Unknown. Interim final rule

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

--- schema: federal-register doc_type: fedreg source_file: FR-2008-03-03.xml --- 73 42 Monday, March 3, 2008 Contents Agricultural Agricultural Marketing Service RULES Honey Packers and Importers Research, Promotion, Consumer Education and Industry Information Order; Referendum Procedures, 11470-11473 08-899 Tart Cherries Grown in Michigan, et al.: Final Free and Restricted Percentages for 2007-2008 Crop Year, 11323-11328 E8-4008 Walnuts Grown in California; Order Amending Marketing Order and Agreement No. 984, 11328-11340 E8-4016 PROPOSED RULES Almonds Grown in California;

Secretary's Decision and Referendum Order on Proposed Amendment of Marketing Order No. 981, 11360-11363 E8-4017 Establishment of Honey Packers and Importers Research, Promotion, Consumer Education and Industry Information Order, 11474-11493 08-900 Agriculture Agriculture Department See Agricultural Marketing Service See Animal and Plant Health Inspection Service See Commodity Credit Corporation See Farm Service Agency See Federal Crop Insurance Corporation See Food and Nutrition Service See Food Safety and Inspection Service See Grain Inspection, Packers and Stockyards Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 11381 E8-4014 Air Force Air Force Department NOTICES Privacy Act of 1974; System of Records, 11399-11402 E8-4048 08-915 Animal Animal and Plant Health Inspection Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11381-11382 E8-4024 Determination of Pest-Free Areas within the States of Ceara and Rio Grande do Norte, Brazil: Request for Comments, 11382-11383 E8-4054 Arts Arts and Humanities, National Foundation See National Foundation on the Arts and the Humanities Centers Centers for Disease Control and Prevention NOTICES Meetings:

Advisory Committee on Childhood Lead Poisoning Prevention, 11419-11420 E8-4085 Commerce Commerce Department See International Trade Administration See National Oceanic and Atmospheric Administration Commodity Commodity Credit Corporation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11383-11384 E8-4015 Defense Defense Acquisition Regulations System RULES Defense Federal Acquisition Regulation Supplement: Codification and Modification of Berry Amendment, 11354-11356 E8-3946 Mandatory Use of Wide Area WorkFlow, 11356-11359 E8-3947 Defense Defense Department See Air Force Department See Defense Acquisition Regulations System See Navy Department NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 11396-11398 E8-3995 E8-3996 E8-4000 E8-4001 Federal Advisory Committees Charter Amendment, 11398-11399 E8-3997 Drug Drug Enforcement Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11443-11444 E8-3954 E8-3955 Education Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11402-11403 E8-3832 Education Research and Special Education Research Grant Programs, 11496-11501 08-911 National Advisory Committee on Institutional Quality and Integrity;

Members, 11403-11404 E8-4010 Recognition of Accrediting Agencies and State Agencies for Approval of Public Postsecondary Vocational Education and Approval of Nurse Education, 11404-11405 E8-4011 School Leadership Grant Program; Applications for New Awards for Fiscal Year

(FY)2008, 11504-11510 E8-4044 Energy Energy Department See Federal Energy Regulatory Commission NOTICES Application for Presidential Permit: Loring BioEnergy, LLC, 11405-11406 E8-3993 Energy Conservation Program for Consumer Products: Representative Average Unit Costs of Energy, 11406-11407 E8-3992 EPA Environmental Protection Agency PROPOSED RULES Revisions to the General Conformity Regulations, 11375-11376 E8-4031 NOTICES Draft Toxicological Review of 2-Hexanone: In Support of the Summary Information in the Integrated Risk Information System, 11408-11410 E8-4051 Posting to Applicability Determination Index Database System of Agency Applicability Determinations, etc., 11410-11418 E8-4030 Executive Executive Office of the President See Presidential Documents Farm Farm Service Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11383-11384 E8-4015 FAA Federal Aviation Administration RULES Airworthiness Directives: Airbus Model A318 et al., 11346-11347 E8-3930 Boeing Model 757 200 et al., 11347-11349 E8-3928 PROPOSED RULES Airworthiness Directives: Airbus Model A330-200 and A340-300 Series Airplanes, 11364-11369 E8-3969 E8-3971 Air Tractor, Inc. AT-200, AT-300, AT-400, AT-500, AT-600, AT-800 Series Airplanes, 11369-11371 E8-4005 Taylorcraft Models A, B, and F Series Airplanes; Correction, 11363-11364 08-892 NOTICES Aeronautical Land-Use Assurance; Waivers: Shawnee Regional Airport, OK; Property Release, 11458 08-919 Meetings: Government/Industry Aeronautical Charting Forum, 11458 08-920 FCC Federal Communications Commission RULES Radio Broadcasting Services: Blanca, Colorado, 11353-11354 E8-4028 NOTICES Petition For Reconsideration of Action in Rulemaking Proceeding, 11418-11419 E8-4050 Federal Crop Federal Crop Insurance Corporation RULES Common Crop Insurance Regulations: Cultivated Wild Rice Crop Insurance Provisions, 11314-11318 E8-3964 Mustard Crop Insurance Provisions, 11318-11323 E8-3963 Federal Emergency Federal Emergency Management Agency NOTICES Disaster and Related Determinations: Tennessee, 11426-11427 E8-3966 Disaster Declaration: Arkansas, 11427-11428 E8-3961 E8-3965 E8-3968 Tennessee, 11428 E8-3967 Indiana: Amendment No. 1 to Notice of a Major Disaster Declaration, 11428 E8-3956 Kentucky: Major Disaster and Related Determinations, 11428-11429 E8-3958 Tennessee: Amendment No. 2 to Notice of a Major Disaster Declaration, 11429 E8-3957 Federal Energy Federal Energy Regulatory Commission NOTICES Combined Notice of Filings, 11407-11408 E8-3983 Federal Highway Federal Highway Administration NOTICES Environmental statements; availability, etc.: Tooele County, UT, 11458-11459 E8-3981 Federal Reserve Federal Reserve System NOTICES Proposals to Engage in Permissible Nonbanking Activities or Acquire Companies Engaged in Permissible Nonbanking Activities, 11419 E8-4013 FTC Federal Trade Commission PROPOSED RULES Guides for the Use of Environmental Marketing Claims; The Green Guides and Packaging; Public Workshop, 11371-11375 E8-3972 Fish Fish and Wildlife Service NOTICES Draft Restoration Plan and Environmental Action Statement, 11431-11432 E8-3987 Food Food and Drug Administration NOTICES Draft Guidance for Industry: Diabetes Mellitus; Developing Drugs and Therapeutic Biologics for Treatment and Prevention, 11420 E8-3974 Food Food and Nutrition Service RULES Special Supplemental Nutrition Program for Women, Infants and Children (WIC): Implementation of Nondiscretionary WIC Certification and General Administrative Provisions, 11305-11314 E8-3880 Food Food Safety and Inspection Service NOTICES Meetings: Codex Committee on Contaminants in Foods, 11384-11385 E8-4056 Codex Committee on Food Additives, 11385-11386 E8-4060 GIPSA Grain Inspection, Packers and Stockyards Administration NOTICES Designations: Owensboro, KY et al., 11386-11387 E8-3978 Opportunity for Designation: Aberdeen, SD et al.; Request for Comments on the Official Agencies Serving These Areas, 11387-11389 E8-3980 Health Health and Human Services Department See Centers for Disease Control and Prevention See Food and Drug Administration See Health Resources and Services Administration See National Institutes of Health Health Health Resources and Services Administration NOTICES Organ Procurement and Transplantation Network, 11420-11422 E8-3994 Homeland Homeland Security Department See Federal Emergency Management Agency See U.S. Citizenship and Immigration Services Interior Interior Department See Fish and Wildlife Service See Land Management Bureau See National Park Service See Reclamation Bureau International International Trade Administration NOTICES Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 11389-11391 E8-4058 E8-4061 Frozen Fish Fillets from Vietnam: Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review etc., 11391-11392 E8-4052 Initiation of Five-year (”Sunset”) Reviews, 11392-11393 E8-4055 Meetings: Exporters’ Textile Advisory Committee, 11393 E8-4049 E8-4053 Rescission of Antidumping Duty Administrative Review: Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Japan, 11393-11395 E8-4063 Wooden Bedroom Furniture from the People's Republic of China: Extension of Time Limit for the Preliminary Results of New Shipper Reviews, 11395-11396 E8-4037 International International Trade Commission NOTICES Certain Off-the-Road Tires From China, 11437-11438 E8-3991 Investigation No. 337-TA-602: Certain GPS Devices and Products Containing Same, 11438 E8-3979 Investigation No. 337-TA-610: Certain Endodontic Instruments, 11439 E8-3976 Investigation Nos. 701-TA-448 and 731-TA-1117: Certain Off-the-Road Tires from China, 11439-11440 E8-3977 Non-Malleable Cast Iron Pipe Fittings from China, 11440-11443 E8-3973 Justice Justice Department See Drug Enforcement Administration Land Land Management Bureau NOTICES Meetings: BLM-Alaska Resource Advisory Council, 11432 E8-3985 Realty Action: Recreation and Public Purposes Act Classification of Public Lands for Conveyance to Lemhi County, ID, 11432-11433 E8-3988 National Archives National Archives and Records Administration NOTICES Availability of Proposed Records Schedules; Comment Request, 11444-11446 E8-4006 National Credit National Credit Union Administration RULES Procedures for Debt Collection, 11340-11346 E8-3799 National Foundation National Foundation on the Arts and the Humanities NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11446-11447 E8-3950 National Highway National Highway Traffic Safety Administration NOTICES Development and Application of Crash Warning Interface Metrics; Request for Information and Comment, 11459-11462 E8-4004 Grant of Petition for Decision of Inconsequential Noncompliance: DaimlerChrysler Corp., 11462 E8-4045 Ford Motor Co., 11462-11464 E8-4043 Mazda North American Operations, Grant of Petition for Decision etc., 11464-11466 E8-4012 Petition for Decision that Nonconforming 2006 and 2007 Subaru Forester Passenger Cars Are Eligible for Importation; Receipt, 11466-11467 E8-4026 NIH National Institutes of Health NOTICES Meetings: National Cancer Institute, 11422-11423 08-906 08-908 National Eye Institute, 11423-11424 08-903 National Institute of Arthritis and Musculoskeletal and Skin Diseases, 11424-11425 08-905 National Institute of Mental Health, 11425 08-909 National Institute on Aging, 11425 08-907 National Institute on Deafness and Other Communication Disorders, 11424 08-901 08-902 Scientific Review Center, 11425-11426 08-904 NOAA National Oceanic and Atmospheric Administration PROPOSED RULES Magnuson-Stevens Act Provisions; Fisheries of the Northeastern United States; Northeast Multispecies Fishery: 2008 Georges Bank Cod Hook Sector Operations Plan and Agreement and Allocation of Georges Bank Cod Total Allowable Catch, 11376-11380 E8-4039 NOTICES Federal Consistency Appeals by Weaver's Cove, LLC and Mill River Pipeline, LLC, 11396 E8-3951 National Park National Park Service NOTICES Meetings: Subsistence Resource Commission; Correction, 11434 E8-4041 National Register of Historic Places; Notification of Pending Nominations and Related Actions, 11434-11436 E8-3975 Navy Navy Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11402 E8-4002 Nuclear Nuclear Regulatory Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11447-11448 E8-4019 E8-4021 General License Confirmatory Order: Accurate NDE and Inspection, LLC, 11448-11450 E8-4025 Pension Pension Benefit Guaranty Corporation NOTICES Variance Approval From Bond/Escrow Requirement Relating to Sale of Assets by Employer Who Contributes to Multiemployer Plan; P&O Ports Florida, Inc., 11450-11451 E8-3990 Presidential Presidential Documents PROCLAMATIONS *Special Observances:* American Red Cross Month (Proc. 8221), 11511-11514 08-940 Save Your Vision Week (Proc. 8222), 11515-11516 08-941 Reclamation Reclamation Bureau NOTICES American Basin Fish Screen and Habitat Improvement Project, Sacramento River, CA, 11436-11437 08-912 SEC Securities and Exchange Commission NOTICES Notice of Application: Eaton Vance Mutual Funds Trust, et al., 11451-11452 E8-3960 Self-Regulatory Organizations; Proposed Rule Changes: Boston Stock Exchange, Inc., 11452-11456 E8-3959 E8-3962 Social Social Security Administration RULES Amendment to Attorney Advisor Program, 11349-11353 E8-3945 State State Department NOTICES Record of Decision, National Interest Determination, and Programmatic Agreement for the Proposed TransCanada Keystone Pipeline Project, 11456 E8-4020 Susquehanna Susquehanna River Basin Commission NOTICES Meetings: Susquehanna River Basin Commission, 11457-11458 E8-3948 Transportation Transportation Department See Federal Aviation Administration See Federal Highway Administration See National Highway Traffic Safety Administration MISSING FOR: U.S. Citizenship and Immigration Services U.S. Citizenship and Immigration Services NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11429-11431 E8-4032 E8-4033 E8-4034 Veterans Veterans Affairs Department NOTICES Genomic Medicine Program Advisory Committee: Notice of Renewal, 11467-11468 08-910 Meetings: Minority Health Advisory Committee, 11468 08-922 Separate Parts In This Issue Part II Agriculture Department, Agricultural Marketing Service, 11470-11493 08-899 08-900 Part III Education Department, 11496-11501 08-911 Part IV Education Department, 11504-11510 E8-4044 Part V Executive Office of the President, Presidential Documents, 11511-11516 08-940 08-941 Reader Aids Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws. To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.gpo.gov and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions. 73 42 Monday, March 3, 2008 Rules and Regulations DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Part 246 RIN 0584-AD73 [FNS-2007-0009] Special Supplemental Nutrition Program for Women, Infants and Children (WIC): Implementation of Nondiscretionary WIC Certification and General Administrative Provisions AGENCY: Food and Nutrition Service, USDA. ACTION: Interim final rule. SUMMARY: This interim final rule amends the regulations for the Special Supplemental Nutrition Program for Women, Infants and Children

(WIC)by implementing most of the nondiscretionary provisions of the Child Nutrition and WIC Reauthorization Act of 2004 that address participant certification and general program administration in the WIC Program. It also implements the exclusions from income eligibility determinations set forth in the National Defense Authorization Act for Fiscal Year

(FY)2006 and in the National Flood Insurance Act of 1968, as amended, and clarifies an inconsistency related to fair hearings and notices of adverse actions that was inadvertently omitted in the publication of the Final WIC Miscellaneous Rule. Finally, this rulemaking includes technical amendments to correct the address and telephone numbers to which complaints alleging discrimination in the WIC Program should be directed, and to correct the address of the Western Regional Office of the Food and Nutrition Service (FNS). The provisions set forth in this rulemaking are nondiscretionary, i.e., the Department has not exercised any authority to interpret the statutory provisions beyond the language that is specifically provided in the legislation. However, the Department believes that at least one of the provisions in this rulemaking may generate additional questions or comments concerning its implementation. Therefore, the rule is being issued as an interim final rule, to afford the public the opportunity to comment on the possible implications of the provisions contained herein. DATES: *Effective Date:* This rule will become effective on May 2, 2008. *Implementation Date:* State agencies must implement the provisions of this rule no later than April 2, 2008. *Comment Date:* To be considered, comments on this interim rule must be postmarked on or before June 2, 2008. ADDRESSES: The Food and Nutrition Service

(FNS)invites interested persons to submit comments on this interim rule. Comments may be submitted by any of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Under the “Comment or Submission” tab, enter Docket ID # FNS-2007-0009 to submit or view public comments and to view supporting and related materials available electronically. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link. • *Mail:* Send comments to Patricia N. Daniels, Director, Supplemental Food Programs Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Room 528, Alexandria, Virginia 22302,

(703)305-2746. Comments submitted in response to this interim rule will be included in the record and will be made available to the public. Please be advised that the substance of the comments and the identities of the individuals or entities submitting the comments will be subject to public disclosure. FNS will make the comments publicly available on the Internet via *http://www.regulations.gov* . Information regarding the interim rule will be available on the FNS Web site at *http://www.fns.usda.gov/wic* . FOR FURTHER INFORMATION CONTACT: Debra R. Whitford, Chief, Policy and Program Development Branch, Supplemental Food Programs Division, Food and Nutrition Service, USDA, 3101 Park Center Drive, Room 528, Alexandria, VA 22302,

(703)305-2746, or *Debbie.Whitford@fns.usda.gov* . SUPPLEMENTARY INFORMATION: Executive Order 12866 This rule has been determined to be significant and was reviewed by the Office of Management and Budget under Executive Order 12866. Regulatory Impact Analysis As required for all rules that have been designated as Significant by the Office of Management and Budget, a Regulatory Impact Analysis was developed for this rule. A complete copy of the Impact Analysis is available by contacting FNS as indicated in the ADDRESSES section of this Preamble. The following summarizes the conclusions of the regulatory impact analysis: Need for Action This action is needed to implement the nondiscretionary provisions of the Child Nutrition and WIC Reauthorization Act of 2004, Public Law 108-265, as well as several additional nondiscretionary legislative provisions affecting the WIC Program. The rule contains several nondiscretionary provisions related to certification, operation, and general administration in the WIC Program, including expanded definitions of “nutrition education” and “supplemental foods”; new exclusions from WIC income eligibility determinations; a new assurance of nondiscrimination; new requirements affecting infant formula rebate contracts; additional exceptions to the physical presence requirement for certification; new requirements and stipulations regarding food delivery systems; and expanded allowances in the areas of funding and financial management. Benefits FNS has already issued policy and guidance to State agencies on implementation of the legislative requirements addressed in this rulemaking, since all of the provisions of the Child Nutrition and WIC Reauthorization Act of 2004 were effective by law on either June 30, 2004; July 1, 2004; or October 1, 2004. Consequently, FNS believes that the current rule will accomplish the goals of the Act concerning participant certification and general program administration. Additionally, the rule has provisions that improve participant access and that give State agencies added flexibility. Costs Overall, most of the provisions will result in little or no change in program costs. Regulatory Flexibility Act This rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-602). Although not required by the Act, Nancy Montanez Johner, Under Secretary, Food, Nutrition, and Consumer Services, hereby certifies that this rule will not have a significant impact upon a substantial number of small entities. The provisions implemented through this rulemaking apply to all State agencies administering the WIC Program, regardless of size. Further, several of the provisions contained in this rule represent options now available to WIC State agencies, rather than new requirements for the operation and administration of the Program. Public Law 104-4, Unfunded Mandate Reform Act of 1995

(UMRA)Title II of the UMRA establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under Section 202 of the UMRA, FNS must generally prepare a written statement, including a cost-benefit analysis, for proposed and interim final/final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, Section 205 of the UMRA generally requires FNS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective, or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector of $100 million or more in any one year. This rule is therefore not subject to the requirements of Sections 202 and 205 of the UMRA. Executive Order 12372 The Special Supplemental Nutrition Program for Women, Infants and Children

(WIC)is listed in the Catalog of Federal Domestic Assistance under No. 10.557. For the reasons set forth in the final rule in 7 CFR part 3015, Subpart V and related Notice (48 FR 29115), this program is included in the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials. Prior to enactment of the Child Nutrition and WIC Reauthorization Act of 2004 (Pub. L. 108-265), the Department held listening sessions at selected locations throughout the country at which representatives of the WIC community had the opportunity to identify areas of interest and concern that they wanted the Reauthorization Act to address. Staff from FNS' headquarters and regional offices also had both formal and informal discussions with State and local officials on an ongoing basis regarding program operation and administration. All of these discussions allowed State and local WIC agencies, as well as other interested parties, to provide feedback that formed the basis for the nondiscretionary legislative provisions contained in Pub. L. 108-265 and implemented through this rulemaking. Federalism Summary Impact Statement Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under Section 6(b)(2)(B) of Executive Order 13132. FNS has considered the impact of this rule on State and local governments and has determined that this rule does not have federalism implications. Therefore, under Section 6(b) of the Executive Order, a federalism summary impact statement is not required. Executive Order 12988 This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is intended to have preemptive effect with respect to local laws, regulations, or policies that conflict with its provisions or that would otherwise impede its full implementation. This rule is not intended to have retroactive effect unless so specified in the Dates or Background paragraphs of the preamble of this rule. Prior to any judicial challenge to the application of the provisions of this rule, all applicable administrative procedures must be exhausted. In the Special Supplemental Food Program for Women, Infants and Children (WIC), the administrative procedures that must be exhausted are as follows: • State agency hearing procedures pursuant to 7 CFR 246.9 must be exhausted for participants concerning denial of participation, disqualification, and claims; • State agency hearing procedures pursuant to 7 CFR 246.18(a)(1) must be exhausted for vendors concerning denial of authorization, termination of agreement, disqualification, civil money penalty or fine; • The State agency process for providing the vendor an opportunity to justify or correct the food instrument pursuant to 7 CFR 246.12(k)(3) must be exhausted for vendors concerning delaying payment for a food instrument or a claim; • State agency hearing procedures pursuant to 7 CFR 246.18(a)(3) must be exhausted for local agencies concerning denial of application, disqualification, or any other adverse action affecting participation; • FNS hearing procedures pursuant to 7 CFR 246.22 must be exhausted for State agencies concerning sanctions imposed by FNS; and • Administrative appeal to the extent required by 7 CFR 3016.36 must be exhausted for vendors and local agencies concerning procurement decisions of State agencies. Civil Rights Impact Analysis FNS has reviewed this rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis,” to identify and address any major civil rights impacts the rule might have on minorities, women, and persons with disabilities. FNS has determined that the rule's intent and provisions will not adversely affect access to WIC services by eligible persons. All data available to FNS indicate that protected individuals have the same opportunity to participate in the WIC Program as non-protected individuals. FNS specifically prohibits State and local governments that administer the WIC Program from engaging in actions that discriminate based on race, color, national origin, age, sex, or disability. Regulations at 7 CFR 246.8 specifically state that Department of Agriculture regulations on non-discrimination (7 CFR parts 15, 15a, and 15b) and FNS instructions ensure that no person shall on the basis of race, color, national origin, age, sex, or disability be excluded from participation in, be denied benefits of, or be otherwise subjected to discrimination under the Program. Discrimination in any aspect of program administration is prohibited by these regulations, Department of Agriculture regulations on non-discrimination (7 CFR parts 15, 15a, and 15b), the Age Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of 1973 (Pub. L. 93-112, section 504), and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any applicable Federal law. Title VI complaints shall be processed in accordance with 7 CFR part 15. Where State agencies have options, and they choose to implement a particular provision of this rulemaking, they must implement it in such a way that it complies with the regulations at 7 CFR 246.8. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 1320) requires that the Office of Management and Budget

(OMB)approve all collections of information by a Federal agency from the public before such collection(s) may be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number. This interim rule contains no new information collection requirements that are subject to OMB approval. The existing recordkeeping and reporting requirements, which were approved under OMB control number 0584-0043, will not change as a result of this rule. E-Government Act Compliance FNS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and other services, and for other purposes. State Plan amendments regarding the implementation of the provisions contained in this rule, as is the case with the entire State Plan, may be transmitted electronically by the State agency to FNS. Also, State agencies may provide vendor and infant formula rebate data, as well as their financial reports, to FNS electronically. Public Participation This action is being finalized without prior notice or public comment under authority of 5 U.S.C. 553(b)(3)(A) and (B). The Child Nutrition and WIC Reauthorization Act of 2004, Public Law 108-265, contained provisions that must be implemented exactly as set forth in the legislation, with no discretion exercised by the Department regarding such implementation. Further, State agencies have already been informed that these nondiscretionary provisions must be implemented prior to the issuance of amendments to the program regulations. Therefore, Under Secretary Nancy Montanez Johner has determined, in accordance with 5 U.S.C. 553(b), that a Notice of Proposed Rulemaking and Opportunity for Public Comments is unnecessary and contrary to the public interest and, in accordance with 5 U.S.C. 553(d), finds that good cause exists for making this rule effective without prior public comment. Background The Child Nutrition and WIC Reauthorization Act of 2004 (Pub. L. 108-265, also known as the Reauthorization Act), enacted on June 30, 2004, contained a number of nondiscretionary provisions related to certification, operation, and general administration. These provisions include: • Expanded definitions of “nutrition education” and “supplemental foods”; • New requirements affecting infant formula rebate contracts; • Additional exceptions to the physical presence requirement for certification; • New requirements and stipulations regarding food delivery systems; and • Expanded allowances in the areas of funding and financial management. FNS issued policy and guidance to State agencies on implementation of these nondiscretionary legislative requirements. All of the provisions of the Child Nutrition and WIC Reauthorization Act of 2004 implemented by this rulemaking were effective by law as noted below. Effective dates for the provisions of the National Defense Authorization Act for Fiscal Year 2006, and amendments to the National Flood Insurance Act of 1968 which are being incorporated into the regulations are also indicated below. All subsequent references to Program regulatory provisions in this preamble are to title 7, Code of Federal Regulations, unless otherwise indicated. *June 30, 2004 (date of enactment):* § 246.12(g)(4); § 246.14(e), § 246.14(e)(1), § 246.14(e)(3)(iii), § 246.14(e)(4), and § 246.14(e)(5); and § 246.16(b)(3)(ii)(A). *July 1, 2004:* § 246.16a(c)(2). *October 1, 2004:* § 246.2 (Definitions); § 246.4(a)(22); § 246.7(o)(2)(ii) and § 246.7(o)(2)(iv); § 246.12(r)(6); § 246.16a(c)(6)(iii) through (c)(6)(iv); § 246.16a(c)(1)(ii); § 246.16a(k); and § 246.16a(l)(3). *June 23, 2005:* § 246.16a(m). *September 20, 2005:* § 246.7(d)(2)(iv)(D)( *34* ). *December 2, 2005:* § 246.8(b). *January 6, 2006 (date of enactment):* § 246.7(d)(2)(iv)(D)( *33* ). Additionally, two legislative exclusions from consideration *in determining income eligibility* for the WIC Program are included in this rulemaking. Both of these exclusions were effective immediately upon the date of enactment of their respective laws. The clarification of an inadvertent inconsistency and omission related to fair hearings and notices of adverse actions as set forth at § 246.9(g) will be effective immediately upon publication of this rule. Finally, two technical amendments are included in this rule. The first amendment applies specifically to § 246.8, Nondiscrimination, and revises the address and telephone numbers to which complaints of alleged discrimination should be directed. The second amendment provides the new address for the FNS Western Region, as set forth in § 246.27, Program information. For clarity, the discussions of the regulatory amendments related to each of these major issues are addressed by topic, rather than in strict regulatory sequential order. 1. Expanded Definitions of “Nutrition Education” and “Supplemental Foods” Nutrition Education (§ 246.2) Section 203(a)(1) of the Reauthorization Act amends Section 17(b)(7) of the CNA by revising the definition of “nutrition education” to include a reference to physical activity. It also removes the term “socioeconomic” from the current definition. By law, these changes were effective October 1, 2004. This revision recognizes that physical activity is one of the key recommendations included in the Dietary Guidelines for Americans 2005 (DGA). The DGAs provide the foundation for WIC nutrition education. The promotion of the health benefits of regular physical activity as a component of nutrition education supports the development of lifelong habits for good health. This legislative provision does not change the principles or requirements previously set forth by the Department regarding the allowable costs of physical activity promotion as a component of nutrition education for WIC participants. Therefore, the definition of “nutrition education” in § 246.2 is amended to reflect the exact language set forth in Public Law 108-265. Additionally, regulatory language related to nutrition education at § 246.11(b) is modified to conform to the new definition. Supplemental Foods (§ 246.2) Section 203(a)(2) of Public Law 108-265 amends Section 17(b)(14) of the CNA, effective October 1, 2004, by revising the definition of “supplemental foods” to include foods that promote health as indicated by relevant nutrition science, public health concerns, and cultural eating patterns. This revision broadens the definition to acknowledge that the identification of supplemental foods provided by WIC should consider relevant nutrition science as well as current public health concerns and cultural eating patterns. Therefore, the definition of “supplemental foods” in § 246.2 is amended to reflect the exact language set forth in Public Law 108-265. 2. New Requirements Affecting Infant Formula Rebate Contracts a. Primary Contract Infant Formula (§§ 246.2 and 246.16a) Section 203(a)(3) of the Reauthorization Act amends Section 17(b) of the CNA to add a definition of “primary contract infant formula”. Although the term “primary contract infant formula” is used throughout § 246.16a (Infant formula cost containment), program regulations do not currently include a specific definition of that term. Including a specific definition at § 246.2 is intended to clarify the use of “primary contract infant formula” wherever it is used. The definition is the same language set forth in Public Law 108-265. As of October 1, 2004, “primary contact infant formula” is used in the WIC Program to refer to the specific infant formula for which a manufacturer submits a bid to a State agency in response to a rebate solicitation and for which a contract is awarded by the State agency as a result of that bid. Section 203(e)(4) of the Reauthorization Act also amends Section 17(h)(8)(A) of the CNA by adding language to clarify that the State agency is required to use the primary contract infant formula as the first choice of issuance for all WIC infants receiving infant formula in their prescribed food packages, with all other infant formulas issued as an alternative to the primary contract infant formula. Current regulations at § 246.16a(c)(6) provide the State agency with the discretion to approve for issuance, in addition to the primary contract infant formula(s), none, some, or all of the winning bidder's other infant formulas. These other infant formulas from the winning bidder will be considered contract brand infant formulas. If a State agency issues separate (uncoupled) bid solicitations for milk-based and soy-based infant formula, the State agency will have two primary contract infant formulas, one for each contract. In addition, the State agency may require medical documentation before issuing any contract brand infant formula and must require medical documentation before issuing any non-contract brand infant formula, exempt infant formula, or WIC-eligible medical food. Effective for all bid solicitations issued on or after October 1, 2004, the State agency must issue the primary contract infant formula, as defined in the Reauthorization Act, as the formula of first choice. The State agency may continue to issue contract brand and non-contract brand alternatives to the primary contract infant formula, if determined to be more appropriate. b. State Alliance (§§ 246.2, 246.16a) Section 203(a)(3) of Public Law 108-265 amends Section 17(b) of the CNA to include a definition of “state alliance.” While alliances have existed in practice, WIC Program regulations have not contained a specific definition for a State alliance. This rule defines “State alliance” in the same manner as set forth in Public Law 108-265. Section 203(e)(3) of the same law limits the size of State alliances, as defined at § 246.2 of this interim rule, to 100,000 infants served by the participating State agencies as of October 1, 2003, or a subsequent date determined by the Secretary for which data is available. For many years, WIC State agencies have entered into partnerships to form an alliance for the purpose of promoting competitive bids and administrative simplification. However, an unintended consequence of large alliances is that competition is diminished because not all infant formula manufacturers may be able to compete for larger State alliance contracts due to production capacity. The Department believes that limiting the size of State alliances will help to maintain competition among infant formula manufacturers by ensuring all manufacturers can compete for rebate contracts. Section 203(e)(3) of Public Law 108-265 allows current State alliances that serve more than 100,000 infant participants to continue to exist, but prohibits them from adding new State agencies to such alliances, except under the following circumstances: • A State alliance that serves more than 100,000 infants may expand to include additional State agencies if the State agency to be included is an Indian Tribal Organization that is also a WIC State agency or a State agency that serves less than 5,000 infants as of October 1, 2003, or a subsequent date determined by the Secretary for which data is available. • Public Law 108-265 also allows the Secretary to grant a waiver to the State agency alliance requirements after submitting a written report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate that describes the cost-containment and competitive benefits of the proposed waiver. Therefore, §§ 246.16a(c)(1)(ii) and 246.16a(c)(2) are amended to include these limitations and their corresponding exceptions. Also, § 246.16a(k) is redesignated as § 246.16a(l), and amended to reflect changes required in Public Law 108-265. This section addresses provisions for a national cost containment bid solicitation and selection. c. Rebate Invoices (§ 246.16a(k)) Section 203(e)(5) of Public Law 108-265 requires WIC State agencies to have a system that ensures that infant formula rebate invoices, under competitive bidding, provide a reasonable estimate or an actual count of the number of units (i.e., cans) of infant formula purchased by participants with food instruments. Manufacturers pay rebates to the State agency based on the number of units of contract brand infant formula indicated on monthly rebate invoices. Historically, State agencies have based their rebate invoices on the total number of units of formula authorized on redeemed food instruments. Because WIC participants do not always purchase the total amount of formula authorized, this method inadvertently bills manufacturers for units of formula that were not purchased. Therefore, a system that bases monthly rebate invoices on the number of units of formula authorized on redeemed food instruments may not be a reasonable estimate of the number of units purchased by participants. To implement this provision, the current § 246.16a(k) is redesignated as § 246.16a(l), and a new paragraph

(k)is added that sets forth the requirements for infant formula rebate invoices. The Department recognizes the challenges some State agencies may face in implementing this requirement. However, over the past few years, many State agencies have worked collaboratively with infant formula manufacturers to develop methodologies that provide a close approximation or reasonable estimate of the number of units of infant formula purchased with WIC food instruments. State agencies that have not yet developed such methodologies should seek information and advice from the Department, as well as from other WIC State agencies that currently have billing systems based on reasonable estimates or actual counts. In addition, the Department encourages State agencies to work together with manufacturers when developing an acceptable billing system. Over the past few years, many State agencies have worked collaboratively with infant formula manufacturers to develop methodologies that provide a close approximation or reasonable estimate of the number of units of infant formula purchased with WIC food instruments. State agencies that need further improvements to their methodologies should seek information and advice from the Department, as well as from other WIC State agencies that currently have billing systems based on reasonable estimates or actual counts. In addition, the Department encourages State agencies to work together with manufacturers when developing an acceptable billing system. d. Uncoupling Milk-Based and Soy-Based Infant Formula Bids (§ 246.16a(c)(1)(ii)) Section 203(e)(6) of Public Law 108-265 requires any WIC State agency or State alliance that served a monthly average of more than 100,000 infants during the preceding 12-month period to solicit separate bids for milk-based and soy-based infant formulas. This provision is implemented by its addition to the WIC Program regulations at § 246.16a(c)(1)(ii). State agencies have always had the option to solicit separate bids for milk- and soy-based infant formulas. In practice, however, most State agencies do not exercise this option. When State agencies do solicit separate bids, competition is open to manufacturers that otherwise may not be able to bid if the infant formula types were coupled due to factors such as production capacity and/or distribution issues. The intent of this provision is to promote competition among infant formula manufacturers by ensuring all manufacturers are able to compete for rebate contracts. Separate bids for milk- and soy-based infant formulas may result in a State agency having two primary contract infant formulas, one for milk-based and one for soy-based formulas. This provision applies to bid solicitations issued on or after October 1, 2004. e. Cent-for-Cent Adjustments (§ 246.16a(c)(6)(iv)) Section 203(e)(7) of Public Law 108-265 requires State agencies to adjust for price increases and price decreases subsequent to the bid opening. This provision applies to bid solicitations issued on or after October 1, 2004. Current regulations state that bid solicitations must require manufacturers to adjust for price changes subsequent to the bid opening; however, it only mandates that manufacturers provide for cost adjustments as a result of any inflation in the wholesale prices of infant formula. It does not include a corresponding adjustment for decreases in wholesale prices. Section 246.16a(c)(6)(iv) reflects this new requirement of adjusting rebates to reflect both increases and decreases in infant formula prices. f. Infant Formula Rebate Contracts and Civil Monetary Penalties (§ 246.16a(l)) This regulation also codifies, at § 246.16a(m), a requirement mandated by Section 17(h)(8)(H) of the CNA. The CNA requires any legal entity (i.e., person, company, corporation), shall be ineligible to submit bids for up to 2 years if it discloses the bid amount or discloses the rebate or discount practices in advance of the bid opening. In addition, the legal entity shall be subject to a civil penalty of up to $100,000, as determined by the Secretary, to provide restitution to the program for harm done. The Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410, 28 U.S.C. 2461 note (the Act)) as amended, requires Federal agencies periodically to adjust certain civil monetary penalties

(CMPs)for inflation. Under the Act, a CMP is defined as any penalty, fine, or other sanction for which a Federal statute specified a monetary amount, including a range of minimum and maximum amounts. Each Executive agency is responsible for adjusting, pursuant to the Act, all CMPs within the agency's jurisdiction. The Act requires each Executive agency to make an initial inflation adjustment for all applicable CMPs not later than 180 days after the date of enactment of the Debt Collection Improvement Act of 1996 (Pub. L. 104-134)—i.e., April 26, 1996—and subsequent inflation adjustments at least once every 4 years thereafter. USDA published its initial round of inflation adjustments in the **Federal Register** on July 31, 1997, and those adjustments became effective on September 2, 1997 (62 FR 40924, July 31, 1997). USDA's initial CMP adjustments are codified in subpart E of 7 CFR 3.91. Subsequently, 7 CFR 3.91(b) was amended to reflect a second round of inflation adjustments in the **Federal Register** on May 24, 2005, and those adjustments became effective June 23, 2005 (70 FR 29573, May 24, 2005). As a result, when adjusted for inflation, the original $100,000,000 civil penalty increases to $132,000,000. This regulation refers to 7 CFR 3.91 when determining a CMP for any person, company, corporation, or legal entity for violations of § 246.16a(l). Although the provision for determining CMPs with the necessary adjustments for inflation is not contained in the Child Nutrition and WIC Reauthorization Act of 2004 (Pub. L. 108-265), it is nondiscretionary. Therefore, it is being included with this interim rule because this is the first appropriate rulemaking with implications for infant formula rebate contracts to be promulgated since the enactment of the second round of adjustments pursuant to the Debt Collection Improvement Act of 1996. 3. Additional Exceptions to the Physical Presence Requirement for Certification (§ 246.7(p)(2)) Section 246.7(p)(2)(ii) of the current WIC Program regulations allows a State agency to exempt from being physically present at certification an infant or child who was present at his/her initial WIC certification and has documented ongoing health care from a health care provider other than the WIC local agency (as set forth in § 246.7(p)(1)), if being physically present would pose an unreasonable barrier. Section 203(b)(2) of the Reauthorization Act amends Section 17(d)(3)(C)(ii) of the CNA to allow a State agency the option to waive the physical presence requirement for an infant or child who was present at his/her initial WIC certification and is receiving ongoing health care. In addition, the Reauthorization Act provides an additional exception from the physical presence requirement for an infant under 8 weeks of age who cannot be present at certification for a reason determined appropriate by the local agency, and for whom all necessary certification information is provided. These changes are intended to reduce the burden on WIC applicants and participants while maintaining program integrity. Thus, § 246.7(p)(2)(ii) is revised in this rule to incorporate the legislative option for exemption from the physical presence requirement and applies to an infant or child receiving ongoing health care from any health care provider, including the local WIC agency. The revised regulatory language also includes the new exemption from the physical presence requirement for infants under 8 weeks of age who cannot be present at the time of certification (for a reason determined appropriate by the local agency) and for whom all necessary certification information is provided. 4. New Requirements and Stipulations Regarding Food Delivery Systems (§ 246.12) a. Participants Allowed To Receive Supplemental Foods From Any Authorized Vendor (§ 246.12(r)) Section 203(c)(1)(A) of Public Law 108-265 amends Section 17(f)(1)(C)(i) of the CNA to require WIC State agencies, effective October 1, 2004, to allow participants to receive supplemental foods from any authorized vendor in the State under retail food delivery systems. This is a new requirement for WIC State agencies. Previously, State agencies were permitted to implement retail food delivery systems in which the name of a specific authorized store, as designated by the participant, was printed on the WIC food instrument. State agencies are no longer allowed to operate such “vendor-specific” retail food delivery systems, i.e., systems that specify the vendor on the food instrument or otherwise require transaction of the food instrument at a designated vendor, even if the participant is provided an opportunity to choose the vendor to be so designated. Therefore, § 246.12(r) is revised to add a requirement that WIC State agencies must establish policy and revise their retail food delivery systems to ensure that WIC participants are allowed to transact their food instruments at any retail store authorized by the State agency. b. Processing Vendor Applications Outside Established Timeframes (§ 246.4) Section 203(c)(1) of the Reauthorization Act amends Section 17(f)(1)(C) of the CNA by adding a new provision requiring State agencies to include in their State plans procedures for accepting and processing vendor applications outside the established timeframes if the State agency determines that there will otherwise be inadequate participant access to the WIC Program. This includes instances in which a previously authorized vendor sells a store under circumstances that do not permit timely notification to the State agency of the change in ownership. By law, this provision was effective October 1, 2004. Currently, § 246.12(g)(7) of the WIC regulations requires the State agency to develop procedures for processing vendor applications outside of its established timeframes when it determines there will be inadequate participant access unless additional vendors are authorized, and § 246.4(a)(14) requires a description of the participant access criteria to be included in the State Plan of Operations. Also, § 246.12(h)(3)(xvii) provides the State agency the discretion to determine the length of advance notice required for vendors reporting changes in ownership. Thus, all State Plans must currently describe participant access criteria, and many State Plans also address vendor application processing timeframes. This provision reinforces the existing regulatory provisions by adding the requirement for a description of these procedures as part of the State Plan to § 246.4(a)(22). c. Prohibition Against Imposition of EBT Costs on Vendors (§ 246.12(g)(4)) Section 203(e)(11) of Public Law 108-265 amended Section 17(h)(12) of the CNA, by replacing it with a new provision that prohibits the Secretary from imposing or allowing a State agency to impose the cost of electronic benefit transfer

(EBT)equipment, systems, or processing on retail vendors as a condition for authorization or participation in the program. By law, this provision was effective June 30, 2004. Such costs include EBT equipment, systems, or processing which are directly attributable to a WIC EBT system and used solely for the WIC Program. Retailers may, however, continue to provide funding for WIC EBT on a voluntary basis, as a number of retailers have already done. WIC EBT is intended to improve program efficiency, and retailers may make a business decision to share in the costs of WIC EBT. EBT processing is the automated data processing in support of WIC EBT purchase transactions and the associated reimbursement to retailers for their daily WIC EBT business. These activities may be carried out by the State agency or a State agency's contracted EBT processor and/or payment processor. It is customary practice for commercial processors that support retailer credit, debit, and food stamp EBT transactions to charge processing fees. Banks also charge fees for automated credits to their customers' accounts. These types of processing fees result from specific retailer business decisions; thus, if a retailer decides to participate in a State EBT system, this cost would not be imposed by the State agency, but would result in a cost to the retailer as part of its commercial relationships. In response to the legislative provisions contained in Public Law 108-265, § 246.12(g) is amended to prohibit a State agency from imposing the costs of EBT equipment, systems, or processing on retail vendors. 5. Expanded Allowances in Funding and Financial Management (§§ 246.14(e) and 246.16(b)) a. Use of Local Agency Claims (§ 246.14(e)) Section 203(c)(3) of Public Law 108-265 amended Section 17(f)(21) of the CNA to allow the WIC State agency to use funds collected through claims assessed against local agencies in the same manner that it uses claims collected from vendors and participants. WIC Program regulations at § 246.14(e) allow the State agency to keep vendor and participant collections and use these funds in the fiscal year in which the initial obligation was made, in which the claim arose, in which the funds are collected, or after the funds are collected, provided certain conditions are met. Before the State agency may credit such recoveries, it must provide vendors and participants with a means to appeal the claim action. For vendor claims, the State agency must provide vendors with an opportunity to justify or correct the claim (§ 246.12(k)(3)); for participant claims, the State agency must provide participants with an administrative hearing (§ 246.9). Because regulations at § 246.18 do not require the State agency to provide the local agency with a full administrative review for local agency claims, unless a claim affects the local agency's participation, the State agency has the discretion to determine the level of review provided for local agency claims. The State agency's review process for local agency claims should be specified or referenced in its local agency agreement. Consequently, a paragraph was added to the regulations to permit the State agency to credit recoveries of local agency claims only after any administrative review requested by the local agency in accordance with the local agency agreement has been completed, making this provision consistent with the requirements for vendor and participant claims. In addition, the paragraphs in the regulations containing the reporting and documentation requirements (§ 246.14(e)(4) through (e)(5)) for vendor and participant claims were revised to include local agency claims. Further guidance regarding State agency reporting of local agency collections is provided in the WIC Reporting Guide. b. Spendforward Authority (§ 246.16(b)) Section 203(f) of Public Law 108-265 amended Section 17(i)(3)(A)(ii)(I) of the CNA to increase the State agency's spendforward authority for nutrition services and administration

(NSA)funds from one percent to three percent of its total grant. Regulations at § 246.16(b)(3)(ii) specify the requirements that a State agency must follow to spend forward NSA funds into the next fiscal year. This legislative provision simply increased the spendforward authority without altering any of the other requirements regarding spendforward funds. Consequently, the regulations prohibiting food fund conversions from being spent forward, as well as those allowing an additional one-half of one percent to be spent forward for the development of management information and EBT systems, remain in effect. 6. Income Exclusions in Determining WIC Eligibility (§ 246.7(d)) a. Family Subsistence Supplemental Allowance

(FSSA)Payments Public Law 108-375, the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, excluded FSSA payments, which are provided to certain members of the Armed Forces and their families, as income in determining eligibility for a number of child nutrition programs, including the WIC program. This provision would have expired September 30, 2006. However, Public Law 109-163, the National Defense Authorization Act for Fiscal Year 2006, made the FSSA, and the exclusion of FSSA assistance from income under other programs, permanent. Therefore, the exclusion of FSSA payments as income for child nutrition programs, including the WIC Program, is also permanent. In determining income eligibility for the WIC Program, WIC State agencies must exclude the FSSA payment. FSSA payments have been made to certain members of the Armed Forces by the Department of Defense

(DOD)since May 2001. b. National Flood Insurance Program Payments Public Law 109-64, enacted September 20, 2005, which amends the National Flood Insurance Act of 1968, states that payments made under the National Flood Insurance Program for flood mitigation activities shall not be counted as income or resources of the owner of the property when determining eligibility for any Federal means-tested program. The Federal Emergency Management Agency awards grants to States and communities, which distribute the funds to individuals and businesses for activities that reduce the risk of repetitive flood damage. Therefore, in determining income eligibility for the WIC Program, State agencies must exclude payments received by property owners under the National Flood Insurance Program. These income exclusions are added to § 246.7(d)(2)(iv)(D) as paragraphs (d)(2)(iv)(D)( *33* ) and (d)(2)(iv)(D)( *34* ), respectively. 7. Fair Hearings and Adverse Action Notification Requirements Prior to the publication of the WIC Miscellaneous Final Rule (71 FR 56708, September 27, 2006), § 246.9(g) of the WIC Program regulations required a participant to request a fair hearing within the 15-day advance adverse action notification period in order to continue receiving WIC benefits pending the outcome of the hearing, or expiration of the certification period, whichever comes first. This requirement was inadvertently removed from the regulations when regulatory language was added to avoid the incorrect impression that a participant must always request a fair hearing within the 15-day advance notice period, instead of within the 60-day period required at § 246.9(e). However, it was not the intention of the Department to rescind this requirement; as indicated in the preamble to the Miscellaneous Final Rule (71 FR 56718), the requirement continues to be in effect. A participant may request a fair hearing within 60 days of the notification of adverse action, but § 246.9(g) should have stated in the Miscellaneous Final Rule that benefits will be continued only if the fair hearing is requested within the 15-day advance adverse action notice period. This rule clarifies the requirement concerning continuation of benefits during the fair hearing period by restoring the provision in question in this interim rule in § 246.9(g). 8. Technical Amendments a. Complaints Alleging Discrimination in the WIC Program Section 246.8(b) of the WIC regulations contains instructions on how discrimination complaints should be filed. The address and telephone numbers to which such complaints should be directed have been changed, and these changes have been included in this rule. b. New Address for FNS Western Regional Office The FNS Western Regional Office was relocated in March of 2007. This regulatory amendment updates the contact information provided in § 246.27(g) by providing the new address. List of Subjects in 7 CFR Part 246 Food assistance programs, Food donations, Grant programs—Social programs, Indians, Infants and children, Maternal and child health, Nondiscrimination, Nutrition education, Public assistance programs, WIC, Women. Accordingly, the WIC Program regulations at 7 CFR part 246 are amended as follows: PART 246—SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN 1. The authority citation for part 246 continues to read as follows: Authority: 42 U.S.C. 1786. 2. In § 246.2: a. Revise the definitions of “Nutrition education” and “Supplemental foods”; and b. Add in alphabetical order the new definitions “Primary contract infant formula”, and “State alliance”. The additions and revisions read as follows: § 246.2 Definitions. *Nutrition education* means individual and group sessions and the provision of materials that are designed to improve health status and achieve positive change in dietary and physical activity habits, and that emphasize the relationship between nutrition, physical activity, and health, all in keeping with the personal and cultural preferences of the individual. *Primary contract infant formula* means the specific infant formula for which manufacturers submit a bid to a State agency in response to a rebate solicitation and for which a contract is awarded by the State agency as a result of that bid. *State alliance* means two or more State agencies that join together for the purpose of procuring infant formula under the Program by soliciting competitive bids for infant formula. *Supplemental foods* means those foods containing nutrients determined by nutritional research to be lacking in the diets of pregnant, breastfeeding and postpartum women, infants, and children, and foods that promote the health of the population served by the WIC Program as indicated by relevant nutrition science, public health concerns, and cultural eating patterns, as prescribed by the Secretary in § 246.10. 3. In § 246.4, redesignate paragraphs (a)(15) through (a)(27) as paragraphs (a)(16) through (a)(28), and add a new paragraph (a)(15), to read as follows: § 246.4 State plan.

(a)* * *

(15)The State agency's procedures for accepting and processing vendor applications outside of its established timeframes if the State agency determines there will otherwise be inadequate participant access to the WIC Program. 4. In § 246.7: a. The word “and” is removed from the end of paragraph (d)(2)(iv)(D)( *31* ); b. Paragraph (d)(2)(iv)(D)( *32* ) is amended by removing the period at the end of the paragraph and adding in its place a semicolon. c. New paragraphs (d)(2)(iv)(D)( *33* ) and (d)(2)(iv)(D)( *34* ) are added; d. Paragraph (o)(2)(ii) is revised; and e. A new paragraph (o)(2)(iv) is added. The revision and additions read as follows: § 246.7 Certification of participants.

(d)* * *

(2)* * *

(iv)* * *

(D)* * * ( *33* ) Payments received by members of the Armed Forces and their families under the Family Supplemental Subsistence Allowance from the Department of Defense (Pub. L. 109-163, sec. 608); and ( *34* ) Payments received by property owners under the National Flood Insurance Program (Pub. L. 109-64).

(o)* * *

(2)* * *

(ii)*Receiving ongoing health care.* The State agency may exempt from the physical presence requirement, if being physically present would pose an unreasonable barrier, an infant or child who was present at his/her initial WIC certification and is receiving ongoing health care.

(iv)*Infants under 8 weeks of age.* The State agency may exempt from the physical presence requirement an infant under eight

(8)weeks of age who cannot be present at certification for a reason determined appropriate by the local agency, and for whom all necessary certification information is provided. 5. In § 246.8, the first sentence of paragraph

(b)is revised to read as follows: § 246.8 Nondiscrimination.

(b)* * * Persons seeking to file discrimination complaints should write to USDA, Director, Office of Adjudication and Compliance, 1400 Independence Avenue, SW., Washington, DC 20250-9410, or call

(800)795-3272 (voice) or

(202)720-6382 (TTY). * * * 6. In 246.9, revise paragraph

(g)to read as follows: § 246.9 Fair hearing procedures for participants.

(g)*Continuation of benefits.* Participants who appeal the termination of benefits within the 15 days advance adverse action notice period provided by § 246.7(j)(6) must continue to receive Program benefits until the hearing official reaches a decision or the certification period expires, whichever occurs first. This does not apply to applicants denied benefits at initial certification, participants whose certification periods have expired, or participants who become categorically ineligible for benefits. Applicants who are denied benefits at initial certification, participants whose certification periods have expired, or participants who become categorically ineligible during a certification period may appeal the denial or termination within the timeframes set by the State agency in accordance with paragraph

(e)of this section, but must not receive benefits while awaiting the hearing or its results. 7. In § 246.10: a. Amend paragraph (d)(2)(ii) by adding the words “other than the primary contract infant formula” immediately after the words “any contract brand infant formula”; and b. Revise the third sentence of paragraph (e)(1)(iii) to read as follows: § 246.10 Supplemental foods.

(e)* * *

(1)* * *

(iii)* * * Except as specified in paragraph

(d)of this section, local agencies must issue as the first choice of issuance the primary contract infant formula, as defined in § 246.2, with all other infant formulas issued as an alternative to the primary contract infant formula. § 246.11 [Amended] 8. In § 246.11: a. Remove the word “Stress” in paragraph (b)(1), and add in its place the word “Emphasize”; b. Further amend paragraph (b)(1) by removing the words “proper nutrition and good health” in paragraph (b)(1), and adding in their place the words “nutrition, physical activity and health”; and c. In the first sentence of paragraph (b)(2), remove the words “in achieving a positive change in food habits, resulting in improved nutritional status”, and add in their place the words “in improving health status and achieving a positive change in dietary and physical activity habits,”. 9. In § 246.12: a. Redesignate paragraphs (g)(5) through (g)(9) as paragraphs (g)(6) through (g)(10); b. Add a new paragraph (g)(5); and c. Add a new paragraph (r)(6). The additions read as follows: § 246.12 Food delivery systems.

(g)* * *

(5)*No imposition of EBT costs on retail vendors.* The State agency may not impose the costs of EBT equipment, systems, or processing required for electronic benefit transfers on any retail store authorized to transact food instruments, as a condition for authorization or participation in the program. The State agency may allow retailers to contribute to such costs on a voluntary basis.

(r)* * *

(6)*Any authorized vendor.* Each State agency shall allow participants to receive supplemental foods from any vendor authorized by the State agency under retail delivery systems. 10. In § 246.14: a. Revise the heading to paragraph (e); b. Revise the first sentence of paragraph (e)(1); c. Remove the word “or” at the end of paragraph (e)(3)(i); d. Remove the period at the end of paragraph (e)(3)(ii) and add in its place the word “; or”; e. Add paragraph (e)(3)(iii); and f. Revise paragraphs (e)(4) and (e)(5). The revisions and addition read as follows: § 246.14 Program costs.

(e)*Use of funds recovered from vendors, participants, or local agencies.*

(1)The State agency may keep funds collected through the recovery of claims assessed against vendors, participants, or local agencies. * * *

(3)* * *

(iii)In the case of a local agency claim, any administrative review requested in accordance with the local agency agreement has been completed.

(4)The State agency must report vendor, participant, and local agency recoveries to FNS through the normal reporting process;

(5)The State agency must keep documentation supporting the amount and use of these vendor, participant, and local agency recoveries. 11. In § 246.16, revise the first sentence of paragraph (b)(3)(ii)(A) to read as follows: § 246.16 Distribution of funds.

(b)* * *

(3)* * *

(ii)* * *

(A)The State agency may spend forward NSA funds up to an amount equal to three

(3)percent of its total grant (NSA plus food grants) in any fiscal year. * * * 12. In § 246.16a: a. Remove the words “primary contract brand infant formula” wherever they appear and add in their place the words “primary contract infant formula”; b. Amend paragraph (c)(1)(i) by removing the reference “(c)(5)” in the 5th sentence and adding in its place the reference “(c)(6)”; c. Add a new sentence between the first and second sentences in paragraph (c)(1)(ii); d. Redesignate paragraphs (c)(2) through (c)(6) as paragraphs (c)(3) through (c)(7); e. Add a new paragraph (c)(2); f. Amend newly redesignated paragraph (c)(3) by removing the reference “(c)(5)” in the second sentence and adding in its place the reference “(c)(6)”; g. Remove the last sentence of newly redesignated paragraph (c)(3); h. Amend the introductory text of newly redesignated paragraph (c)(4) by removing the reference “(c)(3)(ii)” and adding in its place the reference “(c)(4)(ii)”; i. Amend newly redesignated paragraph (c)(4)(ii) by removing the reference “(c)(3)(i)” wherever it appears, and adding in its place the reference “(c)(4)(i)”; j. Amend the last sentence of newly redesignated paragraph (c)(4)(iii) by removing the reference “(c)(4)” and adding in its place the reference “(c)(5)”; k. Amend newly redesignated paragraph (c)(5) by removing the reference “(c)(3)” in the first sentence and adding in its place the reference “(c)(4)”; l. Revise newly redesignated paragraphs (c)(6)(iii) and (c)(6)(iv); m. Revise newly redesignated paragraph (c)(7); n. Add a new paragraph (c)(8); o. Amend paragraph (d)(2)(i)(A) and (d)(2)(i)(B) by removing the reference “(c)(3)” wherever it appears and adding in its place the reference “(c)(4)”; p. Redesignate paragraph

(k)as paragraph (l); q. Add a new paragraph (k); r. In newly redesignated paragraph (l):

(i)Remove the reference “(k)” wherever it appears and add in its place the reference “(l)”;

(ii)Amend the last sentence of newly redesignated paragraph (l)(3) by removing the references “(k)(2)(ii), (k)(2)(iii) and (k)(2)(iv)” and adding in their places the references “(l)(2)(ii), (l)(2)(iii) and (l)(2)(iv)”;

(iii)Amend the first sentence of newly redesignated paragraph (l)(4) by removing the references “(k)(2) and (k)(3)” and adding in their places the references “(l)(2) and (l)(3)”;

(iv)Amend the second sentence of newly redesignated paragraph (l)(5)(iii) by removing the reference “(k)(5)(iii),” and adding in its place the reference “(l)(5)(iii)”;

(v)Amend the second sentence of newly redesignated paragraph (l)(8) by removing the reference “(k)(7)” and adding in its place the reference “(l)(7)”;

(vi)Amend newly redesignated paragraph (l)(9) by removing the references “(k)(7) and (k)(8)” whenever they appear, and adding in their places the references “(l)(7), and (l)(8)”;

(vii)Revise newly redesignated paragraph (l)(3); and s. Add a new paragraph (m). The revisions and additions read as follows: § 246.16a Infant formula cost containment.

(c)* * *

(1)* * *

(ii)* * * Any State agency or alliance that served a monthly average of more than 100,000 infants during the preceding 12-month period shall issue separate bid solicitations for milk-based and soy-based infant formula. * * *

(2)W *hat is the size limitation for a State alliance?* A State alliance may exist among State agencies if the total number of infants served by States participating in the alliance as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, does not exceed 100,000. However, a State alliance that existed as of July 1, 2004, and serves over 100,000 infants may exceed this limit to include any State agency that served less than 5,000 infants as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, and/or any Indian State agency. The Secretary may waive these requirements not earlier than 30 days after submitting to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a written report that describes the cost-containment and competitive benefits of the proposed waiver.

(6)* * *

(iii)*Calculation of rebates during contract term.* The rebates resulting from the application of the percentage discount must remain the same throughout the contract period except for the cent-for-cent rebate adjustments required in paragraph (c)(6)(iv) of this section.

(iv)*Cent-for-cent rebate adjustments.* Bid solicitations must require the manufacturer to adjust rebates for price changes subsequent to the bid opening. Price adjustments must reflect any increase and decrease, on a cent-for-cent basis, in the manufacturer's lowest national wholesale prices for a full truckload of infant formula.

(7)*What is the first choice of issuance for infant formula?* The State agency must use the primary contract infant formula(s) as the first choice of issuance (by physical form), with all other infant formulas issued as an alternative (see § 246.10(e)(1)(iii)).

(8)*Under what circumstances may the State agency issue other contract brand formulas?* Except as required in paragraph (c)(7) of this section, the State agency may choose to approve for issuance some, none, or all of the winning bidder's other infant formula(s). In addition, the State agency may require medical documentation before issuing any contract brand infant formula, except as provided in paragraph (c)(7) of this section (see § 246.10(c)(1)(i)) and must require medical documentation before issuing any WIC formula covered by § 246.10(c)(1)(iii).

(k)*What are the requirements for infant formula rebate invoices?* A State agency must have a system in place that ensures infant formula rebate invoices, under competitive bidding, provide a reasonable estimate or an actual count of the number of units purchased by participants in the program.

(l)* * *

(3)If FNS determines that the number of State agencies making the request provided for in paragraph (l)(2) of this section does not comply with the requirements of paragraph (c)(2) of this section, FNS shall, in consultation with such State agencies, divide such State agencies into more than one group and solicit bids for each group. These groups of State agencies are referred to as “bid groups.” In determining the size and composition of the bid groups, FNS will, to the extent practicable, take into account the need to maximize the number of potential bidders so as to increase competition among infant formula manufacturers and the similarities in the State agencies' procurement and contract requirements (as provided by the State agencies in accordance with paragraphs (l)(2)(ii), (l)(2)(iii), and (l)(2)(iv) of this section). FNS reserves the right to exclude a State agency from the national bid solicitation and selection process if FNS determines that the State agency's procurement requirements or contractual requirements are so dissimilar from those of the other State agencies in any bid group that the State agency's inclusion in the bid group could adversely affect the bids.

(m)*What are the penalties for disclosing the amount of the bid or discount practices prior to the time bids are opened?* Any person, company, corporation, or other legal entity that submits a bid in response to a bid solicitation and discloses the amount of the bid, or the rebate or discount practices of such entities, in advance of the time the bids are opened by the Secretary or the State agency, shall be ineligible to submit bids to supply infant formula to the program for the bidding in progress for up to 2 years from the date the bids are opened. In addition, any person, company, corporation, or other legal entity shall be subject to a civil money penalty as specified in § 3.91(b)(3)(iv) of this title, as determined by the Secretary to provide restitution to the program for harm done to the program. § 246.27 [Amended] 13. In § 246.27, amend paragraph

(g)by removing the words “550 Kearny Street, room 400, San Francisco, California 94108”, and adding in their place the words “90 Seventh Street, Suite #10-100, San Francisco, California 94103”. Dated: February 20, 2008. Nancy Montanez Johner, Under Secretary, Food, Nutrition, and Consumer Services. [FR Doc. E8-3880 Filed 2-29-08; 8:45 am] BILLING CODE 3410-30-P DEPARTMENT OF AGRICULTURE Federal Crop Insurance Corporation 7 CFR Part 457 RIN 0563-AC00 Common Crop Insurance Regulations; Cultivated Wild Rice Crop Insurance Provisions AGENCY: Federal Crop Insurance Corporation, USDA. ACTION: Final rule. SUMMARY: The Federal Crop Insurance Corporation

(FCIC)finalizes the Cultivated Wild Rice Crop Insurance Provisions to convert the cultivated wild rice pilot crop insurance program to a permanent insurance program for the 2009 and succeeding crop years. DATES: *Effective Date:* May 2, 2008. FOR FURTHER INFORMATION CONTACT: Erin Albright, Risk Management Specialist, Product Management, Product Administration & Standards Division, Risk Management Agency, United States Department of Agriculture, Beacon Facility—Mail Stop 0812, Room 421, PO Box 419205, Kansas City, MO 64141-6205, telephone

(816)926-7730. SUPPLEMENTARY INFORMATION: Executive Order 12866 The Office of Management and Budget

(OMB)has determined that this rule is non-significant for the purpose of Executive Order 12866 and, therefore, it has not been reviewed by OMB. Paperwork Reduction Act of 1995 Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through June 30, 2008. E-Government Act Compliance FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995

(c)of the definition of “finished weight” to match subparts

(a)and (b). *Response:* The definition of “processor” was added to the Crop Provisions because it is referenced in other definitions. FCIC agrees the definition of “processor” is confusing by referencing the term “finished weight.” The definition of “processor” has been revised to specify it is a business enterprise that converts green weight to a product ready for commercial sale. Also, the beginning of subpart

(c)of the definition of “finished weight” has been revised accordingly. *Comment:* Two commenters suggested the definition of “planted acreage” could be easier to read if the phrase “including shattering for the second and succeeding years” was put in parentheses instead of setting it off with commas. *Response:* FCIC has made the change accordingly. *Comment:* Two commenters suggested the definition of “recovery percentage” be revised to include the definitions of “standard recovery percentage” and “determined recovery percentage” as subparagraphs. *Response:* FCIC has made the change accordingly. *Comment:* Two commenters suggested commas should be added in section 4 before and after the phrase “* * * the contract change date is November 30 preceding the cancellation date for counties with a February 28 cancellation date * * *” or consider separating the two contract change dates into 4(a) and (b). *Response:* FCIC has revised section 4 to separate the contract change dates into separate subsections as suggested. *Comment:* Two commenters stated section 6(b) uses “shatters” as a verb, while in section 1, “shatter” is defined as a noun. The commenters suggested one or the other should be revised to be consistent. They also indicated the term “shattering” is used in the definition of “planted acreage.” *Response:* FCIC has revised the definition of “shatter” to be defined as a verb. *Comment:* Two commenters thought section 7 should be separated into three subsections for easier identification, and rearranged to list the states first in all three cases: “* * * the calendar date for the end of the insurance period is: “(a) For Minnesota, September 30 * * *; “(b) For California, October 15 * * *; and “(c) For all other states, the date provided in the Special Provisions.” *Response:* FCIC has made the change accordingly. *Comment:* Two commenters recommended the insured cause of loss in section 8 should be clarified as “Fire due to natural causes.” *Response:* In addition to the Cultivated Wild Rice Crop Provisions, the Common Crop Insurance Policy, Basic Provisions are applicable for wild rice. Section 12 of the Basic Provisions states all specified causes of loss must be due to a naturally occurring event. Adding the suggested language could be redundant and could cause confusion by suggesting that the other listed causes of loss do not have to be due to natural causes. Therefore, no change has been made. *Comment:* Two commenters indicated FCIC should consider if section 8(a)(8) should include the phrase that is in the Rice Crop Provisions: “* * * drought, or the intrusion of saline water” [in which case, section 9(b) of the Rice Crop Provisions also should be adapted for use for Cultivated Wild Rice]. *Response:* The crop insurance program for cultivated wild rice is available in certain Minnesota and California counties. The chance for intrusion of saline water in Minnesota is almost non-existent. However, there is a minute possibility for the chance of saline water intrusion in three California counties located in the intermountain region. In addition, two California counties where crop insurance is available are located in areas where the crop could be damaged if levees were to fail. For that reason, FCIC agrees with the commenters and has revised section 8(a)(8) to be consistent with the Rice Crop Provisions and specify the application of saline water is not an insured cause of loss. *Comment:* Two commenters stated if the intention in section 11(b)(2) is to delete the word “section” preceding the phrase “11(b)(1)” in this subsection, the same should be done in subsections (b)(3)-(7) as well to be consistent. *Response:* FCIC did not intend to omit the word “section” as questioned by the commenters. FCIC has added the term “section” preceding 11(b)(1) in section 11(b)(2) accordingly. *Comment:* Two commenters suggested the example contained in section 11 be revised to delete the “/” and replace it with “per” so it is not mistaken for a division symbol. *Response:* FCIC has made the change accordingly. *Comment:* Two commenters asked FCIC to consider rearranging section 11(c) from “The total production (finished weight) to count * * *” to read as “The total production to count (finished weight) * * *” *Response:* FCIC has made the change accordingly. In addition to the changes described above, FCIC has revised the definition of “recovery percentage” in section 1 by deleting the sentence “This is also known as percent recovery.” List of Subjects in 7 CFR Part 457 Crop insurance, Cultivated wild rice, Reporting and recordkeeping requirements. Final Rule Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation finalizes 7 CFR part 457, Common Crop Insurance Regulations, for the 2009 and succeeding crop years as follows: PART 457—COMMON CROP INSURANCE REGULATIONS 1. The authority citation for 7 CFR part 457 continues to read as follows: Authority: 7 U.S.C. 1506(l), 1506(p). 2. Section 457.170 is added to read as follows: § 457.170 Cultivated Wild Rice crop insurance provisions. The Cultivated Wild Rice Crop Insurance Provisions for the 2009 and succeeding crop years are as follows: *FCIC policies:* United States Department of Agriculture, Federal Crop Insurance Corporation. *Reinsured policies:* (Appropriate title for insurance provider). *Both FCIC and reinsured policies:* Cultivated Wild Rice Crop Provisions. 1. Definitions *Approved laboratory.* A testing facility approved by us to determine the recovery percentage from samples of cultivated wild rice. *Cultivated Wild Rice.* A member of the grass family Zizania Palustris L., adapted for growing in man-made flood irrigated fields known as paddies. *Finished weight.*

(a)The green weight delivered to a processor multiplied by the determined recovery percentage;

(b)The green weight stored for seed multiplied by either the determined recovery percentage or the standard recovery percentage in accordance with section 11(d); or

(c)The appraised green weight multiplied by either the determined recovery percentage or the standard recovery percentage in accordance with section 11(d). *Flood irrigation.* Intentionally covering the planted acreage with water and maintaining it at a proper depth throughout the growing season. *Green weight.* The total weight in pounds of the green cultivated wild rice production that was appraised, delivered to a processor, or stored for seed. *Harvest.* Combining or threshing the cultivated wild rice for grain or seed. *Initially planted.* The first occurrence of planting the insured crop on insurable acreage for the crop year. *Planted acreage.* In addition to the definition contained in the Basic Provisions, land on which an adequate amount of seed is initially spread onto the soil surface by any appropriate method (including shattering for the second and succeeding years) and subsequently is mechanically incorporated into the soil at the proper depth, will be considered planted, unless otherwise provided by the Special Provisions or actuarial documents. *Processor.* A business that converts green weight to a product ready for commercial sale using appropriate equipment and methods such as separating immature kernels, fermenting or curing, parching, de-hulling, and scarifying. *Recovery percentage.* The ratio of finished weight to green weight of the cultivated wild rice. As specified in section 11(d), the recovery percentage is either:

(a)The determined recovery percentage for a sample as determined by an approved laboratory; or

(b)The standard recovery percentage provided in the Special Provisions. *Shatter.* The act of mature seeds naturally falling to the ground from a cultivated wild rice plant. 2. Unit Division Provisions in the Basic Provisions that allow optional units by irrigated and non-irrigated practices are not applicable. 3. Insurance Guarantee, Coverage Levels, and Prices for Determining Indemnities In addition to the requirements of section 3 of the Basic Provisions:

(a)You may select only one percentage of the maximum price election for all the cultivated wild rice insured under this policy in the county.

(b)The insurance guarantee per acre is expressed as pounds of finished weight. 4. Contract Changes In accordance with section 4 of the Basic Provisions, the contract change date is:

(a)November 30 preceding the cancellation date for counties with a February 28 cancellation date; and

(b)June 30 preceding the cancellation date for counties with a September 30 cancellation date. 5. Cancellation and Termination Dates In accordance with section 2 of the Basic Provisions, the cancellation and termination dates are: State Cancellation date Termination date Mendocino, Glenn, Butte, and Sierra Counties, California; and all California Counties south thereof February 28 February 28. Minnesota; All Other California Counties; and All Other States September 30 November 30. 6. Insured Crop

(a)In accordance with section 8 of the Basic Provisions, the crop insured will be all the cultivated wild rice in the county grown on insurable acreage for which premium rates are provided by the actuarial documents:

(1)In which you have a share;

(2)That is planted for harvest as grain; and

(3)That is grown in man-made flood irrigated fields.

(b)Section 8(b)(3) of the Basic Provisions is not applicable to the cultivated wild rice seed that naturally shatters and is subsequently mechanically incorporated into the soil. 7. Insurance Period In accordance with section 11 of the Basic Provisions, the calendar date for the end of the insurance period is:

(a)For Minnesota, September 30 of the calendar year the crop is normally harvested;

(b)For California, October 15 of the calendar year the crop is normally harvested; and

(c)For all other states, the date provided in the Special Provisions. 8. Causes of Loss

(a)In accordance with section 12 of the Basic Provisions, insurance is provided only against the following causes of loss that occur during the insurance period:

(1)Adverse weather conditions;

(2)Fire;

(3)Insects, but not damage due to insufficient or improper application of pest control measures;

(4)Plant disease, but not damage due to insufficient or improper application of disease control measures;

(5)Wildlife;

(6)Earthquake;

(7)Volcanic eruption; or

(8)Failure of the irrigation water supply, if caused by a cause of loss specified in sections 8(a)(1) through

(7)that occurs during the insurance period, drought, or the intrusion of saline water.

(b)In addition to the causes not insured against in section 12 of the Basic Provisions, we will not insure against any loss of production due to:

(1)The crop not being timely harvested unless such delay in harvesting is solely and directly due to adverse weather conditions which preclude harvesting equipment from entering and moving about the field; or

(2)The application of saline water, except as specified in section 8(a) of these crop provisions. 9. Replanting Payments The provisions of section 13 of the Basic Provisions are not applicable. 10. Duties in the Event of Damage or Loss Representative samples are required in accordance with section 14 of the Basic Provisions. 11. Settlement of Claim

(a)We will determine your loss on a unit basis. In the event you are unable to provide records of production that are acceptable to us for any:

(1)Optional unit, we will combine all optional units for which such production records were not provided; or

(2)Basic unit, we will allocate any commingled production to such units in proportion to our liability on the harvested acreage for each unit.

(b)In the event of loss or damage covered by this policy, we will settle your claim by:

(1)Multiplying the insured acreage by its respective production guarantee;

(2)Multiplying the result in section 11(b)(1) by the respective price election;

(3)Totaling the results of section 11(b)(2);

(4)Multiplying the total production to be counted, (see section 11(c) through (d)) by the respective price election;

(5)Totaling the results of section 11(b)(4);

(6)Subtracting the result of section 11(b)(5) from the result of section 11(b)(3); and

(7)Multiplying the result of section 11(b)(6) by your share. For example: You have a 100 percent share in 100 acres of cultivated wild rice in the unit, with a guarantee of 400 pounds per acre and a price election of $1.00 per pound. You are only able to harvest 20,000 pounds. Your indemnity would be calculated as follows:

(1)100 acres × 400 pounds = 40,000 pound guarantee;

(2)40,000 pounds × $1.00 per pound price election = $40,000 value of guarantee;

(3)20,000 pounds × $1.00 per pound price election = $20,000 value of production to count;

(4)$40,000 − $20,000 = $20,000 loss; and

(5)$20,000 × 100 percent share = $20,000 indemnity payment.

(c)The total production to count (finished weight) from all insurable acreage on the unit will include:

(1)All appraised production as follows:

(i)Not less than the production guarantee for acreage:

(A)That is abandoned;

(B)Put to another use without our consent;

(C)Damaged solely by uninsured causes; or

(D)For which you fail to provide records of production that are acceptable to us;

(ii)Production lost due to uninsured causes;

(iii)Unharvested production (mature unharvested green weight production must be adjusted in accordance with section 11(d)); and

(iv)Potential production on insured acreage that you intend to put to another use or abandon, if you and we agree on the appraised amount of production. Upon such agreement, the insurance period for that acreage will end when you put the acreage to another use or abandon the crop. If agreement on the appraised amount of production is not reached:

(A)If you do not elect to continue to care for the crop, we may give you consent to put the acreage to another use if you agree to leave intact, and provide sufficient care for, representative samples of the crop in locations acceptable to us (The amount of production to count for such acreage will be based on the harvested production or appraisals from the samples at the time harvest should have occurred. If you do not leave the required samples intact, or fail to provide sufficient care for the samples, our appraisal made prior to giving you consent to put the acreage to another use will be used to determine the amount of production to count); or

(B)If you elect to continue to care for the crop, the amount of production to count for the acreage will be the harvested production, or our reappraisal if additional damage occurs and the crop is not harvested; and

(2)All harvested production from the insurable acreage.

(d)Mature green weight will be multiplied by the recovery percentage subject to the following:

(1)We may obtain samples of the production to determine the recovery percentage.

(2)The determined recovery percentage will be used to calculate your loss only if:

(i)All determined recovery percentages are established using samples of green weight production obtained by us or by the processor for sold or processed production; and

(ii)The samples are analyzed by an approved laboratory.

(3)If the conditions of section 11(d)(2) are not met, the standard recovery percentage will be used. 12. Late Planting The provisions of section 16 of the Basic Provisions are not applicable. 13. Prevented Planting The provisions of section 17 of the Basic Provisions are not applicable. Signed in Washington, DC on February 21, 2008. Eldon Gould, Manager, Federal Crop Insurance Corporation. [FR Doc. E8-3964 Filed 2-29-08; 8:45 am] BILLING CODE 3410-08-P DEPARTMENT OF AGRICULTURE Federal Crop Insurance Corporation 7 CFR Part 457 RIN 0563-AC04 Common Crop Insurance Regulations; Mustard Crop Insurance Provisions AGENCY: Federal Crop Insurance Corporation, USDA. ACTION: Final rule. SUMMARY: The Federal Crop Insurance Corporation

(FCIC)finalizes the Common Crop Insurance Regulations; Mustard Crop Insurance Provisions to convert the mustard pilot crop insurance program to a permanent insurance program for the 2009 and succeeding crop years. DATES: *Effective Date:* April 2, 2008. FOR FURTHER INFORMATION CONTACT: Gary Johnson, Risk Management Specialist, USDA Risk Management Agency-PASD, Beacon Facility-Mail Stop 0812, P.O. Box 419205, Kansas City, MO 64141-6205, telephone

(816)926-7730. SUPPLEMENTARY INFORMATION: Executive Order 12866 The Office of Management and Budget

(OMB)has determined that this rule is non-significant for the purposes of Executive Order 12866 and, therefore, it has not been reviewed by OMB. Paperwork Reduction Act of 1995 Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through June 30, 2008. E-Government Act Compliance FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995

(UMRA)establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA. Executive Order 13132 It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Regulatory Flexibility Act FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. Program requirements for the Federal crop insurance program are the same for all producers regardless of the size of their farming operation. For instance, all producers are required to submit an application and acreage report to establish their insurance guarantees and compute premium amounts, and all producers are required to submit a notice of loss and production information to determine the amount of an indemnity payment in the event of an insured cause of crop loss. Whether a producer has 10 acres or 1000 acres, there is no difference in the kind of information collected. To ensure crop insurance is available to small entities, the Federal Crop Insurance Act authorizes FCIC to waive collection of administrative fees from limited resource farmers. FCIC believes this waiver helps to ensure that small entities are given the same opportunities as large entities to manage their risks through the use of crop insurance. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605). Federal Assistance Program This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450. Executive Order 12372 This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983. Executive Order 12988 This proposed rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or to require the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought. Environmental Evaluation This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed. Background: On Thursday, November 16, 2006, FCIC published a notice of proposed rulemaking in the **Federal Register** at 71 FR 6016-6021 to add 7 CFR 457.168 Mustard crop insurance provisions. The public was afforded 60 days to submit written comments and opinions. The e-mail address listed on the proposed rule and the Federal eRulemaking Portal address were not operational during that time period, therefore, FCIC published a notice in the **Federal Register** at 71 FR 14828 on March 24, 2006, extending the comment period for an additional 30 days, until April 24, 2006. A total of 21 comments were received from 3 commenters. The commenters were an insurance services organization, one insurance provider, and one producer. The comments received and FCIC's responses are as follows: *Comment:* Two commenters have concerns whether a processor contract can be accepted by the insurance provider if the processor is located in Canada. The commenters asked whether it is the insurance provider's responsibility to perform the monetary conversion of the contract price from Canadian dollars to U.S. dollars. *Response:* A contract can be accepted if the processor is located in Canada. It would be preferable if the contract expressed the base contract price in U.S. dollars. However, if the base contract price is expressed in Canadian dollars the insurance provider must convert it to United States dollars based upon the monetary exchange rate on the date the contract was signed by the mustard producer. *Comment:* One commenter suggested adding the definition for “windrow” since windrow is used in the definition for swathed. *Response:* FCIC has added a definition for “windrow.” *Comment:* Two commenters expressed concerns with section 3(c) where it states “that for processor contracts that stipulate the amount of production to be delivered, the number of acres is determined by dividing the amount of production to be delivered by the approved yield.” The commenters questioned what happens if the producer's approved yield is so low that when you divide the amount of production to be delivered by the approved yield more acres are needed to be planted than were actually planted to produce the amount of production stated in the contract. *Response:* FCIC has removed language in section 3(c) and added a new section 3(d) and revised section 8(c) to explain how to determine the total production guarantee and insurable acreage. As added in section 3(d), the total production guarantee will be based on the lesser of the contracted acreage multiplied by the production guarantee per acre, the planted acreage multiplied by the production guarantee per acre, the total production stated in the processor contract, or, for acreage and production processor contracts, the contracted acres multiplied by the contracted production per acre. As revised in section 8(c), insured acreage for acreage and production based processor contracts is based on the lesser of the planted acres or the maximum acres stated in the processor contact. Insured acreage for production based processor contracts will be based on the lesser of the number of acres determined by dividing the production stated in the processor contract by the approved yield or the planted acres. These revisions will ensure that the policy does not provide over-insurance. *Comment:* One commenter suggested in section 3(c) that in the parenthetical phrase the term “stipulates” be changed to “stipulate.” *Response:* FCIC has revised the language in section 3(c) in response to other comments and the term “stipulates” is no longer used in section 3(c). *Comment:* One commenter expressed concern regarding the removal of the provision “to be processed into products for human consumption” in section 7(a)(2). *Response:* FCIC removed the language to allow maximum flexibility in providing coverage for mustard used for other uses. In addition, only mustard that is produced under a processor contract is insurable. Therefore, it is unlikely that the processor will contract for the mustard unless the processor has a use for it. *Comment:* Two commenters expressed concerns with the provisions in section 8(c) that indicate the maximum insurable acreage will be determined by the acreage amount stated in the processor contract(s), if applicable, The commenters asked what the maximum insurable acreage would be if the processor contract(s) do not state acreage amounts. *Response:* As stated above, FCIC has added language in section 8(c) explaining how to determine insurable acreage. For processor contracts that specify acreage only and processor contracts that are acreage and production based the insurable acreage will be the lesser of the planted acres or the acreage specified in the contract. For processor contracts that are production only based the insurable acreage will be the lesser of the number of acres determined by dividing the production stated in the processor contract by the approved yield or the planted acreage. *Comment:* One commenter recommended that section 10(b) be clarified as “Fire, due to natural causes” or “Fire, if caused by lighting” as is in the proposed revision to the Tobacco Crop Provisions. *Response:* Section 12 of the Basic Provisions states all specified causes of loss must be due to a naturally occurring event. Further, if the requirement for natural causes was only included with regard to fire, it may create the mistaken impression that fire is the only cause of action that must be from natural causes. Therefore, no change has been made. *Comment:* One commenter stated the provision in section 13(a)(1)(ii) that states “For any processor contract that stipulates the amount of production to be delivered, and notwithstanding the provisions of this section or any unit division provisions contained in the Basic Provisions or these Crop Provisions” should have been included in section 13(a)(2). *Response:* FCIC moved the provision to section 13(a)(2) accordingly. *Comment:* One commenter suggested FCIC add a hyphen between 650-pound production guarantee in Example #1 in section 13(b). *Response:* FCIC has made the correction accordingly. *Comment:* One commenter suggested FCIC change 13,000 pounds production guarantee to 13,000 pound production guarantee in the Example #1 in section 13(b). *Response:* FCIC has made the correction accordingly. *Comment:* One commenter suggested FCIC change the wording in the first sentence from “with 650 pound production guarantee” to “with a 650-pound production guarantee” in Example #2 in section 13(b). *Response:* FCIC has made the correction accordingly. *Comment:* One commenter suggested FCIC add a hyphen between 6,500 pound production guarantee in Example #2 in section 13(b). *Response:* FCIC has made the correction accordingly. *Comment:* One commenter suggested FCIC delete the space after the “$” sign in “$0.15” in Example #2 in section 13(b). *Response:* FCIC has made the correction accordingly. *Comment:* One commenter stated in section 13(b)(1) that “mustard type” does not need to be specified since type is defined in section 1. *Response:* FCIC has revised section 13(b)(1) accordingly. *Comment:* One commenter expressed concern regarding section 13(b)(1) stating that when the contract states the total production to be delivered with no reference to acres. *Response:* FCIC has added language in section 8(c) explaining how insurable acreage is determined. In addition, FCIC has added the cross reference to section 8(c) in section 13(b)(1) and changed the reference to “insurable acreage” to be consistent with section 8(c). *Comment:* One commenter suggests that the “and” at the end of section 13(c)(1)(iv)(B) should be moved to the end of section 13(c)(2). *Response:* FCIC has revised the provision accordingly. *Comment:* Two commenters expressed concern regarding section 13(c)(3). The commenters concern was with contracts that state the total production to be delivered with no reference to acres. The commenters asked if the insurance provider determines the insured has planted more acres than what is necessary to fulfill the contract does that production on that over planted acreage count at the time of loss, or are all the acres considered insured. *Response:* FCIC has added language in section 8(c) explaining how insurable acreage is determined. The insurance provider should make this determination before issuing the Schedule of Insurance to ensure that the premium and liability are correctly stated. *Comment:* One commenter expressed concern with the provisions in section 13(d)(2) that state “mustard production will be eligible for quality adjustment if.” The commenter asked if contracts are going to be honored from a processor in Canada and whether there is any concern on getting samples to determine the quality adjustment. *Response:* The quality adjustment can be done by a Canadian grader as long as U.S. grading standards are used, or the sample can be pulled and brought to a U.S. grading facility. No change has been made. *Comment:* One commenter suggested in section 13(d)(4) moving the phrase “if the quality adjustment factors are not contained in the Special Provisions” to the beginning of the parenthetical phrase. *Response:* FCIC has changed section 13(d)(4) accordingly. *Comment:* One commenter recommended eliminating the option to increase prevented planting coverage levels in section 15 Prevented Planting. *Response:* Since the recommended change was not proposed, no changes were required as a result of comforming amendments, and the public was not provided an opportunity to comment on the recommended change, the recommendation cannot be incorporated in the final rule. No change has been made. *Comment:* One commenter asked why mustard must be grown under contract. *Response:* There is a very limited market for mustard. Therefore, this requirement ensures there is a market for the mustard crop and that the market is not distorted by an over-production of mustard. List of Subjects in 7 CFR Part 457 Crop insurance, Mustard, Reporting and recordkeeping requirements. Final Rule Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation amends 7 CFR part 457 for the 2009 and succeeding crop years as follows: PART 457—COMMON CROP INSURANCE REGULATIONS 1. The authority citation for 7 CFR part 457 continues to read as follows: Authority: 7 U.S.C. 1506(l), 1506(p). 2. Section 457.168 is added to read as follows: § 457.168 Mustard crop insurance provisions. The Mustard Crop Insurance Provisions for the 2009 and succeeding crop years are as follows: FCIC policies: United States Department of Agriculture Federal Crop Insurance Corporation Reinsured policies: (Appropriate title for insurance provider) Both FCIC and reinsured policies: Mustard Crop Insurance Provisions. 1. Definitions *Base contract price.* The price per pound (U.S. dollars) stipulated in the processor contract (without regard to discounts or incentives) that will be used to determine your price election. *Harvest.* Combining or threshing for seed. A crop that is swathed prior to combining is not considered harvested. *Mustard.* A crop of the family *Cruciferae* , genus. *Planted acreage.* In addition to the definition contained in the Basic Provisions, mustard seed must be planted in rows. Acreage planted in any other manner will not be insurable unless otherwise provided by the Special Provisions, actuarial documents, or by written agreement. *Processor.* Any business enterprise regularly engaged in buying and processing mustard, that possesses all licenses and permits for processing mustard required by the State in which it operates, and that possesses facilities, or has contractual access to such facilities, with enough equipment to accept and process contracted mustard within a reasonable amount of time after harvest. *Processor contract.* A written agreement between the producer and a processor, containing at a minimum:

(a)The producer's commitment to plant and grow mustard of the types specified in the Special Provisions and to deliver the production to the processor;

(b)The processor's commitment to purchase all the production stated in the processor contract; and

(c)A base contract price (U.S. dollars). *Salvage price.* The cash price per pound (U.S. dollars) for mustard qualifying for quality adjustment in accordance with section 13 of these Crop Provisions. *Swathed.* Severance of the stem and seed pods from the ground and placing into windrows without removal of the seed from the pod. *Type.* A category of mustard identified as a type in the Special Provisions. *Windrow.* Mustard that is swathed and placed in a row. 2. Unit Division In addition to the requirements of section 34 of the Basic Provisions, optional units may also be established by type, if types are designated on the Special Provisions. 3. Insurance Guarantees, Coverage Levels, and Prices for Determining Indemnities

(a)In addition to the requirements of section 3 of the Basic Provisions, you may select only one base contract price percentage for all the mustard in the county insured under this policy unless the Special Provisions allow different base contract prices by type.

(b)If base contract prices are allowed by type, you can select one base contract price for each type designated in the Special Provisions. The base contract prices you choose must have the same percentage relationship to the base contract price (maximum price) offered for each type. For example, if you choose 100 percent of the maximum price for a specific type, you must also choose 100 percent of the maximum price for all other types.

(c)If there are multiple base contract prices within the same unit, each will be considered a separate price election that will be multiplied by the number of insurable acres under applicable processor contract. These amounts will be totaled to determine the premium, liability, and indemnity for the unit.

(d)To determine the total production guarantee, apply the lesser of the:

(1)Contracted acres multiplied by the production guarantee (per acre);

(2)Planted acres multiplied by the production guarantee (per acre);

(3)Total production stated in the contract; or

(4)For acreage and production contracts only, the contracted acres multiplied by the contracted production (per acre). 4. Contract Changes In accordance with section 4 of the Basic Provisions, the contract change date is November 30 preceding the cancellation date. 5. Cancellation and Termination Dates In accordance with section 2 of the Basic Provisions, the cancellation and termination dates are March 15. 6. Report of Acreage In addition to the provisions in section 6 of the Basic Provisions, you must provide a copy of all processor contracts to us on or before the acreage reporting date. 7. Insured Crop

(a)In accordance with section 8 of the Basic Provisions, the crop insured will be all mustard in the county for which a premium rate is provided by the actuarial table:

(1)In which you have a share;

(2)That is planted for harvest as seed;

(3)That is grown under, and in accordance with, the requirements of a processor contract executed on or before the acreage reporting date and is not excluded from the processor contract at any time during the crop year; and

(4)That is not, unless allowed by the Special Provisions or by written agreement:

(i)Interplanted with another crop; or

(ii)Planted into an established grass or legume; or

(iii)Planted following the harvest of any other crop in the same crop year.

(b)You will be considered to have a share in the insured crop if, under the processor contract, you retain control of the acres on which the mustard is grown, your income from the insured crop is dependent on the amount of production delivered, and the processor contract provides for delivery of the mustard under specified conditions and at a stipulated base contract price.

(c)A commercial mustard producer who is also a processor may establish an insurable interest if the following requirements are met:

(1)The producer must comply with these Crop Provisions;

(2)Prior to the sales closing date, the Board of Directors or officers of the processor must execute and adopt a resolution that contains the same terms as an acceptable processor contract. Such resolution will be considered a processor contract under this policy; and

(3)Our inspection reveals that the processing facilities comply with the definition of a processor contained in these Crop Provisions. 8. Insurable Acreage In addition to the provisions of section 9 of the Basic Provisions:

(a)Any acreage of the insured crop that is damaged before the final planting date, to the extent that a majority of producers in the area would not normally further care for the crop, must be replanted unless we agree that it is not practical to replant.

(b)We will not insure any acreage that does not meet the rotation requirements, if applicable, contained in the Special Provisions.

(c)Insurable acreage will be:

(1)For acreage only based processor contracts and acreage and production based processor contracts which specify a maximum number of acres, the lesser of:

(i)The planted acres; or

(ii)The maximum number of acres specified in the contract;

(2)For production only based processor contracts, the lesser of:

(i)The number of acres determined by dividing the production stated in the processor contract by the approved yield; or

(ii)The planted acres. 9. Insurance Period In accordance with the provisions of section 11 of the Basic Provisions, the end of the insurance period is October 31 of the calendar year in which the crop is normally harvested unless otherwise stated in the Special Provisions. 10. Causes of Loss In accordance with the provisions of section 12 of the Basic Provisions, insurance is provided only against the following causes of loss which occur during the insurance period:

(a)Adverse weather conditions;

(b)Fire;

(c)Insects, but not damage due to insufficient or improper application of pest control measures;

(d)Plant disease, but not damage due to insufficient or improper application of disease control measures;

(e)Wildlife;

(f)Earthquake;

(g)Volcanic eruption; and

(h)Failure of the irrigation water supply, if applicable, caused by a cause of loss specified in section 10(a) through

(g)that occurs during the insurance period. 11. Replanting Payment

(a)In accordance with section 13 of the Basic Provisions, a replanting payment is allowed if the insured crop is damaged by an insurable cause of loss to the extent that the remaining stand will not produce at least 90 percent of the production guarantee for the acreage, and it is practical to replant or we require you to replant in accordance with section 8(a).

(b)The maximum amount of the replanting payment per acre will be the lesser of 20 percent of the production guarantee (per acre) or 175 pounds, multiplied by the base contract price applicable to the acreage to be replanted, multiplied by your insured share.

(c)When the mustard is replanted using a practice that is uninsurable as an original planting, the liability for the unit will be reduced by the amount of the replanting payment that is attributable to your share. The premium amount will not be reduced. 12. Duties In The Event of Damage or Loss In accordance with the requirements of section 14 of the Basic Provisions, the representative samples of the unharvested crop that we may require must be at least 10 feet wide and extend the entire length of each field in the unit. The samples must not be harvested or destroyed until the earlier of our inspection or 15 days after harvest of the balance of the unit is completed. 13. Settlement of Claim

(a)We will determine your loss on a unit basis.

(1)In the event you are unable to provide separate acceptable production records:

(i)For any optional units, we will combine all optional units for which acceptable production records were not provided; or

(ii)For any basic units, we will allocate any commingled production to such units in proportion to our liability on the harvested acreage for the units.

(2)For any processor contract that stipulates only the amount of production to be delivered, and not withstanding the provisions of this section or any unit division provisions contained in the Basic Provisions, no indemnity will be paid for any loss of production on any unit if the insured produced a crop sufficient to fulfill the processor contract(s) forming the basis of the insurance guarantee

(b)In the event of loss or damage covered by this policy, we will settle your claim by:

(1)Multiplying the insurable acreage of each type, if applicable, determined in accordance with section 8(c), by its respective production guarantee (per acre);

(2)Multiplying each result in section 13(b)(1) by the respective base contract price for each type, if applicable;

(3)Totaling the results in section 13(b)(2);

(4)Multiplying the production to be counted for each type, if applicable (see section 13(c), by its respective base contract price (If you have multiple processor contracts with varying base contract prices within the same unit, we will value your production to count by using your highest base contract price first and will continue in decreasing order to your lowest base contract price based on the amount of production insured at each base contract price);

(5)Totaling the results in section 13(b)(4);

(6)Subtracting the total in section 13(b)(5) from the total in section 13(b)(3); and

(7)Multiplying the result in section 13(b)(6) by your share. Example # 1 (with one base contract price for the unit): You have 100 percent share in 20 acres of mustard in a unit with a 650-pound production guarantee (per acre) and a base contract price of $0.15 per pound. Due to insurable causes, you are only able to harvest 10,000 pounds and there is no appraised production. Your indemnity would be calculated as follows:

(1)20 acres × 650 pounds = 13,000 pound production guarantee;

(2)13,000 pounds × $0.15 base contract price = $1,950 value of guarantee;

(3)$1,950 total value of guarantee;

(4)10,000 pounds × $0.15 base contract price = $1,500 value of production to count;

(5)$1,500 total value of production to count;

(6)$1,950−$1,500 = $450 loss; and

(7)$450 × 100 percent = $450 indemnity payment. Example # 2 (with two base contract prices for the same unit): You have 100 percent share in 20 acres of mustard in a unit with a 650-pound production guarantee (per acre), 10 acres with a base contract price of $0.15 per pound, and 10 acres with a base contract price of $0.10 per pound. Due to insurable causes, you are only able to harvest 8,500 pounds and there is no appraised production. Your indemnity would be calculated as follows:

(1)10 acres × 650 pounds = 6,500-pound production guarantee × $0.15 base contract price = $975 value guarantee;

(2)10 acres × 650 pounds = 6,500-pound production guarantee × $0.10 base contract price = $650 value guarantee;

(3)$975 + $650 = $1,625 total value guarantee;

(4)6,500 pounds of production to count × $0.15 base contract price (higher base contract price) = $975 value of production to count;

(5)2,000 pounds of production to count × $0.10 base contract price (lower base contract price) = $200 value of production to count;

(6)$975 + $200 = $1,175 total value of production to count;

(7)$1,625 total value guarantee—$1,175 total value of production to count = $450 loss; and

(8)$450 × 100 percent = $450 indemnity payment.

(c)The total production to count (in pounds) from all insurable acreage in the unit will include:

(1)All appraised production as follows:

(i)Not less than the production guarantee (per acre) for acreage:

(A)That is abandoned;

(B)That is put to another use without our consent;

(C)That is damaged solely by uninsured causes; or

(D)For which you fail to provide acceptable production records;

(ii)Production lost due to uninsured causes;

(iii)Unharvested production (mature unharvested production may be adjusted for quality deficiencies and excess moisture in accordance with section 13(d)); and

(A)If you do not elect to continue to care for the crop, we may give you consent to put the acreage to another use if you agree to leave intact, and provide sufficient care for, representative samples of the crop in locations acceptable to us (The amount of production to count for such acreage will be based on the harvested production or appraisals from the samples at the time harvest should have occurred. If you do not leave the required samples intact, or you fail to provide sufficient care for the samples, our appraisal made prior to giving you consent to put the acreage to another use will be used to determine the amount of production to count.); or

(2)All harvested production from the insurable acreage; and

(3)Any other uninsurable mustard production that is delivered to fulfill the processor contract.

(d)Mature mustard may be adjusted for excess moisture and quality deficiencies. If moisture adjustment is applicable, it will be made prior to any adjustment for quality.

(1)Mustard production will be reduced by 0.12 percent for each 0.1 percentage point of moisture in excess of 10.0 percent. We may obtain samples of the production to determine the moisture content.

(2)Mustard production will be eligible for quality adjustment only if:

(i)Deficiencies in quality result in the mustard not meeting the requirements for acceptance under the processor contract because of damaged seeds (excluding heat damage), or a musty, sour, or commercially objectionable foreign odor; or

(ii)Substances or conditions are present that are identified by the Food and Drug Administration or other public health organizations of the United States as being injurious to human or animal health.

(3)Quality will be a factor in determining your loss in mustard production only if:

(i)The deficiencies, substances, or conditions specified in section 13(d)(2) resulted from a cause of loss specified in section 10 that occurs within the insurance period; and

(ii)The deficiencies, substances, or conditions specified in section 13(d)(2) result in a salvage price less than the base contract price; and

(iii)All determinations of these deficiencies, substances, or conditions specified in section 13(d)(2) are made using samples of the production obtained by us, by the processor identified in the processor contract for the insured acreage, or by a disinterested third party approved by us; and

(iv)The samples are analyzed by a grader in accordance with the Directive for Inspection of Mustard Seed, provided by the Federal Grain Inspection Service or such other directive or standards that may be issued by FCIC.

(4)Mustard production that is eligible for quality adjustment, as specified in sections 13(d)(2) and (3), will be reduced by multiplying the quality adjustment factors contained in the Special Provisions (if quality adjustment factors are not contained in the Special Provisions, the quality adjustment factor is determined by dividing the salvage price by the base contract price (not to exceed 1.000)) by the number of pounds remaining after any reduction due to excessive moisture (the moisture-adjusted gross pounds) of the damaged or conditioned production.

(i)The salvage price will be determined at the earlier of the date such quality adjusted production is sold or the date of final inspection for the unit subject to the following conditions:

(A)Discounts used to establish the salvage price will be limited to those that are usual, customary, and reasonable.

(B)The salvage price will not include any reductions for:

(1)Moisture content;

(2)Damage due to uninsured causes;

(3)Drying, handling, processing, or any other costs associated with normal harvesting, handling, and marketing of the mustard; except, if the salvage price can be increased by conditioning, we may reduce the salvage price, after the production has been conditioned, by the cost of conditioning but not lower than the salvage price before conditioning; and

(i)We may obtain salvage prices from any buyer of our choice. If we obtain salvage prices from one or more buyers located outside your local market area, we will reduce such price by the additional costs required to deliver the mustard to those buyers.

(ii)Factors not associated with grading under the Directive for Inspection of Mustard Seed, provided by the Federal Grain Inspection Service or such other directive or standards that may be issued by FCIC including, but not limited to, protein and oil will not be considered.

(e)Any production harvested from plants growing in the insured crop may be counted as production of the insured crop on an unadjusted weight basis. 14. Late Planting In lieu of section 16(a) of the Basic Provisions, the production guarantee (per acre) for each acre planted to the insured crop during the late planting period will be reduced by 1 percent per day for each day planted after the final planting date, unless otherwise specified in the Special Provisions. 15. Prevented Planting In addition to the provisions contained in section 17 of the Basic Provisions, your prevented planting coverage will be 60 percent of your production guarantee (per acre) for timely planted acreage. When a portion of the insurable acreage within the unit is prevented from being planted, and there is more than one base contract price applicable to acreage in the unit, the lowest base contract price will be used in calculating any prevented planting payment. If you have limited or additional levels of coverage, as specified in 7 CFR part 400, subpart T, and pay an additional premium, you may increase your prevented planting coverage to the levels specified in the actuarial documents. Signed in Washington, DC, on February 20, 2008. Eldon Gould, Manager, Federal Crop Insurance Corporation. [FR Doc. E8-3963 Filed 2-29-08; 8:45 am] BILLING CODE 3410-08-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 930 [Docket No. AMS-FV-07-0119; FV07-930-3 FR] Tart Cherries Grown in the States of Michigan, et al.; Final Free and Restricted Percentages for the 2007-2008 Crop Year for Tart Cherries AGENCY: Agricultural Marketing Service, USDA. ACTION: Final rule. SUMMARY: This rule establishes final free and restricted percentages for 2007-2008 crop year tart cherries covered under the Federal marketing order regulating tart cherries grown in seven states (order). The percentages are 57 percent free and 43 percent restricted and will establish the proportion of cherries from the 2007 crop which may be handled in commercial outlets. The percentages are intended to stabilize supplies and prices, and strengthen market conditions. The percentages were recommended by the Cherry Industry Administrative Board (Board), the body that locally administers the order. The order regulates the handling of tart cherries grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. DATES: *Effective Date:* March 4, 2008. This final rule applies to all 2007-2008 crop year restricted cherries until they are properly disposed of in accordance with marketing order requirements. FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G. Johnson, DC Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, Unit 155, 4700 River Road, Riverdale, MD 20737; telephone:

(301)734-5243, Fax:

(301)734-5275; e-mail *Patricia.Petrella@usda.gov* or *Kenneth.Johnson@usda.gov.* Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; telephone:

(202)720-2491, Fax:

(202)720-8938, or e-mail: *Jay.Guerber@usda.gov.* SUPPLEMENTARY INFORMATION: This final rule is issued under Marketing Agreement and Order No. 930 (7 CFR part 930), regulating the handling of tart cherries produced in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Department of Agriculture (Department) is issuing this rule in conformance with Executive Order 12866. This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order provisions now in effect, final free and restricted percentages may be established for tart cherries handled by handlers during the crop year. This final rule establishes final free and restricted percentages for tart cherries for the 2007-2008 crop year, beginning July 1, 2007, through June 30, 2008. This final rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with the Secretary a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempt therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction in equity to review the Secretary's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. The order prescribes procedures for computing an optimum supply and preliminary and final percentages that establish the amount of tart cherries that can be marketed throughout the season. The regulations apply to all handlers of tart cherries that are in the regulated districts within the production area. Tart cherries in the free percentage category may be shipped immediately to any market, while restricted percentage tart cherries must be held by handlers in a primary or secondary reserve, or be diverted in accordance with § 930.59 of the order and § 930.159 of the regulations, or used for exempt purposes (to obtain diversion credit) under § 930.62 of the order and § 930.162 of the regulations. The regulated districts for the 2007-2008 season are: District one—Northern Michigan; District two—Central Michigan; District four—New York; District seven—Utah; and District eight—Washington. Districts three, five, and six (Southwest Michigan, Oregon, and Pennsylvania, respectively) will not be regulated for the 2007-2008 season. The order prescribes under § 930.52 that those districts to be regulated shall be those districts in which the average annual production of cherries over the prior three years has exceeded six million pounds. A district not meeting the six million-pound requirement shall not be regulated in such crop year. Because this requirement was not met in the districts of Southwest Michigan, Oregon, and Pennsylvania, handlers in those districts would not be subject to volume regulation during the 2007-2008 crop year. Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. Demand for tart cherries and tart cherry products tend to be relatively stable from year to year. The supply of tart cherries, by contrast, varies greatly from crop year to crop year. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the United States. In addition, since tart cherries are processed either into cans or frozen, they can be stored and carried over from crop year to crop year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely balanced. The primary purpose of setting free and restricted percentages is to balance supply with demand and reduce large surpluses that may occur. Section 930.50(a) of the order prescribes procedures for computing an optimum supply for each crop year. The Board must meet on or about July 1 of each crop year, to review sales data, inventory data, current crop forecasts and market conditions. The optimum supply volume is calculated as 100 percent of the average sales of the prior three years to which is added a desirable carryout inventory not to exceed 20 million pounds or such other amount as may be established with the approval of the Secretary. The optimum supply represents the desirable volume of tart cherries that should be available for sale in the coming crop year. The order also provides that on or about July 1 of each crop year, the Board is required to establish preliminary free and restricted percentages. These percentages are computed by deducting the actual carryin inventory from the optimum supply figure (adjusted to raw product equivalent—the actual weight of cherries handled to process into cherry products) and subtracting that figure from the current year's USDA crop forecast or by an average of such other crop estimates the Board votes to use. If the resulting number is positive, this represents the estimated over-production, which would be the restricted tonnage. The restricted tonnage is then divided by the sum of the crop forecast(s) for the regulated districts to obtain percentages for the regulated districts. The Board is required to establish a preliminary restricted percentage equal to the quotient, rounded to the nearest whole number, with the complement being the preliminary free tonnage percentage. If the tonnage requirements for the year are more than the USDA crop forecast, the Board is required to establish a preliminary free tonnage percentage of 100 percent and a preliminary restricted percentage of zero. The Board is required to announce the preliminary percentages in accordance with paragraph

(h)of § 930.50. The Board met on June 21, 2007, and computed, for the 2007-2008 crop year, an optimum supply of 175 million pounds. The Board recommended that the desirable carryout figure be zero pounds. Desirable carryout is the amount of fruit required to be carried into the succeeding crop year and is set by the Board after considering market circumstances and needs. This figure can range from zero to a maximum of 20 million pounds. The Board calculated preliminary free and restricted percentages as follows: The USDA estimate of the crop for the entire production area was 294 million pounds; a 42 million pound carryin (based on Board estimates) was subtracted from the optimum supply of 175 million pounds which resulted in the 2007-2008 poundage requirements (adjusted optimum supply) of 133 million pounds. The carryin figure reflects the amount of cherries that handlers actually had in inventory at the beginning of the 2007-2008 crop year. Subtracting the adjusted optimum supply of 133 million pounds from the USDA crop estimate (294 million pounds) leaves a surplus of 161 million pounds of tart cherries. Subtracting an additional 12 million pounds for USDA purchases of tart cherry products from the 2006-07 crop but not delivered until 2007 results in a final surplus of 149 million pounds of tart cherries. The surplus (149 million pounds) was divided by the production in the regulated districts (289 million pounds) and resulted in a restricted percentage of 52 percent for the 2007-2008 crop year. The free percentage was 48 percent (100 percent minus 52 percent). The Board established these percentages and announced them to the industry as required by the order. The preliminary percentages were based on the USDA production estimate and the following supply and demand information available at the June meeting for the 2007-2008 year: Millions of pounds Optimum Supply Formula:

(1)Average sales of the prior three years 175

(2)Plus desirable carryout 0

(3)Optimum supply calculated by the Board at the June meeting 175 Preliminary Percentages:

(4)USDA crop estimate 294

(5)Carryin held by handlers as of July 1, 2007 42

(6)Adjusted optimum supply for current crop year (Item 3 minus Item 5) 133

(7)Surplus (Item 4 minus Item 6) 161

(8)Subtract pounds for USDA purchases 12

(9)Surplus (Item 7 minus Item 8) 149

(10)USDA crop estimate for regulated districts 289 Percentages Free Restricted

(11)Preliminary percentages (Item 9 divided by Item 10 × 100 equals restricted percentage; 100 minus restricted percentage equals free percentage 48 52 Between July 1 and September 15 of each crop year, the Board may modify the preliminary free and restricted percentages by announcing interim free and restricted percentages to adjust to the actual pack occurring in the industry. The Secretary establishes final free and restricted percentages through the informal rulemaking process. These percentages will make available the tart cherries necessary to achieve the optimum supply figure calculated by the Board. The difference between any final free percentage designated by the Secretary and 100 percent is the final restricted percentage. The Board met on September 6, 2007, to recommend final free and restricted percentages. The actual production reported by the Board was 248 million pounds, which is a 46 million pound decrease from the USDA crop estimate of 294 million pounds. A 39 million pound carryin (based on handler reports) was subtracted from the optimum supply of 174 million pounds, yielding an adjusted optimum supply for the 2007-2008 crop year of 135 million pounds. Subtracting the adjusted optimum supply of 135 million pounds from the USDA crop estimate (248 million pounds) and subtracting 12 million pounds for USDA purchases of tart cherry products from the 2006-07 crop but not delivered until 2007 results in a surplus of 101 million pounds of tart cherries. The surplus was divided by the production in the regulated districts (236 million pounds) and resulted in a restricted percentage of 43 percent for the 2007-2008 crop year. The free percentage was 57 percent (100 percent minus 43 percent). The final percentages are based on the Board's reported production figures and the following supply and demand information available in September for the 2007-2008 crop year: Millions of pounds Optimum Supply Formula:

(1)Average sales of the prior three years 174

(2)Plus desirable carryout 0

(3)Optimum supply calculated by the Board 174 Final Percentages:

(4)Board reported production 248

(5)Plus carryin held by handlers as of July 1, 2007 39

(6)Subtract USDA committed sales 12

(7)Tonnage available for current crop year 275

(8)Surplus (item 7 minus item 3) 101

(9)Production in regulated districts 236 Percentages Free Restricted

(10)Final Percentages (item 8 divided by item 9 × 100 equals restricted percentage; 100 minus restricted percentage equals free percentage) 57 43 USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. This goal will be met by the establishment of a final percentage which releases 100 percent of the optimum supply and the additional release of tart cherries provided under § 930.50(g). This release of tonnage, equal to 10 percent of the average sales of the prior three years sales, is made available to handlers each season. The Board recommended that such release should be made available to handlers the first week of December and the first week of May. Handlers can decide how much of the 10 percent release they would like to receive on the December and May release dates. Once released, such cherries are released for free use by such handler. Approximately 17 million pounds will be made available to handlers this season in accordance with Department Guidelines. This release will be made available to every handler and released to such handler in proportion to the handler's percentage of the total regulated crop handled. If a handler does not take his/her proportionate amount, such amount remains in the inventory reserve. Final Regulatory Flexibility Analysis Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service

(AMS)has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility. There are approximately 40 handlers of tart cherries who are subject to regulation under the tart cherry marketing order and approximately 900 producers of tart cherries in the regulated area. Small agricultural service firms, which includes handlers, have been defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $6,500,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. A majority of the producers and handlers are considered small entities under SBA's standards. The principal demand for tart cherries is in the form of processed products. Tart cherries are dried, frozen, canned, juiced, and pureed. During the period 2002/03 through 2006/07, approximately 97.9 percent of the U.S. tart cherry crop, or 202.9 million pounds, was processed annually. Of the 202.9 million pounds of tart cherries processed, 63.5 percent was frozen, 23.8 percent was canned, and 12.7 percent was utilized for juice and other products. Based on National Agricultural Statistics Service data, acreage in the United States devoted to tart cherry production has been trending downward. Bearing acreage has declined from a high of 50,050 acres in 1987/88 to 35,800 acres in 2006/07. This represents a 29 percent decrease in total bearing acres. Michigan leads the nation in tart cherry acreage with 70 percent of the total and produces about 75 percent of the U.S. tart cherry crop each year. The 2007/08 crop is moderate in size at 248 million pounds. The largest crop occurred in 1995 with production in the regulated districts reaching a record 395.6 million pounds. The price per pound received by tart cherry growers ranged from a low of 5.6 cents in 1995 to a high of 46.4 cents in 1991. These problems of wide supply and price fluctuations in the tart cherry industry are national in scope and impact. Growers testified during the order promulgation process that the prices they received often did not come close to covering the costs of production. The industry demonstrated a need for an order during the promulgation process of the marketing order because large variations in annual tart cherry supplies tend to lead to fluctuations in prices and disorderly marketing. As a result of these fluctuations in supply and price, growers realize less income. The industry chose a volume control marketing order to even out these wide variations in supply and improve returns to growers. During the promulgation process, proponents testified that small growers and processors would have the most to gain from implementation of a marketing order because many such growers and handlers had been going out of business due to low tart cherry prices. They also testified that, since an order would help increase grower returns, this should increase the buffer between business success and failure because small growers and handlers tend to be less capitalized than larger growers and handlers. Aggregate demand for tart cherries and tart cherry products tends to be relatively stable from year-to-year. Similarly, prices at the retail level show minimal variation. Consumer prices in grocery stores, and particularly in food service markets, largely do not reflect fluctuations in cherry supplies. Retail demand is assumed to be highly inelastic which indicates that price reductions do not result in large increases in the quantity demanded. Most tart cherries are sold to food service outlets and to consumers as pie filling; frozen cherries are sold as an ingredient to manufacturers of pies and cherry desserts. Juice and dried cherries are expanding market outlets for tart cherries. Demand for tart cherries at the farm level is derived from the demand for tart cherry products at retail. In general, the farm-level demand for a commodity consists of the demand at retail or food service outlets minus per-unit processing and distribution costs incurred in transforming the raw farm commodity into a product available to consumers. These costs comprise what is known as the “marketing margin.” The supply of tart cherries, by contrast, varies greatly. The magnitude of annual fluctuations in tart cherry supplies is one of the most pronounced for any agricultural commodity in the United States. In addition, since tart cherries are processed either into cans or frozen, they can be stored and carried over from year-to-year. This creates substantial coordination and marketing problems. The supply and demand for tart cherries is rarely in equilibrium. As a result, grower prices fluctuate widely, reflecting the large swings in annual supplies. In an effort to stabilize prices and supplies, the tart cherry industry uses the volume control mechanisms under the authority of the Federal marketing order. This authority allows the industry to set free and restricted percentages. These restricted percentages are only applied to states or districts with a 3-year average of production greater than six million pounds, and to states or districts in which the production is 50 percent or more of the previous 5-year processed production average. The primary purpose of setting restricted percentages is an attempt to bring supply and demand into balance. If the primary market is over-supplied with cherries, grower prices decline substantially. The tart cherry sector uses an industry-wide storage program as a supplemental coordinating mechanism under the Federal marketing order. The primary purpose of the storage program is to warehouse supplies in large crop years in order to supplement supplies in short crop years. The storage approach is feasible because the increase in price—when moving from a large crop to a short crop year—more than offsets the costs for storage, interest, and handling of the stored cherries. The price that growers receive for their crop is largely determined by the total production volume and carry-in inventories. The Federal marketing order permits the industry to exercise supply control provisions, which allow for the establishment of free and restricted percentages for the primary market, and a storage program. The establishment of restricted percentages impacts the production to be marketed in the primary market, while the storage program has an impact on the volume of unsold inventories. The volume control mechanism used by the cherry industry results in decreased shipments to primary markets. Without volume control the primary markets (domestic) would likely be over-supplied, resulting in lower grower prices. To assess the impact that volume control has on the prices growers receive for their product, an econometric model has been developed. The econometric model provides a way to see what impacts volume control may have on grower prices. The two districts in Michigan, along with the districts in Utah, New York, Washington, and Wisconsin are the restricted areas for this crop year and their combined total production is 236 million pounds. A 43 percent restriction means 186 million pounds is available to be shipped to primary markets. In addition, USDA requires a 10 percent release from reserves as a market growth factor. This results in an additional 17 million pounds being available for the primary market. The 135 million pounds from the two regulated districts in Michigan, Utah, Washington, New York, and Wisconsin, the 12.3 million pounds from the other producing states, the 17 million pound release, and the 39 million pound carry-in inventory gives a total of 203 million pounds being available for the primary markets. The econometric model is used to estimate grower prices with and without regulation. With the volume controls, grower prices are estimated to be approximately $0.12 higher than without volume controls. The use of volume controls is estimated to have a positive impact on growers' total revenues. With regulation, growers' total revenues from processed cherries are estimated to be $10.1 million higher than without restrictions. The without restrictions scenario assumes that all tart cherries produced would be delivered to processors for payments. It is concluded that the 43 percent volume control would not unduly burden producers, particularly smaller growers. The 43 percent restriction would be applied to the growers in the two districts in Michigan, New York, Utah, Washington, and Wisconsin. The growers in the other two states and the one district in Michigan covered under the marketing order will benefit from this restriction. The use of volume controls is believed to have little or no effect on consumer prices and will not result in fewer retail sales or sales to food service outlets. Without the use of volume controls, the industry could be expected to start to build large amounts of unwanted inventories. These inventories have a depressing effect on grower prices. The econometric model shows for every 1 million-pound increase in carryin inventories, a decrease in grower prices of $0.0033 per pound occurs. The use of volume controls allows the industry to supply the primary markets while avoiding the disastrous results of over-supplying these markets. In addition, through volume control, the industry has an additional supply of cherries that can be used to develop secondary markets such as exports and the development of new products. The use of reserve cherries in the production shortened 2002-2003 crop year proved to be very useful and beneficial to growers and packers. In discussing the possibility of marketing percentages for the 2007-2008 crop year, the Board considered the following factors contained in the marketing policy:

(1)The estimated total production of tart cherries;

(2)the estimated size of the crop to be handled;

(3)the expected general quality of such cherry production;

(4)the expected carryover as of July 1 of canned and frozen cherries and other cherry products;

(5)the expected demand conditions for cherries in different market segments;

(6)supplies of competing commodities;

(7)an analysis of economic factors having a bearing on the marketing of cherries;

(8)the estimated tonnage held by handlers in primary or secondary inventory reserves; and

(9)any estimated release of primary or secondary inventory reserve cherries during the crop year. The Board's review of the factors resulted in the computation and announcement in September 2007 of the free and restricted percentages established by this rule (57 percent free and 43 percent restricted). One alternative to this action would be not to have volume regulation this season. Board members stated that no volume regulation would be detrimental to the tart cherry industry due to the size of the 2007-2008 crop. Returns to growers would not cover their costs of production for this season which might cause some to go out of business. As mentioned earlier, the Department's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. The quantity available under this rule is 110 percent of the quantity shipped in the prior three years. The free and restricted percentages established by this rule release the optimum supply and apply uniformly to all regulated handlers in the industry, regardless of size. There are no known additional costs incurred by small handlers that are not incurred by large handlers. The stabilizing effects of the percentages impact all handlers positively by helping them maintain and expand markets, despite seasonal supply fluctuations. Likewise, price stability positively impacts all producers by allowing them to better anticipate the revenues their tart cherries will generate. While the benefits resulting from this rulemaking are difficult to quantify, the stabilizing effects of the volume regulations impact both small and large handlers positively by helping them maintain markets even though tart cherry supplies fluctuate widely from season to season. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this regulation. In addition, the Board's meeting was widely publicized throughout the tart cherry industry and all interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the September 6, 2007, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses. In compliance with Office of Management and Budget

(OMB)regulations (5 CFR part 1320) which implement the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the information collection and recordkeeping requirements under the tart cherry marketing order have been previously approved by OMB and assigned OMB Number 0581-0177, Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin. Reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. As with other, similar marketing order programs, reports and forms are periodically studied to reduce or eliminate duplicate information collection burdens by industry and public sector agencies. This rule does not change those requirements. AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services and for other purposes. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: *http://www.ams.usda.gov/fv/moab.html.* Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section. A proposed rule concerning this action was published in the **Federal Register** on December 11, 2007 (72 FR 70240). Copies of the rule were mailed or sent via facsimile to all Board members and tart cherry handlers. Finally, the rule was made available through the Internet by USDA and the Office of the Federal Register. A 30-day comment period ending on January 10, 2008, was provided to allow interested persons to respond to the proposal. No comments were received. After consideration of all relevant matter presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act. It is further found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the **Federal Register** (5 U.S.C. 553) because handlers are already shipping tart cherries from the 2007-2008 crop and handlers need to be aware of this action as soon as possible. Further, handlers are aware of this rule, which was recommended at a public meeting. Also, a 30-day comment period was provided for in the proposed rule and no comments were received. List of Subjects in 7 CFR Part 930 Marketing agreements, Reporting and recordkeeping requirements, Tart cherries. For the reasons set forth in the preamble, 7 CFR part 930 is amended as follows: PART 930—TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK, PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN 1. The authority citation for 7 CFR part 930 continues to read as follows: Authority: 7 U.S.C. 601-674. 2. Section 930.256 is added to read as follows: Note: This section will not appear in the Annual Code of Federal Regulations. § 930.256 Final free and restricted percentages for the 2007-2008 crop year. The final percentages for tart cherries handled by handlers during the crop year beginning on July 1, 2007, which shall be free and restricted, respectively, are designated as follows: Free percentage, 57 percent and restricted percentage, 43 percent. Dated: February 27, 2008. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E8-4008 Filed 2-29-08; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 984 [Docket No. AO-192-A7; AMS-FV-07-0004; FV06-984-1] Walnuts Grown in California; Order Amending Marketing Order and Agreement No. 984 AGENCY: Agricultural Marketing Service, USDA. ACTION: Final rule. SUMMARY: This rule amends the marketing order for walnuts grown in California. The amendments were proposed by the Walnut Marketing Board (Board), which is responsible for local administration of the order. The amendments will: Change the marketing year; include “pack” as a handler function; restructure the Board and revise nomination procedures; rename the Board and add authority to change Board composition; modify Board meeting and voting procedures; add authority for marketing promotion and paid advertising; add authority to accept voluntary financial contributions and to carry over excess assessment funds; broaden the scope of the quality control provisions and add the authority to recommend different regulations for different market destinations; add authority for the Board to appoint more than one inspection service; replace outdated order language with current industry terminology; and other related amendments. The Department of Agriculture

(USDA)proposed three additional amendments: To establish tenure limitations for Board members, to require that continuance referenda be conducted on a periodic basis to ascertain producer support for the order, and to make any necessary conforming changes. With the exception of the amendment to establish tenure limitations, all of the amendments were favored by walnut growers in a mail referendum, held August 1 through 17, 2007. The proposed amendments are intended to improve the operation and functioning of the marketing order program. DATES: This rule is effective April 2, 2008, except for amendments to §§ 984.7, 984.13, 984.14, 984.15, 984.21, 984.22, 984.42, 984.46, 984.48, 984.50, 984.51, 984.52, 984.59, 984.67, 984.69, 984.70, 984.71, 984.73 and 984.89, which are effective September 1, 2008. FOR FURTHER INFORMATION CONTACT: Melissa Schmaedick, Marketing Order Administration Branch, Fruit and Vegetable Programs, Agricultural Marketing Service, USDA, Northwest Marketing Field Office, 1220 S.W. Third Avenue, Room 385, Portland, Oregon 97204; telephone:

(503)326-2724, Fax:

(503)326-7440, or e-mail: *Melissa.Schmaedick@usda.gov.* Small businesses may request information on this proceeding by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; telephone:

(202)720-2491, fax:

(202)720-8938. SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice of Hearing issued on April 18, 2006, and published in the April 24, 2006, issue of the **Federal Register** (71 FR 20902); a Recommended Decision issued on March 19, 2007, and published in the March 27, 2007, issue of the **Federal Register** (72 FR 14368); and Secretary's Decision and Referendum Order issued on July 9, 2007, and published in the July 13, 2007 issue of the **Federal Register** (72 FR 38498). This action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and is therefore excluded from the requirements of Executive Order 12866. Preliminary Statement This final rule was formulated on the record of a public hearing held on May 17 and 18, 2006, in Modesto, California. Notice of this hearing was issued April 18, 2006 and published in the **Federal Register** on April 24, 2006 (71 FR 420902). The hearing was held to consider the proposed amendment of Marketing Order 984, hereinafter referred to as the “order.” The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et seq.), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900). The notice of hearing contained order changes proposed by the Walnut Marketing Board (Board), which is responsible for local administration of the order, and by the Agricultural Marketing Service (AMS). Upon the basis of evidence introduced at the hearing and the record thereof, the Administrator of AMS on March 19, 2007, filed with the Hearing Clerk, U.S. Department of Agriculture, a Recommended Decision and Opportunity to File Written Exceptions thereto by April 16, 2007. Fifteen exceptions were filed during the exception period. A Secretary's Decision and Referendum Order was issued on July 9, 2007, directing that a referendum be conducted during the period August 1 through 17, 2007, among walnut growers to determine whether they favored the proposed amendments to the order. To become effective, the amendments had to be approved by at least two-thirds of those producers voting or by voters representing at least two-thirds of the volume of walnuts represented by voters voting in the referendum. Voters voting in the referendum favored all but one of the proposed amendments. The amendments favored by voters and included in this order will: 1. Change the marketing year from August 1 through July 31 to September 1 through August 31. This will amend § 984.7, Marketing year, and will result in conforming changes being made to § 984.36, Term of office, and § 984.48, Marketing estimates and recommendations. 2. Specify that the act of packing walnuts is considered a handling function. This will amend § 984.13, To handle, as well as clarify the definition of “pack” in § 984.15 by including the term “shell” as a function of “pack.” 3.

(a)Amend all parts of the order that refer to cooperative seats on the Board, redistribute member seats among districts, and provide designated seats for a handler handling 35 percent or more of production, if such handler exists. This will amend § 984.35, Walnut Marketing Board, and § 984.14, Handler. 3.

(b)Amend the Board member nomination process to reflect proposed changes in the Board structure, as outlined in 3(a). This will amend § 984.37, Nominations, and § 984.40, Alternate. 4. Require Board nominees to submit a written qualification and acceptance statement prior to selection by USDA. This will amend § 984.39, Qualify by acceptance. 5. Change the name of the Walnut Marketing Board to the California Walnut Board. This will amend § 984.6, Board, and § 984.35, Walnut Marketing Board. 6. Add authority to reestablish districts, reapportion members among districts, and revise groups eligible for representation on the Board. This will add a new paragraph

(d)to § 984.35, Walnut Marketing Board. 7. Add percentage requirements to Board quorum and voting requirements, add authority for the Board to vote by “any other means of communication” (including facsimile) and add authority for Board meetings to be held by telephone or by “any other means of communication”, providing that all votes cast at such meetings shall be confirmed in writing. This will amend § 984.45, Procedure, and will result in a conforming change in § 984.48 (a), Marketing estimates and recommendations. 8. Add authority to carry over excess assessment funds. This will amend § 984.69, Assessments. 9. Add authority to accept voluntary financial contributions. This will add a new § 984.70, Contributions. 10. Clarify that members and alternate members may be reimbursed for expenses incurred while performing their duties and that reimbursement includes per diem. This will amend § 984.42, Expenses. 11. Add authority for the Board to appoint more than one inspection service as long as the functions performed by each service are separate and do not duplicate each other. This will amend § 984.51, Inspection and certification of inshell and shelled walnuts. 12.

(a)Broaden the scope of the quality control provisions and by adding authority to recommend different regulations for different market destinations. This will amend § 984.50, Grade and size regulations. 12.

(b)Add authority that would allow for shelled walnuts to be inspected after having been sliced, chopped, ground, or in any other manner changed from shelled walnuts, if regulations for such walnuts are in effect. This will amend § 984.52, Processing of shelled walnuts. 13. Add authority for marketing promotion and paid advertising. This will amend § 984.46, Research and development. 14. Replace the terms “carryover” with “inventory,” and “mammoth” with “jumbo,” to reflect current day industry practices. This will amend § 984.21, Handler inventory, and § 984.67, Exemption, and will also result in conforming changes being made to § 984.48, Marketing estimates and recommendations, and § 984.71, Reports of handler carryover. 15.

(a)Clarify and simplify the interhandler transfer provision, and add authority for the Board to recommend to USDA regulations, including necessary reports, for administrative oversight of such transfers. This will amend § 984.59, Interhandler transfers. 15.

(b)Clarify that the Board may require reports from handlers or packers that place California walnuts into the stream of commerce. This will amend § 984.73, Reports of walnut receipts. 16. Update and simplify the language in § 984.22, Trade demand, to state “United States and its territories,” rather than name “Puerto Rico” and “The Canal Zone”. 17. Add language to the order that would acknowledge that the Board may deliberate, consult, cooperate, and exchange information with the California Walnut Commission. Any information sharing would be kept confidential. This will add a new § 984.91, Relationship with the California Walnut Commission. 18. Require that continuance referenda be conducted on a periodic basis to ascertain industry support for the order and add more flexibility in the termination provisions. This will amend § 984.89, Effective time and termination. The USDA proposal to authorize limitations on tenure failed to obtain the requisite number of votes needed, in number or in volume, to pass. Conforming changes were made to the extent necessary. The amended marketing agreement was subsequently mailed to all walnut handlers in the production area for their approval. The marketing agreement was not approved by handlers representing at least 50 percent of the volume of walnuts handled by all handlers during the representative period of August 1, 2006, through July 31, 2007. Small Business Consideration Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service

(a)Land and trees, $678 (28 percent),

(b)cultural costs, $667 (27 percent),

(c)harvest, $538 (22 percent),

(d)equipment and buildings, $302 (12%), and

(e)cash overhead, $275 (11 percent). At an average grower price in recent years of $0.62 per pound, a grower would need a yield of 2 tons per acre to break even, according to the study. The breakeven price at the State average yield of 1.5 tons per acre is about $0.70 per pound, which is above the actual price received in most recent years, but equal to the 2004 average price received by growers. Individual grower costs can vary considerably due to such variables as horticultural practices and varieties grown, and also due to orchard location and year of acquisition, and water availability and cost. Although a majority of producers are considered small business entities, record evidence also indicates that producer revenue has increased over time. The National Agricultural Statistical Service

(NASS)crop value estimate for 2004, $451.75 million, was 38 percent higher than in 1995, and was the sixth successive yearly increase. Average revenue per acre in 2004 reached a record $2,082. Record evidence also indicates that acreage and production are trending upward. Production did not exceed 300,000 tons until 2001, but has exceeded that level for 4 out of the last 5 years. Witnesses stated that the five-year average production for 1996-2000 was 244,000 tons, compared to the five-year average production (2001-2005), which was 318,600 inshell tons. According to the hearing record, a number of factors have contributed to increased production in recent years. New acres have been planted at a rate of three to five thousand acres per year, some of which are new varieties with higher yields. Witnesses explained that older varieties may yield 1,500 to 3,000 pounds per acre, due to both planting patterns and the typical yield of the variety. New varieties, such as the Chandler, will yield up to 6,000 pounds per acre. Newer plantings have led to a reduction in the cyclical peaks and valleys associated with the alternate-bearing characteristic of tree nuts. This, in turn, has facilitated better inventory management and has made the walnut industry a more reliable ingredient supplier to the food-processing industry. According to the hearing record, the growing season commences in March of each year with harvest occurring between September and November, depending upon the variety. Inshell California walnuts are a seasonal item with 95 percent of the volume shipped between the months of September and December. This represents roughly 25 percent of the industry's production. Inshell walnuts are marketed primarily as a winter holiday food. According to the hearing record, the purchase of significant quantities of inshell walnuts occurs due to the tradition in many markets of displaying them with other inshell nuts as part of winter holiday de cor. Shelled walnuts are marketed on a year-round basis, and represent about 75 percent of utilization. Large handler infrastructure investments have contributed substantially to the growth of the year-round shelled business, as well as the inshell business. Over the past ten years sophisticated laser-sorting equipment and new varieties such as the Chandler have contributed to improved quality. Higher customer expectations have accompanied the improvements in technology and quality, with more demand for high-quality, high-specification California walnuts. Marketing success in Japan is cited as a prime example of this trend. According to the hearing record, shelled walnuts are utilized in a variety of ways, with commercial baking believed to be the single largest utilization category. Retail consumption of walnuts packaged for use in the home has increased dramatically over the past several years. Shelled walnuts may be sold in packages ranging from 2.75 ounce retail packages to large bulk containers of 25 pounds or more for industrial users, wholesalers, and distributors. The last 12 years have seen substantial increases in snack food uses of walnuts, in addition to expansion of ingredient use beyond baking and confectionery items to include usage with salads, rice, and pasta. A high degree of mechanization in the harvest has reduced the deleterious impact on nut quality from rain and other weather conditions. Once harvested, walnuts are taken to holding stations where a fibrous husk is removed, and the walnuts are then dried to approximately eight percent moisture. They are delivered to handlers for further processing, which includes cleaning, sorting, and shelling. According to the hearing record, California walnuts rank eighth in exports over all the commodities grown in the state. The top three inshell export markets are Spain, Italy, and Germany. Five-year average export value (2000/01-2004/05) is approximately $52 million, representing 63 percent of total export value for that five-year period. The key export markets for shelled-walnut utilization are: Japan, Germany, Spain, Israel, Korea, and Canada. Five-year average export value for those six countries is $91.8 million, which is about 76 percent of the total value of shelled walnut exports. California walnuts compete with walnuts grown in China, Turkey, France, Italy, Chile, North Korea, India, Vietnam, Argentina, Brazil, and many areas within the former Soviet Union including Kazakhstan, Ukraine, Hungary, and Moldova. Within the European Union the major competition comes from France and Eastern Europe. In the Pacific Rim, major competitors include China and India. Material Issues The amendments included in this final rule will: Change the marketing year; include “pack” as a handler function; restructure the Board and revise nomination procedures; rename the Board and add authority to change Board composition; modify Board meeting and voting procedures; add authority for marketing promotion and paid advertising; add authority to accept contributions, and to carry over excess assessment funds; broaden the scope of the quality control provisions and add the authority to recommend different regulations for different market destinations; add authority for the Board to designate more than one inspection service; replace outdated order language with current industry terminology; and other related amendments. In addition, the order will be amended to require that continuance referenda be conducted on a periodic basis to ascertain industry support for the order and add more flexibility in the termination provisions. All of the amendments are intended to streamline and improve the administration, operation, and functioning of the program. Many of the amendments will up-date the language of the order, thus better representing and conforming to current practices in the industry. The amendments are not expected to result in any significant cost increases for growers or handlers. More efficient administration of program activities may result in cost savings for the Board. A description of the amendments and their anticipated economic impact on large and small entities is outlined below. Designation of More Than One Inspection Service This amendment adds authority to the order for the Board to designate more than one inspection service, as long as the functions performed by each service are separate and do not conflict with each other. To ensure that walnuts are properly graded and meet marketing order minimum standards, the Board currently arranges for inspection of walnuts prior to shipping for all walnut handlers. The marketing order currently authorizes contracting with one agency, the California based Dried Fruit and Nut Association (DFA). DFA inspects all walnuts that leave California to certify that they meet marketing order minimum standards. Operating as an out-going inspection service, samples of packed walnuts are examined and certified by licensed DFA inspectors at the end of the handling and packing process. The following data representing current inspection costs, summarizing actual inspection cost data for 2004-05 for the entire industry (44 handlers), was presented at the hearing by Board representatives. According to the record, the 2004-05 cost to serve the 44 handlers was $1.857 million, which is an average cost of just over $42,000 per handler. Since inspection costs depend largely on volume handled, the four largest handlers account for $1.282 million, or 69% of total inspection expenditure in the 2004-05 crop year. The 37 smaller handlers account for $412,172 in expenditure, about 22 percent of the total, averaging about $11,000 per handler. Annual Walnut Inspection Costs Using DFA, 2004-05 Crop Year DFA cost Number of handlers Average per handler Largest Handlers $1,282,362 4 $320,591 Additional Large Handlers 162,487 3 54,162 Other Handlers 412,172 37 11,140 All Handlers 1,857,021 44 42,205 Source: Walnut Marketing Board. The Federal-State Inspection Service

(FSIS)has developed effective, less costly alternative inspection programs. The Partners in Quality Program, or PIQ, is a documented quality assurance system. Under this program, individual handlers must demonstrate and document their ability to handle and pack product that meets all relevant quality requirements. Effectiveness of the program is verified through periodic, unannounced audits of each handler's system by USDA approved auditors. Under the Customer Assisted Inspection Program, or CAIP, USDA inspectors oversee the in-line sampling and inspection process performed by trained company staff. USDA oversight ranges from periodic visits throughout the day to a continuous on-site presence. DFA does not offer inspection services that operate similarly to the PIQ and CAIP programs. Cost savings will occur by reducing the prevalence of double inspections under the current system. Currently, one inspection is undertaken to meet minimum USDA quality requirements specified in the marketing order. A second inspection is often necessary to meet the considerably higher standards of specific customers. Moving to a PIQ or CAIP program would greatly reduce inspection costs, because meeting higher standards under PIQ or CAIP would also ensure that an inspected lot met minimum marketing order standards. Witnesses at the hearing testified that the California walnut industry should allow handlers to take advantage of USDA's alternative inspection programs such as the CAIP and the PIQ. Handlers who do not wish to use the alternative inspection services offered by USDA would continue to use the services of the DFA for traditional inspection services, such as end-line and lot inspections. The amendment also specifies that “each service shall be separate so as to not conflict with each other”, meaning that each inspection service will offer distinct and different services ( *i.e.* PIQ vs. lot inspections) so that the integrity of both programs will be maintained. Witnesses speaking in favor of this amendment explained the importance of a handler's ability to take advantage of inspection services that would most economically fit the size and functions of his or her operation. Currently, all walnut product is inspected by DFA. While this inspection service has worked well for the industry for many years, the DFA inspection service does not accommodate inspection procedures that support larger handler economies of scale. Witnesses stated that USDA programs, such as PIQ and CAIP, are designed to fit larger scale handling operations, and therefore offer cost saving advantages that the DFA service does not. This amendment, when implemented, will allow handlers to use the alternative inspection programs offered by USDA. Several witnesses indicated that lowering costs to handlers will benefit growers because they expect that the cost reduction will be reflected in increased payments to growers. Financial impact calculations provided by the Board (shown in the table below) indicate that introducing the option of using PIQ or CAIP programs could result in savings of $1.09 million, an average per handler savings of $156,067 for the industry's seven largest handlers. Due to the high volumes handled, most of the savings accrue to the four largest handlers, estimated at $1.05 million, or an average per handler of $263,169. Walnut Inspection Cost Comparison: DFA vs. USDA for Top 7 Handlers DFA USDA PIQ/CAIP Cost savings Total Per handler Largest 4 Handlers $1,282,362 $229,688 $1,052,674 $263,169 Additional 3 large handlers 162,487 122,692 39,795 13,265 Largest 7 Handlers 1,444,849 352,380 1,092,469 156,067 Source: Walnut Marketing Board. Data from NASS indicate that the two-year average value of the 2003 and 2004 crops was about $415 million. The current DFA inspection cost ($1.857 million) represents a very small proportion of crop value, about 0.4 percent. If the largest 7 handlers used USDA for inspection at a cost of $352,380 and the remaining 37 handlers continue to work with DFA at an estimated cost of $412,172, then the combined cost of $764,552 would represent 0.2 percent of the recent-year crop value. Witnesses emphasized the cost effectiveness of having an additional inspection agency. When implemented, this amendment will facilitate the streamlining of handler operations to utilize the inspection service best suited to their operations. Since potential savings are correlated with economies of scale, record evidence indicates that PIQ and CAIP programs would be most beneficial for large handlers. It is unlikely that the smaller handlers would initially opt for these programs. Smaller handlers that expand their operations in the future may realize benefits from switching to PIQ or CAIP. Witnesses stated that no change in inspection costs is expected for handlers remaining with traditional DFA inspection services. Therefore, no financial disadvantages are expected to result from this proposed amendment. When implemented, this amendment will likely result in an overall decrease in costs of inspection to the industry. Inspection of Sliced, Chopped or Ground Shelled Walnuts This amendment adds authority for shelled walnuts to be inspected after having been sliced, chopped, or ground or in any manner changed from being shelled walnuts, if regulations for such walnuts are in effect. New walnut products are regularly requested by both domestic and foreign customers. In the last 20 years, the industry has become much more capable of producing at a considerably higher level quality and of developing more specific types of products that meet the differing needs of individual customers. To capitalize on this growing capability, a number of witnesses expressed the view that an important tool for increasing sales is the ability to establish standards for these walnut products. The order currently requires shelled product to be certified as merchantable, that is, meeting the minimum USDA requirements prior to further processing. When handlers are processing for end users that require further processing, this certification represents a costly extra step. After the initial shelled walnut certification, the handlers employ their own quality control procedures to meet the higher customer specifications. This amendment will allow a single inspection at the end of the process to serve both purposes. When implemented, this amendment will allow the Board to recommend modifications to allow certification of product after it has been modified or chopped, leading to cost savings in the handling process. Witnesses contended that current standards focus on visually observed characteristics that are significant for consumer acceptance, but often do not adequately address specific quality concerns important to various export markets, including Europe. Such concerns include, for example, moisture content or aflatoxin tolerances. When implemented, this amendment will allow the Board to review scientific data and develop inspection procedures for recommendation and approval by USDA to assure customers that walnuts meet their specified criteria. Any new quality standards recommended by the Board will be subject to thorough review prior to seeking approval from USDA. Witnesses supported this amendment as it will give the Board authority to pursue quality regulations in addition to existing grade standards, both of which are important to industry customers. Witnesses emphasized that this amendment will grant authority to the Board to recommend quality standards that could exceed current standards or to develop new standards for product characteristics not currently covered. Witnesses also stated that no specific modifications are currently requested, just flexibility to create them in the future. While this amendment may result in some cost increases associated with administration and oversight of new quality regulations, it is also expected that some handlers may benefit from lower inspection costs if the inspection requirements for specific markets were modified. Any costs associated with the implementation of this amendment are expected to be outweighed by the overall benefits accrued to the industry. Marketing Promotion and Paid Advertising This amendment adds authority for marketing promotion and paid advertising to the order. Current promotional activities for California walnuts are undertaken by the California Walnut Commission (CWC). Witnesses stated that the CWC's activities have led to considerable success in increasing demand for the industry's product. Witnesses explained that with price inelastic demand for walnuts, recent increases in production could have driven down prices and total grower revenue. The CWC's successful promotional activities have helped mitigate that potential impact, keeping average grower prices and grower revenue steady or increasing for several years. According to the hearing record, adding authority for paid advertising and promotion under the order will benefit the industry by allowing the Board to engage in activities that are currently supported by the Commission. Small businesses will be the greatest beneficiaries of an expanded generic advertising program, because they have the least financial resources to devote to selling their products, according to a witness. While an increase in advertising and promotional activities may result in increased Board expenditures, witnesses were confident that the positive results of the Board's promotional activities on consumer demand for California walnuts will more than outweigh any increases in costs to the industry. Impact of Remaining Amendments Remaining amendments are largely administrative in nature and will impose no new significant regulatory burdens on California walnut growers or handlers. They will benefit the industry by improving the operation of the program and making it more responsive to industry needs. Marketing Year This amendment changes the marketing year of the order from August 1 through July 31 to September 1 through August 31. Under the current definition of the order, the California walnut marketing year begins August 1 and continues through July 31. Witnesses explained that, over time, new varieties of walnuts have been introduced, and the areas in which walnuts are cultivated have shifted. The newer varieties mature later than the varieties grown at the time of the program's inception. At the same time, cultivation has slowly moved into areas that previously were not suited for walnut production. With differences in climate, soil, and water, witnesses explained that these new production areas have slightly later growing cycles. The proposed change in the marketing year will better reflect current crop cycles. Conforming changes were made to § 984.36, Term of office and § 984.48, Marketing estimates and recommendations, so that Board member terms of office and marketing estimates are calculated according to the modified marketing year. This amendment is not expected to result in any increases in costs to growers or handlers. Definition of Pack This amendment specifies that the act of packing walnuts is considered a handling function under the order. In addition, the term “pack” is amended to include shelling, and is modified so that packing is applicable to both inshell and shelled walnuts. According to the hearing record, the order currently defines “to handle” as to “sell, consign, transport, or ship, or in any other way, to put walnuts into the current of commerce”. The definition does not include the specific act of packing. “To pack”, as currently defined in the order means, “to bleach, clean, grade or otherwise prepare inshell walnuts for market”. Pack is not currently applicable to shelled walnuts. Witnesses stated that the amended definitions of “handle” and “pack” will more accurately reflect current industry operations. This amendment is not expected to result in any increases in costs to growers. When implemented, this amendment may result in some packing entities previously not considered to be handlers under the order to be redefined as handlers. According to witnesses, there are roughly five packer entities that will qualify as handlers under the new definition. While some increases in administration costs on the part of handlers could arise as a result of reporting requirements, record evidence indicates that the benefit of more accurate industry information will merit that expense. Restructuring of the Board This amendment modifies all parts of the order that refer to cooperative seats on the Board, redistributes member seats among districts, and provides designated seats for a major handler, if such handler exists. A major handler will have to handle 35 percent or more of the crop. According to the hearing record, the recent transition of the industry's largest cooperative from a cooperative entity to a publicly held company was the impetus for this amendment. Witnesses expressed the need to modify the Board structure to provide for representation that accurately reflects the current industry. Witnesses advocated that the Board structure should maintain the current number of Board members and alternates, and that the allocation of member seats between grower and handler positions should remain the same (meaning 4 handler member seats, five grower member seats and one public member). Witnesses also recommended modifying the allocation of Board representation according to two possible scenarios. The two scenarios include:

(1)Membership allocation that acknowledges the existence of a handler handling 35 percent or more of production and,

(2)membership allocation in the absence of such handler. According to record evidence, these amendments will not result in any increases in costs. Nominations This amendment modifies the Board member nomination process to reflect changes in the Board structure. Current nomination procedures allow for all cooperative seat nominees to be selected by the cooperative and forwarded to the Secretary for approval and appointment. The cooperative nominee selection process is independent of the Board. All non-cooperative seat nominees are selected through a ballot nomination process overseen by the Board staff, and forwarded to the Secretary for approval and appointment. According to the hearing record, the revised nomination procedures will allow a handler who handles 35 percent or more of the crop to nominate persons to fill its designated seats and to forward them to the Secretary for approval and appointment. Nomination of persons to fill all other seats would be conducted by the Board staff. In the event a handler handling 35 percent or more of the crop does not exist, all Board nominees will be selected through a ballot nomination process conducted by the Board staff. While some increases in administration costs could arise as a result of an increased number of ballots to be mailed by the Board if a major handler does not exist, record evidence indicates that the expense would be minor and would not directly burden growers or handlers. Qualify by Acceptance This amendment requires Board nominees to submit a written qualification and acceptance statement prior to selection by USDA. Currently, the acceptance procedure for persons nominated and selected to serve on the Board involves a two-step process. When implemented, the two steps will be combined into one, thus resulting in less paperwork, a shorter acceptance procedure and improved efficiency in the acceptance process. This amendment is not expected to result in any increases in costs to growers or handlers. California Walnut Board This amendment changes the name of the Walnut Marketing Board to the California Walnut Board. Witnesses stated that the name “California Walnut Board” will more accurately represent the Board's responsibilities. This amendment is not expected to result in any significant increases in costs to growers or handlers. Authority To Reestablish Districts and Board Structure This amendment adds authority to reestablish districts, to reapportion members among districts, and to revise groups eligible for representation on the Board. The intent of this amendment is to provide the Board with a tool to more efficiently respond to the changing character of the California walnut industry. In recommending any such changes, the following will be considered:

(1)Shifts in acreage within districts and within the production area during recent years;

(2)the importance of new production in its relation to existing districts;

(3)the equitable relationship between Board apportionment and districts;

(4)changes in industry structure and/or the percentage of crop represented by various industry entities resulting in the existence of two or more handlers handling 35 percent or more of the crop; and

(5)other relevant factors. This amendment is not expected to result in any increases in costs to growers or handlers. Voting Procedures This amendment modifies Board quorum and voting requirements to add percentage requirements, adds authority for the Board to vote by “any other means of communication” (including facsimile) and adds authority for Board meetings to be held by telephone or by “any other means of communication”. Witnesses stated that references to the meeting quorum requirements should be amended to include a percentage equivalent of the current six-out-of-10-member minimum, or sixty percent. In addition, witnesses supported modifying the order language regarding voting requirements to state that a sixty-percent super-majority vote of the members present at a meeting should be required of all Board decisions, except where otherwise specifically provided. The order currently states that a majority vote is needed, with no percentage equivalent specified. According to the record, the order currently requires that all Board meetings be held at a physical location. Witnesses stated that the order should be amended to allow for some meetings to be held using “other means of communication”, such as telephone or videoconferencing. Witnesses stated that use of new communication technology would result in time-savings while still allowing the Board to conduct its business. Witnesses stated that it is the intent of the Board that voting procedures for all types of non-traditional meetings can be recommended and adopted as appropriate for each type of technology used. The above amendments are not expected to result in any significant changes in costs to growers or handlers. Carryover of Excess Assessment Funds This amendment adds authority to the order to carry over excess assessment funds from one marketing year to the next. According to the hearing record, the order currently states that any assessment funds held in excess of the marketing year's expenses must be refunded to handlers. Refunds are returned to handlers in accordance with the amount of that handler's pro rata share of the actual expenses of the Board. This amendment will allow the Board, with the approval of the Secretary, to establish an operating monetary reserve. This will allow the Board to carry over to subsequent production years any excess funds in a reserve, provided that funds already in the reserve do not exceed approximately two years' expenses. If reserve funds do exceed that amount, the assessment rate could be reduced so as to cause reserves to diminish to a level below the two-year threshold. According to the record, reserve funds could be used to defray expenses during any production year before assessment income is sufficient to cover such expenses, or to cover deficits incurred during any fiscal period when assessment income is less than expenses. Additionally, reserve funds could be used to defray expenses incurred during any period when any or all of the provisions of the order are suspended, or to meet any other such costs recommended by the Board and approved by the Secretary. This amendment is not expected to result in any significant increases in costs to growers or handlers. Contributions This amendment adds authority to order for the Board to accept voluntary contributions. Contributions can only be used to pay for research and development activities, and will be free from any encumbrances by the donor. According to the hearing record, the Board will retain oversight of the application of such contributions. Witnesses supported this amendment by stating that it would provide the Board and the industry with valuable resources to enhance research and development activities. It is not expected that this amendment will result in any additional costs to growers or handlers. Reimbursement of Expenses This amendment clarifies that members and alternate members may be reimbursed for expenses incurred while performing their duties and that reimbursement includes per diem. According to the hearing record, this amendment will not have any impact on the current expense reimbursement activities of the Board. Rather, it will clarify and update order language to more clearly state that while Board members and alternates serve without compensation, expenses incurred while performing the duties of a Board member that have been authorized by the Board will be reimbursed. It is not expected that this amendment will result in any additional costs to growers or handlers. Quality Regulations This amendment broadens the scope of the quality control provisions of the order by adding authority to recommend different regulations for different market destinations. Witnesses emphasized the usefulness in terms of market development of being able to establish different regulations for individual markets and/or regions. Witnesses stated that allowing the Board to make such recommendations will help the walnut industry adapt to changing international market conditions. Updating Order Terminology This amendment replaces the terms “carryover” with “inventory,” and “mammoth” with “jumbo,” to reflect current day industry procedures. Conforming changes were made to the § 984.48, Marketing estimates and recommendations, and § 984.71, Reports of handler carryover, sections of the order so that order terminology is consistent throughout. Handler carryover defines the amount of California walnuts (both merchantable as well as the estimated quantity of merchantable walnuts to be produced from shelling stock and unsorted material), wherever located, held by California walnut handlers at any given time. Witnesses explained that the current term “carryover” is misleading in that the term implies the amount of inventory held by handlers from one marketing year to the next. Witnesses stated that the term “inventory” will more accurately convey the intent of this definition, and will also reflect current day calculations of walnut availability. Section 984.67, Exemptions, of the order provides for situations under which California walnuts may be exempted from complying with order regulations. One exemption is applicable to lots of merchantable inshell walnuts that are mammoth size or larger, as defined by the United States Standards for Walnuts in the Shell. Witnesses stated that given the new varieties currently being produced in the industry, the term “mammoth” no longer applies. According to record evidence, the current production's equivalent to “mammoth” size is “jumbo” size, as defined by the United States Standards for Walnuts in the Shell. Thus, witnesses stated that the order language should be updated to reflect the industry's current terminology and size of walnuts being produced. This amendment is not expected to result in any increases in costs to growers or handlers. Interhandler Transfers This amendment clarifies the term “transfer” as used in the order and adds authority for the Board to recommend methods and procedures, including necessary reports, for administrative oversight of such transfers. Witnesses stated that it would be beneficial to simplify current order language so that all interhandler transfers are considered a “sale of inshell and shelled walnuts within the area of production by one handler to another.” Witnesses explained that the new language restated the current application of this provision in walnut transactions in simpler terms. This amendment is not expected to result in any increases in costs to growers or handlers. Reporting Requirements This amendment clarifies that the Board may require reports from handlers and packers to include interhandler transfers or any other activity that involves placing California walnuts into the stream of commerce. According to the hearing record, current authority provided in this section only applies to the reporting of handler walnut receipts from growers. Witnesses stated that this authority should be broadened to include interhandler transfers, or receipts from any other entity as recommended by the Board and approved by the Secretary. This amendment is not expected to result in any increases in costs to growers or handlers. Trade Demand This amendment updates and simplifies the language in § 984.22, Trade demand, to state “United States and its territories,” rather than name “Puerto Rico” and “The Canal Zone”. Witnesses explained that the reference to “Puerto Rico” and “The Canal Zone” in the order is outdated and should be updated to reference “United States and its territories”. According to record evidence, this amendment will not impact trade demand calculations under the order since the purpose of the reference is to accurately identify the amount of shelled or inshell walnuts demanded by the United States, including its territories. Thus, while the terminology identifying the geographic regions included in the calculation will change, the intent of the original language will remain unchanged. This amendment is not expected to result in any increases in costs to growers or handlers. Relationship With California Walnut Commission This amendment adds language to the order stating that the Board may deliberate, consult, cooperate and exchange information with the California Walnut Commission (CWC). Any information sharing will be kept confidential. Record evidence indicates the CWC and the Federal marketing order program are currently administered out of the same office location and employ the same staff. Thus, this amendment will formalize the relationship that currently exists between the two entities. Witnesses stated that collaboration between the two programs leads to reduced administrative costs, as much of the information collected by each entity can be shared. This amendment is not expected to result in any increases in costs to growers or handlers. Continuance Referenda In addition, the order is amended to require that continuance referenda be conducted on a periodic basis to ascertain industry support for the order and add more flexibility in the termination provisions. Currently, there is no requirement in the order that continuance referenda be conducted on a periodic basis. The USDA believes that growers should have an opportunity to periodically vote on whether a marketing order should continue. Continuance referenda provide an industry with a means to measure grower support for the program. Experience has shown that programs need significant industry support to operate effectively. This amendment is not expected to result in any increases in costs to growers or handlers. In discussing the impacts of the proposed amendments on growers and handlers, record evidence indicates that the changes are expected to be positive because the administration of the program will be more efficient. There will be no significant cost impact on either small or large growers or handlers. Interested persons were invited to present evidence at the hearing on the probable regulatory and informational impact of the proposed amendments to the order on small entities. The record evidence is that the amendments are designed to increase efficiency in the functioning of the order. USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. These amendments are designed to enhance the administration and functioning of marketing order 984 to benefit the California walnut industry. Paperwork Reduction Act Current information collection requirements for Part 984 are approved by OMB under OMB No. 0581-0178, Vegetable and Specialty Crops. Any changes in those requirements as a result of this proceeding would be submitted to OMB for approval. Witnesses stated that existing forms could be adequately modified to serve the needs of the Board. While conforming changes to the forms would need to be made (such as changing the name of the Board), the functionality of the forms would remain the same. As with other similar marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. AMS is committed to complying with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Civil Justice Reform The amendments to Marketing Order 984 stated herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. The amendments will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with an amendment. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling. Order Amending the Order Regulating Walnuts Grown in California Findings and Determinations The findings and determinations set forth hereinafter are supplementary and in addition to the findings and determination previously made in connection with the issuance of the order; and all of said previous findings and determinations are hereby ratified and affirmed, except as such findings and determinations may be in conflict with the findings and determinations set forth herein.

(a)*Findings and Determinations Upon the Basis of the Hearing Record.* Pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 *et seq.* ) and the applicable rules of practice and procedure effective thereunder (7 CFR part 900), a public hearing was held upon the proposed amendments to Marketing Order No. 984 (7 CFR part 984), regulating the handling of walnuts grown in California. Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

(1)The marketing order, as amended, and as hereby further amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

(2)The marketing order, as amended, and as hereby further amended, regulates the handling of walnuts grown in the production area in the same manner as, and is applicable only to persons in the respective classes of commercial and industrial activity specified in the marketing order upon which hearings have been held;

(3)The marketing order, as amended, and as hereby further amended, is limited in application to the smallest regional production area which is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivision of the production area would not effectively carry out the declared policy of the Act;

(4)The marketing order, as amended, and as hereby further amended, prescribes, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of walnuts grown in the production area; and

(5)All handling of walnuts grown in the production area is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

(b)*Additional findings.* The effective date for the amendments shall be 30 days after publication in the **Federal Register** , except for §§ 984.7, 984.13, 984.14, 984.15, 984.21, 984.22, 984.42, 984.46, 984.48, 984.50, 984.51, 984.52, 984.59, 984.67, 984.69, 984.70, 984.71, 984.73 and 984.89, which are effective September 1, 2008. The amendments to these sections should be implemented to coincide with the beginning of a new crop year.

(b)*Determinations.* It is hereby determined that:

(1)Handlers (excluding cooperative associations of producers who are not engaged in processing, distributing, or shipping walnuts covered by the order as hereby amended) who, during the period August 1, 2006, through July 31, 2007, handled 50 percent or more of the volume of such walnuts covered by said order, as hereby amended, have not signed an amended marketing agreement; and,

(2)The issuance of this amendatory order, further amending the aforesaid order, is favored or approved by at least two-thirds of the producers who participated in a referendum on the question of approval and who, during the period of August 1, 2006, through July 31, 2007 (which has been deemed to be a representative period), have been engaged within the production area in the production of such walnuts, such producers having also produced for market at least two-thirds of the volume of such commodity represented in the referendum.

(3)In the absence of a signed marketing agreement, the issuance of this amendatory order is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers of walnuts in the production area. Order Relative to Handling of Walnuts Grown in California *It is therefore ordered,* That on and after the effective dates hereof, all handling of walnuts grown in California shall be in conformity to, and in compliance with, the terms and conditions of the said order as hereby amended as follows: The provisions of the proposed order amending the order contained in the Recommended Decision issued by the Administrator on March 19, 2007, and published in the **Federal Register** on March 27, 2007, (72 FR 14368), shall be and are the terms and provisions of this order amending the order and set forth in full herein. List of Subjects in 7 CFR Part 984 Marketing agreements, Nuts, Reporting and recordkeeping requirements, and Walnuts. PART 984—WALNUTS GROWN IN CALIFORNIA For the reasons set forth in the preamble, title 7 of chapter XI of the Code of Federal Regulations is amended as follows: 1. The authority citation for 7 CFR part 984 continues to read as follows: Authority: 7 U.S.C. 601-674. 2. Revise § 984.6 to read as follows: § 984.6 Board. *Board* means the California Walnut Board established pursuant to § 934.35. 3. Revise § 984.7 to read as follows: § 984.7 Marketing year. *Marketing year* means the twelve months from September 1 to the following August 31, both inclusive, or any other such period deemed appropriate and recommended by the Board for approval by the Secretary. 4. Revise § 984.13 to read as follows: § 984.13 To handle. *To handle* means to pack, sell, consign, transport, or ship (except as a common or contract carrier of walnuts owned by another person), or in any other way to put walnuts, inshell or shelled, into the current of commerce either within the area of production or from such area to any point outside thereof, or for a manufacturer or retailer within the area of production to purchase directly from a grower: The term “to handle” shall not include sales and deliveries within the area of production by growers to handlers, or between handlers. 5. Revise § 984.14 to read as follows: § 984.14 Handler. *Handler* means any person who handles inshell or shelled walnuts. 6. Revise § 984.15 to read as follows: § 984.15 Pack. *Pack* means to bleach, clean, grade, shell or otherwise prepare walnuts for market as inshell or shelled walnuts. 7. Revise § 984.21 to read as follows: § 984.21 Handler inventory. *Handler inventory as of any date* means all walnuts, inshell or shelled (except those held in satisfaction of a reserve obligation), wherever located, then held by a handler or for his or her account. 8. Revise § 984.22 to read as follows: § 984.22 Trade demand.

(a)*Inshell.* The quantity of merchantable inshell walnuts that the trade will acquire from all handlers during a marketing year for distribution in the United States and its territories.

(b)*Shelled.* The quantity of merchantable shelled walnuts that the trade will acquire from all handlers during a marketing year for distribution in the United States and its territories. 9. Revise § 984.35 to read as follows: § 984.35 California Walnut Board.

(a)A California Walnut Board is hereby established consisting of 10 members selected by the Secretary, each of whom shall have an alternate nominated and selected in the same way and with the same qualifications as the member. The members and their alternates shall be selected by the Secretary from nominees submitted by each of the following groups or from other eligible persons belonging to such groups:

(1)Two handler members from District 1;

(2)Two handler members from District 2;

(3)Two grower members from District 1;

(4)Two grower members from District 2;

(5)One grower member nominated at-large from the production area; and,

(6)One member and alternate who shall be selected after the selection of the nine handler and grower members and after the opportunity for such members to nominate the tenth member and alternate. The tenth member and his or her alternate shall be neither a walnut grower nor a handler.

(b)In the event that one handler handles 35% or more of the crop the membership of the Board shall be as follows:

(1)Two handler members to represent the handler that handles 35% or more of the crop;

(2)Two members to represent growers who market their walnuts through the handler that handles 35% or more of the crop;

(3)Two handler members to represent handlers that do not handle 35% or more of the crop;

(4)One member to represent growers from District 1 who market their walnuts through handlers that do not handle 35% or more of the crop;

(5)One member to represent growers from District 2 who market their walnuts through handlers that do not handle 35% or more of the crop;

(6)One member to represent growers who market their walnuts through handlers that do not handle 35% or more of the crop shall be nominated at large from the production area; and,

(7)One member and alternate who shall be selected after the selection of the nine handler and grower members and after the opportunity for such members to nominate the tenth member and alternate. The tenth member and his or her alternate shall be neither a walnut grower nor a handler.

(c)Grower Districts:

(1)*District 1.* District 1 encompasses the counties in the State of California that lie north of a line drawn on the south boundaries of San Mateo, Alameda, San Joaquin, Calaveras, and Alpine Counties.

(2)*District 2.* District 2 shall consist of all other walnut producing counties in the State of California south of the boundary line set forth in paragraph (c)(1) of this section.

(d)The Secretary, upon recommendation of the Board, may reestablish districts, may reapportion members among districts, and may revise the groups eligible for representation on the Board as specified in paragraphs

(a)and

(b)of this section: Provided, That any such recommendation shall require at least six concurring votes of the voting members of the Board. In recommending any such changes, the following shall be considered:

(1)Shifts in acreage within districts and within the production area during recent years;

(2)The importance of new production in its relation to existing districts;

(3)The equitable relationship between Board apportionment and districts;

(4)Changes in industry structure and/or the percentage of crop represented by various industry entities resulting in the existence of two or more major handlers;

(5)Other relevant factors. 10. Revise § 984.37 to read as follows: § 984.37 Nominations.

(a)Nominations for all grower members shall be submitted by ballot pursuant to an announcement by press releases of the Board to the news media in the walnut producing areas. Such releases shall provide pertinent voting information, including the names of candidates and the location where ballots may be obtained. Ballots shall be accompanied by full instructions as to their markings and mailing and shall include the names of incumbents who are willing to continue serving on the Board and such other candidates as may be proposed pursuant to methods established by the Board with the approval of the Secretary. Each grower, regardless of the number and location of his or her walnut orchard(s), shall be entitled to cast only one ballot in the nomination and each vote shall be given equal weight. If the grower has orchards in both grower districts, he or she shall advise the Board of the district in which he/she desires to vote. The person receiving the highest number of votes for each grower position shall be the nominee.

(b)Nominations for handler members shall be submitted on ballots mailed by the Board to all handlers in their respective Districts. All handlers' votes shall be weighted by the kernelweight of walnuts certified as merchantable by each handler during the preceding marketing year. Each handler in the production area may vote for handler member nominees and their alternates. However, no handler with less than 35% of the crop shall have more than one member and one alternate member. The person receiving the highest number of votes for each handler member position shall be the nominee for that position.

(c)A calculation to determine whether or not a handler who handles 35 percent or more of the crop shall be made prior to nominations. For the first nominations held upon implementation of this language, the 35 percent threshold shall be calculated using an average of crop handled for the year in which nominations are made and one year's handling prior. For all future nominations, the 35 percent handling calculation shall be based in the average of the two years prior to the year in which nominations are made. In the event that one handler handles 35% or more of the crop the membership of the Board, nominations shall be as follows:

(1)Nominations of growers who market their walnuts to the handler that handles 35% or more of the crop shall be conducted by that handler and the names of the nominees shall be forwarded to the Board for approval and appointment by the Secretary.

(2)Nominations for the two handler members representing the major handler shall be conducted by the major handler and the names of the nominees shall be forwarded to the Board for approval and appointment by the Secretary.

(3)Nominations on behalf of all other grower members (Groups (b)(4),

(5)and

(6)of § 984.35) shall be submitted after ballot by such growers pursuant to an announcement by press releases of the Board to the news media in the walnut producing areas. Such releases shall provide pertinent voting information, including the names of candidates and the location where ballots may be obtained. Ballots shall be accompanied by full instructions as to their markings and mailing and shall include the names of incumbents who are willing to continue serving on the Board and such other candidates as may be proposed pursuant to methods established by the Board with the approval of the Secretary. Each grower in Groups (Groups (b)(4),

(5)and

(6)of § 984.35), regardless of the number and location of his or her walnut orchard(s), shall be entitled to cast only one ballot in the nomination and each vote shall be given equal weight. If the grower has orchard(s) in both grower districts he or she shall advise the Board of the district in which he or she desires to vote. The person receiving the highest number of votes for grower position shall be the nominee.

(4)Nominations for handler members representing handlers that do not handle 35% or more of the crop shall be submitted on ballots mailed by the Board to those handlers. The votes of these handlers shall be weighted by the kernelweight of walnuts certified as merchantable by each handler during the preceding marketing year. Each handler in the production area may vote for handler member nominees and their alternates of this subsection. However, no handler shall have more than one person on the Board either as member or alternate member. The person receiving the highest number of votes for a handler member position of this subsection shall be the nominee for that position.

(d)Each grower is entitled to participate in only one nomination process, regardless of the number of handler entities to whom he or she delivers walnuts. If a grower delivers walnuts to more than one handler entity, the grower must choose which nomination process he or she participates in.

(e)The nine members shall nominate one person as member and one person as alternate for the tenth member position. The tenth member and alternate shall be nominated by not less than 6 votes cast by the nine members of the Board.

(f)Nominations in the foregoing manner received by the Board shall be reported to the Secretary on or before June 15 of each odd-numbered year, together with a certified summary of the results of the nominations. If the Board fails to report nominations to the Secretary in the manner herein specified by June 15 of each odd-numbered year, the Secretary may select the members without nomination. If nominations for the tenth member are not submitted by September 1 of any such year, the Secretary may select such member without nomination.

(g)The Board may recommend, subject to the approval of the Secretary, a change to these nomination procedures should the Board determine that a revision is necessary. 11. In § 984.38, the suspension of August 20, 2005 (70 FR 50153), is lifted effective April 2, 2008. 12. Revise § 984.38 to read as follows: § 984.38 Eligibility. No person shall be selected or continue to serve as a member or alternate to represent one of the groups specified in § 984.35(a)(1) through

(6)or § 984.38(b)(1) through (6), unless he or she is engaged in the business he or she is to represent, or represents, either in his or her own behalf or as an officer or employee if the business unit engaged in such business. Also, each member or alternate member representing growers in District 1 or District 2 shall be a grower, or officer or employee of the group he or she is to represent. 13. Revise § 984.39 to read as follows: § 984.39 Qualify by acceptance. Any person nominated to serve as a member or alternate member of the Board shall, prior to selection by USDA, qualify by filing a written qualification and acceptance statement indicating such person's willingness to serve in the position for which nominated. 14. Revise § 984.40 to read as follows: § 984.40 Alternate.

(a)An alternate for a member of the Board shall act in the place and stead of such member in his or her absence or in the event of his or her death, removal, resignation, or disqualification, until a successor for his or her unexpired term has been selected and has qualified.

(b)In the event any member of the Board and his or her alternate are both unable to attend a meeting of the Board, any alternate for any other member representing the same group as the absent member may serve in the place of the absent member, or in the event such other alternate cannot attend, or there is no such other alternate, such member, or in the event of his disability or a vacancy, his or her alternate may designate, subject to the disapproval of the Secretary, a temporary substitute to attend such meeting. At such meeting such temporary substitute may act in the place of such member. 15. Revise § 984.42 to read as follows: § 984.42 Expenses. The members and their alternates of the Board shall serve without compensation, but shall be allowed their necessary expenses incurred by them in the performance of their duties under this part. 16. Amend § 984.45 by revising paragraphs

(b)and

(c)and adding paragraph

(d)to read as follows: § 984.45 Procedure.

(b)All decisions of the Board, except where otherwise specifically provided (see § 984.35(d)), shall be by a sixty-percent (60%) super-majority vote of the members present. A quorum of six members, or the equivalent of sixty percent (60%) of the Board, shall be required for the conduct of Board business.

(c)The Board may vote by mail or telegram, or by any other means of communication, upon due notice to all members. The Board, with the approval of the Secretary, shall prescribe the minimum number of votes that must be cast when voting is by any of these methods, and any other procedures necessary to carry out the objectives of this paragraph.

(d)The Board may provide for meetings by telephone, or other means of communication and any vote cast at such a meeting shall be confirmed promptly in writing: Provided, That if any assembled meeting is held, all votes shall be cast in person. 17. Revise § 984.46 to read as follows: § 984.46 Research and development. The Board, with the approval of the Secretary, may establish or provide for the establishment of production research, marketing research and development projects, and marketing promotion, including paid advertising, designed to assist, improve, or promote the marketing, distribution, and consumption or efficient production of walnuts. The expenses of such projects shall be paid from funds collected pursuant to § 984.69 and § 984.70. 18. Amend § 984.48 by revising paragraphs

(a)introductory text, (a)(2), (4), and

(5)to read as follows: § 984.48 Marketing estimates and recommendations.

(a)Each marketing year the Board shall hold a meeting, prior to October 20, for the purpose of recommending to the Secretary a marketing policy for such year. Each year such recommendation shall be adopted by the affirmative vote of at least 60% of the Board and shall include the following, and where applicable, on a kernelweight basis:

(2)The Board's estimate of the handler inventory on September 1 of inshell and shelled walnuts;

(4)The Board's estimate of the trade demand for such marketing year for shelled and inshell walnuts, taking into consideration trade inventory, imports, prices, competing nut supplies, and other factors;

(5)The Board's recommendation for desirable handler inventory of inshell and shelled walnuts on August 31 of each marketing year; 19. Amend § 984.50 by revising the heading and paragraph

(d)to read as follows: § 984.50 Grade, quality and size regulations.

(d)*Additional grade, size or other quality regulation.* The Board may recommend to the Secretary additional grade, size or other quality regulations, and may also recommend different regulations for different market destinations. If the Secretary finds on the basis of such recommendation or other information that such additional regulations would tend to effectuate the declared policy of the Act, he or she shall establish such regulations. 20. Amend § 984.51 by revising paragraph

(a)to read as follows: § 984.51 Inspection and certification of inshell and shelled walnuts.

(a)Before or upon handling of any walnuts for use as free or reserve walnuts, each handler at his or her own expense shall cause such walnuts to be inspected to determine whether they meet the then applicable grade and size regulations. Such inspection shall be performed by the inspection service or services designated by the Board with the approval of the Secretary; Provided, That if more than one inspection service is designated, the functions performed by each service shall be separate, and shall not duplicate each other. Handlers shall obtain a certificate for each inspection and cause a copy of each certificate issued by the inspection service to be furnished to the Board. Each certificate shall show the identity of the handler, quantity of walnuts, the date of inspection, and for inshell walnuts the grade and size of such walnuts as set forth in the United States Standards for Walnuts (Juglans regia) in the Shell. Certificates covering reserve shelled walnuts for export shall also show the grade, size, and color of such walnuts as set forth in the United States Standards for Shelled Walnuts (Juglans regia). The Board, with the approval of the Secretary, may prescribe procedures for the administration of this provision. 21. Amend § 984.52 by revising paragraph

(a)and adding a new paragraph

(c)to read as follows: § 984.52 Processing of shelled walnuts.

(a)No handler shall slice, chop, grind, or in any manner change the form of shelled walnuts unless such walnuts have been certified as merchantable or unless such walnuts meet quality regulations established under § 984.50(d) if such regulations are in effect.

(c)The Board shall establish such procedures as are necessary to insure that all such walnuts are inspected prior to being placed into the current of commerce. 22. Revise § 984.59 to read as follows: § 984.59 Interhandler transfers. For the purposes of this part, transfer means the sale of inshell and shelled walnuts within the area of production by one handler to another. The Board, with the approval of the Secretary, may establish methods and procedures, including necessary reports, for such transfers. 23. Amend § 984.67 by revising paragraph

(a)to read as follows: § 984.67 Exemptions.

(a)Exemption from volume regulation. Reserve percentages shall not apply to lots of merchantable inshell walnuts which are of jumbo size or larger as defined in the then effective United States Standards for Walnuts in the Shell, or to such quantities as the Board may, with the approval of the Secretary, prescribe. 24. Amend § 984.69 by revising paragraph

(c)to read as follows: § 984.69 Assessments.

(c)*Accounting.* If at the end of a marketing year the assessments collected are in excess of expenses incurred, such excess shall be accounted for in accordance with one of the following:

(1)If such excess is not retained in a reserve, as provided in paragraph (c)(2) or (c)(3) of this section, it shall be refunded to handlers from whom collected and each handler's share of such excess funds shall be the amount of assessments he or she has paid in excess of his or her pro rata share of the actual expenses of the Board.

(2)Excess funds may be used temporarily by the Board to defray expenses of the subsequent marketing year: Provided, That each handler's share of such excess shall be made available to him or her by the Board within five months after the end of the year.

(3)The Board may carry over such excess into subsequent marketing years as a reserve: Provided, That funds already in reserve do not exceed approximately two years' budgeted expenses. In the event that funds exceed two marketing years' budgeted expenses, future assessments will be reduced to bring the reserves to an amount that is less than or equal to two marketing years' budgeted expenses. Such reserve funds may be used:

(i)To defray expenses, during any marketing year, prior to the time assessment income is sufficient to cover such expenses;

(ii)To cover deficits incurred during any year when assessment income is less than expenses;

(iii)To defray expenses incurred during any period when any or all provisions of this part are suspended;

(iv)To meet any other such costs recommended by the Board and approved by the Secretary. 25. Add a new § 984.70 to read as follows: § 984.70 Contributions. The Board may accept voluntary contributions but these shall only be used to pay expenses incurred pursuant to § 984.46, Research and development. Furthermore, such contributions shall be free from any encumbrances by the donor and the Board shall retain complete control of their use. 26. Revise § 984.71 to read as follows: § 984.71 Reports of handler inventory. Each handler shall submit to the Board in such form and on such dates as the Board may prescribe, reports showing his or her inventory of inshell and shelled walnuts. 27. Revise § 984.73 to read as follows: § 984.73 Reports of walnut receipts. Each handler shall file such reports of his or her walnut receipts from growers, handlers, or others in such form and at such times as may be requested by the Board with the approval of the Secretary. 28. Amend § 984.89 by redesignating paragraph (b)(4) as (b)(5) and adding a new paragraph (b)(4) to read as follows: § 984.89 Effective time and termination.

(b)* * *

(4)Within six years of the effective date of this amendment the Secretary shall conduct a referendum to ascertain whether continuance of this part is favored by producers. Subsequent referenda to ascertain continuance shall be conducted every six years thereafter. The Secretary may terminate the provisions of this part at the end of any fiscal period in which the Secretary has found that continuance of this part is not favored by a two-thirds ( 2/3 ) majority of voting producers, or a two-thirds ( 2/3 ) majority of volume represented thereby, who, during a representative period determined by the Secretary, have been engaged in the production for market of walnuts in the production area. Such termination shall be announced on or before the end of the production year. 29. Add a new § 984.91 to read as follows: § 984.91 Relationship with the California Walnut Commission. In conducting Board activities and other objectives under this part, the Board may deliberate, consult, cooperate and exchange information with the California Walnut Commission, whose activities compliment those of the Board. Any sharing of information gathered under this subpart shall be kept confidential in accordance with provisions under section 10(i) of the Act. Dated: February 27, 2008. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. E8-4016 Filed 2-29-08; 8:45 am] BILLING CODE 3410-02-P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 797 Procedures for Debt Collection AGENCY: National Credit Union Administration (NCUA). ACTION: Final rule. SUMMARY: Pursuant to the Debt Collection Improvement Act of 1996 NCUA is issuing a regulation governing procedures for collecting debts owed to the federal government by present and former NCUA employees. The regulation sets forth the procedures NCUA will follow in collecting debts owed to the United States arising from activities under NCUA jurisdiction. These procedures include collection of debts through administrative offset and salary offset. DATES: This rule is effective April 2, 2008. FOR FURTHER INFORMATION CONTACT: Dianne Salva, Trial Attorney, at the above address or telephone:

(703)518-6540. SUPPLEMENTARY INFORMATION: I. Background This final rule implements the Debt Collection Improvement Act of 1996 (DCIA). The DCIA requires federal agencies to collect debts owed to the United States under regulations prescribed by the head of the agency, and standards prescribed by the Department of Justice and the Department of the Treasury. *31 U.S.C. 3711(d)(2)* . These standards, known as the Federal Claims Collection Standards (FCCS), became effective on December 22, 2000. 31 CFR chapter IX and parts 900 through 904. The DCIA also requires agencies, prior to collecting debts owed to the United States, to:

(1)Adopt without change regulations on collecting debts by offset promulgated by the Department of Justice or Department of the Treasury (FCCS); or

(2)prescribe agency regulations for collecting such debts by offset, which are consistent with the FCCS. *31 U.S.C. 3716* . Agency regulations protect the minimum due process rights that must be afforded to the debtor when an agency seeks to collect a debt by administrative offset, including the ability to verify, challenge, and compromise claims, and access to administrative appeals procedures which are both reasonable and protect the interests of the United States. NCUA has decided to issue its own rule for debt collection and offset, given NCUA's status as an independent regulatory agency. The final rule is consistent with the FCCS, as required by the DCIA. The salary offset portion of the rule has been submitted to and approved by the Office of Personnel Management (OPM), as required by *5 U.S.C. 5514(b)(1)* . In addition to these legal authorities, NCUA is issuing these regulations pursuant to *12 U.S.C. 1752a(d)* , which authorizes NCUA to adopt regulations it deems necessary for transaction of its business. II. The Final Rule A. Subpart A—Scope, Purpose, Definitions and Delegations of Authority The final rule applies only to debts owed to the United States which arise out of NCUA transactions and functions in its agency capacity, including, but not limited to, erroneous salary overpayments to employees and claims arising out of employee benefit withholdings and contributions. The rule does not apply to debts owed to or payments made by NCUA in connection with NCUA's conservatorship, liquidation, supervision, enforcement, or insurance responsibilities, nor does it limit or affect NCUA's authority pursuant to *12 U.S.C. 1752(a) and 1766* . The Executive Director shall follow the procedural standards for collecting debts set forth in the FCCS when he determines that it is appropriate to initiate debt collection or seek offset to collect a debt. 31 CFR parts 900 through 904. The FCCS establish procedures governing the following areas of the debt collection process:

(1)Prompt demand for payment of the claim from the debtor;

(2)review of the existence or amount of a debt claimed upon the debtor's demand for a final agency determination;

(3)standards for collecting debts in installment payments;

(4)the assessment of interest, penalties and administrative costs on debts claimed;

(5)standards for compromise of claims due; and

(6)standards to be followed in determining whether to suspend or terminate collection action. B. Subpart B—Administrative Offset Pursuant to *31 U.S.C. 3716* , NCUA may collect debts owed to the United States through administrative offset. Subpart B of the final rule authorizes NCUA to collect debts owed to the United States by:

(1)Withholding money payable by NCUA to the debtor, or held by NCUA for the debtor; or

(2)by requesting that another federal agency withhold money payable to the debtor, or held by the other federal agency for the debtor. Subpart B meets the requirements under *31 U.S.C. 3716(b)* to provide due process rights to the debtor, including the ability to verify, challenge, and compromise claims, and to provide to administrative appeals procedures which are both reasonable and protect the interests of NCUA. Subpart B also meets the requirement of *31 U.S.C. 3711(d)* that NCUA promulgate administrative offset regulations consistent with the standards established by the Attorney General and the Secretary of the Treasury. C. Subpart C—Salary Offset Subpart C of the final rule provides that when NCUA determines it is appropriate to collect a debt by means of deductions from the current pay account of an NCUA employee, or any individual employed by the federal government (including a former NCUA employee), NCUA shall initiate a salary offset under *5 U.S.C. 5514(a)(1)* . Salary offset is a form of administrative offset governed by statute ( *5 U.S.C. 5514* ) and by regulations issued by the OPM (5 CFR part 550, subpart K). Salary offset may only be used to collect debts owed by persons currently employed by the federal government. Agencies are required to promulgate their own salary offset regulations that conform to OPM's salary offset regulations. As noted above, salary offset rules must receive OPM approval before the regulations become effective. *5 U.S.C. 5514(b)(1);* 5 CFR 550.1104. Subpart C implements those statutory requirements. III. Administrative Procedure Act NCUA has determined that this rule pertains to agency practice and procedure and is interpretative in nature. The procedures contained in the rule for salary offset and administrative offset are mandated by law and by regulations promulgated by OPM, jointly by the Department of the Treasury and the Department of Justice and by the IRS. Notice of proposed rulemaking is not required under the Administrative Procedure Act

(APA)because the rule pertains solely to agency procedure and practice. *5 U.S.C. 553(b)(3)(A)* . Notice and an opportunity for public comment are not necessary prior to issuance of this final rule because it implements a definitive statutory scheme mandated by the DCIA. Regulatory Flexibility Act The Regulatory Flexibility Act requires that NCUA prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small credit unions, or those with under $10 million dollars in assets. The final rule applies to federal agencies and federal employees. Accordingly, the Board determines and certifies that this final rule does not have significant economic impact on a substantial number of small credit unions and that a Regulatory Flexibility Analysis is not required. Paperwork Reduction Act The final rule is not subject to the Paperwork Reduction Act ( *44 U.S.C. 3501* ), since it does not contain any new information collection requirements. Executive Order 13132 Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in *44 U.S.C. 3502(5)* , voluntarily complies with the executive order. The final rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order. The Treasury and General Government Appropriations Act, 1999—Assessment of Federal Regulations and Policies on Families The NCUA has determined that this final rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2682 (1998). Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the APA. *5 U.S.C. 551* . NCUA has obtained the determination of the Office of Management and Budget that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996. List of Subjects in 12 CFR Part 797 Administrative practice and procedure, Claims, Debt collection, Government employees, Hearing procedures, Wages. By the National Credit Union Administration Board on February 21, 2008. Mary F. Rupp, Secretary of the Board. For the reasons set forth in the preamble, NCUA adds 12 CFR part 797 to read as follows: PART 797—PROCEDURES FOR DEBT COLLECTION Subpart A—Scope, Purpose, Definitions and Delegation of Authority Sec. 797.1 Scope. 797.2 Purpose. 797.3 Definitions. 797.4 Delegation of authority. Subpart B—Administrative Offset 797.5 Authority and scope. 797.6 Administrative offset prior to completion of procedures. 797.7 Procedures. 797.8 Right to agency review. 797.9 Review procedures. 797.10 Special review. 797.11 Interest, administrative costs, and penalties. 797.12 Refunds. 797.13 Requests for administrative offset where NCUA is the creditor agency. 797.14 Requests for administrative offset where NCUA is the paying agency. 797.15 Administrative offset against amounts payable from Civil Service Retirement and Disability Fund. 797.16 Stay of offset. Subpart C—Salary Offset 797.17 Authority and scope. 797.18 Notice requirements where NCUA is the creditor agency. 797.19 Review of agency records related to the debt. 797.20 Procedures to request a hearing. 797.21 Hearing procedures. 797.22 Voluntary repayment agreement. 797.23 Certification where NCUA is the creditor agency. 797.24 Certification where NCUA is the paying agency. 797.25 Recovery from final check or other payments due a separated employee. Authority: 12 U.S.C. 1752a; 5 U.S.C. 5514; 31 U.S.C. 3711, 3716, 3720A, 3720D. Subpart A—Scope, Purpose, Definitions and Delegation of Authority § 797.1 Scope. This part establishes NCUA procedures for the collection of certain debts owed to the United States.

(a)This part applies to collections by NCUA from:

(1)Federal employees who are indebted to NCUA;

(2)Employees of NCUA who are indebted to other agencies or NCUA; and

(3)Former federal employees who are indebted to NCUA.

(b)This part does not apply:

(1)To debts or claims arising under the Internal Revenue Code of 1986 (Title 26, U.S. Code), the Social Security Act ( *42 U.S.C. 301 et seq.* ), or the tariff laws of the United States;

(2)To a situation to which the Contract Disputes Act ( *41 U.S.C. 601 et seq.* ) applies;

(3)In any case where collection of a debt is explicitly provided for or prohibited by another statute;

(4)To debts owed to or payments made by NCUA in connection with NCUA's conservatorship, liquidation, supervision, enforcement, or insurance responsibilities pursuant to *12 U.S.C. 1786 and 1787* , nor does it limit or affect NCUA's authority with respect to debts and/or claims pursuant to *12 U.S.C. 1752(a) and 1766* .

(c)Nothing in this part precludes the compromise, suspension, or termination of collection actions, where appropriate, under standards implementing the Debt Collection Improvement Act

(DCIA)( *31 U.S.C. 3711 et seq.* ), the Federal Claims Collection Standards

(FCCS)(31 CFR parts 900 through 904); or any other applicable law. § 797.2 Purpose.

(a)The purpose of this part is to implement federal statutes and regulatory standards authorizing NCUA to collect debts owed to the United States. This part is consistent with the following federal statutes and regulations:

(1)DCIA at *31 U.S.C. 3711* (collection and compromise of claims); section 3716 (administrative offset), and section 3717 (interest and penalty on claims).

(2)*5 U.S.C. 5514* (salary offset);

(3)*5 U.S.C. 5584* (waiver of claims for overpayment);

(4)31 CFR parts 900 through 904 (FCCS);

(5)5 CFR part 550, subpart K (salary offset);

(6)*31 U.S.C. 3720D* , 31 CFR 285.11 (administrative wage garnishment); and

(7)5 CFR 831.1801 through 1808 (U.S. Office of Personnel Management

(OPM)offset).

(b)Collectively, these statutes and regulations prescribe the manner in which federal agencies should proceed to establish the existence and validity of debts owed to the federal government and describe the remedies available to agencies to offset valid debts. § 797.3 Definitions. Except where the context clearly indicates otherwise or where the term is defined elsewhere in this subpart, the following definitions shall apply to this subpart.

(a)Administrative offset, as defined in *31 U.S.C. 3701(a)(1)* , means withholding money payable by the United States government to, or held by the government for, a person to satisfy a debt the person owes the government.

(b)Agency means a department, agency, or instrumentality in the Executive, Judicial, or Legislative branch of the government.

(c)Claim or debt means money or property owed by a person or entity to an agency of the federal government. A “claim” or “debt” includes amounts due the government, fees, services, overpayments, penalties, damages, interest, fines and forfeitures. For purposes of this part, a debt owed to NCUA constitutes a debt owed to the federal government.

(d)Claim certification means a creditor agency's written request to a paying agency to effect an administrative or salary offset.

(e)Creditor agency means an agency to which a claim or debt is owed.

(f)Debtor means the person or entity owing money to the federal government.

(g)Disposable pay means that part of current basic pay or other authorized pay remaining after the deduction of any amount required by law to be withheld. NCUA shall allow the deductions described in 5 CFR 581.105(b) through (f).

(h)Employee means a current employee of NCUA or another agency.

(i)FCCS means the Federal Claims Collection Standards published in 31 CFR part 900.

(j)Hearing official means an individual who is authorized to conduct a hearing with respect to the existence or amount of a debt claimed and issue a final decision on the basis of such hearing. A hearing official may not be under the supervision or control of NCUA when NCUA is the creditor agency.

(k)NCUA means the National Credit Union Administration.

(l)Paying agency means an agency of the federal government owing money to a debtor against which an administrative or salary offset can be effected.

(m)Salary offset means an administrative offset to collect a debt under *5 U.S.C. 5514* by deductions at one or more officially established pay intervals from the current pay account of a debtor.

(n)Waiver means the cancellation, remission, forgiveness, or nonrecovery of a debt allegedly owed by an employee to NCUA or another agency as permitted or required by *5 U.S.C. 5584* or any other law. § 797.4 Delegation of authority. Authority to conduct the following activities is delegated to the Executive Director to:

(a)Initiate and carry out the debt collection process on behalf of NCUA, in accordance with the FCCS;

(b)Accept or reject compromise offers, suspend, terminate or waive collection actions to the full extent of NCUA's legal authority under *12 U.S.C. 1752(a)* and *1789; 31 U.S.C. 3711* , and any other applicable statute or regulation.

(c)Report to consumer reporting agencies certain data pertaining to delinquent debts, where appropriate;

(d)Use offset procedures, including administrative and salary offset, to collect debts; and

(e)Take any other action necessary to promptly and effectively collect debts owed to the government in accordance with the policies contained herein and as otherwise provided by law. Subpart B—Administrative Offset § 797.5 Authority and scope. NCUA may collect a debt owed to the federal government from a person, organization, or other entity by administrative offset, pursuant to 31 U.S.C. 3716, where:

(a)The debt is certain in amount;

(b)Administrative offset is feasible, desirable, and not otherwise prohibited;

(c)The applicable statute of limitations has not expired; and

(d)Administrative offset is in the best interest of the federal government. § 797.6 Administrative offset prior to completion of procedures. Prior to the completion of the procedures described in § 797.7, NCUA may effect administrative offset if failure to offset would substantially prejudice its ability to collect the debt, and if the time before the payment is to be made does not reasonably permit completion of the procedures described in § 797.7. Such prior administrative offset shall be followed promptly by the completion of the procedures described in § 797.7. § 797.7 Procedures. Prior to collecting any debt by administrative offset or referring such claim to another agency for collection through administrative offset, NCUA shall provide the debtor with a written Notice of Intent to Collect by Administrative Offset (the Notice) at least 30 calendar days before administrative offset is to commence. The Notice shall provide the following information:

(a)The nature and amount of the debt, the intention of NCUA to collect the debt through administrative offset, and a statement of the rights of the debtor under this section, including the right to request a waiver under *5 U.S.C. 5584* ;

(b)An opportunity to inspect and copy the records of NCUA related to the debt or receive copies if personal inspection is impractical;

(c)The payment due date, which shall be 30 calendar days from the date after receipt of the initial demand for payment;

(d)An opportunity for the debtor to obtain a review of the determination of indebtedness. Any request for review by the debtor shall be in writing and shall be submitted to NCUA within 15 calendar days after receipt of the Notice. NCUA may waive the time limits for requesting review for good cause shown by the debtor. NCUA shall provide the debtor with a reasonable opportunity for an oral hearing when:

(1)An applicable statute authorizes or requires NCUA to consider waiver of the indebtedness involved, the debtor requests waiver of the indebtedness, and the waiver determination turns on an issue of credibility or veracity; or

(2)The debtor requests reconsideration of the debt and NCUA determines that the question of the indebtedness cannot be resolved by review of the documentary evidence, as for example, when the validity of the debt turns on an issue of credibility or veracity. Unless otherwise required by law, an oral hearing under this subpart is not required to be a formal evidentiary hearing, although NCUA shall document all significant matters discussed at the hearing. In those cases where an oral hearing is not required by this subpart, NCUA shall make its determination on the request for waiver or reconsideration based upon a review of the written record.

(e)An opportunity to enter into a written agreement for the repayment of the amount of the claim at the discretion of NCUA;

(f)That charges for interest, penalties, and administrative costs will be assessed against the debtor, in accordance with *31 U.S.C. 3717* , if payment is not received by the payment due date, unless excused by the FCCS;

(g)That if the debtor has not entered into an agreement with NCUA to pay the debt, has not requested NCUA to review the debt, or has not paid the debt by the payment due date, NCUA intends to collect the debt by all legally available means;

(h)The name and address of the Executive Director whom the debtor shall send all correspondence relating to the debt; and

(i)Other information, as may be appropriate. § 797.8 Right to agency review.

(a)If the debtor disputes the claim, the debtor may request a review of NCUA's determination of the existence of the debt or of the amount of the debt. If only part of the claim is disputed, the undisputed portion should be paid by the payment due date.

(b)To obtain a review, the debtor shall submit a written request for review to the Executive Director within 15 calendar days after receipt of the Notice. The debtor's request for review shall state the basis on which the claim is disputed.

(c)The NCUA shall promptly notify the debtor, in writing, that the NCUA has received the request for review. The NCUA shall conduct its review of the claim in accordance with § 797.9. § 797.9 Review procedures.

(a)Unless an oral hearing is required by § 797.7(d), NCUA's review shall be a review of the written record of the claim.

(b)If an oral hearing is required, NCUA shall provide the debtor with a reasonable opportunity for such a hearing. The oral hearing, however, shall not be an adversarial adjudication and need not take the form of a formal evidentiary hearing. All significant matters discussed at the hearing, however, will be carefully documented.

(c)Any review required by this part, whether a review of the written record or an oral hearing, shall be conducted by a hearing official. When NCUA is the creditor agency and the debtor is an NCUA employee, NCUA shall contact any agency designated in appendix A to 5 CFR part 581 to arrange for a hearing official. When NCUA is the creditor agency and the debtor is not an NCUA employee (i.e., the debtor is employed by another federal agency, also known as the paying agency), and NCUA cannot provide a prompt and appropriate hearing, NCUA may contact an agent of the paying agency designated in appendix A to 5 CFR part 581 to arrange for a hearing official. The paying agency must cooperate with NCUA to provide a hearing official, as required by the FCCS.

(d)The hearing official shall issue a final written decision based on documentary evidence and, if applicable, information developed at an oral hearing. The written decision shall be issued as soon as practicable after the review but not later than 60 days after the date on which the request for review was received by NCUA, unless the debtor requests a delay in the proceedings. A delay in the proceedings shall be granted if the hearing official determines that there is good cause to grant the delay. If a delay is granted, the 60-day decision period shall be extended by the number of days by which the review was postponed.

(e)Upon issuance of the written opinion, NCUA shall promptly notify the debtor of the hearing official's decision. The notification shall include a copy of the written decision issued by the hearing official. § 797.10 Special review.

(a)An employee subject to offset, or a voluntary repayment agreement, may, at any time, request a special review by the Executive Director of the amount of the offset or voluntary repayment, based on materially changed circumstances, including, but not limited to, catastrophic illness, divorce, death, or disability.

(b)To determine whether an offset would prevent the employee from meeting essential subsistence expenses, the employee shall submit a detailed statement and supporting documents for the employee, the employee's spouse, and dependents indicating the employee's assets and liabilities.

(c)If the employee requests a special review under this section, the employee shall file an alternative proposed offset or payment schedule and a statement.

(d)The Executive Director shall evaluate the statement and supporting documents, and determine whether the original offset or repayment schedule imposes an undue financial hardship on the employee. The Executive Director shall notify the employee in writing within 30 calendar days of such determination, including, if appropriate, a revised offset or payment schedule. If the special review results in a revised offset or repayment schedule, NCUA shall provide a new certification to the paying agency. § 797.11 Interest, administrative costs, and penalties. Where NCUA is the creditor agency, it shall assess interest, penalties and administrative costs pursuant to *31 U.S.C. 3717* and 31 CFR parts 900 through 904, unless excused in accordance with the FCCS. § 797.12 Refunds. NCUA shall refund promptly those amounts recovered by offset but later found not to be owed to the federal government. § 797.13 Requests for administrative offset where NCUA is the creditor agency.

(a)NCUA may request that a debt owed to NCUA be collected by administrative offset against funds due and payable to a debtor by another agency.

(b)In requesting administrative offset, NCUA, as creditor, shall certify in writing to the agency holding funds of the debtor:

(1)That the debtor owes the debt;

(2)The amount and basis of the debt; and

(3)That NCUA has complied with the requirements of its own administrative offset regulations and the applicable provisions of the FCCS with respect to providing the debtor with due process. § 797.14 Requests for administrative offset from other federal agencies where NCUA is the paying agency.

(a)Any agency may request that funds due and payable to a debtor by NCUA be administratively offset in order to collect a debt owed to such agency by the debtor.

(b)NCUA shall initiate the requested administrative offset only upon receipt of a written certification from the creditor agency that:

(1)The debtor owes the debt, including the amount and basis of the debt;

(2)The agency has prescribed regulations for the exercise of administrative offset; and

(3)The agency has complied with its own administrative offset regulations and with the applicable provisions of the FCCS, with respect to providing the debtor with due process. § 797.15 Administrative offset against amounts payable from Civil Service Retirement and Disability Fund. NCUA may request that monies payable to a debtor from the Civil Service Retirement and Disability Fund be administratively offset to collect debts owed to NCUA by the debtor. NCUA shall provide OPM with a written certification that states the debtor owes the debt, the amount of the debt, and that NCUA has complied with the agency's offset regulations, as well as, the requirements set forth in 31 CFR parts 900 through 904 and OPM's regulations. § 797.16 Stay of offset.

(a)When a creditor agency receives a debtor's request for inspection of agency records, the offset is stayed for 15 calendar days beyond the date set for the record inspection.

(b)When a creditor agency receives a debtor's offer to enter into a repayment agreement, the offset is stayed until the debtor is notified as to whether the proposed agreement is acceptable.

(c)When a review is conducted, the offset is stayed until the creditor agency issues a final written decision. The written decision must be issued within 60 days after receipt of the debtor's request for review. Subpart C—Salary Offset § 797.17 Authority and scope.

(a)NCUA may collect debts owed by employees to the federal government by means of salary offset under the authority of 5 U.S.C. 5514, 5 CFR part 550, subpart K, and this subpart. The procedures set forth in this subpart apply to situations where NCUA is attempting to collect a debt by salary offset that is owed to it by an individual employed by NCUA or by another agency; or where NCUA employs an individual who owes a debt to another agency. Since salary offset is a type of administrative offset, this subpart supplements subpart B.

(b)The procedures set forth in this subpart do not apply to:

(1)Any routine intra-agency adjustment of pay that is attributable to clerical or administrative error or delay in processing pay documents that have occurred within the four pay periods preceding the adjustment, or any adjustment to collect a debt amounting to $50 or less. However, at the time of any such adjustment, or as soon thereafter as possible, NCUA or its designated payroll agent shall provide the employee with a written notice of the nature and the amount of the adjustment and a point of contact for contesting such adjustment.

(2)Any negative adjustment to pay that arises from an employee's election of coverage or a change in coverage under a federal benefits program that requires periodic deductions from pay, if the amount to be recovered was accumulated over four pay periods or less. However, at the time that such adjustment is made, NCUA shall provide the employee a statement that informs the employee of the previous overpayment. § 797.18 Notice requirements where NCUA is the creditor agency. Where NCUA seeks salary offset under *5 U.S.C. 5514* as the creditor agency, NCUA shall first provide the employee with a written Notice of Intent to Collect by Salary Offset (the Notice) at least 30 calendar days before salary offset is to commence. The Notice shall provide the following information:

(a)That the Executive Director has determined that a debt is owed to NCUA and intends to collect the debt by means of deduction from the employee's current disposable pay account until the debt and all accumulated interest is paid in full or otherwise resolved;

(b)The amount of the debt and the factual basis for the debt;

(c)A salary offset schedule stating the frequency and amount of each deduction, stated as a fixed dollar amount or percentage of disposable pay not to exceed 15 percent;

(d)That in lieu of salary offset, the employee may propose a voluntary repayment plan to satisfy the debt on terms acceptable to NCUA, which must be documented in writing, signed by the employee and the Executive Director, and documented in NCUA's files;

(e)NCUA's policy concerning interest, penalties, and administrative costs, and a statement that such assessments must be made, unless excused in accordance with the FCCS;

(f)That the employee has the right to inspect and copy NCUA records related to the debt, or to receive copies of such records if personal inspection is impractical;

(g)That the employee has a right to request a hearing regarding the existence and amount of the debt claimed or the salary offset schedule proposed by NCUA, provided that the employee files a request for such a hearing with NCUA in accordance with § 797.20, and that such a hearing will be conducted by a hearing official not under the supervision or control of NCUA;

(h)The procedure and deadline for requesting a hearing, including the name, address, and telephone number of the Executive Director or other designated individual to whom a request for a hearing must be sent;

(i)That a request for hearing must be received by NCUA on or before the 30th calendar day following receipt of the Notice, and that filing of a request for hearing will stay the collection proceedings;

(j)That NCUA will initiate salary offset procedures not less than 30 days from the date of the employee's receipt of the Notice, unless the employee files a timely request for a hearing;

(k)That if a hearing is held, the hearing official will issue a decision at the earliest practical date, but not later than 60 days after the filing of the request for the hearing, unless the employee requests a delay in the proceedings which is granted by the hearing official;

(l)That any knowingly false or frivolous statements, representations, or evidence may subject the employee to disciplinary procedures appropriate under *5 U.S.C. chapter 75,* 5 CFR part 752; penalties under the False Claims Act, *31 U.S.C. 3729* through *3731;* criminal penalties under *18 U.S.C. 286, 287, 1001, 1002;* or any other applicable statutory authority; and

(m)That the employee also has the right to request waiver of overpayment pursuant to *5 U.S.C. 5584,* and may exercise any other rights and remedies available under statutes or regulations governing the program for which the collection is being made. § 797.19 Review of NCUA records related to the debt.

(a)An employee who desires to inspect or copy NCUA records related to the employee's debt must send a written request to the Executive Director or the individual designated in the Notice. The letter must be received in the office of that individual within 15 calendar days after the employee's receipt of the Notice.

(b)In response to a timely request submitted by the employee, the employee shall be notified of the location and time when the employee may inspect and copy records related to the debt. If the employee is unable personally to inspect such records, NCUA shall arrange to send copies of such records to the employee. § 797.20 Procedures to request a hearing.

(a)To request a hearing, an employee must send a written request to the Executive Director within 15 calendar days after the employee's receipt of the Notice. If the employee files a request for a hearing after the expiration of the 15th calendar day, NCUA may accept the request if the employee can show that the delay was the result of circumstances beyond the employee's control or the employee failed to receive actual notice of the filing deadline.

(b)The request for a hearing must be signed by the employee and must fully identify and explain with reasonable specificity all the facts, evidence, and witnesses, if any, that support the employee's position. The request must also state whether the employee is requesting an oral or documentary hearing. If an oral hearing is requested, the request shall state why the matter cannot be resolved by a review of documentary evidence alone.

(c)The failure of an employee to request a hearing will be considered an admission by the employee that the debt exists in the amount specified in the Notice. § 797.21 Hearing procedures.

(a)*Obtaining the services of a hearing official.* When the debtor is not an NCUA employee and NCUA cannot provide a prompt and appropriate hearing before a hearing official, NCUA may request a hearing official from an agent of the paying agency, as designated in 5 CFR part 581, appendix A, or as otherwise designated by the paying agency. When the debtor is an NCUA employee, NCUA may contact any agent of another agency, as designated in 5 CFR part 581, appendix A.

(b)*Notice of hearing.* After the employee requests a hearing, the hearing official shall notify the employee of the form of the hearing to be provided. If the hearing will be oral, the notice shall set forth the date, time, and location of the hearing, which must occur no more than 30 calendar days after the request is received, unless the employee requests that the hearing be delayed. If the hearing will be conducted by an examination of documents, the employee, within 30 calendar days, shall submit any evidence or written arguments that should be considered by the hearing official.

(c)*Oral hearing.*

(1)An employee who requests an oral hearing shall be provided an oral hearing if the hearing official determines that the matter cannot be resolved by an examination of the documents alone, as for example, when an issue of credibility or veracity is involved. The oral hearing need not be an adversarial adjudication and rules of evidence need not apply.

(2)Oral hearings may take the form of, but are not limited to:

(i)Informal conferences with the hearing official in which the employee and agency representative are given full opportunity to present evidence, witnesses, and argument;

(ii)Informal meetings in which the hearing examiner interviews the employee; or

(iii)Formal written submissions followed by an opportunity for oral presentation.

(d)*Hearing by examination of documents.* If the hearing official determines that an oral hearing is not necessary, the hearing official shall make the determination based upon an examination of the documents.

(e)*Record.* The hearing official shall maintain a summary record of any hearing conducted under this section.

(f)*Decision.*

(1)The hearing official shall issue a written decision based upon evidence and information developed at the hearing or in the case of a documentary hearing the decision shall be based on the documents and written submissions. The decision shall be issued, as soon as practicable after the hearing, but not later than 60 calendar days after the hearing request was received by NCUA. If the hearing was delayed at the request of the employee, the 60-day decision period shall be extended by the number of days by which the hearing was postponed.

(2)The decision of the hearing official shall be final and is considered to be an official certification regarding the existence and the amount of the debt for purposes of executing salary offset under *5 U.S.C. 5514.* If the hearing official determines that a debt may not be collected by salary offset, but NCUA finds that the debt is still valid, NCUA may seek collection of the debt through other means in accordance with applicable law and regulations.

(g)*Content of decision.* The written decision shall include:

(1)A summary of the facts concerning the origin, nature, and amount of the debt;

(2)The hearing official's findings, analysis, and conclusions; and

(3)The terms of any repayment schedules, if applicable.

(h)*Failure to appear.* If the employee or the NCUA representative fails to appear, the hearing official shall proceed with the hearing as scheduled, and issue the decision based upon the oral testimony presented and the documentation submitted by both parties. At the request of both parties, the hearing official may re-schedule the hearing date. § 797.22 Voluntary repayment agreement.

(a)In response to the Notice, an employee may propose to repay the debt voluntarily in lieu of salary offset by submitting a written proposed repayment schedule to NCUA. Any proposal under this section must be received by NCUA within 15 calendar days after receipt of the Notice.

(b)In response to a timely proposal by the employee, NCUA shall notify the employee whether the employee's proposed repayment schedule is acceptable. NCUA has the discretion to accept, reject, or propose to the employee a modification of the proposed repayment schedule.

(1)If NCUA decides that the proposed repayment schedule is unacceptable, the employee shall have 15 calendar days from the date of the decision in which to file a request for a hearing.

(2)If NCUA decides that the proposed repayment schedule is acceptable or the employee agrees to a modification proposed by NCUA, an agreement shall be put in writing and signed by both the employee and NCUA. § 797.23 Certification where NCUA is the creditor agency.

(a)NCUA shall issue a certification in all cases where the hearing official determines that a debt exists or the employee admits the existence and amount of the debt, as for example, by failing to request a hearing.

(b)The certification must be in writing and state:

(1)That the employee owes the debt;

(2)The amount and basis of the debt;

(3)The date the federal government's right to collect the debt first accrued;

(4)The date the employee was notified of the debt, the action(s) taken pursuant to NCUA's regulations, and the dates such actions were taken;

(5)If the collection is to be made by lump-sum payment, the amount and date such payment will be collected;

(6)If the collection is to be made in installments, the amount or percentage of disposable pay to be collected in each installment and, if NCUA wishes, the desired commencing date of the first installment, if a date other than the next officially established pay period; and

(7)A statement that NCUA's regulation on salary offset has been approved by OPM pursuant to 5 CFR part 550, subpart K. § 797.24 Certification where NCUA is the paying agency.

(a)Upon issuance of a proper certification by NCUA or upon receipt of a proper certification from another creditor agency, NCUA shall send the employee a written notice of salary offset.

(b)Such written notice of salary offset shall advise the employee of the:

(1)Certification that has been issued by NCUA or received from another creditor agency;

(2)Amount of the debt and of the deductions to be made; and

(3)Date and pay period when the salary offset will begin.

(c)If NCUA is not the creditor agency, NCUA shall provide a copy of the notice to the creditor agency and advise the creditor agency of the dollar amount to be offset and the pay period when the offset will begin. § 797.25 Recovery from final check or other payments due a separated employee.

(a)*Lump-sum deduction from final check.* In order liquidate a debt, a lump-sum deduction exceeding 15 percent of disposable pay may be made pursuant to *31 U.S.C. 3716* from any final salary payment due a former employee, whether the former employee was separated voluntarily or involuntarily.

(b)*Lump-sum deductions from other sources.* Whenever an employee subject to salary offset is separated from NCUA, and the balance of the debt cannot be liquidated by offset of the final salary payment, NCUA may offset any later payments of any kind to the former employee to collect the balance of the debt pursuant to *31 U.S.C. 3716.* [FR Doc. E8-3799 Filed 2-29-08; 8:45 am] BILLING CODE 7535-01-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2007-29249; Directorate Identifier 2007-NM-112-AD; Amendment 39-15294; AD 2007-25-12] RIN 2120-AA64 Airworthiness Directives; Airbus Model A318, A319, A320, and A321 Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule; correction. SUMMARY: The FAA is correcting a typographical error in an existing airworthiness directive

(AD)that was published in the **Federal Register** on December 10, 2007 (72 FR 69593). The error resulted in a potential for confusion regarding the applicability of the AD. This AD applies to certain Airbus Model A318, A319, A320, and A321 series airplanes. This AD requires inspections of the landing gear

(LG)selector valve 40GA and the LG door selector valve 41GA, to identify a possible hydraulic leak. The corrective action includes replacing the LG selector valve 40GA and/or the LG door selector valve 41GA if necessary. DATES: Effective January 14, 2008. ADDRESSES: You may examine the AD docket on the Internet at *http://www.regulations.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The address for the Docket Office (telephone 800-647-5527) is the Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. FOR FURTHER INFORMATION CONTACT: Tim Dulin, Aerospace Engineer, International Branch, ANM-116, FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)227-2141; fax

(425)227-1149. SUPPLEMENTARY INFORMATION: On November 21, 2007, the FAA issued AD 2007-25-12, amendment 39-15294 (72 FR 69593, December 10, 2007), for certain Airbus Model A318, A319, A320, and A321 series airplanes. The AD requires inspections of the landing gear

(LG)selector valve 40GA and the LG door selector valve 41GA, to identify a possible hydraulic leak. The corrective action includes replacing the LG selector valve 40GA and/or the LG door selector valve 41GA if necessary. As published, the AD applies to airplanes identified in paragraphs (c)(1) “and” (c)(2) of this AD instead of those identified in paragraph (c)(1) “or” (c)(2) of this AD. This change is relieving in nature, and no other part of the regulatory information has been changed; therefore, the final rule is not republished in the **Federal Register** . The effective date of this AD remains January 14, 2008. § 39.13 [Corrected] In the **Federal Register** of December 10, 2007, on page 69594, in the second column, paragraph

(c)of AD 2007-25-12 is corrected to read as follows:

(c)This AD applies to Airbus Model A318, A319, A320, and A321 series airplanes, certificated in any category, except those identified in paragraph (c)(1) or (c)(2) of this AD. Issued in Renton, Washington, on February 25, 2008. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3930 Filed 2-29-08; 8:45 am] BILLING CODE 4910-13-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2008-0226; Directorate Identifier 2008-NM-016-AD; Amendment 39-15404; AD 2008-05-10] RIN 2120-AA64 Airworthiness Directives; Boeing Model 757-200, -200PF, and -200CB Series Airplanes AGENCY: Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule; request for comments. SUMMARY: The FAA is superseding an existing airworthiness directive

(AD)that applies to certain Boeing Model 757-200, -200PF, and -200CB series airplanes powered by Rolls-Royce engines. The existing AD currently requires repetitive inspections of the shim installation between the vertical flange and bulkhead, and repair if necessary. The existing AD also requires, for certain airplanes, an inspection for cracking of the four critical fastener holes in the horizontal flange, and repair if necessary. This new AD retains the requirements of the existing AD, and requires that the existing action be performed on airplanes without conclusive records of previous inspections. This AD results from our determination that an operator did not maintain records of previous inspections that are necessary to determine the appropriate corrective actions. We are issuing this AD to detect and correct cracks, loose and broken bolts, and shim migration in the joint between the aft torque bulkhead and the strut-to-diagonal brace fitting, which could result in damage to the strut and consequent separation of the strut and engine from the airplane. DATES: This AD becomes effective March 18, 2008. On August 24, 2007 (72 FR 44753, August 9, 2007), the Director of the Federal Register approved the incorporation by reference of Boeing Alert Service Bulletin 757-54A0047, Revision 3, dated June 27, 2007. We must receive any comments on this AD by May 2, 2008. ADDRESSES: You may send comments by any of the following methods: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the instructions for submitting comments. • *Fax:* 202-493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this AD, contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207. Examining the AD Docket You may examine the AD docket on the Internet at *http://www.regulations.gov;* or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt. FOR FURTHER INFORMATION CONTACT: Jason Deutschman, Aerospace Engineer, Airframe Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue, SW., Renton, Washington 98057-3356; telephone

(425)917-6449; fax

(425)917-6590. SUPPLEMENTARY INFORMATION: Discussion On July 31, 2007, we issued AD 2007-16-13, amendment 39-15152 (72 FR 44753, August 9, 2007). That AD applies to certain Boeing Model 757-200, -200PF, and -200CB series airplanes powered by Rolls-Royce engines. That AD requires repetitive inspections of the shim installation between the vertical flange and bulkhead, and repair if necessary. That AD also requires, for certain airplanes, an inspection for cracking of the four critical fastener holes in the horizontal flange, and repair if necessary. That AD resulted from reports of cracking in the pylon under bolts that appear to be undamaged during the existing AD inspections. The actions specified in that AD are intended to detect and correct cracks, loose and broken bolts, and shim migration in the joint between the aft torque bulkhead and the strut-to-diagonal brace fitting, which could result in damage to the strut and consequent separation of the strut and engine from the airplane. Actions Since AD Was Issued Since we issued that AD, we have determined that some operators have not maintained records of findings (positive or negative) beyond one year of inspections conducted in accordance with AD 2007-16-13 or AD 2005-12-04 (which AD 2007-16-13 superseded). Therefore, there is no way to determine conclusively what the findings were during previous inspections. Inspection findings during previous inspections are necessary to determine what additional corrective actions need to be taken in order to adequately address the unsafe condition identified in this AD. This AD has new requirements for these airplanes that do not have records of findings during previous inspections. FAA's Determination and Requirements of This AD The unsafe condition described previously is likely to exist or develop on other airplanes of the same type design. For this reason, we are issuing this AD to supersede AD 2007-16-13. This new AD retains the requirements of the existing AD. This AD also requires that the existing requirements be performed on airplanes for which there are no conclusive records of previous inspections. FAA's Justification and Determination of the Effective Date We are issuing this AD to detect and correct cracks, loose and broken bolts, and shim migration in the joint between the aft torque bulkhead and the strut-to-diagonal brace fitting. These conditions could result in damage to the strut and consequent separation of the strut and engine from the airplane. Because of our requirement to promote safe flight of civil aircraft and thus, the critical need to ensure the structural integrity of the aft torque bulkhead and the strut-to-diagonal brace fitting for the engine strut and the short compliance time involved with this action, this AD must be issued immediately. Because an unsafe condition exists that requires the immediate adoption of this AD, we find that notice and opportunity for prior public comment hereon are impracticable and that good cause exists for making this amendment effective in less than 30 days. Comments Invited This AD is a final rule that involves requirements affecting flight safety, and we did not provide you with notice and an opportunity to provide your comments before it becomes effective. However, we invite you to send any written data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2008-0226; Directorate Identifier 2008-NM-016-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments. We will post all comments we receive, without change, to *http://www.regulations.gov* , including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD. Authority for This Rulemaking Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority. We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action. Regulatory Findings We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. For the reasons discussed above, I certify that the regulation: 1. Is not a “significant regulatory action” under Executive Order 12866; 2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and 3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket. See the ADDRESSES section for a location to examine the regulatory evaluation. List of Subjects in 14 CFR Part 39 Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety. Adoption of the Amendment Accordingly, under the authority delegated to me by the Administrator, the FAA amends part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows: PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority: 49 U.S.C. 106(g), 40113, 44701. § 39.13 [Amended] 2. The Federal Aviation Administration

(FAA)amends § 39.13 by removing amendment 39-15152 (72 FR 44753, August 9, 2007) and adding the following new airworthiness directive (AD): **2008-05-10 Boeing:** Docket No. FAA-2008-0226; Directorate Identifier 2008-NM-016-AD; Amendment 39-15404. Effective Date

(a)This AD becomes effective March 18, 2008. Affected ADs

(b)This AD supersedes AD 2007-16-13. Accomplishing the actions specified in this AD terminates certain requirements of AD 2004-12-07, amendment 39-13666. Applicability

(c)This AD applies to Boeing Model 757-200, -200PF, and -200CB series airplanes; certificated in any category; line numbers 1 through 1048 inclusive; powered by Rolls-Royce engines. Unsafe Condition

(d)This AD results from our determination that an operator did not maintain records of previous inspections that are necessary to determine the appropriate corrective actions. We are issuing this AD to detect and correct cracks, loose and broken bolts, and shim migration in the joint between the aft torque bulkhead and the strut-to-diagonal brace fitting, which could result in damage to the strut and consequent separation of the strut and engine from the airplane. Compliance

(e)You are responsible for having the actions required by this AD performed within the compliance times specified, unless the actions have already been done. Restatement of the Requirements of AD 2007-16-13 Service Bulletin Reference

(f)The term “alert service bulletin,” as used in this AD, means Boeing Alert Service Bulletin 757-54A0047, Revision 3, dated June 27, 2007. One-Time Inspection and Repair

(g)For airplanes identified in paragraphs (g)(1) and (g)(2) of this AD: Within 90 days after August 24, 2007 (the effective date of AD 2007-16-13), do a high frequency eddy current

(HFEC)inspection for cracking of the four critical fastener holes in the horizontal flange and, before further flight, do all applicable repairs, in accordance with Part IV of the Accomplishment Instructions of the alert service bulletin, except as required by paragraph

(k)of this AD.

(1)Airplanes on which findings on the horizontal or vertical fasteners or the shims led to a rejection of any fastener during the actions specified in Boeing Alert Service Bulletin 757-54A0047, dated November 13, 2003; or Boeing Service Bulletin 757-54A0047, Revision 1, dated March 24, 2005.

(2)Airplanes that had equivalent findings prior to Boeing Alert Service Bulletin 757-54A0047, dated November 13, 2003, except for findings on airplanes identified as Group 1, Configuration 2, in the alert service bulletin that were prior to the incorporation of Boeing Service Bulletin 757-54-0035. Repetitive Inspections and Repair

(h)At the applicable times specified in paragraph 1.E., “Compliance,” of the alert service bulletin, except as required by paragraphs

(i)and

(j)of this AD: Do the inspections specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD and, before further flight, do all applicable related investigative actions and repairs, by doing all the actions specified in Parts I and II of the Accomplishment Instructions of the alert service bulletin, except as required by paragraph

(k)of this AD.

(1)Do detailed inspections of the shim installations between the vertical flange and bulkhead to determine if there are signs of movement.

(2)Do detailed inspections of the four fasteners in the vertical flange to determine if there are signs of movement or if there are gaps under the head or collar.

(3)Do detailed inspections of the fasteners that hold the strut to the horizontal flange of the strut-to-diagonal brace fitting to determine if there are signs of movement or if there are gaps under the head or collar. Exceptions To Alert Service Bulletin Procedures Specified in Paragraph (l)(2) of this AD

(i)Where the alert service bulletin specifies a compliance time relative to “the date on this service bulletin,” this AD requires compliance within the corresponding specified time relative to August 24, 2007.

(j)Where the alert service bulletin specifies a compliance time relative to the “date of issuance of airworthiness certificate,” this AD requires compliance within the corresponding time relative to the date of issuance of the original standard airworthiness certificate or the date of issuance of the original export certificate of airworthiness.

(k)If any crack is found during any inspection required by this AD, and the alert service bulletin specifies to contact Boeing for appropriate action: Before further flight, repair the crack using a method approved in accordance with the procedures specified in paragraph

(q)of this AD. New Requirements of This AD One-Time Inspection/Repair for Airplanes for Which There Are No Conclusive Inspection Records

(l)For airplanes for which there are no conclusive records showing no loose or missing fasteners during previous inspections done in accordance with the requirements of AD 2007-16-13, amendment 39-15152; or AD 2005-12-04, amendment 39-14120: Do the actions specified in paragraphs (l)(1) and (l)(2) of this AD, at the times specified in those paragraphs, as applicable.

(1)Within 90 days after the effective date of this AD, do the actions specified in paragraph

(g)of this AD, except as required by paragraph

(k)of this AD.

(2)At the applicable times specified in paragraph 1.E., “Compliance,” of the alert service bulletin, do the actions specified in paragraph

(h)of this AD, except as required by paragraphs

(j)and

(m)of this AD. And, before further flight, do all applicable related investigative actions and repairs, by doing all the actions specified in Parts I and II of the Accomplishment Instructions of the alert service bulletin, except as required by paragraph

(k)of this AD. Exception To Alert Service Bulletin Procedures

(m)Where the alert service bulletin specifies a compliance time relative to “the date on this service bulletin,” this AD requires compliance within the corresponding specified time relative to the effective date of this AD. Credit for Actions Done Using Previous Service Information

(n)Except for the actions specified in paragraph

(l)of this AD, actions done before the effective date of this AD in accordance with Boeing Service Bulletin 757-54A0047, Revision 1, dated March 24, 2005; or Boeing Alert Service Bulletin 757-54A0047, Revision 2, dated January 31, 2007; are considered acceptable for compliance with the corresponding actions specified in this AD.

(o)An inspection and corrective actions done before June 29, 2005 (the effective date of AD 2005-12-04), in accordance with paragraph

(b)or (c), as applicable, of AD 2004-12-07, are acceptable for compliance with the initial inspection requirement of paragraph

(h)of this AD. An Acceptable Method of Compliance With Certain Requirements of AD 2004-12-07

(p)Accomplishing the actions specified in this AD terminates the requirements specified in paragraphs

(b)and

(c)of AD 2004-12-07. Alternative Methods of Compliance (AMOCs) (q)(1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested in accordance with the procedures found in 14 CFR 39.19.

(2)To request a different method of compliance or a different compliance time for this AD, follow the procedures in 14 CFR 39.19. Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector

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

(3)An AMOC that provides an acceptable level of safety may be used for any repair required by this AD, if it is approved by an Authorized Representative for the Boeing Commercial Airplanes Delegation Option Authorization Organization who has been authorized by the Manager, Seattle ACO, to make those findings. For a repair method to be approved, the repair must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

(4)AMOCs approved previously in accordance with AD 2004-12-07 are approved as AMOCs for the corresponding provisions of this AD.

(5)AMOCs approved previously in accordance with AD 2005-12-04 are approved as AMOCs for the corresponding provisions of this AD.

(6)AMOCs approved previously in accordance with AD 2007-16-13 are approved as AMOCs for the corresponding provisions of this AD. Material Incorporated by Reference

(r)You must use Boeing Alert Service Bulletin 757-54A0047, Revision 3, dated June 27, 2007, to perform the actions that are required by this AD, unless the AD specifies otherwise.

(1)On August 24, 2007 (72 FR 44753, August 9, 2007), the Director of the Federal Register approved the incorporation by reference of this service information.

(2)Contact Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-2207, for a copy of this service information. You may review copies at the FAA, Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton, Washington; or at 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/cfr/ibr-locations.html* . Issued in Renton, Washington, on February 22, 2008. Ali Bahrami, Manager, Transport Airplane Directorate, Aircraft Certification Service. [FR Doc. E8-3928 Filed 2-29-08; 8:45 am] BILLING CODE 4910-13-P SOCIAL SECURITY ADMINISTRATION 20 CFR Parts 404 and 416 [Docket No. SSA 2007-0036] RIN 0960-AG49 Amendment to the Attorney Advisor Program AGENCY: Social Security Administration. ACTION: Final rule. SUMMARY: We are issuing this final rule to adopt without change the interim final rule we published on August 9, 2007, which temporarily modifies the prehearing procedures we follow in claims for Social Security disability benefits and supplemental security income

(SSI)payments based on disability or blindness. Under this final rule, we are permitting certain attorney advisors to conduct certain prehearing proceedings, and where the documentary record developed as a result of these proceedings warrants, issue decisions that are wholly favorable to the parties to the hearing. DATES: The interim rule published August 9, 2007 is effective March 3, 2008. FOR FURTHER INFORMATION CONTACT: Marilyn Hull, Social Security Administration, 5107 Leesburg Pike, Falls Church, VA 22041-3260, 703-605-8500 for information about this notice. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at *http://www.socialsecurity.gov* . SUPPLEMENTARY INFORMATION: Electronic Version The electronic file of this document is available on the date of publication in the **Federal Register** at *http://www.gpoaccess.gov/fr/index.html* . Explanation of Changes We are dedicated to providing high-quality service to the American public. Today and for the foreseeable future, we face significant challenges in our ability to provide the level of service that disability benefit claimants deserve because of the significantly increased number and complexity of these benefit claims. Consequently, we are temporarily modifying the procedures we follow in the administrative law judge

(ALJ)hearings process in claims for Social Security disability benefits and SSI payments based on disability or blindness. This temporary modification will help us provide accurate and timely service to claimants for Social Security disability benefits and SSI payments based on disability or blindness. With this modification, we are permitting certain attorney advisors to conduct certain prehearing proceedings to help develop claims and issue wholly favorable decisions in appropriate claims before a hearing is conducted. For reasons we explain in the Public Comments section of this preamble, we expect that this modification will help us to reduce the number of pending cases at the hearing level. We intend to monitor the program closely and to make changes if it does not meet our expectations. This temporary modification applies only to claims processed under parts 404 and 416 of our regulations; it does not apply to claims processed under part 405 of our regulations, which concerns only disability claims filed in the Boston region on or after August 1, 2006. Parts 404 and 416 of our regulations concern disability cases in every area outside the Boston region and non-disability cases in every location. Generally, when a claim is filed for Social Security disability benefits or SSI payments based on disability or blindness, a State agency makes the initial and reconsideration disability determinations for us. An ALJ conducts a hearing after we have made a reconsideration determination. Under this final rule, attorney advisors in our hearing offices whom we designate may conduct certain prehearing proceedings and, where appropriate, issue decisions that are wholly favorable to claimants and any other party to the hearing. Attorney advisors have performed these duties in the past. On June 30, 1995, we announced final rules establishing the attorney advisor program for a limited period of 2 years. 60 FR 34126 (1995). The program's success prompted us to extend the program several times, until it finally ended in April 2001. (62 FR 35073 (June 30, 1997), 63 FR 35515 (June 30, 1998), 64 FR 13677 (March 22, 1999), 64 FR 51892 (September 27, 1999)). The number of requests for hearings that we have received has significantly increased in recent years, and we expect that trend to continue because of the projected increase in the number of disability claims as the baby boomers move into their disability-prone years. In light of our current and projected workload, we plainly must do everything that we can to reduce the number of cases awaiting a hearing. This final rule is an important part of our ongoing effort to decide cases more efficiently and timely. This final rule will allow us to expedite the processing of cases pending at the hearing level without affecting a claimant's right to a hearing before an ALJ. The attorney advisor's conduct of certain prehearing proceedings will not delay the scheduling of a hearing before an ALJ. If the prehearing proceedings are not concluded before the hearing date, the case will be sent to the ALJ unless a decision wholly favorable to the claimant and all other parties is in process, or the claimant and all other parties to the hearing agree in writing to delay the hearing until the prehearing proceedings are completed. Prehearing proceedings may be conducted by an attorney advisor under this final rule if one of the following criteria is met: New and material evidence is submitted, there is an indication that additional evidence is available, there is a change in the law or regulations, or there is an error in the file or some other indication that a wholly favorable decision could be issued. We will mail the attorney advisor's decision to all parties. The notice of decision will state the basis for the decision and advise the parties that an ALJ will dismiss the hearing request unless a party requests to proceed with the hearing within 30 days after the date the notice of the decision of the attorney advisor was mailed. These procedures will remain in effect for a period not to exceed 2 years from the effective date of this final rule, unless we terminate or extend them by publication of a final rule in the **Federal Register** . Public Comments On August 9, 2007, we published an interim final rule with a request for comments. (72 FR 44763). Although the interim final rule became effective on that date, we also provided the public with a 60-day comment period, which closed on October 9, 2007. We received timely comments from one individual and two professional organizations. We carefully considered all the comments. Because some of the comments were lengthy, we have summarized and paraphrased them below. However, we have tried to present all of the commenters' views accurately and to respond to all of the significant issues raised by the comments that were within the scope of this rule. We have not responded to comments that were outside the scope of the interim final rule. The individual commenter and one of the organizational commenters supported the changes. We appreciate this support. In addition to submitting comments on its own behalf, the second organizational commenter also included, within its comment letter, comments made by individual ALJs in its constituency. Although we refer primarily to the comment letter from this organization below, we did carefully consider all of the comments included in the organization's letter, and some of the comments we summarize below are actually from individual members of the organization. *Comment:* The first organizational commenter, which expressed strong support for the changes, noted that the changes should not negatively impact the decisionmaking process for cases that are heard by ALJs. The second organizational commenter did not support the interim final rule. This commenter expressed concern that ALJ productivity would fall. The commenter said that we would be using our “most experienced and gifted writers” to write the easiest decisions, leaving the hardest decisions to be written by our least experienced staff. The second commenter also referred to a 2002 General Accounting Office report entitled “Disappointing Results From SSA's Efforts to Improve the Disability Claims Process Warrant Immediate Attention” (“GAO report”), indicating that our own management had made the same observation. 1 1 GAO 02-322, February 27, 2002, available at *http://www.gao.gov/new.items/d02322.pdf.* See p. 23. This commenter also stated that we had made a number of “unverified programmatic assumptions,” including that: • The rule would not impose net aggregate delay to claims processing and would not exacerbate the aging of pending claims, • The rule would result in fully developed claims ready for ALJ hearing, and • An ALJ, upon receiving a case the attorney advisor determines should be heard, would have little need to do additional development of evidence or prehearing review. The commenter indicated that these assumptions were contradicted by our past experience, prior studies and reports, and our current staffing needs. The commenter believed that, given our limited resources, there was an “unbridgeable gulf” between the case processing realities we face and the restoration of a temporary program that the commenter believed would waste resources. *Response:* The primary purpose of the attorney advisor program is to help us process more efficiently the backlog of cases we are facing at the hearing level, given the realities of our current staffing and budget. Commissioner Astrue has recognized and testified in Congress that ALJs are “achieving a record high production rate,” yet backlogs continue to grow at the hearing level. 2 Plainly, we need to take decisive steps to address this situation. 2 Testimony before the Senate Finance Committee, May 23, 2007, available at: *http://www.socialsecurity.gov/legislation/testimony_052307.htm* . This program is only one tool among several we are now using, or planning to use, to reduce the waiting time for claimants who have requested hearings. 3 We believe that the attorney advisor program is especially important because it helps us to identify individuals who are disabled and who should not have to appear at a hearing in order for us to decide their case. 3 For our current, complete plan, see “Plan to Reduce the Hearings Backlog and Improve Public Service at the Social Security Administration,” September, 13, 2007, available at: *http://www.socialsecurity.gov/hearingsbacklog.pdf.* Because of the provisions for prehearing proceedings in §§ 404.942 and 416.1442 and in our internal procedures implementing the attorney advisor program, we expect that ALJs will be able to decide more readily those cases that attorney advisors review but do not allow. This is because attorney advisors will obtain more evidence in some cases and those cases will be ready for an ALJ hearing sooner than they otherwise would be, and because the attorney advisors will review and recommend development of additional evidence in others. The attorney advisors will also provide ALJs with an analysis of the issues in cases in which they are unable to issue wholly favorable decisions, which will assist the ALJs who subsequently review the case. Also, under this final rule, the conduct of prehearing proceedings by attorney advisors will generally not delay the scheduling or holding of hearings, unless a decision wholly favorable to the claimant and all other parties is in process, or the claimant and all other parties to the hearing agree in writing to delay the hearing until the prehearing proceedings are completed. Only certain attorney advisors are permitted to participate in this program. Our internal instructions provide that only Hearing Office GS-13 Senior Attorney Advisors, Supervisory Attorney Advisors who are Hearing Office Directors, Supervisory Attorney Advisors who are Group Supervisors, and attorneys at the GS-13 level and above in the regional offices of our Office of Disability Adjudication and Review are authorized to issue fully favorable decisions under the interim final rule. These same individuals will be authorized to issue decisions under this final rule. Our internal operating instructions also provide that the attorney advisors who participate in this program will continue to draft decisions for ALJs, as assigned by local hearing office management. Our instructions also allow the management of each local hearing office to decide the amount of time attorney advisors will devote to the adjudication of wholly favorable decisions. We believe that these modifications to the program are improvements over the way we administered the program from 1995 to 2001. Therefore, we anticipate that, with these modifications, ALJs should have sufficient qualified and experienced staff to draft their decisions, conduct research, and perform other tasks. Nevertheless, we are aware that we are shifting valuable resources to this task, even if only part-time, and that there is a potential that this shift will affect ALJs' ability to issue their decisions. Based on our experience using this procedure in the past, we do not believe this will happen, but as we noted earlier in this preamble, we intend to monitor the program closely and will make changes to it, including ending it if necessary, if it does not meet our expectations. We address the additional, specific concerns of the second organizational commenter in the responses that follow. *Comment:* The second organizational commenter also expressed concern that the interim final rule was intended to “pay down” the backlog. This commenter also submitted a number of individual ALJ comments and concerns about allowance rates. Some individual ALJs also believed that the allowance rate would increase. One ALJ believed that the outcomes would vary by office. This ALJ stated that in offices in which the attorney advisors are more conservative than the ALJs, they would waste time reviewing cases that they would not allow, and the program would have no beneficial effect and would delay case processing. In offices in which attorney advisors and the ALJs are “similarly disposed to granting certain cases without a hearing,” the allowance rate would not change and the program would again have no beneficial effect. In offices in which the attorneys are “more sympathetic” to the claimants than the ALJs, “many, many cases” would be paid without merit. *Response:* We do not intend by this final rule to “pay down” the backlog of cases awaiting a hearing, nor do we expect the allowance rate to increase. Rather, we are providing our hearing offices with additional adjudicative capacity to more quickly decide some cases in which we can make a wholly favorable decision without a hearing. This will provide better service to claimants and, we expect, will help us to make faster decisions on all pending hearing requests and to reduce the number of cases in our hearing offices. Therefore, we expect that the overall allowance rate at the hearing level will not change. The purpose of this program is to issue decisions more quickly in cases in which we can make a favorable decision without the time and expense of holding an ALJ hearing, and to improve the efficiency of our hearing office operations given our current staffing and budget. As we explain in more detail in response to another comment below, we plan to carefully monitor attorney advisor decisions for quality to ensure that they are making wholly favorable decisions only in appropriate cases. *Comment:* The same commenter expressed concern about the accuracy, quality, and legal sufficiency of attorney advisor decisions. The commenter referred to a statement in the 2002 GAO report indicating that there were “mixed” findings on the accuracy of attorney advisors' decisions the first time we implemented this program. The commenter also referred to an internal Agency report issued by our Office of Quality Performance

(OQP)in 2001, 4 which found that decisions issued by attorney advisors under the program were supported by substantial evidence 78 percent of the time. 4 In 2001, OQP was called the Office of Quality Assurance and Performance Assessment. *Response:* We are aware of concerns that were raised regarding the quality of decisions made by attorney advisors under our prior rule, and we intend to vigorously monitor the quality of attorney advisor decisions under this final rule. We will randomly select attorney advisor decisions for review by OQP after they have been issued and the decision has been effectuated. We will also perform quality reviews of attorney advisor decisions before they are issued. We will share the information from these reviews with our attorney advisors and use it for training purposes to continually improve the program. We must also put the data cited by the commenter in perspective. The GAO reported results from two studies: One conducted in OQP and the other by the Appeals Council. The reviews in OQP were conducted by ALJs and reported “support” rates; that is, the rate at which the reviewing ALJs agreed that the attorney advisors' decisions were supported by substantial evidence. The GAO indicated that “the quality of decisions made by [attorney advisors] generally increased over the period of the initiative, though falling short of the quality of decisions made by the ALJs.” 5 However, in fact, while OQP did report a support rate for attorney advisor decisions of 78 percent, they also reported a support rate for ALJ on-the-record decisions (that is, decisions made based on the written information in the case file without holding a hearing) of 81 percent, essentially the same as for attorney advisors. Moreover, another Agency internal report issued by OQP in December 2000 showed an 80 percent support rate for attorney advisor decisions in fiscal year 2000. The GAO reported that the study by the Appeals Council indicated that the quality of decisions made by attorney advisors was “comparable” to those made by the ALJs. 6 5 GAO report, p. 23. 6 Id. Finally, we are confident that these “most experienced and gifted writers,” to use the commenter's own description, will produce legally sufficient decisions. *Comment:* The same commenter reported an individual ALJ's comment asserting that during the first attorney advisor program the lack of sufficient attorneys to write the difficult decisions for cases heard by ALJs resulted in a case writing backlog, and that many attorney advisors could not keep up with the flow of cases to be reviewed. *Response:* Although this final rule is substantively the same as the rule we published on June 30, 1995, our internal procedures address current operational issues, including our limited staff. They provide each hearing office with the flexibility to assign work to attorney advisors according to the needs and workloads of the office. Since our intent is to use this program to help reduce the backlog of cases and to provide better and faster service to the public, we will monitor it carefully and immediately take action if we find that it is having the effect the commenter was concerned about—the opposite of what we hope to achieve. *Comment:* The same commenter reported an individual ALJ's comment that attorney advisors made the most errors in cases involving mental impairments and that such cases are generally not “readily susceptible to on-the-record decisions.” *Response:* We have already noted that we will carefully monitor the quality of attorney advisor decisions, and will take appropriate action if we find that there are special problems with the adjudication of cases involving mental impairments. Otherwise, we do not agree with the commenter. We believe that there are no inherent features of cases involving mental impairments that would make them any less susceptible to on-the-record decisions than any other cases. *Comment:* The same commenter reported an individual ALJ's concern that attorney advisors would “waste a lot of time” reviewing cases that will not result in wholly favorable decisions. *Response:* We do not agree that a prehearing review of cases will be a “waste of time” even if the attorney advisor is not able to make a wholly favorable decision. Our internal instructions for these rules permit attorney advisors to obtain evidence from the claimant or the claimant's representative and require them to provide the ALJ with an analysis of the issues in the case, including an explanation of why a wholly favorable decision could not be made on the record. Our instructions also require the attorney advisor to make recommendations to the ALJ for additional development of evidence to complete the record. We believe that, far from being a “waste” of time, these actions will help ALJs to prepare cases for a hearing and to more quickly decide cases that require a hearing after prehearing review. *Comment:* The same commenter reported individual ALJ concerns that attorney advisor independence will be compromised by managerial oversight, performance evaluations, and “bonuses” received by attorney advisors. The individual ALJs were also concerned that the attorney advisor program will “erode the integrity of the independent due process hearing and the role of the ALJ in that process.” *Response:* Our attorney advisors have always been subject to “managerial oversight,” and they will continue to be under this final rule. We do not expect the implementation of this final rule to adversely affect their ability to perform their jobs in an appropriate manner. Regarding the integrity of the independent due process hearing and the role of the ALJ in that process, this final rule augments the process by authorizing attorney advisors to make wholly favorable decisions in claims for disability benefits when there is no need for a hearing. Section 205(b) of the Social Security Act (the Act) requires the Commissioner to make findings of fact, and decisions as to the rights of any individual applying for a payment. The Act further provides that, upon request by any such individual (or upon request by a wife, divorced wife, widow, surviving divorced wife, surviving divorced mother, surviving divorced father, husband, divorced husband, widower, surviving divorced husband, child, or parent who makes a showing in writing that his or her rights may be prejudiced by any decision), the Commissioner shall give the individual reasonable notice and opportunity for a hearing. The final rules explicitly preserve the individual's right to a hearing which will be conducted by an ALJ if the individual is dissatisfied with the decision made by the attorney advisor. Finally, we note that similar concerns were expressed in 1995. Our prior experience using attorney advisors to make decisions from 1995 to 2001 shows that concerns like those characterized above were unfounded. As was the case under our prior rules, attorney advisors who are authorized to conduct prehearing proceedings and issue wholly favorable decisions under the final rule will not conduct a hearing. Hearings will continue to be conducted by ALJs in appropriate cases. *Comment:* The same commenter reported an individual ALJ's concern that there would be an increased potential for abuse, and even fraud, since attorney advisors are not subject to the same financial disclosure rules that ALJs are. *Response:* We do not believe that this rule will increase the likelihood of fraud or abuse because attorney advisors are not required to submit financial reports. We know of no fraud or abuse resulting from the prior rules. However, we will handle any alleged fraud or abuse under our existing guidelines and procedures. *Comment:* The same commenter reported individual ALJs' concerns that ALJs would have to take on more “clerical functions,” and that ALJs “will be forced to write more and more of their own decisions.” *Response:* We do not intend for ALJs to take on any additional “clerical functions” under this final rule, and we do not expect implementation of this final rule to affect the ability of our decision writers to write decisions on behalf of the ALJs. *Comment:* The same commenter indicated that we had rushed to this rule without asking for comments first. *Response:* We disagree with the commenter's observation that we should have first published a notice of proposed rulemaking with respect to this rule. We explained in detail in the preamble to the interim final rule why we determined that notice-and-comment rulemaking was both unnecessary and contrary to the public interest under the Administrative Procedure Act

(APA)(5 U.S.C. 553(b)(B)). Therefore, we properly determined that we had good cause to publish a final rule without requesting prior public comment. (72 FR at 44764). However, we also recognized that the rule we published in August 2007 concerned a subject about which the public was likely to be interested. As a result, we made the rule we published in August 2007 an interim final rule, and we requested public comments regarding the changes we made. Our actions in this regard are consistent with both the APA and good rulemaking practice. *Comment:* The same commenter made a number of alternative recommendations for us to consider instead of the attorney advisor program, such as the implementation of a “Government Representative Program.” The commenter also recommended modifications to the attorney advisor program. *Response:* We did not adopt the comments suggesting alternatives to the attorney advisor program because they were outside the scope of this rulemaking proceeding. The other comments addressed our internal procedures rather than the substance of the interim final rule. In our responses to prior comments, we have discussed our internal procedures, and explained how we believe those procedures provide adequate safeguards to address the concerns that the commenter raised. *Comment:* The same commenter reported an individual ALJ's recommendation that the final rule require that the attorney advisors be limited to reviewing, developing the record, and drafting recommended “on the record” wholly favorable decisions for an ALJ to either sign such decisions or hear such cases. *Response:* We did not adopt this comment suggesting an alternative to the attorney advisor program because it is outside the scope of this rulemaking proceeding. Therefore, for all the reasons stated above, we are adopting the interim final rule without change. Regulatory Procedures Executive Order 12866, as Amended We have consulted with the Office of Management and Budget

(OMB)and determined that this final rule meets the criteria for a significant regulatory action under Executive Order 12866, as amended. Accordingly, it was subject to OMB review. We also have determined that this rule meets the plain language requirement of Executive Order 12866, as amended. Regulatory Flexibility Act We certify that this final rule will not have a significant economic impact on a substantial number of small entities as it affects only individuals. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required. Paperwork Reduction Act This rule will impose no additional reporting or recordkeeping requirements requiring OMB clearance. Federalism Impact and Unfunded Mandates Impact We have reviewed this rule under the threshold criteria of Executive Order 13132 and the Unfunded Mandates Reform Act and have determined that it does not have substantial direct effects on the States, on the relationship between the national government and the States, on the distribution of power and responsibilities among the various levels of government, or on imposing any costs on State, local, or tribal governments. This rule does not affect the roles of the State, local, or tribal governments. (Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security—Disability Insurance; 96.002, Social Security—Retirement Insurance; 96.004, Social Security—Survivors Insurance; 96.006, Supplemental Security Income) List of Subjects 20 CFR Part 404 Administrative practice and procedure; Blind, Disability benefits; Old-age, Survivors, and Disability insurance; Reporting and recordkeeping requirements; Social Security. 20 CFR Part 416 Administrative practice and procedure; Aged, Blind, Disability benefits; Public assistance programs; Reporting and recordkeeping requirements; Supplemental Security Income (SSI). Dated: January 23, 2008. Michael J. Astrue, Commissioner of Social Security. Accordingly, the interim final rule amending subpart J of part 404 and subpart N of part 416 of chapter III of title 20 of the Code of Federal Regulations, which was published at 72 FR 44763 on August 9, 2007, is adopted as a final rule without change. [FR Doc. E8-3945 Filed 2-29-08; 8:45 am] BILLING CODE 4191-02-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [DA 08-378; MB Docket No. 07-165; RM-11371] Radio Broadcasting Services; Blanca, CO AGENCY: Federal Communications Commission. ACTION: Final rule. SUMMARY: At the request of Kevin J. Youngers, Channel 249C2 at Blanca, Colorado, is allotted as the community's first local aural transmission service. Channel 249C2 is allotted at Blanca, Colorado with a site restriction of 6.6 kilometers (4.1 miles) east of the community at coordinates 37-26-35 NL and 105-26-29 WL . DATES: Effective March 31, 2008. ADDRESSES: Secretary, Federal Communications Commission, 445 Twelfth Street, SW., Washington, DC 20554. FOR FURTHER INFORMATION CONTACT: Victoria McCauley, Media Bureau,

(202)418-2180. SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Report and Order MB Docket No. 07-165, adopted February 13, 2008, and released February 15, 2008. The *Notice of Proposed Rule Making* proposed the allotment of Channel 249C2 at Blanca, Colorado. *See* 72 FR 46949, published August 22, 2007. To accommodate the allotment, United States CP, LLC, permittee on Channel 249A at Westcliffe, Colorado, has consented to substitute Channel 269A for Channel 249A at Westcliffe. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 Twelfth Street, SW., Washington, DC 20554. This document may also be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-378-3160 or *http://www.BCPIWEB.com* . The Commission will send a copy of this *Report and Order* in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, *see* 5 U.S.C. 801(a)(1)(A). List of Subjects in 47 CFR Part 73 Radio, Radio broadcasting. As stated in the preamble, the Federal Communications Commission amends 47 CFR part 73 as follows: PART 73—RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, 336. § 73.202 [Amended] 2. Section 73.202(b), the Table of FM Allotments under Colorado is amended by adding Blanca, Channel 249C2. Federal Communications Commission. John A. Karousos, Assistant Chief, Audio Division, Media Bureau. [FR Doc. E8-4028 Filed 2-29-08; 8:45 am] BILLING CODE 6712-01-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 225 and 252 RIN 0750-AD76 Defense Federal Acquisition Regulation Supplement; Codification and Modification of Berry Amendment (DFARS Case 2002-D002) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. SUMMARY: DoD has adopted as final, with changes, an interim rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement Section 832 of the National Defense Authorization Act for Fiscal Year 2002. Section 832 codified and made modifications to the provision of law known as the “Berry Amendment,” which requires the acquisition of certain items from domestic sources. DATES: *Effective Date:* March 3, 2008. FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0328; facsimile 703-602-7887. Please cite DFARS Case 2002-D002. SUPPLEMENTARY INFORMATION: A. Background DoD published an interim rule at 67 FR 20697 on April 26, 2002. The rule amended the DFARS to implement Section 832 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107). Section 832 codified and made minor modifications to the provision of law known as the Berry Amendment (formerly 10 U.S.C. 2241 note, Limitations on Procurement of Food, Clothing, and Specialty Metals Not Produced in the United States; now codified at 10 U.S.C. 2533a). Twenty-two sources submitted comments on the interim rule. A discussion of the comments is provided below: 1. Clothing, Fabrics, and Fibers a. *De minimis exception for cotton, other natural fibers, or wool.*

(1)*Applicability of exception.* *Comment:* One respondent commented on the applicability of the exception in the interim rule at 225.7002-2(i) (now 225.7002-2(j)) for incidental amounts of cotton, other natural fibers, or wool. The respondent stated that the exception should apply only to the incidental amount of cotton, other natural fibers, or wool, not to the end item itself, if the end item is otherwise subject to the Berry Amendment. For example, a jacket of synthetic fibers with cotton lining in the pockets would still be subject to the Berry Amendment with regard to origin of the jacket as a whole. Only the cotton lining of the pockets would be exempt. *DoD Response:* DoD concurs and has clarified this point in the final rule.

(2)*Simplified acquisition threshold.* *Comment:* One respondent requested that DoD revise the exception in the interim rule at 225.7002-2(i) (now 225.7002-2(j)) to clarify that cotton, other natural fibers, or wool must be sourced domestically if the simplified acquisition threshold is met, regardless of their worth as a percentage of the total price of the end product. *DoD Response:* DoD agrees with the intent of the comment, but does not believe a DFARS change is necessary. DFARS 225.7002-2(j) already states that the exception applies only if the value of the fibers is not more than 10 percent of the total price of the end product and does not exceed the simplified acquisition threshold. b. *Para-aramid fibers.* *Comment:* One respondent recommended that the exception for para-aramid fibers at 225.7002-2(m)(2) (now 225.7002-2(o)(2)) be extended to include all fabrics produced in compliance with the North American Free Trade Agreement (NAFTA), and to allow for fabrics made with Kermel aramid fiber produced in France and spun into yarn that is woven and finished in Canada. *DoD Response:* The comment is outside the scope of this DFARS case. Section 807 of Public Law 105-261 only provides authority for DoD to waive the Berry Amendment restrictions for procurement of para-aramid fibers from countries that are party to a defense memorandum of understanding (qualifying countries). Mexico is not a qualifying country. Canada and France are qualifying countries, and can request a waiver from the Under Secretary of Defense (Acquisition, Technology, and Logistics), as did the Netherlands. c. *Examples of textile products.* *Comment:* One respondent suggested that DoD modify the rule at 225.7002-2(m)(1) (now 225.7002-2(o)(1)) to state that “Examples of textile products, made in whole or in part of fabric, include [but are not limited to]—”. *DoD Response:* DoD does not believe the suggested change is necessary, since the term “examples” means that the list is not exhaustive. Similar language is common throughout the DFARS. d. *Footwear* . *Comment:* One respondent requested that DoD clarify in the regulations that footwear is indeed included under the Berry Amendment restriction on clothing. *DoD Response:* This issue has since been clarified at DFARS 225.7002-1(a)(2), which now lists footwear as an item of clothing. e. *Parachutes.* *Comment:* Several respondents requested that DoD include parachutes as a listed item under the Berry Amendment. In the past several years, some parachutes have been manufactured in Mexico, although the synthetic fibers and fabric were manufactured in the United States. *DoD Response:* DoD has implemented the law as written and cannot add items to the list of restricted items without a change to the law. 2. Food Items—Exception for Products Manufactured or Processed in the United States a. *Raw products.* *Comment:* There was mixed response as to whether procurement of food items that are manufactured or processed in the United States, but are from raw products of foreign origin, should be allowed. Some respondents favored the clarification of the exception in the Berry Amendment relating to foods manufactured or processed in the United States. Other respondents objected on the basis of harm to small businesses and possible contamination of foreign food ingredients (particularly fish). Another respondent suggested that foreign suppliers of seafood raw materials should be held to the same third-party verification requirements for sanitation as domestic processors. *DoD Response:* The issue relating to the requirement for seafood products manufactured or processed in the United States to be made from domestic fish or seafood was resolved by Section 8118 of the Defense Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287), which made this requirement permanent. This requirement is implemented at DFARS 225.7002-2(l). The other comments are outside the scope of this DFARS case. b. *Definition of “manufactured” and “processed.”* *Comment:* There was mixed response regarding definition of the terms “manufactured” and “processed.” One respondent was concerned that suppliers may mistakenly consider packaging, repackaging, or blending sufficient processing to change the foreign raw materials into a product that could be procured by the U.S. military. The respondent cited the definition of “processed food” in the Federal Food, Drug and Cosmetic Act (21 U.S.C. 321(gg)). Another respondent strongly urged that DoD take a “common-sense” approach and not attempt to impose a highly technical and potentially overly restrictive definition of what constitutes a product manufactured or processed in the United States. This respondent stated that widely accepted and robust definitions and standards already exist for such matters under U.S. Customs Law. *DoD Response:* DoD agrees that the definition of these terms would be extremely complex and would probably vary depending on the food being manufactured or processed. The “definition” in the Federal Food, Drug and Cosmetic Act is not really definitive, because it only cites examples of processing “such as canning, cooking, freezing, dehydration, or milling.” This is not an exhaustive list of the ways in which food might be processed, and does not present criteria by which to determine whether the actions carried out constitute “processing.” c. *Packaging for meals-ready-to-eat (MRE).* *Comment:* One respondent stated that the rule should explicitly require domestic sourcing for MRE packaging. The respondent acknowledged that packaging has never been explicitly included in the Berry Amendment, but believed that it has been strongly implied. The respondent expressed concern that the MRE pouches may be contaminated, and thus may contaminate the food. *DoD Response:* The comment is outside the scope of this DFARS case, since food packaging is not covered by the Berry Amendment. 3. Items of Individual Equipment *Comment:* One respondent objected to the parenthetical explanation of items of individual equipment at DFARS 225.7002-1(a)(10), “(Federal Supply Class 8465).” The respondent was concerned that, because of this insertion, items that normally may be considered under the Berry Amendment may inadvertently be excluded. *DoD Response:* The comment is outside the scope of this DFARS case. The reference to Federal Supply Class 8465 has been in the DFARS since 1997, and was not changed by this DFARS rule. However, DoD recognizes the concerns of the respondent and is willing to further consider the issue under a separate DFARS case, if adequate supporting rationale is received. 4. Specialty Metals One respondent had three objections to the DFARS implementation of the Berry Amendment with regard to specialty metals (none of which were changed by the interim rule). These objections are no longer pertinent, as the result of Section 842 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), which established separate restrictions on specialty metals under 10 U.S.C. 2533b; and Sections 804 and 884 of the National Defense Authorization Act for Fiscal Year 2008, which further amended the restrictions. DoD is implementing these statutory changes under a separate DFARS case. 5. Other Exceptions a. *Activities located outside the United States.* *Comment:* One respondent stated that the exceptions in the interim rule at 225.7002-2(e) and

(f)(now 225.7002-2(e) and (g)) refer to “activities located outside the United States” instead of using the statutory language of “establishment located outside the United States” (10 U.S.C. 2533a(d)(3)). *DoD Response:* The interim rule made no change to the cited DFARS language. DoD refers to its overseas establishments as “activities” and considers this term to accurately reflect the intent of the law. b. *NAFTA.* *Comment:* One respondent recommended that the Berry Amendment be expanded to include the partners of NAFTA, allowing Canadian and Mexican firms to participate in the U.S. purchasing process. *DoD Response:* The comment is outside the scope of this DFARS case. To allow purchases of restricted items from Canada and Mexico would require a change to the Berry Amendment. 6. Protectionism *Comment:* One respondent objected to the “protectionism” of the Berry Amendment because of increased costs. *DoD Response:* The comment relates to the merits of the Berry Amendment itself, not the DFARS rule, and, therefore, is outside the scope of this DFARS case. 7. Training *Comment:* One respondent commented on the need for training on the Berry Amendment for procurement officers and other personnel to make the procurement process as seamless as possible. The respondent also recommended publication of “Frequently Asked Questions” on the Defense Procurement website to benefit the general public, as well as Congressional, Administration, and DoD staffs. *DoD Response:* DoD recognizes the need for more information and training on the Berry Amendment. A Continuous Learning Module on the Berry Amendment (CLC 125) is now available at *https://learn.dau.mil.* In addition, answers to frequently asked questions are available at *http://www.acq.osd.mil/dpap/cpic/ic/berry_amendment_faq.html* . The Berry Amendment is a very complex issue that frequently requires case-by-case determination of applicability. However, DoD promotes a broader understanding of the basic concepts, so that procurement personnel will recognize the situations in which they need to seek additional guidance. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act DoD certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule primarily clarifies existing policy pertaining to the acquisition of certain items from domestic sources. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Parts 225 and 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Accordingly, the interim rule amending 48 CFR parts 225 and 252, which was published at 67 FR 20697 on April 26, 2002, is adopted as a final rule with the following changes: 1. The authority citation for 48 CFR parts 225 and 252 continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 225—FOREIGN ACQUISITION 2. Section 225.7002-2 is amended by revising paragraph

(j)introductory text to read as follows: 225.7002-2 Exceptions.

(j)Acquisitions of incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool— PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 252.212-7001 [Amended] 3. Section 252.212-7001 is amended as follows: a. By revising the clause date to read “(MAR 2008)”; and b. In paragraph (b)(5), by removing “(JAN 2007)” and adding in its place “(MAR 2008)”. 4. Section 252.225-7012 is amended by revising the clause date and paragraph (c)(2) introductory text to read as follows: 252.225-7012 Preference for Certain Domestic Commodities. PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES (MAR 2008)

(c)* * *

(2)To incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool— [FR Doc. E8-3946 Filed 2-29-08; 8:45 am] BILLING CODE 5001-08-P DEPARTMENT OF DEFENSE Defense Acquisition Regulations System 48 CFR Parts 232 and 252 and Appendix F to Chapter 2 RIN 0750-AF63 Defense Federal Acquisition Regulation Supplement; Mandatory Use of Wide Area WorkFlow (DFARS Case 2006-D049) AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD). ACTION: Final rule. SUMMARY: DoD has issued a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to require use of the Wide Area WorkFlow electronic system for submitting and processing payment requests and receiving reports under DoD contracts. Use of Wide Area WorkFlow facilitates timely and accurate payments to DoD contractors. DATES: Effective Date: March 3, 2008. FOR FURTHER INFORMATION CONTACT: Ms. Robin Schulze, Defense Acquisition Regulations System, OUSD (AT&L) DPAP (CPF), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-3062. Telephone 703-602-0326; facsimile 703-602-7887. Please cite DFARS Case 2006-D049. SUPPLEMENTARY INFORMATION: A. Background This final rule requires use of the Wide Area WorkFlow

(WAWF)electronic system for submission and processing of payment requests and receiving reports under DoD contracts. WAWF, when fully implemented, will eliminate paper documents, eliminate redundant data entry, improve data accuracy, reduce the number of lost or misplaced documents, and result in more timely payments to contractors. DoD published a proposed rule at 72 FR 45405 on August 14, 2007. Sixteen respondents submitted comments on the proposed rule. A discussion of the comments is provided below: 1. Recommendation To Allow Third Party Payment System

(TPPS)U.S. Bank—PowerTrack Transactions *Comment:* Eight respondents expressed concern that the rule would no longer support the use of TPPS, indicating that the rule fails to acknowledge the unique needs of suppliers who invoice on a transaction basis, such as those in the express and ground package delivery industry. *DoD Response:* The rule has been amended to permit the use of a DoD-approved electronic third party payment system or other exempt vendor payment/invoicing system (such as PowerTrack, Transportation Financial Management System, and Cargo and Billing System) for payment of commercial transportation services. 2. Recommendation To Allow Continued Use of the Governmentwide Commercial Purchase Card *Comment:* One respondent questioned the functionality of WAWF to support Government purchase card

(GPC)transactions. *DoD Response:* DFARS 232.7002(a)(1) exempts purchases paid for with a GPC. Therefore, the requirement to submit payment requests electronically through WAWF does not extend to GPC purchases. 3. Recommendation To Exclude Existing Foreign Military Sales Contracts *Comment:* One respondent expressed concern that the rule would require modification of existing foreign military sales contracts. *DoD Response:* In accordance with FAR 1.108(d), the rule is prospective in nature, becoming effective for solicitations issued on or after the effective date of the rule. It does not require modification of existing contracts. 4. Government Not Fully Compliant *Comment:* Three respondents expressed concern that WAWF has not been fully implemented within DoD. *DoD Response:* There are currently over 145,000 Government users of WAWF, with new users being added at the rate of 2,500 per month. All of the military departments are expanding their use of WAWF and have targets to complete deployment in fiscal year 2008. However, DoD recognizes there are instances where WAWF cannot be used, such as in a contingency environment. Paragraph (c)(2) of the clause at 252.232-7003 provides an exception to the use of WAWF for those DoD locations that are unable to receive a payment request or provide acceptance in electronic form. 5. Acceptance Issues a. *Clarification that WAWF includes receiving reports* . *Comment:* One respondent recommended clarifying that WAWF also includes receipt and acceptance, not just payment requests, since receiving reports are part of the payment process. *DoD Response:* The rule has been amended to clarify that the electronic submission of payment requests also includes the electronic submission of receiving report documentation necessary to support payment. Receiving reports are a key part of the payment process and have an important and close interrelationship with payment requests in WAWF. b. *Blanket exception for installations unable to provide acceptance in WAWF* . *Comment:* One respondent recommended a blanket exception for payments on installation support contracts where there presently is no centralized structure in place for acceptance of items or services in WAWF. *DoD Response:* Paragraph (c)(2) of the clause at 252.232-7003 contains an exception to the use of WAWF for those DoD locations that are unable to provide acceptance in electronic form. However, DoD expects that use of this exception will be rare, since DoD is committed to full implementation of WAWF by the end of fiscal year 2008. 6. Recommendation for the Clause To Include Payment Instructions *Comment:* One respondent recommended that the contract clause contain actual payment instructions, including fill-ins for the information required by WAWF, such as required DoDAACs and supplemental e-mail addresses for the contracting officer's representative, the procuring contracting officer, or other contract administrators. *DoD Response:* The contracting office will include DoDAACs and supplemental e-mail addresses within the contract as necessary, with the exception of those for the Defense Contract Audit Agency (DCAA). The contractor should follow the instructions in WAWF to determine the appropriate DCAA office and DoDAAC. 7. Recommendation To Clarify Who Has Exception Authority (Procuring Contracting Officer

(PCO)or Administrative Contracting Officer (ACO)) for Use of WAWF *Comment:* One respondent recommended clarification in the contract clause and its prescription to provide authority for the PCO to grant exceptions to the use of WAWF at the time of contract formation. The determination should be included in Section G of the contract, eliminating the requirement for a copy of the ACO's determination to be provided with each payment request. *DoD Response:* Prior to award, the PCO may authorize a contractor to use an electronic form other than WAWF, in accordance with DFARS 232.7003(b), and the authorization will be annotated in Section G of the contract. After award, the ACO may authorize (in writing) the contractor to submit non-electronic payment requests and receiving reports when electronic submission would be unduly burdensome to the contractor (DFARS 252.232-7003(c)(3)). The requirement for the contractor to provide a copy of the ACO's written authorization with the payment request is intended to facilitate processing of the request and prevent inadvertent rejection of the paper document. 8. WAWF System Issues a. *Credit invoices cannot process in WAWF* . *Comment:* One respondent suggested that, because the current workload for negative invoices requires the submission of paper invoices, the rule should provide the authority to use alternative billing arrangements when WAWF is not suitable or available. *DoD Response:* The requirement to submit payment requests in electronic form does not extend to credit invoices/vouchers. WAWF was designed to comply with requirements for payments and will not be modified to accept credits. Any credits due to the Government on invoices with negative amounts should be coordinated with the Defense Finance and Accounting Service entitlement office. b. *User difficulties* . *Comment:* One respondent expressed concern that WAWF is not vendor-friendly for input of documents. There are too many screens, fields, and steps; DoD activities do not always input the required purchase order and modification information; and invoices are not paid any faster than when using the mail system. *DoD Response:* Although WAWF input requires the use of multiple screens and fields, the information required for payment requests remains in compliance with FAR 32.905, Payment documentation and process. Purchase order and modification information used by WAWF is extracted from the Electronic Document Access

(EDA)system to populate the WAWF data screens; the information is not input to WAWF. Therefore, errors in the data pulled from the EDA system are not a limitation of WAWF, but rather an EDA issue. Further, the decrease in processing time from submission to payment is realized in WAWF's immediate transmission of a document from action step to action step. c. *Company-wide computer system revamp* . *Comment:* One respondent stated that it was in the middle of a company-wide computer system revamp and any changes at this time would require a 12-month lead time. *DoD Response:* The rule is prospective in nature, becoming effective for solicitations issued on or after the effective date of the rule. Contractors will be expected to make the system changes necessary to comply with the provisions of new awards. However, the rule provides for the use of an alternate electronic form if authorized by the contracting officer. d. *Electronic data interchange

(EDI)American National Standards Institute

(ANSI)X.12 Capability* . *Comment:* One respondent requested a clear understanding of the EDI ANSI X.12 interfacing options with DoD. *DoD Response:* It is anticipated that WAWF will support EDI ANSI X.12 into the future. No changes are being contemplated. e. *Grant and cooperative agreement processing capability* . *Comment:* One respondent recommended inclusion of non-acquisition instruments (grants and cooperative agreements). *DoD Response:* While use of WAWF for these instruments will not be mandated, WAWF Version 3.12 (released October 21, 2007) accommodates the processing of grant payments and other transactions. f. *WAWF downtime* . *Comment:* One respondent expressed concern that WAWF is frequently not available. *DoD Response:* Statistics maintained by the WAWF Program Office show that WAWF availability has been at 99.955 percent for peak hours and 100 percent for off-peak hours. g. *Processing of 9000 series, contract data requirements list, and first article contract line items* . *Comment:* One respondent stated that WAWF does not accept 9000 series, contract data requirements list, and first article contract line items, and should not be mandated until all items may be processed electronically. *DoD Response:* WAWF Version 3.12, released October 21, 2007, accommodates the processing of 9000 series, contract data requirements list, and first article contract line items. This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. B. Regulatory Flexibility Act DoD has prepared a final regulatory flexibility analysis consistent with 5 U.S.C. 604. A copy of the analysis may be obtained from the point of contact specified herein. The analysis is summarized as follows: The objective of the rule is to fully automate the payment process, including receiving reports, to significantly improve the timeliness of payments and to reduce DoD's interest charges for late payments. The rule continues DoD's implementation of the electronic invoicing requirements of 10 U.S.C. 2227, as added by Section 1008 of the National Defense Authorization Act for Fiscal Year 2001 (Pub. L. 106-398). The DFARS presently identifies three accepted electronic forms of transmitting payment requests under DoD contracts:

(1)American National Standards Institute

(ANSI)X.12 Electronic Data Interchange (EDI);

(2)Web Invoicing System (WInS); and

(3)WAWF. ANSI X.12 EDI and WInS cannot process all DoD payment request types, nor can they process receiving reports. In addition, EDI and WInS information cannot be made available to all interested Government offices and organizations. WAWF is the only DoD system that can process all payment request types as well as receiving reports. WAWF keeps historical files that are readily available for both contractor and Government use. The use of WAWF already has contributed significantly to improving the timeliness of payments and to DoD's goal of reducing interest charges for late payments. The rule will still allow a contractor to submit a payment request through an electronic means other than WAWF, or in a non-electronic format, if authorized by the contracting officer. In addition, the rule will allow contractors to submit ANSI X.12 EDI transactions through WAWF. Approximately 1,000 small entities will be required to switch from WInS to the WAWF system, used by over 20,000 small entities. Both systems involve submission of invoices through the World Wide Web. Approximately 1 hour is needed to learn the WAWF system. No reporting, recordkeeping, or compliance records will be required from small entities. All such records will be generated by DoD as a by-product of the use of the required system. C. Paperwork Reduction Act The Paperwork Reduction Act does not apply, because the rule does not impose any information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, *et seq.* List of Subjects in 48 CFR Parts 232 and 252 Government procurement. Michele P. Peterson, Editor, Defense Acquisition Regulations System. Therefore, 48 CFR parts 232 and 252 and Appendix F to chapter 2 are amended as follows: 1. The authority citation for 48 CFR parts 232 and 252 and Appendix F to subchapter I continues to read as follows: Authority: 41 U.S.C. 421 and 48 CFR Chapter 1. PART 232—CONTRACT FINANCING 2. The heading of subpart 232.70 is revised to read as follows: Subpart 232.70—Electronic Submission and Processing of Payment Requests and Receiving Reports 3. Section 232.7002 is amended by revising paragraph

(a)introductory text, paragraph (a)(6), the last sentence of paragraph (b), paragraph

(c)introductory text, and the first sentence of paragraph (c)(1) to read as follows: 232.7002 Policy.

(a)Contractors shall submit payment requests and receiving reports in electronic form, except for—

(6)Cases in which DoD is unable to receive payment requests or provide acceptance in electronic form; or

(b)* * * Scanned documents are acceptable for processing supporting documentation other than receiving reports and other forms of acceptance.

(c)When payment requests and receiving reports will not be submitted in electronic form—

(1)Payment requests and receiving reports shall be submitted by facsimile or conventional mail. * * * 4. Sections 232.7003 and 232.7004 are revised to read as follows: 232.7003 Procedures.

(a)The accepted electronic form for submission of payment requests and receiving reports is Wide Area WorkFlow (see Web site— *https://wawf.eb.mil/* ).

(b)If the payment office and the contract administration office concur, the contracting officer may authorize a contractor to submit a payment request and receiving report using an electronic form other than Wide Area WorkFlow. However, with this authorization, the contractor and the contracting officer shall agree to a plan, which shall include a timeline, specifying when the contractor will transfer to Wide Area WorkFlow.

(c)For payment of commercial transportation services provided under a Government rate tender or a contract for transportation services, the use of a DoD-approved electronic third party payment system or other exempted vendor payment/invoicing system (e.g., PowerTrack, Transportation Financial Management System, and Cargo and Billing System) is permitted. 232.7004 Contract clause. Except as provided in 232.7002(a), use the clause at 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports, in solicitations and contracts. PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 5. Section 252.212-7001 is amended by revising paragraph (b)(17) to read as follows: 252.212-7001 Contract Terms and Conditions Required To Implement Statutes or Executive Orders Applicable to Defense Acquisitions of Commercial Items.

(b)* * *

(17)__252.232-7003, Electronic Submission of Payment Requests and Receiving Reports (MAR 2008) (10 U.S.C. 2227). 6. Section 252.232-7003 is amended by revising the section heading, the clause title and date, and paragraphs (a)(2), (b), and

(c)to read as follows: 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports. ELECTRONIC SUBMISSION OF PAYMENT REQUESTS AND RECEIVING REPORTS (MAR 2008)

(a)* * *

(2)*Electronic form* means any automated system that transmits information electronically from the initiating system to all affected systems. Facsimile, e-mail, and scanned documents are not acceptable electronic forms for submission of payment requests. However, scanned documents are acceptable when they are part of a submission of a payment request made using Wide Area WorkFlow

(WAWF)or another electronic form authorized by the Contracting Officer.

(b)Except as provided in paragraph

(c)of this clause, the Contractor shall submit payment requests and receiving reports using WAWF, in one of the following electronic formats that WAWF accepts: Electronic Data Interchange, Secure File Transfer Protocol, or World Wide Web input. Information regarding WAWF is available on the Internet at *https://wawf.eb.mil/* .

(c)The Contractor may submit a payment request and receiving report using other than WAWF only when—

(1)The Contracting Officer authorizes use of another electronic form. With such an authorization, the Contractor and the Contracting Officer shall agree to a plan, which shall include a timeline, specifying when the Contractor will transfer to WAWF;

(2)DoD is unable to receive a payment request or provide acceptance in electronic form;

(3)The Contracting Officer administering the contract for payment has determined, in writing, that electronic submission would be unduly burdensome to the Contractor. In such cases, the Contractor shall include a copy of the Contracting Officer's determination with each request for payment; or

(4)DoD makes payment for commercial transportation services provided under a Government rate tender or a contract for transportation services using a DoD-approved electronic third party payment system or other exempted vendor payment/invoicing system (e.g., PowerTrack, Transportation Financial Management System, and Cargo and Billing System). 7. Section 252.246-7000 is amended by revising the clause date and paragraph

(b)to read as follows: 252.246-7000 Material Inspection and Receiving Report. MATERIAL INSPECTION AND RECEIVING REPORT (MAR 2008)

(b)Contractor submission of the material inspection and receiving information required by Appendix F of the Defense FAR Supplement by using the Wide Area WorkFlow

(WAWF)electronic form (see paragraph

(b)of the clause at 252.232-7003) fulfills the requirement for a material inspection and receiving report (DD Form 250). Two copies of the receiving report (paper copies of either the DD Form 250 or the WAWF report) shall be distributed with the shipment, in accordance with Appendix F, Part 4, F-401, Table 1, of the Defense FAR Supplement. Appendix F—Material Inspection and Receiving Report 8. Appendix F to chapter 2 is amended in Part 3, Section F-306, by revising paragraph

(a)to read as follows: F-306 Invoice instructions.

(a)Contractors shall submit payment requests and receiving reports in electronic form, unless an exception in 232.7002 applies. Contractor submission of the material inspection and receiving information required by this appendix by using the Wide Area WorkFlow electronic form (see paragraph

(b)of the clause at 252.232-7003) fulfills the requirement for an MIRR. 9. Appendix F to chapter 2 is amended in Part 4, Section F-401, by revising paragraph

(a)to read as follows: F-401 Distribution.

(a)The contractor is responsible for distributing the DD Form 250, including mailing and payment of postage. Use of the Wide Area WorkFlow electronic form satisfies the distribution requirements of this section, except for the copies required to accompany shipment. [FR Doc. E8-3947 Filed 2-29-08; 8:45 am] BILLING CODE 5001-08-P 73 42 Monday, March 3, 2008 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 981 [Docket No. AO-214-A7; AMS-FV-07-0050; FV07-981-1] Almonds Grown in California; Secretary's Decision and Referendum Order on Proposed Amendment of Marketing Order No. 981 AGENCY: Agricultural Marketing Service, USDA. ACTION: Proposed rule and referendum order. SUMMARY: This decision proposes amendments to Marketing Order No. 981 (order), which regulates the handling of almonds grown in California, and provides growers with the opportunity to vote in a referendum to determine if they favor the changes. The amendments are based on those proposed by the Almond Board of California (Board), which is responsible for local administration of the order. The amendments would authorize the establishment of different outgoing quality requirements for different markets and would authorize the establishment of bulk container marking and labeling requirements. The proposals are intended to provide additional flexibility in administering the quality control provisions of the order and provide the industry with additional tools for the marketing of almonds. DATES: The referendum will be conducted from March 24 through April 11, 2008. The representative period for the purpose of the referendum is August 1, 2006, through July 31, 2007. FOR FURTHER INFORMATION CONTACT: Martin Engeler, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, Suite 102-B, Fresno, California 93721; Telephone:

(559)487-5110, Fax:

(559)487-5906, or E-mail: *Martin.Engeler@usda.gov;* or Laurel May, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; Telephone:

(202)720-2491, Fax:

(202)720-8938, or E-mail: *Laurel.May@usda.gov.* Small businesses may request information on this proceeding by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., Stop 0237, Washington, DC 20250-0237; Telephone:

(202)720-2491, Fax:

(202)720-8938, or E-mail: *Jay.Guerber@usda.gov.* SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice of Hearing issued on June 29, 2007, and published in the July 6, 2007, issue of the **Federal Register** (72 FR 36900), and a Recommended Decision issued on December 21, 2007, and published in the December 28, 2007, issue of the **Federal Register** (72 FR 73671). This action is governed by the provisions of sections 556 and 557 of Title 5 of the United States Code and is therefore excluded from the requirements of Executive Order 12866. Preliminary Statement The proposed amendments are based on the record of a public hearing held August 2, 2007, in Modesto, California, to consider such amendments to the order. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-612), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR part 900). The Notice of Hearing was published in the **Federal Register** on July 6, 2007 (72 FR 36900), and contained amendment proposals submitted by the Board. The amendments included in this decision would: 1. Authorize the establishment of different outgoing almond quality requirements for different markets; and 2. Authorize the establishment of container marking and labeling requirements. In addition, the Agricultural Marketing Service

(AMS)proposed to make changes as may be necessary to the order, if any of the proposed changes are adopted, so that all of the order's provisions conform to the effectuated amendments. Upon the basis of evidence introduced at the hearing and the record thereof, the Administrator of AMS on December 21, 2007, filed with the Hearing Clerk, U.S. Department of Agriculture (USDA), a Recommended Decision and Opportunity to File Written Exceptions thereto by January 17, 2008. None were filed. Small Business Consideration Pursuant to the requirements set forth in the Regulatory Flexibility Act

(RFA)(5 U.S.C. 601-612), AMS has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis. The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions so that small businesses will not be unduly or disproportionately burdened. Marketing orders and amendments thereto are unique in that they are normally brought about through group action of essentially small entities for their own benefit. Small agricultural service firms, which include handlers regulated under the order, have been defined by the Small Business Administration

(SBA)(13 CFR 121.201) as those having annual receipts of less than $6,500,000. Small agricultural producers have been defined as those with annual receipts of less than $750,000. There are approximately 104 handlers of almonds subject to regulation under the order and approximately 6,000 producers of almonds in the regulated area. Information provided at the hearing indicates that approximately 50 percent of the handlers would be considered small agricultural service firms. According to data reported by the National Agricultural Statistics Service (NASS), the two-year average crop value for 2005-06 and 2006-07 was $2.283 billion. Dividing that average by 6,000 producers yields average estimated producer revenues of $380,500, which suggests that the majority of almond producers would also be considered small entities according to the SBA's definition. The order regulates the handling of almonds grown in the state of California. The California almond bearing acreage increased nearly 40 percent between 1996 and 2006, from 418,000 to 585,000 acres. Approximately 1.115 billion pounds (shelled basis) of almonds were produced during the 2006-07 season. Bearing acreage for the 2007-08 season is estimated to be 615,000 acres. NASS has forecasted that the 2007-08 crop will reach 1.330 billion pounds (shelled basis). More than two thirds of California's almond crop is exported to approximately 90 countries worldwide, and comprises nearly 80 percent of the world's almond supply. Under the order, incoming and outgoing quality regulations are established, statistical information is collected, production research projects are conducted, and marketing research and generic promotion programs are sponsored. Program activities administered by the Board are designed to support large and small almond producers and handlers. The 10-member Board is comprised of both producer and handler representatives from the production area. Board meetings where regulatory recommendations and other decisions are made are open to the public. All members are able to participate in Board deliberations, and each Board member has an equal vote. Others in attendance at meetings are also allowed to express their views. The Board's Food Quality and Safety Committee discussed the need for amendments to the order at meetings held on May 12, 2005; July 20, 2005; and November 1, 2006. The Board approved language for two proposed amendments to the order at their meeting on November 28, 2006. During a conference call on February 27, 2007, the Board confirmed that the two amendments should be proposed to USDA. The views of all participants were considered throughout this process. In addition, the hearing to receive evidence on the proposed changes was open to the public and all interested parties were invited and encouraged to participate and provide their views. The proposed amendments are intended to provide the Board and the industry with additional flexibility in the marketing of California almonds. Record evidence indicates that the proposed amendments are intended to benefit all producers and handlers under the order, regardless of size. There would be no cost implications for handlers or growers from adding the proposed order authorities. Costs of implementation would be incurred only if specific additional requirements were established following future informal rulemaking. All grower and handler witnesses supported the proposed amendments and commented on the implications of implementing specific requirements in the future. In that context, witnesses stated that they expected the benefits to be substantial and the costs of any future requirements to be minimal. A description of the proposed amendments and their anticipated economic impact on small and large entities is discussed below. Proposal 1—Adding the Authority To Establish Different Outgoing Quality Requirements for Different Markets The record shows that the proposal to add authority to establish different outgoing quality requirements for different markets would, in itself, have no economic impact on producers or handlers of any size. Regulations implemented under that authority could impose additional costs on handlers required to comply with them. However, witnesses testified that establishing mandatory regulations for different markets could increase the industry's credibility and reduce the risk that shipments of substandard product could jeopardize the entire industry's reputation. Record evidence shows that any additional costs are likely to be offset by the benefits of complying with those requirements. Witnesses cited decreased delays and demurrage charges, as well as fewer rejected loads and increased customer confidence, as expected benefits. Recently, almonds have been rejected in the EU due to aflatoxin levels exceeding its importing tolerances. Information provided at the hearing shows that the rejection of a 44,000 pound container of almonds in the EU costs about $10,000, or 22.7 cents per pound. The cost includes demurrage for unanticipated delays at port, warehousing product while awaiting official import testing results, shipping rejected almonds back to the U.S., and shipping a replacement container back to the EU. To reduce the risk of rejections, the California almond industry developed a voluntary aflatoxin testing protocol. Witnesses estimated that the cost of the pre-export testing, including the value of the sample, analytical fees, courier fees, and sampling labor is less than 2 cents per pound, which is less than 10 percent of the cost associated with a rejection. Proponents testified that if a requirement that all almonds destined for the EU be tested prior to shipment was established under authority provided by the proposed order amendment, handlers would incur the cost of testing, but those costs would be expected to be more than offset by the reduced risk of rejections. It's likely that most handlers are already complying with their customers' specific market requirements on a voluntary basis as a part of doing business, but witnesses explained that mandatory requirements lend credibility to the entire industry. In addition, such requirements could reduce the risk that one shipment of substandard product would jeopardize the entire industry's reputation. Currently, outgoing quality requirements established under the order apply to all handler entities regardless of size. If the proposed amendment and subsequent regulations established thereunder are implemented, distribution of any increased costs between small and large entities would depend on the requirements established for the markets to which individual handlers shipped their almonds as well as the volume of almonds shipped to those markets. But increases in cost would be equitable to all entities because requirements for each market would be imposed uniformly on all handlers shipping to that market. Witnesses explained that almonds are used in many different ways by the various markets. In Europe, almonds are widely used as marzipan and ingredients for baked goods, candy, and other dishes. In India and the Middle East, almonds are presented as gifts at holidays and weddings, and play a part in other cultural traditions. India imports large quantities of inshell almonds that are then processed by hand. The wide range of uses leads to a similarly wide array of customer requirements. According to record testimony, handlers adapt their export methods to satisfy customer requirements. One witness explained that it is often difficult for smaller handlers to stay informed of rapidly changing import regulations. The witness stated that small handlers in particular would benefit from the proposed authority to establish different requirements for different markets by avoiding costly mistakes that could be associated with not understanding various market and import requirements. If regulations were established under the proposed authority, the Board would provide information about updated requirements to the industry. Finally, one witness explained that having the ability under the order to establish different outgoing quality requirements for different markets would not restrict handlers' choices regarding which markets to supply. Rather, the provision would ensure that the important standards that differentiate markets would be consistently met by all handlers shipping to those markets. Proposal 2—Adding the Authority To Establish Container Labeling and Marking Requirements The proposal described in Material Issue No. 2 would add § 981.43 to the order to provide general authority to establish container marking and labeling requirements. If implemented, the proposed amendment would allow the Board, through the informal rulemaking process, to recommend and establish uniform container marking and labeling regulations in response to evolving market requirements. Under current order provisions, there is only very limited authority for container marking and labeling requirements. Witnesses testified that the lack of this authority has hindered them from adapting quickly and appropriately to recent market situations. In one case described at the hearing, the industry was unable to implement container marking or labeling following recalls for possible *Salmonella* contamination. Witnesses stated that customer confidence in almond quality could have been reinforced if the necessary authority to establish marking and labeling requirements had been available. Such authority would have allowed the industry to prescribe labeling to clearly indicate which almonds had been treated to reduce risk of contamination. The proposed amendment would allow the industry to respond to evolving market needs as they develop by establishing uniform and consistent marking and labeling requirements. According to proponents, the ability to communicate important product information to customers in a uniform and consistent manner will be essential as the industry strives to maintain its position in the expanding global marketplace. If the proposed amendment is implemented, costs of complying with any regulations established thereunder would not be disproportionate to small businesses. Witnesses testified that applying labels and marks to almond containers is currently a common practice, and industry handlers already have container marking processes and equipment in place. Therefore, the costs associated with the addition of uniform marking or labeling requirements would be minimal for both small and large entities. The record shows that any costs would likely be offset by the benefits derived from being more responsive to market demands. Interested persons were invited to present evidence at the hearing on the probable regulatory and informational impact of the proposed amendments to the order on small entities. The record evidence indicates that the proposed amendments are intended to benefit all producers and handlers under the order, regardless of size. Further, the record shows that the costs associated with implementing regulations would be outweighed by the benefits expected to accrue to the California almond industry. USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule. These amendments are designed to enhance the administration and functioning of the order to the benefit the California almond industry. Paperwork Reduction Act Information collection requirements for Part 981 are currently approved by the Office of Management and Budget (OMB), under OMB Number 0581-0178, Vegetable and Specialty Crops. Implementation of these proposed amendments would not trigger any changes to those requirements. Should any such changes become necessary in the future, they would be submitted to OMB for approval. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. AMS is committed to complying with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes. Civil Justice Reform The amendments to Marketing Order 981 proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this proposal. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of the entry of the ruling. Findings and Conclusions The findings and conclusions, rulings, and general findings and determinations included in the Recommended Decision set forth in the December 28, 2007 issue of the **Federal Register** are hereby approved and adopted. Marketing Order Annexed hereto and made a part hereof is the document entitled “Order Amending the Order Regulating the Handling of Almonds Grown in California.” This document has been decided upon as the detailed and appropriate means of effectuating the foregoing findings and conclusions. *It is hereby ordered,* That this entire decision be published in the **Federal Register** . Referendum Order It is hereby directed that a referendum be conducted in accordance with the procedure for the conduct of referenda (7 CFR part 900.400-407) to determine whether the annexed order amending the order regulating the handling of almonds grown in California is approved or favored by growers, as defined under the terms of the order, who during the representative period were engaged in the production of almonds in the production area. The representative period for the conduct of such referendum is hereby determined to be August 1, 2006, through July 31, 2007. The agents of the Secretary to conduct such referendum are hereby designated to be Kurt Kimmel and Terry Vawter, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA; Telephone:

(559)487-5901, Fax:

(559)487-5906, or E-mail: *Kurt.Kimmel@usda.gov* or *Terry Vawter@usda.gov,* respectively. List of Subjects in 7 CFR Part 981 Almonds, Marketing agreements, Nuts, Reporting and recordkeeping requirements. Dated: February 27, 2008. Lloyd C. Day, Administrator, Agricultural Marketing Service. Order Amending the Order Regulating the Handling of Almonds Grown in California 1 1 This order shall not become effective unless and until the requirements of § 900.14 of the rules of practice and procedure governing proceedings to formulate marketing agreements and marketing orders have been met. Findings and determinations The findings and determinations hereinafter set forth are supplementary to the findings and determinations which were previously made in connection with the issuance of the marketing order; and all said previous findings and determinations are hereby ratified and affirmed, except insofar as such findings and determinations may be in conflict with the findings and determinations set forth herein.

(a)*Findings and Determinations Upon the Basis of the Hearing Record.* Pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-612), and the applicable rules of practice and procedure effective thereunder (7 CFR part 900), a public hearing was held upon the proposed amendments to the Marketing Order No. 981 (7 CFR part 981), regulating the handling of almonds grown in California. Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

(1)The marketing order, as amended, and as hereby proposed to be further amended, and all of the terms and conditions thereof, would tend to effectuate the declared policy of the Act;

(2)The marketing order, as amended, and as hereby proposed to be further amended, regulates the handling of almonds grown in the production area in the same manner as, and is applicable only to, persons in the respective classes of commercial and industrial activity specified in the marketing order upon which a hearing has been held;

(3)The marketing order, as amended, and as hereby proposed to be further amended, is limited to its application to the smallest regional production area which is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

(4)The marketing order, as amended, and as hereby proposed to be further amended, prescribes, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of almonds grown in the production area; and

(5)All handling of almonds grown in the production area as defined in the marketing order is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce. Order Relative to Handling *It is therefore ordered,* That on and after the effective date hereof, all handling of almonds grown in California shall be in conformity to, and in compliance with, the terms and conditions of the said order as hereby proposed to be amended as follows: The provisions of the proposed marketing order amending the order contained in the Recommended Decision issued by the Administrator on December 21, 2007, and published in the **Federal Register** (72 FR 73671) on December 28, 2007, will be and are the terms and provisions of this order amending the order and are set forth in full herein. PART 981—ALMONDS GROWN IN CALIFORNIA 1. The authority citation for 7 CFR part 981 continues to read as follows: Authority: 7 U.S.C. 601-674. 2. Amend paragraph

(b)of § 981.42 by adding the following sentence before the last sentence to read as follows: § 981.42 Quality control.

(b)* * * The Board may, with the approval of the Secretary, establish different outgoing quality requirements for different markets. * * * 3. Add a new § 981.43 to read as follows: § 981.43 Marking or labeling of containers. The Board may, with the approval of the Secretary, establish regulations to require handlers to mark or label their containers that are used in packaging or handling of bulk almonds. For purposes of this section, *container* means a box, bin, bag, carton, or any other type of receptacle used in the packaging or handling of bulk almonds. [FR Doc. E8-4017 Filed 2-29-08; 8:45 am] BILLING CODE 3410-02-P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2008-0177; Directorate Identifier 2007-CE-093-AD] RIN 2120-AA64 Airworthiness Directives; Taylorcraft Models A, B, and F Series Airplanes AGENCY: Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed rulemaking; correction. SUMMARY: This document makes a correction to a current notice of proposed rulemaking (NPRM), which was published in the **Federal Register** on February 20, 2008 (73 FR 9239), and applies to certain Taylorcraft Models A, B, and F series airplanes. The NPRM proposed to require inspection of the wing strut attach fittings for corrosion or cracks and would require repair or replacement if corrosion or cracks are found. The docket number was incorrectly referenced at “FAA-2007-0177” instead of “FAA-2008-0177.” The NPRM is posted in the FAA-2008-0177 docket section of the Federal Docket Management System (FDMS). This document corrects the docket number and should further reduce the confusion associated with the inadvertent error. DATES: We must receive comments on this proposed AD by March 21, 2008. ADDRESSES: Use one of the following addresses to comment on this proposed AD: • *Federal eRulemaking Portal:* Go to *http://www.regulations.gov.* Follow the instructions for submitting comments. • *Fax:*

(202)493-2251. • *Mail:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Andy McAnaul, Aerospace Engineer, 10100 Reunion Place, San Antonio, Texas 78216; telephone:

(210)308-3365; fax:

(210)308-3370. SUPPLEMENTARY INFORMATION: Discussion On February 12, 2008, the FAA issued an NPRM (73 FR 9239; February 20, 2008), which applies to certain Taylorcraft Models A, B, and F series airplanes. This proposed AD would require inspection of the wing strut attach fittings for corrosion or cracks and would require repair or replacement if corrosion or cracks are found. The docket number was incorrectly referenced as “FAA-2007-0177” instead of “FAA-2008-0177.” The NPRM is posted in the FAA-2008-0177 docket section of the FDMS. Need for the Correction This correction is needed to identify the docket number and should further reduce the confusion associated with the inadvertent error. Correction of Publication Accordingly, the publication of February 20, 2008 (73 FR 9239), which was the subject of FR Doc. E8-2995, is corrected as follows: On page 9239, in the second column, in the first line under 14 CFR Part 39, replace “[Docket No. FAA-2007-0177;” with “[Docket No. FAA-2008-0177;” On page 9240, in the first column, in the second line from the top of the page, replace “FAA-2007-0177;” with “FAA-2008-0177”. On page 9241, in the first column, in the third line under § 39.13 [Amended], replace “FAA-2007-0177;” with “FAA-2008-0177”. Action is taken herein to correct this reference in the NPRM. Issued in Kansas City, Missouri, on February 25, 2008. David R. Showers, Acting Manager, Small Airplane Directorate, Aircraft Certification Service. [FR Doc. 08-892 Filed 2-29-08; 8:45 am]

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