random alcohol violation rate is 1.0 percent or higher in any subsequent calendar year. FRA may lower the minimum random alcohol testing rate to 10 percent of covered railroad employees whenever the industry-wide violation rate is less than 0.5 percent for two calendar years while testing at a higher rate. In this notice, FRA announces that the minimum random drug testing rate will remain at 25 percent of covered railroad employees for the period January 1, 2008, through December 31, 2008, because the industry random drug testing positive rate was below 1.0 percent for the last two years (.060 in 2006 and .073 in 2005). The minimum random alcohol testing rate will remain at 10 percent of covered railroad employees for the period January 1, 2008, through December 31, 2008, because the industry-wide violation rate for alcohol has remained below 0.5 percent for the last two years (.013 in 2006 and .017 in 2005). Railroads remain free, as always, to conduct random testing at higher rates. Issued in Washington, DC, on December 17, 2007. Joseph H. Boardman, Administrator. [FR Doc. E7-25353 Filed 12-28-07; 8:45 am] BILLING CODE 4910-06-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 635 [Docket No. 070612190-7684-02] RIN 0648-AV58 Atlantic Highly Migratory Species; 2008 Atlantic Bluefin Tuna Quota Specifications and Effort Controls AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Final rule. SUMMARY: NMFS announces the final rule to set 2008 fishing year specifications for the Atlantic bluefin tuna
(BFT)fishery, including quotas for each of the established domestic fishing categories and effort controls for the General category and Angling category. This action is necessary to implement recommendations of the International Commission for the Conservation of Atlantic Tunas (ICCAT), as required by the Atlantic Tunas Convention Act (ATCA), and to achieve domestic management objectives under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). DATES: The rule is effective January 30, 2008, except that the Angling category retention limit found under the heading Angling Category Effort Controls is effective January 30, 2008 through December 31, 2008, and the General category retention limit found under the heading General Category Effort Controls is effective June 1, 2008, through August 31, 2008. ADDRESSES: Supporting documents, including the 2007 Environmental Assessment (EA), Regulatory Impact Review (RIR), and Final Regulatory Flexibility Analysis
(FRFA)and the Consolidated Atlantic Highly Migratory Species Fishery Management Plan (Consolidated HMS FMP), are available from Sarah McLaughlin, Highly Migratory Species Management Division, Office of Sustainable Fisheries (F/SF1), NMFS, One Blackburn Drive, Gloucester, MA 01930. These documents are also available from the HMS Management Division website at *http://www.nmfs.noaa.gov/sfa/hms/* or at the Federal e-Rulemaking Portal: *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Sarah McLaughlin, 978-281-9260. SUPPLEMENTARY INFORMATION: Atlantic tunas are managed under the dual authority of the Magnuson-Stevens Act and the ATCA. The ATCA authorizes the Secretary of Commerce (Secretary) to promulgate regulations, as may be necessary and appropriate, to implement ICCAT recommendations. The authority to issue regulations under the Magnuson-Stevens Act and the ATCA has been delegated from the Secretary to the Assistant Administrator for Fisheries, NOAA (AA). The implementing regulations for Atlantic HMS are at 50 CFR part 635. Background Background information about the need for the BFT quota specifications and effort controls for the 2008 fishing year (January 1 through December 31, 2008) was provided in the preamble to the proposed rule (72 FR 56036, October 2, 2007) and is not repeated here. The 2008 annual specifications are necessary to implement the 2006 ICCAT quota recommendation, as required by the ATCA, and to achieve domestic management objectives under the Magnuson-Stevens Act. This action is published in accordance with the framework procedures set forth in the Consolidated HMS FMP and is supported by the analytical documents prepared for the Consolidated HMS FMP and for the 2007 BFT specifications and effort controls. Copies of these documents are available from NMFS (see ADDRESSES ). In the final 2007 fishing year BFT specifications (72 FR 33401, June 18, 2007), NMFS modified the baseline landings quota to 1,165.12 mt to implement the 2006 ICCAT recommendation and set the category subquotas per the allocations established in the Consolidated HMS FMP. The baseline quotas are as follows: General category—548.8 mt; Harpoon category—45.4 mt; Purse Seine category—216.7 mt; Angling category—229.5 mt; Longline category—94.4 mt; and Trap category—1.2 mt. An additional 29.1 mt is allocated to the Reserve category for inseason adjustments, scientific research collection, potential overharvest in any category except the Purse Seine category, and potential quota transfers. The baseline Angling category quota of 229.5 mt is further subdivided as follows: School BFT—119 mt, with 45.8 mt to the northern area (north of 39°18′ N. latitude), 51.2 mt to the southern area (south of 39°18′ N. latitude), plus 22 mt held in reserve; large school/small medium BFT—105.2 mt, with 49.6 mt to the northern area and 55.6 mt to the southern area; and large medium/giant BFT—5.3 mt, with 1.8 mt to the northern area and 3.5 mt to the southern area. The 25-mt Northeast Distant gear restricted area
(NED)set-aside quota is in addition to the overall incidental longline quota to be subdivided in accordance with the North/South allocation percentages (i.e., no more than 60 percent to the south of 31° N. latitude). Thus, the baseline Longline category quota of 94.4 mt is subdivided as follows: 37.8 mt to pelagic longline vessels landing BFT north of 31° N. latitude and 56.6 mt to pelagic longline vessels landing BFT south of 31° N. latitude, with 25 mt set-aside for bycatch of BFT related to directed pelagic longline fisheries in the NED. NMFS accounts for landings under this additional quota separately from other landings under the Longline north subcategory. The baseline landings quota and category subquotas are effective until changed, for instance, as a result of a potential new ICCAT BFT Total Allowable Catch
(TAC)recommendation made at its upcoming 2008 Annual Meeting. Consistent with the Consolidated HMS FMP, and through this action, NMFS is making underharvest adjustments for the 2008 fishing year. Changes from the Proposed Rule Since 1997, NMFS has implemented General category RFDs to extend the General category fishing season. NMFS has received comment from fishery participants that RFDs are not necessary, as BFT landings in the last several years have been low and not at a pace that warrants NMFS control for market purposes. For the 2008 fishing year, NMFS has decided not to implement RFDs via this final rule. For more information, please see the Comments and Responses section. If NMFS determines that action is needed during the fishing year to extend the General category fishery, NMFS may publish an inseason action (under 50 CFR 635.23(a)(4)) to decrease the daily retention limit of large medium and giant BFT over a range of zero to a maximum of three per vessel. 2008 Quota Specifications NMFS anticipates that the 2007 fishing year (June 1, 2007-December 31, 2007) underharvest will be substantial, based on current landings information and communication with BFT fishermen, and given the relatively low BFT harvest rates in recent years. However, the current ICCAT recommendation limits the amount of underharvest the United States may carry over for 2008 to 595.1 mt. Landings of large medium and giant BFT (measuring 73 inches (185.4 cm) or greater) landed in the commercial BFT fisheries and under the Angling category trophy fishery are as follows, through November 26, 2007: General category—87.9 mt; Harpoon category—12.1 mt; Longline category—26.4 mt (18 mt in the North, 2.9 mt in the Northeast Distant gear restricted area (NED), and 5.5 mt in the South]; Trap category—0 mt; and Purse Seine category—28.0 mt. The recreational Angling category fishery is still underway and final estimates from the Large Pelagic Survey
(LPS)are not expected to be available until the end of the year. Once LPS estimates are available, NMFS may adjust 2008 recreational measures (i.e., retention limits) and quotas or make necessary adjustments for the following year's fishery (i.e., the 2009 fishing year) based on the LPS data and analyses, the needs of the fishery, and other factors (such as the 2008 ICCAT recommendation, research needs, etc.), as appropriate. Currently, however, preliminary 2007 landings estimates for the fishery indicate that the 2007 fishing year underharvest is substantial, and that the full 595.1 mt of underharvest (consistent with the ICCAT recommended limit) will be available for carryover to the 2008 fishing year. NMFS establishes the final quota specifications as proposed, i.e., carries over 595.1 mt of BFT underharvest from the 2007 fishing year to the 2008 fishing year quota, and distributes that underharvest to:
(1)Allow for potential transfer of a portion (up to 15 percent) of the 2008 U.S. quota to other ICCAT Contracting Parties and other domestic management objectives, if warranted;
(2)ensure that the Longline category has sufficient quota to operate during the 2008 fishing year after the required accounting for BFT dead discards; and
(3)provide the non-Longline quota categories the remainder of the underharvest consistent with the allocation scheme established in the Consolidated HMS FMP. As proposed, this final action applies 53.6 mt of BFT underharvest to cover the anticipated pelagic longline fishery landings during the 2008 fishing year. Additionally, this action places 178.5 mt (i.e., 15 percent of 1,190.12 mt) of 2007 fishing year underharvest in the Reserve for potential ICCAT transfer purposes and other domestic management objectives. This action distributes the remainder of the quota carryover (363 mt) to the Angling, General, Harpoon, Purse Seine, and Trap categories consistent with their FMP allocations. Initial quota specifications for the 2008 fishing year as follows: General category—740.0 mt; Harpoon category— 61.2 mt; Purse Seine category—292.2 mt; Angling category —309.5 mt; Longline category—56.7 mt; and Trap category—1.6 mt. Additionally, 207.6 mt are allocated to the Reserve category for inseason adjustments, scientific research collection, potential overharvest in any category except the Purse Seine category, and potential quota transfers. The General category quota of 740.0 mt is divided per the time period allocations established in the Consolidated FMP, i.e., 39.2 mt (5.3 percent) for the period beginning January 1, 2008, and ending January 31, 2008, 370.0 mt (50 percent) for the period beginning June 1, 2008, and ending August 31, 2008, 196.1 mt (26.5 percent) for the period beginning September 1, 2008, and ending September 30, 2008, 96.2 mt (13 percent) for the period beginning October 1, 2008, and ending November 30, 2008; and 38.5 mt (5.2 percent) for the period beginning December 1, 2008, and ending December 31, 2008. The Angling category quota of 309.5 mt is further subdivided as follows: School BFT—119 mt, with 45.8 mt to the northern area (north of 39°18′ N. latitude), 51.2 mt to the southern area (south of 39°18′ N. latitude), plus 22 mt held in reserve; large school/small medium BFT—183.4 mt, with 86.6 mt to the northern area and 96.8 mt to the southern area; and large medium/giant BFT—7.1 mt, with 2.4 mt to the northern area and 4.7 mt to the southern area. The Longline category quota of 56.7 mt is subdivided as follows: 22.7 mt to pelagic longline vessels landing BFT north of 31° N. latitude and 34.0 mt to pelagic longline vessels landing BFT south of 31° N. latitude, with 25 mt set-aside for bycatch of BFT related to directed pelagic longline fisheries in the NED. NMFS will account for landings under this additional quota separately from other landings under the Longline north subcategory. Once complete information, including recreational landings estimates, is available for the 2007 fishing year, NMFS may need to publish quota adjustments or other inseason management measures, as necessary, in 2008 for the 2008 fishing year. General Category Effort Controls Because of the large quota available for the General category, NMFS increases the retention limit of BFT for the January and June-August subperiods from the default one-fish retention limit. Therefore, persons aboard vessels permitted in the General category may retain three large medium or giant BFT (measuring 73 inches (185.4 cm) or greater) per vessel per day/trip from June 1, 2008, through August 31, 2008. Anticipating that this action might not be effective by January 1, 2008, NMFS published an inseason action to adjust the General category retention limit to three large medium or giant BFT per vessel per day/trip effective October 1, 2007, through January 31, 2008 (72 FR 61565, October 31, 2007). The BFT retention limit may be adjusted via inseason action, if warranted, under § 635.23(a)(4). Angling Category Effort Controls This final rule establishes an Angling category retention limit to one school BFT (27 inches (68.6 cm) to less than 47 inches (119.4 cm)), and two large school/small medium BFT (i.e., two BFT measuring 47 inches (119.4 cm) to less than 73 inches (185.4 cm)) per vessel per day/trip. This retention limit is effective for persons aboard vessels permitted in the Angling category from January 30, 2008 through December 31, 2008. This retention limit may be adjusted via inseason action, if warranted, under § 635.23(b)(3). Comments and Responses Below, NMFS summarizes and responds to all comments received on the proposed quota specifications and effort controls for the General and Angling categories. In addition, NMFS received comments on issues that were not considered part of this rulemaking. For example, NMFS received comment that the pelagic longline incidental BFT retention limits should be raised to reduce regulatory discard of commercial-sized BFT. In contrast, NMFS received a request from an environmental organization to take action to limit BFT mortality on pelagic longline gear and to remove the exemption from target catch requirements that currently applies to pelagic longline vessels fishing in the Northeast Distant gear restricted area until the 25-mt set-aside for that area is met. Another commenter expressed frustration with Purse Seine fishing in Cape Cod Bay and alleged unchecked violation of BFT fishing regulations in general. NMFS acknowledges receipt of these comments, although the issues raised are not addressed in this action as they were not considered part of this rulemaking. A. BFT Quotas *Comment 1* : NMFS received a range of comments on the quota specifications. Most of the commenters wrote or spoke about the need for greater conservation measures, both for juvenile and spawning-sized BFT. One commenter opposed carryover of underharvest in any fishery from one year to the next. An environmental organization representative requests that NMFS keep landings of school fish low in 2008 to contribute to rebuilding the BFT population and to ensure a recreational fishery in the last year of the four-year (2007-2010) balancing period over which ICCAT recommends limiting school BFT landings to 10 percent of the TAC (i.e., an average of 119 mt annually). In contrast, one commenter asked if NMFS would adjust the school BFT subquota (upward of the proposed 119 mt) if landings estimates indicate that less than 119 mt will have been taken in the 2007 fishing year (i.e., if NMFS could increase the school BFT quota for 2008 while maintaining average landings of 119 mt annually over the 2007-2010 balancing period). *Response* : Carryover of underharvest (limited to no more than 50 percent of the U.S. TAC) is consistent with both the ICCAT recommendation and the BFT quota regulations. The specifications included in this rule reflect application of underharvest from the 2007 fishing year to the baseline quotas that were established in the 2007 final specifications (72 FR 33401, June 18, 2007). The distribution of the 595.1-mt underharvest provides for several existing and potential management needs, namely:
(1)Setting aside sufficient quota for a potential transfer to another ICCAT Contracting Party, if warranted;
(2)providing sufficient quota for pelagic longline operations;
(3)appropriately accounting for dead discards; and
(4)distributing the remainder per the Consolidated HMS FMP allocation. Reduction of the overall quota, or to category quota and subquota allocations, would involve a regulatory change and/or amendment to the Consolidated HMS FMP. The final Angling category school BFT subquota is 119 mt. Final LPS estimates for the 2007 fishing year will not be compete until after preparation of this final rule. NMFS does not currently have information that would support an increase to the Angling category school BFT subquota for the 2008 fishing year. As mentioned above, NMFS may need to publish a quota adjustment or other inseason action in 2008 once landings information for the 2007 fishing year is complete. However, as 2007 is the first year of the current 4-year balancing period, NMFS has considerable flexibility over the next 3 years to manage the school BFT fishery (including adjustment of retention limits) consistent with the ICCAT recommendation that limits tolerance for school BFT landings to 10 percent of the U.S. TAC, calculated on a 4-year average (i.e., 2007-2010). *Comment 2* : Some commenters opposed the concept of a U.S. quota transfer to another ICCAT-contracting party. An industry representative suggested that NMFS fully allocate the quota carryover amount to the quota categories rather than holding 15-percent of the TAC (178.5 mt) in the Reserve, and suggests that NMFS subsequently consult with representatives of applicable quota categories if and when a quota transfer request is received. This commenter anticipates that such a request would be initiated by industry in consultation with the industry of another ICCAT Contracting Party. *Response* : The authority to transfer BFT quota to other ICCAT contracting parties originates with a 2006 ICCAT recommendation, which allows a contracting party to transfer up to 15 percent of its TAC to another Contracting Party. NMFS notes that any transfer requests would be initiated by other ICCAT member countries to the U.S. Government. In response to a transfer request, the United States (through NMFS) would evaluate several factors, including the projected ability of U.S. vessels to harvest the U.S. TAC during the fishing year and potential impacts to the stock, in a separate action and consider public input on that action. In these specifications, NMFS is placing 178.5 mt (15 percent of the U.S. TAC) of 2007 fishing year underhavest in the Reserve so that, if the United States were to approve a transfer, the quota would be taken from the Reserve and not from category-specific quotas. NMFS maintains that, should a transfer to another ICCAT contracting party be considered and approved, it should be taken from the Reserve, which NMFS specifically holds for purposes of inseason or annual adjustments and fishery research. Because of the ICCAT-recommended limit on quota carryover and given the recent trend of substantial U.S. TAC underharvest, distribution of 178.5 mt of carryover to individual quota categories would not result in substantially greater future fishing opportunities than holding that amount in Reserve. Further, the regulations regarding determination criteria and annual adjustment of the BFT quota at §§ 635.27(a)(8) and 635.27(a)(9) allow NMFS to transfer quotas among categories based on the several criteria (such as a review of landing trends, the projected ability of the vessels fishing under a particular category quota to harvest the additional amount of BFT before the end of the fishing year, the estimated amounts by which quotas for other categories might be exceeded, the effects of the adjustment on accomplishing the objectives of the fishery management plan, etc.). Therefore, should a situation arise in which a BFT domestic quota transfer from the Reserve to a quota category is needed to avoid exceeding that category's quota, NMFS could take action as appropriate. The carryover of BFT underharvest that NMFS proposed, and finalizes in this action, is consistent with the Consolidated HMS FMP and with the 2006 ICCAT recommendation to limit carryover to 50 percent of an ICCAT contracting party's initial TAC. A regulatory amendment would be required for NMFS not to carry forward unharvested quota from one year to the next. B. General Category Effort Controls *Comment 1* : As described above, NMFS received comments that the setting of RFDs is not necessary, as BFT landings in the General category have been low, and not at a pace that warrants NMFS control for market purposes. *Response* : NMFS agrees that overall landings in the last few years have been lower than they have since the late 1990s, when NMFS began to implement RFDs to extend the General category season for as long as possible to provide fishing opportunities over an expanded temporal and geographic range. Due to low landings rates in recent years and the fact that the fishery has not needed to be closed, and based on the expectation that landings rates in the 2008 fishing season will be similar, NMFS is not implementing RFDs through this final rule. NMFS may use its inseason action authority at 50 CFR 635.23(a)(4) to adjust the General category retention limit if it determines that action is needed during the fishing year to extend the General category fishery. *Comment 2* : One commenter suggested, due to continued underharvest of BFT, that a General category daily retention limit of two rather than three BFT measuring 73 inches or greater (as proposed) per vessel per day/trip, would be appropriate, while still meeting the needs of commercial BFT fishermen. *Response* : NMFS acknowledges the recent low catches in the General category fishery. NMFS is contributing to research and monitoring efforts to determine the reasons for the apparent lack of availability of BFT to the U.S. fishery, i.e., whether due to lower stock abundance or changes in BFT distribution. In the meantime, NMFS is setting the General category daily retention limit at three BFT to allow increased opportunities to harvest the General category quota during periods when catch rates have historically been low, and to avoid accumulation of unused quota. C. Angling Category Effort Controls *Comment 1* : NMFS received a range of comments on the Angling category effort controls. Some commenters supported the Angling category retention limit as proposed, and some expressed that anglers should be limited to one fish per day. Related to the comment on the Angling category school BFT subquota in Section A, one commenter asked if the daily retention limit for school BFT could be increased without risking the 4-year average of 119 mt of landings being exceeded. *Response* : NMFS currently does not have complete landings estimates for the 2007 fishing year and therefore does not have sufficient information to support a change to the 2008 fishing year Angling category retention limit. NMFS may determine, once 2008 estimates are complete, that the retention limit should be adjusted in order to meet the limit on school BFT over the 4-year balancing period. NMFS has the authority either to make inseason adjustments to the Angling category quota during the 2008 fishing year, or, depending on the results of the LPS data and analyses and the needs of the fishery, may make necessary adjustments (such as retention limits, quotas, and subquotas) in the 2009 fishing year specifications and effort controls. Classification NMFS publishes these final specifications and effort controls under the authority of the Magnuson-Stevens Act and ATCA. The Assistant Administrator for Fisheries
(AA)has determined that the regulations contained in this final rule are necessary to implement the recommendations of ICCAT and to manage the domestic Atlantic HMS fisheries, and are consistent with the Magnuson-Stevens Act and its National Standards. This final rule been determined to be not significant for purposes of Executive Order 12866. The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared. Authority: 16 U.S.C. 971 *et seq.* ; 16 U.S.C. 1801 *et seq.* Dated: December 20, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. [FR Doc. E7-25256 Filed 12-28-07; 8:45 am] BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No. 071030625-7696-02] RIN 0648-XC84 Fisheries of the Northeastern United States; Summer Flounder, Scup, and Black Sea Bass Fisheries; 2008 Summer Flounder, Scup, and Black Sea Bass Specifications; Preliminary 2008 Quota Adjustments; 2008 Summer Flounder Quota for Delaware AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Final rule. SUMMARY: NMFS issues final specifications for the 2008 summer flounder, scup, and black sea bass fisheries. This final rule specifies allowed harvest limits for both commercial and recreational fisheries, including commercial scup possession limits. This action prohibits federally permitted commercial vessels from landing summer flounder in Delaware in 2008 due to continued quota repayment from previous years’ overages. The actions of this final rule are necessary to comply with regulations implementing the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP), as well as to ensure compliance with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The intent of this action is to establish harvest levels and other management measures to ensure that target fishing mortality rates
(F)or exploitation rates, as specified for these species in the FMP, are not exceeded. In addition, this action implements measures that ensure continued rebuilding of these three overfished species and ends overfishing in the summer flounder fishery. DATES: Effective January 1, 2008, through December 31, 2008. ADDRESSES: Copies of the specifications document, including the Environmental Assessment (EA), Regulatory Impact Review (RIR), Initial Regulatory Flexibility Analysis (IRFA), and other supporting documents used by the Summer Flounder, Scup, and Black Sea Bass Monitoring Committees are available from Daniel Furlong, Executive Director, Mid-Atlantic Fishery Management Council, Room 2115, Federal Building, 300 South Street, Dover, DE 19901-6790. The specifications document is also accessible via the Internet at *http://www.nero.noaa.gov.* The Final Regulatory Flexibility Analysis
(FRFA)consists of the IRFA, public comments and responses contained in this final rule, and the summary of impacts and alternatives contained in this final rule. Copies of the small entity compliance guide are available from Patricia A. Kurkul, Regional Administrator, Northeast Region, National Marine Fisheries Service, One Blackburn Drive, Gloucester, MA 01930-2298. FOR FURTHER INFORMATION CONTACT: Michael Ruccio, Fishery Policy Analyst,
(978)281-9104. SUPPLEMENTARY INFORMATION: Background The summer flounder, scup, and black sea bass fisheries are managed cooperatively under the provisions of the FMP developed by the Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission (Commission), in consultation with the New England and South Atlantic Fishery Management Councils. The management units specified in the FMP include summer flounder ( *Paralichthys dentatus* ) in U.S. waters of the Atlantic Ocean from the southern border of North Carolina
(NC)northward to the U.S./Canada border, and scup ( *Stenotomus chrysops* ) and black sea bass ( *Centropristis striata* ) in U.S. waters of the Atlantic Ocean from 35°13.3′ N. lat. (the latitude of Cape Hatteras Lighthouse, Buxton, NC) northward to the U.S./Canada border. The Council prepared the FMP under the authority of the Magnuson-Stevens Act, 16 U.S.C. 1801 *et seq.* Regulations implementing the FMP appear at 50 CFR part 648, subparts A (general provisions), G (summer flounder), H (scup), and I (black sea bass). General regulations governing U.S. fisheries also appear at 50 CFR part 600. States manage summer flounder within 3 nautical miles of their coasts, under the Commission's plan for summer flounder, scup, and black sea bass. The Federal regulations govern vessels fishing in the exclusive economic zone (EEZ), as well as vessels possessing a Federal fisheries permit, regardless of where they fish. The regulations outline the process for specifying the annual catch limits for the summer flounder, scup, and black sea bass commercial and recreational fisheries, as well as other management measures (e.g., mesh requirements, minimum fish sizes, gear restrictions, possession restrictions, and area restrictions) for these fisheries. The measures are intended to achieve the annual targets set forth for each species in the FMP, specified either as an F or an exploitation rate (i.e., the proportion of fish available at the beginning of the year that may be removed by fishing during the year). Once the catch limits are established, they are divided into quotas based on formulas contained in the FMP. Detailed background information regarding the status of the summer flounder, scup, and black sea bass stocks and the development of the 2008 specifications for these fisheries was provided in the proposed specifications (72 FR 64023; November 14, 2007). That information is not repeated here. NMFS will establish the 2008 recreational management measures for summer flounder, scup, and black sea bass by publishing proposed and final rules in the **Federal Register** at a later date, following receipt of the Council's recommendations as specified in the FMP. Summer Flounder The FMP requires that annual fishing levels (i.e., Total Allowable Landings or TAL) must achieve at least a 50-percent probability of constraining harvests to an F rate that produces the maximum yield per recruit, or F MAX . The best available scientific information from the 2007 updated summer flounder assessment conducted by the Southern Demersal Working Group (SDWG), using the methods and models recommended for continued use by the NMFS Office of Science and Technology during its 2006 peer review, indicates that F MAX for 2008 is 0.28. However, the best available scientific information also indicates that, for 2008, a TAL set lower than the F MAX level is needed to ensure that the rebuilding objective of 197.2 million lb (89,448 mt) spawning stock biomass
(SSB)can be attained by the rebuilding period end date of January 1, 2013. For 2008, the F TARGET =F REBUILD at 0.199. The TAL associated with the target F (i.e., F REBUILD for 2008) is allocated 60 percent to the commercial sector and 40 percent to the recreational sector by the FMP. The commercial quota is allocated to the coastal states based upon percentage shares specified in the FMP. The recreational harvest limit is specified on a coastwide basis. Recreational measures will be the subject of a separate rulemaking early in 2008. This final rule implements the specifications contained in the November 14, 2007, proposed rule—a summer flounder TAL of 15.77 million lb (7,153 mt) for 2008. This TAL has a 75-percent probability of achieving the F REBUILD target of 0.199, and a 99-percent probability that the overfishing threshold, F MAX =0.28, will not be exceeded in 2008. Three research projects that would utilize the full summer flounder research set-aside
(RSA)of 233,192 lb (106 mt) have been conditionally approved by NMFS and are currently awaiting notice of award. After deducting this RSA, the TAL is divided into a commercial quota of 9,322,085 lb (4,228 mt) and a recreational harvest limit of 6,214,723 lb (2,819 mt). If a proposed project is not approved by the NOAA Grants Office, the research quota associated with the disapproved proposal will be restored to the summer flounder TAL through publication in the **Federal Register** . Consistent with the revised quota setting procedures for the FMP (67 FR 6877, February 14, 2002), summer flounder overages are determined based upon landings for the period January-October 2007, plus any previously unaccounted for overages from January-December 2006. Table 1 summarizes, for each state, the commercial summer flounder percent share, the 2008 commercial quota (both initial and less the RSA), the quota overages as described above, and the resulting final adjusted 2008 commercial quota less the RSA. Table 1.—Final State-by-State Commercial Summer Flounder Allocations for 2008 State Percent share Initial quota lb kg Initial quota less RSA lb kg 2007 Quota overages (through 10/31/07) 1 lb kg Adjusted quota less RSA lb kg ME 0.04756 4,500 2,041 4,434 2,011 0 0 4,434 2,011 NH 0.00046 44 20 43 19 0 0 43 19 MA 6.82046 645,352 292,732 635,809 288,403 20,591 9,340 615,218 279,063 RI 15.68298 1,483,924 673,108 1,461,981 663,154 0 0 1,461,981 663,154 CT 2.25708 213,565 96,873 210,407 95,441 0 0 210,407 95,441 NY 7.64699 723,558 328,206 712,859 323,353 15,375 6,974 697,484 316,379 NJ 16.72499 1,582,519 717,830 1,559,118 707,216 0 0 1,559,118 707,216 DE 0.01779 1,683 764 1,658 752 55,556 25,200 −53,898 −24,448 MD 2.03910 192,940 87,517 190,087 86,223 0 0 190,087 86,223 VA 21.31676 2,016,992 914,907 1,987,166 901,379 0 0 1,987,166 901,379 NC 27.44584 2,596,925 1,177,965 2,558,524 1,160,547 0 0 2,558,524 1,160,547 Total 2 100.00 9,462,001 4,291,964 9,322,086 4,228,498 91,522 41,514 9,284,462 4,211,431 1 2007 quota overage is determined through comparison of landings for January through October 2007, plus any landings in 2006 in excess of the 2006 quota (that were not previously addressed in the 2007 specifications), with the 2007 emergency rule quota for each state (72 FR 2458, January 19, 2007). For Delaware, includes continued repayment of overharvest from 2007 and previous years. 2 Total quota is the sum of all states having allocation. A state with a negative number has a 2008 allocation of zero (0). Kilograms are as converted from pounds and may not necessarily add due to rounding. The Commission has established a system whereby 15 percent of each state's quota may be voluntarily set aside each year to enable vessels to land an incidental catch allowance after the directed fishery in a state has been closed. The intent of the incidental catch set-aside is to reduce discards by allowing fishermen to land summer flounder caught incidentally in other fisheries during the year, while ensuring that the state's overall quota is not exceeded. These Commission set-asides are not included in these 2007 final summer flounder specifications because NMFS does not have authority to establish such subcategories. Delaware Summer Flounder Closure Table 1 indicates that, for Delaware, the amount of the 2007 summer flounder quota overage (inclusive of overharvest from previous years) is greater than the amount of commercial quota allocated to Delaware for 2008. As a result, there is no quota available for 2008 in Delaware. The regulations at § 648.4(b) provide that Federal permit holders, as a condition of their permit, must not land summer flounder in any state that the Administrator, Northeast Region, NMFS (Regional Administrator), has determined no longer has commercial quota available for harvest. Therefore, effective January 1, 2008, landings of summer flounder in Delaware by vessels holding commercial Federal summer flounder fisheries permits are prohibited for the 2008 calendar year, unless additional quota becomes available through a quota transfer and is announced in the **Federal Register** . Federally permitted dealers are advised that they may not purchase summer flounder from federally permitted vessels that land in Delaware for the 2008 calendar year, unless additional quota becomes available through a transfer, as mentioned above. Scup The 2008 fishing season is year 1 of the 7-year, constant F strategy scup rebuilding plan implemented by Amendment 14 to the FMP (72 FR 40077; July 23, 2007). The target exploitation rate for scup in 2008 is 9 percent, which will result in an F=0.10, as called for under the rebuilding plan. The FMP specifies that the Total Allowable Catch
(TAC)associated with a given exploitation rate be allocated 78 percent to the commercial sector and 22 percent to the recreational sector. Scup discard estimates are deducted from both sectors’ TACs to establish TALs for each sector, i.e., TAC minus discards equals TAL. The commercial TAC, discards, and TAL (commercial quota) are then allocated on a percentage basis to three quota periods, as specified in the FMP: Winter I (January-April)—45.11 percent; Summer (May-October)—38.95 percent; and Winter II (November-December)—15.94 percent. The recreational harvest limit is allocated on a coastwide basis. Recreational measures will be the subject of a separate rulemaking early in 2008. This final rule implements the specifications contained in the November 14, 2007, proposed rule: A 9.9-million-lb (4,491-mt) scup TAC and a 7.34-million-lb (3,329-mt) scup TAL. The TAC is divided into the commercial (78 percent) and recreational (22 percent) allocations, in accordance with the FMP; then the respective discard estimates are subtracted to yield the preliminary TAL. After deducting 214,000 (97 mt) of RSA for the three approved research projects, the initial TAL is a commercial quota of 5,248,000 lb (2,381 mt) and a recreational harvest limit of 1,830,920 lb (830 mt). If a proposed project is not approved by the NOAA Grants Office, the research quota associated with the disapproved proposal will be restored to the scup TAL through publication in the **Federal Register** . Consistent with the revised quota setting procedures established for the FMP (67 FR 6877, February 14, 2002), scup overages are determined based upon landings for the Winter I and Summer 2007 periods, plus any previously unaccounted for landings from January-December 2006. Table 2 presents the final 2008 commercial scup quota for each period and the reported 2007 landings for the 2007 Winter I and Summer periods. There was no overage of the Winter I quota; however, an overage of 624,876 lb (283 mt) occurred during the Summer quota period. As a result, the 2008 Summer period quota is reduced by this amount. On July 24, 2007, (72 FR 40263) NMFS announced a transfer of unharvested quota from the Winter I to the Winter II 2007 quota period. Per the quota accounting procedures, after June 30, 2008, NMFS will compile all available landings data for the 2007 Winter II quota period and compare the landings to the 2007 Winter II quota period allocation, as adjusted by the aforementioned transfer. Any overages will be determined and deductions, if needed, will be made to the Winter II 2008 allocation and published in the **Federal Register** . Table 2.—Scup Preliminary 2007 Commercial Landings By Quota Period Quota period 2007 Quota lb mt Reported 2007 Landings through 10/31/07 lb mt Preliminary Overages as of 10/31/07 lb mt Winter I 4,012,895 1,820 3,386,505 1,536 0 0 Summer 3,464,914 1,572 4,089,790 1,855 624,876 283 Winter II 1,417,991 643 N/A N/A N/A N/A Total 8,895,800 4,035 7,476,295 3,391 N/A N/A N/A = Not applicable. Table 3 presents the commercial scup percent share, 2008 TAC, projected discards, 2008 initial quota (with and without the RSA deduction), overage deductions (as necessary), and initial possession limits, by quota period. This final rule continues the status quo Winter I period (January-April) per-trip possession limit of 30,000 lb (13.6 mt), and a Winter II period (November-December) initial per-trip possession limit of 2,000 lb (907 kg). The Winter I per-trip possession limit will be reduced to 1,000 lb (454 kg) when 80 percent of the commercial quota allocated to that period is projected to be harvested. Table 3.—Initial Commercial Scup Quota Allocations for 2008 by Quota Period Quota period Percent share Total allowable catch lb mt Discards lb mt Initial quota lb mt Initial quota less overages (through 10/31/2007) 1 lb mt Adjusted quota less overages and RSA lb mt Possession limits (Per trip) 2 lb kg Winter I 45.11 3,483,394 1,580 1,019,486 462 2,463,908 1,118 N/A N/A 2,367,373 1,074 30,000 13,608 Summer 38.95 3,007,719 1,364 880,270 399 2,127,449 965 1,502,573 682 1,419,220 644 N/A N/A Winter II 15.94 1,230,887 558 360,244 163 870,643 395 N/A N/A 836,531 379 2,000 907 Total 3 100.0 7,722,000 3,503 2,260,000 1,025 5,462,000 2,478 N/A N/A 4,623,124 2,097 N/A N/A 1 An overage of 624,876 lb (283 mt) occurred during the 2007 Summer quota period 2 The Winter I possession limit will drop to 1,000 lb (454 kg) upon attainment of 80 percent of that period's allocation. The Winter II possession limit may be adjusted (in association with a transfer of unused Winter I quota to the Winter II period) via notification in the Federal Register . 3 Metric tons are as converted from pounds and may not necessarily add due to rounding. N/A = Not applicable. Consistent with the unused Winter I commercial scup quota rollover provisions at § 648.120(a)(3), this final rule maintains the Winter II possession limit-to-rollover amount ratios that were in place for the 2007 fishing year, as shown in Table 4. The Winter II possession limit will increase by 1,500 lb (680 kg) for each 500,000 lb (227 mt) of unused Winter I period quota transferred, up to a maximum possession limit of 8,000 lb (3,629 kg). Table 4.—Potential Increase in Winter II Possession Limits Based on the Amount of SCUP Rolled Over From Winter I to Winter II Period Initial Winter II possession limit lb kg Rollover from Winter I to Winter II lb mt Increase in initial Winter II possession limit lb kg Final Winter II possession limit after rollover from Winter I to Winter II lb kg 2,000 907 0-499,999 0-227 0 0 2,000 907 2,000 907 500,000-999,999 227-454 1,500 680 3,500 1,588 2,000 907 1,000,000-1,499,999 454-680 3,000 1,361 5,000 2,268 2,000 907 1,500,000-1,999,999 680-907 4,500 2,041 6,500 2,948 2,000 907 2,000,000-2,500,000 907-1,134 6,000 2,722 8,000 3,629 Black Sea Bass For 2008, the target exploitation rate for black sea bass is 25 percent. The FMP specifies that the TAL associated with a given exploitation rate be allocated 49 percent to the commercial sector and 51 percent to the recreational sector. The recreational harvest limit is allocated on a coastwide basis. Recreational measures will be the subject of a separate rulemaking early in 2008. This final rule implements the specifications contained in the November 14, 2007, proposed rule: A 4.22-million-lb (1,194-mt) black sea bass TAL. After deducting 85,790 lb (39 mt) of RSA for the three approved research projects, the TAL is divided into a commercial quota of 2,025,763 lb (919 mt) and a recreational harvest limit of 2,108,447 lb (9569 mt). If a proposed project is not approved by the NOAA Grants Office, the research quota associated with the disapproved proposal will be restored to the black sea bass TAL through publication in the **Federal Register** . Consistent with the revised quota setting procedures for the FMP, black sea bass overages are determined based upon landings for the period January-September 2007, plus any previously unaccounted for landings from January-December 2006. There were no overages for either period; thus, no overage deduction adjustment to the 2008 commercial quota is necessary. Comments and Responses NMFS received 25,443 comments during the comment period for the November 14, 2007, proposed rule. Of these, 20,159 comments were received through the prescribed methods outlined in the proposed rule: Electronic submission via the Federal eRulemaking Portal ( *http://www.regulations.gov* ); fax; standard mail; and hand delivery. An additional 5,284 were sent via e-mail to the Regional Administrator. Though these comments were not supplied through the prescribed methods, they were form letters that make the same points as other comments received through the established public comment system and are therefore addressed in this final rule's responses to comments. In addition, one comment letter contained over 14,000 signatories. This letter was treated as 14,000+ comments for the purposes of the total comments received enumeration listed above. Comments were received from the representatives of several conservation groups, recreational and commercial fishery associations and advocacy groups, and private citizens. The vast majority (99 percent) of comments received were from individual members of various conservation groups and from a conservation-based recreational fishery advocacy group who urged NMFS to adopt a summer flounder TAL lower than the 15.77-million-lb (7,153-mt) implemented by this final rule. Only comments that were applicable to the proposed 2008 specifications, including the analyses used to support these specifications, are addressed in this preamble. The majority of the comments submitted contained the same or similar language; therefore, the significant issues and concerns have been summarized and responded to here. *Comment 1:* Many commenters suggested that a 15.77-million-lb (7,153-mt) summer flounder TAL for 2008 has less than the required regulatory and 2000 Federal court-ordered 1 50-percent probability of constraining fishing mortality below the overfishing level (F MAX = 0.28) in 2008. These commenters advocated for a lower 2008 TAL and suggested that the TAL be established anywhere from a low of 8.0 million lb (3,629 mt) to a high of 12.9 million lb (5,851 mt). The majority of commenters advocating for a lower TAL indicated that NMFS should implement the 11.64-million-lb (5,280-mt) TAL, on the low end of the Summer Flounder Monitoring Committee's (Monitoring Committee) recommended TAL range. 1 *Natural Resources Defense Council* v. *Daley* Civil NO. 1:99 CV00221(JLG). *Response:* NMFS disagrees that the proposed TAL, which is implemented through this final rule, fails to meet the regulatory and legal requirements to prevent overfishing. Analysis conducted by the Northeast Fisheries Science Center (NEFSC) indicates that a 15.77-million-lb (7,153-mt) TAL has a 99-percent probability of not exceeding the overfishing level (F MAX = 0.28) in 2008. Responses to comments 2 through 7 contain additional justification for the selection of the TAL implemented by this final rule. *Comment 2:* Many commenters indicated that they believe the 15.77-million-lb (7,153-mt) summer flounder TAL has less than a 50-percent probability of meeting the F <sup>REBUILD</sup> target recommended by the Monitoring Committee (F <sup>REBUILD</sup> adjusted = 0.143) and is, therefore, in violation of the summer flounder regulations and Federal court order. *Response:* Contrary to the interpretation of the commenters, the specific regulatory and Federal court-ordered requirement for probabilities of success regarding the annual TAL is limited to providing at least a 50-percent probability of not exceeding the overfishing threshold (F <sup>MAX</sup> =F <sup>MSY</sup> =0.28). There is no specific regulatory or statutory requirement that NMFS must meet regarding probabilities for success relative to F <sup>REBUILD</sup> . The Council and NMFS may choose from among various alternative rebuilding strategies. Analysis provided by the Monitoring Committee indicates that a 15.77-million-lb (7,153-mt) TAL has a 75-percent probability of not exceeding F <sup>REBUILD</sup> =0.199, which is lower than F <sup>MAX</sup> =0.28. *Comment 3:* Several commenters relayed that they expected a 15.77-million-lb (7,153-mt) summer flounder TAL in 2008 to prevent sufficient continued stock growth and will prevent the rebuilding target of 197.2 million lb (89,448 mt) SSB from being attained by the January 1, 2013, rebuilding period end date, as required by the Magnuson-Stevens Act. *Response:* Stock projections using a 15.77-million-lb (7,153-mt) summer flounder TAL, based on F <sup>REBUILD</sup> =0.199 in 2008, indicate that the stock can achieve the rebuilding target biomass level by January 1, 2013. This TAL and F in 2008 provide a 75-percent probability that the rebuilding target will be met within the required time frame. The responses to comments 5 and 6 provide additional information germane to stock growth and rebuilding. *Comment 4:* Many commenters asserted that overfishing has occurred in the summer flounder fishery since 1982 and that a 15.77-million-lb (7,153-mt) summer flounder TAL will not end overfishing in 2008. *Response:* NMFS reiterates that a 15.77-million-lb (7,153-mt) summer flounder TAL is projected to have a 99-percent probability of constraining harvest below the overfishing level in 2008. In addition, the first definition of overfishing for summer flounder was not established until the adoption of Amendment 2 to the FMP, which occurred in 1991. NMFS acknowledges that exploitation on the summer flounder stock was high, prior to the establishment of an overfishing definition, but overfishing was not assessed relative to an established threshold. The Sustainable Fisheries Act of 1996 established a requirement for rebuilding periods for U.S. fisheries that were determined to be overfished. Overfishing has occurred in the summer flounder fishery each year of the rebuilding period for which complete data are available, 2000-2006. Evaluation of the 2007 fishery performance will not be available until mid-2008, after the commercial and recreational fishery data has been compiled and audited. The level of overfishing has decreased substantially over the course of the rebuilding period, even with the retrospective pattern that has resulted in estimated F's increasing for previous years when more recent data are added to the assessment model. Until 2006, the TAL was set at the F <sup>MAX</sup> level with only a 50-percent probability for success in all but one year (i.e., the 2004 fishing year, for which the TAL was set at the FMAX level with a 75-percent probability for success). For the 2007 fishery, the TAL was established to achieve a lower F <sup>REBUILD</sup> level, with a 75-percent probability of success of achieving that lower target. Over the course of the rebuilding period, NMFS and the Council have been successful at substantially reducing fishing mortality. NMFS expects, based on the analysis of the 2008 TAL and the associated 99-percent probability of success, that overfishing will not occur in 2008. NMFS is also prepared to further constrain or close the recreational fishery in Federal waters of the EEZ during or prior to the fishing season, if needed, to further insure that 2008 mortality objectives for the summer flounder fishery are met and to ensure that overfishing does not occur. *Comment 5:* Some commenters expressed concern that the 15.77-million-lb (7,153 mt) summer flounder TAL fails to compensate directly for the retrospective pattern in the stock assessment modeling approach and does not provide for an adequate buffer between the maximum sustainable yield and overfishing level in compensation for the model uncertainty. *Response:* The advice of the SDWG in regards to the retrospective pattern for the 2007 stock assessment update was, “Given the persistent retrospective underestimation of fishing mortality in the [stock] assessment, [fishery] managers should consider adopting a lower TAL for 2008 than indicated by the median projection results to reduce the risk that overfishing will occur.” Similarly, the advice of the 2006 biological reference point peer review was that, “The [peer review] Panel does not find that it is necessary to make an explicit adjustment for the retrospective pattern in the VPA [Virtual Population Analysis; stock assessment model] results. The pattern diminishes in the last year [2005], its cause is not clear, and past patterns in the opposite direction have also diminished after a few years.” The median projection result for 2008 is the TAL resulting from a 50-percent probability of achieving F <sup>MAX</sup> =0.28 and would yield a TAL of 23.8 million lb (10,807 mt). NMFS has followed the advice from the independent stock assessment review body and recent peer review and set the TAL for 2008 at the lower F <sup>REBUILD</sup> =0.199 level, with a further reduction by using the 25th percentile projection (i.e., a 75-percent probability of achieving the F <sup>REBUILD</sup> ). This is the most risk-averse approach yet applied to setting a summer flounder TAL since the rebuilding period began in 2000. NMFS acknowledges that the 2008 TAL does not explicitly adjust for the retrospective pattern as was recommended by the Monitoring Committee. However, the TAL implemented by this rule is consistent with the advice of the independent stock assessment body and the SDWG, and reduces the TAL from the minimum level required by the regulations to lower the risk that overfishing will occur in 2008. The TAL provides for high probabilities of success relative to both the overfishing threshold (F <sup>MAX</sup> ) and the necessary rebuilding F (F <sup>REBUILD</sup> ) to ensure continued stock rebuilding. Similarly, the TAL does provide a precautionary approach by employing the F <sup>REBUILD</sup> rather than the FMAX level, and by utilizing a probability higher than the 50-percent required, at 99-percent, of not exceeding the overfishing threshold (F <sup>MAX</sup> ). This TAL has been reduced 33.7 percent from the median projection (i.e., 50-percent probability of success) F <sup>MSY</sup> =F <sup>MAX</sup> level to compensate for uncertainty. *Comment 6:* The majority of the commenters suggested that implementing a TAL higher than the Monitoring Committee's recommended TAL range is contrary to scientific advice. These commenters asserted that this is in violation of the reauthorized Magnuson-Stevens Act that the Council may not set annual catch limits higher that the recommendations of the Council's Scientific and Statistical Committee (SSC), ignores the best available science as required by National Standard 2 of the Magnuson-Stevens Act, and is inconsistent with public hearing documents for proposed National Standard 1 guidelines. *Response:* All of the TAL options evaluated by the Monitoring Committee, including the 15.77-million-lb (7,153-mt) TAL implemented by this final rule, were derived using the most recent stock assessment update provided by the SDWG. The SDWG utilized the modeling approaches and methods recommended for continued use by the NMFS Office of Science and Technology in its 2006 peer review of the summer flounder biological reference points. The data utilized in the 2007 SDWG update are the most recent, best available, fishery-independent, recreational, and commercial fishery-dependent information and, as such, are consistent with National Standard 2 and constitute the best available scientific information. The selection of a TAL from among those options developed by the Monitoring Committee represents a policy choice for the Council and NMFS. NMFS and the Council recognize that TALs within the Monitoring Committee's recommended range would be more risk averse than the TAL implemented by this rule; however, NMFS is confident that the 15.77-million-lb (7,513-mt) TAL is sufficiently risk averse to ensure that all the regulatory and statutory requirements pertaining to annual TALs and rebuilding are met while somewhat mitigating the economic impacts associated with a reduction in harvest level (see responses to comments 1 through 7 for additional information). The FMP's implementing regulations specify that the Monitoring Committee shall recommend fishing levels that produce the maximum yield per recruit (F <sup>MAX</sup> ) with at least a 50-percent probability of success. There is no regulatory requirement that the Council adopt the recommendations of the Monitoring Committee, nor is the Monitoring Committee explicitly required to forward recommendations to achieve rebuilding or attain alternate F targets, other than those that would yield at least a 50-percent probability of constraining F at or below the overfishing level. The reauthorized Magnuson-Stevens Act specifies that the Council's SSC shall provide ongoing scientific advice to the Council for, among other things, annual catch levels, ending overfishing, and achieving rebuilding targets. The Council's SSC did not review the updated 2007 assessment, nor did it make recommendations to the Council regarding the 2008 summer flounder TAL. NMFS has encouraged the Council to modify its operating procedures so that SSC review is incorporated into the annual specification setting process; however, to date this has not been done. There is no statutory requirement that NMFS only implement recommendations that have been vetted through the Council's SSC. The Magnuson-Stevens Reauthorization Act was signed into law in January 2007. Development and implementation of guidance for several changes in the Act are in various stages of development. Guidance from the Secretary of Commerce, via NMFS, to Councils on SSC use is expected in the near-term. In the interim, the Council has developed internal guidance that relies on Monitoring Committee recommendations for specification setting, such that overfishing does not occur. The Annual Catch Limit
(ACL)provisions of the Magnuson-Stevens Reauthorization Act are not required to be in place until 2010 or 2011, dependent on the status of the stock in question. The Monitoring Committee, while composed of scientists and individuals with stock assessment expertise, is not the same as the Council's SSC and, therefore, neither the Council nor NMFS is under any statutory requirement to accept its recommendations when other alternatives are available that also satisfy the regulatory and statutory requirements for annual summer flounder TALs. NMFS has not yet published a proposed rule containing guidance for the application of National Standard 1 under the reauthorized Magnuson-Stevens Act. While the public hearing document supplied in advance of the proposed rule was provided to form the basis of discussions with the public, final guidance has yet to be developed and may differ from the hearing document and/or proposed rule, when published in the **Federal Register** . The public will have opportunity to provide comment during the proposed rule comment period, once a proposed rule is published. The response to comment 5 contains information on the level of precaution associated with the 15.77-million-lb (7,153-mt) TAL implemented by this final rule. As previously outlined, NMFS has a regulatory obligation to satisfy when implementing an annual summer flounder TAL (i.e., by implementing a TAL with at least a 50-percent probability that overfishing will not occur). For 2008, both the Monitoring Committee and Council's recommendations satisfy this requirement. NMFS must use the best available scientific information, consistent with National Standard 2. The TAL implemented by this final rule does so, as outlined previously in this response and in the response to comment 5. NMFS must also ensure that the TAL provides a reasonable probability for continued stock rebuilding so that the stock is rebuilt no later than January 1, 2013; but is under no legal or regulatory requirement to adopt any particular rebuilding strategy as long as it complies with the requirements of section 304(e) of the Magnuson-Stevens Act. As long as the TAL satisfies these requirements, the selection of one TAL over another is a policy choice for the Council and the agency. For 2008, NMFS agrees with the Council that a TAL of 15.77-million-lb (7,153-mt) satisfies all of these performance metrics while mitigating some of the economic impacts associated with the lower TAL options and finds no legal or regulatory impediment to prevent implementation of the Council's recommendation. The process for setting TALs is performed annually. Each year, the performance of the previous year's TAL and F target are evaluated along with updates to the stock status and the projected TALs and F targets needed in the remaining rebuilding years (e.g., 2009-2012) to ensure the rebuilding target is met. In any given year, adjustments may be needed to the projections utilized in the previous year's assessments to ensure that the regulatory and statutory rebuilding requirements continue to be met. This was the case for 2008, in which a TAL lower than what was projected in 2007 is needed to ensure continued rebuilding. Implementation of the 15.77- million-lb (7,153-mt) TAL for 2008 does not lock the rebuilding trajectory into an unadjustable course of action for the remainder of the rebuilding period. While NMFS is not implementing the specific recommendations of the Monitoring Committee, the 15.77-million-lb (7,153-mt) TAL is consistent with the recommendations of the SDWG recommendation to use a TAL lower than the median projection (i.e., 50-percent probability) to minimize the possibility that overfishing will occur. *Comment 7:* Some commenters advocating for a lower 2008 TAL expressed concern that the approach taken by NMFS for 2008 is for a short-term gain with long-term negative stock implications for the remainder of the rebuilding period. *Response:* NMFS disagrees that the TAL implemented by this final rule would have negative stock implications for the remainder of the rebuilding period. There is no evidence that the 15.77-million-lb (7,153-mt) TAL would adversely affect the summer flounder stock. Under all the scenarios presented by the Monitoring Committee and evaluated by the Council, the stock is expected to continue to increase toward, and attain, the rebuilding target within the rebuilding period. The distinction among the alternative TALs considered has nothing to do with the potential adverse impacts to the stock, but rather on the probability of achieving a specific rebuilding trajectory. NMFS is confident that the TAL implemented by this rule will prevent overfishing and enable the stock to continue rebuilding. *Comment* 8: Some commenters advocating for a higher 2008 TAL stated that the summer flounder stock is at a historic high, healthy, and does not need further quota reductions in 2008. In addition, they stated that summer flounder biomass as high as the biomass target has never been seen before, and current stock conditions are the highest in 25 years. *Response:* NMFS acknowledges that the summer flounder biomass has been at high levels in recent years, peaking in 2005 at the highest level in the 40-year NEFSC trawl survey time series; however, stock size decreased from the 2005 to 2006 stock assessment and the biomass target has not yet been achieved. Additional harvest reductions are necessary in 2008 to continue stock growth toward the rebuilding target biomass level. Projections indicate that the TAL implemented by this final rule will provide for sufficient stock growth in 2008 to maintain a trajectory sufficient to attain the rebuilding target no later than January 1, 2013. Based on the accepted and frequently peer-reviewed stock assessment model, the full potential growth of the stock has yet to be realized. None of the peer-reviewed science indicates that the rebuilding target cannot be attained within the rebuilding period or that the biomass target is incorrect. *Comment 9:* Some commenters who felt the 2008 TAL was too low stated that they believe the summer flounder assessment is flawed and has not been critically peer reviewed by individuals outside of NMFS. The commenters suggested that the SSC and National Academies of Science should review the modeling methods and rebuilding target. *Response:* NMFS disagrees. The statement that the summer flounder assessment has not been critically peer reviewed by persons from outside the agency is not true. The summer flounder stock assessment has been independently reviewed by scientists from outside NMFS twice in the rebuilding period: In 2002 as part of the NEFSC's Stock Assessment Review Committee
(SARC)35, and again in 2005 during SARC 41. In these reviews, a panel of independent stock assessment experts, provided by the Center for Independent Experts, critically reviewed the assessment methodology and data. While recommendations have been made to develop additional modeling approaches, these peer reviews have confirmed the current model and modeling approaches to be statistically valid for the annual stock assessment updates that provide the foundation for establishing the TAL. The NMFS Office of Science and Technology convened an additional review of the biological reference points for the summer flounder stock to ensure that the 2007 quota for the fishery was based on the best possible scientific information available and used the best possible methodology. The review panelists were scientists with recognized stock assessment expertise who have not been involved in past summer flounder assessments: Two from the NMFS Northwest Region and one from Louisiana State University. The peer review panel recommended several adjustments in the assessment, and these were incorporated into the analysis that stemmed from the peer review and have been utilized by the SDWG in updating the assessment used to set the 2008 TAL. NMFS agrees that the SSC should be involved in the Council's annual TAL recommendation process as a means to provide independent scientific advice on annual catch limits, consistent with the reauthorized Magnuson-Stevens Act. A benchmark assessment, including peer review by independent stock assessment experts from the Center for Independent Experts, is scheduled to occur in 2008. The results of the benchmark assessment are expected to be made available for the 2009 specification setting process that will begin with the Council's August 2008, meeting. NMFS does not find an additional peer review by the National Academies of Science to be necessary in view of the multiple reviews conducted on the summer flounder assessment during the rebuilding period. *Comment 10:* Most of the commenters favoring a higher 2008 summer flounder TAL expressed concerns about social and economic impacts, stating that continued reductions to the TAL in 2008 will have severe economic impacts to both commercial and recreational fishery participants, as well as support businesses (e.g., bait and tackle shops, waterfront hotels, and marinas), many of whom the commenters believe are likely to go out of business within the next year. *Response:* NMFS acknowledges that there are economic impacts associated with reductions in the TAL from one year to the next and that continual decreases have a cumulative effect on fishery participants and associated businesses. A full discussion of the economic impacts expected to result from the 2008 TAL are contained in the EA/RIR/IRFA/specifications document prepared by the Council (see ADDRESSES ) and summarized in the IRFA contained in the proposed rule (72 FR 64023; November 14, 2007), and is not repeated here. NMFS has a regulatory obligation to ensure that the TAL implemented has at least a 50-percent probability of not exceeding the overfishing threshold (F <sup>MAX</sup> ), and a statutory obligation to ensure that the summer flounder stock is rebuilt to 197 million lb (89,411 mt) no later than January 1, 2013. The 15.77-million-lb (7,153-mt) TAL implemented by this rule satisfies these requirements. The TAL implemented is less restrictive than the Monitoring Committee's recommended range for 2008, which would have had higher economic impacts. Additional discussion of the steps taken to minimize, to the extent practicable, the economic impacts on small entities (i.e., Federal permit holders) is outlined in the FRFA, contained in the Classification section of this final rule. Although this final rule does not directly regulate fishing support industries, NMFS acknowledges that potential reductions in fishing effort and associated expenditures may have indirect impacts on hotels, restaurants, fishing gear and bait shops, and other associated businesses. Sufficient data are not available to enumerate or characterize the impacts of the 2008 TAL on these businesses. *Comment 11:* One commenter believed commercial fisheries that degrade habitat and discard summer flounder are the cause of the stalled stock rebuilding. *Response:* NMFS and the Council acknowledged in Amendment 13 to the FMP that mobile bottom-tending and stationary fishing gear have the potential to impact adversely essential fish habitat (EFH). Amendment 13 included alternatives that minimize, to the extent practicable, adverse impacts on EFH. Given that the scope of the specifications, which include the summer flounder TAL, is narrow by operation of the regulations and the TAL is consistent with the regulations implementing the FMP, the effects of commercial fishing on EFH are not required to be re-evaluated by the Council, and no new alternatives to minimize impacts were presented in its analysis of the 2008 specifications. Discard estimates from both commercial and recreational fisheries are included in the annual stock assessment update that was utilized to derive the 2008 TAL; therefore, discard effects on stock growth are incorporated into the annual projections of mortality incurred by the summer flounder stock. *Comment 12:* Many of those favoring a higher 2008 summer flounder TAL made statements to the effect that the rigid rebuilding timeline imposed by the Magnuson-Stevens Act is not based on science and the rebuilding target is unrealistic. One commenter also stated that the status of the summer flounder stock is not adequately reflected by the TAL options considered for 2008. *Response:* NMFS is obligated to meet its statutory mandate to rebuild the summer flounder stock no later than the extended rebuilding deadline of January 1, 2013. While the summer flounder stock has increased in size since the rebuilding period began in 2000, it is not yet rebuilt. Multiple peer reviews of the summer flounder stock assessment and biological reference points have upheld that the rebuilding target is realistic and that it can be attained within the rebuilding period (see responses to comments 6, 8, and 9 for more information). The 2008 TAL implemented by this final rule was derived utilizing the same methods and data which have been previously peer reviewed and recommended for continued use. The 15.77-million-lb (5,153 mt) TAL is a reduction from the maximum amount permissible under the regulations to ensure continued stock rebuilding and to end overfishing. NMFS acknowledges that the summer flounder stock has been at high levels in recent years (see response to comment 8) and has improved since the beginning of the rebuilding period. However, overfishing in the summer flounder fishery continued through 2006, the stock is overfished, and it has yet to reach its maximum potential. *Comment 13:* One commenter commented that the proposed rule has no discussion on the existing summer flounder allocation between commercial and recreational fisheries. *Response:* The annual specification process in the regulations does not permit the Council to evaluate or change the allocation between the commercial and recreational summer flounder fisheries. The Council has identified the commercial/recreational allocation as a topic for further development as part of Amendment 15 to the FMP. Development of Amendment 15 is expected to continue during 2008, with tentative completion scheduled for late 2010/early 2011. *Comment 14:* One commenter stated that the Secretary of Commerce has an obligation to ensure that regulations implementing the rebuilding plan for summer flounder allocate the restrictions equitably and fairly and that there is no reference to this in the proposed rule for the public to evaluate if such issues are being addressed by the rulemaking. *Response:* The Magnuson-Stevens Act section 303(a)(14) criteria referenced by the commenter are not required to be addressed in the annual specification setting. The section in question is in reference to FMP requirements and, as such, the criteria therein were addressed in Amendment 12 to the FMP, which established the summer flounder rebuilding program. *Comment 15:* One commenter opposed the scup TAL, indicating that scup values from the spring survey index are not compelling for recommending a reduced quota and that the discard estimates were overestimated. *Response:* The spring SSB 3-year average index value remains the best available information for assessing the status of the scup stock. The reduction in quota is not only the result of a reduced 2007 spring survey value, which reduced the 3-year average value, but is the result of implementing the scup stock rebuilding program contained in Amendment 14 to the FMP. The rebuilding plan requires a constant F of 0.10 for the years 2008-2012. The discard estimates were generated using the NEFSC observer program and dealer data and the geometirc mean discards-to-landings ratio. Recreational discards were estimated using the Marine Recreational Fisheries Statistical Survey (MRFSS). While both are produced annually and have not for this year been externally peer reviewed, the estimates were reviewed by the Scup Monitoring Committee and constitute the best scientific information available. *Comment 16:* One commenter opposed the black sea bass TAL for 2008, stating that the 3-year average survey index is not appropriate for determining exploitable biomass. *Response:* The most recent full stock assessment for black sea bass was completed in 2006 as part of the NEFSC SARC 43. The SARC rejected the results of this assessment for management use. Therefore, the previous assessment remains the best available scientific information and utilizes the 3-year moving average of the NEFSC spring survey catch-per-tow as a means to define exploitable biomass. NMFS continues to support the development of additional assessment methods for black sea bass; however, until such time that new methods are developed and accepted through peer review, the 3-year average NEFSC spring survey catch-per-tow remains the best available scientific information. *Comment 17:* One comment was received in support of the 2008 conditionally approved RSA amounts. *Response:* NMFS implements the proposed RSA amounts through this final rule. Classification The Administrator, Northeast Region, NMFS, determined that this final rule is necessary for the conservation and management of the summer flounder, scup, and black sea bass fisheries and that it is consistent with the Magnuson-Stevens Act and other applicable laws. The Assistant Administrator for Fisheries, NOAA, finds good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delayed effectiveness period for this rule. This action establishes specifications (i.e., annual quotas) for the summer flounder, scup, and black sea bass fisheries and possession limits for the commercial scup fishery. Preparation of the proposed rule was dependent on the submission of the EA/RIR/IRFA in support of the specifications, which was developed by the Council. This document was received by NMFS late in September 2007. This documentation in support of the Council's recommended specifications is required for NMFS to provide the public with information from the environmental and economic analyses as required in rulemaking. NMFS published the proposed rule as expeditiously as possible following a review of the Council's proposed specifications for compliance with the Magnuson-Stevens Act, the FMP and its implementing regulations, and other applicable law. The proposed rule was published on November 14, 2007, with a 21-day comment period ending December 3, 2007. Publication of the adjusted summer flounder quota by the start of the fishing year that begins January 1, 2008, is required by the order of Judge Robert Doumar in *North Carolina Fisheries Association* v. *Daley* . If implementation of the specifications is delayed until beyond January 1, 2008, NMFS will be prevented from carrying out its legal obligation to prevent overfishing of these three species and will be in violation of a Federal court order. If a 30-day delay in effectiveness were to be required, the lack of effective quota specifications would prevent NMFS from closing the fishery should landings exceed the quotas. The summer flounder, scup, and black sea bass fisheries are all expected to be active at the start of the fishing season in 2008. In addition, the Delaware summer flounder fishery would be open for fishing, but in a negative quota situation. All of these factors could result in large overages that would have distributional effects on other quota periods and could disadvantage some gear sectors. This final rule has been determined to be not significant for purposes of Executive Order 12866 because this action contains no implementing regulations. This final rule does not duplicate, conflict, or overlap with any existing Federal rules. Included in this final rule is the FRFA prepared pursuant to 5 U.S.C. 604(a). The FRFA incorporates the IRFA, a summary of the significant issues raised by the public comments in response to the IRFA, NMFS's responses to those comments, and a summary of the analyses completed to support the action. A copy of the EA/RIR/IRFA is available from the Council (see ADDRESSES ). The preamble to the proposed rule included a detailed summary of the analyses contained in the IRFA, and that discussion is not repeated here. Final Regulatory Flexibility Analysis Statement of Objective and Need A description of the reasons why this action is being taken, and the objectives of and legal basis for this final rule are contained in the preambles to the proposed rule and this final rule and are not repeated here. Summary of Significant Issues Raised in Public Comments Several of the comment letters received on the proposed rule specifically addressed the potential economic impact of reduction of the summer flounder TAL on the recreational fishing industry, particularly in NJ. No changes to the proposed rule were required to be made as a result of public comments. For a summary of the comments received, and the responses thereto, refer to the “Comments and Responses” section of this preamble. Description and Estimate of Number of Small Entities to Which the Rule will Apply The categories of small entities likely to be affected by this action include commercial and charter/party vessel owners holding an active Federal commercial or charter/party permit for summer flounder, scup, or black sea bass, as well as owners of vessels that fish for any of these species in state waters. The Council estimates that the 2008 quotas could affect 2,253 vessels that held a Federal summer flounder, scup, and/or black sea bass permit in 2006, the most recent year for which complete permit data exists. The specific breakdown of permits, by species and type, are as follows: Commercial—summer flounder, 1,021 permits; scup, 884 permits; black sea bass, 928 permits and recreational charter/party—summer flounder 872; scup, 759; black sea bass, 832. Some individuals hold combinations of commercial and charter/party permits for one or more of the three species. The more immediate impact of this final rule will likely be felt by the 903 vessels that actively participated (i.e., landed these species) in these fisheries in 2006. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements No additional reporting, recordkeeping, or other compliance requirements are included in this final rule. Description of the Steps Taken to Minimize Economic Impact on Small Entities Specification of commercial quotas and possession limits is constrained by the conservation objectives set forth in the FMP and implemented at 50 CFR part 648 under the authority of the Magnuson-Stevens Act. Economic impacts of reduced quota specifications, that reduce the number of fish that may be taken by participants of both commercial and recreational fisheries, may be offset by adjustments to such measures as commercial fish sizes, changes to mesh sizes, gear restrictions, or possession and trap limits that may increase efficiency or value of the fishery. For 2008, no such adjustments were recommended by the Council; therefore, this final rule contains no such measures. Therefore, the economic impact analysis of the action is evaluated solely on the different levels of quota specified in the alternatives. The ability of NMFS to minimize economic impacts for this action is constrained to approving quota levels that provide the maximum availability of fish while still ensuring that the required objectives and directives of the FMP, its implementing regulations, and the Magnuson-Stevens Act are met. The economic analysis for the 2008 specification assessed the impacts for three alternatives. The no action alternative wherein no quotas are established for 2008, designated as Alternative 4, was excluded from analysis because it is not consistent with the goals and objectives of the FMP and the Magnuson-Stevens Act. Implementation of the no action alternative in 2008 would substantially complicate the approved management programs for these three species. NMFS is required under the FMP's implementing regulations to specify and implement a TAL (and TAC for scup) for these fisheries on an annual basis. The no action alternative would result in no TAL (and no scup TAC) for 2008 and would likely result in overfishing of the resources. Alternative 3 (status quo) would maintain the specifications in place for these fisheries in 2007. As such, this is the least restrictive alternative and would produce the smallest impact on small entities. Because of the difference in RSA between 2007 and 2008, implementation of this alternative would result in minor increases in the quotas for all three species. However, implementation of Alternative 3 would likely result in the biological targets (i.e., fishing mortality and exploitation rates) specified in the FMP being exceeded and would jeopardize the rebuilding plans for these overfished species. Alternative 3 is, therefore, inconsistent with the goals and objectives of the FMP, its implementing regulations, and the Magnuson-Stevens Act. Alternative 2 is the most restrictive set of specifications for 2008. It includes the Monitoring Committee's recommended summer flounder TAL of 11.64 million lb (5,280 mt), a 5.02-million-lb TAL (2,277-mt) for scup, and a 3.75-million-lb (1,710-mt) TAL for black sea bass. The measures contained in Alternative 2 would meet all the objectives of the FMP and satisfy the requirements of the Magnuson-Stevens Act. Alternative 2 would also have the highest economic impact on small entities. This alternative was not selected for implementation as the measures contained therein were overly restrictive relative to the FMP and Magnuson-Stevens Act requirements for the three species. This final rule implements Alternative 1, the Council's preferred alternative, which consists of the quota alternatives with an intermediate level economic impacts to small entities when compared to Alternatives 2 and 3. Relative to 2007, the 2008 commercial quotas and recreational harvest measures in this action would result in the following TAL decreases for the commercial and recreational sectors: • 7.8 percent for summer flounder • 38.8 percent for scup • 15.6 percent for black sea bass Alternative 1 was selected because it satisfies NMFS's obligation to implement specifications that are consistent with the goals, objectives, and requirements of the FMP, its implementing regulations, and the Magnuson-Stevens Act. The Alternative 1 TAL for summer flounder is sufficiently risk-averse, providing a high probability that the rebuilding F rate and an even higher probability that the overfishing threshold
(FMAX)will not be exceeded in 2008. The rebuilding F, TAL, and the associated probabilities for success were all derived using the best available, peer-reviewed scientific methods and modeling approaches. Alternative 1 provides for a higher summer flounder TAL than the most restrictive TAL and has the highest economic impact contained in Alternative 2. As such, Alternative 1 minimizes to the extent practicable, given the regulatory and statutory requirements, the economic impacts on small entities that participate in the summer flounder fishery. Similarly, the Alternative 1 measures for scup satisfy the requirements of the recently implemented rebuilding plan for that stock. The black sea bass quota in Alternative 1 was selected as a risk-averse measure that will adequately constrain harvest in 2008 and provide continued rebuilding of the overfished stock. Table 5 presents the 2008 initial TALs, RSA, commercial quotas adjusted for RSA, and preliminary recreational harvests for the fisheries under these three quota alternatives. Table 5.—Comparison of the Alternatives of Quota Combinations Reviewed in Million lb and Metric Tons. Initial TAL RSA 2007 Commercial quota overage Preliminary adjusted commercial quota Preliminary recreational harvest limit Quota Alternative 1 (Preferred): Summer Flounder 15.77 (11,793) 0.233
(106)0.09
(41)9.2 (4,187) 10.26 (4,653) Scup 7.34 (7,380) 0.214
(97)0.62
(283)4.62 (2,095) 1.83
(830)Black Sea Bass 4.22 (3,629) 0.086
(39)0.00 2.03
(920)2.11
(957)Quota Alternative 2 (Most Restrictive): Summer Flounder 11.64 (10,700) 0.233
(106)0.09
(41)6.75 (3,061) 4.56 (2,068) Scup 5.02 (4,885) 0.151
(97)0.62
(283)2.92 (1,324) 1.33
(603)Black Sea Bass 3.75 (3,402) 0.086
(39)0.00 1.80
(817)1.87
(848)Quota Alternative 3 (Status Quo-Least Restrictive): Summer Flounder 17.112 (13,744) 0.233
(106)0.09
(41)10.03 (4,540) 6.75 (3,061) Scup 12.00 (7,484) 0.214
(97)0.62
(283)8.32 (3,773) 4.2 (1,905) Black Sea Bass 5.00 (3,719) 0.086
(39)0.00 2.41 (1,782) 2.51 (1,856) The revenue decreases associated with the RSA program are expected to be minimal, and are expected to yield important benefits associated with improved fisheries data. It should also be noted that fish harvested under the RSA program would be sold, and the profits would be used to offset the costs of research. As such, total gross revenues to the industry will not decrease substantially, if at all, as a result of this final rule authorizing RSA for 2008. Small Entity Compliance Guide Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a small entity compliance guide will be sent to all holders of Federal permits issued for the summer flounder, scup, and black sea bass fisheries. In addition, copies of this final rule and guide (i.e., permit holder letter) are available from NMFS (see ADDRESSES ) and at the following Web site: *http://www.nero.noaa.gov.* Dated: December 21, 2007. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. [FR Doc. 07-6252 Filed 12-26-07; 1:10 pm]
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