Unknown. Final rule

50,646 words·~230 min read·/register/2008/05/27/08-1297

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-2008-05-27.xml --- 73 102 Tuesday, May 27, 2008 Contents Agriculture Agriculture Department See Animal and Plant Health Inspection Service See Commodity Credit Corporation See Farm Service Agency See Forest Service See Rural Utilities Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 30375 E8-11708 Animal Animal and Plant Health Inspection Service RULES Amendments to Treatments for Plant Pests, 30271-30274 E8-11740 Exotic Newcastle Disease;

Quarantine Restrictions, 30291-30299 E8-11741 Antitrust Antitrust Division NOTICES National Cooperative Research and Production Act of 1993: Network Centric Operations Industry Consortium, Inc.; Correction, 30454 Z8-10136 Ultrafine Grained Titanium for Near-net Shape Forging, etc.; Correction, 30454 Z8-10139 Centers Centers for Disease Control and Prevention NOTICES Implementation of New Authorities for the Public Health Emergency Preparedness Cooperative Agreement, 30401-30405 E8-11718 Centers Centers for Medicare & Medicaid Services PROPOSED RULES Medicare and Medicaid Programs:

Hospice Conditions of Participation Extension of Timeline for Publication of Final Rule, 30355-30356 E8-11801 Civil Civil Rights Commission NOTICES Meetings: Vermont Advisory Committee, 30376 E8-11783 Coast Guard Coast Guard PROPOSED RULES Definition of Marine Debris for Purposes of the Marine Debris Research, Prevention, and Pollution Act, 30322-30326 E8-11700 Commerce Commerce Department See International Trade Administration See National Institute of Standards and Technology See National Oceanic and Atmospheric Administration NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 30376-30377 E8-11599 Commodity Commodity Credit Corporation RULES Cotton World Price Determination, 30274-30277 E8-11803 Commodity Commodity Futures Trading Commission NOTICES Meetings; Sunshine Act, 08-1289 08-1291 30382-30383 08-1294 Drug Drug Enforcement Administration NOTICES Manufacturer of Controlled Substances Application: AMRI Rensselaer, Inc., 30418-30419 E8-11633 Siegfried (USA), Inc., 30418 E8-11631 Education Education Department NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 30383 E8-11717 Meetings: National Advisory Committee on Institutional Quality and Integrity, 30383-30384 E8-11778 Energy Energy Department See Federal Energy Regulatory Commission EPA Environmental Protection Agency RULES Clean Air Act Approval and Promulgation of Air Quality Implementation Plan Revision for North Dakota, 30308-30316 E8-11479 PROPOSED RULES Approval and Promulgation of Air Quality Implementation Plans: Pennsylvania, 30342-30354 E8-11734 E8-11735 E8-11752 E8-11753 E8-11754 Virginia, 30340-30342 E8-11733 Clean Air Act Approval and Promulgation of Air Quality Implementation Plan Revision for North Dakota, 30355 E8-11476 NOTICES Workshop to review initial draft materials for the Particulate Matter:

Integrated Science Assessment, 30391-30392 E8-11755 Equal Equal Employment Opportunity Commission NOTICES Meetings: Equal Employment Opportunity Commission, 30392 E8-11730 Executive Executive Office of the President See Presidential Documents Farm Farm Service Agency NOTICES Emergency Conservation Program, 30376 E8-11774 FAA Federal Aviation Administration RULES Performance and Handling Qualities Requirements for Rotorcraft; Correction, 30454 Z8-3817 FCC Federal Communications Commission RULES Standardized and Enhanced Disclosure Requirements for Television Broadcast Licensee Public Interest Obligations:

Extension of the Filing Requirement for Children's Television Programming Report (FCC Form 398), 30316 E8-11407 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 30392-30393 E8-11777 Petition for Reconsideration of Action in Rulemaking Proceeding: Federal-State Joint Board on Universal Service, 30393 E8-11775 FDIC Federal Deposit Insurance Corporation NOTICES Guidelines for Appeals of Material Supervisory Determinations, 30393-30398 E8-11416 Federal Emergency Federal Emergency Management Agency PROPOSED RULES Proposed Flood Elevation Determinations, 30356-30361 E8-11691 E8-11692 NOTICES Major Disaster Declarations:

Maine, 30412-30414 E8-11687 E8-11689 E8-11693 Mississippi, 30414 E8-11686 Missouri, 30414 E8-11688 Oklahoma, 30414-30415 E8-11690 Federal Energy Federal Energy Regulatory Commission PROPOSED RULES Modification of Interchange and Transmission Loading Relief Reliability Standards, etc., 30326-30328 E8-11694 NOTICES Combined Notice of Filings, 30384-30386 E8-11728 E8-11729 Environmental Impact Statements; Availability, etc.: Florida Gas Transmission Company, LLC, 30386-30390 E8-11695 Intent to File License Application, Filing of Pre-Application Document and Commencing Licensing Proceeding, etc.:

Fairlawn Hydroelectric Company, LLC., 30390-30391 E8-11696 Federal Reserve Federal Reserve System NOTICES Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 30398 E8-11743 Proposals to Engage in Permissible Nonbanking Activities or to Acquire Companies that are Engaged in Permissible Nonbanking Activities, 30398 E8-11746 Fish Fish and Wildlife Service PROPOSED RULES Endangered and Threatened Wildlife and Plants: Designation of Critical Habitat for Alabama Sturgeon (Scaphirhynchus suttkusi), 30361-30374 E8-11461 Food Food and Drug Administration RULES Food Labeling:

Health Claims; Dietary Noncariogenic Carbohydrate Sweeteners and Dental Caries, 30299-30301 E8-11802 NOTICES Reportable Food Registry as Required by the Food and Drug Administration Amendments Act of 2007, 30405-30406 E8-11517 Foreign Foreign Assets Control Office NOTICES Additional Designation of Entities Pursuant to Executive Order (12978), 30446-30448 E8-11679 Forest Forest Service RULES Clarifying Prohibitions for Failure to Maintain Control of Fires that Damage National Forest System Lands, 30305-30307 E8-11731 GSA General Services Administration NOTICES Meetings:

Multiple Award Schedule Advisory Panel, 30398-30399 E8-11706 Health Health and Human Services Department See Centers for Disease Control and Prevention See Centers for Medicare & Medicaid Services See Food and Drug Administration See Health Resources and Services Administration See National Institutes of Health NOTICES Meetings: American Health Information Community Chronic Care Workgroup, 30400 E8-11770 American Health Information Community Confidentiality, Privacy, & Security Workgroup, 30399 E8-11758 American Health Information Community Consumer Empowerment Workgroup, 30400 E8-11762 American Health Information Community Electronic Health Records Workgroup, 30400 E8-11764 American Health Information Community Personalized Healthcare Workgroup, 30401 E8-11773 American Health Information Community Population Health and Clinical Care Connections Workgroup, 30400 E8-11767 American Health Information Community Quality Workgroup, 30399 E8-11749 Secretary's Advisory Committee on Genetics, Health, and Society, 30401 E8-11798 Health Health Resources and Services Administration NOTICES Statement of Organization, Functions and Delegations of Authority, 30406-30408 E8-11800 Homeland Homeland Security Department See Coast Guard See Federal Emergency Management Agency See Transportation Security Administration See U.S.

Customs and Border Protection RULES Revision of Department of Homeland Security Acquisition Regulation; Technical Amendments (HSAR Case 2008-001), 30317-30318 E8-11560 Interior Interior Department See Fish and Wildlife Service See Land Management Bureau See Minerals Management Service IRS Internal Revenue Service RULES Treatment of Property Used to Acquire Parent Stock in Certain Triangular Reorganizations Involving Foreign Corporations, 30301-30305 E8-11653 PROPOSED RULES Treatment of Property Used to Acquire Parent Stock in Certain Triangular Reorganizations Involving Foreign Corporations, 30330-30331 E8-11647 NOTICES Federally Funded Research and Development Center, 30448 E8-11654 Meetings:

Ad Hoc IRS Forms and Publications/Language Services Issue Committee of the Taxpayer Advocacy Panel, 30448 E8-11683 Area 1 Taxpayer Advocacy Panel (including the states of NY, CT, MA, RI, NH, VT and ME), 30449 E8-11651 Area 2 Taxpayer Advocacy Panel (including the states of DE, NC, SC, NJ, MD, PA, VA, WV and DC), 30449 E8-11656 Area 3 Taxpayer Advocacy Panel (including the states of FL, GA, AL, MS, LA, AR, and the territory of PR)., 30449 E8-11655 Area 4 Taxpayer Advocacy Panel (including the states of IL, IN, KY, MI, OH, TN, and WI), 30449-30450 E8-11663 Area 5 Taxpayer Advocacy Panel (including the states of IA, KS, MN, MO, NE, OK, and TX), 30450 E8-11680 Area 6 Taxpayer Advocacy Panel (including the states of AZ, CO, ID, MT, NM, ND, OR, SD, UT, WA and WY), E8-11661 30450 E8-11678 Area 7 Taxpayer Advocacy Panel (including the states of AK, CA, HI, and NV), 30451 E8-11682 Small Business/Self Employed - Taxpayer Burden Reduction Issue Committee of the Taxpayer Advocacy Panel, 30451 E8-11685 Tax Exempt and Government Entities Division, 30451 E8-11797 Taxpayer Advocacy Panel Earned Income Tax Credit Issue Committee, 30452 E8-11684 Taxpayer Advocacy Panel Volunteer Income Tax Assistance Issue Committee, 30452 E8-11660 Wage & Investment Reducing Taxpayer Burden Issue Committee of the Taxpayer Advocacy Panel, 30452 E8-11658 International International Trade Administration NOTICES Application for Duty-Free Entry of Scientific Instruments, 30377 E8-11561 Applications for Duty-Free Entry of Scientific Instruments, 30377-30378 E8-11563 E8-11761 Preliminary Results of Changed-Circumstances Review:

Ball Bearings and Parts Thereof from the United Kingdom, 30378-30380 E8-11744 Justice Justice Department See Antitrust Division See Drug Enforcement Administration Land Land Management Bureau NOTICES Call for a Nomination for Front Range Colorado Resource Advisory Council, 30416 E8-11745 Intent to Prepare an Environmental Impact Statement: Whiskey South II Vegetation Management Project, Cottonwood Field Office, Idaho County, Idaho, 30417-30418 E8-11722 Minerals Minerals Management Service PROPOSED RULES Allocation and Disbursement of Royalties, Rentals, and Bonuses-Oil and Gas, Offshore, 30331-30340 E8-11709 NOTICES Extension of Post-Sale Evaluation Period for Central Gulf of Mexico Lease Sale (206), 30418 E8-11711 National Archives National Archives and Records Administration NOTICES Records Schedules;

Availability and Request for Comments, 30419-30420 E8-11791 National Highway National Highway Traffic Safety Administration NOTICES Limited Extension of Temporary Exemption: Spyker Automobielen B.V., 30443-30445 E8-11699 National National Institute for Literacy NOTICES Meetings: National Institute for Literacy Advisory Board, 30420-30421 E8-11707 National Institute National Institute of Standards and Technology NOTICES Construction Grant Program Notice of Availability of Funds, 30380-30381 E8-11719 NIH National Institutes of Health NOTICES Government-Owned Inventions;

Availability for Licensing, 30408-30409 E8-11698 Meetings: Chairpersons, Boards of Scientific Counselors for Institutes/Centers at the NIH, 30409 E8-11715 Interagency Autism Coordinating Committee (IACC)., 30409-30410 E8-11713 National Cancer Institute, 30410-30411 E8-11811 National Cancer Institute Special Emphasis Panel, Discovery and Development, 30410 E8-11644 National Center for Complementary and Alternative Medicine Special Emphasis Panel Clinical Science, 30411 E8-11714 National Institute of Diabetes and Digestive and Kidney Diseases, 30411 E8-11634 Secretary's Advisory Committee on Genetics, Health, and Society, 30411-30412 E8-11792 The National Institute of Dental and Craniofacial Research: 2009-2013 Strategic Plan, 30412 E8-11799 NOAA National Oceanic and Atmospheric Administration RULES Fisheries of the Economic Exclusive Zone Off Alaska;

Shallow-Water Species Fishery by Vessels Using Trawl Gear in the Gulf of Alaska, 30318-30319 08-1297 Fisheries of the Exclusive Economic Zone Off Alaska: Allocating Bering Sea and Aleutian Islands King and Tanner Crab Fishery Resources; Correction, 30319-30320 E8-11780 PROPOSED RULES Definition of Marine Debris for Purposes of the Marine Debris Research, Prevention, and Pollution Act, 30322-30326 E8-11700 NOTICES Atlantic Highly Migratory Species: Environmental Impact Statement for Amendment 4 to the 2006 Consolidated Atlantic Highly Migratory Species Fishery Management Plan, 30381-30382 E8-11779 National Science National Science Foundation NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 30421-30422 E8-11710 Permit Applications Received, 30422 E8-11817 Nuclear Nuclear Regulatory Commission PROPOSED RULES Natural Resources Defense Council; Receipt of Petition for Rulemaking, 30321-30322 E8-11727 NOTICES Draft Regulatory Guide: Issuance, Availability, 30422-30423 E8-11748 Facility Operating License: Nuclear Management Company, LLC; Correction, 30423 E8-11750 Facility Operationg License: University of Floida, 30424-30425 E8-11768 Final Interim Staff Guidance DC/COL-ISG-01:

Seismic Issues Associated with High Frequency Ground Motion, 30425-30426 E8-11786 Opportunity for Hearing: Crow Butte Resources, Inc., etc., 30426-30430 E8-11724 Presidential Presidential Documents PROCLAMATIONS *Special observances:* National Maritime Day (Proc. 8259), 30269-30270 08-1302 RUS Rural Utilities Service RULES Accounting Requirements for RUS Electric Borrowers, 30277-30291 E8-11264 SEC Securities and Exchange Commission NOTICES Self-Regulatory Organizations; Proposed Rule Changes:

Chicago Board Options Exchange, Inc., 30430-30433 E8-11702 E8-11703 International Securities Exchange, LLC, 30433-30434 E8-11701 New York Stock Exchange LLC, 30434-30439 E8-11723 E8-11808 SBA Small Business Administration NOTICES Disaster Declarations: Kentucky, 30439 E8-11747 Maine, E8-11712 30439-30440 E8-11757 North Carolina, 30440 E8-11760 Meetings: Small Business Size Standards, 30440-30442 E8-11763 State State Department NOTICES Agency Information Collection Activities;

Proposals, Submissions, and Approvals, 30442 E8-11766 Amended Designations of Islamic Jihad Group (IJG), 30443 E8-11772 Culturally Significant Objects Imported for Exhibition Determinations: “Sur Le Motif; Painting in Nature Around 1800” and Additional Art Objects from the Netherlands, 30443 E8-11769 Thrift Thrift Supervision Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 30452-30453 E8-11771 Transportation Transportation Department See Federal Aviation Administration See National Highway Traffic Safety Administration Transportation Transportation Security Administration NOTICES Transportation Worker Identification Credential:

Enrollment Dates for the Ports of Paulsboro, NJ; Paducah, KY; Marquette, MI; Valdez, AK; St. Croix, VI; and Coos Bay, OR, 30415-30416 E8-11807 Treasury Treasury Department See Foreign Assets Control Office See Internal Revenue Service See Thrift Supervision Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 30446 E8-11681 Customs U.S. Customs and Border Protection PROPOSED RULES Customs Broker License Examination Individual Eligibility Requirements, 30328-30330 E8-11732 NOTICES International Registered Traveler Pilot Program:

Name Changed; Starting Date Accelerated; Changes to Enrollment Center Information, 30416 E8-11629 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. 73 102 Tuesday, May 27, 2008 Rules and Regulations DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 305 [Docket No.

APHIS-2006-0091] Amendments to Treatments for Plant Pests AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Final rule. SUMMARY: We are amending the regulations for the treatment of plant pests by removing two treatment options that we now believe to be ineffective at neutralizing their target plant pests. A review of these treatments found these options to be ineffective. We are also removing two treatment schedules that are no longer authorized for use and clarifying the fruits and vegetables on which two methyl bromide treatments may be used.

These changes are necessary to ensure that ineffective or unauthorized treatments are not used and to clarify the regulations. DATES: *Effective Date:* June 26, 2008. FOR FURTHER INFORMATION CONTACT: Dr. Inder P.S. Gadh, Senior Risk Manager-Treatments, Commodity Import Analysis and Operations, PPQ, APHIS, 4700 River Road Unit 133, Riverdale, MD 20737-1236;

(301)734-8758. SUPPLEMENTARY INFORMATION: Background The phytosanitary treatments regulations contained in 7 CFR part 305 (referred to below as the regulations) set out standards and schedules for treatments required in 7 CFR parts 301, 318, and 319 for fruits, vegetables, and other articles to prevent the introduction or dissemination of plant pests or noxious weeds into or through the United States. On July 5, 2007, we published in the **Federal Register** (72 FR 36629-36632, Docket No. APHIS-2006-0091) a proposal 1 to amend the regulations by: 1 To view the proposed rule and the comment we received, go to *http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=APHIS-2006-0091.* • Amending two treatments to remove options that we now believe to be ineffective at neutralizing their target plant pests; • Removing two treatment schedules that are no longer authorized for use; and • Clarifying the fruits and vegetables on which two methyl bromide treatments may be used. We solicited comments concerning our proposal for 60 days ending September 4, 2007. We received one comment by that date, from the national plant protection organization of a foreign country. We address the issues raised by the commenter in the following paragraphs. The regulations in § 305.2 allow grapes from Australia to enter the United States if they are treated in accordance with methyl bromide/cold treatment combination treatment MB&CT T108-b, found in § 305.10 of the regulations, in order to neutralize the plant pests *Austrotortrix* spp., *Epiphyas* spp., * Bactrocera tryoni,* Mediterranean fruit fly (Medfly), and other fruit flies. The regulations in § 305.2 also provide for the use of MB&CT T108-b to qualify apples, grapes, and pears for interstate movement from areas within the United States that are quarantined due to the presence of Medfly. This treatment schedule has stipulated that these commodities first be fumigated with methyl bromide and then held at either 33 °F or below for 21 days, or between 48 °F and 56 °F for 6 days. In the proposed rule, we stated that our review of these two options had led us to determine that there was not adequate scientific justification to conclude that these pests could be neutralized if the cold treatment option of holding the fruit between 48 °F and 56 °F for 6 days was used. We therefore proposed to remove this option from the regulations. The commenter stated that we had failed to provide a citation for our review, or scientific information in support of such a change, and asked that such information be provided in this final rule. Our review evaluated the scientific justification for each component of the various MB&CT treatment schedules to ensure that all supporting data incorporated and thus adequately reflected the pertinent research on the efficacy of such treatments at neutralizing their target pests. This review revealed the absence of any supporting scientific evidence suggesting that the cold treatment option that we are removing from the regulations is an effective deterrent for its target pests. Indeed, the review determined that the inclusion of this treatment option in the regulations was the result of a long-standing clerical error in the Plant Protection and Quarantine

(PPQ)Treatment Manual. Cold treatment at a temperature between 48 °F and 56 °F is an effective component of treatment schedule T108-a-3, where fumigation is performed with a higher dose and for a longer duration than under T108-b. It appears that this temperature range option was inadvertently copied into treatment schedule T108-b, where its efficacy had not been established. When we moved the treatment schedules from the PPQ Treatment Manual into the regulations in part 305, this error was repeated. However, we welcome any research suggesting that this treatment is, in fact, effective at neutralizing its target pests, and therefore ought to be reintroduced into the regulations. Fumigation according to methyl bromide treatment schedule MB T104-a-1, in accordance with the methyl bromide treatment regulations in § 305.6, has been listed as an approved treatment for hitchhikers or surface pests, except mealybugs, for all imported fruits and vegetables. Similarly, fumigation according to methyl bromide treatment schedule MB T104-a-2 has been listed as an approved treatment for mealybugs for all imported fruits and vegetables. In the proposed rule, we pointed out that only some fruits and vegetables are approved by the Environmental Protection Agency to be treated with methyl bromide under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). We therefore proposed to update the commodity entries in the table in § 305.2(h)(2)(i) for MB T104-a-1 and MB T104-a-2 to clarify that only imported fruits and vegetables approved under FIFRA for treatment with methyl bromide, rather than all imported fruits and vegetables, may be treated according to those treatment schedules. The commenter suggested that we not change the regulations to specify the commodities approved under FIFRA, since that act could be amended in the future to include or exclude certain fruits or vegetables, and any such revisions to FIFRA would necessitate subsequent revisions to our regulations. Instead, the commenter suggested that any references to specific commodities approved under FIFRA be contained in an updated PPQ Treatment Manual. We did not propose to list specific commodities in the regulations; rather, we proposed to amend the entry for “all imported fruits and vegetables” in order to make it clear that the two methyl bromide treatments could be applied only to those fruits and vegetables that are approved for treatment with methyl bromide under FIFRA. The commenter also pointed out that FIFRA applies only to the use and sale of specific chemicals within the United States. Accordingly, the commenter suggested that we revise the wording of § 305.2 to make it clear that FIFRA does not apply to the sale or use of specific chemicals or classes of chemicals in any other country. We do not believe that it is necessary to make such a statement in our regulations, as they do not assert or imply that FIFRA's applicability extends to the regulation of chemicals by other countries. The commenter also asserted that, because FIFRA has no authority in other countries, it is possible that a country may employ a methyl bromide fumigation treatment or fumigate an item not approved under FIFRA prior to exporting the commodity to the United States, and yet still comply with our quarantine requirements. For this reason, the commenter suggested that we also amend § 305.2 to specify that all imported foods must not exceed methyl bromide residue limits contained in 40 CFR 180.123. If methyl bromide was not approved for use on a particular fruit or vegetable under FIFRA, then we would not prescribe its use as a quarantine treatment for that article. We cannot, therefore, envision any circumstances under which an article that we did not require to be treated with methyl bromide would be so treated anyway, or if it was treated with methyl bromide rather than the treatment required under the regulations, that the article would be eligible for entry into the United States. Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, without change. Executive Order 12866 and Regulatory Flexibility Act This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866. We are amending the regulations for the treatment of plant pests by removing two treatment options that we now believe to be ineffective at neutralizing their target plant pests. A review of these treatments found these options to be ineffective. We are also removing two treatment schedules that are no longer authorized for use and clarifying the fruits and vegetables on which two methyl bromide treatments may be used. These changes are necessary to ensure that ineffective or unauthorized treatments are not used and to clarify the regulations. Removing treatment schedules T409-c-1 and T409-c-3 from the regulations is not expected to have any economic impacts because, to our knowledge, these treatments have not been used for many years. Clarifying that treatment schedules MB T104-a-1 and MB T104-a-2 are approved only for those imported fruits and vegetables that are approved for treatment with methyl bromide under FIFRA is not expected to have any economic effects because it simply clarifies the circumstances under which APHIS will perform or authorize the treatments. Therefore, this economic analysis concentrates on the potential economic effects of amending two treatment options for fruits and vegetables. We are amending methyl bromide treatment schedule MB T101-j-2-1 to indicate that it may only be performed at a temperature of 80 °F or above. The commodities for which this treatment is an approved treatment will not change. The treatment schedule is approved for *Anastrepha* spp. fruit flies in grapefruits, oranges, and tangerines from Mexico and for *Anastrepha ludens* (Mexican fruit fly) in grapefruits, oranges, and tangerines moved interstate from areas within the United States that are quarantined due to the presence of Mexican fruit fly. We are also amending the methyl bromide-cold treatment combination treatment schedule MB&CT T108-b to remove the cold treatment option of holding the fruit between 48 °F and 56 °F for 6 days. The other options available for this MB&CT treatment and the commodities for which this treatment is an approved treatment will not change. The treatment schedule is approved for *Austrotortrix* spp., *Epiphyas* spp., *Bactrocera tryoni,* Medfly, and other fruit flies in grapes from Australia and for Medfly in apples, grapes, and pears moved interstate from areas within the United States that are quarantined due to the presence of Medfly. Depending on the actual cost increases that occur because of changes to the treatment schedules for MB T101-j-2-1 and MB&CT T108-b, foreign suppliers or domestic suppliers located in quarantined areas may experience a cost increase, and consequently the quantity of fruit or vegetables shipped could decrease. This decrease in the quantity shipped could result in a price increase, benefiting U.S. producers and suppliers located outside quarantined areas. In reality, negative effects of the changes in treatment requirements will be negligible; any changes in treatment costs associated with these amendments to the treatment schedules will represent a small fraction of the prices of the fruits and vegetables. Additionally, import quantities affected are small to nonexistent. Grapefruit, orange, and tangerine imports from Mexico represent less than one-half of 1 percent of domestic supply, and there are no records of apple, grape, or pear imports from Australia. Domestically, this rule amends approved treatments for regulated articles moved interstate from areas quarantined due to Medfly. If the changes affect treatment costs or shipping expenses, U.S. entities that could be affected include producers of Medfly host crops, many of which are categorized within the following North American Industry Classification System subsectors: NAICS 111310, Orange Groves; NAICS 111320, Citrus (except Orange) Groves; NAICS 111331, Apple Orchards; NAICS 111332, Grape Vineyards; NAICS 111334, Berry (except Strawberry) Farming; NAICS 111335, Tree Nut Farming; NAICS 111336, Fruit and Tree Nut Combination Farming; and NAICS 111339, Other Noncitrus Fruit Farming. Other entities that could be affected are fruit and vegetable wholesalers (NAICS 422480), supermarkets and other grocery stores (NAICS 445110), warehouse clubs and superstores (NAICS 452910), and fruit and vegetable markets (NAICS 445230). Other than warehouse clubs and superstores, the vast majority of the businesses that compose these industries are small entities. The Small Business Administration

(SBA)classifies Medfly host crop operations as small entities if their annual receipts are not more than $750,000. 2 According to the 2002 Census of Agriculture, there were 446 operations that were engaged in the production of citrus and noncitrus fruits. Over 99 percent of these entities were designated as small entities. The SBA classifies fresh fruit and vegetable merchant wholesalers (NAICS code 422480) as small entities if they employ 100 or fewer employees. According to the 2002 Economic Census there were 4,644 of these entities nationally, with 484 (or 10.4 percent) of them considered to be large. SBA classifies supermarkets and other grocery stores (NAICS 445110) as small entities if their annual receipts are not more than $25 million. There were 56,577 supermarkets and other groceries in 2002. Of these, only 3,477 or 6.1 percent are considered to be large. Fruit and vegetable markets (NAICS 445230) are considered small if their annual sales are not more than $6.5 million. In 2002, the most recent year for which data are available, the census reported 2,257 fruit and vegetable markets. 3 Approximately 96 percent of these are considered to be small entities by SBA standards. The census also reported 2,761 warehouse clubs and superstores (NAICS 452910), which are classified as small entities if their annual sales are not more than $25 million. Of the above total, 2,593, or 93.9 percent, are classified as large entities. 2 SBA, Small business Size Standards matched to North American Industry Classification System 2002, Effective January 2006 ( *http://www.sba.gov/size/sizetable2002.html* ). 3 U.S. Census Bureau, 2002 Economic Census Geographic Area Series: Manufacturing and Wholesale Trade, Revised January 2006 ( *http://www.census.gov/econ/census02/guide/geosumm.htm* ). The majority of entities that could be affected by the rule are small entities. However, any effects will be minimal. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities. Executive Order 12372 This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.) Executive Order 12988 This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule:

(1)Preempts all State and local laws and regulations that are inconsistent with this rule;

(2)has no retroactive effect; and

(3)does not require administrative proceedings before parties may file suit in court challenging this rule. Paperwork Reduction Act This final rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). List of Subjects for 7 CFR Part 305 Irradiation, Phytosanitary treatment, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements. Accordingly, we are amending 7 CFR part 305 as follows: PART 305—PHYTOSANITARY TREATMENTS 1. The authority citation for 7 CFR part 305 continues to read as follows: Authority: 7 U.S.C. 7701-7772 and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3. 2. Section 305.2 is amended as follows: a. In the table in paragraph (g), by removing, in the entry for Aircraft, the words “Fruit flies and soft-bodied insects” in the Pest column and “Aerosol T409-c-1 or Aerosol T409-c-3.” in the Treatment column. b. In the table in paragraph (h)(2)(i), under All, by revising the entry for “All imported fruits and vegetables” and by adding a new entry for “All imported fruits and vegetables approved for treatment with methyl bromide under the Federal Insecticide, Fungicide, and Rodenticide Act “ to read as set forth below. § 305.2 Approved treatments.

(h)* * *

(2)* * *

(i)* * * Location Commodity Pest Treatment schedule All All imported fruits and vegetables Most Quick freeze T110. All imported fruits and vegetables approved for treatment with methyl bromide under the Federal Insecticide, Fungicide, and Rodenticide Act Hitchhiker pests or surface pests, except mealybugs MB T104-a-1. Mealybugs MB T104-a-2. * * * * * * * 3. In § 305.6, in the table in paragraph (a), the entry for T101-j-2-1 is revised to read as follows. § 305.6 Methyl bromide fumigation treatment schedules.

(a)* * * Treatment schedule Pressure Temperature ( °F) Dosage rate (lb/1,000 cubic feet) Exposure period (hours) * * * * * * * T101-j-2-1 NAP 80 or above 2.5 2 * * * * * * * 4. Section 305.9 is amended as follows: a. By revising the section heading to read as set forth below. b. By revising paragraph (b), including the table, to read as set forth below. § 305.9 Aerosol spray for aircraft treatment schedule.

(b)*Aerosol schedule.* Treatment schedule Aerosol Rate T-409b d-phenothrin (10%) 8g/1,000 ft 3 . 5. In § 305.10, in the table in paragraph (a)(3), the entry for T-108b is revised to read as follows: § 305.10 Treatment schedules for combination treatments.

(a)* * *

(3)* * * Treatment schedule Type of treatment Temperature ( °F) Dosage rate (lb/1,000 cubic feet) Exposure period (hours) * * * * * * * T108-b MB 50 or above 1.5 2 hours. 40-49 2 2 hours. CT 33 or below 21 days. * * * * * * * Done in Washington, DC, this 20th day of May 2008. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E8-11740 Filed 5-23-08; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF AGRICULTURE Commodity Credit Corporation 7 CFR Part 1427 RIN 0560-AH78 Cotton World Price Determination AGENCY: Farm Service Agency and Commodity Credit Corporation, USDA. ACTION: Final rule. SUMMARY: The Commodity Credit Corporation

(CCC)is revising the Upland Cotton regulations to use Far East prices instead of Northern Europe prices in determining the upland cotton adjusted world price (AWP). The change is being made because of changes in the market and in the available price data. The AWP is used to determine repayment rates for marketing assistance loans

(MAL)and to establish loan deficiency payments (LDP). DATES: *Effective Date:* May 23, 2008. FOR FURTHER INFORMATION CONTACT: Scott Sanford, Fibers, Peanuts, and Tobacco Analysis Director, Economic and Policy Analysis Staff, Farm Service Agency, United States Department of Agriculture (USDA), Stop 0515, 1400 Independence Ave., SW., Washington, DC 20250-0515. Telephone:

(202)720-3392. Electronic mail: *Scott.Sanford@wdc.usda.gov.* Persons with disabilities who require alternative means for communication (Braille, large print, audio tape, etc.) should contact the USDA Target Center at

(202)720-2600 (voice and TDD). SUPPLEMENTARY INFORMATION: Background CCC administers the commodity loan program for upland cotton. Under section 1204 of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171, 7 U.S.C. 7934), repayment of the loan is allowed at the AWP in lieu of what would otherwise be full repayment of the loan plus interest. Under section 1204, AWP is the “prevailing world market price for the commodity (adjusted to United States quality and location), as determined by the Secretary.” No particular formula is set by the statute for determining the prevailing world price; however, as specified in the regulation in 9 CFR 1427.25, for the 2007 and preceding crops CCC has used a northern Europe

(NE)price. While the statute does not require the use of an NE price for this purpose the statute does require the use of an NE price for certain other purposes, one being in connection with an adjustment, under section 1234(e), to the otherwise determined AWP, and the other being in connection with import quotas under section 1237(b). AWP's are announced each Thursday and are generally based on quotes for a particular crop—that is, cotton in a particular crop year. The changeover from one crop to the next occurs in April. By regulation, there is a 6-week phase-in period in which the old and new crop prices are mixed progressively in favor of new crop prices. This rule changes the basic AWP determination to a Far East

(FE)rather than NE basis. At one time, northern Europe was a center of cotton trade. However, in recent years much of the focus of world trade in cotton has moved to the Pacific Rim countries, especially China. Now, the vast majority of U.S. cotton exports are destined for the Far East, with smaller shares to South Asia, Mexico, and Turkey. Less than one percent of U.S. cotton exports are now bound for Northern Europe. Also, Cotlook, Ltd. (Cotlook), the supplier of NE quotes, has announced that it will not publish forward crop quotes, NE basis, for the 2008 season. No NE quotes will be published by Cotlook at all after July 31, 2008. By contrast, Cotlook will continue to publish Far East prices. There is no alternative, preferable reporting system. The coarse count adjustment of section 1427.25(f) of the regulations will be made on an FE rather than NE basis. In the two instances in which an NE basis is statutorily required those determinations will be made using such direct or indirect data as may be available. Notice and Comment These regulations are exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553), as specified in section 1601(c) of the 2002 Farm Bill, which requires that the regulations be promulgated and administered without regard to the notice and comment provisions of section 5 of title 5 of the United States Code or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and public participation in rulemaking. Executive Order 12866 The Office of Management and Budget

(OMB)designated this rule as economically significant under Executive Order 12866 and, therefore, OMB reviewed this final rule. A cost-benefit assessment of this rule was completed and is available from the contact information above. Summary of Economic Impacts The switch to FE as the basis for determining the cotton AWP is expected to generate modest savings as lower transportation costs to the FE. The net effect will likely raise the AWP, reducing CCC's exposure on marketing loan benefits. Counter-cyclical payments are not affected because the change to FE quotes does not affect the marketing year average price that triggers counter-cyclical payments. Recent survey results quantify the transportation cost savings associated with a shift from the NE to the FE market. Annually, CCC conducts a survey of transportation costs for delivering U.S. cotton to foreign ports. In the February 2008 survey, shippers were asked to estimate their costs for delivery to FE as well as NE ports, resulting in NE costs of 14.52 cents per pound and FE costs of 12.41 cents per pound. The difference, 2.11 cents per pound, more than offsets the historical average of 1.07 cents per pound by which FE quotes exceed NE quotes. As a result, the AWP on an FE basis will be 1.04 cents per pound higher (2.11 cents minus 1.07 cents) than it would be on an NE basis, and marketing loan benefits (when available) will be 1.04 cents per pound lower. Based on a 20-million bale crop (the average of recent years), marketing loan benefits (when available) would be $104 million per year lower using Far East quotes. The change recognizes the shift in world cotton trade to the FE market that has occurred over time. In addition, it allows the program to operate in the manner that provides a smooth transition between crop years, while reducing potential CCC budgetary outlays. Regulatory Flexibility Act This rule is not subject to the Regulatory Flexibility Act since CCC is not required to publish a notice of proposed rulemaking for this rule. Environmental Review The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4347, the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the FSA regulations for compliance with NEPA (7 CFR part 799). The following final rule was determined to be Categorically Excluded. Therefore, no environmental assessment or environmental impact statement will be completed for this final rule. Executive Order 12372 This program is not subject to Executive Order 12372, which requires consultation with State and local officials. See the notice related to 7 CFR part 3015, subpart V, published in the **Federal Register** on June 24, 1983 (48 FR 29115). Executive Order 12612 This rule does not have Federalism implications that warrant the preparation of a Federalism Assessment. This rule will not have a substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government. Executive Order 12988 This final rule has been reviewed under Executive Order 12988. This final rule is not retroactive and it does not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought regarding the provisions of this rule the administrative appeal provisions of 7 CFR parts 11 and 780 must be exhausted. Unfunded Mandates This rule contains no Federal mandates under the regulatory provisions of Title II of the UMRA for State, local, and tribal government or the private sector. In addition, CCC was not required to publish a notice of proposed rulemaking for this rule. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA. Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) Section 1601(c)(3) of the 2002 Farm Bill requires that the Secretary use the authority in section 808 of title 5, United States Code, which allows an agency to forgo SBREFA's usual 60-day Congressional Review delay of the effective date of a major regulation if the agency finds that there is a good cause to do so. Accordingly, this rule is effective upon publication in the **Federal Register** . Paperwork Reduction Act These regulations are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in section 1601(c)(2)(A) of the 2002 Farm Bill, which provides that these regulations be promulgated and administered without regard to the Paperwork Reduction Act. E-Government Act Compliance CCC 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. List of Subjects in 7 CFR Part 1427 Cotton, Cottonseeds, Loan programs-agriculture, Packaging and containers, Price support programs, Reporting and recordkeeping requirements, Surety bonds, Warehouses. Accordingly, amend 7 CFR part 1427 as follows: PART 1427—COTTON 1. Revise the authority for part 1427 to read as follows: Authority: 7 U.S.C. 7231-7236, 15 U.S.C. 714b and 714c, Public Law 108-324, Public Law 108-447, and Public Law 109-234. 2. Amend § 1427.3 as follows: a. Remove the definition of “current shipment price” and add a new definition, in alphabetical order, for the term “current northern Europe shipment”. b. Remove the definition of “forward shipment price” and add a new definition, in alphabetical order, for the term “Forward northern Europe shipment” to read as follows. c. Amend the definition of “U.S. Northern Europe current price” by removing the words “current shipment” and adding the words “current northern Europe shipment” in their place. d. Revise the definition of “U.S. Northern Europe forward price” by removing the words “forward shipment” and adding the words “forward northern Europe shipment” in their place. e. Add new definitions, in alphabetical order, for the following terms “Current Far East shipment price,” “Far East current price,” “Far East forward price,” “Far East price,” “Forward Far East shipment price,” “U.S. Far East current price,” “U.S. Far East forward price,” and “U.S. Far East price,” as set forth below: § 1427.3 Definitions. *Current Far East shipment price* means, during the period in which two daily price quotations are available for the growth quoted for M 1 3/32 inch cotton, CFR (cost and freight) Far East, the price quotation for cotton for shipment no later than August/September of the current calendar year. *Current northern Europe shipment* means, during the period in which two daily price quotations are available for the growth quoted for M 1 3/32 inch cotton, C.I.F. northern Europe, the price quotation for cotton for shipment no later than August/September of the current calendar year. *Far East current price* means the average for the preceding Friday through Thursday of the current shipment prices for the five lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East. *Far East forward price* means the average for the preceding Friday through Thursday of the forward shipment prices for the five lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East. *Far East price* means, during the period in which only one daily price quotation is available for the growth quoted for M 1 3/32 inch cotton, CFR Far East, the average of the price quotations for the preceding Friday through Thursday of the five lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East. *Forward Far East shipment price* means, during the period in which two daily price quotations are available for the growths quoted for M 1 3/32 inch cotton, CFR Far East, the price quotation for cotton for shipment no earlier than October/November of the current calendar year. *Forward northern Europe shipment* means, during the period in which two daily price quotations are available for the growths quoted for M 1 3/32 inch cotton, C.I.F. northern Europe, the price quotation for cotton for shipment no earlier than October/November of the current calendar year. *U.S. Far East current price* means the average for the preceding Friday through Thursday of the current Far East shipment prices for the lowest-priced U.S. growth as quoted for M 1 3/32 inch cotton, CFR Far East. *U.S. Far East forward price* means the average for the preceding Friday through Thursday of the forward Far East shipment prices for the lowest-priced U.S. growth as quoted for M 1 3/32 inch cotton, CFR Far East. *U.S. Far East price* means, during the period in which only one daily price quotation is available for the U.S. growths quoted for M 1 3/32 inch cotton, CFR Far East, the average of the price quotations for the preceding Friday through Thursday of the lowest-priced U.S. growth as quoted for M 1 3/32 inch cotton, CFR Far East. 3. Amend § 1427.25 as follows: a. Revise the following paragraphs to read as set forth below: paragraphs (a)(1), (a)(2), (c)(1)(i)(B), (d)(2)(i), (f)(2)(i)(B), and (g). b. In paragraph (a)(3), remove the words “Northern Europe price (NE)” and add, in their place the words “Far East price (FE).” c. In the following places, remove the abbreviation “NE” and add, in their place the abbreviation “FE:” i. Paragraph

(c)introductory text, ii. Paragraph (c)(1) introductory text, and iii. Paragraph (f)(2)(i) introductory text. d. In paragraphs (f)(2)(iii) and (f)(3) introductory text, remove the words “Northern Europe” and add, in their place the words “Far East.” e. In the following places, remove the words “C.I.F. northern Europe” and add, in their place each time they appear, the words “CFR Far East:” i. Paragraph (c)(1)(i)(A), ii. Paragraph (d)(1) introductory text, iii. Paragraph (d)( 2) introductory text, iv. Paragraph (d)(3)(i), and v. Paragraph (f)(2)(i)(A). f. In paragraph (c)(4)(i)(B), add the abbreviation “(NE)” immediately following the words “northern Europe.” g. In paragraph (c)(4)(ii), remove the word “shipment” and add, in its place each time it appears, the words “northern Europe shipment:” h. In paragraph (c)(4)(iv)(B), remove the reference “paragraph (a)” and add, in its place, the reference “paragraph (c).” i. In paragraphs (d)(1)(i) and (ii), remove the words “northern Europe” and add, in their place each time they appear, the words “the Far East:” j. In paragraph (d)(2)(i), remove the words “northern Europe quotation” and add, in their place, the words “Far East quotation.” k. In paragraph (e), remove the word “Standard” each time it appears. § 1427.25 Determination of the prevailing world market price and the adjusted world price for upland cotton.

(a)* * *

(1)During the period when only one daily price quotation is available for each growth quoted for Middling one and three-thirty-second inch (M 1 3/32 inch) cotton, CFR (cost and freight) Far East, the prevailing world market price for upland cotton will be based on the average of the quotations for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East.

(2)During the period when both a price quotation for cotton for shipment no later than August/September of the current calendar year (current Far East shipment price) and a price quotation for cotton for shipment no earlier than October/November of the current calendar year (forward Far East shipment price) are available for growths quoted for M 1 3/32 inch cotton, CFR Far East, the prevailing world market price for upland cotton will be based on the following: Beginning with the first week covering the period Friday through Thursday that includes April 15 or, if both the average of the current Far East shipment prices for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East (Far East current price (FEc)), and the average of the forward Far East shipment prices for the preceding Friday through Thursday for the 5 lowest-priced growths of the growths quoted for M 1 3/32 inch cotton, CFR Far East (Far East forward price (FEf)), are not available during that period, beginning with the first week covering the period Friday through Thursday after the week which includes April 15 in which both the FEc and FEf price are available, the prevailing world market price for upland cotton will be based on the result calculated by the following procedure:

(i)Weeks 1 and 2: ((2 × FEc) + FEf)/3.

(ii)Weeks 3 and 4: (FEc + FEf)/2.

(iii)Weeks 5 and 6: (FEc + (2 × FEf))/3.

(iv)Week 7 through July 31: FEf.

(c)* * *

(1)* * *

(i)* * *

(B)The average of the current Far East shipment prices for U.S. Memphis territory and the California/Arizona territory as quoted each Thursday for M 1 3/32 inch cotton, CFR Far East, during the period when both current Far East shipment prices and forward Far East shipment prices for such growths are available; and

(d)* * *

(2)* * *

(i)May use the available Far East quotation to determine the difference between the average price quotations for the U.S. Memphis territory and the California/Arizona territory, as quoted for M 1 3/32 inch cotton, CFR Far East, and the average price of M 1 3/32 inch, leaf 3, (micronaire 3.5 through 3.6 and 4.3 through 4.9, strength 25.5 through 29.4 grams per tex, length uniformity 80 through 82 percent) cotton, as quoted each Thursday in the designated U.S. spot markets for that week, or

(f)* * *

(2)* * *

(i)* * *

(B)During the period when both current Far East shipment prices and forward Far East shipment prices are available for the growths quoted for “coarse count” cotton, CFR Far East, the result calculated by the following procedure: Beginning with the first week covering the period Friday through Thursday including April 15 or, if both the average of the current Far East shipment prices for the preceding Friday through Thursday for the three lowest-priced growths of the growths quoted for “coarse count” cotton, CFR Far East (Far East coarse count current price (FECCc)), and the average of the forward Far East shipment prices for the preceding Friday through Thursday for the three lowest-priced growths of the growths quoted for “coarse count” cotton, CFR Far East (Far East coarse count forward price (FECCf)), are not available during that period, beginning with the first week covering the period Friday through Thursday after the week including April 15 in which both the Far East coarse count current price and the Far East coarse count forward price are available: ( *1* ) Weeks 1 and 2: (2 × FECCc) + FECCf)/3; ( *2* ) Weeks 3 and 4: (FECCc + FECCf)/2; ( *3* ) Weeks 5 and 6: (FECCc + (2 × FECCf))/3; and ( *4* ) Week 7 through July 31: The FECCf, minus:

(g)If the 6-week transition period from using current Far East shipment prices to using forward Far East shipment prices in the determination of the FE under paragraph (a)(2) of this section, and the Far East coarse count price under paragraph (f)(2)(i)(B) of this section do not begin at the same time, CCC will use either current Far East shipment prices, forward Far East shipment prices, or any combination thereof to determine the FE and/or the Far East coarse count price used in the determination of the adjustment for upland cotton under paragraph (f)(1) of this section and determined under paragraph (f)(2) of this section to prevent distortions in such adjustment. Signed at Washington, DC, on May 20, 2008. Teresa C. Lasseter, Executive Vice President, Commodity Credit Corporation. [FR Doc. E8-11803 Filed 5-23-08; 8:45 am] BILLING CODE 3410-05-P DEPARTMENT OF AGRICULTURE Rural Utilities Service 7 CFR Part 1767 RIN 0572-AC08 Accounting Requirements for RUS Electric Borrowers AGENCY: Rural Utilities Service, USDA. ACTION: Final rule. SUMMARY: The Rural Utilities Service, an agency delivering the United States Department of Agriculture's Rural Development Utilities Programs, hereinafter referred to as Rural Development and/or Agency, is amending its regulation on accounting policies and procedures for Rural Development Electric Programs borrowers as set forth in 7 CFR part 1767, Accounting Requirements for Rural Development Electric Program Borrowers. This final rule reconciles Part 1767 with the Uniform System of Accounts as set forth by the Federal Energy Regulatory Commission (FERC); adopts FERC accounting guidance for Regional Transmission Organizations, Asset Retirement Obligations with modifications, Other Comprehensive Income, and Derivatives and Hedging Instruments; amends accounting interpretations for Special Equipment Accounting, Storm Damage, Rural Economic Development Loan and Grant Program and Consolidated Financial Statements; sets forth an accounting interpretation to establish uniform reporting procedures for Accounting for Cushion of Credit Accounts, and codifies guidance on records retention currently published in Bulletin 180-2. This final rule also corrects a number of administrative errors existing within this part. The section of the proposed rule that deals with accounting for and reporting on Renewable Energy Credits will be addressed in a subsequent final rule. EFFECTIVE DATE: May 27, 2008. FOR FURTHER INFORMATION CONTACT: Ms. Diana C. Alger, Chief, Technical Accounting and Auditing Staff, Program Accounting Services Division, Rural Development, STOP 1523, Room 2221, South Building, U.S. Department of Agriculture, Washington, DC 20250, telephone number

(202)720-5227. SUPPLEMENTARY INFORMATION: General Discussion On July 13, 2007 the Agency published a proposed rule in the **Federal Register** (72 FR 38511) entitled *Accounting Requirements for RUS Electric Program Borrowers* , and the public was invited to submit comments on or before September 11, 2007. Comments were received and are addressed in the Discussion Comment section of this rule. One issue still under consideration is the renewable energy credit market. The Agency has determined that it is best to defer any decisions on this accounting treatment until further information is available. A separate rulemaking will address this issue and will be published in the **Federal Register** at a future date. Background In order to facilitate the effective and economical operation of a business enterprise, adequate and reliable financial records must be maintained. Accounting records must provide a clear, accurate picture of current economic conditions from which management can make informed decisions in charting the company's future. The rate regulated environment in which an electric utility operates causes an even greater need for financial information that is accurate, complete, and comparable with that of other electric utilities. Rural Development, as a Federal lender and mortgagee, and in furthering the objectives of the Rural Electrification Act (RE Act) (7 U.S.C. 901 *et seq.* ), has a legitimate programmatic interest and a substantial financial interest in requiring adequate records to be maintained. In order to provide Rural Development with financial information that can be analyzed and compared with the operations of other borrowers in the Rural Development program, all Rural Development borrowers must maintain financial records that utilize uniform accounts and uniform accounting policies and procedures. The standard Rural Development security instrument, therefore, requires borrowers to maintain their books, records, and accounts in accordance with methods and principles of accounting prescribed by Rural Development in the Rural Development Uniform System of Accounts

(USoA)for its electric borrowers. The Uniform System of Accounts promulgated by the Federal Energy Regulatory Commission

(FERC)serves as a basis for this part. When new or revised accounting guidance is provided by FERC for electric utilities, Rural Development must review this guidance within the framework of this part for applicability to its borrowers. FERC issued Order 627, Accounting and Reporting of Financial Instruments, Comprehensive Income, Derivatives and Hedging Activities, on October 10, 2002. After reviewing Order 627, Rural Development has determined that this guidance shall be adopted with minor modification. Order 627 established Account 219, Accumulated Other Comprehensive Income, an account number already in use in this part and identified as Other Margins and Equities. Therefore, Rural Development is establishing Account 209, Accumulated Other Comprehensive Income, and modify Section 1767.15(w) Accounting for Other Comprehensive Income, accordingly. All other accounts and instructions are adopted as set forth in Order 627. On April 9, 2003, FERC issued Order 631, Accounting, Financial Reporting and Rate Filing Requirements for Asset Retirement Obligations. The purpose of this order was the incorporation of the requirements of Statement of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations, issued in June 2001 by the Financial Accounting Standards Board. After reviewing Order 631, Rural Development has determined to adopt with minor modification. In addition to a number of changes in instructions and account descriptions to accommodate the prescribed accounting for Asset Retirement Obligations, FERC established new accounts to record transactions associated with asset retirement obligations. One of the new accounts created by Order 631 was Account 403.1, Depreciation Expense for Asset Retirement Costs. This account number is already used within the mandated subaccounts of 403 to represent Depreciation Expense—Steam Production Plant. Therefore, Rural Development is establishing Account 403.8, Depreciation Expense—Asset Retirement Obligations, and modifies paragraph

(C)of the description for Account 103, Experimental Electric Plant Unclassified, accordingly. All other accounts and instructions are being adopted as set forth in Order 631 with one exception. Rural Development will not require that separate subsidiary records be maintained for the amount of accrued cost of removal other than legal obligations for the retirement of plant recorded in Account 108, Accumulated Provision for Depreciation of Electric Utility Plant. Order 668, Accounting and Financial Reporting for Public Utilities Including Regional Transmission Organizations (RTO), issued by FERC on December 16, 2005, and clarifying Order 668-A, Accounting and Financial Reporting for Public Utilities Including RTOs, issued by FERC on April 20, 2006, amended the USoA and established standard accounting guidance for RTO costs to provide better comparability between utilities and to improve the transparency of financial information pertaining to RTOs along with a better understanding of RTO costs. The new accounts established by FERC in Order 668 and the instructions is being adopted by Rural Development. In 1997, in response to FERC Orders 888 and 889 on open access, Rural Development revised its USoA to require borrowers to allocate employee pensions and benefits expense, as well as payroll taxes and insurance costs to the appropriate functional operations, maintenance, and administrative expense accounts to which labor charges are accrued to make available to management reliable financial information concerning the actual cost of products and services it provides. To ensure comparable results, Rural Development has modified the newly added accounts to accommodate this allocation. To ensure that borrowers consistently account for their financial operations and to keep pace with the changing environment in which they operate, the Rural Development USoA must be revised and updated from time to time. Rural Development is, therefore, amending and revising several accounting interpretations found in Section 1767.41, Accounting Methods and Procedures required of all Rural Development Borrowers. Interpretation 119, Special Equipment, is revised to conform to guidance provided in a Rural Development letter dated November 14, 2000, providing guidelines for requesting a waiver from the special equipment accounting procedures. Interpretation 136, Storm Damage, is revised to provide new guidance on accounting for reimbursements of storm damage by the Federal Emergency Management Administration. Interpretation 626, Rural Economic Development Loan and Grant Program, is revised to include accounting guidance for recording the default on the repayment of economic development loans made by borrowers to local economic development projects. Interpretation 404, Consolidated Financial Statements, is revised to clarify the requirements for reporting consolidated subsidiaries on Forms 7, Financial and Statistical Reports for Distribution Borrowers, and Form 12, Financial and Statistical Reports for Power Supply Borrowers and Electric Distribution Borrowers with Generating Facilities. Rural Development is also setting forth a new accounting interpretation that establishes uniform accounting and reporting procedures for Cushion of Credit Accounts which are created by voluntary unscheduled payment by a borrower in excess of amounts due and payable. Bulletin 180-2, Record Retention Recommendations for Rural Development Electric Borrowers, effective June 26, 2003, currently provides the Agency's recommendations for record retention. This final rule codifies these requirements with modifications in subpart D. The final rule contains a number of other revisions to make administrative corrections to addresses for submitting requests, position titles to update current versions of forms, to change publication names, and to correct errors found in the previously codified version of this part. Summary of Comments A proposed rule entitled, “Accounting Requirements for RUS Electric Program Borrowers,” published July 13, 2007, at 72 FR 38511, invited interested parties to submit comments on or before September 11, 2007. The National Rural Electric Cooperative Association (NRECA), Southern Maryland Electric Cooperative, Inc, and the National Rural Utilities Cooperative Finance Corporation

(CFC)submitted comments. No comments from any other sources were received. The comments submitted by NRECA represent the views of its members. The following paragraphs address the various topics that were discussed by the commenters. Adoption of FERC Order 668 *Comment:* CFC concurred with the Agency's adoption of recent FERC orders and suggested that the Agency incorporate FERC Order 668-A which made technical corrections to the original order and added clarification to certain netting concepts found in Order 668. *Agency Response:* The Agency agrees with the recommendation and has revised the final rule accordingly. Interpretation No. 633, Cushion of Credit *Comment:* NRECA, on behalf of its members, expressed concern for what they see as an inappropriate matching of the requirement to record interest income from the cushion of credit account in Account 419, Interest and Dividend Income, with the requirement that the balance in the account be reported as an unapplied payment and netted against long-term debt. This commenter suggests that it may be more appropriate to record the balance in the cushion of credit account as an investment if the requirement remains to record the interest income in Account 419. *Agency Response:* For purposes of the USoA and for reporting on the Forms 7 and 12, the Agency believes that its treatment for cushion of credit funds and interest earned is best suited for the substance of this transaction. While we recognize that this accounting treatment produces results unique to our borrowers, we expect and anticipate these results during our financial analysis and factor the results into our financial decision making. However, a valid argument can be made for an alternative presentation on the audited financial statements, particularly if those statements are being used to support efforts to secure outside financing. Therefore, we revised the final rule to permit presentation of the cushion of credit balance as a long-term investment for financial statement presentation while maintaining the current treatment for Forms 7 and 12 reporting. Interpretation No. 634, Renewable Energy Credits *Comment:* All three commenters expressed dissatisfaction with the accounting guidance provided for Renewable Energy Credits. *Agency Response:* Because of the controversy currently surrounding recording renewable energy credits, the lack of authoritative guidance from the Federal Energy Regulatory Commission or the Financial Accounting Standards Board, and the relative immaturity of the renewable energy credit market, the Agency has determined that it is best to defer any decisions on this accounting treatment until further information is available. The Agency will proceed with this final rule and address renewable energy credits in a later rulemaking. Executive Order 12866 This final rule has been determined to be not significant for purposes of Executive Order 12866, and therefore has not been reviewed by the Office of Management and Budget (OMB). Regulatory Flexibility Act Certification Pursuant to 5 U.S.C. 553(a)(2), this final rule is exempt from the rulemaking requirements of the Administrative Procedure Act (5 U.S.C. 551 *et seq.* ), including the requirement to provide prior notice and an opportunity for public comment. Because this final rule is not subject to a requirement to provide prior notice and an opportunity for public comment pursuant to 5 U.S.C. 553, or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) are inapplicable. Information Collection and Recordkeeping Requirements This final rule contains no new reporting or recordkeeping burdens under OMB control number 0572-0003 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). National Environment Policy Act Certification The Administrator of RUS has determined that this final rule will not significantly affect the quality of the human environment as defined by the National Environmental Policy Act of 1969 (42 U.S.C. 4321 *et seq.* ). Therefore, this action does not require an environmental impact statement or assessment. Catalog of Federal Domestic Assistance The program described by this final rule is listed in the Catalog of Federal Domestic Assistance Program under numbers 10.850—Rural Electrification Loans and Loan Guarantees. This catalog is available on a subscription basis from the Superintendent of Documents, the United States Government Printing Office, Washington, DC 20402-9325,

(202)512-1800. Executive Order 12372 This final rule is excluded from the scope of Executive Order 12372, Intergovernmental Consultation, which may require a consultation with State and local officials. See the final rule related notice entitled, “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034) advising that Rural Development loans and loan guarantees were not covered by Executive Order 12372. List of Subjects in 7 CFR Part 1767 Electric power, Loan programs—energy, Rural areas, Uniform System of Accounts, Administrative practice and procedure, and Agriculture. For the reason set forth in the preamble, Rural Development hereby amends 7 CFR chapter XVII as follows: PART 1767—ACCOUNTING REQUIREMENTS FOR RUS ELECTRIC BORROWERS 1. The authority for part 1767 continues to read as follows: Authority: 7 U.S.C. 901 *et seq.* 2. Amend § 1767.10 by: a. Revising the definition of Cost of removal to read as set forth below; b. Removing the definitions of *Capital lease* and *Operating Lease* ; and c. Adding the definitions of *Form 7* ; *Form 12* ; *Lease Capital* ; *Lease Operating* ; and *Regional Market* in alphabetical order as set forth below. The additions and revision read as follows: § 1767.10 Definitions. *Cost of removal* is the cost of demolishing, dismantling, tearing down or otherwise removing electric plant, including the cost of transportation and handling incidental thereto. It does not include the cost of removal activities associated with asset retirement obligations that are capitalized as part of the tangible long-lived assets that give rise to the obligation. (See Sec. 1767.15(y). *Form 7* is the January 2004 revision (or the revision of any other date which may be specified) of such Form 7, Financial and Statistical Report, or any later revision which shall have been at the time prescribed for use by Rural Development. *Form 12* is the December 2002 revision (or the revision of any other date which may be specified) of such Form 12, Operating Report—Financial, or any later revision which shall have been at the time prescribed for use by Rural Development. *Lease, capital* is a lease of property used in utility or nonutility operations, which meets one or more of the criteria stated in § 1767.15(s). *Lease, operating* is a lease of property used in utility or nonutility operations, which does not meet any of the criteria stated in § 1767.15(s). *Regional Market* is an organized energy market operated by a public utility, whether directly or through a contractual relationship with another entity. 3. In § 1767.12, paragraph

(a)is revised to read as follows: § 1767.12 Accounting system requirements.

(a)Each Rural Development electric borrower must maintain and keep its books of accounts and all other books and records that support the entries in such books of accounts in accordance with §§ 1767.13-1767.31. 4. In § 1767.13, paragraph

(a)is revised to read as set forth below, and paragraph

(e)is amended by redesignating paragraph (e)(4) as (e)(5) and adding a new (e)(4) to read as follows: § 1767.13 Departures from the prescribed Rural Development uniform system of accounts.

(a)No departures are to be made to the prescribed Rural Development USoA without the prior written approval of Rural Development. Requests for departures from the Rural Development USoA shall be addressed, in writing, to the Assistant Administrator, Program Accounting and Regulatory Analysis. (AA-PARA).

(e)* * *

(4)A resolution from the borrower's Board of Directors authorizing such action; and 5. Section 1767.14 is revised to read as follows: § 1767.14 Interpretations of the Rural Development uniform system of accounts. To maintain uniformity in accounting, borrowers must submit questions concerning interpretations of the Rural Development USoA, in writing, to the AA-PARA, for consideration and decision. (Approved by the Office of Management and Budget under control number 0572-0002). 6. Amend § 1767.15, as follows: a. Revise paragraphs (a)(4), (a)(6), and (t)(2) to read as set forth below; b. Redesignate paragraphs (t)(3) and (t)(4) as (t)(4) and (t)(5), respectively, and add a new paragraph (t)(3) to read as set forth below; and c. Add new paragraphs

(v)through

(y)to read as set forth below. The additions and revisions read as follows: § 1767.15 General instructions.

(a)* * *

(4)No utility shall destroy any such books or records unless the destruction thereof is permitted by the rules and regulations contained in subpart D of this part.

(6)When the utility chooses to recognize the gain in the year of reacquisition as a taxable gain, Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, shall be credited with the amount of the related tax effect, such amount to be allocated to the periods affected in accordance with the provisions of Account 190, Accumulated Deferred Income Taxes.

(t)* * *

(2)The utility shall record a capital lease as an asset in Account 101.1, Property Under Capital Leases, Account 120.6, Nuclear Fuel Under Capital Leases or Account 121, Nonutility Property;

(3)The utility, as a lessee, shall recognize an asset retirement obligation arising from the plant under a capital lease unless the obligation is recorded as an asset and liability under a capital lease. The utility shall record the asset retirement cost by debiting Account 101.1, Property Under Capital Leases, or Account 120.6, Nuclear Fuel Under Capital Leases, or Account 121, Nonutility Property, as appropriate, and crediting the liability for the asset retirement obligation in Account 230, Asset Retirement Obligations. Asset retirement costs recorded in Account 101.1, Account 120.6, or Account 121 shall be amortized by charging rent expense, or Account 518, Nuclear Fuel Expense, or Account 421, Miscellaneous Nonoperating Income, as appropriate, and crediting a separate subaccount of the account in which the asset retirement costs are recorded. Charges for the periodic accretion of the liability in Account 230, Asset Retirement Obligations, shall be recorded by a charge to Account 411.10, Accretion Expense, for electric utility plant, and Account 421, Miscellaneous Nonoperating Income, for nonutility plant and a credit to Account 230, Asset Retirement Obligations.

(v)*Depreciation Accounting.*

(1)*Method.* Utilities must use a method of depreciation that allocates in a systematic and rational manner the service value of depreciable property over the service life of the property.

(2)*Service lives.* Estimated useful service lives of depreciable property must be supported by engineering, economic, and other depreciation studies.

(3)*Rate.* Utilities must use percentage rates of depreciation that are based on a method of depreciation that allocates in a systematic and rational manner the service value of depreciable property to the service life of the property. Where composite depreciation rates are used, they should be based on the weighted average estimated useful service lives of the depreciable property comprising the composite group.

(w)*Accounting for other comprehensive income.*

(1)Utilities shall record items of other comprehensive income in Account 209, Accumulated Other Comprehensive Income. Amounts included in this account shall be maintained by each category of other comprehensive income. Examples of categories of other comprehensive income include foreign currency items, minimum pension liability adjustments, unrealized gains and losses on available-for-sale type securities and cash flow hedge amounts. Supporting records shall be maintained for Account 209 so that the cumulative amount of other comprehensive income for each item included in this account can be readily identified.

(2)When an item of other comprehensive income enters into the determination of net income in the current or subsequent periods, a reclassification adjustment shall be recorded in Account 209 to avoid double counting of that amount.

(3)When it is probable that an item of other comprehensive income will be included in the development of cost-of-service rates in subsequent periods, that amount of unrealized losses or gains will be recorded in Accounts 182.3, Other Regulatory Assets or 254, Other Regulatory Liabilities, as appropriate.

(x)*Accounting for derivative instruments and hedging activities.*

(1)Utilities shall recognize derivative instruments as either assets or liabilities in the financial statements and measure those instruments at fair value, except those falling within recognized exceptions. Normal purchases or sales are contracts that provide for the purchase or sale of goods that will be delivered in quantities expected to be used or sold by the utility over a reasonable period in the normal course of business. A derivative instrument is a financial instrument or other contract with all of the following characteristics:

(i)It has one or more underlyings and a notional amount or payment provision. Those terms determine the amount of the settlement or settlements, and, in some cases, whether or not a settlement is required.

(ii)It requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors.

(iii)Its terms require or permit net settlement, can readily be settled net by a means outside the contract, or provide for delivery of an asset that puts the recipient in a position not substantially different from net settlement.

(2)The accounting for the changes in the fair value of derivative instruments depends upon its intended use and designation. Changes in the fair value of derivative instruments not designated as fair value or cash flow hedges shall be recorded in Account 175, Derivative instrument assets, or Account 244, Derivative Instrument Liabilities, as appropriate, with the gains recorded in Account 421, Miscellaneous Nonoperating Income, and losses recorded in Account 426.5, Other Deductions.

(3)A derivative instrument may be specifically designated as a fair value or cash flow hedge. A hedge is used to manage risk to price, interest rates, or foreign currency transactions. A company shall maintain documentation of the hedge relationship at the inception of the hedge that details the risk management objective and strategy for undertaking the hedge, the nature of the risk being hedged, and how hedge effectiveness will be determined.

(4)If the utility designates the derivative instrument as a fair value hedge against exposure to changes in the fair value of a recognized asset, liability, or a firm commitment, it shall record the change in fair value of the derivative instrument to Account 176, Derivatives in Instrument Assets—Hedges, or Account 245, Derivative Instrument Liabilities—Hedges, as appropriate, with a corresponding adjustment to the subaccount of the item being hedged. The ineffective portion of the hedge transaction shall be reflected in the same income or expense account that will be used when the hedged item enters into the determination of net income. In the case of a fair value hedge of a firm commitment a new asset or liability is created. As a result of the hedge relationship, the new asset or liability will become part of the carrying amount of the item being hedged.

(5)If the utility designates the derivative instrument as a cash flow hedge against exposure to variable cash flows of a probable forecasted transaction, it shall record changes in the fair value of the derivative instrument in Account 176, Derivative Instrument Assets—Hedges, or Account 245, Derivative Instrument Liabilities—Hedges, as appropriate, with a corresponding amount in Account 209, Accumulated Other Comprehensive Income, for the effective portion of the hedge. The ineffective portion of the hedge transaction shall be reflected in the same account or expense account that will be used when the hedged item enters into the determination of net income. Amounts recorded in other comprehensive income shall be reclassified into earning in the same period or periods that the hedged forecasted item enters into the determination of net income.

(y)*Accounting for asset retirement obligations.*

(1)An asset retirement obligation represents a liability for the legal obligation associated with the retirement of a tangible long-lived asset that a company is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract or by legal construction of a contract under the doctrine of promissory estoppel. An asset retirement cost represents the amount capitalized when the liability is recognized for the long-lived asset that gives rise to the legal obligation. The amount recognized for the liability and an associated asset retirement cost shall be stated at the fair value of the asset retirement obligation in the period in which the obligation is incurred.

(2)The utility shall initially record a liability for an asset retirement obligation in Account 230, Asset Retirement Obligations, and charge the associated asset retirement costs to electric utility plant (including Accounts 101.1 and 120.6), and nonutility plant, as appropriate, related to the plant that gives rise to the legal obligation. The asset retirement cost shall be depreciated over the useful life of the related asset that gives rise to the obligation. For periods subsequent to the initial recording of the asset retirement obligation, a utility shall recognize the period to period changes of the asset retirement obligation that result from the passage of time due to the accretion of the liability and any subsequent measurement changes to the initial liability for the legal obligation recorded in Account 230, Asset retirement obligations, as follows:

(i)The utility shall record the accretion of the liability by debiting Account 411.10, Accretion Expense, for electric utility plant, Account 413, Expenses of Electric Plant Leased to Others, for electric plant leased to others, and Account 421, Miscellaneous Nonoperating Income, for nonutility plant and crediting Account 230, Asset Retirement Obligations; and

(ii)The utility shall recognize any subsequent measurement changes of the liability initially recorded in Account 230, Asset Retirement Obligation, for each specific asset retirement obligation as an adjustment of that liability in Account 230 with the corresponding adjustment to electric utility plant, electric plant leased to others, and nonutility plant, as appropriate. The utility shall on a timely basis monitor any measurement changes of the asset retirement obligations.

(3)Gains or losses resulting from the settlement of asset retirement obligations associated with utility plant resulting from the difference between the amount of the liability for the asset retirement obligation included in Account 230, Asset Retirement Obligations, and the actual amount paid to settle the obligation shall be accounted for as follows:

(i)Gains shall be credited to Account 411.6, Gains from Disposition of Utility Plant, and;

(ii)Losses shall be charged to Account 411.7, Losses from Disposition of Utility Plant.

(4)Gains or losses on the settlement of asset retirement obligations associated with nonutility plant resulting from the difference between the amount of the liability for the asset retirement obligation in Account 230, Asset Retirement Obligations, and the amount paid to settle the obligation, shall be accounted for as follows:

(i)Gains shall be credited to Account 421, Miscellaneous Nonoperating Income, and;

(ii)Losses shall be charged to Account 426.5, Other Deductions.

(5)For purposes of analyses a utility shall maintain supporting documentation so as to be able to furnish accurately and expeditiously with respect to each asset retirement obligation the full details of the identity and nature of the legal obligation, the year incurred, the identity of the plant giving rise to the obligation, the full particulars relating to each component and supporting computations related to the measurement of the asset retirement obligation. 7. Amend § 1767.16 as follows: a. Add paragraph (a)(4) to read as set forth below; b. Amend paragraph (c)(17)(i) by revising the value of W to read as set forth below; and, c. Add paragraph (c)(21) to read as set forth below; The additions and revisions read as follows: § 1767.16 Electric plant instructions.

(a)* * *

(4)Plant acquired by lease which qualifies as capital lease property under Sec. 1767.15(s), Criteria for Classifying Leases, shall be recorded in Account 101.1, Property Under Capital Leases, or Account 120.6, Nuclear Fuel Under Capital Leases, as appropriate.

(c)* * *

(17)* * *

(i)* * * W = Average balance in construction work in progress plus nuclear fuel in process of refinement, conversion, enrichment, and fabrication, less asset retirement costs related to plant under construction.

(21)Asset retirement. The costs recognized as a result of asset retirement obligations incurred during the construction and testing of utility plant shall constitute a component of construction costs. 8. Amend § 1767.18 as follows: a. In the subject table, under heading *Utility Plant,* add entries 108.9, 175, and 176 to read as set forth below; b. Under 101.1 Property Under Capital Leases, revise paragraph C. to read as set forth below; c. Under 103 Experimental Electric Plant Unclassified, amend paragraph C. by revising the first sentence to read as set forth below; d. Under 108 Accumulated Provision for Depreciation of Electric Utility Plant, amend paragraph C. by adding an entry for 108.9 to read as set forth below; e. Revise paragraph A. of 121 Nonutility Property to read as set forth below; f. Revise paragraph A. of 124 Other Investments to read as set forth below; g. Revise 125 Sinking Funds to read as set forth below; h. Revise 126 Depreciation Fund to read as set forth below; i. Revise 128 Other Special Funds to read as set forth below; j. Add Account 175 Derivative Instrument Assets to read as set forth below; k. Add Account 176 Derivative Instrument Assets—Hedges to read as set forth below. l. Revise paragraph B. of 182.3 Other Regulatory Assets to read as set forth below; The additions and revisions read as follows: § 1767.18 Assets and other debits. Utility Plant 108.9 Accumulated Provision for Depreciation of Asset Retirement Costs 175 Derivative Instrument Assets 176 Derivative Instrument Assets—Hedges 101.1 Property Under Capital Leases C. Records shall be maintained with respect to each capital lease reflection:

(1)Name of lessor,

(2)basic details of lease,

(3)terminal date,

(4)original cost or fair market value of property leased,

(5)future minimum lease payments,

(6)executory costs,

(7)present value of minimum lease payments,

(8)the amount representing interest and the interest rate used, and

(9)expenses paid. Records shall also be maintained for plant under a lease, to identify the asset retirement obligation and cost originally recognized for each lease and the periodic charges and credits made to the asset retirement obligations and asset retirement costs. 103 Experimental Electric Plant Unclassified C. The depreciation on property in this account shall be charged to Account 403.8, Depreciation Expense, for asset retirement costs, as appropriate, and credited to Account 108, Accumulated Provision for Depreciation of Electric Utility Plant. * * * 108 Accumulated Provision for Depreciation of Electric Utility Plant C. Account 108 shall be subaccounted as follows 108.9 Accumulated Provision for Depreciation of Asset Retirement Costs 121 Nonutility Property A. This account shall include the book cost of land, structure, and equipment or other tangible or intangible property owned by the utility, but used in utility service and not properly includible in Account 105, Electric Plant Held for Future Use. This account shall also include, where applicable, amounts recorded for asset retirement costs associated with nonutility plant. 124 Other Investments A. This account shall include the book cost of investments in securities issued or assumed by nonassociated companies, investment advances to such companies, and any investments not accounted for elsewhere. This account shall also included unrealized holding gains and losses on trading and available-for-sale types of security investments. Include also the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. (See Account 419, Interest and Dividend Income.) 125 Sinking Funds This account shall include the amount of cash and book cost of investments held in sinking funds. This account shall also include unrealized holding gains and losses on trading and available-for-sale types of investments. A separate account, with appropriate title, shall be kept for each sinking fund. Transfers from this account to special deposit accounts, may be as necessary for the purpose of paying matured sinking fund obligations, or obligations called for redemption but not presented, or the interest thereon. 126 Depreciation Fund This account shall include the amount of cash and the book cost of investments which have been segregated in a special fund for the purpose of identifying such assets with the accumulated provisions for depreciation. This account shall also include unrealized holding gains and losses on trading and available-for-sale types of security investments. 128 Other Special Funds This account shall include the amount of cash and book cost of investments which have been segregated in special funds for insurance, employee pensions, savings, relief, hospital, and other purposes not provided for elsewhere. This account shall also include unrealized holding gains and losses on trading and available-for-sale types of security investments. A separate account, with appropriate title, shall be kept for each fund. Note: Amounts deposited with a trustee under the terms of an irrevocable trust agreement for pensions or other employee benefits shall not be included in this account. 175 Derivative Instrument Assets This account shall include the amounts paid for derivative instruments, and the change in the fair value hedges. Account 421, Miscellaneous Nonoperating Income, shall be credited or debited, as appropriate, with the corresponding amount of the change in the fair value of the derivative instrument. 176 Derivative Instrument Assets—Hedges A. This account shall include the amounts paid for derivative instruments, and the change in the fair value of derivative instrument assets designated by the utility as cash flow or fair value hedges. B. When a utility designates a derivative instrument asset as a cash flow hedge it will record the change in the fair value of the derivative instrument in this account with a concurrent charge to Account 209, Accumulated Other Comprehensive Income, with the effective portion of the gain or loss. The ineffective portion of the cash flow hedge shall be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income. C. When a utility designates a derivative instrument as a fair value hedge it shall record the change in the fair value of the derivative instrument in this account with a concurrent charge to a subaccount of the asset or liability that carries the item being hedged. The ineffective portion of the fair value hedge shall be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income. 182.3 Other Regulatory Assets B. The amounts included in this account are to be established by those charges which would have been included in net income, or accumulated other comprehensive income, determinations in the current period under the general requirements of the Uniform System of Accounts but for it being probable that such items will be included in a different period(s) for purposes of developing the rates that the utility is authorized to charge for its utility services. When specific identification of the particular source of a regulatory asset cannot be made, such as in plant phase-ins, rate moderation plans, or rate levelization plans, Account 407.4, Regulatory Credits, shall be credited. The amounts recorded in this account are generally to be charged, concurrently with the recovery of the amounts in rates, to the same account that would have been charged if included in income when incurred, except all regulatory assets established through the use of Account 407.4 shall be charged to Account 407.3, Regulatory Debits, concurrent with the recovery of the amounts in rates. 9. Amend § 1767.19 as follows: a. In the subject table, under *Margins and Equities,* add an entry for 209 to read as set forth below; b. In the subject table, under *Long-Term Debt,* add an entry for 224.18 to read as set forth below; c. Add a new entry for 209 Accumulated Other Comprehensive Income to read as set forth below; d. In 224 Other Long-Term Debt, paragraph B. subject index, add an entry for subaccount 224.18 to read as set forth below; e. Add 224.18 Other Long-Term Debt Grant Funds to read as set forth below: f. In 229 Account Accumulated Provision for Rate Refunds, add an entry under Current and Accrued Liabilities to read as set forth below; g. Add 230 Asset Retirement Obligations to read as set forth below; h. Add 244 Derivative Instrument Liabilities to read as set forth below; i. Add 245 Derivative Instrument Liabilities-Hedges to read as set forth below, and j. Revise paragraph B. of 254 Other Regulatory Liabilities to read as set forth below. The additions and revisions read as follows: § 1767.19 Liabilities and other credits. Liabilities and Other Credits Margins and Equities 209 Accumulated Other Comprehensive Income Long-Term Debt 224.18 Other Long-Term Debt—Grant Funds 209 Accumulated Other Comprehensive Income A. This account shall include revenues, expenses, gains, and losses that are properly includable in other comprehensive income during the period. Examples of other comprehensive income include foreign currency items, minimum pension liability adjustment, unrealized gains and losses on certain investments in debt and equity securities, and cash flow hedges. Records supporting the entries to this account shall be maintained so that the utility can furnish the amount of other comprehensive income for each item included in this account. B. This account shall also be debited or credited, as appropriate, with amounts of accumulated other comprehensive income that have been included in the determination of net income during the period and in accumulated other comprehensive income in prior periods. Separate records for each category of items shall be maintained to identify the amount of the reclassification adjustments from accumulated other comprehensive income to earning made during the period. 224 Other Long-Term Debt B. * * * 224.18 Other Long-Term Debt—Grant Funds 224.18 Other Long-Term Debt—Grant Funds This account shall include the total amount of Rural Development grant funds awarded for rural economic development purposes, which are subject to repayment at the conclusion of the project. (See Sec. 1767.41, Interpretation 626, Rural Economic Development Loan and Grant Program.) Current and Accrued Liabilities 230 Asset Retirement Obligations A. This account shall include the amount of liabilities for the recognition of asset retirement obligations related to electric utility plant and nonutility plant that gives rise to the obligations. This account shall be credited for the amount of the liabilities for asset retirement obligations with amounts charged to the appropriate electric utility plant accounts or nonutility plant account to record the related asset retirement costs. B. The utility shall charge the accretion expense to Account 411.10, Accretion Expense, for electric utility plant, Account 413, Expenses for Electric Plant Leased to Others, for electric plant leased to others, or Account 421, Miscellaneous Nonoperating Income, for nonutility plant, as appropriate, and credit Account 230, Asset Retirement Obligations. C. This account shall be debited with amounts paid to settle the asset retirement obligations recorded herein. D. The utility shall clear from this account any gains or losses resulting from the settlement of asset retirement obligations in accordance with the instruction prescribed in Sec. 1767.15(y). 244 Derivative Instrument Liabilities This account shall include the change in the fair value of all derivative instrument liabilities not designated as cash flow or fair value hedges. Account 426, Other Deductions, shall be debited or credited as appropriate with the corresponding amount of the change in the fair value of the derivative instrument. 245 Derivative Instrument Liabilities—Hedges A. This account shall include the change in the fair value of derivative instrument liabilities designated by the utility as cash flow or fair value hedges. B. A utility shall record the change in the fair value of a derivative instrument liability related to a cash flow hedge in this account, with a concurrent charge to Account 209, Accumulated Other Comprehensive Income, with the effective portion of the derivative's gain or loss. The ineffective portion of the cash flow hedge shall be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income. C. A utility shall record the change in the fair value of a derivative instrument liability related to a fair value hedge in this account, with a concurrent charge to a subaccount of the asset or liability that carries the item being hedged. The ineffective portion or the fair value hedge shall be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income. 254 Other Regulatory Liabilities B. The amounts included in this account are to be established by those credits which would have been included in net income, or accumulated other comprehensive income, determinations in the current period under the general requirements of the Uniform System of Accounts but for it being probable that:

(1)Such items will be included in a different period(s) for purposes of developing the rates that the utility is authorized to charge for its utility services; or

(2)refunds to customers, not provided for in other accounts, will be required. When specific identification of the particular source of the regulatory liability cannot be made or when the liability arises from revenues collected pursuant to tariffs on file at a regulatory agency, Account 407.3, Regulatory Debits, shall be debited. The amounts recorded in this account generally are to be credited to the same account that would have been credited if included in income when earned except:

(1)All regulatory liabilities established through the use of Account 407.3 shall be credited to Account 407.4, Regulatory Credits; and

(2)in the case of refunds, a cash account or other appropriate account should be credited when the obligation is satisfied. 10. Amend 1767.20 as follows: a. Revise the introductory text; b. In the table of contents, under *Steam Production* , add an entry for 317; c. In the table of contents, under *Nuclear Production* , add an entry for 326; d. In the table of contents, under *Hydraulic Production* , add an entry for 337; e. In the table of contents, under *Other Production* , add an entry for 347; f. In the table of contents, under *Transmission Plant* , add an entry for 359.1; g. In the table of contents, under *Distribution Plant* , add an entry for 374; h. In the table of contents, add new title *Regional Transmission Market Operation Plant* , and entries for 380, 381, 382, 383, 384, 385, and 386; i. In the table of contents, under *General Plant* , add an entry for 399.1; j. Add a new entry for 317 Asset Retirement costs for Steam Production Plant; k. Add a new entry for 326 Retirement Costs for Nuclear Production Plant; l. Add a new entry for 337 Asset Retirement costs for Hydraulic Production Plant; m. Add a new entry for 347 Asset Retirement Costs for Other Production Plant; n. Add a new entry for subaccount 359.1 Asset Retirement Costs for Transmission Plant; o. Add a new entry for 374 Asset Retirement Costs for Distribution Plant; p. Under new account title *Regional Transmission Market Operation Plant* , add new entries for 380, 381, 382, 383, 384, 385, and 386; q. Add a new entry for subaccount 399.1 Asset Retirement Costs for General Plant. The revisions and additions read as follows: § 1767.20 Plant accounts The plant accounts identified in this section shall be used by all Rural Development borrowers. Production Plant Steam Production 317 Asset Retirement Costs for Steam Production Plant Nuclear Production 326 Asset Retirement Costs for Nuclear Production Plant Hydraulic Production 337 Asset Retirement Costs for Hydraulic Production Plant Other Production 347 Asset Retirement Costs for Other Production Plant Transmission Plant 359.1 Asset Retirement Costs for Transmission Plant Distribution Plant 374 Asset Retirement Costs for Distribution Plant Regional Transmission Market Operation Plant 380 Land and Land Rights 381 Structures and Improvements 382 Computer Hardware 383 Computer Software 384 Communication Equipment 385 Miscellaneous Regional Transmission and Market Operation Plant 386 Asset Retirement Costs for Regional Transmission and Market Operation Plant General Plant 399.1 Asset Retirement Costs for General Plant Production Plant Steam Production 317 Asset Retirement Costs for Steam Production Plant This account shall include asset retirement costs on plant included in the steam production function. Nuclear Production 326 Asset Retirement Costs for Nuclear Production Plant This account shall include asset retirement costs on plant included in the nuclear production function. Hydraulic Production 337 Asset Retirement Costs for Hydraulic Production Plant This account shall include asset retirement costs on plant included in the hydraulic production function. Other Production 347 Asset Retirement Costs for Other Production Plant This account shall include asset retirement costs on plant included in the other production function. Transmission Plant 359.1 Asset Retirement Costs for Transmission Plant This account shall include asset retirement costs on plant included in the transmission plant function. Distribution Plant 374 Asset Retirement Costs for Distribution Plant This account shall include asset retirement costs on plant included in the distribution plant function. Regional Transmission and Market Operation Plant 380 Land and Land Rights This account shall include the cost of land and land rights used in connection with regional transmission and market operations. 381 Structures and Improvements This account shall include the cost in place of structures and improvement used for regional transmission and market operations. 382 Computer Hardware This account shall include the cost of computer hardware and miscellaneous information technology equipment to provide scheduling, system control and dispatching, system planning, standards development, market monitoring, and market administration activities. Records shall be maintained identifying to the maximum extent practicable computer hardware owned and used for:

(1)Scheduling, system control and dispatching,

(2)System planning and standards development, and

(3)Market monitoring and market administration activities. Items 1. Personal computers 2. Servers 3. Workstations 4. Energy Management System

(EMS)hardware 5. Supervisory Control and Data Acquisition (SCADA) system hardware 6. Peripheral equipment 7. Networking components 383 Computer Software This account shall include the cost of off-the-shelf and in-house developed software purchased and used to provide scheduling, system control and dispatching, system planning, standards development, market monitoring, and market administration activities. Records shall be maintained identifying to the maximum extent practicable the cost of software used for:

(1)Scheduling, system control and dispatching,

(2)System planning and standards development, and

(3)Market monitoring and market administration activities. Items 1. Software licenses 2. User interface software 3. Modeling software 4. Database software 5. Tracking and monitoring software 6. Energy Management System

(EMS)software 7. Supervisory Control and Data Acquisition (SCADA) system software 8. Evaluation and assessment system software 9. Operating, planning and transaction scheduling software 10. Reliability applications 11. Market application software 384 Communication Equipment This account shall include the cost of communication equipment owned and used to acquire or share data and information used to control and dispatch the system. Items 1. Fiber optic cable 2. Remote terminal units 3. Microwave towers 4. Global Positioning System

(GPS)equipment 5. Servers 6. Workstations 7. Telephones 385 Miscellaneous Regional Transmission and Market Operation Plant This account shall include the cost of regional transmission and market operation plant and equipment not provided for elsewhere. 386 Asset Retirement Costs for Regional Transmission and Market Operation Plant This account shall include asset retirement costs on regional transmission and market operations plant and equipment. General Plant 399.1 Asset Retirement Costs for General Plant This account shall include asset retirement costs on plant included in the general plant function. 11. Section 1767.21 is amended as follows: a. Add account titles for 403.8, 403.9 and 411.10 to read as set forth below; b. Add entries for 403.8 and 403.9 under 403 Depreciation Expense to read as set forth below; c. Amend 411.6 by designating the current text as paragraph A. and adding paragraph B. to read as set forth below; d. Amend 411.7 by designating the current text as paragraph A. and adding paragraph B. to read as set forth below; and e. Add an entry for 411.10 to read as set forth below. § 1767.21 Operating Income. Utility Operating Income 403.8 Depreciation Expense-Asset Retirement Costs 403.9 Depreciation Expense-Regional Transmission and Market Operation Plant 411.10 Accretion Expense Utility Operating Income 403 Depreciation Expense C. * * * 403.8 Depreciation Expense-Asset Retirement Costs 403.9 Depreciation Expense-Regional Transmission and Market Operation Plant 411.6 Gains From Disposition of Utility Plants B. The utility shall record in this account gains resulting from the settlement of asset retirement obligations related to utility plant in accordance with the accounting prescribed in Sec. 1767.15(y). 411.7 Losses From Disposition of Utility Plant B. The utility shall record in this account losses resulting from the settlement of asset retirement obligations related to utility plant in accordance with the accounting prescribed in Sec. 1767.15(y). 411.10 Accretion Expense This account shall be charged for accretion expense on the liabilities associated with asset retirement obligations included in Account 230, Asset Retirement Obligations, relating to electric utility plant. 12. Section 1767.22 is amended as follows: a. Amend Account 421, Miscellaneous Nonoperating Income, by adding items

(4)through

(6)to read as set forth below; b. Amend Account 426.5, Other Deductions, by adding item

(6)to read as set forth below. § 1767.22 Other income and deductions. 421 Miscellaneous Nonoperating Income 4. This account shall include the accretion expense on the liability for an asset retirement obligation included in Account 230, Asset Retirement Obligations, related to nonutility plant. 5. This account shall include the depreciation expense for asset retirement costs related to nonutility plant. 6. The utility shall record in this account gains resulting from the settlement of asset retirement obligations related to nonutility plant in accordance with the accounting prescribed in § 1767.15(y). 426.5 Other Deductions 6. The utility shall record in this account losses resulting from the settlement of asset retirement obligations related to nonutility plant in accordance with the accounting prescribed in § 1767.15(y). 13. Amend § 1767.23 by revising Account 432 to read as follows: § 1767.23 Interest charges. 432 Allowance for Borrowed Funds Used During Construction—Credit This account shall include concurrent credits for allowance for borrowed funds used during construction, not to exceed amounts computed in accordance with the formula prescribed in § 1767.16(c)(17). Note: This account shall not be recorded in Account 427.3, Interest Charged to Construction—Credit. 14. Amend § 1767.26 as follows: a. Add 456.1, 457.1, and 457.2 to the subject table to read as set forth below; b. Amend 456, Other Electric Revenues, by removing paragraph 5; and redesignating paragraph 6 as 5; and c. Add entries for 456.1, 457.1 and 457.2 to read as set forth below. The additions read as follows: § 1767.26 Operating revenue. Operating Revenue Sales of Electricity 456.1 Revenues from Transmission of Electricity of Others 457.1 Regional Transmission Service Revenues 457.2 Miscellaneous Revenue 456.1 Revenues From Transmission of Electricity of Others This account shall include revenues from transmission of electricity of others over transmission facilities of the utility. 457.1 Regional Transmission Service Revenues This account shall include revenues derived from providing scheduling, system control and dispatching services. Include also in this account reimbursements for system planning, standards development, and market monitoring and market compliance activities. Records shall be maintained so as to show:

(1)The services supplied and revenues received from each customer and

(2)the amounts billed by tariff or specified rates. 457.2 Miscellaneous Revenues This account shall include revenues and reimbursements for costs incurred by regional transmission service providers not provided for elsewhere. Records shall be maintained so as to show:

(1)The services supplied and revenues received from each customer, and

(2)the amounts billed by tariff or specified rates. 15. Amend § 1767.27 as follows: a. Add new accounts 561.1 through 561.8 to the subject index immediately following entry 560, Operations Supervision and Engineering, to read as set forth below; b. Add new accounts 569.1 through 569.4 to the subject index immediately following entry 569, Maintenance of Structures, to read as set forth below; c. Add new accounts 575.1 through 575.8 to the subject index under a new account title *Regional Market Expense (Operations)* immediately following entry 573, Maintenance of Miscellaneous Transmission Plant; to read as set forth below; d. Add new accounts 576.1 through 576.5 to the subject index under a new account title Regional Market Expense (Maintenance) immediately following entry 575.8, Rents, to read as set forth below; e. Amend 555 Purchased Power by adding a note following paragraph B. to read as set forth below; f. Amend 556 System Control Load Dispatching by revising the introductory text to read as set forth below; g. Remove Account 561 Load Dispatching; h. Add new accounts to descriptions for 561.1 through 561.8 to read as set forth below; i. Add new accounts and descriptions for 569.1 through 569.4 to read as set forth below; j. Add new accounts and descriptions for 575.1 through 575.8 to read as set forth below; and k. Add new accounts and descriptions for 576.1 through 576.5 to read as set forth below. The additions and revisions read as follows: § 1767.27 Operation and maintenance expenses. Transmission Expenses (Operations) 561.1 Load Dispatch-Reliability 561.2 Load Dispatch-Monitor and Operate Transmission System 561.3 Load Dispatch-Transmission Service and Scheduling 561.4 Scheduling, System Control and Dispatching Services 561.5 Reliability, Planning and Standards Development 561.6 Transmission Service Studies 561.7 Generation Interconnection Studies 561.8 Reliability Planning and Standards Development Services (Maintenance) 569.1 Maintenance of Computer Hardware 569.2 Maintenance of Computer Software 569.3 Maintenance of Communication Equipment 569.4 Maintenance of Miscellaneous Regional Transmission Plant Regional Market Expenses (Operation) 575.1 Operation Supervision 575.2 Day-Ahead and Real-Time Market Administration 575.3 Transmission Rights Market Administration 575.4 Capacity Market Administration 575.5 Ancillary Services Market Administration 575.6 Market Monitoring and Compliance 575.7 Market Administration, Monitoring and Compliance Services 575.8 Rents (Maintenance) 576.1 Maintenance of Structures and Improvements 576.2 Maintenance of Computer Hardware 576.3 Maintenance of Computer Software 576.4 Maintenance of Communication Equipment 576.5 Maintenance of Miscellaneous Market Operation Plant 555 Purchased Power Note: The records supporting this account shall provide information pertaining to the purchase of power from renewable energy sources. 556 System Control and Load Dispatching This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, and expenses incurred in load dispatching activities for system control. Utilities having an interconnected electric system or operating under a central authority which controls the production and dispatching of electricity may apportion these costs to this account and transmission expense Account 561.1 through 561.4, and Account 581, Load Dispatching—Distribution. 561.1 Load Dispatch—Reliability This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred by a regional transmission service provider or other transmission provider to manage the reliability coordination function as specified by the North American Electric Reliability Council

(NERC)and individual reliability organizations. These activities shall include performing current and next day reliability analysis. This account shall include the costs incurred to calculate load forecasts, and performing contingency analysis. 561.2 Load Dispatch—Monitor and Operate Transmission System This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred by a regional transmission service provider or other transmission provider to monitor, assess and operate the power system and individual transmission facilities in real-time to maintain safe and reliable operation of the transmission system. This account shall also include the expense incurred to manage transmission facilities to maintain system reliability and to monitor real-time flows and direct actions according to regional plans and tariffs if necessary. Items 1. Receive and analyze outage requests 2. Reschedule outage plans 3. Monitor solution quality field data values, providing model updates to NERC and coordinating network model changes across all systems 4. Conduct operating training related to NERC Certification 5. Monitor generation resources and communicate expected dispatch actions 6. Ensure ancillary service requirements are met 7. Directing switching 8. Controlling system voltages 9. Obtaining reports on the weather and special events 10. Preparing operating reports and data for billing and budget purposes 561.3 Load Dispatch—Transmission Service and Scheduling This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred by a regional transmission service provider or other transmission provider to process hourly, daily, weekly and monthly transmission service requests using an automated system such as an Open Access Same-Time Information System (OASIS). It shall include the expenses incurred to operate the automated transmission service request system and to monitor the status of all scheduled energy transactions. 561.4 Scheduling, System Control and Dispatching Services This account shall include the costs billed to the transmission owner, load serving entity or generator for scheduling, system control and dispatching service. Include in this account service billings for system control to maintain the reliability of the transmission area in accordance with reliability standards, maintaining defined voltage profiles, and monitoring operations of the transmission facilities. 561.5 Reliability, Planning and Standards Development This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred for the system planning of the interconnected bulk electric transmission system within a planning authority area. Items 1. Developing and maintaining transmission system models to evaluate transmission system performance. 2. Maintaining and applying methodologies and tools for the analysis and simulation of the transmission systems for the assessment and development of transmission expansion plans. 3. Assessing, developing and documenting transmission expansion plans. 4. Maintaining transmission system models (steady-state, dynamics, and short circuit). 5. Collecting transmission information and transmission facility characteristics and ratings. 6. Notifying participants of any planned transmission changes that may impact their facilities. 7. Developing and reporting on transmission expansion plans for assessment and compliance with reliability standards. 8. Developing reliability standards for the planning and operation of the interconnected bulk electric transmission systems that serve the United States, Canada and Mexico. 9. Developing criteria and certification procedures for reliability authorities, transmission operators and others. 10. Outside services employed. Note: The cost of supervision, customer records and collection expenses, administrative and general salaries, regulatory commission expenses, general advertising, and rents shall be charged to the customer accounts, service, administrative and general expense accounts contained in the Uniform System of Accounts. 561.6 Transmission Service Studies This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred to conduct generation interconnection studies for proposed interconnections with the transmission system. Detailed records shall be maintained for each study undertaken and all reimbursements received for conducting such a study. 561.7 Generation Interconnection Studies This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred to conduct generation interconnection studies for proposed interconnections with the transmission system. Detailed records shall be maintained for each study undertaken and all reimbursements received for conducting such a study. 561.8 Reliability Planning and Standards Development Services This account shall include the costs billed to the transmission owner, load serving entity, or generator for system planning of the interconnected bulk electric transmission service provider for system reliability and resource panning to develop long-term strategies to meet customer demand and energy requirements. This account shall also include fees and expenses for outside services incurred by the regional transmission service provider and billed to the load serving entity, transmission owner or generator. 569.1 Maintenance of Computer Hardware This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used and expenses incurred in the maintenance of computer hardware serving the transmission function. 569.2 Maintenance of Computer Software This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used and expenses incurred for annual computer software license renewals, annual software update services and the cost of ongoing support for software products serving the transmission function. Items 1. Telephone Support 2. Onsite support 3. Software updates and minor revisions 569.3 Maintenance of Communication Equipment This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used and expenses incurred in the maintenance of communication equipment serving the transmission function. 569.4 Maintenance of Miscellaneous Regional Transmission Plant This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, materials used and expenses incurred in the maintenance of miscellaneous regional transmission plant serving the transmission function. Regional Market Expenses (Operational) 575.1 Operation Supervision This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the general supervision and direction of the regional energy markets. 575.2 Day-Ahead and Real-Time Market Administration This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred to facilitate the Day-Ahead and Real-Time markets. This account shall also include the costs incurred to manage the real-time deployment of resources to meet generation needs and to provide capacity adequacy verification. Include in this account the costs incurred to maintain related sections of the tariff, market rules, operating procedures, and standards and coordinating with neighboring areas. Items 1. Consultant fees and expenses 2. System record and report forms 3. Meals, traveling and incidental expenses Note: The cost of supervision, customer records and collection expenses, administrative and general salaries, regulatory commission expenses, general advertising, and rents shall be charged to the customer accounts, service, administrative and general expense accounts contained in the Uniform System of Accounts. 575.3 Transmission Rights Market Administration This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred to manage the allocation and auction of transmission rights. 575.4 Capacity Market Administration This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred to manage the allocation of capacity rights. 575.5 Ancillary Services Market Administration This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred to manage all other ancillary services market functions 575.6 Market Monitoring and Compliance This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred to review market data and operational decisions for compliance with market rules. It shall also include the costs incurred to interface with external market monitors. 575.7 Market Administration, Monitoring and Compliance Services This account shall include the cost billed to the transmission owner, load serving entity or generator for market administration, monitoring and compliance services. 575.8 Rents This account shall include all rents of property of others used, occupied, or operated in connection with market administration and monitoring. (See Sec. 1767.17(c).) (Maintenance) 576.1 Maintenance of Structures and Improvements This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the maintenance of structures used in market administration and monitoring. (See Sec. 1767.17(b).) 576.2 Maintenance of Computer Hardware This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the maintenance of computer hardware used in market administration and monitoring. 576.3 Maintenance of Computer Software This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred for annual computer software license renewals, annual software update services and the cost of ongoing support for software products used in market administration and monitoring. Items 1. Telephone support 2. Onsite support 3. Software updates and minor revisions 576.4 Maintenance of Communication Equipment This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the maintenance of communication equipment used in market administration and monitoring. 576.5 Maintenance of Miscellaneous Market Operation Plant This account shall include the cost of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, and expenses incurred in the maintenance of miscellaneous market operation plant used in market administration and monitoring. 16. Amend § 1767.41, as follows: a. In the Numerical Index, add the entry for 633 in numerical order to read as set forth: b. In the subject matter Index, add Cushion of Credit items in alphabetical order to read as set forth below; c. Revise 119 Special Equipment to read as set forth below; d. Amend 136 Storm Damage by removing paragraph d. and revising paragraphs b. and c. and the undesignated paragraph before the table to read as set forth below; e. Amend 404 Consolidate Financial Statement by revising the undesignated concluding paragraph to read as set forth below; f. Revise 626 Rural Economic Development Loan and Grant Program to read as set forth below; g. Add a new description for 633 for Cushion of Credit to read as set forth below. The additions and revisions read as follows: § 1767.41 Accounting methods and procedure required of all RUS borrowers. Number Title 633 Cushion of Credit. Subject Matter Index Number * * * * * C * * * * * Cushion of Credit 633 * * * * * 119 Special Equipment Special Equipment items are classified as such because they are continually being moved from one location to another due to load changes and maintenance practices. The USoA provides accounting that differs from that used for other types of materials. The cost, new, of special equipment items shall be capitalized at the time of purchase; it shall not be charged to Account 154 as is the case with other materials. The first installation cost, as well as all incidental costs necessary to prepare the equipment for use, shall be capitalized with the material upon purchase. All subsequent costs of removing, resetting, changing, renewing oil, and repairing constitute operations and maintenance expenses. The capitalized cost of special equipment items, including the first installation, shall be removed from the electric plant accounts only when the items are abandoned or retired from the system. Meters, line-type transformers, oil circuit reclosers, sectionalizers, current and potential transformers, meter sockets, and other metering equipment listed in Account 370, Meters, as well as pole-type and underground voltage regulators in Account 368, Line Transformers, are considered to be special equipment items. Similarly, load control receivers (load control switches) recorded in Account 371, Installations on Customers' Premises, are considered to be items of special equipment. ( *See* Interpretation No. 118.) Transformers, voltage regulators, metering equipment, and current and potential transformers for substations are not. Special equipment items which are classified as nonusable shall be segregated in the warehouse and retired from service. The Summary of Special Equipment Costs shall be retitled Summary of Special Equipment Costs Retired and used for this purpose. A journal entry reflecting this information shall be prepared and posted to the books. Since loan funds for special equipment, including first installation costs, are approved for advance by the Rural Development upon receipt of the borrower's written estimate of funds required, and not on the basis of an Inventory of Work Orders, it is improper to take a credit for any salvage involved in the retirement of special equipment on the Inventory of Work Orders. Electric borrowers that wish to receive a waiver from the special equipment accounting requirements should submit a letter request to Rural Development. In order to expedite these requests the letter to Rural Development should state that the borrower will adhere to the following requirements to account for special equipment using the work order procedure rather than the special equipment accounting procedures prescribed by Rural Development: 1. New purchases of special equipment items are to be charged to Account 154, Materials and Supplies, upon purchase. 2. Labor, material and overhead costs associated with the initial installation and all subsequent installations of special equipment are recorded on construction work orders and charged to the appropriate plant accounts upon closeout of the construction work order. 3. Labor and overhead costs associated with the removal of special equipment items, whether the items removed are placed in inventory or permanently retired and disposed of, are recorded on retirement work orders and charged or credited to the depreciation reserve account upon closeout of the retirement work order. 4. The special equipment items retired and salvaged for reuse are returned to the materials and supplies account at the average material cost in the materials and supplies account and credited to the depreciation reserve upon closeout of the retirement work order. In addition to recognition of the requirements noted above, the borrower should indicate how it plans to account for the items of special equipment that have been charged to the plant accounts but not installed (in inventory). Two acceptable methods to account for this equipment are:

(1)Leave the equipment in the plant accounts until the inventory is depleted and charge only new purchases to materials and supplies, or

(2)credit the plant accounts for the installed cost of the equipment in inventory, charge the equipment cost to materials and supplies, and charge the installation cost to the appropriate operations expense account. Also, under the second method, the borrower must submit a “negative” special equipment summary to Rural Development to return to the balance in reserve for the current loan the installed cost of special equipment in inventory on the date of transition. 136 Storm Damage As a result of recent hurricane, flood, and ice storm damage, Rural Development has received several inquiries concerning the proper accounting for storm damage costs and the associated funds received from the Federal Emergency Management Administration (FEMA). Storm damage costs should be accounted for under the work order procedure. Units of property destroyed or otherwise removed from service must be reflected on retirement work orders and units of property installed must be shown on construction work orders. To ensure that the accounting for construction and retirement costs is as accurate as possible, an effort should be made to accurately accumulate material, labor, and overhead costs. Even when extreme care has been exercised, however, it may still be necessary to use estimates to develop the appropriate cost figures. When a storm occurs, a utility typically incurs a large retirement loss, all or a part of which should be charged to the accumulated provision for depreciation. Storm damage costs over and above construction and retirement costs represent maintenance expense. Maintenance costs include the costs of resagging lines, straightening poles, and replacing minor items of property. When extensive damage has occurred, the need to restore the property to an operating condition without delay usually results in excessive costs being incurred. Standard property unit costs may be used as a guide in determining the amount to be capitalized. It should be noted, however, that when standard property unit costs are used, all excess costs are charged to maintenance expense. Because of the storm's destruction, property is retired prematurely and as a result, extraordinary retirement losses occur. When such extraordinary losses occur, they should be recorded in the year in which the losses are incurred. If the recording of such losses will materially distort the income statement, such losses may be charged to Account 435, Extraordinary Deductions. These costs may be deferred and amortized to future periods only if the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation (Statement No. 71), are applied. Under the provisions of Statement No. 71, a utility may defer certain costs, provided such costs are included in the utility's rate base and recovered through future rates. If an Rural Development borrower elects to apply the provisions of Statement No. 71, Rural Development approval is required. To obtain Rural Development approval, a borrower must submit: a. A detailed description of the plan including the nature of the expense item, the amount of the deferral, the specific time period for rate recovery, and justifying support for the time period selected; b. The accounting journal entries being used by the cooperative to record the expense deferral and amortization of deferred costs; and c. A copy of the state Commission order authorizing recovery of the deferred costs through future rates, or in the absence of commission jurisdiction, a resolution from the cooperative's board of directors authorizing such recovery. To assist in the restoration of the damaged facilities, the Federal government often provides assistance through Federal Emergency Management Agency (FEMA). Under current FEMA procedures, FEMA provides funds for the restoration of facilities based upon the cost estimates submitted by the entity requesting assistance. If the FEMA grant is for less than 100 percent of the cost estimates, and does not specify offset expenses, thereby providing the borrower with the maximum opportunity to utilize Rural Development Utilities Program loan funds to finance capitalizable costs. When the funds are received, they should be accounted for by first applying the funds received as a credit to maintenance expense and administrative and general costs. Any remaining funds should then be applied as a credit to construction and retirement costs. 404 Consolidated Financial Statements Although Statement No. 94 requires the consolidation of majority-owned subsidiaries, Forms 7 and 12 must be prepared on a basis consistent with the equity method of accounting for investments. For distribution borrowers, this requires that the investment be shown on Form 7 in Part C, Balance Sheet, on line 7, Investments in Subsidiary Companies, or line 9, Investments in Associated Organizations—Other—General Funds, as appropriate. The result of operation is shown in Part A, Statement of Operations, on line 23, Income

(Loss)from Equity Investments. For generation and transmission borrowers, the investments should be shown on Form 12, in Section C, Balance Sheet, on Line 7, Investments in Subsidiary Companies, or Line 9, Investments in Associated Organizations—Other—General Funds, as appropriate. The result of operations should be shown in Section A, Statement of Operations, on line 30, Income

(Loss)from Equity Investments. 626 Rural Economic Development Loan and Grant Program On December 21, 1987, Section 313, Cushion of Credits Payments Program, was added to the Rural Electrification Act. Section 313 establishes a Rural Economic Development Subaccount and authorizes the Administrator of the Rural Utilities Service to provide zero interest loans or grants to RE Act borrowers for the purpose of promoting rural economic development and job creation projects. Subpart B, Rural Economic Development Loan and Grant Program, 7 CFR Part 1703, sets forth the policies and procedures relating to the zero interest loan program and for approving and administering grants. The accounting journal entries required to record the transactions associated with a rural economic development loan are as follows: Dr. 224.17, RUS Notes Executed—Economic Development—Debit Cr. 224.16, Long-Term Debt—RUS Economic Development Notes Executed To record the contractual obligation to RUS for the Economic Development Notes. Dr. 131.12, Cash—General—Economic Development Funds Cr. 224.17, RUS Notes Executed—Economic Development—Debit To record the receipt of the economic development loan funds. Dr. 123, Investment in Associated Organizations or Dr. 124, Other Investments Cr. 131.12, Cash—General—Economic Development Funds To record the disbursement of Economic development loan funds to the project. Dr. 131.1, Cash—General Funds Cr. 421, Miscellaneous Nonoperating Income To record payment received from the project for loan servicing charges. Dr. 171, Interest and Dividends Receivable Cr. 419, Interest and Dividend Income To record the interest earned on the investment of rural economic development loan funds. Dr. 426.1, Donations or Dr. 426.5, Other Deductions Cr. 131.1, Cash—General Funds To record the payment of interest earned in excess of $500.00 on the investment of rural economic development loan funds. Note: Interest earned in excess of $500.00 must be used for the rural economic development project for which the loan funds were received or returned to RUS. Dr. 131.12, Cash—General—Economic Development Funds Cr. 123, Investment in Associated Organizations or Cr. 124, Other Investments To record receipt of the repayment, by the project, of economic development loan funds. Dr. 426.5, Other Deductions Cr. 123, Investment in Associated Organizations or Cr. 124, Other Investments To record the default, by a project, of economic development loan funds. Dr. 224.16, Long-Term Debt—RUS Economic Development Notes Executed Cr. 131.12, Cash—General—Economic Development Funds To record the repayment, to RUS, of the economic development loan funds. The accounting journal entries required to record the transactions associated with a rural economic development grant are as follows: Dr. 131.13, Cash—General—Economic Development Grant Funds Cr. 224.18, Other Long-Term Debt—Grant Funds; Cr. 208, Donated Capital; or Cr. 421, Miscellaneous Nonoperating Income To record grant funds disbursed by RUS. If the grant agreement requires repayment of the funds upon termination of the revolving loan program, Account 224.18 should be credited. If the grant agreement states that there is absolutely no obligation for repayment upon termination of the revolving loan program, the funds should be accounted for as a permanent infusion of capital by crediting Account 208. If, however, the grant agreement is silent as to the final disposition of the grant funds, Account 421 should be credited. Dr. 123.3, Investment in Associated Organizations—Federal Economic Development Loans Cr. 131.13, Cash—General—Economic Development Grant Funds To record advances of Federal funds to associated organizations for authorized rural economic development projects. Dr. 124.1, Other Investments—Federal Economic Development Loans Cr. 131.13, Cash—General—Economic Development Grant Funds To record advances of Federal funds to nonassociated organizations for authorized rural economic development projects. Dr. 171, Interest and Dividends Receivable Cr. 419, Interest and Dividend Income To record the accrual of interest on loans made to associated and nonassociated organizations with Federal funds for authorized rural economic development projects. Dr. 131.14, Cash—General—Economic Development Non-Federal Revolving Funds Cr. 123.3, Investment in Associated Organizations—Federal Economic Development Loans or Cr. 124.1, Other Investments—Federal Economic Development Loans To record repayment of loans made with Federal funds. Dr. 123.4, Investment in Associated Organizations—Non-Federal Economic Development Loans Cr. 131.14, Cash—General—Economic Development Non-Federal Revolving Funds To record advances of non-Federal funds to associated organizations for authorized rural economic development projects. Dr. 124.2, Other Investments—Non-Federal Economic Development Loans Cr. 131.14, Cash—General—Economic Development Non-Federal Revolving Funds To record advances of non-Federal funds to nonassociated organizations for authorized rural economic development projects. Dr. 171, Interest and Dividends Receivable Cr. 419, Interest and Dividend Income To record the accrual of interest on loans made to associated and nonassociated organizations with non-Federal funds for authorized rural economic development projects. Dr. 131.14, Cash—General—Economic Development Non-Federal Revolving Funds Cr. 123.4, Investment in Associated Organizations—Non-Federal Economic Development Loans or Cr. 124.2, Other Investments—Non-Federal Economic Development Loans To record repayment of loans made with non-Federal funds. 633 Cushion of Credit On December 21, 1987, Section 313, Cushion of Credits Payments Program, was added to the Rural Electrification Act. Cushion of credit regulations are located in The Code of Federal Regulations

(CFR)7 CFR part 1785. A cushion of credit payment is a voluntary unscheduled payment by a borrower in excess of amounts due and payable. A cushion of credit account is automatically established by Rural Development for each borrower who makes a payment after October 1, 1987, in excess of amounts then due on a Rural Development note. Payments received in the month in which an installment is due will be applied to the installment due. However, if the regular installment payment is received at a later date in the month, the first payment received will be applied retroactively to the cushion of credit account and the second will be applied to the installment due. By law, cushion of credit accounts earn five per cent interest annually, accrued daily and posted quarterly. Although the interest earned will appear as a reduction in the interest billed on the borrower's Rural Development notes and will be separately shown on Form 694, Statement of Interest and Principal Due, interest billed must be adjusted by adding back the interest earned while principal is reduced by the amount of the interest earned before recording the debt payment. Below is an example of the adjustment required: As billed Adjustment Adjusted Payment Billed $1,000 $1,000 Principal 800 −$50 750 Interest * 200 50 250 * Includes reduction of $50 for interest earned on cushion of credit account. Cushion of credit is intended to enable the borrower to deposit funds and have those funds available to make scheduled payments (or installments) only. A borrower may not have more cushion of credit funds, including accrued interest, than their entire Rural Development debt which includes loans made in Rural Electric and Telephone

(RET)and Federal Financing Bank (FFB). If a borrower makes less than or no payment when their billing invoice is due, cushion of credit will automatically add to or make their payment systematically for them. Cushion of credit is not available to use for prepayment of loan accounts before maturity except for the following situations: 1. The total amount of cushion of credit principal with accrued interest equals the borrower's total debt 2. The borrower intends to prepay all remaining debt using a combination of payment with all cushion of credit funds available. Accounting Requirements All payments made to a cushion of credit account should be recorded as follows: Dr. 224.6, Advance Payments Unapplied—Long-Term Debt—Debit Cr. 131.1, Cash—General All interest earned on the balance of funds in the account should be recorded as follows: Dr. 224.6, Advance Payments Unapplied—Long-Term Debt—Debit Cr. 419, Interest and Dividend Income Reporting Requirements Previously, Rural Development required that the balance in the cushion of credit account be reported, on the Form 7, Financial and Statistical Report, as a reduction of the Rural Development long-term debt balance. On January 15, 2003, Rural Development issued letter guidance permitting a proportionate share of the cushion of credit balance be reported as a reduction in Current Maturities Long-Term Debt. Additionally, beginning with calendar year 2006 submissions, Form 7 has been revised to include a separate line for cushion of credit balances within the long-term debt section of Part C. For purposes of the audited financial statements, presentation of the balance of the cushion of credit account as a long-term investment is an acceptable alternative to Rural Development. 17. Add Subpart D to read as follows: Subpart D—Preservation of Records Sec. 1767.66 Purpose. 1767.67 General. 1767.68 Designation of a supervisory official. 1767.69 Index of records. 1767.70 Record storage media. 1767.71 Periods of retention. 1767.72-1767.85 [Reserved] Subpart D—Preservation of Records § 1767.66 Purpose. This subpart establishes policies and procedures for the effective preservation and efficient maintenance of financial records of Electric borrowers. § 1767.67 General.

(a)Rural Development endorses the guidelines as described by the Federal Energy Regulatory Commission's

(FERC)“Regulations to Govern the Preservation of Records of Public Utilities and Licensees.” The FERC guidelines can be found in 18 CFR part 125.

(b)The regulations prescribed in this part apply to all books of account, contracts, records, memoranda, documents, papers, and correspondence prepared by or on behalf of the borrower as well as those which come into its possession in connection with the acquisition of property by purchase, consolidation, merger, etc.

(c)The regulations prescribed in this part shall not be construed as excusing compliance with any other lawful requirements for the preservation of records. § 1767.68 Designation of a supervisory official. Each borrower shall designate one or more officials to supervise the preservation of its records. § 1767.69 Index of records.

(a)Each borrower shall maintain a master index of records. The master index shall identify the records retained, the related retention period, and the locations where the records are maintained. The master index shall be subject to review by Rural Development and Rural Development shall reserve the right to add records, or lengthen retention periods upon finding that retention periods may be insufficient for its purposes.

(b)At each office where records are kept or stored the borrower shall arrange, file, and index the records currently at that site so that they may be readily identified and made available to representatives of Rural Development. § 1767.70 Record storage media. The media used to capture and store the data will play an important part of each Rural Development borrower. Each borrower has the flexibility to select its own storage media. The following are required:

(a)The storage media shall have a life expectancy at least equal to the applicable retention period provided for in the master index of records, unless there is a quality transfer from one media to another with no loss of data. Each transfer of data from one media to another shall be verified for accuracy and documented.

(b)Each borrower shall implement internal control procedures that assure the reliability of, and ready access to, data stored on machine-readable media. The borrower's internal control procedures shall be documented by a responsible supervisory official.

(c)Records shall be indexed and retained in such a manner that they are easily accessible.

(d)The borrower shall have the hardware and software available to locate, identify, and reproduce the records in readable form without loss of clarity.

(e)At the expiration of the retention period, the borrower may use any appropriate method to destroy records.

(f)When any records are lost or destroyed before the expiration of the retention period set forth in the master index, a certified statement shall be added to the master index listing, as far as may be determined, the records lost or destroyed and describing the circumstances of the premature loss or destruction. § 1767.71 Periods of retention.

(a)Records of Rural Development borrowers of a kind not listed in the FERC regulations should be governed by those applicable to the closest similar records. Financial requirement and expenditure statements, which are not specifically covered by FERC regulations, are recommended to be kept for one year after the “as of date” of Rural Development's loan fund and accounting review.

(b)Consumer accounts' records should be kept for those years for which patronage capital has not been allocated.

(c)Records supporting construction financed by Rural Development shall be retained until audited and approved by Rural Development.

(d)Records related to plant in service must be retained until the facilities are permanently removed from utility service, all removal and restoration activities are completed, and all costs are retired from the accounting records unless accounting adjustments resulting from reclassification and original costs studies have been approved by Rural Development or other regulatory body having jurisdiction.

(e)Life and mortality study data for depreciation purposes must be retained for 25 years or for 10 years after plant is retired, whichever is longer. § 1767.72-1767.85 [Reserved] Dated: April 7, 2008. James M. Andrew, Administrator, Rural Utilities Service. [FR Doc. E8-11264 Filed 5-23-08; 8:45 am] BILLING CODE 3410-15-P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Part 82 [Docket No. APHIS-2006-0036] RIN 0579-AC42 Exotic Newcastle Disease; Quarantine Restrictions AGENCY: Animal and Plant Health Inspection Service, USDA. ACTION: Final rule. SUMMARY: We are making several changes to the exotic Newcastle disease domestic quarantine regulations, including adding an option for the movement of pet birds; adding restrictions on the interstate movement of live ratites out of quarantined areas; harmonizing our domestic and import regulations regarding the movement of dressed carcasses of dead birds and dead poultry; providing for the use of alternative procedures for treating manure and litter and for composting; and adding an additional surveillance period after the conditions for removing quarantine are met before quarantine is removed. We concluded that these changes are necessary based on our experiences during the eradication programs for the 2002-2003 outbreaks of exotic Newcastle disease in California, Arizona, Nevada, and Texas. In the event of an exotic Newcastle disease outbreak, these changes will help to ensure that exotic Newcastle disease does not spread from quarantined areas and that exotic Newcastle disease is eradicated within quarantined areas. DATES: *Effective Date:* June 26, 2008. FOR FURTHER INFORMATION CONTACT: Dr. Glen Garris, Director, National Veterinary Stockpile, National Center for Animal Health Emergency Management, VS, APHIS, 4700 River Road Unit 41, Riverdale, MD 20737-1231;

(301)734-8073. SUPPLEMENTARY INFORMATION: Background Exotic Newcastle disease

(END)is a contagious and fatal viral disease affecting the respiratory, nervous, and digestive systems of birds and poultry. END is so virulent that many birds and poultry die without showing any clinical signs. A death rate of almost 100 percent can occur in unvaccinated poultry flocks. END can infect and cause death even in vaccinated poultry. The regulations in “Subpart A—Exotic Newcastle Disease (END)” (9 CFR 82.1 through 82.16, referred to below as the regulations) were established to prevent the spread of END in the United States in the event of an outbreak. These regulations specify the conditions under which certain articles, including live birds and live poultry, dead birds and dead poultry, manure and litter, eggs other than hatching eggs, hatching eggs, and vehicles and conveyances, may be moved out of areas listed in § 82.3 as quarantined for END. On March 27, 2006, we published in the **Federal Register** (71 FR 15047-15059, Docket No. APHIS-2006-0036) a proposal 1 to amend the regulations by adding an option for the movement of pet birds; adding restrictions on the interstate movement of live ratites out of quarantined areas; harmonizing the domestic and foreign regulations regarding the movement of dressed carcasses of dead birds and dead poultry, including one change to the importation regulations; providing for the use of alternative procedures for treating manure and litter and for composting; and adding an additional surveillance period after the conditions for removing quarantine are met before quarantine is removed. 1 To view the proposed rule and the comments we received, go to *http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=APHIS-2006-0036.* The changes we proposed were based on experience we gained during our most recent eradication effort for END. Between November 21, 2002, and September 16, 2003, areas of the States of California, Arizona, Nevada, New Mexico, and Texas were quarantined due to the presence of END. In order to make better decisions on how to eradicate END from those areas, we completed several risk assessments and epidemiological investigations in the context of our activities under the regulations. The experience we gained during those outbreaks in enforcing the regulations and conducting the risk assessments and epidemiological investigations informed the proposed rule. (The risk assessments are available from the person listed under FOR FURTHER INFORMATION CONTACT .) We solicited comments concerning our proposal for 60 days ending May 26, 2006. We received seven comments by that date. They were from producers and private citizens. They are discussed below by topic. Other Live Birds, Including Ratites The regulations in § 82.5(b) provide that birds other than pet birds and poultry not known to be infected with or exposed to END are allowed to be moved interstate from an area quarantined for END only if the following conditions are met: • They are accompanied by a permit; • They are covered in such a way as to prevent feathers and other debris from blowing or falling off the means of conveyance; • They are moved in a means of conveyance either under official seal or are accompanied by a Federal representative; • They are not unloaded until their arrival at their destination listed on the permit, except for emergencies; and • The permit is presented upon arrival at the destination and copies of the permit are submitted so that a copy is received by the State animal health official and the veterinarian in charge for the State of destination within 72 hours of arrival. Birds other than poultry are required to be moved to a site approved by the Administrator. Poultry are required to be moved to a recognized slaughtering establishment and must be slaughtered within 24 hours of arrival at such an establishment; the required permit must be presented to a State or Federal representative upon arrival at such an establishment. We proposed to amend the regulations to place the same requirements on ratites moved interstate from a quarantined area as we do on poultry. The term “ratites” encompasses cassowaries, emus, kiwis, ostriches, and rheas. Surveillance of these birds for infection with END is more difficult than surveillance of poultry. Detection of virus shedding in live ratites is unpredictable. Examiners may not always be able to detect END infection by examination or testing of swabs for virus, which are the standard procedures for testing other birds whose movement is regulated under § 82.5(b). Tissue samples can provide additional certainty in diagnosing END; however, while the death loss rates in production flocks of poultry mean that tissue samples are normally available for testing, the death loss rates in flocks of ratites are much lower, meaning that tissue samples of ratites may be unavailable. The relative lack of dead ratites for surveillance purposes also means that tests on tissues of dead ratites are less reliable than tests on tissues of dead poultry. For these reasons, no consensus exists on optimal surveillance techniques for END in live ratites. This means that any determination that ratites to be moved interstate from a quarantined area are not known to be infected with END is, at best, uncertain. In addition, it is often difficult to determine whether ratites have been exposed to END; they are mostly maintained in outdoor pens or in backyard flocks, which are often less biologically secure than the facilities in which commercial flocks of poultry are maintained. Ratites that have been kept in these conditions within a quarantined area may, therefore, be more likely to have been exposed to END than other birds kept under more biologically secure conditions. Finally, ratites typically live in highly concentrated populations, meaning that END could be spread quickly by an infected or exposed ratite moved interstate from a quarantined area. Slaughtering and disposing of live poultry moved interstate from a quarantined area, as required by § 82.5(b), ensures that END virus is not spread from any poultry that, despite not being known to be infected with or exposed to END, may pose a risk of spreading the END virus during interstate movement. We proposed to require that ratites be moved to slaughter under the same conditions as live poultry to ensure that the END virus would not be spread through the movement of ratites from quarantined areas. We received three comments on this proposed change. All three of the commenters opposed the change, stating instead that ratites should be treated similarly to other birds and allowed to move from the quarantined area without moving directly to slaughter. Instead, the commenters favored testing and holding the ratites under quarantine until they were proved not to be infected with END. Two of the commenters stated that there are tests that can identify END in ratites, making such a policy feasible. We agree that there are methods that can be used to test ratites for END. As discussed in the proposed rule, however, surveillance of these birds for infection with END is more difficult than surveillance of poultry. Detection of virus shedding in live ratites is unpredictable. Examiners may not always be able to detect END infection by examination or testing of swabs for virus, which are the standard procedures for testing other birds whose movement is regulated by § 82.5(b). Tissue samples can provide additional certainty in diagnosing END; however, while the death loss rates in production flocks of poultry mean that tissue samples are normally available for testing, the death loss rates in flocks of ratites are much lower, meaning that tissue samples of ratites may be unavailable. For these reasons, no consensus exists on optimal surveillance techniques for END in live ratites. Given that and the other risk factors described above, we believe that the risk associated with the interstate movement of ratites is similar to that associated with the interstate movement of poultry, and that the same restrictions on that movement are warranted. One commenter stated that her own research had not shown ostrich to be especially susceptible to END or to have been a factor for the spread of END during the 2002-2003 END outbreaks. During the 2002-2003 END outbreaks, we required ratites moved interstate from the quarantined area to be moved directly to slaughter, based on a risk assessment we conducted. This risk assessment and our experience in the 2002-2003 END outbreak led us to propose this change. The fact that ratites were not a factor for the spread of END during the 2002-2003 outbreak is therefore not inconsistent with the change we proposed. Two of these commenters provided additional information for the section of our economic analysis that addressed the potential economic impact of this change, mostly related to the size of the ratite industry. We have used this information to update our economic analysis. The commenters additionally expressed concern that the change would have catastrophic economic effects on the ratite industry. Whenever END is detected in the United States, we will pursue eradication of the disease. Any quarantine for END would be temporary and local, thus minimizing the number of ratite operations affected by the requirement that ratites that are moved from the quarantined area be moved directly to slaughter. (Ratite flock owners whose flocks are not known to be infected with or exposed to END could also keep their flock in place during the quarantine.) The potential economic effects of this change, in the event of an END outbreak, are discussed in more detail under the heading “Executive Order 12866 and Regulatory Flexibility Act” later in this document. Our proposed changes classified birds that could be moved from the quarantined area as pet birds, other birds, and poultry and ratites. One commenter, a racing pigeon association, recommended that racing pigeons be considered “other birds” rather than pet birds. The commenter stated that pets are essentially animals that are kept by humans for companionship; pigeon fanciers do not keep racing pigeons as pets, but as the necessary element in their hobby of breeding and racing pigeons. Racing pigeons are highly trained, fed careful diets, kept on a strict sanitary and medical regimen, and much prized for their athletic accomplishments. Pigeon fanciers do not look to their loft of birds, typically 60 to 100 in number, for companionship. The commenter also stated that racing pigeons are thoroughbreds and that championship birds can be worth thousands of dollars. We agree with the commenter. During the 2002-2003 END outbreak, we considered racing pigeons to be “other birds,” and we will do so if another END outbreak occurs in the United States. Because the definition of *pet bird* in § 82.1 reads “Any bird that is kept for personal pleasure and is not for sale,” and because the commenter has presented convincing evidence that racing pigeons meet neither of these criteria, we believe that the regulations already accommodate the policy suggested by the commenter. Other Comments One commenter stated that the proposed rule was not in accord with the Terrestrial Animal Health Code published by the World Organization for Animal Health (OIE), specifically Chapter 2.7.13, Newcastle Disease, and Chapter 1.3.5, Zoning and Compartmentalization. 2 2 The Terrestrial Animal Health Code can be viewed on the Internet at *http://www.oie.int/eng/normes/mcode/en_sommaire.htm* . The Terrestrial Animal Health Code is designed to provide a science-based reference document for international trade in animals and animal products. OIE guidelines are not intended to be prescriptive; each member nation sets its regulatory policy based not only on the Code but also on, among other things, local conditions. The commenter did not specify what provisions of the proposed rule were inconsistent with the Terrestrial Animal Health Code. We believe the changes we proposed are appropriate for eradicating END within the United States. We are making no changes in response to this comment. One commenter stated that poultry become infected with END when they are kept in conditions that adversely affect their welfare. This commenter also stated that the interstate movement of poultry should not be allowed for any reason. Poultry become infected with END when they are exposed to its causal virus. We may restrict the movement of poultry or any other animal only to the extent that such restrictions are necessary to prevent the introduction or spread of a pest or disease of livestock. One commenter recommended that we require the complete and immediate incineration of all poultry carcasses known to be infected with END. The commenter recommended that we accomplish this by requiring all poultry producers to have a dual-chambered, environmentally safe incinerator on their premises. The commenter stated that such a requirement would eliminate the risk associated with moving the carcasses of infected poultry from a premises to an incinerator. The commenter is correct that such a policy would directly address the risk associated with the movement of carcasses of infected poultry. However, we believe that the movement of such carcasses to an incinerator can be done safely if biological security protocols are followed. Therefore, an on-premises incinerator requirement is unnecessary. We will continue to work with States and industry to determine the safest and most efficient ways to dispose of carcasses of poultry infected with or exposed to END and other highly virulent poultry diseases. Miscellaneous Change The regulations in 9 CFR 94.6 address the importation into the United States of carcasses of game birds from regions where END is considered to exist. Paragraph (b)(1) of this section allows the carcasses of game birds to be imported into the United States as long as they are eviscerated and their heads and feet have been removed. In the proposed rule, we stated that the importation of such carcasses poses a high risk of introducing END into the United States and proposed to remove and reserve paragraph § 94.6(b)(1). Since the publication of the proposed rule, we have completed a more thorough risk assessment of the risk associated with importing carcasses of game birds, as part of a risk assessment supporting the development of regulations for the importation of poultry and poultry products from regions where highly pathogenic avian influenza exists. This risk assessment, which will be published in completed form along with a rule proposing such regulations, indicates that the risk of disease introduction associated with the importation of game bird carcasses under the conditions specified in § 94.6(b)(1) is actually low. The carcass preparation process for game birds makes the tissue unsuitable for virus survival, and game bird carcasses typically do not come into contact with poultry populations, because the carcasses are intended for home display. Therefore, this final rule withdraws that proposed amendment and leaves § 94.6(b)(1) unchanged. Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the change discussed in this document. This final rule also serves to affirm the last 4 interim rules in a series of 10 interim rules we published between November 2002 and September 2003. The first six interim rules amended the regulations in part 82 by adding portions of Arizona, California, Nevada, New Mexico and Texas to the list in § 82.3 of areas quarantined for END; the final four interim rules subsequently removed all those areas from that list. The 10 interim rules elicited a total of 11 comments, only 2 of which were germane to the action taken in the interim rule ( *i.e.* , the addition or removal of an area from quarantine). In both cases, the commenters pointed out the need for adequate surveillance to ensure the complete eradication of END in an area before it is removed from quarantine. In this final rule, we supplement the conditions for removing an area from quarantine by requiring an additional surveillance period after those conditions have been met before the quarantine will be removed. As noted in the proposed rule, we made that amendment based on information gained during the 2002-2003 END outbreak, which includes the information contained in the comments we received on the interim rules. Executive Order 12866 and Regulatory Flexibility Act This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget. We are making several changes to the END domestic quarantine regulations, including adding an option for the movement of pet birds; adding restrictions on the interstate movement of live ratites out of quarantined areas; harmonizing our domestic and import regulations regarding the movement of dressed carcasses of dead birds and dead poultry; providing for the use of alternative procedures for treating manure and litter and for composting; and adding an additional surveillance period after the conditions for removing quarantine are met before quarantine is removed. We concluded that these changes are necessary based on our experiences during the eradication programs for the 2002-2003 outbreaks of END in California, Arizona, Nevada, and Texas. In the event of an END outbreak, these changes will help to ensure that END does not spread from quarantined areas and that END is eradicated within quarantined areas. END, also known as velogenic viscerotropic Newcastle disease, is a highly contagious and fatal viral disease affecting all species of birds. END is one of the most infectious and virulent diseases of poultry in the world, and the infection often results in many birds dying before demonstrating any clinical signs of infection. In unvaccinated poultry flocks, END has a death rate of close to 100 percent. Moreover, the mortality rates in vaccinated flocks are 10 to 20 percent, clearly showing that vaccination does not guarantee complete protection against END. END was first identified in the United States in 1950 in California. The outbreak was traced to game birds and pheasants imported from Hong Kong. The disease spread to five poultry farms in Contra Costa County, but was quickly eliminated by destroying infected chickens. In 1971, a major outbreak of END occurred in California commercial poultry and lasted for 2 years. As a result of that outbreak 1,341 infected flocks were identified, and almost 12 million birds were destroyed. The eradication program cost taxpayers $56 million ($228 million in 2002 dollars), severely disrupted the operations of many producers, and increased the prices of poultry and poultry products to consumers. On October 1, 2002, END was confirmed in backyard poultry in Southern California. The disease spread from backyard poultry to commercial poultry operations in California, backyard poultry in Nevada and Arizona, and poultry in Texas. The U.S. Department of Agriculture (USDA)'s Animal and Plant Health Inspection Service (APHIS) took the lead in END eradication efforts. Immediately a task force of over 1,500 people from APHIS, the California Department of Food and Agriculture, and other State and Federal agencies combined forces to fight this devastating disease. Almost 4 million birds were destroyed to contain the spread of END. Economic Analysis The final rule change to the END regulations will have an effect on all persons and entities handling birds of any type, including farm and commercial operations, backyard flock owners and enthusiasts, and pet bird owners in an END quarantined area wishing to engage in interstate movement. While accurate statistics on farm and commercial operations in the United States are readily available, there is a significant information gap on the backyard flocks and pet bird owners. As such, we have no way of quantifying the true number of persons affected by these changes. The United States is the world's largest producer of poultry meat and the second-largest egg producer behind China. Preliminary reports for the year 2005 indicate there were a total of 452.8 million chickens, excluding commercial broilers, with a cash value of over $1.133 billion. In 2004 broiler production, raised for the purpose of meat production, totaled 8.7 billion birds, with a combined live weight of over 45.7 billion pounds. The value of broiler production for that year was over $20.4 billion. In 2004, the last full report available, there were over 89 billion eggs produced with a cash value of over $5.3 billion. 3 Preliminary statistics for 2004 indicate that turkey production totaled over 264 million birds with a combined live weight of 7.3 billion pounds and a cash value of over $3 billion. 4 3 USDA, *Agricultural Statistics 2006.* Washington, D.C.: National Agricultural Statistics Service, 2006. Estimates cover the 12-month period, December 1 of the previous year through November 30. 4 USDA, *Agricultural Statistics 2006* . Estimates based on turkeys placed September 1, 2003 through August 31, 2004 and excludes young turkeys lost. The U.S. poultry industry plays a significant role in international trade. In fact, the United States is the world's largest exporter of turkey products, and the second largest exporter of broilers. In 2005, broiler exports totaled 5.1 billion pounds, valued at $2.1 billion. 5 Turkey exports for the same year totaled over 541 million pounds, with a total value of about $369 million. In addition, 61.8 million dozen shell eggs for consumption, and 55 million pounds of egg products were exported in 2005. 6 The presence of END in the United States would significantly reduce our ability to be competitive in international markets in the trade of poultry and poultry products. By extension, any efforts made to contain and prevent the spread of END throughout the United States would serve to enhance our reputation for providing high-quality products. Thus, the changes in this rule will benefit the commercial poultry industry by increasing product marketability, both domestically and internationally. 5 USDA-ERS, *Background Statistics on U.S. Broiler Industry* . Washington, D.C.: Economic Research Service, 2006. 6 USDA-FAS, *U.S. Trade Statistics.* Washington, D.C.: Foreign Agricultural Service, 2006. This final rule also impacts the movement of ratites out of a quarantined area. Ratites are a family of flightless birds with small wings and flat breastbones. Domestic production of ratites is limited to ostriches and emus. This alternative livestock industry is still in its infancy, so new in fact that ratites have only been under mandatory USDA inspection since April 22, 2002, and were first included as a separate line item in the 2002 USDA Census of Agriculture. Ostrich was the first ratite to be raised in the United States. According to the 2002 Census of Agriculture, there are 5,224 farms raising a total of 48,221 emus, and 1,643 farms holding an inventory of 20,560 ostriches. Additionally, there were 15,682 emus and 16,038 ostriches sold according to Census data. 7 Ostriches are raised primarily for meat, with an average bird yielding about 75-100 pounds of meat, whereas emus are raised primarily for oil. According to American Ostrich Association

(AOA)estimates, approximately 500,000 to 750,000 pounds of ostrich meat were processed from domestically produced ostrich in 2005, with a slaughter price of $1 per pound live weight. Due to a fluctuating market for oil, the value of emu production is indeterminate at this time. While U.S. farms raising ratites can have an inventory ranging from 2 to 2,000 birds, the AOA estimates that there are probably less than a dozen farms in the United States with 100 or more birds. 8 Based on these estimates, as well as Census data, we can assume the majority of ratite farmers would be considered small entities by SBA standards. 9 7 USDA, *2002 Census of Agriculture—Table 27.* Washington, D.C.: National Agricultural Statistics Service, 2006. 8 Source: Dianna Westmoreland and Carole Price of the AOA, through submitted comments and personal communication. 9 A small ratite farm is one having $750,000 or less in annual receipts. North American Industry Classification System (NAICS) code 112390, “Other Poultry Production,” which includes duck, emu, geese, ostrich, pheasant, quail and ratite production. Table of Size Standards based on NAICS 2002. Washington, D.C.: U.S. Small Business Administration, effective July 31, 2006. Comments on the interim rule expressed concern over the continued presence of the U.S. ratite industry in light of movement restrictions put in place by this rule. However, we feel confident in our position that the ratite industry will not be significantly affected by this rule, especially not to the extent that the industry will no longer be viable. This rule will only affect those ratite owners located in an area quarantined for END who wish to move their ratites interstate. It is important to note that any area deemed necessary to be quarantined will be as small as possible, and will only be quarantined for a limited period of time, until the disease is eradicated. Farms raising ostriches and emus within the quarantined area will have the option of moving their birds directly to slaughter. The rule will impact ratite owners located in a quarantined area that move day-old or infant ratite birds interstate to farms where the birds are then raised, but we do not believe this impact will be significant, especially considering the quarantine would be in place for a limited time. In addition, the regulations will affect backyard poultry not kept for commercial sale and pet owners in the quarantined area, the number of which is indeterminate. Although the specific numbers of persons in this category are unknown, we feel safe in determining that the impact of this regulation will not be significant as it only affects those owners located within a quarantined area for the limited time the quarantine is actually in place. The remainder of this analysis will consider each of the major changes in the final rule individually and examine the expected benefits and costs. Live Pet Birds The regulations in § 82.5 have prohibited the movement of pet birds out of a quarantined area unless they have been in the owner's control for 90 days. The final rule adds a new option that allows pet birds, except those that are imported for eventual resale as pets, that have been in the owner's control for less than 90 days to be moved out of the quarantined area if they enter a 30-day quarantine at a USDA quarantine station outside of the quarantined area and meet all other requirements for movement. There is a user fee of $390 to enter into this 30-day USDA quarantine station. Entering into this quarantine station is voluntary and is meant to increase the flexibility for pet owners who have been in control of their pet birds for less than 90 days. Intuitively, we expect only those pet owners who consider the value of protecting and moving their birds out of the quarantine area to be higher than the expense of the $390 fee to voluntarily enter the USDA facility. While that does pose an expense to pet owners, in light of the fact that the option allows for interstate movement where the regulations otherwise do not, it is safe to assume the cost is not overly burdensome for those pet owners deciding to enter their birds into the USDA facility. Those birds that are imported for eventual resale as pets, which fall under the added definition of commercial birds, are not bound by the restrictions in § 82.5(a). Current regulations require that commercial birds be imported from and into biologically secure facilities. As such, birds imported for eventual resale as pets have already met the necessary requirements to be determined free of END. This amendment is more of a clarification rather than an actual change in movement requirements. Generally, END regulations governing pet birds are more restrictive than for other birds due to the fact that there are fewer biological security measures in place, and pet birds are thus more vulnerable to contracting and spreading END. Other Live Birds, Including Ratites Ratites tend to be housed in outdoor pens or backyard flocks, thereby making surveillance of these birds for END more difficult. Also, virus detection techniques that are widely used to detect END were inconclusive when used on ratites. Combined, this creates a situation where infection of ratites in a quarantined area is highly possible and detection is uncertain, thus increasing the risk for widespread END dissemination. Consequently, this final rule amends § 82.5(b)(5) to prohibit interstate movement of ratites from an area quarantined for END unless they are moved to a recognized slaughtering establishment and slaughtered within 24 hours of arrival at that establishment. Previously, ratites not known to be infected with or exposed to END were allowed to move interstate as long as they were accompanied by a permit. Coupled with the knowledge that epidemiological tests for END were inconclusive in ratites, this created a situation where the dissemination of END was possible. In situations where ratites were thought to be exposed to END, these flocks were depopulated and the owners were paid indemnity based on current market values. While this rule places additional restrictions on the movement of ratites from areas quarantined because of END, we do not believe the economic effects of this rule will be significant. Even though the interstate movement of ratites from a quarantined area must be directly to slaughter, the marketability of meat and oil, which are the primary markets for the ratite industry, are not adversely affected by this movement restriction. Essentially, this change in the regulations seeks to increase biological security measures by restricting the movement of ratites from quarantined areas. We do not expect the economic impacts to affected producers of ratites to be significant. Dressed Carcasses of Dead Birds and Dead Poultry We will harmonize § 82.6 with the regulations in § 94.6 under which carcasses, and parts or products of carcasses, of birds and poultry may be imported into the United States from an area where END is considered to exist. The principal effect of this change will be to prohibit any movement of uncooked bird or poultry meat out of a quarantined area. Only meat that has both been packed in hermetically sealed containers and cooked by a commercial method after packing to produce articles that are shelf-stable without refrigeration, or cooked so that it has a thoroughly cooked appearance throughout, will be allowed to move from the quarantined area. The regulations had not required sealing and commercial cooking, so these new regulations are intended to provide a higher level of protection against the spread of END. The cost burdens of these changes are fairly obvious for those producers in a quarantined area engaged in the interstate movement of dead birds and poultry. Specifically, these costs include gathering materials to seal the dead birds or poultry; the expense of electricity and/or gas, and perhaps equipment, needed to commercially cook the dead birds or poultry, and the additional labor costs associated with this change. These costs vary by producer. We do not anticipate these costs will significantly impact producers, the majority of which are small entities. The major benefit of this change, outside of increasing safeguards against END, is to harmonize our domestic requirements for movement out of a quarantined area with our import requirements for dressed carcasses from regions where END is known to exist. Manure and Litter Previously the only way manure and litter used by birds and poultry not known to be infected with END could be moved interstate from a quarantined area was by heating throughout to a temperature of not less than 175 °F along with other requirements. This rule will provide producers with additional flexibility by providing for the use of any alternative treatment that is determined by the Administrator to be adequate in preventing the dissemination of END. This change would result in a potential decrease in cost, as we assume producers are profit-maximizing entities; hence, it is safe to assume any alternative treatment proposed and accepted will be cheaper than the heat treatment previously required. As such, it is hard to quantify the actual cost savings of this change in the regulations as it will vary based on the alternative chosen. Also, this rule establishes a procedure under which composted manure and/or litter from infected premises will be allowed to move outside the quarantined area. The regulations in § 82.7(a)(2) have prohibited the movement from a quarantined area of any manure or litter from infected premises, so this amendment will allow producers greater flexibility. Thus, we expect that producers will benefit by having greater flexibility and the opportunity to decrease their present costs by looking into additional options for the disposal of manure and litter. Eggs, Other Than Hatching Eggs This final rule adds performance standards for processing plants that prepare eggs for eventual sale. In an effort to increase biological security at these sites, these processing plants will have to meet several standards, including: • Physically separating processing and layer facilities, the incoming and outgoing eggs by quarantined and non-quarantined areas, and any flocks that may reside at the processing plant. • Putting in place adequate controls to ensure processing plants are not exposed to END by any outside sources (i.e. those persons higher up in the vertical chain of production). • Disinfecting equipment in accordance with 9 CFR part 71 at intervals deemed appropriate by the Administrator, so that there is less of a chance the equipment will transmit END to the eggs being processed. Implementing these biological security standards will pose some burdens on processing plants. The actual cost imposed is indeterminable, because that will vary by processing plant. However, it is of note that the majority of these standards have to do with modifications in the procedures rather than any sort of capital investment. As such, it is not expected that processing plants will incur a significant economic burden by conforming to these standards. Hatching Eggs This change in the regulations will better harmonize domestic requirements for the movement of hatching eggs from a quarantined area with the import requirements for hatching eggs from regions where END is considered to exist. As a result, persons wishing to move hatching eggs out of a quarantined area must now follow the procedures in the National Poultry Improvement Plan for sanitizing hatching eggs, as found in 9 CFR 147.22 and 147.25. By harmonizing our domestic requirements with our import requirements, the conditions governing the movement of hatching eggs out of quarantined areas will be slightly more restrictive. However, this change is not expected to pose a significant economic burden upon affected entities. Removal of Quarantine Finally, before the quarantine is lifted, birds and poultry that died from any cause other than slaughter, along with accompanying manure and litter generated by these birds and poultry, must be disposed of using an approved method, including composting. This final rule will allow the use of any alternative composting treatment that is determined by the Administrator to be adequate to prevent the dissemination of END. This amendment is expected to produce cost savings, as we would expect producers to only adopt alternative treatment mechanisms that are cheaper than those currently prescribed. In addition, the regulations will require follow-up surveillance after a quarantined area has fulfilled all requirements to have the quarantine lifted. The time period necessary to conduct this follow-up surveillance will be determined by the Administrator of APHIS. This additional observation period will ensure the quarantine is not lifted prematurely. Impact on Small Entities This final rule's amendments to the regulations are intended to ensure that any future END outbreaks in the United States are contained to as small an area as possible while allowing emergency authorities the flexibility to choose the methods best suited to meet that goal. Costs of complying with the regulations are relatively minimal and for the most part are not borne by producers. Specifically, there will be a user fee of $390 to enter the 30-day USDA quarantine station for those pet owners in control of their pets for less than 90 days wishing to move their birds interstate. In order to comply with those regulatory changes that will harmonize domestic and import regulations for END, producers located within the quarantined area wishing to engage in interstate movement of dead birds and poultry must sustain the costs relating to sealing and commercially cooking the birds. In the case of processing plants, the costs inherent in complying with the change in the regulations are not expected to require capital investment; rather, there will be the cost of extra labor and materials required with respect to meeting the amended standards. Finally, State and/or Federal Governments, depending on the type of quarantine, must shoulder the cost of inspection and certification of hatching eggs from a quarantined area. The benefits of the changes in this rule aimed at ensuring more efficient and effective END containment and eradication efforts are numerous. In many cases, the actual benefit in monetary terms is not possible to quantify. For example, pet bird owners in control of their pets for less than 90 days are afforded the opportunity to move their pets from the quarantined area. Alternative treatment procedures for moving manure and litter from a quarantined area will be considered and accepted by APHIS, thus lifting some of the cost burdens previously faced by producers. Most importantly, the changes in this final rule are intended to reduce and even eliminate biological security hazards associated with END. The costs of compliance are insignificant in comparison to the benefits of containing and eradicating END in domestic flocks. Therefore, APHIS believes the net benefit of this rule will be positive. The Regulatory Flexibility Act requires that agencies consider the economic impact of a regulation on small entities. The 2002 Agricultural Census estimated there were 83,381 domestic poultry and egg farms, with a total market value over $23.9 billion. Unfortunately, concrete information on the size distribution is unknown, but the census does indicate that only 8,791, or 10.5 percent, of those poultry operations have sold between $500,000 and $999,999 in market value of agricultural products. 10 Also, as was mentioned on the outset, the ratite farming industry is in its infancy. Therefore, it would be safe to assume that the majority of poultry operations in the United States are classified as small entities. 11 While we acknowledge that these small entities will incur some costs of compliance, we do not believe these costs are significant. Further, it is vital to remember that this final rule affects only those small poultry operations located within an area quarantined for END, and only for as long as the quarantine is in place. 10 USDA, *2002 Census of Agriculture, Table 56.* Washington, DC: National Agricultural Statistics Service, 2006. 11 A small chicken egg operation is one having $10.5 million or less in annual receipts. All other poultry products and meat operations are small if they have $750,000 or less in annual receipts. Table of Size Standards based on NAICS 2002. Washington, DC: U.S. Small Business Administration, effective July 31, 2006. Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities. Executive Order 12372 This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.) Executive Order 12988 This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule:

(1)Preempts all State and local laws and regulations that are in conflict with this rule;

(2)has no retroactive effect; and

(3)does not require administrative proceedings before parties may file suit in court challenging this rule. Paperwork Reduction Act This final rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 (et seq.). List of Subjects for 9 CFR Part 82 Animal diseases, Poultry and poultry products, Quarantine, Reporting and recordkeeping requirements, Transportation. Accordingly, we are amending 9 CFR part 82 as follows: PART 82—EXOTIC NEWCASTLE DISEASE

(END)AND CHLAMYDIOSIS 1. The authority citation for part 82 continues to read as follows: Authority: 7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4. 2. Section 82.1 is amended as follows: a. By removing the definition of *pet bird* . b. By adding, in alphabetical order, definitions of *commercial birds, pet birds* , and *ratites* to read as set forth below. c. By revising the definition of *dressed carcasses* to read as set forth below. § 82.1 Definitions. *Commercial birds.* Birds that are moved or kept for resale, breeding, public display, or any other purpose, except pet birds. *Dressed carcasses* . Carcasses of birds or poultry that have been eviscerated, with heads and feet removed, or parts or products of such carcasses. *Pet birds* . Birds, except ratites, that are kept for the personal pleasure of their individual owners and are not intended for resale. *Ratites* . Cassowaries, emus, kiwis, ostriches, and rheas. § 82.4 [Amended] 3. In § 82.4, paragraph (a)(2) is amended by adding the words “, except as provided in § 82.7(b)” after the word “END”. 4. Section 82.5 is amended as follows: a. By revising paragraph

(a)and the introductory text of paragraph

(b)to read as set forth below. b. In paragraph (b)(5), by adding the words “or ratites” after the word “poultry” each time it occurs. § 82.5 Interstate movement of live birds and live poultry from a quarantined area.

(a)*Pet birds* . An individual may move his or her pet birds interstate from a quarantined area only if the birds are not known to be infected with or exposed to END and the following requirements are fulfilled:

(1)*Epidemiological and testing requirements.* For all pet birds moved interstate, epidemiological evidence must indicate that the birds are not infected with any communicable disease.

(i)*Pet birds that have been under the control and ownership of the owner for at least 90 days.* Pet birds that have been under the ownership and control of the individual to whom the permit is issued for the 90 days before interstate movement, show no clinical signs of sickness (such as diarrhea, nasal discharge, ocular discharge, ruffled feathers, or lack of appetite) during the 90 days before interstate movement, and have been maintained apart from other birds and poultry in the quarantined area during the 90 days before interstate movement may be moved to a location outside the quarantined area for subsequent examination. The individual to whom the permit is issued must maintain ownership and control of the birds and maintain them apart from other birds and poultry from the time they arrive at the place to which the individual is taking them until a Federal representative or State representative 3 examines the birds and determines that the birds show no clinical signs of END. The examination will not be less than 30 days after the interstate movement. The individual to whom the permit is issued must allow Federal representatives and State representatives to examine the birds at any time until they are declared free of END by either a Federal veterinarian or a State veterinarian. 3 The location of Federal representatives and State representatives may be obtained by writing to Emergency Programs, Veterinary Services, Animal and Plant Health Inspection Service, 4700 River Road, Unit 41, Riverdale, MD 20737-1231.

(ii)*All other pet birds* . Pet birds that do not meet the criteria in paragraph (a)(2)(i) of this section may only be moved to a USDA-approved quarantine facility outside the quarantined area for a 30-day quarantine before being released. The individual to whom the permit is issued must maintain ownership and control of the birds and maintain them isolated from other birds or poultry until the time they arrive at the USDA-approved quarantine facility. The pet bird owner is responsible for all costs associated for keeping his or her pet birds at the USDA-approved quarantine facility for the 30-day quarantine period.

(2)*Movement restrictions* . All pet birds must be moved interstate from a quarantined area under the following conditions:

(i)The birds are accompanied by a permit obtained in accordance with § 82.11.

(ii)The birds are moved interstate by the individual to whom the permit is issued.

(iii)The birds are caged while being moved interstate.

(iv)Within 24 hours of a bird's dying or showing clinical signs of sickness (such as diarrhea, nasal discharge, ocular discharge, ruffled feathers, or lack of appetite), the individual to whom the permit is issued notifies the veterinarian in charge or the State animal health official 4 in the State to which the birds are moved. 4 The location of the veterinarian in charge or the State animal health official may be obtained by writing to Emergency Programs, Veterinary Services, Animal and Plant Health Inspection Service, 4700 River Road, Unit 41, Riverdale, MD 20737-1231, or by referring to the local telephone book.

(v)The individual to whom the permit is issued submits copies of the permit so that a copy is received by the State animal health official and the veterinarian in charge for the State of destination within 72 hours of the arrival of the birds at the destination listed on the permit.

(b)*Other birds (including commercial birds) and poultry.* Except as provided for pet birds in paragraph

(a)of this section, a person may move live birds (including commercial birds) and live poultry that are not known to be infected with or exposed to END interstate from a quarantined area only if: 5. In § 82.6, paragraph

(b)is revised to read as follows. § 82.6 Interstate movement of dead birds and dead poultry from a quarantined area.

(b)Dressed carcasses from birds and poultry that are not known to be infected with END may be moved interstate from a quarantined area only if:

(1)The dressed carcasses are from birds or poultry that were slaughtered in a recognized slaughtering establishment; 6 6 See footnote 5 to § 82.5.

(2)The dressed carcasses have been processed in one of the following ways:

(i)They are packed in hermetically sealed containers and cooked by a commercial method after such packing to produce articles which are shelf-stable without refrigeration; or

(ii)They have been thoroughly cooked and have a thoroughly cooked appearance throughout;

(3)If the dressed carcasses are from poultry, the processing establishment that treats the dressed carcasses in accordance with paragraph (b)(2) of this section employs the following safeguards:

(i)If receiving or handling any live poultry, there must be complete separation between the slaughter portion of the establishment and the portions of the establishment in which further processing takes place;

(ii)If the plant processes dressed carcasses from both quarantined and nonquarantined areas, all areas, utensils, and equipment likely to contact the poultry carcasses to be processed, including skimming, deboning, cutting, and packing areas, are cleaned and disinfected in accordance with part 71 of this chapter between the processing of dressed poultry carcasses from the quarantined area and the processing of dressed poultry carcasses from nonquarantined areas;

(iii)The dressed carcasses are stored in a manner that ensures that no cross-contamination with potentially infectious materials, such as raw or unprocessed products, occurs;

(4)The dressed carcasses are accompanied by a permit obtained in accordance with § 82.11;

(5)The dressed carcasses are moved in a means of conveyance either under official seal or accompanied by a Federal representative;

(6)The dressed carcasses are not unloaded until their arrival at the destination listed on the permit required by paragraph (b)(4) of this section;

(7)The dressed carcasses are moved, without stopping, to the destination listed on the permit required by paragraph (b)(4) of this section, except for normal traffic conditions, such as traffic lights and stop signs; and

(8)Copies of the permit accompanying the dressed carcasses are submitted so that a copy is received by the State animal health official and the veterinarian in charge for the State of destination within 72 hours of the arrival of the dressed carcasses at the destination listed on the permit required by paragraph (b)(4) of this section. 6. Section 82.7 is amended as follows: a. By redesignating paragraphs (a), (b), (c), and

(d)as paragraphs (a)(1), (a)(2), (a)(3), and (a)(4), respectively, and designating the introductory text of the section as paragraph (a). b. In newly redesignated paragraph (a)(2), by adding the words “or subjected to any other treatment approved by the Administrator as being adequate to prevent the dissemination of END” after the words “not less than 175 ° F (79.4 ° C)”. c. By adding a new paragraph

(b)to read as set forth below. § 82.7 Interstate movement of manure and litter from a quarantined area.

(b)Compost derived from manure generated by and litter used by birds or poultry known to be infected with END may be moved interstate from a quarantined area only if:

(1)The manure and litter is accompanied by a permit obtained in accordance with § 82.11;

(2)All birds and poultry have been removed from the premises where the manure or litter is held;

(3)After all birds are removed from the premises where the manure or litter is held, all manure and litter inside and outside the bird or poultry house remains undisturbed for at least 28 days before being moved from the infected premises for composting;

(4)Composting is done at a site approved by the Administrator and under a protocol approved by the Administrator as being adequate to prevent the dissemination of END. All manure and litter from the infected premises must be moved to the composting site at the same time;

(5)Following the composting process, the composted manure or litter remains undisturbed for an additional 15 days before movement;

(6)After this 15-day period, all of the composted manure or litter from the infected site is removed at the same time;

(7)The resulting compost must be transported either in a previously unused container or in a container that has been cleaned and disinfected, since last being used, in accordance with part 71 of this chapter;

(8)The vehicle in which the resulting compost is to be transported has been cleaned and disinfected, since last being used, in accordance with part 71 of this chapter; and

(9)Copies of the permit accompanying the compost derived from the manure and the litter are submitted so that a copy is received by the State animal health official and the veterinarian in charge for the State of destination within 72 hours of arrival of the compost at the destination listed on the permit. 7. Section 82.8 is amended as follows: a. In paragraph (a)(2), by removing the citation “7 CFR part 59” and adding the citation “9 CFR part 590” in its place. b. By revising paragraph (a)(3) to read as set forth below. § 82.8 Interstate movement of eggs, other than hatching eggs, from a quarantined area.

(a)* * *

(3)The establishment that processes the eggs, other than hatching eggs, for sale establishes procedures adequate to ensure that the eggs are free of END, including:

(i)The establishment separates processing and layer facilities, the incoming and outgoing eggs at the establishment, and any flocks that may reside at the establishment;

(ii)The establishment implements controls to ensure that trucks, shipping companies, or other visitors do not expose the processing plant to END;

(iii)Equipment used in the establishment is cleaned and disinfected in accordance with part 71 of this chapter at intervals determined by the Administrator to ensure that the equipment cannot transmit END to the eggs, other than hatching eggs, being processed; and

(iv)The eggs are packed either in previously unused flats or cases, or in used plastic flats that were cleaned or disinfected since last being used, in accordance with part 71 of this chapter; 8. Section 82.9 is amended as follows: a. In paragraph (b), by removing the word “and” at the end of the paragraph. b. By redesignating paragraph

(c)as paragraph (d). c. By adding a new paragraph

(c)to read as set forth below. § 82.9 Interstate movement of hatching eggs from a quarantined area.

(c)The hatching eggs have been kept in accordance with the sanitation practices specified in § 147.22 and § 147.25 of the National Poultry Improvement Plan; and 9. Section 82.14 is amended as follows: a. In paragraph (c)(2), in the introductory text, by revising the second sentence to read as set forth below. b. In paragraph (e)(2), by removing the first sentence and by adding two new sentences in its place to read as set forth below. c. By adding a new paragraph

(i)to read as set forth below. § 82.14 Removal of quarantine.

(c)* * *

(2)* * * The birds and poultry must be composted according to the following instructions or according to another procedure approved by the Administrator as being adequate to prevent the dissemination of END:

(e)* * *

(2)*Composting* . If the manure and litter is composted, the manure and litter must be composted in the quarantined area. The manure and litter must be composted according to the following method, or according to another procedure approved by the Administrator as being adequate to prevent the dissemination of END: Place the manure and litter in rows 3 to 5 feet high and 5 to 10 feet at the base. * * *

(i)After the other conditions of this section are fulfilled, an area will not be released from quarantine until followup surveillance over a period of time determined by the Administrator indicates END is not present in the quarantined area. Done in Washington, DC, this 20th day of May 2008. Kevin Shea, Acting Administrator, Animal and Plant Health Inspection Service. [FR Doc. E8-11741 Filed 5-23-08; 8:45 am] BILLING CODE 3410-34-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 101 [Docket No. FDA-2006-P-0404] (Formerly Docket No. 2006P-0487) Food Labeling: Health Claims; Dietary Noncariogenic Carbohydrate Sweeteners and Dental Caries AGENCY: Food and Drug Administration, HHS. ACTION: Final rule. SUMMARY: The Food and Drug Administration

(FDA)is adopting as a final rule, without change, the provisions of the interim final rule that amended the regulation authorizing a health claim on noncariogenic carbohydrate sweeteners and dental caries, i.e., tooth decay, to include isomaltulose as a substance eligible for the health claim. FDA is taking this action to complete the rulemaking initiated with the interim final rule. DATES: This rule is effective May 27, 2008. FOR FURTHER INFORMATION CONTACT: Jillonne Kevala, Center for Food Safety and Applied Nutrition (HFS-830), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740-3835, 301-436-1450. SUPPLEMENTARY INFORMATION: I. Background In the **Federal Register** of September 17, 2007 (72 FR 52783), FDA published an interim final rule to amend the regulation in part 101 (21 CFR part 101) that authorizes a health claim on the relationship between noncariogenic carbohydrate sweeteners and dental caries (§ 101.80) to include the noncariogenic sugar isomaltulose. Under section 403(r)(3)(B)(i) and section 403(r)(7) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 343(r)(3)(B)(i) and 343(r)(7)), FDA issued this interim final rule in response to a petition filed under section 403(r)(4) of the act. Section 403(r)(3)(B)(i) of the act states that the Secretary of Health and Human Services (and, by delegation, FDA) shall issue a regulation authorizing a health claim if he or she “determines, based on the totality of publicly available scientific evidence (including evidence from well-designed studies conducted in a manner which is consistent with generally recognized scientific procedures and principles), that there is significant scientific agreement, among experts qualified by scientific training and experience to evaluate such claims, that the claim is supported by such evidence” (see also § 101.14(c)). Section 403(r)(4) of the act sets out the procedures that FDA is to follow upon receiving a health claim petition. Section 403(r)(7) of the act permits FDA to make a proposed regulation issued under section 403(r) effective upon publication pending consideration of public comment and publication of a final regulation if the agency determines that such action is necessary for public health reasons. On August 31, 2006, Cargill, Inc. (petitioner), submitted a health claim petition to FDA requesting that the agency amend the “dietary noncariogenic carbohydrate sweeteners and dental caries” claim at § 101.80 to authorize a noncariogenic dental health claim for isomaltulose. FDA filed the petition for comprehensive review in accordance with section 403(r)(4) of the act on December 8, 2006. The petitioner requested that FDA grant an interim final rule by which foods containing isomaltulose could bear the health claim prior to publication of the final rule. FDA and the petitioner mutually agreed to extend the deadline for the agency's decision on the petition to September 5, 2007. As part of its review of the scientific literature on isomaltulose and dental caries, FDA considered the scientific evidence presented in the petition as well as information previously considered by the agency on the etiology of dental caries and the effects of slowly fermentable carbohydrates. The agency summarized this evidence in the interim final rule (72 FR 52783 at 52784 to 52786). Based on the available evidence, FDA concluded that isomaltulose, like other noncariogenic carbohydrate sweeteners listed in § 101.80(c)(2)(ii), does not promote dental caries. Consequently, FDA amended § 101.80(c)(2)(ii) to broaden the health claim to include isomaltulose as an additional substance eligible for the health claim. II. Summary of Comments and the Agency's Response FDA solicited comments on the interim final rule. The comment period closed on December 3, 2007. The agency received four letters of response, three from consumers and one from a manufacturer. The manufacturer supported the interim rule. Two of the consumers' comments addressed issues that are outside the scope of this rulemaking and will not be addressed here. The remaining comment suggested that there had been insufficient testing to demonstrate the safety of isomaltulose, but did not provide any information or analysis to support revision of the agency's conclusion. Given the absence of contrary evidence on the agency's decisions announced in the interim final rule, FDA is adopting as a final rule, without change, the interim final rule that amended § 101.80 to include isomaltulose as a substance eligible for the dental caries health claim. III. Analysis of Impacts FDA has examined the impacts of the final rule under Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this final rule is not a significant regulatory action under the Executive order. The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because this final rule allows new voluntary behavior and imposes no additional restrictions on current practices, the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement which includes an assessment of anticipated costs and benefits before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $127,000,000, using the most current

(2006)Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this final rule to result in any one-year expenditure that would meet or exceed this amount. FDA received no comments relevant to economic impact. The costs and benefits of available regulatory alternatives analyzed in the interim final rule (72 FR 52783 at 52787 to 52788) are adopted without change in this final rule. By now affirming that interim final rule, FDA has not imposed any new requirements. Therefore, there are no additional costs and benefits associated with this final rule. IV. Environmental Impact The agency has determined under 21 CFR 25.32(p) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. V. Paperwork Reduction Act FDA concludes that the labeling provisions of this final rule are not subject to review by the Office of Management and Budget because they do not constitute a “collection of information” under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Rather, the food labeling health claim on the association between consumption of isomaltulose and the nonpromotion of dental caries is a “public disclosure of information originally supplied by the Federal Government to the recipient for the purpose of disclosure to the public” (5 CFR 1320.3(c)(2)). VI. Federalism FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule will have a preemptive effect on State law. Section 4(a) of the Executive order requires agencies to “construe * * * a Federal statute to preempt State law only where the statute contains an express preemption provision or there is some other clear evidence that the Congress intended preemption of State law, or where the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.” Section 403A of the act (21 U.S.C. 343-1) is an express preemption provision. Section 403A(a)(5) of the act provides that: * * * no State or political subdivision of a State may directly or indirectly establish under any authority or continue in effect as to any food in interstate commerce—* * *(5) any requirement respecting any claim of the type described in section 403(r)(1) made in the label or labeling of food that is not identical to the requirement of section 403(r) * * * On September 17, 2007, FDA published an interim final rule which imposed requirements under section 403(r) of the act. This final rule affirms the September 17, 2007, amendment to the existing food labeling regulations to add isomaltulose to the authorized health claim for noncariogenic carbohydrate sweeteners and dental caries. Although this rule has a preemptive effect in that it precludes States from issuing any health claim labeling requirements for isomaltulose and the nonpromotion of dental caries that are not identical to those required by this final rule, this preemptive effect is consistent with what Congress set forth in section 403A of the act. Section 403A(a)(5) of the act displaces both State legislative requirements and State common law duties. *Riegel v. Medtronic* , 128 S. Ct. 999 (2008). FDA believes that the preemptive effect of this final rule is consistent with Executive Order 13132. Section 4(e) of the Executive order provides that “when an agency proposes to act through adjudication or rulemaking to preempt State law, the agency shall provide all affected State and local officials notice and an opportunity for appropriate participation in the proceedings.” On August 1, 2007, FDA's Division of Federal and State Relations provided notice via fax and e-mail transmission to State health commissioners, State agriculture commissioners, food program directors, and drug program directors, as well as FDA field personnel, of FDA's intent to amend the health claim regulation authorizing health claims for noncariogenic carbohydrate sweeteners and dental caries (§ 101.80). FDA received no comments from any States in response to this notice. In addition, the agency sought input from all stakeholders through publication of the interim final rule in the **Federal Register** on September 17, 2007 (72 FR 52783). FDA received no comments from any States on the interim final rule. In conclusion, the agency believes that it has complied with all of the applicable requirements of Executive Order 13132 and has determined that the preemptive effects of this rule are consistent with the Executive order. List of Subjects in 21 CFR Part 101 Food labeling, Nutrition, Reporting and Recordkeeping requirements. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 101 is amended as follows: PART 101—FOOD LABELING Accordingly, the interim final rule amending § 101.80 that was published in the **Federal Register** of September 17, 2007 (72 FR 52783), is adopted as a final rule without change. Dated: May 19, 2008. Jeffrey Shuren, Associate Commissioner for Policy and Planning. [FR Doc. E8-11802 Filed 5-23-08; 8:45 am] BILLING CODE 4160-01-S DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9400] RIN 1545-BG97 Treatment of Property Used To Acquire Parent Stock in Certain Triangular Reorganizations Involving Foreign Corporations AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final and temporary regulations. SUMMARY: This document contains final and temporary regulations under section 367(b) of the Internal Revenue Code (Code). The final regulations revise an existing final regulation and add a cross-reference. The temporary regulations implement the rules described in Notice 2006-85 and Notice 2007-48. The regulations affect corporations engaged in certain triangular reorganizations involving one or more foreign corporations. The text of the temporary regulations serves as the text of the proposed regulations (REG-136020-07) set forth in the notice of proposed rulemaking on this subject published in the Proposed Rules section in this issue of the **Federal Register** . DATES: *Effective Date:* These regulations are effective May 27, 2008. *Applicability Dates:* For dates of applicability, see § 1.367(a)-3T(b)(2)(i)(C) and 1.367(b)-14T(e). FOR FURTHER INFORMATION CONTACT: Daniel McCall,

(202)622-3860 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background On September 22, 2006, the IRS and Treasury Department issued Notice 2006-85 (2006-41 IRB 677), which announced that regulations would be issued under section 367(b) to address certain triangular reorganizations under section 368(a) involving one or more foreign corporations. On May 31, 2007, the IRS and Treasury Department issued Notice 2007-48 (2007-25 IRB 1428), which amplified Notice 2006-85 and announced that additional regulations would be issued under section 367(b). Each notice describes transactions the IRS and Treasury Department believe raise significant policy concerns. Notice 2006-85 describes triangular reorganizations in which a subsidiary

(S)purchases stock of its parent corporation

(P)from P in exchange for property, and then exchanges the P stock for the stock or assets of a target corporation (T), but only if P or S (or both) is foreign. Notice 2006-85 announced that regulations to be issued under section 367(b) would make adjustments that would have the effect of a distribution of property from S to P under section 301 (deemed distribution). Notice 2006-85 further announced that regulations would address similar transactions where S acquires the P stock from a related party that purchased the P stock in a related transaction. Notice 2007-48 describes transactions in which S purchases all or a portion of the P stock exchanged in the reorganization from a person other than P (such as from public shareholders on the open market). Notice 2007-48 announced that regulations to be issued under section 367(b) would also make adjustments that would have the effect of a distribution of property from S to P (under section 301) followed by a deemed contribution of such property by P to S. Notice 2007-48 further announced that the regulations would take into account the earnings and profits of other corporations, as appropriate, if a principal purpose of creating, organizing, or funding S is to avoid the adjustments to be made by the regulations. These temporary regulations set forth the regulations described in Notices 2006-85 and 2007-48. The existing final regulations under § 1.367(b)-13 are revised to conform the definitions of the terms P, S, and T in those regulations to the definitions of such terms in these temporary regulations. The existing final regulations under § 1.367(b)-2 are revised to clarify that the definition of earnings and profits in § 1.367(b)-2(l)(8) applies only for purposes of §§ 1.367(b)-7 and 1.367(b)-9. Explanation of Provisions A. Section 367— In General Section 367(a)(1) provides that if, in connection with any exchange described in section 332, 351, 354, 356, or 361, a United States person transfers property to a foreign corporation, such foreign corporation shall not, for purposes of determining the extent to which gain shall be recognized on such transfer, be considered to be a corporation. However, exceptions are provided under section 367(a)(2) and (3), and the Secretary has broad authority under section 367(a)(6) to provide that section 367(a)(1) will not apply to certain transfers otherwise described therein. Section 367(b)(1) provides that in the case of any exchange described in section 332, 351, 354, 355, 356, or 361 in connection with which there is no transfer of property described in section 367(a)(1), a foreign corporation shall be considered to be a corporation except to the extent provided in regulations prescribed by the Secretary which are necessary or appropriate to prevent the avoidance of Federal income taxes. Section 367(b)(2) provides that the regulations prescribed pursuant to section 367(b)(1) shall include (but shall not be limited to) regulations dealing with the sale or exchange of stock or securities in a foreign corporation by a United States person, including regulations providing the circumstances under which gain is recognized, amounts are included in gross income as a dividend, adjustments are made to earnings and profits, or adjustments are made to basis of stock or securities. B. Policies of Section 367(b) Section 367(b) was enacted to ensure that international tax considerations are adequately addressed when the nonrecognition provisions of subchapter C of the Code apply to certain exchanges involving foreign corporations. Congress further noted that “it is essential to protect against tax avoidance in transfers to foreign corporations and upon the repatriation of previously untaxed foreign earnings. * * *” H.R. Rep. No. 658, 94th Cong., 1st Sess. 241 (1975). Accordingly, Congress granted the Secretary authority to provide regulations “necessary or appropriate to prevent the avoidance of Federal income taxes” and identified “transfers constituting a repatriation of foreign earnings” as a type of transfer to be covered in regulations to be promulgated by the Secretary. Id. The Secretary has exercised this grant of authority to address a wide range of international policy concerns. For further discussion, see Notices 2006-85 and 2007-48. C. Adjustments Made Under Section 367(b) These temporary regulations apply to triangular reorganizations where P or S (or both) is foreign and, in connection with the reorganization, S acquires, in exchange for property, all or a portion of the P stock that is used to acquire the stock or assets of T. The “in connection with” standard is a broad standard that includes any transaction related to the reorganization even if the transaction is not part of the plan of reorganization. For example, the temporary regulations apply to a triangular reorganization regardless of whether P controls S (within the meaning of section 368(c)) when S acquires the P stock that is used in the reorganization. In a triangular reorganization subject to the temporary regulations, adjustments shall be made that have the effect of a distribution of property from S to P under section 301. The amount of the deemed distribution shall equal the amount of money plus the fair market value of other property that S used to acquire P stock. For this purpose, the term property has the meaning set forth in section 317(a), but includes any liability assumed by S in exchange for the P stock (notwithstanding the application of section 357(a)) and any S stock used by S to acquire the P stock from a person other than P. Consistent with the rule announced in Notice 2007-48, these temporary regulations provide that to the extent S buys P stock from a person other than P, immediately after taking into account the deemed distribution to P, P is deemed to contribute to S the property deemed distributed to P. These temporary regulations provide that the deemed distribution shall be treated as a distribution for all purposes of the Code. For example, provisions such as sections 312, 881, 897, 902, 959, 1442, and 1445 apply, as appropriate, to the deemed distribution. Similarly, the deemed contribution of property shall be treated as a contribution of property for all purposes of the Code. For example, appropriate adjustments to P's basis in the S stock and other affected items shall be made according to applicable Code provisions. Ordering rules are provided that generally require the deemed distribution and, in cases where S buys P stock from a person other than P, the deemed contribution to be taken into account before the transfers undertaken pursuant to the triangular reorganization. If P does not control S (within the meaning of section 368(c)) at the time that S purchases the P stock, the deemed distribution and deemed contribution shall be treated as separate transactions occurring immediately after P acquires control of S. Thus, in a transaction where S purchases the P stock from a person other than P, after taking into account the adjustments made under these temporary regulations, S's purchase and transfer of P stock pursuant to the triangular reorganization are taken into account under generally applicable Code provisions, such as sections 304, 354, 356, 358, and 368. These temporary regulations also provide that appropriate adjustments will be made if in connection with a triangular reorganization described in the regulations, a transaction is engaged in with a view to avoid the purpose of the regulations. For example, if S is a newly formed corporation and, in connection with the reorganization, P contributes to S another corporation with positive earnings and profits

(S2)to facilitate S's purchase of the P stock or to facilitate the repayment of an obligation incurred by S to purchase the P stock, then, under the temporary regulations, the earnings and profits of S may be deemed to include the earnings and profits of S2. Finally, these temporary regulations contain a coordination rule that applies to transactions described in section 367(a) and § 1.367(b)-14T. The IRS and Treasury Department continue to study transactions that implicate the policies of section 367(a) and (b), but that are not subject to both provisions as a result of the application of the coordination rule. Comments are requested on such transactions. Availability of IRS Documents IRS notices cited in this preamble are made available by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Effective/Applicability Dates With respect to those rules addressing transactions described in Notice 2006-85, these temporary regulations are generally applicable to transactions occurring on or after September 22, 2006, with limited transition relief. With respect to those rules addressing transactions described in Notice 2007-48, these temporary regulations are generally applicable to transactions occurring on or after May 31, 2007, with limited transition relief. Other rules included in these temporary regulations are generally applicable to transactions occurring on or after May 23, 2008, with limited transition relief. See § 1.367(b)-14T(e). No inference is intended as to the potential applicability of other Code or regulatory provisions or judicial doctrines (including substance over form) to transactions described in these temporary regulations. Effect on Other Documents The following publications are obsolete as of May 27, 2008: Notice 2006-85 (2006-41 IRB 677). Notice 2007-48 (2007-25 IRB 1428). Special Analyses It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. A delayed effective date would be inappropriate because the purpose of this regulation is to address transactions that the IRS and Treasury Department believe raise serious policy concerns. Accordingly, good cause is found for dispensing with notice and public comment pursuant to 5 U.S.C. 553(b) and

(c)and with a delayed effective date pursuant to 5 U.S.C. 553(d). Furthermore, under section 7805(b)(1)(C) of the Code, an effective date earlier than the date this regulation is filed with the **Federal Register** is appropriate because prior notices substantially described the rules contained in this regulation. For applicability of the Regulatory Flexibility Act, see the cross-referenced notice of proposed rulemaking published elsewhere in this **Federal Register** . Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Request for Comments For information on how to submit comments or request a public hearing, see the section “Comments and Requests for a Public Hearing,” set forth in the notice of proposed rulemaking published elsewhere in this issue of the **Federal Register** . Drafting Information The principal author of these regulations is Daniel McCall of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1—INCOME TAXES **Paragraph 1** . The authority citation for part 1 is amended by adding new entries in numerical order to read as follows: Authority: 26 U.S.C. 7805 * * * Section 1.367(a)-3T(b)(2)(i)(C) also issued under 26 U.S.C. 367(a) and (b). * * * Section 1.367(b)-14T also issued under 26 U.S.C. 367(b). * * * **Par. 2** . Section 1.367(a)-3 is amended by revising the first sentence in paragraph (b)(2)(i) and adding new paragraph (b)(2)(i)(C) to read as follows: § 1.367(a)-3 Treatment of transfers of stock or securities to foreign corporations.

(b)* * *

(2)* * *

(i)* * * A transfer of stock or securities described in section 367(a) or the regulations thereunder as well as in section 367(b) or the regulations thereunder shall be subject concurrently to sections 367(a) and

(b)and the respective regulations thereunder, except as provided in paragraph (b)(2)(i)(A) through

(C)of this section. * * *

(C)[Reserved]. For further guidance, see § 1.367(a)-3T(b)(2)(i)(C). **Par. 3** . Section 1.367(a)-3T is amended by revising paragraphs

(a)through

(d)and (f)(3), to read as follows: § 1.367(a)-3T Treatment of transfers of stock or securities to foreign corporations (temporary).

(a)through (b)(2)(i)(B) [Reserved]. For further guidance, see § 1.367(a)-3(a) through (b)(2)(i)(B).

(C)If in connection with a transaction described in § 1.367(b)-14T, one or more U.S. persons transfer stock of T, as defined in § 1.358-6(b)(1)(iii), to a corporation in a transfer described in section 367(a), and the amount of gain in the T stock that would otherwise be recognized under section 367(a) is less than the deemed distribution that would result from the adjustments made under § 1.367(b)-14T and that would be treated as a dividend under section 301(c)(1), then section 367(b), and not section 367(a), shall apply to such transaction. This paragraph (b)(2)(i)(C) applies to transfers occurring on or after May 23, 2008. (b)(2)(ii) through

(d)[Reserved]. For further guidance, see § 1.367(a)-3(b)(2)(ii) through (d).

(f)* * *

(3)*Expiration date.* The applicability of § 1.367(a)-3T(b)(2)(i)(C) expires on May 23, 2011. The applicability of § 1.367(a)-3T(e) and (f)(1) and (f)(2) expires on February 1, 2010. **Par. 4.** Section 1.367(b)-2 is amended by revising paragraph (l)(8) to read as follows: § 1.367(b)-2 Definitions and special rules.

(l)* * *

(8)*Earnings and profits.* For purposes of §§ 1.367(b)-7 and 1.367(b)-9, the term *earnings and profits* means post-1986 undistributed earnings, pre-1987 accumulated profits, and pre-1987 section 960 earnings and profits. **Par. 5.** Section 1.367(b)-13 is amended by redesignating paragraph (a)(2)(ii) as paragraph (a)(2)(iii), revising newly designated paragraph (a)(2)(iii), and adding a new paragraph (a)(2)(ii) to read as follows: § 1.367(b)-13 Special rules for determining basis and holding period.

(a)* * *

(2)* * *

(ii)The terms *P, S,* and *T* have the meanings set forth in § 1.358-6(b)(1)(i), (ii), and (iii), respectively.

(iii)A triangular reorganization is a reorganization described in § 1.358-6(b)(2)(i), (ii), or

(iii)or in sections 368(a)(1)(G) and (a)(2)(D) (a forward triangular merger, triangular C reorganization, reverse triangular merger, or triangular G reorganization, respectively). **Par. 6.** Section 1.367(b)-14T is added to read as follows: § 1.367(b)-14T Acquisition of parent stock for property in triangular reorganizations (temporary).

(a)*In general—*

(1)*Scope and purpose.* This section applies to triangular reorganizations where P or S (or both) is foreign and, in connection with the reorganization, S acquires, in exchange for property (as defined in this section), all or a portion of the P stock that is used to acquire the stock or assets of T. This section may apply to a reorganization regardless of whether P controls S (within the meaning of section 368(c)) at the time S acquires the P stock that is used to acquire the stock or assets of T. The purpose of this section is to prevent what is in effect a distribution of property to P without the application of provisions otherwise applicable to property distributions, when in connection with a triangular reorganization S acquires, in exchange for property, all or a portion of the P stock used in the reorganization.

(2)*Definitions.* For purposes of this section, the following definitions apply:

(i)The terms *P, S,* and *T* have the meanings set forth in § 1.358-6(b)(1)(i), (ii), and (iii), respectively.

(ii)In general, the term *property* has the meaning set forth in section 317(a). Notwithstanding section 357(a), such term includes any liability assumed by S in exchange for the P stock used to acquire the stock or assets of T. Such term also includes any S stock used by S to acquire P stock from a person other than P.

(iii)The term *triangular reorganization* means a reorganization described in § 1.358-6(b)(2) or in section 368(a)(1)(G) and (a)(2)(D).

(b)*General rules—*

(1)*Deemed distribution.* If this section applies, adjustments shall be made that have the effect of a distribution of property from S to P under section 301 (deemed distribution). The amount of the deemed distribution shall equal the amount of money plus the fair market value of other property transferred, in connection with the reorganization, by S in exchange for the P stock used to acquire the stock or assets of T in the triangular reorganization. Additional adjustments shall be made under paragraph (b)(3) of this section to the extent S acquires, in exchange for property, P stock from a person other than P.

(2)*Timing in the case of acquisitions from P.* To the extent S acquires P stock from P in exchange for property, the deemed distribution described in paragraph (b)(1) of this section shall be treated as a transaction separate from, and occurring immediately before, the triangular reorganization. Therefore, P shall not be treated as receiving the property from S in exchange for P stock. The transfers of P stock in the triangular reorganization shall be subject to generally applicable provisions. See, for example, § 1.1032-2.

(3)*Timing and deemed contribution in the case of acquisitions from persons other than P.* To the extent S acquires P stock from a person other than P in exchange for property (the purchase), then immediately following the deemed distribution described in paragraph (b)(1) of this section, adjustments shall be made that have the effect of a contribution by P to S (deemed contribution) of the property deemed distributed by S to P under paragraph (b)(1) of this section. If P controls S (within the meaning of section 368(c)) at the time of the purchase, the deemed distribution and deemed contribution shall be treated as separate transactions occurring immediately before the purchase. If P does not control S (within the meaning of section 368(c)) at the time of the purchase, the deemed distribution and deemed contribution shall be treated as separate transactions occurring immediately after P acquires control of S. Other provisions, such as sections 304, 354, 358 and 368, shall apply after the adjustments made pursuant to paragraph (b)(1) of this section and this paragraph.

(4)*Example.* The rules of this paragraph

(b)are illustrated by the following example:

(i)*Facts.* P, a publicly traded domestic corporation, owns all of the outstanding stock of FS, a foreign corporation, and all of the outstanding stock of US1, a domestic corporation that is a member of the P consolidated group. US1 owns all of the outstanding stock of FT, a foreign corporation, the fair market value of which is $100x. FS purchases $100x of P stock on the open market for cash. Pursuant to foreign law, FT merges with and into FS in a triangular reorganization described in section 368(a)(1)(A) by reason of section 368(a)(2)(D). US1 exchanges all the outstanding stock of FT for the stock of P purchased by FS on the open market for $100x cash.

(ii)*Analysis.* The triangular reorganization is described in paragraph (a)(1) of this section. Therefore, pursuant to paragraphs (b)(1) and (b)(3) of this section, FS is treated as distributing $100x to P under section 301. Immediately after such deemed distribution, P is deemed to contribute to FS the $100x that was deemed distributed to P. The deemed distribution and deemed contribution are treated as separate transactions occurring immediately before FS's purchase of the P stock used in the triangular reorganization.

(c)*Collateral adjustments.* This paragraph

(c)provides rules for the treatment of a deemed distribution or deemed contribution resulting under paragraph (b)(1) or (b)(3) of this section.

(1)*Deemed distribution.* A deemed distribution of property described in paragraph (b)(1) of this section shall be treated as a distribution of property for all purposes of the Internal Revenue Code. For example, under section 301(c) the distribution may constitute a dividend to the extent of the earnings and profits of S, a return of basis, or gain from the sale or exchange of property, as appropriate. In addition, sections 902 and 959 may apply when S is foreign, and sections 897, 1442, and 1445 may apply when S is domestic.

(2)*Deemed contribution.* A deemed contribution of property described in paragraph (b)(3) of this section shall be treated as a contribution of property for all purposes of the Internal Revenue Code. For example, appropriate adjustments to P's basis in the S stock and other affected items shall be made according to applicable provisions.

(d)*Special rule.* Appropriate adjustments shall be made pursuant to this section if, in connection with a triangular reorganization, a transaction is engaged in with a view to avoid the purpose of this section as described in paragraph (a)(1) of this section. For example, if S is formed or availed of with a view to avoid the purpose of this section, the earnings and profits of S may be deemed to include the earnings and profits of a corporation related to S (within the meaning of section 267(b)).

(e)*Effective/applicability date—*

(1)*Acquisitions of P stock from P or related persons.* Except as otherwise provided in this paragraph (e), this section applies to triangular reorganizations described in paragraph (a)(1) of this section, to the extent S acquires the P stock from P or from a person related to P or S within the meaning of section 267(b) or 707(b), occurring on or after September 22, 2006. This section, however, shall not apply to triangular reorganizations described in paragraph (a)(1) of this section, to the extent S acquires the P stock from P or from a person related to P or S within the meaning of section 267(b) or 707(b), completed on or after September 22, 2006, pursuant to a written agreement that was (subject to customary conditions) binding before September 22, 2006, and all times afterward.

(2)*Acquisitions of P stock from persons other than P—*

(i)*General rule.* Except as otherwise provided in this paragraph (e), this section applies to triangular reorganizations described in paragraph (a)(1) of this section, to the extent S acquires the P stock from a person other than P that is not related to P or S within the meaning of section 267(b) or 707(b) (unrelated person), occurring on or after May 31, 2007.

(ii)*Binding commitment exception.* This section shall not apply to triangular reorganizations described in paragraph (a)(1) of this section, to the extent S acquires the P stock from an unrelated person, pursuant to a written agreement that was (subject to customary conditions) binding before May 31, 2007, and all times afterward, but only to the extent that—

(A)S acquired the P stock from an unrelated person before May 31, 2007; or

(B)S had a commitment to acquire the P stock from an unrelated person pursuant to a written agreement that was (subject to customary conditions) binding before May 31, 2007, and all times afterward, or pursuant to a tender offer announced before May 31, 2007, that is subject to section 14(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78n(d)(1)) and Regulation 14(D) (17 CFR 240.14d-1 through 240.14d-101) or that is subject to comparable foreign laws.

(3)*Application of special rule—*

(i)*General rule.* Except as provided in paragraph (e)(3)(ii) of this section, paragraph

(d)of this section applies to triangular reorganizations described in paragraph (a)(1) of this section occurring on or after May 31, 2007.

(ii)*Binding commitment exception.* Paragraph

(d)of this section shall not apply to triangular reorganizations described in paragraph (a)(1) of this section entered into pursuant to a written agreement that was (subject to customary conditions) binding before May 31, 2007, and all times afterward, but only to the extent that—

(A)S acquired the P stock before May 31, 2007; or

(4)*Treatment of S stock as property—*

(i)*General rule.* Except as provided in paragraph (e)(4)(ii) of this section, the treatment of S stock as property under paragraph (a)(2)(ii) of this section applies to triangular reorganizations described in paragraph (a)(1) of this section occurring on or after *May 23, 2008.*

(ii)*Binding commitment exception.* The treatment of S stock as property under paragraph (a)(2)(ii) of this section shall not apply to triangular reorganizations described in paragraph (a)(1) of this section occurring on or after May 23, 2008 entered into pursuant to a written agreement that was (subject to customary conditions) binding before May 23, 2008 and all times afterward, but only to the extent that—

(A)S acquired the P stock before *May 23, 2008;* or

(B)S had a commitment to acquire the P stock from an unrelated person pursuant to a written agreement that was (subject to customary conditions) binding before May 23, 2008 and all times afterward, or pursuant to a tender offer announced before May 23, 2008, that is subject to section 14(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78n(d)(1)) and Regulation 14(D) (17 CFR 240.14d-1 through 240.14d-101) or that is subject to comparable foreign laws.

(5)*Expiration.* The applicability of this section expires May 23, 2011. Linda E. Stiff, Deputy Commissioner for Services and Enforcement. Approved: May 16, 2008. Eric Solomon, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. E8-11653 Filed 5-23-08; 8:45 am] BILLING CODE 4830-01-P DEPARTMENT OF AGRICULTURE Forest Service 36 CFR Part 261 RIN 0596-AC30 Clarifying Prohibitions for Failure To Maintain Control of Fires That Damage National Forest System Lands AGENCY: Forest Service, USDA. ACTION: Notice of final rule. SUMMARY: This final rule revises regulations to establish a new prohibition for starting and negligently failing to maintain control of a prescribed fire. Proof of criminal negligence is required for this offense. The rule also clarifies that the prohibition for causing and failing to maintain control of all other fires is a strict liability offense, not requiring proof of criminal intent. In implementing the National Fire Plan, the Forest Service has encouraged adjacent landowners to develop integrated fire management plans for the use of prescribed fire for the restoration and protection of private lands adjacent to National Forest System lands. Without these changes, adjacent landowners might be discouraged from using prescribed fire. DATES: This rule is effective June 26, 2008. ADDRESSES: The public may inspect comments received at USDA Forest Service, State and Private Forestry, 1400 Independence Avenue, SW., Washington, DC. Visitors are encouraged to call ahead to 202-205-1331 to facilitate entry into the building. FOR FURTHER INFORMATION CONTACT: Denny Truesdale, State and Private Forestry, 202-205-1588. Individuals who use telecommunication devices for the deaf

(TDD)may call the Federal Information Relay Service

(FIRS)at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern Standard Time, Monday through Friday. SUPPLEMENTARY INFORMATION: The following outline contains the contents of the SUPPLEMENTARY INFORMATION section of this final rule: Background Regulatory Certifications Regulatory Impact Environmental Impact Federalism Consultation With Tribal Governments No takings Implications Controlling Paperwork Burdens on the Public Energy Effects Civil Justice Reform Unfunded Mandates List of Subjects in Part 261 Background A new paragraph

(c)is added to section 261.1, Scope, to clarify that unless criminal intent (“ *mens rea* ”) is expressly required in the provision setting forth the offense, strict liability would apply. Whether criminal intent is a required element of an offense is a question of statutory construction. Where a statute or regulation does not expressly require criminal intent, “silence on this point by itself does not necessarily suggest that Congress intended to dispense with the conventional *mens rea* element * * *” *Staples* v. *United States* , 511 U.S. 600, 605 (1994). As a general rule, absent a clear indication of legislative intent, courts require proof of intent for criminal offenses. See *Id* . at 605, for a discussion of cases that support this well-established principle. However, the general presumption that some guilty intent or purpose is required does not apply to “public welfare offenses.” These are offenses that typically impose penalties to serve as an effective means of regulation. *Id* . At 606 (“[i]n construing such statutes, we have inferred from silence that Congress did not intend to require proof of *mens rea* to establish an offense”). Public welfare offenses are those that “are not of the nature of positive aggressions or invasions, with which the common law so often dealt, but are in the nature of neglect where the law requires care, or inaction where it imposes duty.” *Morissette* v. *United States* , 342 U.S. 246, 255 (1952). Public welfare offenses “render[s] criminal a type of conduct that a reasonable person should know is subject to stringent public regulation and may seriously threaten the community's health and safety.” *Liparota* v. *United States* , 471 U.S. 419, 426 (1985). A person should know that the use of Federal lands is subject to stringent regulation, and that action or inaction in violation of such regulation can cause irreparable harm to the public or the land and its resources. The clarification to section 261.1 states the agency's long-standing interpretation of its criminal prohibitions as public welfare offenses and confirms that, as such, they generally are strict liability offenses. Proof of criminal intent is required only where expressly provided by the specific prohibition. To this end, section 261.5(e) is revised to remove the term “allowing.” Section 261.5(e) currently prohibits “allowing a fire to escape from control.” The term “allowing” has been interpreted differently by courts in some cases to require proof of criminal intent. *United States* v. *Semenza* , 835 F.2d 223 (9th Cir. 1987); *United States* v. *Osgudthorpe* , 13 F. Supp.2d 1215 (D. Utah, 1998). In other cases, courts have found that the term does not require proof of criminal intent. *United States* v. *Larson* , 746 F.2d 455 (8th Cir. 1984), citing *United States* v. *Wilson* , 438 F.2d 525 (9th Cir. 1971). The revision clarifies that the prohibition in section 261.5(e) is a strict liability offense. In addition to removing the term “allowing,” section 261.5(e) is also revised to limit its application to fires that are not prescribed fires. As clarified, the prohibition is a strict liability offense for causing and failing to maintain control of a fire that is not a prescribed fire that damages National Forest System

(NFS)lands. Section 261.5 also is revised to add a new prohibition to address prescribed fires. Paragraph

(g)is added to prohibit the negligent failure to maintain control of a prescribed fire that damages NFS lands. This prohibition is not a strict liability offense. It requires proof that the offender acted with criminal negligence. Section 261.2 is revised to add a definition of “prescribed fire.” The term is defined to mean a planned and intentionally lit fire allowed to burn within the applicable requirements of Federal or State laws, regulations, or permits. Many States do not have laws establishing requirements for prescribed fires. Under the definition, if a prescribed fire is allowed under applicable law (even if the law does not limit how the burn is to be conducted) and the fire was intentionally lit and planned to some extent, section 261.5(g) applies and the Federal government would need to prove that the defendant acted with criminal negligence. The distinction between failure to maintain control of a prescribed fire (requiring proof of criminal negligence) and another fire (requiring no proof of criminal intent) is necessary to support efforts to reduce hazardous fuels on properties adjacent to National Forest System lands. These efforts are intended to restore ecosystems and, by doing so, protect communities in the wildland urban interface. In implementing the National Fire Plan, the Forest Service and the Department of the Interior land managing agencies have increased the amount of prescribed burning on lands under their jurisdiction. The agencies also have encouraged adjacent landowners to develop integrated fire management plans, including the use of prescribed fire, for the restoration and protection of private lands. If the prohibition for lighting and failing to maintain a prescribed fire were a strict liability offense, adjacent landowners might be discouraged from using prescribed fire as a tool on their lands out of concern that, if the fire were to escape control, they could be cited for a criminal violation without regard to whether they acted with criminal intent. New paragraph

(g)alleviates this impediment. Response to Comments A 60-day comment period on the proposed rule was initiated on April 2, 2007 (72 FR 15641). Several respondents replied. One respondent had two recommendations, another respondent is a timber industry associate, and the other respondents' comments were outside the scope of this rule. *The first respondent had two recommendations* . The first was a change in recovering damages from the Forest Service during fire suppression actions. This would require legislative changes to the Federal Tort Claim Act and is not part of this rule. The second recommendation was for changes to a State of Oregon statute and is also not covered by this rule. *The second respondent had several comments* . The first: “* * * this proposed rule sets a higher bar for finding adjacent landowners liable for damage caused by `prescribed fires' * * * while defining `all other fires' as strict liability offenses. In short, the rule would allow the Forest Service to hold a neighboring landowner, or their contractors, liable for any escaped fire—even if their conduct in the burning activity was fully legal and without criminal intent.” *The respondent includes an example:* “All fires—broadcast, spot burning, jackpot burning, pile burning—should not be defined as subject to this proposed rule, if they were intentionally started and are compliant with federal laws, state and local laws, regulations, and permits.” All of the examples used by the respondent are included under the definition for a prescribed fire in this rule. The standard of negligence would apply, not strict liability, since an intentionally lit fire, whether a broadcast burn or any of the other ignition techniques listed that is fully in compliance with state and/or local laws meets the definition of a prescribed burn. *The respondent states:* “The only cases where negligence applies should be those where fires started illegally.” This is actually the opposite of the intent of the rule. Negligence requires a higher standard of proof and is used for fires started legally—for example, prescribed fires that are lit in compliance with applicable laws. For all other fires, the standard of strict liability is applied. There is a comment on Forest Service liability to private landowners which the respondent notes is outside the scope of this rule. Another comment covers the use of this rule regarding fires started by a purchaser of a timber sale contract on National Forests. Nothing in the rule supercedes the requirements, terms, or clauses in a timber sale contract, or any other type of contract, including a contract for prescribed fire on National Forest System land. The respondent cites timber sale contract standard clause B7.5 that sets the purchaser's responsibility for fires caused by negligence or fault. This rule does not change those responsibilities in either current or future contracts, nor will the rule supercede any state law in regards to the collection or recovery of suppression costs. No changes to the rule are made in response to the comments from the two respondents. Regulatory Certifications Regulatory Impact This rule has been reviewed under USDA procedures and Executive Order (E.O.) 12866 on Regulatory Planning and Review. The Office of Management and Budget

(OMB)has determined that this is a non-significant rule as defined by E.O 12866. This rule will not have an annual effect of $100 million or more on the economy, nor adversely affect productivity, competition, jobs, the environment, public health or safety, nor state or local governments. This rule would not interfere with an action taken or planned by another agency nor raise new legal or policy issues. Finally, this rule will not alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients of such programs. Therefore, it has been determined that this rule is not an economically significant regulatory action. This rule also has been considered in light of the Regulatory Flexibility Act, as amended, (5 U.S.C. 601 *et seq.* ). In promulgating this rule, publication of an advance notice of proposed rulemaking was not required by law. Further, it has been determined that this rule will not have a significant economic impact on a substantial number of small business entities as defined by that act. Therefore, it has been determined that preparation of a regulatory flexibility analysis is not required for this rule. Environmental Impact Section 31.11a of Forest Service Handbook 1909.15 (69 FR 40591; July 6, 2004) excludes from documentation in an environmental assessment or environmental impact statement “civil and criminal law enforcement and investigative activities.” This rule clearly falls within this category of actions and the agency has determined that no extraordinary circumstances exist which would require preparation of an environmental assessment or an environmental impact statement. Moreover, this rule itself has no impact on the human environment. Therefore, it has been determined that preparation of an environmental assessment or an environmental impact statement is not required in promulgating this rule. Federalism The agency has considered this rule under the requirements of E.O. 12612 and has made a preliminary assessment that the rule will not have substantial direct effects on the states, on the relationship between the Federal government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, the agency has determined that no further assessment on federalism implications is necessary at this time. Consultation With Tribal Governments This rule has been reviewed under E.O. 13175 of November 6, 2000, “Consultation, and Coordination with Indian Tribal Governments.” This rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. Nor does this rule impose substantial direct compliance costs on Indian tribal governments or preempt tribal law. Therefore, it has been determined that this rule does not have tribal implications requiring advance consultation with Indian tribes. No Takings Implications This rule has been reviewed for its impact on private property rights under E. O. 12630. It has been determined that this rule does not pose a risk of taking private property; in fact, the rule honors access to private property pursuant to statute and to outstanding or reserved rights. Controlling Paperwork Burdens on the Public This rule does not contain any record keeping or reporting requirements or other information collection requirements as defined in 5 CFR Part 1320 and, therefore, imposes no paperwork burden on the public. Accordingly, the review provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, *et seq.* ) and implementing regulations at 5 CFR Part 1320 do not apply. Energy Effects This rule has been reviewed under E.O. 13211 of May 18, 2001, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.” This rule will not have a significant adverse effect on the supply, distribution, or use of energy. Nor has the Office of Management and Budget designated this rule as a significant energy action. Therefore, it has been determined that this rule does not constitute a significant energy action requiring the preparation of a Statement of Energy Effects. Civil Justice Reform This rule revision has been reviewed under E.O. 12988 of February 5, 1996, Civil Justice Reform. The revision:

(1)Preempts all state and local laws and regulations that are found to be in conflict with or that would impede its full implementation;

(2)does not retroactively affect existing permits, contracts, or other instruments authorizing the occupancy and use of National Forest System lands, and

(3)does not require administrative proceedings before parties may file suit in court challenging these provisions. Unfunded Mandates Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Department has assessed the effects of this rule on state, local, and tribal governments, and on the private sector. This rule does not compel the expenditure of $100 million or more by any state, local, or tribal government, or anyone in the private sector. Therefore, a statement under section 202 of the act is not required. List of Subjects in 36 CFR Part 261 Law enforcement, National forests. Therefore, for the reasons set forth in the preamble, the Forest Service amends Part 261 of Title 36 of the Code of Federal Regulations as follows: PART 261—PROHIBITIONS 1. The authority citation for part 261 continues to read: Authority: 7 U.S.C. 1011(f); 16 U.S.C. 472, 551, 620(f), 1133(c), (d)(1), 1246(i). Subpart A—General Prohibitions 2. In § 261.1, add paragraphs

(c)and

(d)to read as follows: § 261.1 Scope.

(c)Unless an offense set out in this part specifies that intent is required, intent is not an element of any offense under this part.

(d)None of these prohibitions apply to any person engaged in fire suppression actions. 3. In § 261.2, add a definition for “Prescribed fire” to read as follows: § 261.2 Definitions. *Prescribed fire* means a planned and intentionally lit fire allowed to burn within the requirements of Federal or State laws, regulations, or permits. 4. Amend § 261.5 by revising paragraph

(e)and by adding paragraph

(g)to read as follows: § 261.5 Fire.

(e)Causing and failing to maintain control of a fire that is not a prescribed fire that damages the National Forest System.

(g)Negligently failing to maintain control of a prescribed fire on Non-National Forest System lands that damages the National Forest System. Dated: May 19, 2008. Mark Rey, Under Secretary, NRE. [FR Doc. E8-11731 Filed 5-23-08; 8:45 am] BILLING CODE 3410-11-P ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 60 [EPA-R08-OAR-2007-0617; FRL-8570-2] Clean Air Act Approval and Promulgation of Air Quality Implementation Plan Revision for North Dakota; Revisions to the Air Pollution Control Rules and Alternative Monitoring Plan for Mandan Refinery; Delegation of Authority for New Source Performance Standards AGENCY: Environmental Protection Agency (EPA). ACTION: Direct final rule and delegation of authority. SUMMARY: EPA is taking direct final action approving revisions to the State Implementation Plan

(SIP)as submitted by the Governor of North Dakota with a letter dated March 8, 2007. The revisions affect certain air pollution control rules regarding general provisions, open burning restrictions, permitting, and fugitive emissions. In addition, we are approving a revision to a chapter of the SIP regarding an alternative monitoring plan for the Tesoro Mandan Refinery. This action is being taken under section 110 of the Clean Air Act. EPA is also providing notice that on August 22, 2007, North Dakota was delegated authority to implement and enforce certain New Source Performance Standards as in effect on January 31, 2006. DATES: This action is effective on July 28, 2008 without further notice, unless EPA receives adverse comment by June 26, 2008. If adverse comment is received, EPA will publish a timely withdrawal of the direct final rule in the **Federal Register** informing the public that the rule will not take effect. ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R08-OAR-2007-0617, by one of the following methods: • *http://www.regulations.gov.* Follow the on-line instructions for submitting comments. • E-mail: *Platt.Amy@epa.gov.* • *Fax* :

(303)312-6064 (please alert the individual listed in the FOR FURTHER INFORMATION CONTACT section if you are faxing comments). • *Mail:* Callie Videtich, Director, Air Program, Environmental Protection Agency (EPA), Region 8, Mailcode 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129. • *Hand Delivery:* Director, Air Program, Environmental Protection Agency (EPA), Region 8, Mailcode 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129. Such deliveries are only accepted Monday through Friday, 8 a.m. to 4:30 p.m., excluding Federal holidays. Special arrangements should be made for deliveries of boxed information. *Instructions:* Direct your comments to Docket ID No. EPA-R08-OAR-2007-0617. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at *http://www.regulations.gov,* including any personal information provided, unless the comment includes information claimed to be Confidential Business Information

(CBI)or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through *http://www.regulations.gov* or e-mail. The *http://www.regulations.gov* Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA, without going through *http://www.regulations.gov,* your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at *http://www.epa.gov/epahome/dockets.htm.* For additional instructions on submitting comments, go to section I. General Information of the SUPPLEMENTARY INFORMATION section of this document. *Docket:* All documents in the docket are listed in the *http://www.regulations.gov* index. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in *http://www.regulations.gov* or in hard copy at the Air Program, Environmental Protection Agency (EPA), Region 8, 1595 Wynkoop Street, Denver, Colorado 80202-1129. EPA requests that if at all possible, you contact the individual listed in the FOR FURTHER INFORMATION CONTACT section to view the hard copy of the docket. You may view the hard copy of the docket Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays. FOR FURTHER INFORMATION CONTACT: Amy Platt, EPA Region 8, at

(303)312-6449, or *Platt.Amy@epa.gov.* SUPPLEMENTARY INFORMATION: Table of Contents I. General Information II. Background III. Revisions in the March 8, 2007 Submittal That Are the Subject of This Document IV. Delegation of Authority V. Section 110(l) VI. Final Action VII. Statutory and Executive Order Review Definitions For the purpose of this document, we are giving meaning to certain words or initials as follows:

(i)The words or initials *Act* or *CAA* mean or refer to the Clean Air Act, unless the context indicates otherwise.

(ii)The words * EPA, we, us* or *our* mean or refer to the United States Environmental Protection Agency.

(iii)The initials *SIP* mean or refer to State Implementation Plan.

(iv)The words *State* or *ND* mean the State of North Dakota, unless the context indicates otherwise.

(v)The initials NDDH mean or refer to the North Dakota Department of Health. I. General Information A. What Should I Consider as I Prepare My Comments for EPA? 1. *Submitting CBI.* Do not submit this information to EPA through *http://regulations.gov* or e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. 2. *Tips for Preparing Your Comments.* When submitting comments, remember to: a. Identify the rulemaking by docket number and other identifying information (subject heading, **Federal Register** date and page number). b. Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations

(CFR)part or section number. c. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes. d. Describe any assumptions and provide any technical information and/or data that you used. e. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced. f. Provide specific examples to illustrate your concerns, and suggest alternatives. g. Explain your views as clearly as possible, avoiding the use of profanity or personal threats. h. Make sure to submit your comments by the comment period deadline identified. II. Background The Act requires States to follow certain procedures in developing implementation plans and plan revisions for submission to us. Sections 110(a)(2) and 110(l) of the Act provide that each implementation plan must be adopted after reasonable notice and public hearing. To provide for public comment, the North Dakota Department of Health (NDDH), after providing notice, held a public hearing on May 4, 2006 to consider the revisions to the State Implementation Plan

(SIP)and Air Pollution Control Rules. Following the public hearing, comment period, and legal review by the North Dakota Attorney General's Office, NDDH adopted the revisions. The revisions to the Air Pollution Control Rules became effective on January 1, 2007 and the revision to the SIP chapter regarding an alternative monitoring plan for the Tesoro Mandan Refinery became effective on February 27, 2007. The North Dakota Governor submitted the SIP revisions to us with a letter dated March 8, 2007. III. Revisions in the March 8, 2007 Submittal That Are the Subject of This Document The revisions in the March 8, 2007 submittal to be addressed in this document pertain to certain portions of the North Dakota Air Pollution Control Rules regarding general provisions, open burning, permitting, and fugitive emissions. These revisions involve the following chapters of the North Dakota Administrative Code (N.D.A.C.): 33-14-01 General Provisions; 33-15-04 Open Burning Restrictions; 33-15-14 Designated Air Contaminant Sources, Permit to Construct, Minor Source Permit to Operate, Title V Permit to Operate (certain sections specific to permit to construct); and 33-15-17 Restriction of Fugitive Emissions. In addition, the March 8, 2007 submittal included a revision to SIP Chapter 8, Source Surveillance, to provide an alternative monitoring plan for the Tesoro Mandan Refinery. A. Chapter 33-15-01, N.D.A.C., General Provisions Sections 33-15-01-04 and 33-15-01-05 were revised. In section 33-15-01-04, the baseline date for the incorporation by reference of the Federal definition of “volatile organic compounds,” located at 40 CFR 51.100(s), was updated to January 1, 2006. In section 33-15-01-05, a slight editorial change was made to the meaning of the abbreviation for PM <sup>10</sup> . These revisions were made to match Federal requirements and are approvable. B. Chapter 33-15-04, N.D.A.C., Open Burning Restrictions Sections 33-15-04-01 and 33-15-04-02 were revised. Section 33-15-04-01, Refuse Burning Restrictions, was revised to clarify that the burning of trade waste is not allowed. As defined in the General Provisions chapter (33-15-01-04, N.D.A.C.), trade waste means solid, liquid, or gaseous waste material resulting from construction or the conduct of any business, trade, or industry, or any demolition operation, including wood, wood containing preservatives, plastics, cartons, grease, oil, chemicals, and cinders. In section 33-15-04-02, Permissible Open Burning, a reference to the North Dakota Rural Fire Contingency Plan was removed since this document no longer exists. In addition, changes were made to limit approval of open burning to abate a fire hazard to the NDDH or its designee, as well as to require State and Federal agencies that conduct prescribed burning to submit an annual report upon request by NDDH. Finally, a notification requirement was replaced by a requirement that prohibits open burning when a burning ban is declared by State or local officials. These changes clarified existing rules, eliminated out-of-date references, and added reporting requirements for State and Federal prescribed burning. These revisions are approvable. C. Chapter 33-15-14, N.D.A.C., Designated Air Contaminant Sources, Permit To Construct, Minor Source Permit To Operate, Title V Permit To Operate (Certain Sections Specific To Permit To Construct) In the Permit to Construct section, 33-15-14-02, subdivision 33-15-14-02.13.c was revised. These revisions relate to certain sources that will now be exempt from requirements for a permit to construct. Specifically, an exemption was added for any internal combustion engine, or multiple engines at the same facility, with a total combined actual emission rate of 5 tons per year or less of any air contaminant for which an ambient air quality standard has been promulgated in section 33-15-02-04. Given that this revision reduces the stringency of the rule, EPA requested a demonstration that the revision will not interfere with attainment and maintenance of the National Ambient Air Quality Standards (NAAQS), Prevention of Significant Deterioration of Air Quality Increments (PSD Increments), or any other requirement of the Clean Air Act. In a July 7, 2006 letter from Terry O'Clair, NDDH, to Richard Long, EPA, NDDH provided results from a SCREEN3 1 modeling run which shows that a typical internal combustion engine emitting 5 tons a year of nitrogen dioxide (NO 2 ) will not violate the NAAQS or PSD increments. Based on AP-42 emission factors for this type of engine, NO 2 has the larger emission rate and would be the pollutant of concern, while CO and PM emission rates are much lower for such engines and would not be expected to threaten the NAAQS or PSD increments. As a result, EPA is satisfied that this revision will not adversely impact the NAAQS or PSD increments. Therefore, this revision is approvable. 1 SCREEN3 is a single source Gaussian plume screening model which provides, among other things, maximum ground-level concentrations for point, area, flare, and volume sources. In addition, subdivision 33-15-14-02.13.o was revised to remove a reference to subdivision n of subsection 1 of section 33-15-14-06. Section 33-15-14-06, subsection 1, contains the State's definitions for the Title V operating permits program. The previous reference to subdivision n was to the definition of “major source,” and the purpose of the reference was to define oil and gas production facilities that either were or were not major sources. Now the definition of “major source” is found at subdivision o. Rather than include a reference to a new subdivision letter that might change again, the State changed the reference to be at the more general subsection level. This was purely a housekeeping change and is approvable. D. Chapter 33-15-17, N.D.A.C., Restriction of Fugitive Emissions A provision was added to section 33-15-17-02 to restrict fugitive particulate emissions that would have an adverse impact on visibility on any Class I Federal area. The NDDH made this revision to help prevent degradation of visibility in Theodore Roosevelt National Park and Lostwood Wilderness Area due to fugitive emissions. This revision is approvable. E. SIP Chapter 8, “Source Surveillance,” Section 8.3.1, “Continuous Opacity Monitoring for Fluid Bed Catalytic Cracking Units: Tesoro Refining and Marketing Co., Mandan Refinery” The Tesoro Refining and Marketing Company (Tesoro) currently operates a fluidized bed catalytic cracking unit

(FCCU)at the Mandan Refinery. The refinery was constructed in the 1950s and is required to continuously monitor the opacity of emissions from the FCCU according to 40 CFR Part 51, Appendix P, and North Dakota SIP Chapter 8, Source Surveillance. In May 1977, the NDDH issued an order requiring the installation and operation of continuous opacity monitoring

(COM)equipment for emissions from the FCCU, and the opacity has been continuously monitored since the compliance date of September 30, 1978. In 2001, Tesoro entered into a Consent Decree with EPA to settle allegations of noncompliance under the Prevention of Significant Deterioration Program. As part of this settlement, Tesoro was required to control SO <sup>2</sup> emissions from the FCCU. Tesoro installed a wet scrubber and wet electrostatic precipitator

(ESP)to comply with the terms of the Consent Decree. The large amount of moisture from the control system has made monitoring of the opacity of emissions using COM equipment infeasible. Specifically, water droplets contained in the flue gas could potentially result in the monitor overstating the true opacity. Therefore, Tesoro requested alternative monitoring procedures and requirements in accordance with 40 CFR Part 51, Appendix P, Section 6.0. The NDDH and EPA agreed with Tesoro that such alternative monitoring procedures and requirements were warranted given that the excess moisture in the stack from the wet scrubber interferes with the COM and makes the COM data inaccurate. As a result, NDDH revised SIP Chapter 8, “Source Surveillance,” Section 8.3, “Continuous Emission Monitoring Requirements for Existing Stationary Sources, including amendments to Permits to Operate and Department Order.” The revision provided for a new Section 8.3.1, “Continuous Opacity Monitoring for Fluid Bed Catalytic Cracking Units: Tesoro Refining and Marketing Co., Mandan Refinery.” This new section provides alternative monitoring procedures and requirements for the Tesoro Mandan refinery. Tesoro has demonstrated through Method 9 measurements that the FCCU will easily comply with the visible emissions limit of 40% opacity when the scrubber flow rate is at least 2511 gallons per minute (gpm). Therefore, the alternative monitoring plan requires that liquid flow through the wet scrubber at 2511 gpm, or more, on an hourly average basis. If the flow rate is less than 2511 gpm, Tesoro must conduct a Method 9 test each day until the required flow rate is achieved. In addition, Section 8.3.1 contains, among other things, the following requirements: 1. Tesoro must monitor the liquid flow rate through the wet gas scrubber on a continuous basis. 2. Tesoro must keep records of the liquid flow rate on a continuous basis, and keep such records for at least five years. 3. Tesoro must submit semi-annual deviations reports for the FCCU, listing any time period monitoring is not conducted as outlined in Section 8.3.1 and any time monitoring indicates the required flow rate is not attained. Tesoro must also submit an annual certification indicating compliance with the visible emissions limit. EPA interprets these provisions such that a failure to maintain a liquid flow rate through the wet scrubber of at least 2511 gpm, one-hour average, is a violation of the SIP. This alternative monitoring plan was finalized between Tesoro and NDDH on February 27, 2007, and approved by the director of EPA Region 8's Technical Enforcement Program in an August 24, 2007 letter from Cynthia Reynolds (on behalf of Martin Hestmark) to Ron W. Day, Tesoro Refining and Marketing Company. EPA is satisfied that this alternative monitoring plan will ensure Tesoro complies with the requirements of 40 CFR 51.214 and 40 CFR Part 51, Appendix P, to continuously monitor opacity emissions and will be adequate to ensure Tesoro complies with the SIP opacity limits that apply to the FCCU at the Mandan Refinery. Accordingly, this approval ratifies the Region 8 Technical Enforcement Program's approval of the alternative monitoring procedures and requirements reflected in new Section 8.3.1 of the North Dakota SIP. IV. Section 110(l) Section 110(l) of the Clean Air Act states that a SIP revision cannot be approved if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress towards attainment of the National Ambient Air Quality Standards (NAAQS) or any other applicable requirements of the Act. There are no nonattainment areas in North Dakota. The revisions to the general provisions, open burning restrictions, and fugitive emissions provisions are consistent with Federal requirements, clarifying in nature, and will not interfere with requirements of the Act related to administrative or procedural provisions. Although the revision to the permitting provisions reduces the stringency of the rule, the State has adequately demonstrated through modeling that it will not adversely impact the NAAQS or PSD Increments. The revisions to SIP Chapter 8, regarding the alternative monitoring plan for Tesoro's Mandan refinery, adequately detail monitoring parameters, frequency of monitoring, wet gas scrubber flow rate requirements, recordkeeping, and reporting requirements to ensure that the refinery can comply with requirements to continuously monitor opacity emissions and will be adequate to ensure Tesoro complies with the SIP opacity limits that apply to the FCCU at the Mandan Refinery. Therefore, these revisions do not interfere with attainment or maintenance of the NAAQS or other applicable requirements of the Act. V. Delegation of Authority With a July 17, 2007 letter, the Governor of North Dakota requested delegation of authority for revisions to the New Source Performance Standards (NSPS), promulgated in Chapter 33-15-12, N.D.A.C. On August 22, 2007, delegation was given with the following letter: Ref: 8P-AR Terry O'Clair, Director, Division of Air Quality, Environmental Health Section, North Dakota Department of Health, 918 E. Divide Avenue, Bismarck, ND 58501-1947 Re: Delegation of Clean Air Act New Source Performance Standards Dear Mr. O'Clair: With Governor Hoeven's July 17, 2007 letter and your July 18, 2007 letter, the State of North Dakota submitted revisions to its Air Pollution Control Rules and requested, among other things, direct delegation to implement and enforce the Federal New Source Performance Standards (NSPS). Specifically, North Dakota Administrative Code Chapter 33-15-12, Standards of Performance of New Stationary Sources, was revised to update the citation for the incorporated Federal NSPS in 40 CFR Part 60 as those in effect on January 31, 2006, with the exception of subparts Eb, L, M, N, Na, P, Q, R, S, and BB, which have not been adopted by the State. Subsequent to States adopting NSPS regulations, EPA delegates the authority for the implementation and enforcement of those NSPS, so long as the States' regulations are equivalent to the Federal regulations. EPA reviewed the pertinent statutes and regulations of the State of North Dakota and determined that they provide an adequate and effective procedure for the implementation and enforcement of the NSPS by the State. Therefore, pursuant to Section 111(c) of the Clean Air Act (Act), as amended, and 40 CFR Part 60, EPA hereby delegates its authority for the implementation and enforcement of the NSPS to the State of North Dakota as follows:

(A)Responsibility for all sources located, or to be located, in the State of North Dakota subject to the standards of performance for new stationary sources promulgated in 40 CFR Part 60. The categories of new stationary sources covered by this delegation are all NSPS subparts in 40 CFR Part 60, as in effect on January 31, 2006, with the exception of subparts Eb, L, M, N, Na, P, Q, R, S, and BB, which have not been adopted by the State. *Note this delegation does not include the emission guidelines in subparts Cb, Cc, Cd, Ce, BBBB, DDDD, and HHHH. These subparts require state plans, which are approved under a separate process pursuant to Section 111(d) of the Act.*

(B)Not all authorities of NSPS can be delegated to States under Section 111(c) of the Act, as amended. The EPA Administrator retains authority to implement those sections of the NSPS that require:

(1)Approving equivalency determinations and alternative test methods,

(2)decision-making to ensure national consistency, and

(3)EPA rulemaking in order to implement. Enclosed with this letter is a list of examples of sections in 40 CFR Part 60 related to the NSPS being delegated in this letter that cannot be delegated to the State of North Dakota. Please note that the enclosed list has been updated since our July 27, 2005 delegation of authority to implement and enforce the NSPS to the State of North Dakota.

(C)The North Dakota Department of Health

(NDDH)and EPA will continue a system of communication sufficient to guarantee that each office is always kept informed and current regarding compliance status of the subject sources and interpretation of the regulations.

(D)Enforcement of the NSPS in the State will be the primary responsibility of the NDDH. If the NDDH determines that such enforcement is not feasible and so notifies EPA, or where the NDDH acts in a manner inconsistent with the terms of this delegation, EPA may exercise its concurrent enforcement authority pursuant to section 113 of the Act, as amended, with respect to sources within the State of North Dakota subject to NSPS.

(E)The State of North Dakota will at no time grant a variance or waiver from compliance with NSPS regulations. Should NDDH grant such a variance or waiver, EPA will consider the source receiving such relief to be in violation of the applicable Federal regulation and initiate enforcement action against the source pursuant to section 113 of the Act. The granting of such relief by the NDDH shall also constitute grounds for revocation of the delegation by EPA.

(F)If at any time there is a conflict between a State regulation and a Federal regulation (40 CFR Part 60), the Federal regulation must be applied if it is more stringent than that of the State. If the State does not have the authority to enforce the more stringent Federal regulation, this portion of the delegation may be revoked.

(G)If the Regional Administrator determines that a State procedure for enforcing or implementing the NSPS is inadequate, or is not being effectively carried out, this delegation may be revoked in whole or part. Any such revocation shall be effective as of the date specified in a Notice of Revocation to the NDDH.

(H)Acceptance of this delegation of presently promulgated NSPS does not commit the State of North Dakota to accept delegation of future standards and requirements. A new request for delegation will be required for any standards not included in the State's July 17, 2007 letter.

(I)Upon approval of the Regional Administrator of EPA Region 8, the Director of NDDH may sub-delegate his authority to implement and enforce the NSPS to local air pollution control authorities in the State when such authorities have demonstrated that they have equivalent or more stringent programs in force.

(J)The State of North Dakota must require reporting of all excess emissions from any NSPS source in accordance with 40 CFR Part 60.7(c).

(K)Performance tests shall be scheduled and conducted in accordance with the procedures set forth in 40 CFR Part 60 unless alternate methods or procedures are approved by the EPA Administrator. Although the Administrator retains the exclusive right to approve equivalent and alternate test methods as specified in 40 CFR Part 60.8(b)(2) and (3), the State may approve minor changes in methodology provided these changes are reported to EPA Region 8. The Administrator also retains the right to change the opacity standard as specified in 40 CFR Part 60.11(e).

(L)Determinations of applicability, such as those specified in 40 CFR Part 60.5 and review of plans, as provided for in 40 CFR Part 60.6, shall be consistent with those determinations already made and reviews conducted by the EPA.

(M)Alternatives to continuous monitoring procedures or reporting requirements, as outlined in 40 CFR Part 60.13(i), may be approved by the State only if the specific NSPS grants that authority. Otherwise, EPA retains the authority to review and approve such alternatives.

(N)If a source proposes to modify its operation or facility which may cause the source to be subject to NSPS requirements, the State shall notify EPA Region 8 and obtain a determination on the applicability of the NSPS regulations.

(O)Information shall be made available to the public in accordance with 40 CFR Part 60.9. Any records, reports, or information provided to, or otherwise obtained by, the State in accordance with the provisions of these regulations shall be made available to the designated representatives of EPA upon request.

(P)All reports required pursuant to the delegated NSPS should not be submitted to the EPA Region 8 office, but rather to the NDDH.

(Q)As 40 CFR Part 60 is updated, North Dakota should revise its regulations accordingly and in a timely manner and submit to EPA requests for updates to its delegation of authority. EPA is approving North Dakota's request for NSPS delegation for all areas within the State except for the following: Lands within the exterior boundaries of the Fort Berthold, Fort Totten, Standing Rock and Turtle Mountain Indian Reservations; and any other areas which are “Indian Country” within the meaning of 18 U.S.C. 1151. Since this delegation is effective immediately, there is no need for the State to notify the EPA of its acceptance. Unless we receive written notice of objections from you within ten days of the date on which you receive this letter, the State of North Dakota will be deemed to accept all the terms of this delegation. To inform the public of this delegation, EPA will publish an information notice in the **Federal Register** in which this letter will appear in its entirety. If you have any questions on this matter, please contact me at

(303)312-6241 or Callie Videtich, Director of our Air and Radiation Program, at

(303)312-6434, or toll-free at 1-800-227-8917. Sincerely, Stephen S. Tuber *Assistant Regional Administrator* Office of Partnerships and Regulatory Assistance Enclosure cc: Tom Bachman, NDDH Enclosure to Letter Delegating NSPS in 40 CFR Part 60, Effective Through January 31, 2006, to the State of North Dakota Examples of Authorities in 40 CFR Part 60 Which Cannot Be Delegated 40 CFR subparts Section(s) A 60.8(b)(2) and (b)(3), and those sections throughout the standards that reference 60.8(b)(2) and (b)(3); 60.11(b) and (e); and 60.13(i). Da 60.47Da. Db 60.44b(f), 60.44b(g) and 60.49b(a)(4). Dc 60.48c(a)(4). Ec 60.56c(i), 60.8. J 60.105(a)(13)(iii) and 60.106(i)(12). Ka 60.114a. Kb 60.111b(f)(4), 60.114b, 60.116b(e)(3)(iii), 60.116b(e)(3)(iv), and 60.116b(f)(2)(iii). O 60.153(e). DD 60.302(d)(3). GG 60.332(a)(4) and 60.335(b)(10)(ii). VV 60.482-1(c)(2) and 60.484. WW 60.493(b)(2)(i)(A) and 60.496(a)(1). XX 60.502(e)(6). AAA 60.531, 60.533, 60.534, 60.535, 60.536(i)(2), 60.537, 60.538(e), and 60.539. BBB 60.543(c)(2)(ii)(B). DDD 60.562-2(c). GGG 60.592(c). III 60.613(e). JJJ 60.623. KKK 60.634. NNN 60.663(f). QQQ 60.694. RRR 60.703(e). SSS 60.711(a)(16), 60.713(b)(1)(i) and (ii), 60.713(b)(5)(i), 60.713(d), 60.715(a) and 60.716. TTT 60.723(b)(1), 60.723(b)(2)(i)(C), 60.723(b)(2)(iv), 60.724(e) and 60.725(b). VVV 60.743(a)(3)(v)(A) and (B), 60.743(e), 60.745(a) and 60.746. WWW 60.754(a)(5). CCCC 60.2030(c)(1) through (7). VI. Final Action EPA is approving revisions to the North Dakota SIP that involve certain portions of the North Dakota Air Pollution Control Rules regarding general provisions, open burning, permitting, and fugitive emissions, as submitted by the Governor of North Dakota with a letter dated March 8, 2007. Specifically, EPA approves revisions to the following portions of the North Dakota Administrative Code (N.D.A.C.): Chapter 33-15-01, General Provisions, sections 33-15-01-04 and 33-15-01-05; Chapter 33-15-04, Open Burning Restrictions, sections 33-15-04-01 and 33-15-04-02; Chapter 33-15-14, Designated Air Contaminant Sources, Permit to Construct, Minor Source Permit to Operate, Title V Permit to Operate, subsections 33-15-14-02.13.c. and 33-15-14-02.13.o. (certain sections specific to permit to construct); and Chapter 33-15-17, Restriction of Fugitive Emissions, subsection 33-15-17-02. In addition, EPA approves revisions to North Dakota SIP Chapter 8, “Source Surveillance,” also submitted by the Governor of North Dakota with his March 8, 2007 letter. Specifically EPA approves Section 8.3.1, “Continuous Opacity Monitoring for Fluid Bed Catalytic Cracking Units: Tesoro Refining and Marketing Co., Mandan Refinery.” EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's **Federal Register** , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on July 28, 2008 without further notice unless EPA receives adverse comment by June 26, 2008. If EPA receives adverse comment, EPA will publish a timely withdrawal in the **Federal Register** informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. VII. Statutory and Executive Order Review Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it approves a state rule implementing a Federal standard. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ). The Congressional Review Act, 5 U.S.C. 801 *et seq.,* as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the **Federal Register** . A major rule cannot take effect until 60 days after it is published in the **Federal Register** . This action is not a “major rule” as defined by 5 U.S.C. 804(2). Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 28, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).) List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds. Dated: May 7, 2008. Carol Rushin, Acting Regional Administrator, Region 8. 40 CFR part 52 is amended to read as follows: PART 52—[AMENDED] 1. The authority citation for part 52 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart JJ—North Dakota 2. Section 52.1820 is amended to read as follows: a. In the table in paragraph

(c)by: i. Revising the entries for “33-15-01-04;” “33-15-01-5;” “33-15-04-01;” “33-15-04-02;” “33-15-14-02;” and “33-15-17-02.” ii. Adding entries in numerical order for “33-15-04-02.1.b, 33-15-04-02.1.e, 33-15-04-02.1.g, and 33-15-04-02.2.k;” and “33-15-14-02.13.c and 33-15-14-02.13.o.” iii. Removing the entry for “33-15-14-02.5, 33-15-14-02.13.c, and 33-15-14-02.13.i(5)” and adding in its place a new entry for “33-15-14-02.5 and 33-15-14-02.13.i(5).” b. In paragraph

(d)by revising the table. c. In the table in paragraph

(e)by revising the entry “(1)” and by adding entry “(20)” in numerical order. § 52.1820 Identification of plan. *(c) EPA approved regulations.* State of North Dakota Regulations State citation Title/subject State effective date EPA approval date and citation 2 Explanations * * * * * * * 33-15-01-04 Definitions 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] 33-15-01-05 Abbreviations 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] * * * * * * * 33-15-04-01 Refuse Burning Restrictions 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] 33-15-04-02 Permissible Open Burning 1/1/96 4/21/97, 62 FR 19224 Excluding subsections 1.b, 1.e, 1.g, and 2.k which were subsequently revised and approved. See below. 33-15-04-02.1.b, 33-15-04-02.1.e, m, 33-15-04-02.1.g, and 33-15-04-02.2.k Permissible Open Burning 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] * * * * * * * 33-15-14-02 Permit to Construct 3/1/94 8/21/95, 60 FR 43396 Excluding subsections 12, 3.c, 13.b.1, 5, 13.c, 13.i(5), 13.o, and 19 (one sentence) which were subsequently revised and approved. See below. See additional interpretive materials cited in 57 FR 28619, 6/26/92, regarding the State's commitment to meet the requirements of EPA's “Guideline on Air Quality Models (Revised).” * * * * * * * 33-15-14-02.5 and 33-15-14-02.13.i(5) Review of application—Standard for granting permits to construct and Exemptions 3/1/03 8/8/05, 70 FR 45539 33-15-14-02.13.c and 33-15-14-02.13.o Exemptions 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] * * * * * * * 33-15-17-02 Restriction of fugitive particulate emissions 1/1/07 5/27/08, [Insert Federal Register page number where the document begins.] * * * * * * * 2 In order to determine the EPA effective date for a specific provision listed in this table, consult the **Federal Register** notice cited in this column for the particular provision. *(d) EPA-approved source-specific requirements.* Name of source Nature of requirement State effective date EPA approval date and citation 3 Explanations —Leland Olds Station Units 1 & 2 SIP Chapter 8, Section 8.3, Continuous Emission Monitoring Requirements for Existing Stationary Sources, including amendments to Permits to Operate and Department Order 5/6/77 10/17/77, 42 FR 55471 —Milton R. Young Unit 1 —Heskett Station Units 1 & 2 —Stanton Station Unit 1 —American Crystal Sugar at Drayton —Tesoro Mandan Refinery SIP Chapter 8, Section 8.3.1, Continuous Opacity Monitoring for Fluid Bed Catalytic Cracking Units: Tesoro Refining and Marketing Co., Mandan Refinery 2/27/07 5/27/08, [Insert Federal Register page number where the document begins.] 3 In order to determine the EPA effective date for a specific provision listed in this table, consult the Federal Register notice cited in this column for the particular provision. *(e) EPA-approved nonregulatory provisions.* Name of nonregulatory SIP provision Applicable geographic or non-attainment area State submittal date/adopted date EPA approval date and citation 4 Explanations

(1)Implementation Plan for the Control of Air Pollution for the State of North Dakota Statewide Submitted: 1/24/72 Adopted: 1/24/72 5/31/72, 37 FR 10842 Excluding subsequent revisions, as follows: Chapters 6, 11, and 12, and Sections 2.11, 3.2.1, 3.7, 5.2.1, 6.10, 6.11, 6.13, 8.3, and 8.3.1. Revisions to these non-regulatory provisions have subsequently been approved. See below. Clarification submitted: 6/14/73; 2/19/74; 6/26/74; 11/21/74; 4/23/75 With all clarifications: 3/2/76, 41 FR 8956 Chapters: 1. Introduction 2. Legal Authority 3. Control Strategy 4. Compliance Schedule 5. Prevention of Air Pollution Emergency Episodes 7. Review of New Sources and Modifications 8. Source Surveillance 9. Resources 10. Inter-governmental Cooperation 11. Rules and Regulations With subsequent revisions to the chapters as follows: * * * * * * *

(20)Revisions to SIP Chapter 8, Section 8.3.1 Submitted: 3/8/07 5/27/08, [Insert Federal Register page number where the document begins.] 4 In order to determine the EPA effective date for a specific provision listed in this table, consult the Federal Register notice cited in this column for the particular provisions. 40 CFR part 60 is amended to read as follows: PART 60—[AMENDED] 3. The authority citation for part 60 continues to read as follows: Authority: 42 U.S.C. 7401 *et seq.* Subpart A—General Provisions 4. In § 60.4, amend the table in paragraph

(c)by revising the entries for subparts “L,” “M,” “N,” “Na,” “P,” “Q,” “R,” “S,” and “BB” to read as follows: § 60.4 Addresses.

(c)* * * Delegation Status of New Source Performance Standards [(NSPS) for Region VIII] Subpart CO MT ND SD UT WY * * * * * * * L—Secondary Lead Smelters (*) (*) (*) (*) M—Secondary Brass and Bronze Production Plants (*) (*) (*) (*) N—Primary Emissions from Basic Oxygen Process Furnaces (after 6/11/73) (*) (*) (*) (*) Na—Secondary Emissions from Basic Oxygen Process Furnaces (after 1/20/83) (*) (*) (*) (*) * * * * * * * P—Primary Copper Smelters (*) (*) (*) (*) Q—Primary Zinc Smelters (*) (*) (*) (*) R—Primary Lead Smelters (*) (*) (*) (*) S—Primary Aluminum Reduction Plants (*) (*) (*) (*) * * * * * * * BB—Kraft Pulp Mills (*) (*) (*) (*) * * * * * * * (*) Indicates approval of State regulation. [FR Doc. E8-11479 Filed 5-23-08; 8:45 am] BILLING CODE 6560-50-P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [MB Docket Nos. 00-168, 00-44; FCC 07-205] Standardized and Enhanced Disclosure Requirements for Television Broadcast Licensee Public Interest Obligations; Extension of the Filing Requirement for Children's Television Programming Report (FCC Form 398) AGENCY: Federal Communications Commission. ACTION: Final rule; correction. SUMMARY: The Federal Communications Commission is correcting a final rule published in the **Federal Register** on March 13, 2008, 73 FR 13452. The document adopted a standardized form for the quarterly reporting of programming aired in response to issues facing a television station's community and a requirement that portions of each television station's public inspection file be placed on the Internet. DATES: The rules in this document contain information collection requirements that have not been approved by the Office of Management and Budget (OMB). After OMB approval is received, the Commission will publish a document in the **Federal Register** announcing the effective date of the rules. FOR FURTHER INFORMATION CONTACT: For additional information on this proceeding, contact Holly Saurer, *Holly.Saurer@fcc.gov* of the Media Bureau, Policy Division,

(202)418-2120. SUPPLEMENTARY INFORMATION: In rule FR Doc. E8-5052 published on March 13, 2008, 73 FR 13452 make the following correction. 1. On page 13463, in the second column, under § 73.3527, paragraph (e)(8)(i) and

(ii)are added to read as follows: § 73.3527 [Corrected]

(e)* * *

(8)* * *

(i)*Issues/programs lists.* For nonexempt noncommercial educational radio broadcast stations, every three months a list of programs that have provided the station's most significant treatment of community issues during the preceding three month period. The list for each calendar quarter is to be filed by the tenth day of the succeeding calendar quarter (e.g., January 10 for the quarter October-December, April 10 for the quarter January-March, etc.). The list shall include a brief narrative describing what issues were given significant treatment and the programming that provided this treatment. The description of the programs shall include, but shall not be limited to, the time, date, duration, and title of each program in which the issue was treated. The lists described in this paragraph shall be retained in the public inspection file until final action has been taken on the station's next license renewal application.

(ii)*TV Standardized Public Interest Reporting Form.* For noncommercial educational TV and Class A TV broadcast stations, every three months a completed Standardized Public Interest Reporting Form with regard to the station's efforts to determine the issues facing its community and the programming aired during the preceding three month period in response to those issues. The form for each calendar quarter is to be filed by the thirtieth day of the succeeding calendar quarter (e.g., January 30 for the quarter October-December, April 30 for the quarter January-March, etc.). The forms described in this paragraph shall be retained in the public inspection file until final action has been taken on the station's next license renewal application. Federal Communications Commission. Marlene H. Dortch, Secretary. [FR Doc. E8-11407 Filed 5-23-08; 8:45 am] BILLING CODE 6712-01-P DEPARTMENT OF HOMELAND SECURITY 48 CFR Parts 3001, 3002, 3009, and 3013 [Docket No. DHS-2008-0051] RIN 1601-AA51 Office of the Chief Procurement Officer; Revision of Department of Homeland Security Acquisition Regulation; Technical Amendments (HSAR Case 2008-001) AGENCY: Department of Homeland Security. ACTION: Final rule. SUMMARY: The Department of Homeland Security

(DHS)is amending its Homeland Security Acquisition Regulation to make the Transportation Security Administration subject to that regulation and to the Federal Acquisition Regulation system for acquisitions initiated after June 22, 2008. This rule also removes provisions related to DHS special streamlined acquisition authority, changes the name of the Bureau of Immigration and Customs Enforcement to U.S. Immigration and Customs Enforcement, and the name of the Bureau of Customs and Border Protection to U.S. Customs and Border Protection in the Homeland Security Acquisition Regulation, and makes other technical amendments. DATES: *Effective date:* This rule is effective May 27, 2008. Although this rule goes into effect on May 27, 2008, the Transportation Security Administration exemption from the Homeland Security Acquisition Regulation and the Federal Acquisition Regulation system remains in effect up to and including June 22, 2008. FOR FURTHER INFORMATION CONTACT: Kathy Strouss, Office of the Chief Procurement Officer, Department of Homeland Security (DHS),

(202)447-5300. SUPPLEMENTARY INFORMATION: I. Background and Purpose The Homeland Security Acquisition Regulation

(HSAR)supplements the Federal Acquisition Regulation

(FAR)system to provide a uniform department-wide acquisition regulation for the Department of Homeland Security (DHS). The Transportation Security Administration

(TSA)has historically been exempt from the HSAR by authority of section 101(a) of the Aviation and Transportation Security Act (ATSA), Pub. L. 107-71, codified at section 114(o) of title 49, which applies the acquisition management system

(AMS)established by the Administrator of the Federal Aviation Administration

(FAA)to TSA acquisitions. The Homeland Security Act of 2002, Pub. L. 107-296 (HSA), as amended, transferred TSA into DHS, but did not remove the application of the FAA AMS to TSA acquisitions. TSA thus continues to use the FAA AMS, and not the HSAR and the FAR, for TSA acquisitions. On December 26, 2007, the President signed and thereby enacted the Consolidated Appropriations Act of 2008, Pub. L. 110-161. This legislation at division E, Title V, section 568, strikes section 114(o) of Title 49 effective June 23, 2008. Accordingly, TSA will be required to follow the FAR system and HSAR authorities for TSA acquisitions initiated after June 22, 2008. This final rule implements those changes by removing the TSA exemption from the HSAR and applying the HSAR and the FAR system to TSA acquisitions initiated on or after June 23, 2008. Removal of DHS Streamlined Acquisition Authority, Name Changes for Two Components, and Additional Technical Amendments Additional amendments contained in this regulatory action include technical amendments to 48 CFR Chapter 30 content as follows: • Name changes for the Bureau of Immigration and Customs Enforcement and the Bureau of Customs and Border Protection in Parts 3001 and 3002; • Removal of expired authority at 3013.70 regarding special streamlined acquisition authority; and • Removal of the HSAR 3052.209-72 provision prescription content at the 3009.507 heading. These amendments incorporate into the HSAR name changes made by DHS to two DHS Components. Congress and the President established DHS on January 24, 2003, as the result of the reorganization of 22 federal agencies, including the former Immigration and Naturalization Service

(INS)and the U.S. Customs Service (Customs Service). Pursuant to sections 403, 442, 451 and 1502 of the HSA, the INS and the Customs Service were transferred to DHS effective March 1, 2003, and reorganized to become the Bureau of Citizenship and Immigration Services, the Bureau of Immigration and Customs Enforcement, and the Bureau of Customs and Border Protection. On January 18, 2007, DHS notified Congress that, pursuant to HSA section 872(a)(2), DHS was renaming the Bureau of Immigration and Customs Enforcement as U.S. Immigration and Customs Enforcement (ICE), and the Bureau of Customs and Border Protection as U.S. Customs and Border Protection (CBP). These name changes are reflected in a DHS notice published in the **Federal Register** on April 23, 2007, at 72 FR 20131. That notice requires that all references to the Bureau of Immigration and Customs Enforcement and the Bureau of Customs and Border Protection in existing documents and actions be construed as references to U.S. Immigration and Customs Enforcement

(ICE)and U.S. Customs and Border Protection (CBP), respectively. The amendments below make corresponding name changes to HSAR regulatory text. The amendments also remove the provision prescription at 3009.507, which is now obsolete. Finally, technical amendments to 3013.70 reflect the expiration of special streamlined DHS acquisition authorities. The HSA at division E, title VIII, section 833, authorized special streamlined acquisition authority for certain DHS procurement actions. That special authority expired on September 30, 2007. These amendments remove the HSAR guidance and instructions related to those expired authorities. Good Cause for Immediate Adoption DHS is issuing this final rule without prior notice and opportunity to comment pursuant to its authority under section 4(a) of the Administrative Procedure Act

(APA)(5 U.S.C. 553(b)). This provision authorizes the agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” DHS finds that prior notice and public comment to this interim final rule is unnecessary and contrary to the public interest because the regulatory action implements a non-discretionary, legislative mandate and makes other minor, technical changes that do not otherwise modify the Department's current policies. As such, this is a technical and administrative change for which prior public notice and comment is unnecessary and contrary to the public interest. II. Rulemaking Analysis and Notices A. Executive Order 12866 The Office of Management and Budget has determined this rule to not be a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993), as amended. Accordingly, this action was not subject to review under the Executive Order by the Office of Information and Regulatory Affairs within OMB. B. Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)) The Regulatory Flexibility Act (5 U.S.C. 601 *et seq.* ) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. DHS has certified that there is good cause for this interim final rule to be issued without prior notice and comment. In these circumstances an initial regulatory flexibility analysis is not required. In addition, this rule interprets legislation and is not subject to agency discretion. DHS thus certifies that this rule will not have a significant impact on a substantial number of small entities. DHS will, however, consider comments from small entities concerning the affected HSAR Part(s) in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately in writing to Kathy Strouss, the Office of the Chief Procurement Officer at *Kathy.Strouss@dhs.gov* and should cite to 5 U.S.C. 601, *et seq.* (HSAR case 2008-001), in the subject matter line of the correspondence. C. Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35) This regulatory action will not impose any additional reporting or recordkeeping requirements under the Paperwork Reduction Act. D. Federalism (Executive Order 13132) This regulatory action does not have Federalism implications, as set forth in Executive Order 13132. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. List of Subjects in 48 CFR Parts 3001, 3002, 3009, and 3013 Government procurement. Dated: May 19, 2008. Thomas W. Essig, Chief Procurement Officer, Department of Homeland Security. For the reasons stated in the preamble, the Department of Homeland Security amends 48 CFR parts 3001, 3002, 3009, and 3013 as follows: 1. The authority citation for 48 CFR parts 3001, 3002, 3009, and 3013 continues to read as follows: Authority: 41 U.S.C. 418b(a) and (b). PART 3001—FEDERAL ACQUISITION REGULATION SYSTEM 2. Revise section 3001.104(b) to read as follows: 3001.104 Applicability.

(b)The Transportation Security Administration

(TSA)exception to this regulation is authorized by the Aviation and Transportation Security Act of 2001

(ATSA)(section 101(a) of Public Law 107-71, as implemented at section 114(o) of title 49) for contracts awarded by TSA pursuant to this ATSA authority. The Consolidated Appropriations Act of 2008, Public Law 110-161, Division E, Title V, section 568 eliminates ATSA section 114(o) effective June 23, 2008. Accordingly, TSA acquisitions initiated after June 22, 2008 are subject to 48 CFR Chapters 1 and 30. 3. Revise section 3001.105-2(a) to read as follows: 3001.105-2 Arrangement of regulations.

(a)General. The HSAR, which encompasses both Department-wide and Component-unique guidance, conforms to the arrangement and numbering system prescribed by

(FAR)48 CFR 1.105-2. Guidance that is unique to a Component contains the organization's acronym or abbreviation directly following the title. The following acronyms apply: DHS Office of Procurement Operations (OPO); Federal Emergency Management Agency (FEMA); Federal Law Enforcement Training Center (FLETC); Transportation Security Administration (TSA); U.S. Coast Guard (USCG); U.S. Customs and Border Protection (CBP); U.S. Immigration and Customs Enforcement (ICE); and U.S. Secret Service (USSS). PART 3002—DEFINITIONS OF WORDS AND TERMS 4. Amend section 3002.101 by revising the definition for “Component” to read as follows: 3002.101 Definitions. *Component* means the following entities for purposes of this chapter:

(1)DHS Office of Procurement Operations (OPO);

(2)Federal Emergency Management Agency (FEMA);

(3)Federal Law Enforcement Training Center (FLETC);

(4)Transportation Security Administration (TSA), for acquisitions initiated after June 22, 2008;

(5)U.S. Coast Guard (USCG);

(6)U.S. Customs and Border Protection (CBP);

(7)U.S. Immigration and Customs Enforcement (ICE); and

(8)U.S. Secret Service (USSS). PART 3009—CONTRACTOR QUALIFICATIONS 5. Remove and reserve section 3009.507 to read as follows: 3009.507 Solicitation provision and contract clause. [Reserved] PART 3013—SIMPLIFIED ACQUISITION PROCEDURES 3013.70 [Removed and reserved] 6. Remove section 3013.70. [FR Doc. E8-11560 Filed 5-23-08; 8:45 am] BILLING CODE 4410-10-P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 071106671-8010-02] RIN 0648-XI13 Fisheries of the Economic Exclusive Zone Off Alaska; Shallow-Water Species Fishery by Vessels Using Trawl Gear in the Gulf of Alaska AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Temporary rule; closure. SUMMARY: NMFS is prohibiting directed fishing for species that comprise the shallow-water species fishery by vessels using trawl gear in the Gulf of Alaska (GOA). This action is necessary because the second seasonal apportionment of the 2008 Pacific halibut bycatch allowance specified for the shallow-water species fishery in the GOA has been reached. DATES: Effective 1200 hrs, Alaska local time (A.l.t.), May 21, 2008, through 1200 hrs, A.l.t., July 1, 2008. FOR FURTHER INFORMATION CONTACT: Jennifer Hogan, 907-586-7228. SUPPLEMENTARY INFORMATION: NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska

(FMP)prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679. The second seasonal apportionment of the 2008 Pacific halibut bycatch allowance specified for the shallow-water species fishery in the GOA is 100 metric tons as established by the 2008 and 2009 harvest specifications for groundfish of the GOA (73 FR 10562, February 27, 2008), for the period 1200 hrs, A.l.t., April 1, 2008, through 1200 hrs, A.l.t., July 1, 2008. In accordance with § 679.21(d)(7)(i), the Administrator, Alaska Region, NMFS, has determined that the second seasonal apportionment of the 2008 Pacific halibut bycatch allowance specified for the trawl shallow-water species fishery in the GOA has been reached. Consequently, NMFS is prohibiting directed fishing for the shallow-water species fishery by vessels using trawl gear in the GOA. The species and species groups that comprise the shallow-water species fishery are pollock, Pacific cod, shallow-water flatfish, flathead sole, Atka mackerel, skates and “other species.” This inseason adjustment does not apply to fishing for pollock by vessels using pelagic trawl gear in those portions of the GOA open to directed fishing for pollock. This inseason adjustment does not apply to vessels fishing under a cooperative quota permit in the cooperative fishery in the Rockfish Pilot Program for the Central GOA. After the effective date of this closure the maximum retainable amounts at § 679.20(e) and

(f)apply at any time during a trip. Classification This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of the shallow-water species fishery by vessels using trawl gear in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of May 20, 2008. The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment. This action is required by § 679.21 and is exempt from review under Executive Order 12866. Authority: 16 U.S.C. 1801 *et seq.* Dated: May 21, 2008. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. 08-1297 Filed 5-21-08; 1:37 pm]

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