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Code · REGISTER · 2008-06-23 · U.S. Small Business Administration · Notices

Notices. Amendment 2

131,319 words·~597 min read·/register/2008/06/23/08-1371

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

BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #11286 and #11287] Indiana Disaster Number IN-00019 AGENCY: U.S. Small Business Administration. ACTION: Amendment 2. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Indiana (FEMA-1766-DR), dated 06/11/2008. *Incident:* Severe Storms, Flooding, and Tornadoes. *Incident Period:* 05/30/2008 and continuing. EFFECTIVE DATE: 06/16/2008. *Physical Loan Application Deadline Date:* 08/11/2008. *EIDL Loan Application Deadline Date:* 03/11/2009.
ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road,Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster declaration for the State of Indiana, dated 06/11/2008 is hereby amended to include the following areas as adversely affected by the disaster: *Primary Counties:
(Physical Damage and Economic Injury Loans):* Decatur, Wayne. *Contiguous Counties: (Economic Injury Loans Only):* Indiana: Union. Ohio: Preble. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008.) James E. Rivera, Acting Associate Administrator for Disaster Assistance. [FR Doc. E8-14092 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #11292] GEORGIA Disaster #GA-00015 AGENCY:
U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of GEO RGIA (FEMA-1761-DR), dated 05/23/2008. *Incident:* Severe Storms and Flooding. *Incident Period:* 05/11/2008 through 05/12/2008. *Effective Date:* 05/23/2008. *Physical Loan Application Deadline Date:* 07/22/2008. ADDRESSES: Submit completed loan applications to:U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road,Fort Worth, TX 76155.
FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance,U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 05/23/2008, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster: *Primary Counties:* Bibb, Carroll, Crawford, Douglas, Emanuel, Glynn, Jefferson, Jenkins, Johnson, Laurens, McIntosh, Treutlen, Twiggs, Wilkinson. *The Interest Rates are:* Percent Other (Including Non-Profit Organizations) with Credit Available Elsewhere 5.250 Businesses and Non-Profit Organizations Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 11292.
(Catalog of Federal Domestic Assistance Number 59008) James E. Rivera, Acting Associate Administrator for Disaster Assistance. [FR Doc. E8-14109 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 11290] Montana Disaster # MT-00038 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Montana (FEMA-1767-DR), dated 06/13/2008. *Incident:* Severe Winter Storm. *Incident Period:* 05/01/2008 through 05/02/2008.
EFFECTIVE DATE: 06/13/2008. *Physical Loan Application Deadline Date:* 08/12/2008. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 06/13/2008, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster: *Primary Counties:* Carter, Custer, Fallon, Powder River. The Interest Rates are: Percent Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.250 Businesses And Non-Profit Organizations Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 11290. (Catalog of Federal Domestic Assistance Number 59008) James E. Rivera, Acting Associate Administrator for Disaster Assistance. [FR Doc.
E8-14093 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #11291] Oklahoma Disaster #OK-00021 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Oklahoma (FEMA-1752-DR), dated 05/05/2008. *Incident:* Severe Storms, Tornadoes, and Flooding. *Incident Period:* 03/17/2008 through 03/23/2008. EFFECTIVE DATE: 05/05/2008. *Physical Loan Application Deadline Date:* 07/07/2008.
ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President's major disaster declaration on 05/05/2008, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster: Primary Counties: Adair, Haskell, Hughes, Latimer, Le Flore, Mayes, Mccurtain, Mcintosh, Muskogee, Okfuskee, Okmulgee, Pittsburg, Pushmataha, Sequoyah. The Interest Rates are: Percent Other (Including Non-Profit Organizations) With Credit Available Elsewhere 5.250 Businesses And Non-Profit Organizations Without Credit Available Elsewhere 4.000 The number assigned to this disaster for physical damage is 11291.
(Catalog of Federal Domestic Assistance Number 59008) James E. Rivera. Acting Associate Administrator for Disaster Assistance. [FR Doc. E8-14091 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #11288 and #11289] Wisconsin Disaster Number WI-00013 AGENCY: U.S. Small Business Administration. ACTION: Amendment 1. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Wisconsin (FEMA-1768-DR), dated 06/14/2008. *Incident:* Severe Storms, Tornadoes, and Flooding. *Incident Period:* 06/05/2008 and continuing.
EFFECTIVE DATE: 06/16/2008. *Physical Loan Application Deadline Date:* 08/13/2008. *EIDL Loan Application Deadline Date:* 03/13/2009. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION:
The notice of the Presidential disaster declaration for the State of Wisconsin, dated 06/14/2008 is hereby amended to include the following areas as adversely affected by the disaster: *Primary Counties:* (Physical Damage and Economic Injury Loans): Racine, Richland. *Contiguous Counties:* (Economic Injury Loans Only): Wisconsin: Kenosha, Walworth. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008.
) James E. Rivera, Acting Associate Administrator for Disaster Assistance. [FR Doc. E8-14094 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION Small Business Size Standards: Waiver of the Nonmanufacturer Rule AGENCY: U.S. Small Business Administration. ACTION: Notice of Waiver of the Nonmanufacturer Rule for Other Aircraft Parts and Auxiliary Equipment Manufacturing (Drones and Aircraft Launching Equipment), Product Service Codes 1550 and 1720. SUMMARY:
The U.S. Small Business Administration
(SBA)is granting a waiver of the Nonmanufacturer Rule for Other Aircraft Parts and Auxiliary Equipment Manufacturing (Drones and Aircraft Launching Equipment). The basis for waiver is that no small business manufacturers are supplying this class of product to the Federal government. The effect of a waiver would be to allow otherwise qualified regular dealers to supply the products of any manufacturer on a Federal contract set aside for small businesses; service-disabled veteran-owned small businesses or SBA's 8(a) Business Development Program. DATE: This waiver is effective July 8, 2008. FOR FURTHER INFORMATION CONTACT: Pamela M. McClam, Program Analyst, by telephone at
(202)205-7408; by FAX at
(202)481-4783; or by e-mail at *Pamela.McClam@sba.gov* . SUPPLEMENTARY INFORMATION: Section 8(a)(17) of the Small Business Act (Act), 15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, or SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market. As implemented in SBA's regulations at 13 CFR 121.1202(c), in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six-digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code required as a data entry field by the Federal Procurement Data System. The SBA received a request on May 2, 2008, to waive the Nonmanufacturer Rule for Other Aircraft Parts and Auxiliary Equipment Manufacturing (Drones, Miscellaneous Aircraft Accessories and Components, and Aircraft Launching Equipment). In response, on May 16, 2008, SBA published in the **Federal Register** a notice of intent to waive the Nonmanufacturer Rule for Other Aircraft Parts and Auxiliary Equipment Manufacturing (Drones and Aircraft Launching Equipment). SBA explained in the notice that it was soliciting comments and sources of small business manufacturers of this class of products. One comment was received regarding our intent to waive Miscellaneous Aircraft Accessories and Components, Product Service Code 1680. Based on the information in that comment, SBA has determined that there are small business manufacturers of Product Service Code 1680 and will not be granting a waiver. No comments were received regarding Product Service Codes 1550 and 1720, therefore SBA is granting the waiver of the Nonmanufacturer Rule for Other Aircraft Parts and Auxiliary Equipment Manufacturing (Drones and Aircraft Launching Equipment) NAICS code 336413, Product Service Codes 1550 and 1720. Authority: 15 U.S.C. 637(a)(17). Karen Hontz, Director for Government Contracting. [FR Doc. E8-14116 Filed 6-20-08; 8:45 am] BILLING CODE 8025-01-P DEPARTMENT OF STATE [Public Notice 6273] 60-Day Notice of Proposed Information Collection: Form DS-3083, Training Registration (for Non-U.S. Government Persons), OMB Control No. 1405-0145 ACTION: Notice of request for public comments. SUMMARY: The Department of State is seeking Office of Management and Budget
(OMB)approval for the information collection described below. The purpose of this notice is to allow 60 days for public comment in the **Federal Register** preceding submission to OMB. We are conducting this process in accordance with the Paperwork Reduction Act of 1995. • *Title of Information Collection:* Training Registration (for Non-U.S. Government Persons). • *OMB Control Number:* 1405-0145. • *Type of Request:* Extension of a Currently Approved Collection. • *Originating Office:* Foreign Service Institute, FSI/EX. • *Form Number:* DS-3083. • *Respondents:* Respondents are non-U.S. government persons and/or their eligible family members, authorized by Public Law 105-277 to receive training delivered by the Foreign Service Institute on a reimbursable or advance-of-funds basis. • *Estimated Number of Respondents:* 100. • *Estimated Number of Responses:* 100. • *Average Hours per Response:* 0.5. • *Total Estimated Burden:* 50. • *Frequency:* On occasion. • *Obligation to Respond:* Required to Obtain or Retain a Benefit. DATES: The Department will accept comments from the public up to 60 days from June 23, 2008. ADDRESSES: You may submit comments by any of the following methods: • E-mail: *oshimawa@state.gov.* • Mail (paper, disk, or CD-ROM submissions): Foreign Service Institute, Office of Management, U.S. Department of State, Washington, DC 20522-4201. • Fax: 703-302-7227. You must include the DS form number (if applicable), information collection title, and OMB control number in any correspondence. FOR FURTHER INFORMATION CONTACT: Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed information collection and supporting documents, to Wayne A. Oshima, Foreign Service Institute, Office of Management, U.S. Department of State, Washington, DC 20522-4201, who may be reached on 703-302-6730 or at *oshimawa@state.gov.* SUPPLEMENTARY INFORMATION: We are soliciting public comments to permit the Department to: • Evaluate whether the proposed information collection is necessary for the proper performance of our functions. • Evaluate the accuracy of our estimate of the burden of the proposed collection, including the validity of the methodology and assumptions used. • Enhance the quality, utility, and clarity of the information to be collected. • Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of technology. Abstract of Proposed Collection This data collection tool is to be used to obtain information from non-U.S. Government persons so that they can enroll in courses offered by the Department of State's Foreign Service Institute. This includes information of a personal and business nature, and credit card information so that the Department can receive reimbursement. Methodology This information will be collected in hard copy format, which is either mailed or transmitted by facsimile machine to the Foreign Service Institute. Dated: June 9, 2008. Catherine J. Russell, Executive Director,Foreign Service Institute,Department of State. [FR Doc. E8-14132 Filed 6-20-08; 8:45 am] BILLING CODE 4710-34-P DEPARTMENT OF TRANSPORTATION Office of the Secretary Notice of Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits Filed Under Subpart B (Formerly Subpart Q) During the Week Ending May 16, 2008 The following Applications for Certificates of Public Convenience and Necessity and Foreign Air Carrier Permits were filed under Subpart B (formerly Subpart Q) of the Department of Transportation's Procedural Regulations. (See 14 CFR 301.201 *et seq.* ). The due date for Answers, Conforming Applications, or Motions to Modify Scope are set forth below for each application. Following the Answer period DOT may process the application by expedited procedures. Such procedures may consist of the adoption of a show-cause order, a tentative order, or in appropriate cases a final order without further proceedings. *Docket Number:* DOT-OST-2008-0127. *Date Filed:* May 14, 2008. *Due Date for Answers, Conforming Applications, or Motion To Modify Scope:* May 30, 2008. *Description:* Application of Kalitta Air, L.L.C. (Kalitta) for
(1)a certificate of public convenience and necessity authorizing it to provide scheduled foreign air transportation of property and mail between a point or point(s) in the United States and a point or point(s) in China, via intermediate points, and beyond China to any point or points;
(2)designation as the additional U.S.-flag all-cargo carrier permitted effective March 25, 2009; and
(3)allocation of 10 of the 15 all-cargo frequencies that become available March 25, 2009. *Docket Number:* DOT-OST-2008-0162. *Date Filed:* May 15, 2008. *Due Date for Answers, Conforming Applications, or Motion to Modify Scope:* June 5, 2008. *Description:* Joint Application of Delta Air Lines, Inc. (“Delta”), Northwest Airlines, Inc. (“Northwest”) and Northwest's wholly-owned subsidiaries, Compass Airlines, Inc. (“Compass”) and Mesaba Aviation, Inc. (“Mesaba”) (collectively, the “Joint Applicants”) requesting that the Department transfer all of the certificates of public convenience and necessity, exemptions, statements of authorizations, frequency allocations, designations and related authorities held by Northwest, Compass, and Mesaba. The Joint Applicants also request the Department's approval of the final transfer of international authority that will occur upon the ultimate merger of Delta and Northwest. Renee V. Wright, Program Manager, Docket Operations,Federal Register Liaison. [FR Doc. E8-14127 Filed 6-20-08; 8:45 am] BILLING CODE 4910-9X-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration Surface Transportation Environment and Planning Cooperative Research Program
(STEP)AGENCY: Federal Highway Administration (FHWA), DOT. ACTION: Notice. SUMMARY: Section 5207 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) established the Surface Transportation Environment and Planning Cooperative Research Program (STEP). The general objective of the STEP is to improve understanding of the complex relationship between surface transportation, planning, and the environment. SAFETEA-LU provides $16.875 million per year for fiscal years
(FY)2006-2009 to implement this new cooperative research program. The STEP is the primary source of funds to conduct all Federal Highway Administration research on planning and environmental issues. In addition, Congress mandated several special studies and STEP will be the funding source for those projects. The purpose of this notice is to announce revisions to the STEP implementation strategy for FY 2009 and to request suggested lines of research for the FY 2009 STEP via the STEP Web site at *http://www.fhwa.dot.gov/hep/step/index.htm.* DATES: Suggestions for lines of research should be submitted to the STEP Web site on or before September 22, 2008. FOR FURTHER INFORMATION CONTACT: Felicia Young, Office of Interstate and Border Planning,
(202)366-1263, *Felicia.young@fhwa.dot.gov;* or Wil Baccus, Office of the Chief Counsel,
(202)366-1396; Federal Highway Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through Friday, except Federal holidays. SUPPLEMENTARY INFORMATION: Electronic Access An electronic copy of this notice may be downloaded from the Office of the **Federal Register** 's home page at *http://www.archives.gov* and the Government Printing Office's Web site at *http://www.access.gpo.gov.* Background Section 5207 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (Pub. L. 109-59, Aug. 10. 2005), established the Surface Transportation Environment and Planning Cooperative Research Program. The STEP is a new cooperative research program for environment and planning research created in section 507 of Title 23, United States Code, Highways (23 U.S.C. 507). The general objective of the STEP is to improve understanding of the complex relationship between surface transportation, planning, and the environment. SAFETEA-LU established five priority areas for STEP research. These priority funding areas include:
(1)Develop more accurate models for evaluating transportation control measures and system designs for use by State and local governments to meet environmental requirements;
(2)improve understanding of transportation demand factors;
(3)develop indicators of economic, social, and environmental performance of transportation systems to facilitate alternatives analysis;
(4)meet additional priorities as determined by the Secretary in the strategic planning process identified in section 5208 of SAFETEA-LU; and
(5)refine the scope and research emphases through outreach and in consultation with stakeholders. Congestion reduction also has been identified as a priority research area for the strategic planning process identified in section 5208 of SAFETEA-LU and is a key element of other STEP priority research areas. Therefore, in addition to the aforementioned research priorities, the STEP will also address research priorities related to congestion reduction. Transportation system congestion is one of the single largest threats to U.S. economic prosperity and the American way of life. In response to the challenges of congestion, in May 2006, the DOT established the National Strategy to Reduce Congestion on America's Transportation Network (the “Congestion Initiative”). 1 The Congestion Initiative is a bold and comprehensive national program to reduce congestion on the Nation's roads, rails, runways and waterways. 1 Speaking before the National Retail Federation's annual conference on May 16, 2006, in Washington, DC, former U.S. Transportation Secretary Norman Mineta unveiled a new plan to reduce congestion plaguing America's roads, rails, and airports. The National Strategy to Reduce Congestion on America's Transportation Network includes a number of initiatives designed to reduce transportation congestion. The transcript of these remarks is available at: *http://www.dot.gov/affairs/minetasp051606.htm.* Additional information may be located at: *http://www.fightgridlocknow.gov.* Traffic congestion affects virtually every aspect of peoples' lives—where people live, where they work, where they shop, and how much they pay for goods and services. According to 2005 figures, in certain metropolitan areas the average rush hour driver loses as many as 72 hours per year to travel delay—equivalent to almost 2 weeks of work, amounting annually to a virtual “congestion tax” as high as $1,374 per traveler in wasted time and fuel. 2 Nationwide, congestion imposes costs on the economy of over $78 billion per year, 3 more than a five-fold increase since 1982, and that would be even higher if it accounted for the significant cost of unreliability to drivers and businesses, the environmental impacts of idle related auto emissions, or increased gasoline prices. 2 Texas Transportation Institute (TTI, 2007 Urban Mobility Report, September 2007 ( *http://tti.tamu.edu/documents/mobility_report_2007_wappx.pdf* , Table 1; and *http://mobility.tamu.edu/ums/congestion_data/tables/los_angeles.pdf* ), Tables 1 and 2. 3 TTI, 2007 Urban Mobility Report, p. 1. The STEP directly addresses congestion reduction efforts as part of the Planning Focus Area. Other STEP emphasis areas include goals and objectives that relate to congestion reduction. These include: Congestion; Air Quality and Global Climate Change, Bicycle/Pedestrian and Health, Environmental Streamlining/Stewardship; United States/Canada and United States/Mexico Border Planning; Safety Planning; Freight Planning; Travel Modeling, etc. In addition, the STEP outreach efforts continue to seek partnerships that can leverage limited research funding with other stakeholders and partners in order to increase the total amount of funding available to meet the Nation's surface transportation research needs including congestion reduction. SAFETEA-LU provides $16.875 million per year for FY 2006-2009 to implement this new cooperative research program. Due to obligation limitations, rescissions, and congressional designation of Title V Research in SAFETEA-LU, it is anticipated that approximately $12 million of the $16.875 million authorized will be available each fiscal year. The FHWA is issuing this notice to:
(1)to announce revisions to the STEP Implementation Strategy for the FY 2009 STEP, and
(2)to solicit comments via the STEP Web site on proposed research activities to be undertaken in the FY 2009 STEP. The STEP Implementation Strategy was revised to: Update information on the graph and chart regarding historical planning and environment research funding, and to add information about the proposed FY 2009 STEP including proposed funding levels, goals and potential research activities. Suggested lines of research activities for the FY 2009 STEP may include potential research ideas related to highway safety and the Congestion Initiative. Research activities related to the Congestion Initiative could specifically include ideas to relieve urban congestion; improve analysis tools for measuring and analyzing environmental impacts of congestion management projects; enhance national data resources on operational and environmental effects of congestion management projects; unleash private sector investment resources; promote operational and technological improvements; and target major freight bottlenecks and expand freight policy outreach. We invite the public to visit this Web site to obtain additional information on the STEP, as well as information on the process for forwarding comments to the FHWA regarding the STEP implementation plan. The URL for the STEP Web site is *http://www.fhwa.dot.gov/hep/step/index.htm.* The FHWA will use this Web site as a major mechanism for informing the public regarding the status of the STEP. Authority: Section 5207 of Pub. L. 109-59. Issued on: June 11, 2008. James D. Ray, Acting Federal Highway Administrator. [FR Doc. E8-14135 Filed 6-20-08; 8:45 am] BILLING CODE 4910-22-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration [FTA Docket No. FTA-2008-0034] Notice of Request for the Extension of a Currently Approved Information Collection AGENCY: Federal Transit Administration, DOT. ACTION: Notice of request for comments. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this notice announces the intention of the Federal Transit Administration
(FTA)to request the Office of Management and Budget
(OMB)to extend the following currently approved information collection: 49 U.S.C. Section 5330—Rail Fixed Guideway Systems, State Safety Oversight. DATES: Comments must be submitted before August 22, 2008. ADDRESSES: To ensure that your comments are not entered more than once into the docket, submit comments identified by the docket number by only one of the following methods: 1. *Web site: www.regulations.gov.* Follow the instructions for submitting comments on the U.S. Government electronic docket site. ( **Note:** The U.S. Department of Transportation's (DOT's) electronic docket is no longer accepting electronic comments.) All electronic submissions must be made to the U.S. Government electronic docket site at *www.regulations.gov.* Commenters should follow the directions below for mailed and hand-delivered comments. 2. *Fax:* 202-366-7951. 3. *Mail:* U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Docket Operations, M-30, West Building, Ground Floor, Room W12-140, Washington, DC 20590-0001. 4. *Hand Delivery:* U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Docket Operations, M-30, West Building, Ground Floor, Room W12-140, Washington, DC 20590-0001 between 9 a.m. and 5 p.m., Monday through Friday, except federal holidays. *Instructions:* You must include the agency name and docket number for this notice at the beginning of your comments. Submit two copies of your comments if you submit them by mail. For confirmation that FTA has received your comments, include a self-addressed stamped postcard. Note that all comments received, including any personal information, will be posted and will be available to Internet users, without change, to *www.regulations.gov.* You may review DOT's complete Privacy Act Statement in the **Federal Register** published April 11, 2000 (65 FR 19477), or you may visit *www.regulations.gov.* Docket: For access to the docket to read background documents and comments received, go to *www.regulations.gov* at any time. Background documents and comments received may also be viewed at the U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Docket Operations, M-30, West Building, Ground Floor, Room W12-140, Washington, DC 20590-0001 between 9 a.m. and 5 p.m., Monday through Friday, except federal holidays. FOR FURTHER INFORMATION CONTACT: Mr. Levern McElveen, Safety Team Leader, Office of Safety and Security,
(202)366-1651, or e-mail: *Levern.McElveen@dot.gov.* SUPPLEMENTARY INFORMATION: Interested parties are invited to send comments regarding any aspect of this information collection, including:
(1)The necessity and utility of the information collection for the proper performance of the functions of the FTA;
(2)the accuracy of the estimated burden;
(3)ways to enhance the quality, utility, and clarity of the collected information; and
(4)ways to minimize the collection burden without reducing the quality of the collected information. Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection. *Title:* 49 U.S.C. Section 5330—Rail Fixed Guideway Systems, State Safety Oversight ( *OMB Number: 2132-0558* ). *Background:* 49 U.S.C. Section 5330 requires States to designate a State Safety Oversight
(SSO)agency to oversee the safety and security of each rail transit agency within the State's jurisdiction. To comply with Section 5330, SSO agencies must develop program standards which meet FTA's minimum requirements. In the Program Standard, which must be approved by FTA, each SSO agency must require each rail transit agency in the State's jurisdiction to prepare and implement a System Safety Program Plan
(SSPP)and System Security Plan (SSP). The SSO agency also requires the rail transit agencies in its jurisdiction to conduct specific activities, such as accident investigation, implementation of a hazard management program, and the management of an internal safety and security audit process. SSO agencies review and approve the SSPPs and SSPs of the rail transit agencies. Once every three years, States conduct an on-site review of the rail transit agencies in their jurisdictions to assess SSPP/SSP implementation and to determine whether these plans are effective and if they need to be updated. SSO agencies develop final reports documenting the findings from these on-site reviews and require corrective actions. SSO agencies also review and approve accident investigation reports, participate in the rail transit agency's hazard management program, and oversee implementation of the rail transit agency's internal safety and security audit process. SSO agencies review and approve corrective action plans and track and monitor rail transit agency activities to implement them. Collection of this information enables each SSO agency to monitor each rail transit agency's implementation of the State's requirements as specified in the Program Standard approved by FTA. Without this information, States would not be able to oversee the rail transit agencies in their jurisdictions. Recent recommendations from the National Transportation Safety Board
(NTSB)and the Government Accountability Office
(GAO)have encouraged States and rail transit agencies to devote additional resources to these safety activities and safety oversight in general. SSO agencies also submit an annual certification to FTA that the State is in compliance with Section 5330 and an annual report documenting the State's safety and security oversight activities. FTA uses the annual information submitted by the States to monitor implementation of the program. If a State fails to comply with Section 5330, FTA may withhold up to five percent of the funds appropriated for use in a State or urbanized area in the State under section 5307. The information submitted by the States ensures FTA's compliance with applicable federal laws, OMB Circular A-102, and 49 CFR Part 18, “Uniform Administrative Requirements for Grants and Cooperative Agreements with State and Local Governments.” *Respondents:* State and local government agencies. *Estimated Annual Burden on Respondents:* Annually, each designated SSO agency devotes approximately 767 hours to information collection activities for each of the rail transit agencies in the State's jurisdiction. Combined, the SSO agencies spend approximately 33,770 hours on information collection activities each year, or roughly half of the total level of effort devoted to implement Section 5330 requirements in a given year. The local governments affected by Section 5330, including the rail transit agencies, spend an annual total of 108,623 hours on information collection activities to support implementation of Section 5330, or approximately 2,469 hours each. This amount also equals approximately half of the total level of effort devoted to implement Section 5330 requirements in a given year. *Estimated Total Annual Burden:* 142,393 hours. *Frequency:* Annual. Issued: June 16, 2008. Ann M. Linnertz, Associate Administrator for Administration. [FR Doc. E8-14050 Filed 6-20-08; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration [Docket No. PHMSA-2007-28505] Pipeline Safety: Requests for Special Permit AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA); DOT. ACTION: Notice. SUMMARY: The Federal pipeline safety laws allow a pipeline operator to request PHMSA to waive compliance with any part of the Federal pipeline safety regulations by granting a special permit to the operator. PHMSA is publishing this notice to provide a list of special permit requests we have received from pipeline operators seeking relief from compliance with certain pipeline safety regulations. This notice seeks public comment on these requests, including comments on any environmental impacts. At the conclusion of the comment period, PHMSA will evaluate each request individually to determine whether to grant or deny a special permit. DATES: Submit any comments regarding any of these special permit requests by July 23, 2008. ADDRESSES: Comments should reference the docket number for the special permit request and may be submitted in the following ways: • *E-Gov Web Site: http://www.Regulations.gov.* This site allows the public to enter comments on any **Federal Register** notice issued by any agency. • *Fax:* 1-202-493-2251. • *Mail:* Docket Management System: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • *Hand Delivery:* DOT Docket Management System; U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590 between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. *Instructions:* You should identify the docket number for the special permit request you are commenting on at the beginning of your comments. If you submit your comments by mail, submit two copies. To receive confirmation that PHMSA received your comments, include a self-addressed stamped postcard. Internet users may submit comments at *http://www.regulations.gov.* Note: Comments are posted without changes or edits to *http://www.regulations.gov,* including any personal information provided. There is a privacy statement published on *http://www.regulations.gov.* FOR FURTHER INFORMATION CONTACT: Wayne Lemoi by telephone at
(404)832-1160; or, e-mail at *wayne.lemoi@dot.gov.* SUPPLEMENTARY INFORMATION: PHMSA has filed in the Federal Docket Management System
(FDMS)requests for special permits we have received from pipeline operators seeking relief from compliance with certain pipeline safety regulations. Each request has been assigned a separate docket number in the FDMS. We invite interested persons to participate by reviewing these special permit requests and by submitting written comments, data or other views. Please include any comments on environmental impacts granting the special permit may have. Before acting on any special permit request, PHMSA will evaluate all comments received on or before the comment closing date. We will consider comments received after this date if it is possible to do so without incurring additional expense or delay. We may grant a special permit or deny a request based on the comments we receive. PHMSA has received the following special permit requests. Docket No. Requester Regulation(s) Nature of special permit PHMSA-2008-0139 Aker Kvaerner IHI Gulf (Aker Gulf) 49 CFR 193.2301 To authorize Aker Gulf to use automatic ultrasonic examination to inspect liquefied natural gas
(LNG)storage tank welds in lieu of radiography during construction of the Gulf Clean Energy, LNG Re-gasification Terminal in Jackson County, Mississippi. PHMSA-2008-0140 Cascade Natural Gas Corporation (Cascade) 49 CFR 192.745 To authorize Cascade to operate the KB Pipeline in Cowlitz County, Washington, and Columbia County, Oregon, from May 1, 2008, to October 1, 2009, without partially operating certain PBV trunnion mounted ball valves during the required annual inspections. Cascade will use alternate inspection methods until a root cause investigation is completed on the failure of a similar valve in another pipeline operator's system. PHMSA-2008-0141 Northern Natural Gas Company
(NNG)49 CFR 192.635(b) To authorize NNG to operate a 2-mile natural gas transmission pipeline segment near Harrisburg, South Dakota, without injecting odorant into the gas. PHMSA-2008-0143 Southern LNG, Inc.
(SLNG)49 CFR 193.2301 To authorize SLNG to use ultrasonic examination to inspect LNG storage tank welds in lieu of radiography during expansion of the Elba Island LNG storage facility near Savannah, Georgia. PHMSA-2008-0154 Iroquois Gas Transmission System (Iroquois) 49 CFR 192.1, 11, 192.145, 192.201, 192.503, 192.505, 192.611, and 192.619 To authorize Iroquois to immediately increase the maximum allowable operating pressure
(MAOP)of its entire pipeline system in the United States from 1,440 psig to 1,480 psig and after specific materials upgrades to increase the MAOP to 1,600 psig. This would result in the system operating up to 80% of the specified minimum yield strength
(SMYS)in Class 1 locations, 67% SMYS in Class 2 locations, and 56% SMYS in Class 3 locations. This request applies to the 30-inch and 24-inch diameter mainline from Waddington, NY, to South Commack, NY, and to Hunts Point in New York City, including all meter stations, lateral pipelines to customer delivery points, compressor stations and all appurtenant pipeline and station facilities. Iroquois also requests the Special Permit to apply to facilities currently certificated and proposed to be in-service in 2008 and 2009 at locations in Dover, NY, Brookfield, CT, Newtown, CT and Milford, CT. PHMSA-2008-0156 TransCanada Pipelines Limited (TransCanada) 49 CFR 192.611 To authorize TransCanada to operate 17 segments along Line “A” in Boundary, Bonner, Kootenai, Spokane, Walla Walla, Umatilla, Morrow, Deschutes, and Klamath Counties in Idaho, Oregon and Washington without reducing the operating pressure as a result of changes from Class 1 and Class 2 to Class 3 locations. PHMSA-2008-0157 TransCanada Pipelines Limited (TransCanada) 49 CFR 192.611 To authorize TransCanada to operate two segments along Line “A” in Boundary and Kootenai Counties, Idaho, without reducing the operating pressure as a result of changes from Class 1 to Class 3 locations. PHMSA-2008-0158 Texas Gas Transmission, LLC (Texas Gas) 49 CFR 192.611 To authorize Texas Gas to operate 2 segments on 2 parallel gas pipelines in Iberia Parish, LA, without reducing operating pressure as a result of changes from Class 1 to Class 3 locations. PHMSA-2008-0159 Texas Gas Transmission, LLC (Texas Gas) 49 CFR 192.611 To authorize Texas Gas to operate 4 segments on 3 parallel gas pipelines in Graves County, KY, without reducing operating pressure as a result of changes from Class 1 or Class 2 to Class 3 locations. PHMSA-2008-0163 Transwestern Pipeline Company, L.L.C. (Transwestern) 49 CFR 192.1, 11, and 192.201 To authorize Transwestern to design, construct and operate the San Juan NPS 36 loop expansion project (San Juan Stitches) near Gallup, NM, at up to 80% SMYS in Class 1 locations, 67% SMYS in Class 2 locations, and 56% SMYS in Class 3 locations. Authority: 49 U.S.C. 60118(c)(1) and 49 CFR 1.53. Issued in Washington, DC on June 17, 2008. Alan Mayberry, Director, Engineering and Emergency Support. [FR Doc. E8-14117 Filed 6-20-08; 8:45 am] BILLING CODE 4910-60-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration [Docket ID PHMSA-2008-0161] Pipeline Safety: Workshop on Cased Pipeline Integrity Assessments AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT. ACTION: Notice of workshop. SUMMARY: PHMSA is holding a Workshop on Cased Pipeline Integrity Assessments and in coordination with a planning group representing the National Association of Pipeline Safety Regulators, American Gas Association, Interstate Natural Gas Association of America, American Public Gas Association, American Petroleum Institute, and NACE International, the workshop focus will be for pipeline operators, trade associations, and others to address concerns with successfully using External Corrosion Direct Assessment integrity evaluation methods and use of other technologies to assess casings in High Consequence Areas. DATES: The workshop will be held July 15-16, 2008. ADDRESSES: The workshop will be held at the Sheraton Gateway Suites Chicago O'Hare, 6501 North Manheim Road, Rosemont, IL 60018. Hotel reservations under the U.S. Department of Transportation room block can be made at
(847)699-6300 by June 30. A daily rate of $168.00 is available. The meeting room(s) will be posted at the hotel on the days of the workshop. FOR FURTHER INFORMATION CONTACT: Max Kieba at
(202)493-0595, or by e-mail at *max.kieba@dot.gov.* SUPPLEMENTARY INFORMATION: *Registration:* Members of the public may attend this free workshop. To help with estimating attendance and planning for the breakout session, all attendees are encouraged to register for the workshop at *http://primis.phmsa.dot.gov/meetings/Mtg54.mtg.* Hotel reservations must be made by contacting the hotel directly. Comments should reference Docket ID PHMSA-08-0161. Comments may be submitted in the following ways: • *E-Gov Web Site: http://www.regulations.gov* . This site allows the public to enter comments on any **Federal Register** notice issued by any agency. Follow the instructions for submitting comments. • *Fax:* 1-202-493-2251. • *Mail:* Docket Management System, U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Room W12-140, Washington, DC 20590. • *Hand Delivery:* DOT Docket Management System, Room W12-140, on the ground floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. *Instructions:* Identify the Docket ID at the beginning of your comments. If you submit your comments by mail, submit two copies. If you wish to receive confirmation that PHMSA has received your comments, include a self-addressed stamped postcard. Internet users may submit comments at *http://www.regulations.gov.* Note: Comments will be posted without changes or edits to *http://www.regulations.gov* including any personal information provided. Please see the Privacy Act heading in the Regulatory Analyses and Notices section of the SUPPLEMENTARY INFORMATION for additional information. *Privacy Act Statement:* Anyone may search the electronic form of all comments received for any of our dockets. You may review DOT's complete Privacy Act Statement in the **Federal Register** published April 11, 2000 (65 FR 19477). *Information on Services for Individuals with Disabilities:* For information on facilities or services for individuals with disabilities, or to request special assistance at the meeting, please contact Max Kieba by July 1, 2008. *Web Casting:* The workshop will be Web cast except for the breakout sessions on the second day. Information on the Web cast link, including estimates of times when the Web cast will be on, will be posted on the meeting Web site above. Presentations from the workshop and recommendations from the breakout sessions will be uploaded to the meeting Web site within 30 days after the workshop. *Additional Information on Cased Crossings:* The meeting Web site will have a list of technical documents participants are encouraged to review prior to the workshop, along with a list of questions and issues we will address during the workshop. Workshop Agenda The first day of the workshop will include:
(1)A background of the regulatory integrity requirements,
(2)Technical updates by both operators and service providers,
(3)Overview of research of new technology, inspection issues and the current integrity inspection positions,
(4)Status of the stakeholders represented followed by panels presenting and discussing current NACE standards,
(5)Approaches and assessment methodologies being used for cased pipeline segments, and
(6)Research completed or underway. The second day of the workshop will include:
(1)Breakout sessions on the above topics, followed by the group convening to talk about technical assessment successes,
(2)New technology,
(3)New integrity assessment approaches,
(4)Status update of assessments, and
(5)Long term issues. The second day will also serve as a brainstorm session for identifying discussion topics/issues that should be incorporated into a future public workshop on the broader issue of how pipeline industry can work collaboratively with others to reduce the need for casings on newly installed pipe. The goal at the end of the workshop will be to develop a list of potential solutions that can address the issues through usage of new technology, understanding of and/or changes to the regulations, updating of standards, operating practices and/or research. PHMSA will then analyze the list of potential solutions with stakeholders for consideration on which solutions can best address the issues. Issued in Washington, DC, on June 18, 2008. William H. Gute, Deputy Associate Administrator for Pipeline Safety. [FR Doc. E8-14119 Filed 6-20-08; 8:45 am] BILLING CODE 4910-60-P DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Ex Parte No. 290 (Sub-No. 5) (2008-3)] Quarterly Rail Cost Adjustment Factor AGENCY: Surface Transportation Board. ACTION: Approval of rail cost adjustment factor. SUMMARY: The Board has approved the third quarter 2008 rail cost adjustment factor
(RCAF)and cost index filed by the Association of American Railroads. The third quarter 2008 RCAF (Unadjusted) is 1.147. The third quarter 2008 RCAF (Adjusted) is 0.527. The third quarter 2008 RCAF-5 is 0.500. DATES: *Effective Date:* July 1, 2008. FOR FURTHER INFORMATION CONTACT: Pedro Ramirez,
(202)245-0333. [Federal Information Relay Service
(FIRS)for the hearing impaired: 1-800-877-8339.] SUPPLEMENTARY INFORMATION: Additional information is contained in the Board's decision, which is available on our Web site *http://www.stb.dot.gov* . To purchase a copy of the full decision, write to, e-mail or call the Board's contractor, ASAP Document Solutions; 9332 Annapolis Rd., Suite 103, Lanham, MD 20706; e-mail *asapdc@verizon.net* ; phone
(202)306-4004. [Assistance for the hearing impaired is available through FIRS: 1-800-877-8339.] This action will not significantly affect either the quality of the human environment or energy conservation. Pursuant to 5 U.S.C. 605(b), we conclude that our action will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act. By the Board, Chairman Nottingham, Vice Chairman Mulvey and Commissioner Buttrey. Decided: June 17, 2008. Anne K. Quinlan, Acting Secretary. [FR Doc. E8-14075 Filed 6-20-08; 8:45 am] BILLING CODE 4915-01-P DEPARTMENT OF VETERANS AFFAIRS [OMB Control No. 2900-New (SAR)] SAR Application; Correction AGENCY: Veterans Benefits Administration, Department of Veterans Affairs. ACTION: Notice; correction. SUMMARY: The Department of Veterans Affairs
(VA)published a collection of information notice in the **Federal Register** on June 12, 2008, that contained an error. The notice incorrectly stated that the “Veterans Health Administration” had submitted a collection of information to the Office of Management and Budget
(OMB)for review and comment. This document corrects the error to reflect that the “Veterans Benefits Administration” submitted the collection of information to OMB for review and comment. FOR FURTHER INFORMATION CONTACT: Denise McLamb, Records Management Service (005R1B), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, at 202-461-7485. Correction In FR Doc. E8-13245, published on June 12, 2008, at 73 FR 33497, make the following correction. On page 33497, in the third column, at the Agency heading remove “Veterans Health Administration” and add, in its place, “Veterans Benefits Administration”, and in the Summary remove “Veterans Health Administration (VHA)” and add, in its place, “Veterans Benefits Administration (VBA)”. Dated: June 17, 2008. William F. Russo, Director of Regulations Management. [FR Doc. E8-14089 Filed 6-20-08; 8:45 am] BILLING CODE 8320-01-P 73 121 Monday, June 23, 2008 Proposed Rules Part II Securities and Exchange Commission 17 CFR Parts 230, 232, 239, et al. Interactive Data for Mutual Fund Risk/Return Summary; Proposed Rule SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 230, 232, 239, 270, and 274 [Release Nos. 33-8929, 34-57942, 39-2457, IC-28298; File Number S7-12-08] RIN 3235-AK13 Interactive Data for Mutual Fund Risk/Return Summary AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: We are proposing rules requiring mutual funds to provide risk/return summary information in a form that would improve its usefulness to investors. Under the proposed rules, risk/return summary information could be downloaded directly into spreadsheets, analyzed in a variety of ways using commercial off-the-shelf software, and used within investment models in other software formats. Mutual funds would provide the risk/return summary section of their prospectuses to the Commission and on their Web sites in interactive data format using the eXtensible Business Reporting Language (“XBRL”). The interactive data would be provided as an exhibit to registration statements. The proposed rules are intended not only to make risk/return summary information easier for investors to analyze, but also to assist in automating regulatory filings and business information processing. Interactive data has the potential to increase the speed, accuracy, and usability of mutual fund disclosure, and eventually reduce costs. We are also proposing to permit investment companies to submit portfolio holdings information in our interactive data voluntary program without being required to submit other financial information. DATES: Comments should be submitted on or before August 1, 2008. ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/proposed.shtml* ); • Send an e-mail to *rule-comments@sec.gov* . Please include File Number S7-12-08 on the subject line; or • Use the Federal eRulemaking Portal ( *http://www.regulations.gov* ). Follow the instructions for submitting comments. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number S7-12-08. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/proposed.shtml* ). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: Alberto H. Zapata, Senior Counsel, or Tara R. Buckley, Branch Chief, Office of Disclosure Regulation, Division of Investment Management, at
(202)551-6784, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-5720. SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission (“Commission”) is proposing amendments to Rule 485 1 under the Securities Act of 1933 (“Securities Act”), Rules 11, 2 202, 3 and 401 4 of Regulation S-T, 5 Rule 8b-33 6 under the Investment Company Act of 1940 (“Investment Company Act”), and Form N-1A 7 under the Securities Act and the Investment Company Act. We are also proposing amendments to proposed Rule 405 of Regulation S-T. 8 1 17 CFR 230.485. 2 17 CFR 232.11. 3 17 CFR 232.202. 4 17 CFR 232.401. 5 17 CFR 232.10 *et seq* . 6 17 CFR 270.8b-33. 7 17 CFR 239.15A and 274.11A. 8 *See* Securities Act Release No. 8924 (May 30, 2008) [73 FR 32794 (June 10, 2008)] (“Interactive Data Proposing Release”). Table of Contents I. Introduction and Background A. Introduction B. Current Filing Technology and Interactive Data C. The Commission's Multiyear Evaluation of Interactive Data and Overview of Proposed Rules II. Discussion of the Proposed Amendments A. Submission of Risk/Return Summary Information Using Interactive Data B. Compliance Date C. Documents and Information Covered by the Proposed Rules D. Filing Period E. Web Site Posting of Interactive Data F. Accuracy and Reliability of Interactive Data G. Required Items H. Consequences of Non-Compliance and Hardship Exemption I. Changes to the Voluntary Program III. General Request for Comments IV. Paperwork Reduction Act V. Cost/Benefit Analysis VI. Consideration of Burden on Competition and Promotion of Efficiency, Competition, and Capital Formation VII. Initial Regulatory Flexibility Analysis VIII. Small Business Regulatory Enforcement Fairness Act IX. Statutory Authority X. Text of Proposed Rule and Form Amendments I. Introduction and Background A. Introduction Over the last several decades, developments in technology and electronic data communication have significantly decreased the time and cost of filing disclosure documents with us. Technological developments also have facilitated greater transparency in the form of easier access to, and analysis of, financial reporting and disclosures. Most notably, in 1993 we began to require electronic filing on our Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”). 9 Since then, widespread use of the Internet has vastly decreased the time and expense of accessing disclosure filed with us. 9 In 1993, we began to require domestic issuers to file most documents electronically. Securities Act Release No. 6977 (Feb. 23, 1993) [58 FR 14628 (Mar. 18, 1993)]. Electronic filing began with a pilot program in 1984. Securities Act Release No. 6539 (June 27, 1984) [49 FR 28044 (July 10, 1984)]. We continue to update our filing standards and systems as technologies improve. These developments assist us in our goal to promote efficient and transparent capital markets. For example, since 2003 we have required electronic filing of certain ownership reports filed on Forms 3, 10 4, 11 and 5 12 in a format that provides interactive data, and recently we adopted similar rules governing the filing of Form D. 13 In addition, recently we have encouraged, and in some cases required, open-end management investment companies (“mutual funds”) 14 and public reporting companies to provide disclosures and communicate with investors using the Internet. 15 Now, as part of our continuing efforts to assist filers as well as investors who use Commission disclosures, we propose to require that mutual fund risk/return summary information be provided in a format that makes the information interactive. 10 17 CFR 249.103 and 274.202. 11 17 CFR 249.104 and 274.203. 12 17 CFR 249.105. 13 17 CFR 239.500. 14 An open-end management investment company is an investment company, other than a unit investment trust or face-amount certificate company, that offers for sale or has outstanding any redeemable security of which it is the issuer. *See* Sections 4 and 5(a)(1) of the Investment Company Act [15 U.S.C. 80a-4 and 80a-5(a)(1)]. 15 *See, e.g.* , Exchange Act Release No. 57172 (Jan. 18, 2008) [73 FR 4450 (Jan. 25, 2008)]; Securities Act Release No. 8861 (Nov. 21, 2007) [72 FR 67790 (Nov. 30, 2007)] (“Summary Prospectus Proposing Release”); Exchange Act Release No. 56135 (July 26, 2007) [72 FR 42222 (Aug. 1, 2007)]; Exchange Act Release No. 55146 (Jan. 22, 2007) [72 FR 4148 (Jan. 29, 2007)]; Securities Act Release No. 8591 (July 19, 2005) [70 FR 44722 (Aug. 3, 2005)]. Our proposal builds on our voluntary filer program, started in 2005, 16 that allowed us to evaluate the merits of interactive data. The voluntary program allows companies to submit financial statements on a supplemental basis in interactive format as exhibits to specified filings under the Securities Exchange Act of 1934 (“Exchange Act”) and the Investment Company Act. 17 Over 75 companies have participated in the voluntary program. These companies span a wide range of industries and company characteristics, and have a total market capitalization of over $2 trillion. Companies that participate in the program still are required to file their financial statements in American Standard Code for Information Interchange (“ASCII”) or HyperText Markup Language (“HTML”). 18 16 Securities Act Release No. 8529 (Feb. 3, 2005) [70 FR 6556 (Feb. 8, 2005)] (“Voluntary Program Adopting Release”). 17 15 U.S.C. 80a-1 *et seq* . 18 HTML is a standardized language commonly used to present text and other information on Web sites. In 2007, we extended the program to enable mutual funds voluntarily to submit in interactive data format supplemental information contained in the risk/return summary section of their prospectuses. 19 The risk/return summary contains key information about a fund's investment objectives and strategies, costs, risks, and past performance. 20 Approximately 20 mutual funds from a wide variety of fund families have submitted risk/return summary information in interactive format. 19 Securities Act Release No. 8823 (July 11, 2007) [72 FR 39290 (July 17, 2007)] (“Risk/Return Voluntary Program Adopting Release”). 20 Items 2 and 3 of Form N-1A. In a recently issued release, we proposed to require companies, other than investment companies that are registered under the Investment Company Act, business development companies, 21 and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X, to submit financial information to the Commission in interactive data format. 22 In this release, we propose to extend similar requirements to mutual fund risk/return summary information. 21 Business development companies are a category of closed-end investment companies that are not required to register under the Investment Company Act. 15 U.S.C. 80a-2(a)(48). 22 *See* Interactive Data Proposing Release, supra note 8. The submission of mutual fund risk/return summary information based on interactive data would create new ways for investors, analysts, and others to retrieve and use the information. For example, users of risk/return summary information could download cost and performance information directly into spreadsheets, analyze it using commercial off-the-shelf software, or use it within investment models in other software formats. Through interactive data, what is currently static, text-based information can be dynamically searched and analyzed, facilitating the comparison of mutual fund cost, performance, and other information across multiple classes of the same fund and across the more than 8,000 funds currently available. 23 23 Investment Company Institute, *2008 Investment Company Fact Book* , at 15 (2008), available at: *http://www.icifactbook.org/pdf/2007_factbook.pdf* (as of year-end 2007, there were 8,752 mutual funds). Interactive data also could provide a significant opportunity to automate regulatory filings and business information processing, with the potential to increase the speed, accuracy, and usability of mutual fund disclosure. Such automation could eventually reduce costs. A mutual fund that uses a standardized interactive data format at earlier stages of its reporting cycle could reduce the need for repetitive data entry and, therefore, the likelihood of human error. In this way, interactive data may improve the quality of information while reducing its cost. Also, to the extent investors currently are required to pay for access to mutual fund risk/return summary information that has been extracted and reformatted into an interactive data format by third-party sources, the availability of interactive data in Commission filings could allow investors to avoid additional costs associated with third-party sources. We believe that requiring mutual funds to file the risk/return summary section of their prospectuses using interactive data format would enable investors, analysts, and the Commission staff to capture and analyze that information more quickly and at less cost than is possible using the same information provided in a static format. Any investor with a computer would have the ability to acquire and download interactive data that have generally been available only to intermediaries and third-party analysts. The proposed interactive data requirements would not change what is currently disclosed, but would add a requirement to include risk/return summary information in a new format as an exhibit. Thus the proposal to require that filers provide risk/return summary information using interactive data will not alter the disclosure or formatting standards of mutual fund prospectuses, which would continue to be available as they are today for those who prefer to view the traditional text-based document. Throughout this release, we solicit comment on many issues concerning the use of interactive data, including specifically whether mutual fund risk/return summary information in interactive data format should be required as exhibits to Securities Act registration statements filed with us. We are seeking comment from investors, mutual funds, financial intermediaries, analysts, accountants, and any other parties or individuals who may be affected by the use of interactive disclosure in Commission filings, and any other members of the public. B. Current Filing Technology and Interactive Data Companies filing electronically are required to file their registration statements and periodic reports in ASCII or HTML format. 24 Also, to a limited degree, our electronic filing system uses other formats for internal processing and document-type identification. For example, our system uses eXtensible Markup Language (“XML”) to process reports of beneficial ownership of equity securities on Forms 3, 4, and 5 under section 16(a) of the Exchange Act. 25 24 Rule 301 of Regulation S-T [17 CFR 232.301] requires electronic filings to comply with the EDGAR Filer Manual, and Section 5.2 of the EDGAR Filer Manual requires that electronic filings be in ASCII or HTML format. Rule 104 of Regulation S-T [17 CFR 232.104] permits filers to submit voluntarily as an adjunct to their official filings in ASCII or HTML unofficial PDF copies of filed documents. Unless otherwise stated, we refer to filings in ASCII or HTML as traditional format filings. 25 15 U.S.C. 78p(a). Electronic formats such as HTML, XML, and XBRL are open standards 26 that define or “tag” data using standard definitions. The tags establish a consistent structure of identity and context. This consistent structure can be recognized and processed by a variety of different software applications. In the case of HTML, the standardized tags enable Web browsers to present Web sites' embedded text and information in predictable format. In the case of XBRL, software applications, such as databases, financial reporting systems, and spreadsheets, recognize and process tagged information. 26 The term “open standard” is generally applied to technological specifications that are widely available to the public, royalty-free, at minimal or no cost. XBRL was derived from the XML standard. It was developed and continues to be supported by XBRL International, a collaborative consortium of approximately 550 organizations representing many elements of the financial reporting community worldwide in more than 20 jurisdictions, national and regional. XBRL U.S., the international organization's U.S. jurisdiction representative, is a non-profit organization that includes companies, public accounting firms, software developers, filing agents, data aggregators, stock exchanges, regulators, financial services companies, and industry associations. 27 27 XBRL U.S. supports efforts to promote interactive financial and business data specific to the U.S. Risk/return summary information in interactive format requires a standard list of tags. These tags are similar to definitions in an ordinary dictionary, and they cover a variety of concepts that can be read and understood by software applications. For the risk/return summary, a mutual fund would use the list of tags for risk/return summary information developed by the Investment Company Institute (“ICI”). 28 This list of tags contains descriptive labels, authoritative references to Commission regulations where applicable, and other elements, all of which provide the contextual information necessary for interactive data 29 to be recognized and processed by software. 30 28 Unless stated otherwise, when we refer to the “list of tags for risk/return summary information” we mean the interactive data taxonomy developed by the ICI, including any modifications. We anticipate entering into a contract to update the architecture of the taxonomy developed by the ICI and conform the taxonomy to any changes in the risk/return summary that we adopt pursuant to a pending rule proposal. *See* Summary Prospectus Proposing Release, *supra* note 15. The ICI is a national association of the U.S. investment company industry. The taxonomy developed by the ICI received acknowledgement from XBRL International in June 2007 and is used by mutual funds participating in the Commission's voluntary program. The taxonomy is available on XBRL International's Web site at: *http://www.xbrl.org/Taxonomy/ici/ici-rr-summarydocument-20070516-acknowledged.htm* . 29 The proposed rules would define the interactive data necessary to create human-readable disclosure as the “interactive data file,” which would be required with every interactive data submission. *See* Interactive Data Proposing Release, *supra* note 8 (proposing new definitions under 17 CFR 232.11). The EDGAR Filer Manual would identify any necessary supporting files. 30 For example, contextual information would identify the entity to which it relates, usually by using the filer's CIK number. A hypothetical filer converting its traditional electronic disclosure of total annual fund operating expenses of 0.73% would have to create interactive data that identify what the 0.73% represents, total annual fund operating expenses, and that the number is a percentage. The contextual information would include other information as necessary; for example, the date of the prospectus to which it relates and the series and class to which it applies. A mutual fund may issue multiple “series” of shares, each of which is preferred over all other series in respect of assets specifically allocated to that series. Rule 18f-2 under the Investment Company Act [17 CFR 270.18f-2]. Each series is, in effect, a separate investment portfolio. A mutual fund may issue more than one class of shares that represent interests in the same portfolio of securities with each class, among other things, having a different arrangement for shareholder services or the distribution of securities, or both. Rule 18f-3 under the Investment Company Act [17 CFR 270.18f-3]. To apply data tags to risk/return summary information, a preparer uses commercially available software that guides the preparer in mapping information in the risk/return summary, such as line item costs in a mutual fund's fee table, to the appropriate tags in the standard list. This involves locating an element in the list of tags that represents the particular disclosure that is to be tagged. Occasionally, because mutual funds have some flexibility in preparing the risk/return summary, particularly the narrative portions, it is possible that a mutual fund may wish to use a non-standard disclosure that is not included in the standard list of tags. In this situation, a fund would create a company-specific element, called an extension. A mutual fund may choose to tag its own risk/return summary using commercially available software, or it may choose instead to outsource the tagging process. In the event a mutual fund relies upon a service provider to tag the fund's risk/return summary, the mutual fund would want to carefully review the tagging done by the service provider in order to make sure that the tagged risk/return summary information is accurate and consistent with the information the mutual fund presents in its traditional format filing. Because mutual fund risk/return summary information in interactive data format, referred to as the interactive data file, is intended to be processed by software applications, the unprocessed interactive data is not readable. Thus, viewers are necessary to convert the interactive data file to human readable format. Some viewers are similar to Web browsers used to read HTML files. The Commission's Web site currently provides links to four viewers that allow the public to easily read mutual fund and other company disclosures submitted using interactive data. 31 One of these viewers allows users to view and compare mutual fund risk/return summary information, including investment objectives and strategies, risks, costs, and performance, that is submitted in interactive data format. 32 These viewers demonstrate the capability of downloading interactive data into software such as Microsoft Excel as well as into other applications that are widely available on the Internet. In addition, we are aware of other applications under development that may provide additional and advanced functionality. 31 *See* viewers available at *http://www.sec.gov/xbrl* . 32 A mutual fund information viewer for the voluntary program is available at: *http://a.viewerprototype1.com/viewer* . C. The Commission's Multiyear Evaluation of Interactive Data and Overview of Proposed Rules In 2004, we began assessing the benefits of interactive data and its potential for improving the timeliness and accuracy of financial disclosure and analysis of Commission filings. 33 As part of this evaluation, we adopted rules in 2005 permitting filers, on a voluntary basis, to provide financial disclosure in interactive data format as an exhibit to certain filings on our electronic filing system. After more than two years of increasing participation, over 75 companies have chosen to provide interactive data financial reporting. 34 33 *See SEC Announces Initiative to Assess Benefits of Tagged Data in Commission Filings* , Securities and Exchange Commission Press Release, July 22, 2004, available at: *http://www.sec.gov/news/press/2004-97.htm* . 34 A viewer for this interactive data is available at: *http://www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml* . This viewer, one of several funded by the Commission to demonstrate interactive data, maintains a running total of companies and filers submitting data as part of the voluntary program. As of April 17, 2008, 78 companies had submitted 350 interactive data reports. In 2007, we extended the program to enable mutual funds voluntarily to submit risk/return summary information in interactive data format. To date, approximately 20 mutual funds have chosen to provide interactive data risk/return summaries. 35 35 The mutual fund information viewer contains all mutual fund submissions under the voluntary program. As of May 1, 2008, 21 mutual funds had submitted 33 interactive data reports. During this time, we have kept informed of technology advances and other interactive data developments. We note that several U.S. and foreign regulators have begun to incorporate interactive data into their financial reporting systems. The Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve, and the Office of the Comptroller of the Currency (“OCC”) require the use of XBRL. 36 As of 2006, approximately 8,200 U.S. financial institutions were using XBRL to submit quarterly reports to banking regulators. 37 Countries that have required or instituted voluntary or pilot programs for XBRL financial reporting include Australia, Belgium, Canada, China, Denmark, France, Germany, Ireland, Israel, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Thailand, and the United Kingdom. 38 36 Since 2005, the FDIC, Federal Reserve, and the OCC have required the insured institutions that they oversee to file their quarterly Consolidated Reports of Condition and Income (called “Call Reports”) in interactive data format using XBRL. Call Reports, which include data about an institution's balance sheet and income statement, are used by these federal agencies to assess the financial health and risk profile of the financial institution. 37 *See* Improved Business Process Through XBRL: A Use Case for Business Reporting, available at *http://www.xbrl.org/us/us/FFIEC%20White%20Paper%2002Feb2006.pdf* . 38 *See* XBRL International Progress Report (November 2007), available at *http://www.xbrl.org/ProgressReports/2007_11_XBRL_Progress_Report.pdf.* We also have kept informed of relevant advances and developments by hosting roundtables on the topic of interactive data reporting, 39 creating the Commission's Office of Interactive Disclosure, 40 and meeting with international securities regulators to discuss, among other items, timetables for implementation of interactive data initiatives for financial reporting. 41 Also, staff of the Commission have attended meetings of the Advisory Committee on Improvements to Financial Reporting (“CIFiR”) in which the committee discussed proposals for financial reporting using interactive data. 42 We also have reviewed written statements and public comments received by CIFiR on its XBRL developed proposal. 43 39 *See* materials available at *http://www.sec.gov/spotlight/xbrl/xbrl-meetings.shtml* . 40 *See SEC Announces New Unit to Lead Global Move to Interactive Data* , Securities and Exchange Commission Press Release, October 9, 2007, available at: *http://www.sec.gov/news/press/2007/2007-213.htm* . 41 *See Chairman Cox, Overseas Counterparts Meet to Discuss Interactive Data Timetable* , Securities and Exchange Commission Press Release, November 9, 2007, available at: *http://www.sec.gov/news/press/2007/2007-227.htm* . 42 The Commission established CIFiR to examine the U.S. financial reporting system, with the goals of reducing unnecessary complexity and making information more useful and understandable for investors. *See SEC Establishes Advisory Committee to Make U.S. Financial Reporting System More User-Friendly for Investors* , Securities and Exchange Commission Press Release, June 27, 2007, available at *http://www.sec.gov/news/press/2007/2007-123.htm* . CIFiR conducted an open meeting on March 14, 2008, in which it heard reactions from an invited panel of participants to CIFiR's developed proposal regarding required filing of financial information using interactive data. An archived Webcast of the meeting is available at *http://sec.gov/about/offices/oca/cifir.shtml* . The March 14, 2008 panelists presented their views and engaged with CIFiR members regarding issues relating to requiring interactive data tagged financial statements, including tag list and technological developments, implications for large and small public companies, needs of investors, necessity of assurance and verification of such tagged financial statements, and legal implications arising from such tagging. Also, CIFiR has provided to the Commission an interim progress report that contains a developed proposal that the Commission, over the long term, require the filing of financial information using interactive data once specified conditions are satisfied. See Progress Report of the Advisory Committee on Improvements to the Financial Reporting to the United States Securities and Exchange Commission (Feb. 14, 2008) (“Progress Report”), available at *http://www.sec.gov/about/offices/oca/acifr/acifr-pr-021408-final.pdf* . 43 The XBRL developed proposal appears in chapter 4 of the Progress Report. Written statements of panelists at the March 14, 2008 meeting and public comments received on the Progress Report are available at *http://sec.gov/comments/265-24/265-24.shtml* . Building on our experience monitoring the voluntary program and our participation in the other initiatives described above, we are now proposing rules to require mutual funds to provide risk/return summary information using interactive data as an exhibit to their registration statements filed on Form N-1A. 44 Interactive data would be required to be provided on a mutual fund's Web site 45 and with the fund's Securities Act registration statements and post-effective amendments thereto. 46 We believe this has the potential to provide advantages for the investing public by making risk/return summary information more accessible, timely, inexpensive, and easier to analyze. 44 Form N-1A is the form used by mutual funds to register under the Investment Company Act and to offer securities under the Securities Act. 45 The proposed Web site posting requirement would apply only to the extent a mutual fund already maintains a Web site. 46 Interactive data would be required as an exhibit to a Securities Act registration statement or post-effective amendment thereto that contains risk/return summary information. Interactive data would not be required as an exhibit to a post-effective amendment that does not contain risk/return summary information. By enabling mutual funds to further automate their disclosure processes, interactive data may eventually help funds improve the speed at which they generate information, while reducing the cost of filing and potentially increasing the accuracy of the data. For example, with standardized interactive data tags, registration statements may require less time for information gathering and review. Also, standardized interactive data tagging may enhance the ability of a fund's in-house professionals to identify and correct errors in the fund's registration statements filed in traditional electronic format. Mutual funds also may gain benefits not directly related to risk/return summary information disclosures. For example, mutual fund families that use interactive data may be able to compile information more quickly and potentially more reliably both for internal purposes and for communications with financial intermediaries, third party information providers, and the public. However, we recognize that at the outset, mutual funds would most likely prepare their interactive data as an additional step after their prospectuses have been prepared. The principal elements of the proposal are as follows: • Mutual funds would provide to the Commission a new exhibit with their risk/return summary information in interactive data format, beginning with initial registration statements, and post-effective amendments that are annual updates to effective registration statements, that become effective after December 31, 2009. 47 47 The proposed schedule is premised on the rules being adopted this fall in time for mutual funds to implement this schedule, and could be adjusted depending on when the Commission adopts any final rules. • Mutual funds providing risk/return summary information in interactive data format would be required to use the most recent list of tags released by XBRL U.S. as required by the EDGAR Filer Manual. Mutual funds also would be required to tag a limited number of document and entity identifier elements, such as the form type and the fund's name. As with interactive data for the risk/return summary, these document and entity identifier elements would be formatted using the appropriate list of tags as required by the EDGAR Filer Manual. 48 48 The appropriate list of tags for document and entity identifier elements would be a list released by XBRL U.S. and would be required to be used by all issuers required to submit interactive data. • A mutual fund required to provide risk/return summary information in interactive data format to the Commission also would be required to post that information in interactive data format on its Web site on the earlier of the date that the interactive data is submitted to the Commission or is required to be submitted to the Commission. • The proposed rules would not alter the requirements to provide risk/return summary information with the traditional format filings. 49 49 When we extended the voluntary program to the mutual fund risk/return summary, we stated in the adopting release that the interactive data submission would be supplemental to filings and not replace the required traditional electronic format of the information it contains. We also said that volunteers would be required to continue to file their traditional electronic filings. *See* Part II.A. of the Risk/Return Voluntary Program Adopting Release, *supra* note 19, 72 FR at 39292. • Risk/return summary information in interactive data format would be provided as exhibits identified in General Instruction C.3.(g) of Form N-1A. • Viewable interactive data as displayed through software available on the Commission's Web site, and to the extent identical in all material respects to the corresponding portion of the traditional format filing, would be subject to all the same liability provisions of the federal securities laws as the corresponding data in the traditional format filing. • Data in the interactive data file submitted to us generally would be subject to the federal securities laws in a manner similar to that of the voluntary program and, as a result, would be ○ Deemed not filed for purposes of specified liability provisions; and ○ Protected from liability for failure to comply with the proposed tagging and related requirements if the interactive data file either ▪ Met the requirements; or ▪ Failed to meet those requirements, but the failure occurred despite the mutual fund's good faith and reasonable effort, and the mutual fund corrected the failure as soon as reasonably practicable after becoming aware of it. • The proposed rules would require the risk/return summary information and document and entity identifier elements to be tagged according to Regulation S-T and the EDGAR Filer Manual. 50 50 Proposed Rule 405 of Regulation S-T would directly set forth the basic tagging requirements and indirectly set forth the rest of the tagging requirements through the requirement to comply with the EDGAR Filer Manual. Consistent with proposed Rule 405, the Filer Manual would contain the technical tagging requirements. *See* Interactive Data Proposing Release, *supra* note 8 (proposing Rule 405 of Regulation S-T). • Each interactive data submission would be required to be filed as a post-effective amendment under Rule 485(b) under the Securities Act 51 and would be required to be filed after effectiveness of the related filing, but no later than 15 business days after the effective date of the related filing. 51 Rule 485(b) under the Securities Act provides for immediate effectiveness of amendments to registration statements that make certain non-material and other changes. • If a mutual fund does not submit or post interactive data as required, the fund's ability to file post-effective amendments to its registration statement under Rule 485(b) under the Securities Act would be automatically suspended until the fund submits and posts the interactive data as required. • We anticipate that the voluntary program would be modified, if the proposed rules are adopted, to exclude participation by mutual funds with respect to risk/return summary information but continue to permit investment companies to participate with respect to financial statement information. As a result, the voluntary program would continue for the financial statements of investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X. • Registered investment companies, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X would be permitted to submit exhibits under the voluntary program containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. II. Discussion of the Proposed Amendments A. Submission of Risk/Return Summary Information Using Interactive Data The ICI's risk/return summary list of tags received acknowledgement from XBRL International in June 2007. 52 The Commission anticipates entering into a contract to update the architecture of the list of tags and conform the list of tags to any changes in the risk/return summary that we adopt pursuant to a pending rule proposal. 53 52 The list of tags is available on XBRL International's Web site at: *http://www.xbrl.org/Taxonomy/ici/ici-rr-summarydocument-20070516-acknowledged.htm* . *There are two levels of XBRL taxonomy recognition:*
(1)“Acknowledgement” is formal recognition that a taxonomy complies with XBRL specifications, including testing by a defined set of validation tools; and
(2)“approval” is a formal recognition requiring more detailed quality assurance and testing, including compliance with official XBRL guidelines for the type of taxonomy under review, creation of a number of instance documents, and an open review period after acknowledgement. For more information regarding the XBRL taxonomy recognition process, see “Taxonomy Recognition Process” on the XBRL International Web site available at: *http://www.xbrl.org/TaxonomyRecognition/* . 53 *See* Summary Prospectus Proposing Release, *supra* note 15. Interactive data risk/return summary information using the list of tags for risk/return summary information has been submitted voluntarily to us by approximately 20 mutual funds. In recent years, there has been a growing development of software products for users of interactive data, as well as of applications to assist companies, including mutual funds, to tag their disclosures using interactive data. 54 The growing number of software applications available to preparers and consumers is helping make interactive data increasingly useful to both retail and institutional investors, as well as to other participants in the U.S. and global capital markets. On this basis, we believe interactive data, and in particular the XBRL standard, have become widespread and that the list of tags for risk/return summary information is now sufficiently advanced to require that mutual funds provide their risk/return summary information in interactive data format. 54 *See SEC's Office of Interactive Disclosure Urges Public Comment as Interactive Data Moves Closer to Reality for Investors* , Securities and Exchange Commission Press Release, Dec. 5, 2007, available at: *http://www.sec.gov/news/press/2007/2007-253.htm* . A list of interactive data products and service providers is available at: *http://xbrl.us/Vendors/Pages/default-expand.aspx* . As discussed in more detail below, our proposed rules would require all mutual funds to submit interactive data with any registration statement or post-effective amendment on Form N-1A that includes or amends risk/return summary information. 55 We anticipate that the first required submissions would be for initial registration statements and post-effective amendments that are annual updates to effective registration statements and that become effective after December 31, 2009. 55 *See* proposed General Instruction C.3.(g) to Form N-1A. We are proposing that mutual funds be required to provide the same risk/return summary information in interactive data format that mutual funds have been providing in the voluntary program. 56 In addition, funds would be required to provide document and entity identifier tags, such as the form type and the fund's name. As was the case in the voluntary program, the proposed requirement for interactive data reporting is intended to be disclosure neutral. We do not intend the rules to result in mutual funds providing more, less, or different disclosure for a given disclosure item depending upon the format, whether ASCII, HTML, or XBRL. 56 *See* proposed General Instruction C.3.(g) to Form N-1A. We propose to continue requiring the existing electronic formats now used in filings because we believe it is necessary to monitor the usefulness of interactive data reporting to investors and the cost and ease of providing interactive data before attempting further integration of the interactive data format. However, the proposed rules would treat viewable interactive data as displayed through software available on the Commission's Web site, and interactive data generally, 57 as part of the official filing, instead of a supplement as is the case in the voluntary program. Further evaluation will be useful with respect to the availability of inexpensive, sophisticated interactive data viewers. Currently there are many software providers and financial printers that are developing interactive data viewers. We anticipate that these will become widely available and increasingly useful to investors. 57 As further discussed below in Part II.F, interactive data generally would be deemed not filed for purposes of specified liability provisions. We expect that the open standard feature of XBRL format will facilitate the development of applications and software, and that some of these applications may be made available to the public for free or at a relatively low cost. The expected continued improvement in this software would give the public increasingly useful ways to view and analyze mutual fund risk/return summary information. After evaluating the use of the new interactive data technologies, software, and list of tags, we may consider proposing rules to eliminate the filing of risk/return summary information in ASCII or HTML format. Or we may consider proposing rules to require a filing format that integrates ASCII or HTML with XBRL. We believe XBRL is the appropriate interactive data format with which to supplement ASCII and HTML. Our experience with the voluntary program and feedback from company, audit, and software communities point to XBRL as the appropriate open standard for the purposes of this rule. As a derivative of the XML standard, XBRL data would be compatible with a wide range of open source and proprietary XBRL software applications. As discussed above, many XBRL-related products exist for analysts, investors, filers, and others to more easily create and compare disclosures; still others are in development, and that process would likely be hastened by mutual fund disclosure using interactive data. Comments on our 2004 concept release and proposed rules in 2004 and 2007 generally supported interactive data and XBRL in particular. 58 Several other factors support our views regarding XBRL's broad and growing acceptance, internationally as well as in the U.S. For example, as noted above, in addition to the use of XBRL by other U.S. agencies, 59 several foreign securities regulators have adopted voluntary or required XBRL financial reporting. 60 We understand that several U.S. public and private companies use XBRL in connection with financial reporting or analysis. 58 Securities Act Release No. 8497 (Sept. 27, 2004) [69 FR 59111 (Oct. 1, 2004)] (“Concept Release”); Securities Act Release No. 8496 (Oct. 1, 2004) [69 FR 59094 (Oct. 1, 2004)]; Securities Act Release No. 8781 (Feb. 6, 2007) [72 FR 6676 (Feb. 12, 2007)]. *See, e.g.* , letter from Deloitte & Touche LLP (Nov. 11, 2004) regarding the Voluntary Program Adopting Release, *supra* note 16; and letter from PR Newswire Association LLC (Nov. 11, 2004) regarding the Concept Release; and letters from Charles S. Hoffman (Feb. 10, 2007); ICI (Mar. 14, 2007); NewRiver, Inc. (Mar. 14, 2007); PricewaterhouseCoopers LLP (Mar. 14, 2007); and Ayal Rosenthal (Mar. 6, 2007) regarding extending the voluntary program to allow funds to submit tagged risk/return summaries. We also note that financial statement participants in the voluntary program provided positive feedback with respect to possible mandatory XBRL. For example, the vast majority of voluntary program participants that submitted responses and views to a questionnaire answered in the affirmative to the question “Based on your experience to date, do you think it would be advisable for the Commission to continue to explore the feasibility and desirability of the use of interactive data on a more widespread and, possibly, mandated basis?” See question V.f in the Interactive Data Voluntary Program Questionnaire available at *http://www.sec.gov/cgi-bin/XBRL_Questionnaire.* 59 *See* note 36 above. Also we note CIFiR's support of XBRL as referenced above in Part I.C. 60 For example, such countries include Canada, China, Israel, Japan, Korea, and Thailand. Request for Comment: • Should we adopt rules that require each mutual fund's risk/return summary information to be provided in interactive data format? What are the principal factors that should be considered in making this decision? Is it useful to users of risk/return summary information to continue to have, in addition to interactive data, duplicate, human-readable risk/return summary information in ASCII or HTML format? • What opportunities exist to improve the display of risk/return summary information prepared using interactive data? How should these affect any continued requirement to file ASCII- or HTML-formatted risk/return summary information? For example, if the technology is sufficiently developed, should we propose rules to encourage or require a format that embeds interactive data tags in HTML so that risk/return summary information can be viewed in a browser? How should these affect any continued requirement to file ASCII- or HTML-formatted risk/return summary information? What obstacles exist to making such improvements in the display of XBRL information? • Is it appropriate to require mutual funds to provide interactive data using XBRL? Alternatively, in place of such a requirement, should the Commission instead wait to see whether interactive data disclosure by mutual funds is voluntarily adopted? Without a requirement, would the development of products for producing and using interactive data from mutual funds meet the needs of investors, third party information providers, and others who seek interactive data? Would a large percentage of mutual funds provide interactive data voluntarily, and following the same standard, if not required to do so? • If we do not adopt the proposed rules and instead wait to see whether mutual funds on their own expand their use of interactive data, would such data be less comparable among mutual funds? Is there a “network effect,” such that interactive data would not be useful unless many or all mutual funds provide their risk/return summary information using interactive data? Would the development of software for retail investors to obtain and make use of such data be slowed without a requirement that mutual funds provide interactive data? • What advantages are there to investors having the mutual fund responsible for preparing risk/return summary information in interactive data format, as opposed to a model in which third parties independently prepare the information in interactive format and charge a fee for it? • Do commenters agree that compared to filings using ASCII and HTML, interactive data would require less manually-transferred data? If so, do commenters believe that the proposed rules would result in less human error and therefore contribute to reduced costs? • If we require interactive data disclosure and the proposed rules result in more effective and efficient disclosure with reduced human error and cost, would fees charged by financial printers or other service providers be likely reduced to reflect such lower costs? • If we adopt rules requiring interactive data disclosure of risk/return summary information, is the XBRL standard the one that we should use? Are any other standards becoming more widely used or otherwise superior to XBRL? What would the advantages of any such other standards be over XBRL? • Is the XBRL format for interactive data sufficiently developed to require its use at this time? If not, what indicators should we use to determine when it has become sufficiently developed to require its use? • Are vendors likely to develop and make commercially available software applications or Internet products that will be able to deliver the functionality of interactive data to retail investors? • How important is it that many different types of viewers with varying levels of sophistication and functionality be available to investors? In addition to the free viewer provided on the SEC Web site, are there likely to be other such products available at low or no cost? • If we require risk/return summary information in interactive data format, what are the principal challenges facing the eventual integration of such reporting with the current filing formats, ASCII and HTML, so that filing in all three formats would no longer be necessary? B. Compliance Date The proposed rules would require all mutual funds to submit interactive data with any registration statement or post-effective amendment on Form N-1A that includes or amends risk/return summary information. 61 If the rules are adopted by this fall, we anticipate that the first required submissions would be for initial registration statements and post-effective amendments that are annual updates to effective registration statements 62 and that become effective after December 31, 2009. We are sensitive to concerns that undue expense and burden should not accompany the adoption of required interactive data reporting. We therefore propose limitations on liability applicable to the interactive data file, as well as a 15-business-day period for making interactive data submissions after effectiveness of the related filing. 63 61 *See* proposed General Instruction C.3.(g) to Form N-1A. 62 Section 10(a)(3) of the Securities Act [15 U.S.C. 77j(a)(3)] generally requires that when a prospectus is used more than nine months after the effective date of the registration statement, the information in the prospectus must be as of a date not more than sixteen months prior to such use. The effect of this provision is to require mutual funds to update their prospectuses annually to reflect current cost, performance, and other financial information. A mutual fund updates its registration statement by filing a post-effective amendment to the registration statement. 63 We discuss more fully at Part II.F liability related to required submissions of interactive data in general and the continuation of some of the limitations on liability used in the voluntary program in particular. Mutual funds under the proposed rules would be required to convert their risk/return summary information into an interactive data file using the list of tags for risk/return summary information, as approved for use by the Commission. 64 The submission also would be required to include any supporting files as prescribed by the EDGAR Filer Manual. Interactive data would be required for the entirety of the risk/return summary information, including information for all series and all classes. 65 64 *See* Interactive Data Proposing Release, *supra* note 8 (proposing amendments to Rule 11 of Regulation S-T and proposing new Rule 405(a)) and proposed amendments to proposed Rule 405(a). 65 Proposed General Instruction C.3.(g) of Form N-1A. As noted above, we anticipate deferring the requirement for submission of risk/return summary information in interactive data format for all mutual funds until after December 31, 2009. We also anticipate that the voluntary program, with its limitations on liability, will remain available to mutual funds until December 31, 2009, for purposes of submitting risk/return summary information in interactive data format. We believe that this period of almost two years from now will give mutual funds, including those that have not previously participated in the voluntary program, adequate opportunity to test interactive data submissions so that they may be fully prepared to file risk/return summary information in interactive data format after December 31, 2009. Our multiyear experience with interactive data has helped us understand the extent to which a mutual fund would incur additional costs to create and submit its existing disclosures in interactive data format. Based on that experience, we believe that the process of converting a mutual fund's existing ASCII or HTML risk/return summary information into interactive data would not impose a significant burden or cost. Mutual funds could choose to tag their risk/return summary information using available software without using outside services or consultants; alternatively, they could rely on financial printers, consultants, and software companies for assistance, although they would retain ultimate responsibility for both their risk/return summary information and their tagged data. As discussed in more detail in the cost-benefit analysis below, 66 we believe that the modest first-year costs for a mutual fund would decrease in subsequent periods. We also believe that these costs would be justified by interactive data's benefits. 66 *See* Part V. We expect that most mutual funds that are part of smaller fund families, which generally are disproportionately affected by regulatory costs, also would be able to provide their risk/return summary information in interactive data format without undue effort or expense. While interactive data reporting involves changes in reporting procedures mostly in the initial reporting periods, we expect that these changes would provide efficiencies in future periods. As a result, there may be potential net savings to the mutual fund, particularly if interactive data become integrated into the mutual fund's disclosure process. While we recognize that requiring interactive data risk/return summary information would likely result in start-up expenses for smaller mutual fund families, we expect that both software and third-party services will be available to help meet the needs of smaller mutual fund families. We also intend that the delayed compliance date for all mutual funds would permit mutual funds that are part of smaller fund families to learn from the experience of funds that have participated in the voluntary program and to participate in the voluntary program themselves during the almost two-year period prior to December 31, 2009. The delayed compliance date would also give mutual funds that are part of smaller fund families a significant period of time across which to spread first-year data tagging costs. We believe that adopting a delayed compliance date of December 31, 2009, would establish an appropriate and measured timeline, which we would be able to monitor and, if necessary, reconsider during the continuation of the voluntary program. Request for Comment: • Is the proposed schedule for implementation of interactive data tagging appropriate? • Should we advance the first required interactive data submission to be for filings that become effective after June 30, 2009, or some other date, rather than December 31, 2009? Should we delay the first required interactive data submissions until, for example, 2011, 2012, or later? What benefits would there be to advancing or delaying implementation of the proposed rules? How much lead time do mutual funds need to familiarize themselves with interactive data and the process of mapping risk/return summary information using the list of tags for risk/return summary information? • Should there be a phase-in to provide mutual funds with more time to become familiar with the list of tags for risk/return summary information and to encourage potential vendors of interactive data products and services to invest in the development and marketing of such products? If so, what should the phase-in dates be and what funds should be included in each phase? Should we differentiate funds based on net assets of the fund, the fund family, or on some other basis? Should we, for example, provide a more delayed compliance date for mutual funds that are small entities for purposes of the Regulatory Flexibility Act, *i.e.,* funds that, together with other investment companies in the same group of related investment companies, have net assets of $50 million or less as of the end of their most recent fiscal year? If we provide a more delayed compliance date for smaller fund families, how should we define such a category? • Is the proposed timing sufficient for mutual funds to familiarize themselves with interactive data and the process of mapping risk/return summary information using the list of tags for risk/return summary information? Is it sufficient for funds that are part of smaller fund families, *e.g.,* funds that are small entities for purposes of the Regulatory Flexibility Act? • Should there be a longer lag than proposed for mutual funds that are part of smaller fund families, *e.g.,* funds that are small entities for purposes of the Regulatory Flexibility Act, to allow them to allocate the necessary resources and meet the proposed requirements? • Should mutual funds that are part of smaller fund families, *e.g.,* funds that are small entities for purposes of the Regulatory Flexibility Act, be subject to the proposed rules at all? Should compliance with the proposed rules be solely voluntary for those funds? • Will the rule proposal and the anticipated December 31, 2009 compliance date sufficiently encourage potential vendors of interactive data products and services to invest in the development and marketing of such products? If not, what changes should we make to encourage developments in the markets for filer and investor products related to mutual fund interactive data? C. Documents and Information Covered by the Proposed Rules The proposed rules would require interactive data tagging of a mutual fund's risk/return summary information, which is currently provided in response to Items 2 and 3 of Form N-1A. 67 In November 2007, the Commission proposed to amend Form N-1A. 68 The amendments, if adopted as proposed, would result in the risk/return summary information being contained in Items 2, 3, and 4 of Form N-1A. If the Commission adopts that proposal, we intend to apply any tagging rules we adopt to the items of amended Form N-1A that contain the information that is currently contained in Items 2 and 3. 67 *See* proposed Rule 405(b)(2); General Instruction C.3.(g) to Form N-1A. We are also proposing technical amendments to proposed Rule 405 that reflect this proposed requirement. As previously noted, proposed Rule 405 of Regulation S-T would directly set forth the basic tagging requirements and indirectly set forth the rest of the tagging requirements through the requirement to comply with the EDGAR Filer Manual. Consistent with proposed Rule 405, the EDGAR Filer Manual would contain the detailed tagging requirements. 68 *See* Summary Prospectus Proposing Release, *supra* note 15, 72 FR at 67817. As with the voluntary program, the proposed rules would require mutual funds to provide the interactive data in an exhibit. 69 Interactive data would be required for all information in the risk/return summary, including information for each series and class included in a mutual fund's prospectus. 70 The proposed rules would not, however, require interactive data submissions for parts of Form N-1A other than the risk/return summary information. 69 *See* proposed General Instruction C.3.(g) to Form N-1A; proposed Rule 405(a). The Interactive Data File must be named “EX-101” as specified in the EDGAR Filer Manual. 70 *See* proposed General Instruction C.3.(g) to Form N-1A. As with the voluntary program, the proposed rules would require that the information contained in the risk/return summary section in the traditional format filing on Form N-1A be the same as in the interactive data format. 71 Further, the interactive data would have to be submitted in a manner that would permit the information for each series and any class-specific information, such as expenses and performance, to be separately identified by series and class. 72 However, information that is not class-specific, such as investment objectives, would not be required to be separately identified by class. 71 Proposed Rule 405(b)(2). 72 Proposed General Instruction C.3.(g) to Form N-1A. To clarify the intent of the rules, we propose to include an instruction to proposed Rule 405 of Regulation S-T stating that the rules require a disclosure format, but do not change substantive disclosure requirements. 73 The rules also would state clearly that the information in interactive data format should not be more or less than the information in the ASCII or HTML part of the Form N-1A filing. 74 73 *See* Interactive Data Proposing Release, *supra* note 8 (proposing Preliminary Note 2 to proposed Rule 405). 74 Proposed Rule 405(b)(2). The proposed rules would not eliminate or alter existing filing requirements that risk/return summary information be filed in traditional format. We believe investors and other users may wish to use these electronic formats to obtain an electronic or printed copy of the entire registration statement, either in addition to or instead of disclosure formatted using interactive data. In addition, we propose to no longer require or permit the cautionary disclosure that is used in the voluntary program for required interactive data, which states that investors should not rely on the interactive data information in making investment decisions. We believe that such language would be inconsistent with the proposal that interactive data be part of the related registration statement. We are proposing to require a mutual fund to submit interactive data for the risk/return summary information that is contained in any filing on Form N-1A that includes or amends information provided in response to Items 2 and/or 3. 75 This would include initial registration statements and any post-effective amendment that makes changes to the risk/return summary information. 76 75 Proposed General Instruction C.3.(g) to Form N-1A. 76 Revised interactive data would be required with respect to post-effective amendments that make changes to the risk/return summary information so that the risk/return summary information would be the same in both the traditional format filing and the interactive data file. If the risk/return summary information is not revised in connection with a post-effective amendment, the exhibit index would indicate that the interactive data file was already provided. Request for Comment: • Has the interactive information available through the voluntary program been useful? Should we require that more or less information be tagged? For example, should the entire risk/return summary section of Form N-1A, including the investment objective and strategies, risks, costs, and performance information, be required to be tagged in interactive data format? Should we apply tagging requirements to both narrative information, such as investment objectives, and numerical information, such as costs? • Would investors and other users of risk/return summary information find tagged risk/return information useful for analytical purposes? Is tagged risk/return summary information that is narrative, rather than numerical, useful as an analytical tool? • Would the availability of interactive data-formatted risk/return summary information possibly cause competitive pressures on mutual funds to choose to make more disclosures than are required by Commission regulations? Alternatively, might the availability of tagged data possibly cause mutual funds to choose to curtail such disclosures? What types of disclosures would those be? • Once interactive data are provided with a Form N-1A filing, should we limit the requirement to provide interactive data for amendments to only the amendments that reflect substantive changes from or additions to the risk/return summary information? What would the benefits and burdens be of revising interactive data that previously was provided in connection with a registration statement on Form N-1A to reflect changes? • Do the standards we propose for tagging provide clear enough guidance for preparers so that we can expect to achieve consistency among filers? • Should we require that mutual funds tag their document and entity 77 information? Would this information be useful in interactive data format? 77 *See* *supra* note 48. • Should we provide an opportunity for mutual funds to submit voluntarily in interactive data format information other than that which they would be required to submit as interactive data? If so, should we permit such interactive data format information to be subject to provisions governing the proposed required filing of interactive data? Should we instead permit such interactive data format information to be submitted under the voluntary program? • If we adopt the recently proposed amendments to Form N-1A, 78 should we require interactive data format information for the risk/return summary? Should we require interactive data format information for any additional information contained in the proposed summary section of the prospectus? Should the information in the proposed summary prospectus be tagged? If so, should all of the information required in the summary prospectus be tagged? If not, what information in the summary prospectus should be tagged? Should only the risk/return information in the summary prospectus be tagged? 78 *See* Summary Prospectus Proposing Release, *supra* note 15. • When we proposed the summary prospectus, we proposed that mutual funds choosing to use a summary prospectus be required to provide the summary prospectus, the statutory prospectus, and the statement of additional information on the Internet with links that would allow persons to move back and forth among the documents. 79 If we were to require information in the prospectus and/or the summary prospectus to be submitted in interactive data format, should we adopt as proposed or modify the proposed linking requirements? 80 79 *See* Summary Prospectus Proposing Release, *supra* note 15, 72 FR at 67802-03. 80 *See* Summary Prospectus Proposing Release, *supra* note 15, 72 FR at 67803 and 67816 (Proposed Rule 498(f)(2)(ii) and
(iii)under the Securities Act would require persons accessing documents on the Internet to be able to move back and forth between certain specified sections of the documents.). • Should the proposed rules eliminate the requirement that the risk/return summary information be submitted in traditional format, in addition to interactive data format? Should cautionary language from the voluntary program be eliminated or modified and, if not, why not? • Should the proposed rules apply to a prospectus filed under Securities Act Rule 497? 81 If we require interactive data with filings that do not currently include exhibits, such as prospectus supplements, should we require that the interactive data be provided as schedules or exhibits? 81 17 CFR 230.497. Currently, Rule 497 prospectuses do not have a provision for exhibits, so additional EDGAR programming would be needed. D. Filing Period Form N-1A filings, which contain mutual fund registration statements (or amendments thereto), are often subject to revision prior to effectiveness. For this reason, the proposed rules would not permit the submission of an interactive data exhibit that is related to a registration statement or a post-effective amendment that is not yet effective. More specifically, the proposed rules would provide that an interactive data exhibit to a Form N-1A filing, whether the filing is an initial registration statement or a post-effective amendment thereto, must be submitted as a post-effective amendment to the registration statement to which the interactive data relates. Under the proposal, the amendment, including the interactive data, must be submitted after the related filing becomes effective, but not later than 15 business days after the effective date of the related filing. 82 Our proposal that the interactive data exhibit be filed within 15 business days is intended both to provide funds with adequate time to prepare the exhibit and to make the interactive data available promptly. An exhibit containing interactive data format risk/return summary information could be submitted under Rule 485(b) of the Securities Act, which provides for immediate effectiveness of amendments that make non-material changes, and would only need to contain the new exhibit, a facing page, a signature page, a cover letter explaining the nature of the amendment, and a revised exhibit index. 82 Proposed General Instruction C.3.(g) of Form N-1A. This proposal differs from the voluntary program which does not impose a time limit for the filing of interactive data. Request for Comment: • Should we require interactive data information to be submitted before effectiveness of the related filing, *e.g.* , at the same time that the related filing is made? Or should we, as proposed, require interactive data information to be provided only after the related filing becomes effective? If so, is 15 business days after the effective date of the related filing an appropriate time period for filing the interactive data? Should the time period be shorter or longer, *e.g.,* 1 day, 5 days, 10 days, 20 days, 30 days? Would it be feasible and desirable to require interactive data to be submitted on the effective date of the related filing, either for filings that become effective automatically and/or for filings that are declared effective by the Commission staff? How would different requirements regarding the time of filing affect the usefulness of the interactive data, the ability of funds to file accurate interactive data, and the burdens of filing the data? E. Web Site Posting of Interactive Data We believe interactive data, consistent with our proposed rules, should be easily accessible for all investors and other market participants. As such disclosure becomes more widely available, advances in interactive data software, online viewers, search engines, and other Web tools may in turn facilitate access and usability of the data. Encouraging widespread accessibility to mutual funds' risk/return summary information furthers our mission to promote fair, orderly, and efficient markets, and facilitates capital formation. We believe Web site availability of the interactive data would encourage its widespread dissemination, thereby contributing to lower access costs for users. We therefore propose that each mutual fund be required to provide the same interactive data on its Web site, if it has one, that would be required to be provided to the Commission. 83 The interactive data on a fund's Web site would be required by the end of the business day on the earlier of the date that the interactive data is submitted to the Commission or is required to be submitted to the Commission. 84 83 *See* proposed General Instruction C.3.(g) to Form N-1A. 84 *See* Interactive Data Proposing Release, *supra* note 8 (proposing Rule 405(f)); proposed Rule 405(a). Proposed Rule 405(a) requires posting to a “corporate” Web site. For mutual funds, this would require posting to the fund's Web site. The day the interactive data is submitted electronically to the Commission may not be the business day on which it was deemed officially filed. For example, a filing submitted after 5:30 p.m. generally is not deemed officially filed until the following business day. Under the proposed rules, the Web posting would be required to be posted at any time on the same day that the interactive data exhibit to a Form N-1A filing is deemed officially filed or required to be filed, whichever is earlier. We believe access to the interactive data on fund Web sites would enable search engines and other data aggregators to more quickly and cheaply aggregate the data and make them available to investors because the data would be available directly from the mutual fund, instead of through third-party sources that may charge a fee. To help further our goals of decreasing user cost and increasing availability, we do not propose to allow mutual funds to comply with the Web posting requirement by including a hyperlink to the documents available electronically on the Commission's Web site. We believe this requirement would be consistent with the increasing role that mutual fund Web sites perform in supplementing the information filed electronically with the Commission by delivering risk/return summary information and other disclosure directly to investors. For example, we recently proposed amendments that would permit a person to satisfy its mutual fund prospectus delivery obligations under the Securities Act by sending or giving the key information directly to investors in the form of a summary prospectus and providing the statutory prospectus on an Internet Web site. 85 We also note that mutual funds may satisfy certain disclosure obligations by posting required disclosures on their Web sites. 86 In addition, many mutual funds provide on their Web sites access to their prospectuses, statements of additional information, and other Commission filings. 87 This proposal would expand such Web site posting by requiring mutual funds with Web sites to post their interactive data as well. 85 *See* Summary Prospectus Proposing Release, *supra* note 15, 72 FR at 67798-99. 86 *See* , *e.g.,* Securities Act Release No. 8458 (Aug. 23, 2004) [69 FR 52788 (Aug. 27, 2004)] (disclosure regarding portfolio managers); Securities Act Release No. 8408 (April 16, 2004) [69 FR 22300 (April 23, 2004)] (disclosure regarding market timing and selective disclosure of portfolio holdings); Securities Act Release No. 8393 (Feb. 27, 2004) [69 FR 11244 (Mar. 9, 2004)] (shareholder reports and quarterly portfolio disclosure); Securities Act Release No. 8188 (Jan. 31, 2003) [68 FR 6564 (Feb. 7, 2003)] (disclosure of proxy voting policies and records); Exchange Act Release No. 47262 (Jan. 27, 2003) [68 FR 5348 (Feb. 3, 2003)] (disclosure of code of ethics). 87 Mutual funds filing registration statements are required to disclose whether or not they make available free of charge on or through their Web site, if they have one, their statement of additional information and shareholder reports. Funds that do not make their reports available in that manner also must disclose the reasons that they do not. *See* Item 1(b)(1) of Form N-1A. Request for Comment: • Should we adopt rules that require each mutual fund to post interactive data from its risk/return summary on its Web site, if it has one? • What advantages, if any, would dual Internet and EDGAR availability have for individual investors, other users, search engines, software developers, and others involved in the extraction and processing of risk/return summary data? Would it be helpful if our Web site provided the option to download the interactive data submission from our Web site or the mutual fund's Web site? Would it add a significant burden if a mutual fund were required to submit with its interactive data the URL that would link specifically to that interactive data as posted on the mutual fund's Web site or, alternatively, link to a part of the mutual fund's Web site from which there would be easy access to the interactive data as posted there? What would facilitate the realization of any advantages of Web site posting, for example, the use of a standardized URL for interactive data? Would a standardized URL add significant cost to posting? • Instead of requiring Web site posting, should we require that mutual funds disclose in their prospectuses, registration statements, shareholder reports, or elsewhere whether or not they provide free access to their interactive data on their Web sites and, if not, why not? • What impact would be realized by mutual funds that do not currently provide Web sites? Would the proposed rules affect whether mutual funds create or maintain Web sites? • Would Web site posting decrease the time and cost required for aggregators of mutual fund disclosure, individual investors, and other users to access disclosure formatted using interactive data? • If we require Web site posting of interactive data, as proposed, should we also require that the Web site include language stating that the entire registration statement also is available for free at the Commission's Web site? F. Accuracy and Reliability of Interactive Data 1.Voluntary Program To help ensure the accuracy of interactive data in the voluntary program, the data has undergone validation upon receipt by our electronic filing system separate from the normal validation of the traditional format filing. 88 Potential liability also helps ensure the accuracy and reliability of the data. Although the voluntary program has provided limited protections from liability under the federal securities laws, 89 interactive data in the voluntary program are subject to the anti-fraud provisions of the federal securities laws. The voluntary program also encourages participants' efforts to create accurate and reliable interactive data that is the same as the corresponding disclosure in the traditional electronic format filing by providing that a participant is not liable for information in its interactive data that reflects the same information that appears in the corresponding portion of the traditional format filing, to the extent that the information in the corresponding portion of the traditional format filing was not materially false or misleading. To further encourage reasonable efforts to provide accurate interactive data, the voluntary program treats interactive data that do not reflect the same information as the official version as reflecting the official version if the volunteer meets several conditions. The volunteer must have made a good faith and reasonable attempt to reflect the same information as appears in the traditional format filing and, as soon as reasonably practicable after becoming aware of any difference, the volunteer must amend the interactive data to cause them to reflect the same information. 90 88 If the traditional format filing meets its validation criteria, but any interactive data fail their own validation criteria, all interactive data are removed and the traditional format filing is accepted and disseminated without the interactive data file. 89 Rule 402 of Regulation S-T provides these liability protections. 90 17 CFR 232.402(b). 2. Use of Technology to Detect Errors Complete, accurate, and reliable prospectus and other disclosures are essential to investors and the proper functioning of the securities markets. Our proposed requirement to submit interactive data with mutual fund registration statements is designed to provide investors with new tools to obtain, review, and analyze information from mutual funds more efficiently and effectively. To satisfy these goals, interactive data must meet investor expectations of reliability and accuracy. Many factors, including mutual fund policies and procedures buttressed by incentives provided by the application of technology by the Commission, market forces, and the liability provisions of the federal securities laws, help further those goals. Building on the validation criteria referenced above for interactive data in the voluntary program, we plan to use validation software to check interactive data for compliance with many of the applicable technical requirements and to help the Commission identify data that may be problematic. For example, we expect the validation software to: • Check if required conventions (such as the use of angle brackets to separate data) are applied properly for standard and, in particular, non-standard special labels and tags; • Identify, count, and provide the staff with easy access to non-standard special labels and tags; 91 91 For example, if a mutual fund uses the words “redemption fees” as the caption for a value data tagged as “exchange fees,” the software could flag the filing and bring it to the staff's attention. • Identify the use of practices, including some the XBRL U.S. Preparers Guide contains, that enhance usability; 92 92 The XBRL U.S. Preparers Guide, available from the XBRL U.S. Web site, would provide guidance to facilitate preparing information in the interactive data format that we propose to require. • Facilitate comparison of interactive data with disclosure in the corresponding traditional format data in the official filing; • Check for mathematical errors; and • Analyze the way that mutual funds explain how particular facts relate to one another. 93 93 The technology used to show these relationships is known as a “linkbase.” The availability of interactive data to the staff may also enhance its review of mutual fund filings. After the FDIC required submission of interactive data, it reported that its analysts were able to increase the number of banks they reviewed by 10% to 33%, and that the number of bank reports that failed to fully meet filing requirements fell from 30% to 0%. These bank reports require information that is more structured and less varied than the information we would require. As a result, the FDIC's efficiency gains from the use of interactive data likely would be greater than ours. We believe analysts, individual investors, and others outside the Commission that use the interactive data submitted to us also will make use of software and other tools to evaluate the interactive data and, as a result, market forces will encourage mutual funds to provide interactive data that accurately reflects the corresponding traditional format data in the traditional format filing. For example, the use of non-standard labels or tags (extensions) could introduce errors, but we expect the open source and public nature of interactive data and the list of tags for risk/return summary information would enable software easily to detect and identify any modifications or additions to the approved list of tags. We believe such software and other technology will be widely available for free or at reasonable cost. Investors, analysts, and other users therefore would be able to identify the existence and evaluate the validity of any such modifications or additions. We also anticipate that mutual funds preparing their interactive data and investors, analysts, and other users would use such devices to search for and detect any changes made to the standard list of tags. Because analysts and other users would rapidly discover mistakes or alterations not consistent with the desired use of interactive data, mutual funds would have a powerful incentive to prepare such data with care and promptly to correct any errors. With this proposal, we seek the rapid adoption and use of interactive data without imposing unnecessary cost and expense on mutual funds. We therefore propose that the interactive data itself provided to us generally would be subject to a liability regime under the federal securities laws similar to that governing the voluntary program. We also propose that viewable interactive data 94 as displayed through software available on the Commission's Web site, as described above and further discussed below, would be subject to the same liability under the federal securities laws as the corresponding portions of the traditional format filing. 95 94 Proposed Rule 11 of Regulation S-T would define viewable interactive data as “Interactive Data in Viewable Form.” *See* Interactive Data Proposing Release, *supra* note 8 (proposing Rule 11 of Regulation S-T). We are proposing technical amendments to include references to risk/return summary information in the definition. 95 Proposed Rule 406 of Regulation S-T would set forth the liability applicable to interactive data and viewable interactive data that is displayed through software available on the Commission's Web site. Proposed Rule 406 also would clarify that disclosures in the traditional format part of an official filing on Form N-1A that contains the information corresponding to the interactive data remain subject to the federal securities laws as in the past and that nothing in proposed Rule 405 of Regulation S-T (setting forth content, format, and other requirements related to interactive data) or proposed Rule 406 would affect the liability otherwise applicable to the traditional format data. We are not proposing to modify proposed Rule 406 as set forth in our recently issued release. *See* Interactive Data Proposing Release, *supra* note 8 (proposing Rule 406 of Regulation S-T). Interactive data would be subject to the following liability-related provisions: • Deemed not filed or part of a registration statement or prospectus for purposes of sections 11 and 12 of the Securities Act; • Deemed not filed for purposes of section 18 of the Exchange Act and section 34(b) of the Investment Company Act; • Not otherwise subject to the liabilities of these sections; • Subject to other liability under these Acts for the substantive content of the risk/return summary disclosures (as distinct from compliance with proposed Rule 405) in the same way and to the same extent as the corresponding information in the related traditional format official filing. 96 The content of the risk/return summary disclosures refers, for example, to the investment objectives and strategies, costs, risks, and past performance. The Rule 405 requirements generally refer to the process of tagging and formatting the content of the risk/return summary for the interactive data file; 96 Proposed Rule 11 of Regulation S-T would define “Related Official Filing.” *See* Interactive Data Proposing Release, *supra* note 8 (proposing amendments to Rule 11 of Regulation S-T). We are proposing technical amendments to the definition. • Deemed filed for purposes of (and, as a result, benefit from) Rule 103 of Regulation S-T; 97 and 97 The viewed data would be deemed filed for purposes of Rule 103 of Regulation S-T [17 CFR 232.103] and, as a result, in general, the mutual fund would not be subject to liability for electronic transmission errors beyond its control if the mutual fund corrects the problem through an amendment as soon as reasonably practicable after the fund becomes aware of the problem. • Protected from liability under these Acts for failure to comply with the requirements of proposed Rule 405 if the interactive data either: ○ Met the requirements of proposed Rule 405 of Regulation S-T; or ○ Failed to meet those requirements but the failure occurred despite the mutual fund's good faith and reasonable effort and the mutual fund corrected the failure as soon as reasonably practicable after becoming aware of it. None of the proposed liability-related provisions for interactive data submitted to the Commission, however, would affect the application of the anti-fraud provisions under the federal securities laws, whether the interactive data is submitted to the Commission or posted on a fund's Web site. Rule 405 is being proposed, in part, under the Commission's authority to specify information required to be submitted to the Commission in registration statements. To encourage accurate filing of interactive data without fear of making good faith errors, the Commission is proposing Rule 406. 98 Although not expressly addressed in proposed Rule 406, the Commission would have the authority to enforce compliance with proposed Rule 405 because it has the authority to enforce compliance with any of its rules. 98 *See* Interactive Data Proposing Release, *supra* note 8 (proposing Rule 406). We believe these liability-related provisions strike an appropriate balance between avoiding unnecessary cost and expense and encouraging accuracy in light of the nature of the interactive data to which they apply and the additional accuracy incentives that may be provided by our validation software and market forces. Other aspects of the proposal would supplement the Commission's objective of supplying reliable and accurate information to investors. First, the risk/return summary information and other disclosures in the traditional format related official filing to which the interactive data relate would continue to be subject to the usual liability provisions of the federal securities laws. For example, the traditional format related official filing would continue to be subject to section 10(b) and Rule 10b-5 99 of the Exchange Act and, in the appropriate circumstance, to section 11 of the Securities Act. 99 17 CFR 240.10b-5. Second, we propose that the usual liability provisions of the federal securities laws also would apply to human-readable interactive data that is identical in all material respects to the corresponding data in the traditional format filing 100 as displayed by a viewer that the Commission provides. Under these circumstances, for example, a Form N-1A's viewable interactive data would be deemed filed and subject to section 11 of the Securities Act and section 34(b) of the Investment Company Act, consistent with the liability applicable to the corresponding part of the traditional format Form N-1A. In that regard, such viewable interactive data disclosure therefore would have exactly the same potential liability as the corresponding portions of the traditional format filing. We believe applying liability for such viewable interactive data displayed through software on the Commission's Web site would further investors' interests in filers providing accurate interactive data under our proposal. 100 The human-readable interactive data would be identical to the corresponding data in the traditional format filing if the mutual fund complied with the interactive data tagging requirements of proposed Rule 405. We expect that each mutual fund would be in the best position to determine the appropriate manner in which to assure the accuracy of the interactive data it would be required to submit and the viewable interactive data that would result. We also expect that software providers and other private sector third parties would help develop procedures and tools to help in that regard. As an adjunct to those private sector efforts, we plan to make available to mutual funds, on an optional basis, the opportunity to help assure accuracy by making a test submission with the Commission or using software we provide to create viewable interactive data. A mutual fund would have the opportunity to submit an interactive data exhibit as part of a test submission just as a filer can make test submissions today. 101 The validation system would process the test submission with an interactive data exhibit similar to the way it processes test submissions today. If it found an error, it would advise the filer of the nature of the error and as to whether the error was major or minor. As occurs in the voluntary program, a major error in an interactive data exhibit that was part of a live filing would cause the exhibit to be held in suspense in the electronic filing system while the rest of the filing would be accepted and disseminated if there were no major errors outside of the interactive data exhibit. If that were to happen, the filer would need to revise the interactive data exhibit to eliminate the major error and submit the exhibit as an amendment to the filing to which it is intended to appear as an exhibit. A minor error in an interactive data exhibit that was part of a live filing would not prevent the interactive data exhibit from being accepted and disseminated together with the rest of the filing if there were no major errors in the rest of the filing. We believe it would be appropriate to accept and disseminate a filing without the interactive data exhibit submitted with it if only the exhibit has a major error, in order to disseminate at least as much information at least as timely as would have been disseminated were there no interactive data requirement. 101 The EDGAR Filer Manual addresses test submissions primarily at section 6.6.5 of Volume II. We are not proposing that mutual funds be required to involve third parties such as auditors or consultants in the creation of the interactive data provided as an exhibit to a mutual fund's Form N-1A filing, including assurance. We are taking this approach after considering various factors, including: • The availability of a comprehensive list of tags for risk/return summary information from which appropriate tags can be selected, thus reducing a mutual fund's need to develop new elements; • The availability of user-friendly software with which to create the interactive data file; • The delayed compliance date, prior to which mutual funds may become familiar with the tagging of risk/return summary information; • The availability of interactive data technology specifications, and of other XBRL U.S. and XBRL International resources for preparers of tagged data; • The advances in rendering/presentation software and validation tools for use by preparers of tagged data that can identify the existence of certain tagging errors; • The expectation that preparers of tagged data will take the initiative to develop sufficient internal review procedures to promote accurate and consistent tagging; and • The mutual fund's and preparer's liability for the accuracy of the traditional format version of the risk/return summary information that will also be provided using the interactive data format. Request for Comment: • Do the proposed rules strike an appropriate balance to promote the availability of reliable interactive data without imposing undue additional costs and burdens? If not, what balance of liability will best encourage mutual funds to prepare reliable interactive data without subjecting them to undue fear of mis-tagging? How does the “extensibility” of interactive data, *i.e.* , a mutual fund's ability to customize the standard list of tags to correspond more closely to the fund's particular risk/return summary information, affect your answer? • What are the risks to investors under the proposed liability rules? Will investors still find the interactive data sufficiently reliable to use it? • Should interactive data be subject to liability if a mutual fund does not tag its risk/return summary information in a manner consistent with the standards approved by the Commission, irrespective of the mutual fund's good faith effort? If the answer is yes, what should the mutual fund's liability be for such errors, and should liability attach even if the mistake is inadvertent? What if the error is the result of negligent tagging practices, but there was no affirmative intent to mislead? • If interactive data are subject to liability as proposed, is it necessary or appropriate for viewable interactive data to be subject to liability as and to the extent proposed or otherwise? Should the answer depend on the degree of liability to which the interactive data are subject? Should viewable interactive data be subject to liability in a manner or to an extent different than as proposed? • Should any or all interactive data be deemed filed for purposes of Section 34(b) of the Investment Company Act and, if so, should it be regardless of compliance with proposed Rule 405 or a filer's good faith and reasonable efforts to comply? • Should the liability for interactive data be exactly the same as it is for XBRL-Related Documents under the voluntary program? • Would software be commercially available and reasonably accessible to all required interactive data filers, investors, and analysts that would make detection of tagging errors, such as the use of inappropriate tags or improper extensions, easy and cost-effective? If so, would such monitoring by investors and analysts likely discourage the improper use of extensions or negligent conduct in the tagging process? • Would the use of software to search for and detect any differences between a mutual fund's interactive data and the Commission-approved interactive data tags and other attributes depend on the degree of investor interest or analysis by third party information providers? • Should a rule expressly state that the Commission retains the authority to enforce compliance with proposed Rule 405? • Should we require the involvement of auditors, consultants, or other third parties in the tagging of data? If assurance should be required, what should be its scope, and should any such requirement be phased in? • Should we phase in increasing levels of liability over time? Are the proposed limitations on liability necessary and appropriate at the outset, for example, the first year that a mutual fund is subject to the interactive data requirement, but inappropriate at a later time? Should we require that interactive data be subject to more liability later? • Should the validation software, as contemplated, cause an interactive data exhibit with a major error to be held in suspense in the electronic filing system while the rest of the filing would be accepted and disseminated if there were no major errors outside of the interactive data exhibit? In that case, should the validation software hold the entire filing in suspense or reject or accept the entire filing or interactive data exhibit? G. Required Items 1. Data Tags To comply with the proposed rules, mutual funds would be required to tag their risk/return summary information using the most recent list of tags for mutual fund risk/return summaries, as released by XBRL U.S. and required by the EDGAR Filer Manual. The ICI's risk/return summary list of tags received acknowledgement from XBRL International in June 2007. The Commission anticipates entering into a contract to update the architecture of the list of tags and conform the list of tags to any changes in the risk/return summary that we adopt pursuant to a pending rule proposal. 102 102 *See* Summary Prospectus Proposing Release, *supra* note 15. Updates to the list of tags for risk/return summary reporting may be posted and available for downloading from time to time to reflect changes in the risk/return summary requirements, refinements to the list of tags, or for other reasons. To provide mutual funds sufficient time to become familiar with any such updates, we anticipate giving advance notice before requiring use of an updated list of tags. Based on experience to date with the list of tags for risk/return summaries, we believe that, with the enhancements to the list of tags that XBRL U.S. will be developing, the list of tags will be sufficiently developed to support the interactive data disclosure requirements in the proposed rules. One of the principal benefits of interactive data is its extensibility —that is, the ability to add to the standard list of tags in order to accommodate unique circumstances in a mutual fund's particular disclosures. The use of customized tags, however, may also serve to reduce the ability of users to compare similar information across mutual funds. In order to promote comparability across funds, our proposed rules would limit the use of extensions to circumstances where the appropriate element does not exist in the standard list of tags. 103 We also are proposing that wherever possible, preparers change the label for an element that exists in the standard list of tags, instead of creating a new customized tag. 104 103 Proposed Rule 405(c)(1)(iii)(B) as proposed in Interactive Data Proposing Release, *supra* note 8. 104 Proposed Rule 405(c)(1)(iii)(A) as proposed in Interactive Data Proposing Release, *supra* note 8. Under Item 401(c) of Regulation S-T, voluntary filers' interactive data elements must reflect the same information as the corresponding traditional format elements. Further, no data element can be “changed, deleted or summarized” in the interactive data file. 105 We do not propose to change this equivalency standard for risk/return summary information provided in interactive data format as required by the proposed rules. 106 105 Proposed Rule 405(c)(2) as proposed in Interactive Data Proposing Release, *supra* note 8 106 *Id.* Request for Comment: • Is our focus on comparability appropriate? Instead of stressing ease of risk/return summary comparability, should our rules permit greater use of customized data tags? • Should we codify any other principles to encourage comparability without unduly reducing the extensibility of interactive data? 2. Regulation S-T and the EDGAR Filer Manual We propose to require that mutual funds provide interactive data in the form of exhibits to the related registration statement on Form N-1A. 107 Interactive data would be required to comply with our Regulation S-T 108 and the EDGAR Filer Manual. The EDGAR Filer Manual is available on our Web site. It includes technical information for making electronic filings to the Commission. Volume II of this manual includes guidance on the preparation, submission, and validation of interactive data submitted under the voluntary program. Before adoption of our proposed rules, we plan to update our manual with additional instructions for filers of interactive data. 107 The requirement to submit interactive data as an exhibit would appear in proposed General Instruction C.3.(g) of Form N-1A. 108 Proposed Rule 405 of Regulation S-T would directly set forth the basic tagging and posting requirements for the XBRL data and require compliance with the EDGAR Filer Manual. Consistent with proposed Rule 405, the EDGAR Filer Manual would contain the detailed tagging requirements. In addition to both Regulation S-T, which would include the rules we are proposing, and the instructions in our EDGAR Filer Manual, filers may access other sources for guidance in tagging their financial information. These include the XBRL U.S. Preparers Guide; user guidance accompanying tagging software; and financial printers and other service providers. New software and other forms of third-party support for tagging risk/return summary information using interactive data are also becoming available. Request for Comment: • What specific guidance should be provided in Regulation S-T for interactive data filers? • Does the XBRL U.S. Preparers Guide provide useful guidance to promote consistent tagging among various mutual funds? • Is the user guidance accompanying tagging software, and the guidance available from financial printers and other service providers, helpful for filers to tag their risk/return summary information? What other sources of guidance might prove useful? H. Consequences of Non-Compliance and Hardship Exemption We propose that if a filer does not provide the required interactive data submission, or post the interactive data on its Web site, by the required due date, the filer's ability to file post-effective amendments under Rule 485(b), which provides for immediate effectiveness of amendments that make non-material and other changes, would be automatically suspended. 109 The suspension would become effective at the time that the filer fails to meet the requirement to submit or post interactive data and would terminate as soon as the filer has submitted and posted that data. The suspension would apply to post-effective amendments filed after the suspension becomes effective, but would not apply to post-effective amendments that were filed before the suspension became effective. The suspension would not apply to post-effective amendments filed solely for purposes of submitting interactive data, which would enable a filer to cure its failure to submit interactive data by filing an amendment under Rule 485(b). We believe that precluding the use of immediate effectiveness of post-effective amendments during any period of failure to comply would appropriately direct attention to the proposed interactive data requirement without permanently suspending a mutual fund's ability to file post-effective amendments under Rule 485(b) once the fund has remedied the failure. 109 Proposed Rule 485(c)(3). If the proposed rules are adopted, we anticipate that we would not interpret Rule 303, 110 which restricts the ability of registered investment companies to incorporate by reference into an electronic filing documents that have not been filed in electronic format, to apply to the failure to file Interactive Data Files. Thus, as long as the traditional format electronic filing has been made as required, the failure to file a required Interactive Data File would not affect a mutual fund's ability to incorporate by reference the mutual fund's prospectus. For example, if we were to adopt as proposed our proposed rules regarding a summary prospectus for mutual funds, we anticipate that a mutual fund could incorporate by reference its statutory prospectus into its summary prospectus as permitted by those proposed rules, notwithstanding the fund's failure to file required interactive data. 111 110 Rule 303 of Regulation S-T. 111 *See* Summary Prospectus Proposing Release, *supra* note 15. Consistent with the treatment of other applicable reporting obligations, we propose to provide a continuing hardship exemption for the inability to timely electronically submit interactive data. Rule 202 of Regulation S-T provides for continuing hardship exemptions. 112 112 Rule 201 of Regulation S-T provides for temporary hardship exemptions. We are not proposing a temporary hardship exemption because our proposal would provide a mutual fund with a 15-business day period for submitting the interactive data file for a related Form N-1A filing. Rule 202 permits a filer to apply in writing for a continuing hardship exemption if information otherwise required to be submitted in electronic format cannot be so filed without undue burden or expense. If the staff, through authority delegated from the Commission, grants the request, the filer must file the information in paper by the applicable due date and file a confirming electronic copy if and when specified in the grant of the request. We propose to revise Rule 202 to provide that a grant of a continuing hardship exemption for interactive data would not require a paper submission. 113 If the filer did not electronically submit the interactive data by the end of the period for which the exemption was granted, the filer's ability to file post-effective amendments under Rule 485(b) would be suspended until it did electronically submit the interactive data. 114 Similarly, we propose to revise Rule 202 to provide an essentially mirror-image exemption from the proposed requirement for a mutual fund that has a Web site to post the interactive data on its Web site. 115 113 *See* Proposed Rule 202 as proposed in Interactive Data Proposing Release, *supra* note 8. 114 Proposed amendment to Note 4 to Rule 202 as proposed in Interactive Data Proposing Release, *supra* note 8; Proposed Rule 485(c)(3). 115 *Id.* Request for Comment: • Are the consequences for failure to comply with the interactive data submission requirements appropriate? • Should we suspend the ability of a mutual fund to file post-effective amendments under Rule 485(b) if it does not comply with the proposed rules? Should the proposed rules provide similar treatment whether the failure to comply relates to interactive data submission or to Web site posting? Should the suspension apply to the particular fund that failed to comply, all series of a registrant that failed to comply, or all funds of a complex that failed to comply? • Should the proposed rules treat a mutual fund's compliance with interactive data requirements as an express condition to the mutual fund's related registration statement or post-effective amendment becoming effective? • Should the failure to file or post interactive data as required restrict a mutual fund's ability to incorporate by reference the fund's statutory prospectus, including under our proposed rules relating to a mutual fund summary prospectus? • Does our proposed rule strike the correct balance of positive and negative consequences when a mutual fund meets its requirements to provide traditional format documents but fails to provide interactive data? • Do commenters believe that the proposed revisions to the continuing hardship exemption would be sufficient to cover unanticipated technical difficulties associated with interactive data? If insufficient, why would they be insufficient and how should the hardship exemption be tailored to address technical difficulties associated with interactive data? • Should we provide a temporary hardship exemption? If so, would six business days be an appropriate period for the temporary hardship exemption to apply? 116 If not, would a shorter or longer period be appropriate, and why? 116 *See* Proposed Rule 201 as proposed in Interactive Data Proposing Release, *supra* note 8 (proposing a six-business-day temporary hardship exemption for financial statement filers). I. Changes to the Voluntary Program If we adopt rules requiring mutual funds to submit risk/return information in interactive data format, we intend that mutual funds would no longer be able to submit risk/return summary information in interactive data format through the voluntary program after the compliance date for the mandatory rules. We are proposing to amend Rule 8b-33 to remove risk/return summary information as a category of information permitted to be submitted under the voluntary program. In addition, we are proposing technical amendments to other rules to reflect this. 117 117 *See* proposed Rule 401(a); proposed Rule 401(d)(1)(i); proposed Rule 401(d)(2)(i). We are also proposing to delete current Rule 401(b)(1)(iv), which provides the option to file risk/return summary information under the voluntary program, and to replace it with the option to file the portfolio holdings schedule on a stand-alone basis described below. Further, in order to encourage participation in the voluntary program for tagging investment company financial information, we are proposing amendments to enable investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X to submit exhibits containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. 118 As with the current voluntary program, volunteers could participate, without pre-approval, merely by submitting a tagged *Schedule I—Investments in Securities of Unaffiliated Issuers* (“Schedule I”). 119 To facilitate this, the Commission anticipates entering into a contract to develop a list of tags that could be used to tag portfolio holdings. 118 Proposed Rule 401(b)(1)(iv) (designating *Schedule I—Investments in securities of unaffiliated issuers* as mandatory content under the voluntary program). If rules requiring interactive data financial information are adopted, we anticipate that the voluntary program would be modified to permit participation only by registered investment companies, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X. *See* Interactive Data Proposing Release, supra note 8 (proposed Rule 401(a)). 119 Rule 12-12 of Regulation S-X [17 CFR 210.12-12]. Currently, the interactive data furnished under the voluntary program must consist of at least one item from a list of enumerated mandatory content (“Mandatory Content”), including financial statements, earnings information, and, for registered management investment companies, financial highlights or condensed financial information and risk/return summary information set forth in Items 2 and 3 of Form N-1A. 120 We are adding Schedule I information as a separate item of Mandatory Content that participants can submit in order to give volunteers greater flexibility in tagging fund data. 120 Rule 401(b)(1) of Regulation S-T [17 CFR 232.401(b)(1)]. Investors, financial intermediaries, and third party information providers, among others, use the portfolio holdings data contained in Schedule I to make decisions concerning the purchase and continued holding of funds and for other purposes. Portfolio holdings data promises to be even more useful to these various stakeholders if this data is interactive. In addition, allowing volunteers to submit tagged portfolio holdings information without having to submit other financial information in interactive data format would increase the range of options for participation in the voluntary program and encourage increased participation. Under the current voluntary program, any official filing with which tagged exhibits are submitted must disclose that the financial information is “unaudited” or “unreviewed,” as applicable and that the purpose of submitting the tagged exhibits is to test the related format and technology and, as a result, investors should not rely on the exhibits in making investment decisions. 121 We believe that this cautionary disclosure should also be tagged and included within each interactive data exhibit, in order to help alert investors and other users that the exhibits should not be relied on in making investment decisions. Accordingly, we are proposing that this disclosure be required in the exhibits submitted pursuant to the voluntary program as a tagged data element, 122 consistent with how the cautionary disclosure is presented in risk/return summary exhibits under the current voluntary program. 121 Rule 401(d)(1)(ii) of Regulation S-T [17 CFR 232.401(d)(1)(ii)]. 122 *See* proposed Rule 401(d)(2). Request for Comment: • Is allowing the tagging of fund data contained in Schedule I separately from other investment company financial information an appropriate next step in the voluntary program for investment companies? Is there other investment company information that should be included in the voluntary program? • What effect would tagged data have on investors', analysts', and other users' ability to analyze investment company portfolio holdings? Are there any potential problems related to providing investment company portfolio holdings in interactive data format? For example, could this facilitate the front-running of investment company portfolio transactions or other behavior that could harm investors? • Is the tagging of fund data contained in Schedule I useful on a stand-alone basis? Should we instead require a fund that submits tagged data for Schedule I to also provide tagged data for Schedules II through V, 123 as Schedules I through V are often presented together in fund financial statements? Should we allow funds to tag any or all of Schedules I through V in the voluntary program without tagging other financial information? Are there particular Schedules, or particular combinations of Schedules, that should be permitted to be tagged in the voluntary program without tagging other financial information? 123 *Schedule II—Investments—other than securities* , Rule 12-13 of Regulation S-X [17 CFR 210.12-13]; *Schedule III—Investments in and advances to affiliates* , Rule 12-14 of Regulation S-X [17 CFR 210.12-14]; *Schedule IV—Investments—securities sold short* , Rule 12-12A of Regulation S-X [17 CFR 210.12-12A]; and *Schedule V—Open option contracts written* , Rule 12-12B of Regulation S-X [17 CFR 210.12-12B]. • How would allowing volunteers to submit an interactive data exhibit consisting of Schedule I information on a stand-alone basis affect participation in the voluntary program? Does the tagging of Schedule I information separately from other investment company financial information present any technical concerns that would affect participation in the voluntary program? • Should we require cautionary disclosure in the tagged schedule of portfolio holdings as a tagged data element? • Is additional or different language necessary for cautionary disclosure? • Has development of a list of tags for portfolio holdings advanced sufficiently to permit tagging of Schedule I on a stand-alone basis? If not, what further steps are needed? III. General Request for Comments We request comment on the specific issues we discuss in this release, and on any other approaches or issues that we should consider in connection with the proposed amendments. We seek comment from any interested persons, including those required to file information with us on the EDGAR system, as well as investors, disseminators of EDGAR data, industry analysts, EDGAR filing agents, and any other members of the public. IV. Paperwork Reduction Act The proposed amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995, or PRA. 124 The purpose of the proposed amendments is to make risk/return summary information easier for investors to analyze and to assist in automating regulatory filings and business information processing. We are submitting the proposed amendments to the Office of Management and Budget
(OMB)for review in accordance with the PRA. 125 An agency may not conduct or sponsor, and a person is not required to respond to, an information collection unless it displays a currently valid OMB control number. 124 44 U.S.C. 3501 *et seq.* 125 44 U.S.C. 3507(d) and 5 CFR 1320.11. The title for the new collection of information for submitting risk/return summary information in interactive data format that the proposed amendments would establish is “Mutual Fund Interactive Data” (OMB Control No. 3235-XXXX). This collection of information relates to already existing regulations and forms adopted under the Securities Act, the Exchange Act, and the Investment Company Act that set forth disclosure requirements for mutual funds and other issuers. The proposed amendments, if adopted, would require mutual funds to submit their risk/return summary information in interactive data format and post it on their Web sites, if any, in interactive data form. The specified risk/return summary information already is and would continue to be required to be submitted to the Commission in traditional format under existing disclosure requirements. Compliance with the proposed amendments would be mandatory beginning with initial registration statements, and post-effective amendments that are annual updates to effective registration statements, that become effective after December 31, 2009. 126 The information required to be submitted would not be kept confidential by the Commission. 126 *See* Part II.B. The title for the collection of information for submitting portfolio holdings in interactive data format is “Voluntary XBRL-Related Documents” (OMB Control No. 3235-0611). The proposed amendments would permit investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X to submit exhibits containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. Compliance with the proposed amendments would be voluntary. The information required to be submitted would not be kept confidential by the Commission. A. Reporting and Burden Estimate 1. Submission of Risk/Return Summary Information Using Interactive Data Form N-1A (OMB Control No. 3235-0307) under the Securities Act and the Investment Company Act 127 is used by mutual funds to register under the Investment Company Act and to offer their securities under the Securities Act. The information required by the new collection of information we propose, would correspond to the risk/return summary information now required by Form N-1A and would be required to appear in exhibits to Form N-1A and on mutual funds' Web sites. 127 17 CFR 239.15A; 17 CFR 274.11A. Based on estimates from voluntary program participant responses to a questionnaire and our experiences with the voluntary program, we estimate that interactive data filers would require an average of approximately 13 burden hours to tag risk/return summary information in the first year, and the same task in subsequent years would require an average of approximately 11 hours. 128 The average annual burden over a three-year period is estimated at approximately 12 hours. 129 Based on estimates of 8,810 mutual funds submitting interactive data documents, 130 each incurring 12 hours per year on average, we estimate that, in the aggregate, interactive data adoption would result in an additional 105,720 burden hours, on average, for all mutual funds for each of the first three years. 131 Converted into dollars, this amounts to approximately $22,500,000. 132 128 The average burden hours for the first and subsequent submissions were calculated using data collected from 6 responses to a voluntary program participant questionnaire from mutual funds that participated in the voluntary program. *See* Part V, *infra* . 129 (13.33 hours for the first submission + 11.275 hours for the second submission + 11.275 hours for the third submission) ÷ 3 years = approximately 12 hours. 130 This estimate is based on analysis by the Division of Investment Management staff of publicly available data. 131 8,810 mutual funds × 12 incremental burden hours per mutual fund = 105,720 burden hours. 132 This cost increase is estimated using an estimated hourly wage rate of $213.00 ((105,720 burden hours) × $213.00 hourly wage rate = $22,518,360 total incremental internal cost). The estimated wage figure is based on published rates for compliance attorneys and programmer analysts, modified to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead, yielding effective hourly rates of $270 and $194, respectively. *See* Securities Industry Association, *Report on Management & Professional Earnings in the Securities Industry 2007* (Sept. 2007) (“SIA Report”). The estimated wage rate was further based on the estimate that compliance attorneys would account for one quarter of the hours worked and senior system analysts would account for the remaining three quarters, resulting in a weighted wage rate of $213.00 (($270 × .25) + ($194 ×.75)). We further estimate that mutual funds would require an average of approximately 1 burden hour to post interactive data to their Web sites. Based on estimates of 8,810 mutual funds posting interactive data, each incurring 1 burden hour per year on average, we estimate that, in the aggregate, adoption of Web site posting requirements would result in an additional 8,810 burden hours for all mutual funds. 133 Converted into dollars, this amounts to approximately $2,200,000. 134 133 8,810 mutual funds × 1 burden hour per mutual fund = 8,810 burden hours. 134 ($250 × 1 hour × 8,810 mutual funds). This cost estimate is based on informal discussions with a limited number of persons believed to be generally knowledgeable about preparing, submitting, and posting interactive data. *See* Part V, *infra* . We also estimate that software and consulting services would be used by mutual funds for an increase of approximately $803 per mutual fund. 135 Based on the estimate of 8,810 mutual funds using software and consulting services at an annual cost of $803 we estimate that, in the aggregate, the total external costs to the industry would be approximately $7,100,000. 136 135 For purposes of this estimate, we assumed that the largest 50 fund complexes would develop software in-house incurring costs of $125,000 in the first year. Assuming that the largest 50 fund complexes would develop software for use in all of their funds, and that their funds encompass 80% of the number of funds (7,048), then the average first year cost for those funds would be ($125,000 × 50)/7,048 = $887. Therefore, for those funds using software developed internally, the average 3 year cost would be approximately $829 ($887 in the first year + $800 in the second year + $800 in the third year) ÷ 3 years = approximately $829. The average 3 year cost for those funds that use commercial software would be $700 ($500 in the first year + $800 in the second year + $800 in the third year) ÷ 3 years = $700. Assuming 80% of funds incurred costs of $829 and 20% of funds incurred costs of $700, the average software and consulting cost per mutual fund would be approximately $803. These estimates were derived from responses to a voluntary program questionnaire. *See* Part V, *infra* . 136 8,810 mutual funds × $803 = approximately $7,100,000. Regulation C and Regulation S-T Regulation C (OMB Control No. 3235-0074) describes the procedures to be followed in preparing and filing registration statements with the Commission. Regulation S-T (OMB Control No. 3235-0424) specifies the requirements that govern the electronic submission of documents. The proposed changes to these items would add and revise rules under Regulations C and S-T. The filing requirements themselves, however, are included in Form N-1A and we have reflected the burden for these new requirements in the burden estimate for Mutual Fund Interactive Data. The rules in Regulations C and S-T do not impose any separate burden. 2. Changes To the Voluntary Program We are proposing to decrease the burden associated with the existing collection of information for Voluntary XBRL-Related Documents to reflect the proposed amendments. If we adopt rules requiring mutual funds to submit risk/return information in interactive data format, we intend that mutual funds would no longer be able to submit risk/return summary information in interactive data format through the voluntary program after the compliance date for the mandatory rules. When we adopted the amendments to expand the voluntary program to enable mutual funds voluntarily to submit risk/return summary information in interactive data format, we estimated an increase to the existing collection of information for Voluntary XBRL-Related Documents. 137 We estimated that 10% of the approximately 545 fund complexes that have mutual funds, or 55 fund complexes, would each submit documents containing tagged risk/return summary information for one mutual fund. 138 We further estimated that the initial creation of tagged documents containing risk/return summary information would require, on average, approximately 110 burden hours per mutual fund, and the creation of such tagged documents in subsequent years would require an average 10 burden hours per mutual fund. Because the PRA estimates represent the average burden over a three-year period, we estimated the average hour burden for the submission of tagged documents containing risk/return summary information for one mutual fund to be approximately 43 hours. 139 137 *See* Voluntary Program Adopting Release, *supra* note 16. 138 In the case of a mutual fund with multiple series, our estimate treated each series as a separate mutual fund. 139 (110 hours in the first year + 10 hours in the second year + 10 hours in the third year) ÷ 3 years = 43 hours. Based on the estimates of 55 participants submitting tagged documents containing risk/return summary information for one mutual fund once per year and incurring 43 hours per submission, we estimated that, in the aggregate, the industry would incur an additional 2,365 burden hours associated with the amendments. 140 We further estimated that 75% of this burden increase, or approximately 1,774 hours, would be borne internally by the mutual fund complexes. We estimated that this internal burden increase converted to dollars would amount to a total annual increase of internal costs of approximately $393,828. 141 140 55 documents per year × 43 hours per submission = 2,365 hours. 141 *See* note 82 of the Voluntary Program Adopting Release, *supra* note 16. We also estimated that 25% of the burden, or approximately 591 hours, would be outsourced to external professionals and consultants retained by the mutual fund complex at an average cost of $256.00 per hour for a total annual increase of approximately $151,296. 142 In addition, we estimated that the cost of licensing software would be $333 per participant per year, for a total annual increase of $18,315. 143 Altogether, we estimated the total annual increase in external costs related to the amendments would be $169,611. 144 142 *See* note 83 of the Voluntary Program Adopting Release, *supra* note 16. 143 $333 per participant × 55 participants = $18,315. 144 This annual total consisted of $151,296 in outside professional costs plus $18,315 in software costs. Given that mutual funds would no longer be able to submit risk/return summary information in interactive data format through the voluntary program if the proposed amendments are adopted, we would reduce the internal hour burden associated with the voluntary program by 1,774 hours and the internal cost burden by $393,828. We would also reduce the external cost burden by $169,611. We also are proposing amendments to the voluntary program to enable investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X to submit exhibits containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. As with the current voluntary program, volunteers could participate, without pre-approval, merely by submitting Schedule I in interactive data format. 145 145 Rule 12-12 of Regulation S-X [17 CFR 210.12-12]. Investors, financial intermediaries, and third party information providers, among others, use the portfolio holdings data contained in Schedule I to make decisions concerning the purchase and continued holding of funds and for other purposes. Portfolio holdings data promises to be even more useful to these various stakeholders if this data is interactive. In addition, allowing volunteers to submit tagged portfolio holdings information without having to submit other financial information in interactive data format would increase the range of options for participation in the voluntary program and encourage increased participation. We estimate that 20 registrants would choose to submit a schedule of portfolio holdings in interactive data format. We believe that investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X would participate, given the flexibility provided by a new option to submit exhibits containing just portfolio holdings information in interactive data format. Submission of portfolio holdings information in interactive data format would not affect the burden of preparing the registrants' traditional format filings. In order to provide portfolio holdings information in interactive data format, a participating registrant would have to tag Schedule I and submit the resulting interactive data file as an exhibit to its filing on Form N-CSR or Form N-Q. 146 The Commission anticipates entering into a contract to develop a list of tags that could be used to tag portfolio holdings. Based on our experience with mutual funds that have submitted risk/return summary information in the current voluntary program, we estimate that the initial creation of portfolio holdings information in interactive data format would require, on average, approximately 12 burden hours per registrant, 147 and the creation of such information in interactive data format in subsequent years would require an average 10 burden hours per registrant. 148 Because the PRA estimates represent the average burden over a three-year period, we estimate the average hour burden for the submission of portfolio holdings information in interactive data format for one registrant to be approximately 11 hours. 149 146 Form N-CSR [17 CFR 249.331; 17 CFR 274.128]; Form N-Q [17 CFR 249.332; 17 CFR 274.130]. 147 Mutual funds submitting risk/return summary information in our voluntary program indicated that an initial submission in the voluntary program took approximately 13 hours of labor. Given that the submission of portfolio holdings in interactive data format is less complex than the submission of risk/return summary information in interactive data format but potentially requires the tagging of many more individual items, we estimate that the initial creation of interactive data files containing portfolio holdings information would require, on average, approximately 12 burden hours per volunteer. 148 Mutual funds submitting risk/return summary information in the current voluntary program indicated that each set of submissions, after the initial set, would take approximately 11 burden hours, or 2 hours less than the initial submission. We estimate that the reduction in burden hours for subsequent submissions of portfolio holdings information in interactive data format would be a similar 2 hour reduction, or approximately 10 burden hours per volunteer. 149 (12 hours in the first year + 10 hours in the second year + 10 hours in the third year) ÷ 3 years = approximately 11 hours. While the PRA requires an estimate based on a hypothetical three years of participation, a registrant, as noted earlier, could participate in the voluntary program by submitting portfolio holdings information in interactive data format over a shorter period or even just once as the registrant chooses. Based on the estimate of 20 registrants submitting interactive data files containing portfolio holdings information once each year and incurring 11 hours per submission we estimate that, in the aggregate, the industry would incur an additional 220 burden hours associated with the proposed amendments. 150 We estimate that this internal burden increase converted to dollars would amount to approximately $47,000. 151 150 20 documents per year × 11 hours per submission = 220 hours. We note that mutual funds submit portfolio holdings information to the Commission four times per year. However, for purposes of our analysis, we estimate that mutual funds choosing to participate in the voluntary program would submit portfolio holdings information in interactive data format once each year. 151 This cost increase is estimated by multiplying the increase in annual internal hour burden
(220)by the estimated hourly wage rate of $213.00. *See supra* note 132. We also estimate that external professionals and consultants would be retained by the registrant for an increase of approximately $600.00. 152 It is our understanding that annual software licensing costs generally would be included in the cost of hiring external professionals and consultants. 153 Based on the estimate of 20 registrants retaining external professionals and consultants at an annual cost of $600.00 we estimate that, in the aggregate, the total external cost to the industry would be $12,000. 154 152 ($100.00 in the first year + $800.00 in the second year + $800.00 in the third year) ÷ 3 years = approximately $600.00. Mutual funds participating in our voluntary program for the submission of risk/return summary information in interactive data format indicated an initial external cost of $100.00 for the hiring of external professionals and consultants and projected an annual cost of $800.00 for external service providers going forward. The increase going forward was due to the fact that a couple of participants indicated that their external service provider had waived its fee for the initial submission. 153 We note that one respondent spent over $100,000 internally to develop software to submit risk/return summary information in interactive data format. We did not include this number in our calculations as this software was developed solely for purposes of submitting risk/return summary information and not for submitting financial information in interactive data format. *See infra* note 170. 154 20 registrants submitting interactive data files under the voluntary program × $600.00 = $12,000. As a result of the changes to the voluntary program, we therefore estimate a total decrease in internal burden hours of approximately 1,600 155 and a total decrease in internal costs of approximately $347,000. 156 We further estimate a total decrease in external costs of approximately $158,000. 157 155 (1,774 hours for the removal of risk/return summary information from the voluntary program − 220 hours for the submission of schedule of portfolio holdings in interactive data format = approximately 1,600 hours.) 156 ($393,828 for the removal of risk/return summary information from the voluntary program − $47,000 for the submission of schedule of portfolio holdings in interactive data format = approximately $347,000.) 157 ($169,611 for the removal of risk/return summary information from the voluntary program − $12,000 for the submission of schedule of portfolio holdings in interactive data format = approximately $158,000.) B. Request for Comments We solicit comment on the expected Paperwork Reduction Act effects of the proposed amendments, including the following: • The accuracy of our estimates of the additional burden hours that would result from adoption of the proposed amendments; • Whether the proposed new collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility; • Ways to enhance the quality, utility, and clarity of the information to be collected; • Ways to minimize the burden of the collection of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and • Any effects of the proposed amendments on any other collections of information not previously identified. Any member of the public may direct to us any comments concerning these burden estimates and suggestions for reducing the burdens. Persons submitting comments on the collection of information requirements should direct their comments to the OMB, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and send a copy of the comments to Office of the Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-9303, with reference to File No. S7-12-08. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-12-08, and be submitted to the Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549. OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this release. Consequently, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. V. Cost/Benefit Analysis A. Submission of Risk/Return Summary Information *Using Interactive Data* The proposed rules would require submission of interactive data-formatted risk/return summary information and the posting of such information on a mutual fund's Web site, if any. We believe that the proposed rules likely would result in the benefits and costs described below. We base our belief on an economic analysis of data obtained from several sources, including voluntary program participant responses to a staff-prepared questionnaire and our experiences with the voluntary program. 158 158 The proposed required program, similar to the voluntary program, would require use of interactive data in XBRL format. Interactive data are intended to remove a barrier in the flow of information between mutual funds and users of information that is conveyed through mutual fund disclosures. This should enable less costly dissemination of information and thereby improve the allocation of capital. The cost of implementation will depend primarily on the costs of transition by mutual funds to the new mode of reporting. The magnitudes of these benefits and costs from any individual mutual fund's adoption of interactive data reporting will depend on the number of other mutual funds that also adopt and on the availability of supporting software and other infrastructures that enable analysis of the information. To the extent that submitted information allows investors to make investment decisions based on market-wide comparison and analysis, the value to the investors of the reported information tends to increase with the total number of mutual funds adopting the regime. Likewise, mutual funds' incentives to report their information using interactive data depends on the interest level of the investors in this mode of reporting. By mandating implementation, the rule will expand the network of adopters and thereby create positive network externalities of reported information for the investors. 1. Benefits of Interactive Data Submissions and Web Site Posting The proposed rules have the potential to benefit investors both directly and by facilitating the exchange of information between mutual funds and the third party information providers and other intermediaries who receive and process mutual fund disclosures. Information Access Benefits of the proposed rulemaking accrue from the acceleration of market-wide adoption of interactive data format reporting. The magnitudes of the benefits thus depend on the value to investors of the new reporting regime relative to the old reporting regime and on the extent to which the mandated adoption speeds up the market-wide implementation. Requiring mutual funds to file their risk/return summary information using the interactive data format would enable investors, third party information providers, and the Commission staff to capture and analyze that information more quickly and at a lower cost than is possible using the same information provided in a static format. 159 Even though the new regime does not require any new information to be disclosed or reported, certain benefits accrue when mutual funds use an interactive data format to report their risk/return summary information. These include the following. Through interactive data, what is currently static, text-based information could be dynamically searched and analyzed, facilitating the comparison of mutual fund cost, performance, and other information across multiple classes of the same fund and across the more than 8,000 funds currently available. Any investor with a computer would have the ability to acquire and download data that have generally been available only to intermediaries and third-party analysts. For example, users of risk/return summary information could download it directly into spreadsheets, analyze it using commercial off-the-shelf software, or use it within investment models in other software formats. Also, to the extent investors currently are required to pay for access to mutual fund risk/return summary information that has been extracted and reformatted into an interactive data format by third-party sources, the availability of interactive data in Commission filings could allow investors to avoid additional costs associated with third-party sources. 159 *See* Part I. The magnitude of this informational benefit varies, however, with the availability of sophisticated tools that will allow investors to analyze the information. The growing development of software products for users of interactive data is helping to make interactive data increasingly useful to both institutional and retail investors. 160 For example, currently there are many software providers and financial printers that are developing interactive data viewers. We anticipate that these will become widely available and increasingly accessible to investors. We expect that the open standard feature of the interactive data format will facilitate the development of applications, and software, and that some of these applications may be made available to the public for free or at a relatively low cost. The continued improvement in this software would allow increasingly useful ways to view and analyze mutual fund risk/return summary information to help investors make more well-informed investment decisions. 160 *See SEC's Office of Interactive Disclosure Urges Public Comment as Interactive Data Moves Closer to Reality for Investors,* Securities and Exchange Commission Press Release, Dec. 5, 2007, available at *http://www.sec.gov/news/press/2007/2007-253.htm.* Interactive data also could provide a significant opportunity for mutual funds to automate their regulatory filings and business information processing, with the potential to increase the speed, accuracy, and usability of mutual fund disclosure. This reporting regime may in turn reduce filing and processing costs. By enabling mutual funds to further automate their disclosure processes, interactive data may eventually help funds improve the speed at which they generate information. For example, with standardized interactive data tags, registration statements may require less time for information gathering and review. A mutual fund that uses a standardized interactive data format at earlier stages of its reporting cycle may also increase the accuracy of its disclosure by reducing the need for repetitive data entry that could introduce errors and enhancing the ability of a mutual fund's in-house professionals to identify and correct errors in the fund's registration statements filed in traditional electronic format. There has been a growing development of software products to assist mutual funds to tag their risk/return summary information using interactive data helping make interactive data increasingly useful. 161 161 *Id.* Mutual funds that automate their regulatory filings and business information processing in a manner that facilitates their generation and analysis of disclosures could, as a result, realize a reduction in costs. Market Efficiency The proposed requirements could benefit investors by making financial markets more efficient in regard to the following: 162 162 We believe the benefits will stem primarily from the requirement to submit interactive data to the Commission and the Commission's disseminating that data. We also believe, however, that the requirement that mutual funds with Web sites post the interactive data required to be submitted would encourage its widespread dissemination thereby contributing to lower access costs for users and the related benefits described. We solicit comment in Part II.E regarding what advantages dual Commission and Web site availability would have. • Capital formation as a result of mutual funds' being in a better position to attract shareholders because of greater (less costly) awareness on the part of investors of mutual fund risk/return summary information; and • Capital allocation as a result of investors' being better able to allocate capital among those mutual funds seeking it because of interactive data reporting's facilitating innovations in efficient communication of mutual fund risk/return summary information. More Efficient Capital Formation An increase in the efficiency of capital formation is a benefit that may accrue to the extent that interactive data reduces some of the information barriers that make it costly for mutual funds to find appropriate sources of new investors. In particular, smaller mutual fund complexes are expected to benefit from enhanced exposure to investors. If interactive data risk/return summary reporting increases the availability, or reduces the cost of collecting and analyzing, mutual fund risk/return summary data, then there could be improved coverage of mutual funds in smaller fund complexes by third party information providers and commercial data vendors. At present, some mutual funds in smaller fund complexes do not provide their data to third party information providers. 163 This may reduce the likelihood that their data is readily available to investors who use commercially available products to assess mutual fund performance. Hence, if interactive data reporting increases coverage of mutual funds in smaller fund complexes by third party information providers, and this increases their exposure to investors, then lower search costs for shareholders could result. 163 Analysis by Division of Investment Management staff based on publicly available data. More Efficient Capital Allocation An increase in the efficiency of capital allocation may accrue to the extent that interactive data increase the quality of information by reducing the cost to access, collect, and analyze mutual fund risk/return summary information or improve the content of mutual fund-reported information. 164 An increase in quality and improvement in content could enable investors to better allocate their capital among mutual funds. 164 In the context of the discussion below, quality refers to the ease with which end-users of risk/return summary information can access, collect, and analyze the data. This issue is separate from the content of mutual fund-reported information. Information quality in mutual fund markets would likely be higher if interactive data reporting were required than if not, leading to more efficient capital allocation. As a result of the improved utility of information, investors may be able to evaluate various mutual funds, thereby facilitating capital flow into their favored investment prospects. We believe that requiring mutual funds to provide interactive data would improve the quality of risk/return summary information available to end users, and help spur interactive data-related innovation in the supply of mutual fund comparative products, resulting from a potential increased competition among suppliers of such products due to lower entry barriers as a result of lower data collection costs. However, we have considered competing views of the informational consequences of interactive data. For example, a requirement to submit interactive data information could decrease the marginal benefit of collecting information and thus reduce the information quality to the extent it reduces third-party incentives to facilitate access to, collect, or analyze information. Assuming that markets efficiently price the value of information, the amount of information accessed, collected (or enhanced), and analyzed will be determined by the marginal benefit of doing so. 165 Lowering information collection costs (through a requirement to submit interactive data information) should increase this benefit. If this is so, then there should be no degradation in the level of information quality as a result of changes in third-party provider behavior under an interactive data reporting regime. However, if one competitor in the industry can subsidize its operations through an alternative revenue stream, both quality and competition may suffer. 166 165 Also, we expect that because the proposed rules would require the use of the XBRL interactive data standard, XBRL's being an open standard would facilitate the development of related software, some of which may, as a result, be made available to the public for free or at a relatively low cost and provide the public alternative ways to view and analyze interactive data information provided under our proposed rules. 166 For illustration purposes only, assume that an Internet service company develops an interactive data-based tool that easily provides mutual fund risk/return summary information for free to all subscribers, and it uses this product as a loss leader to increase viewership and advertising revenue. If the data provided is of the same quality as data provided through subscription to other available commercial products, then there should be no informational efficiency loss. However, if a data aggregator's providing information that improves investor interpretation and goes beyond risk/return summary information is possible, but no longer profitable to produce for competitors without the subsidy, then valuable information production may be lost. Another potential information consequence of the proposed requirements may be changes to the precision and comparability of the information disseminated by data service providers since the interactive data requirements would shift the source of data formatting that allows aggregation and facilitates comparison and analysis from end-users to mutual funds submitting interactive data. At present, data service providers manually key risk/return summary information into a format that allows aggregation. As a result, the data service provider makes interpretive decisions on how to aggregate reported items so that they can be compared across all mutual funds. Consequently, when a subscriber of the commercial product offered by a data service provider uses this aggregated data, it can expect consistent interpretation of the reported items. In contrast, a requirement for mutual funds to submit interactive data information would require the mutual funds to independently decide within the confines of applicable requirements which “tag” best describes each item within the risk/return summary—perhaps with the help from a filing agent or consultant—lessening the amount of interpretation required by data aggregators or end-users of the data. Once a tag is chosen, comparison to other funds is straightforward. However, since mutual funds have some discretion in how to select tags, and can choose extensions (new tags) when they can not find an appropriate existing tag, unique interpretations by each fund could result in reporting differences from what current data service providers and other end-users would have chosen. This view suggests that the information disseminated by data aggregators may be, on the one hand, less comparable because they have not normalized it across mutual funds but, on the other hand, more accurate because the risk of human error in the manual keying and interpretation of filed information would be eliminated and more precise because it will reflect decisions by the mutual funds themselves. Replication of prior methods of interpretation still would be possible, however, because mutual funds would continue to be required to file risk/return summary information in traditional format. As a result, nothing would prohibit data aggregators from continuing to provide normalized data. Nonetheless, interactive data benefits could diminish if other reporting formats are required for clarification in data aggregation. The content of mutual fund-reported information may improve because, as previously discussed, a mutual fund that uses a standardized interactive data format at earlier stages of its disclosure cycle may increase the accuracy of its disclosure. In contrast, the content of mutual fund-reported information may improve or decline to the extent that the interactive data process influences what mutual funds disclose. While the proposed requirements to submit and post interactive data information are intended to be disclosure neutral, it is possible they would affect what is disclosed. 167 167 We solicit comment on whether the proposed requirements would affect mutual fund disclosure in Part II.C. 2. Costs of Interactive Data Submissions and Web Site Posting The primary cost of the rulemaking is the cost of mutual funds' implementation of the rule, which includes the costs of submitting and posting interactive data. We discuss this cost element extensively below. In addition, because the proposed rules would allow an increase in the flow of risk/return summary information being reported directly to third party information providers and investors, there will be a cost of learning on the part of the investors in using and analyzing risk/return summary information at the interactive data level. As for the cost of implementation of the rule, based on currently available data, we estimate the average direct costs of submitting and posting interactive data-formatted risk/return summary information for all mutual funds under the proposed rules would, based on certain assumptions, be as follows: Table.—Estimated Direct Costs of Submitting Interactive Data-Formatted Risk/Return Summary Information First submission Subsequent submissions Preparation 168 $2,600 $2,300 Software and consulting services 169 170 20,600 800 Web site posting 171 250 250 Total cost 23,450 3,350 The above estimates are generated from a limited number of voluntary program participant questionnaire responses. In particular, these responses provided detail on the actual and projected costs of preparing risk/return summary information in interactive data format and for purchasing software or related filing agent services. A detailed analysis of the costs associated with voluntary program participation suggests that the estimated direct cost of submitting risk/return summary information in interactive data format falls within the range of $735.50 to $127,500 per fund for the first submission. 172 This cost reflects expenditures on interactive data-related software, consulting or filing agent services used, and the market rate for all internal labor hours spent (including training) to prepare, review, and submit the first interactive data format risk/return summary information. The future experiences of individual mutual funds regarding risk/return summary information filed in an interactive data format still may vary according to the mutual funds' size, complexity, and other factors not apparent from the voluntary program participant responses. The discussion below summarizes the *direct* cost estimates of compliance regarding risk/return summary submissions based on voluntary program participant questionnaire responses and the specified assumptions. 173 168 Estimates based on risk/return summary voluntary program questionnaire responses. The voluntary program questionnaire responses indicated that different filers use different personnel to prepare interactive data submissions. We calculated costs for each participant based upon the personnel each individual respondent to the voluntary program questionnaire indicated it used and the length of time it indicated the personnel spent on the preparation. The numbers in the table represent the average of all of these calculations. The following wage rates were assumed for preparation cost estimates: operations specialist—$129; paralegal—$168; senior compliance examiner—$180; intermediate business analyst—$183; senior accountant—$185; programmer analyst—$194; financial reporting manager—$268; and attorney—$295. These estimated wage figures are based on published rates for the personnel above, modified to account for bonuses, firm size, employee benefits, and overhead, yielding the effectively hourly rates above. *See* SIA Report, *supra* note 132. 169 Software licensing and the use of a consultant can be substitutionary—mutual funds can choose to do one or the other, or do both—and are thus aggregated. 170 We note that one volunteer expended over $100,000 in information technology to develop internal software that applies interactive data tags to risk/return summary information. This one expenditure by one fund resulted in a higher average software and consulting services cost per fund of $20,600 for the first submission. Excluding this data, the average software and consulting services costs per fund would have been approximately $500. While our averages imply that the costs of internally developing software are allocated to one fund in the sample, in reality the complex that developed the software will likely use that software for all of its funds. Thus the development cost could be allocated across all funds within that complex rather than to one fund. 171 Voluntary program participants were not required to post on their Web sites, if any, the interactive data information they submitted. Consequently, the costs of the requirement to post interactive data information are not derived from the voluntary program participant questionnaire responses or discussed in our analysis of those responses. Those costs are, instead, derived from informal discussions with a limited number of persons believed to be generally knowledgeable about preparing, submitting, and posting interactive data. 172 *See supra* note 170 with respect to the high end of the range. 173 The details of this analysis regarding risk/return summary information, including the underlying assumptions and other considerations related to both the costs and benefits of requiring submission of interactive data, are provided following the summary. • Average cost of first submission, excluding the costs of Web site posting, from voluntary program questionnaire data is $23,200. • Projected average cost of subsequent submissions, excluding the costs of Web site posting, from voluntary program questionnaire data is $3,100. This analysis attempts to quantify some of the direct costs that mutual funds will incur if we require submission and posting of interactive data. Whether mutual funds choose to purchase and learn how to use software packages designed for interactive data submissions or outsource this task to a third party, internal (labor) resources would be required to complete the task. The cost estimates provided here using voluntary program participant questionnaire responses shed light on the potential dollar magnitude of the costs of requiring interactive data submissions. At present, there are 22 mutual funds that have participated in the voluntary program. Of these, 9 were provided questionnaires on the details of their cost experience, and 6 responses were collected by the time of this analysis representing the cost data for 10 funds. 174 The table below summarizes the aggregate costs per mutual fund, including software and filing agent service costs and an estimated cost for the internal labor hours required to prepare and submit the interactive data format information. The low and high estimates of the cost for internal labor hours were calculated using a variety of billing rates corresponding to the job descriptions of internal personnel involved in preparing the tagged risk/return summaries. 175 The reported costs are calculated using responses from the six voluntary program participants that provided responses. Although there are only 6 voluntary program respondents to the questionnaire, those 6 respondents represent mutual fund complexes whose assets comprise approximately 26.35% of all the assets of the mutual funds that ultimately would be required to submit interactive data. 176 174 The questionnaires requested data for one fund; however, several questionnaire respondents voluntarily submitted cost information for more than one fund. 175 *See supra* note 168. These estimates are from the Securities Industry and Financial Markets Association's Management & Professional Earnings in the Securities Industry 2007, modified to account for an 1800-hour work year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead. Questionnaire respondents apportioned time spent tagging risk/return summaries among various job types. 176 Based on total mutual fund assets of $11.8 trillion. Lipper-Directors' Analytical Data, Reuters 2008. Table.—Summary of Illustrative Survey Data on the Direct Cost Estimates for Voluntary Program Participants All voluntary program participants respondents Low High First submission: Estimated costs $735.50 177 $127,500 Subsequent submissions: Estimated costs $555.00 $5,640 Average reduction in cost from first to second submission 24.54% 178 95.58% Scalability of Interactive Data-Related Support Services and Technology The final cost consideration in this section is the scalability of interactive data-related support services and technology. In particular, it is unclear how the market for interactive data support services and technology may change if the Commission required over 8,000 mutual funds to submit and post interactive data. 177 We note that these costs are higher due to one questionnaire respondent who spent significantly more than all other respondents to create its own interactive data software in-house. *See supra* note 170. 178 *Id.* The roles of each potential kind of service provider within the interactive data market are likely to develop further and are not yet clear, and there are many potential participants to consider, including the software vendors, print/filing agents, and consultants, as well as the Commission. 179 Until the market of mutual funds that submit interactive data information grows substantially larger (either by requirement or by expansion of the number of volunteers), it is difficult to predict how standard solutions will evolve. For example, we do not know whether mutual funds will adopt solutions that create interactive data submissions using third party software, a so-called “bolt-on” approach, or will seek integrated solutions that enable funds to prepare interactive data submissions from their existing software. Moreover, filing agents may maintain their role as an intermediary by offering interactive data technology or other service providers may cause that role to change. Others with technical expertise may participate in the technology with unpredictable results. 179 In addition, mutual fund complexes with a large number of funds may consider developing software in-house since that cost could be allocated across all of their funds. Combining the uncertainty over the source of future interactive data services with increased demand for these services could result in a new equilibrium market price that is different from what is currently reported by voluntary program participants. This price could be higher if the demand for interactive data services increases (from 15 mutual fund complexes currently participating in the voluntary program to 683 mutual fund complexes 180 participating) at a faster rate than the supply for these same services. More broadly, if an interactive data requirement resulted in clients subscribing for interactive data services faster than the rate at which these services can be supplied, then a price increase is the natural discriminator in how to allocate limited resources. 180 Investment Company Institute, *2008 Investment Company Fact Book* , at 14 (2008), available at: *http://www.icifactbook.org/pdf/2008_factbook.pdf* (683 fund sponsors). The submission costs discussed in this section suggest that if interactive data is implemented too quickly it could result in higher than necessary submission costs if the supply of interactive data-related resources is constrained, but the effect would likely diminish as a market place for interactive data services develops. Hence, this concern is mitigated by delaying the requirement that mutual funds submit interactive data until December 31, 2009. This delay would allow interactive data service suppliers to keep pace with demand. B. Changes to Voluntary Program In order to facilitate further evaluation of data tagging, the proposed amendments would enable investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X to submit exhibits containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. 1. Benefits We believe that portfolio holdings information in interactive data format may allow more efficient and effective retrieval, research, and analysis of registrants' portfolio holdings through automated means. The proposed amendments to the voluntary program will assist us in assessing whether using interactive data tags enhances users' ability to analyze and compare portfolio holdings information included in filings with the Commission. Currently, a number of companies use computers and data entry staff to mine portfolio holdings information provided by mutual funds and others in order to populate databases that are used to package information for sale to analysts, funds, investors, and others. Permitting funds and other entities to tag portfolio holdings information in Commission filings will aid this data-mining process in that it will identify points of data at the source, which could reduce the cost to populate databases and improve the accuracy of that data. Additionally, the changes to the voluntary program may benefit funds and the public by permitting experimentation with data tagging using the new portfolio holdings list of tags when it is created. In the future, the availability of potentially more accurate information about mutual funds and other entities could also reduce the cost of research and analysis and create new opportunities for companies that compile, provide, and analyze data to produce more value added services. Enhanced access to information submitted in interactive data format also has the potential to allow retail investors (or financial advisers assisting such investors) to perform more personalized and sophisticated analyses and comparisons of mutual funds and other investment options, which could result in investors making better informed investment decisions, and therefore in a more efficient distribution of assets by investors among different funds. This may, in turn, also contribute to increased competition among mutual funds and other entities and result in a more efficient allocation of resources among competing investment products. Although it is not possible to quantify precisely the beneficial effects of more efficient allocation of investors' assets and increased competition, they may be significant, given the size of the mutual fund industry. Other potential benefits resulting from the inclusion of portfolio holdings information as a stand-alone item in the voluntary program could include an increase in the accuracy of information and the potential for increased timeliness of data that investors use to make informed investment decisions. Another potential benefit is that portfolio holdings information submitted in interactive data format would allow automated, instantaneous extraction of every investment disclosed in the schedule of portfolio holdings. Finally, the investment analysis process could become more efficient and effective through the increased use of automation and reduced human intervention that would result from the use of interactive data. 2. Costs The proposed amendments to the voluntary program would lead to some costs for filers choosing to submit portfolio holdings information in interactive data format. 181 For purposes of the PRA, we estimated that the increase in annual internal burden hours to the industry would be approximately 220 hours, which would amount to an increase in costs of approximately $47,000 and that the increase in annual external costs per filer would amount to approximately $600 per year for a total estimated increase to the industry of approximately $12,000 on an annual basis. 182 181 For purposes of the PRA, we also estimated a reduction in burden hours for the voluntary program collection of information, due to removal of risk/return summary information from the voluntary program. *See supra* Part IV.A.2. 182 *See supra* Part IV.A.2. We based these cost estimates upon, among other things, experience with mutual funds who have submitted risk/return summary information in interactive data format in the current voluntary program. 183 Due to the ongoing nature of the project to develop the list of tags for portfolio holdings, however, we have limited data to quantify the cost of implementing the use of interactive data tags applied to portfolio holdings information, and we seek comment and supporting data on our estimates with regard to the proposed amendments. In the future, there may be additional costs to current users of EDGAR data. For example, companies that currently provide tagging and dissemination of EDGAR data may experience decreased demand for their services. These entities have developed certain products and services based on data in EDGAR; many entities disseminate, repackage, analyze, and sell the information. Allowing filers to submit tagged portfolio holdings information, even voluntarily, may have an impact on entities providing EDGAR-based services and products. Because the Commission does not regulate all these entities, it is currently not feasible to accurately estimate the number or size of these potentially affected entities. The limited, voluntary nature of the program will help the Commission assess the effect, if any, on these entities. Additionally, the availability of interactive data on EDGAR may provide these companies with alternative business opportunities. 183 *See supra* note 168. C. Comment Solicited We solicit comment on all aspects of this cost-benefit analysis, including the identification of any additional costs or benefits of, or suggested alternatives to, the proposed rules. Commenters are requested to provide empirical data and other factual support for their views to the extent possible. We request comment regarding the costs and benefits to investors, mutual funds, third-party information providers, software providers, filing agents, and others who may be affected by the proposed rules. We are particularly interested in information on the costs and benefits to smaller mutual fund complexes. In particular, we request comment regarding: • The differences between start-up costs and the costs of providing interactive data on a continuing basis after the initial preparation; and • The cost of Web site posting. VI. Consideration of Burden on Competition and Promotion of Efficiency, Competition, and Capital Formation Section 23(a)(2) of the Exchange Act 184 requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule would have on competition. In addition, section 23(a)(2) prohibits us from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. Furthermore, section 2(b) 185 of the Securities Act, section 3(f) 186 of the Exchange Act, and section 2(c) 187 of the Investment Company Act require us, when engaging in rulemaking where we are required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. 184 15 U.S.C. 78w(a)(2). 185 15 U.S.C. 77b(b). 186 15 U.S.C. 78c(f). 187 15 U.S.C. 80a-2(c). A. Submission of Risk/Return Summary Information Using Interactive Data The proposals to require mutual funds to submit interactive data to the Commission and post it on their Web sites are intended to make risk/return summary information easier for investors to analyze while assisting in automating regulatory filings and business information processing. In particular, we believe that the proposed rules would enable investors and others to search and analyze the risk/return summary information dynamically; facilitate comparison of mutual fund cost, performance, and other information; and, possibly, provide a significant opportunity to automate regulatory filings and business information processing with the potential to increase the speed, accuracy, and usability of risk/return summary disclosure. Further, as discussed in detail above, we believe that the proposals may lead to more efficient capital formation and allocation. 188 188 See Part V.A. We understand that private sector businesses such as those that access mutual fund information and aggregate, analyze, compare, or convert it into interactive format have business models and, as a result, competitive strategies that the proposed interactive data requirements might affect. Since interactive data technology is designed to remove an informational barrier, business models within the mutual fund services industry that are currently adapted to traditional format document reporting may change, with possible consequences for the revenue stream of current product offerings due to the competitive effects of such a change. The competitive effects may relate to changes in the accessibility of risk/return summary information to investors, the nature of the information that investors receive, and the potential from new entry or innovation in the markets through which mutual fund disclosures are transmitted from mutual funds to investors. For example, lower entry barriers that result from lower data collection costs may increase competition among third-party information providers and help spur interactive data-related innovation. It is also possible, however, that a requirement to submit interactive data information could decrease the marginal benefit of collecting information and thus cause third-party information providers to produce information that is less robust to the extent the decreased marginal benefit reduces third party incentives to facilitate access to, collect, or analyze information. If markets efficiently price the value of information, the amount of information accessed, collected (or enhanced), and analyzed will be determined by the marginal benefit of doing so. 189 Lowering information collection costs (through a requirement to submit interactive data information) should increase this benefit. If this is so, then there should be no degradation in the level of information quality as a result of changes in third-party provider behavior under an interactive data reporting regime. However, if one competitor in the industry can subsidize its operations through an alternative revenue stream, both quality and competition may suffer. 189 Also, we expect that because the proposed rules would require the use of the XBRL interactive data standard, XBRL's being an open standard would facilitate the development of related software, some of which may, as a result, be made available to the public for free or at a relatively low cost and provide the public alternative ways to view and analyze interactive data information provided under our proposed rules. For the reasons described more fully above, we believe the liability protections for interactive data would be necessary or appropriate in the public interest and consistent with the protection of investors. Moreover, the protections would also be consistent with the purposes fairly intended by the policy and provisions of the Investment Company Act. B. Changes to the Voluntary Program The proposed amendments would no longer allow mutual funds to submit risk/return summary information in interactive data format through the voluntary program after the compliance date for the mandatory rules and would enable investment companies that are registered under the Investment Company Act, business development companies, and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X to submit exhibits containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. The changes to the voluntary program are intended to help further evaluate the usefulness to investors, third-party information providers, investment companies, the Commission, and the marketplace of interactive data and, in particular, of submitting portfolio holdings information in interactive data format. Because compliance with the proposed amendments will be voluntary, the Commission estimates that the impact of the proposal will be limited. However, because the submission of portfolio holdings information in interactive data format has the potential to facilitate analysis of that information, we believe that the proposed amendments could promote efficiency by allowing us and others to gain experience with portfolio holdings information in interactive data format. Further, submitting portfolio holdings information in interactive data format has the potential to help streamline the delivery of portfolio holdings information, and provide investors and others with improved tools to compare funds and other entities. As with the filing of risk/return summary information in interactive data format, we believe that the potential to streamline the delivery of portfolio holdings information and to provide investors and others with improved comparison tools could promote efficiency and competition through more efficient allocation of investments by investors and more efficient allocation of assets among competing funds and other investment products. In the future, companies that currently provide tagging and dissemination of EDGAR data may experience decreased demand for their services. The availability of interactive data on the Commission's electronic filing system however, may provide these companies with alternative business opportunities. We do not anticipate that the proposed amendments would have a significant impact on capital formation. Finally, because the proposals are designed to permit mutual funds and other entities to provide information in a format that we believe would be more useful to investors, we believe that the proposed amendments are appropriate in the public interest and for the protection of investors. C. Request for Comment We request comment on whether the proposals, if adopted, would promote efficiency, competition, and capital formation or have an impact or burden on competition. Commenters are requested to provide empirical data and other factual support for their views, if possible. VII. Initial Regulatory Flexibility Analysis This Initial Regulatory Flexibility Analysis has been prepared in accordance with 5 U.S.C. 603. It relates to proposed amendments that would require mutual funds to provide risk/return summary information to the Commission and on their Web sites in interactive data format and that would enable investment companies and other entities to submit exhibits through the voluntary program containing a tagged schedule of portfolio holdings without having to submit other financial information in interactive data format. A. Reasons for, and Objectives of, the Proposed Action Submission of Risk/Return Summary Information Using Interactive Data The main purpose of the proposed amendments is to make risk/return summary information easier for investors to analyze while assisting in automating regulatory filings and business information processing. Currently, mutual funds are required to file their registration statements in a traditional format that provides static text-based information. We believe that providing the risk/return summary information these filings contain in interactive data format would: • Enable investors and others to search and analyze the information dynamically; • Facilitate comparison of mutual fund performance; and • Possibly provide a significant opportunity to automate regulatory filings and business information processing with the potential to increase the speed, accuracy, and usability of risk/return summary disclosure. Changes to the Voluntary Program The main purpose of the proposed amendments to the voluntary program is to help us evaluate the usefulness to investors, third party information providers, funds, the Commission, and the marketplace of interactive data and, in particular, of submitting portfolio holdings information in interactive data format. We believe the proposed changes to the voluntary program would enable us to further study the extent to which interactive data enhance the comparability of portfolio holdings information, the usefulness of interactive data for dissemination, and our staff's ability to review and assess the accuracy and adequacy of that data. The proposed changes to the voluntary program also would help us assess the effect of interactive data on the quality and transparency of portfolio holdings information, as well as the compatibility of interactive data with the Commission's disclosure requirements. More specifically, we believe that the proposed changes to the voluntary program would better enable us to study the extent to which interactive data would: • Enable investors and others to search and analyze the information dynamically; • Facilitate comparison of portfolio holdings among funds and other entities; and • Possibly provide a significant opportunity to reduce the resources needed for data analysis. In addition, we believe the proposed changes to the voluntary program would enhance our ability to evaluate the: • Impact on the staff's ability to review filings on a more timely and efficient basis, • Use of interactive data for risk assessment and surveillance procedures, and • Compatibility of interactive data with reporting quality, transparency, and other Commission reporting requirements. B. Legal Basis We are proposing the amendments under sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act, 190 sections 3, 12, 13, 14, 15(d), 23(a), 35A, and 36 of the Exchange Act, 191 sections 314 and 319 of the Trust Indenture Act 192 and sections 6(c), 8, 24, 30, and 38 of the Investment Company Act. 193 190 15 U.S.C. 77e, 77f, 77g, 77s(a), and 77z-3. 191 15 U.S.C. 78c, 78 *l* , 78m, 78n, 78o(d), 78w(a), 78 *ll* , and 78mm. 192 15 U.S.C. 77nnn and 77sss. 193 15 U.S.C. 80a-6(c), 80a-8, 80a-24, 80a-29, and 80a-37. C. Small Entities Subject to the Proposed Rules The proposed amendments would affect mutual funds that are small entities. For purposes of the Regulatory Flexibility Act, an investment company is a small entity if it, together with other investment companies in the same group of related investment companies, has net assets of $50 million or less as of the end of its most recent fiscal year. 194 Approximately 127 mutual funds registered on Form N-1A meet this definition. 195 All of these mutual funds would become subject to the proposed rules to require submission of risk/return summary information using interactive data. Regarding the proposed changes to the voluntary program, a smaller subset of small entity mutual funds may voluntarily submit tagged portfolio holdings information, but, because submitting portfolio holdings information would be voluntary, we anticipate that only mutual fund complexes with sufficient resources would elect to participate. To date, no small entity mutual funds have elected to participate in the current voluntary program. 194 17 CFR 270.0-10. 195 This estimate is based on analysis by the Division of Investment Management staff of publicly available data as of December 2007. D. Reporting, Recordkeeping and Other Compliance Requirements Submission of Risk/Return Summary Information Using Interactive Data All mutual funds subject to the proposed rules would be required to submit risk/return summary information to the Commission in interactive data format and, if they have a Web site, post the interactive data on their Web site. We believe that, in order to submit risk/return summary information in interactive data format, mutual funds in general and small entities in particular likely would need to prepare and then submit the interactive data by expending internal labor hours in connection with either or both of • Purchasing, learning, and using software packages designed to prepare risk/return summary information in interactive format; and • Hiring and working with a consultant or filing agent. We believe that mutual funds would incur relatively little cost in connection with the requirement to post the interactive data on their Web site because the requirement applies only to mutual funds that already have a Web site. 196 196 The internal labor and external costs required to comply with the proposed rules are discussed more fully in Parts IV and V above. Changes to the Voluntary Program The voluntary program is designed to assist us in assessing the feasibility of using interactive data on a broader basis. Experience with the current voluntary program indicates that the cost of submitting portfolio holdings information in interactive data format, the associated burden on the Commission's electronic filing system, and the possible effect of the proposed changes to the voluntary program on those entities that use the data from the Commission's electronic filing system would be minimal. No registrant would be required to submit documents in interactive data format under the proposed changes to the voluntary program. The submission of portfolio holdings information in interactive data format would require a participant to tag the portfolio holdings information already provided in required disclosures and to submit exhibits to its filing. Volunteers may also need to purchase software or retain a consultant to assist in creating interactive data exhibits. 197 197 *Id* . E. Duplicative, Overlapping, or Conflicting Federal Rules We believe that the proposed amendments would not duplicate, or overlap, or conflict with, other federal rules. F. Agency Action to Minimize the Effect on Small Entities The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish the stated objective, while minimizing any significant adverse impact on small entities. In connection with the proposed amendments, we considered several alternatives, including the following: • Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities; • Further clarifying, consolidating, or simplifying the proposed requirements; • Using performance rather than design standards; and • Providing an exemption from the proposed requirements, or any part of them, for small entities. Submission of Risk/Return Summary Information Using Interactive Data We believe that, as to small entities, differing compliance, reporting or timetable requirements, a partial or complete exemption from the proposed requirements, or the use of performance rather than design standards would be inappropriate because these approaches would detract from the long-term completeness and uniformity of the interactive data format risk/return summary information database. Less long-term completeness and uniformity would reduce the extent to which the proposed requirements would enable investors and others to search and analyze the information dynamically; facilitate comparison of mutual fund performance; and, possibly, provide a significant opportunity to automate regulatory filings and business information processing with the potential to increase the speed, accuracy, and usability of risk/return summary information disclosure. We note, however, that all mutual funds, including small entities, would not be subject to the proposed requirements until after December 31, 2009. 198 We solicit comment, however, on whether differing compliance, reporting, or timetable requirements, a partial or complete exemption, or the use of performance rather than design standards would be consistent with our described main goal of making risk/return summary information easier for investors to analyze while assisting in automating regulatory filings and business information processing. 198 In this regard, in Part II.B. of this release we note that the additional time is intended to permit mutual funds to plan for and implement the interactive data reporting process after having the opportunity to experiment with the voluntary program. We also there solicit comment on the appropriate timetable for smaller mutual fund complexes (which would include small entities) and note that the additional time also is intended to enable us to monitor the voluntary program and, if necessary, make appropriate adjustments to the timetable. We are considering whether further clarifying, consolidating, or simplifying the proposed interactive data submission and posting requirements would be appropriate. Based in part on our experience with the voluntary program, we believe that the proposed requirements are sufficiently clear and straightforward (although, we seek comment on this). Changes to the Voluntary Program The purpose of the proposed amendments is to help us evaluate the usefulness to investors, third party information providers, mutual funds and other entities, the Commission, and the marketplace of interactive data and, in particular, of submitting portfolio holdings information in interactive data format. Submitting documents containing portfolio holdings information in interactive data format would be entirely voluntary. We have considered different or simpler procedures for small entities, but for interactive data to provide benefits such as ready comparability there cannot be alternative procedures in place for different entities. Similarly, in order to achieve the benefits of interactive data, use of a single technology is necessary. If we determine to require the filing of portfolio holdings information in interactive data format in the future, we will look to the results of the voluntary program, including those of the proposed changes to the voluntary program, to find alternatives to minimize any burden on small entities. We solicit comment on how the proposals could be modified to minimize the effect on small entities. G. Solicitation of Comment We encourage comments with respect to any aspect of this Initial Regulatory Flexibility Analysis. In particular, we request comments regarding: • The number of small entities that may be affected by the proposed amendments; • The existence or nature of the potential impact of the proposed amendments on small entities as discussed in this analysis; and • How to quantify the impact of the proposed amendments. We ask those submitting comments to describe the nature of any impact and provide empirical data supporting the extent of the impact. These comments will be considered in the preparation of the Final Regulatory Flexibility Analysis, if the proposed amendments are adopted, and will be placed in the same public file as comments on the proposed amendments themselves. VIII. Small Business Regulatory Enforcement Fairness Act For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, a rule is “major” if it has resulted, or is likely to result in: • An annual effect on the economy of $100 million or more; • A major increase in costs or prices for consumers or individual industries; or • Significant adverse effects on competition, investment, or innovation. We request comment on whether our proposals would be a “major rule” for purposes of SBREFA. We solicit comment and empirical data on: • The potential effect on the U.S. economy on an annual basis; • Any potential increase in costs or prices for consumers or individual industries; and • Any potential effect on competition, investment, or innovation. IX. Statutory Authority The Commission is proposing the amendments outlined above under sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act [15 U.S.C. 77e, 77f, 77g, 77j, 77s(a), and 77z-3]; sections 3, 12, 13, 14, 15(d), 23(a), 35A, and 36 of the Exchange Act [15 U.S.C. 78c, 78 *l* , 78m, 78n, 78o(d), 78w(a), 78 *ll* , and 78mm]; sections 314 and 319 of the Trust Indenture Act [15 U.S.C. 77nnn and 77sss]; and sections 6(c), 8, 24, 30, and 38 of the Investment Company Act [15 U.S.C. 80a-6(c), 80a-8, 80a-24, 80a-29, and 80a-37]. List of Subjects 17 CFR Parts 232 and 239 Reporting and recordkeeping requirements, Securities. 17 CFR Parts 230, 270 and 274 Investment companies, Reporting and recordkeeping requirements, Securities. Text of Proposed Rule and Form Amendments For the reasons set forth above, the Commission proposes to amend Title 17, Chapter II of the Code of Federal Regulations as follows: PART 230—GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933 1. The authority citation for Part 230 continues to read in part as follows: Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 77z-3, 77sss, 78c, 78d, 78j, 78 *l* , 78m, 78n, 78o, 78t, 78w, 78 *ll* (d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, unless otherwise noted. 2. Amend § 230.485 by adding paragraph (c)(3) to read as follows: § 230.485 Effective date of post-effective amendments filed by certain registered investment companies.
(c)* * *
(3)A registrant's ability to file a post-effective amendment, other than an amendment filed solely for purposes of submitting an Interactive Data File, under paragraph
(b)of this section is automatically suspended if a registrant fails to submit and post on its Web site any Interactive Data File exhibit as required by General Instruction C.3.(g) of Form N-1A. A suspension under this paragraph (c)(3) shall become effective at such time as the registrant fails to submit or post an Interactive Data File as required by General Instruction C.3.(g) of Form N-1A. Any such suspension, so long as it is in effect, shall apply to any post-effective amendment that is filed after the suspension becomes effective, but shall not apply to any post-effective amendment that was filed before the suspension became effective. Any suspension shall apply only to the ability to file a post-effective amendment pursuant to paragraph
(b)of this section and shall not otherwise affect any post-effective amendment. Any suspension under this paragraph (c)(3) shall terminate as soon as a registrant has submitted and posted to its Web site the Interactive Data File as required by General Instruction C.3.(g) of Form N-1A. PART 232—REGULATION S-T—GENERAL RULES AND REGULATIONS FOR ELECTRONIC FILINGS 3. The authority citation for Part 232 continues to read in part as follows: Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78 *l* , 78m, 78n, 78o(d), 78w(a), 78 *ll* , 80a-6(c), 80a-8, 80a-29, 80a-30, 80a-37, and 7201 *et seq.* ; and 18 U.S.C. 1350. 4. Further amend § 232.11 as published at 73 FR 32827, June 10, 2008 by revising the definitions of “Interactive Data in Viewable Form” and “Related Official Filing” to read as follows: § 232.11 Definition of terms used in part 232. *Interactive Data in Viewable Form* . The term *Interactive Data in Viewable Form* means the financial statements, financial statement schedules, financial statement footnotes, and, in the case of an open-end management investment company registered under the Investment Company Act of 1940, risk/return summary information that
(1)Are displayed when an Interactive Data File is converted from machine-readable computer code into human-readable text through software the Commission provides; and
(2)Are displayed through such conversion identically in all material respects to the corresponding financial statements, financial statement schedules, financial statement footnotes, and, in the case of an open-end management investment company registered under the Investment Company Act of 1940, risk/return summary information in the Related Official Filing. *Related Official Filing.* The term *Related Official Filing* means the ASCII or HTML format part of the official filing with which an Interactive Data File appears as an exhibit or, in the case of a filing on Form N-1A, the ASCII or HTML format part of an official filing that contains the information to which an Interactive Data File corresponds. 5. Further amend § 232.202 as published at 73 FR 32828, June 10, 2008, by revising Note 4 to read as follows: § 232.202 Continuing hardship exemption. Note 4 to § 232.202: Failure to submit or post, as applicable, the Interactive Data File as required by Rule 405 by the end of the continuing hardship exemption if granted for a limited period of time, will result in ineligibility to use Forms S-3, S-8, and F-3 (§§ 239.13, 239.16b and 239.33 of this chapter), constitute a failure to have filed all required reports for purposes of the current public information requirements of Rule 144(c)(1) (§ 230.144(c)(1) of this chapter), and, pursuant to Rule 485(c)(3), suspend the ability to file post-effective amendments under Rule 485(b) (§ 230.485 of this chapter). 6. Further amend § 232.401 as published at 73 FR 32828, June 10, 2008, by revising paragraph
(a)to read as follows: § 232.401 XBRL-Related Document submissions.
(a)Only an electronic filer that is an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 *et seq.* ), a “business development company” as defined in section 2(a)(48) of that Act, or an entity that reports under the Exchange Act and prepares its financial statements in accordance with Article 6 of Regulation S-X (17 CFR 210.6-01 *et seq.* ) is permitted to participate in the voluntary XBRL (eXtensible Business Reporting Language) program. An electronic filer that participates in the voluntary XBRL program may submit XBRL-Related Documents (§ 232.11) in electronic format as an exhibit to: the filing to which the XBRL-Related Documents relate; an amendment to such filing, or, if the electronic filer is eligible to file a Form 8-K (§ 249.308 of this chapter) or a Form 6-K (§ 249.306 of this chapter), a Form 8-K or a Form 6-K, as applicable, that references the filing to which the XBRL-Related Documents relate if such Form 8-K or Form 6-K is submitted no earlier than the date of that filing. The XBRL-Related Documents must comply with the content and format requirements of this section, be submitted as an exhibit to a form that contains the disclosure required by this section and be submitted in accordance with the EDGAR Filer Manual and, as applicable, one of Item 601(b)(100) of Regulation S-K (§ 229.601(b)(100) of this chapter), Item 601(b)(100) of Regulation S-B (§ 228.601(b)(100) of this chapter), Form 20-F (§ 249.220f of this chapter), Form 6-K or § 270.8b-33 of this chapter. 7. Amend § 232.401 by revising paragraphs (b)(1)(iv), (d)(1)(i), (d)(2) introductory text, and (d)(2)(i) to read as follows: § 232.401 XBRL-Related Document submissions.
(b)* * *
(1)* * *
(iv)If the electronic filer is an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 *et seq.* ), a “business development company” as defined in Section 2(a)(48) of that Act, or an entity that reports under the Exchange Act and prepares its financial statements in accordance with Article 6 of Regulation S-X (17 CFR 210.6-01 *et seq.* ), *Schedule I—Investments in Securities of Unaffiliated Issuers* (§ 210.12-12 of this chapter).
(d)* * *
(1)* * *
(i)That the financial information contained in the XBRL-Related Documents is “unaudited” or “unreviewed,” as applicable;
(2)The disclosures required by paragraph (d)(1) of this section must appear within the XBRL-Related Documents as a tagged data element and, as applicable, in:
(i)The exhibit index of a Form 10-K (§ 249.310 of this chapter), 10-Q (§ 249.308a of this chapter), 10 (§ 249.210 of this chapter), 10-SB (§ 249.210b of this chapter), 10-KSB (§ 249.310b of this chapter), 10-QSB (§ 249.308b of this chapter) or 20-F; 8. Further amend § 232.405 as published beginning at 73 FR 32828, June 10, 2008 by: a. Revising Preliminary Note 1; b. Revising paragraph (a); c. Redesignating paragraph
(b)as paragraph (b)(1) and adding the phrase “If the electronic filer is not an open-end management investment company registered under the Investment Company Act of 1940,” to the beginning of the paragraph; d. Redesignating paragraphs (b)(1) and (b)(2) as paragraphs (b)(1)(i) and (b)(1)(ii); e. Redesignating Note to paragraph
(b)as Note to paragraph (b)(1); f. Adding paragraph (b)(2); and g. Adding a sentence at the end of the Note to § 232.405. The revisions and additions read as follows: § 232.405 Interactive Data File submissions and postings. Preliminary Notes 1. Sections 405 and 406 of Regulation S-T (§§ 232.405 and 232.406) apply to electronic filers that submit or post Interactive Data Files. Item 601(b)(101) of Regulation S-K (§ 229.601(b)(101) of this chapter), Item 101 of the Instructions as to Exhibits of Form 20-F (§ 249.220f of this chapter), and General Instruction C.3.(g) of Form N-1A (§§ 239.15A and 274.11A of this chapter) specify when electronic filers are required or permitted to submit or post an Interactive Data File (§ 232.11), as further described below in the Note to Section 405.
(a)*Content, Format, Submission and Posting Requirements—General.* An Interactive Data File (§ 232.11) must:
(1)Comply with the content, format, submission and Web site posting requirements of this section;
(2)Be submitted only by an electronic filer either required or permitted to submit an Interactive Data File as specified by Item 601(b)(101) of Regulation S-K (§ 229.601(b)(101) of this chapter), Item 101 of the Instructions as to Exhibits of Form 20-F (§ 249.220f of this chapter), or General Instruction C.3.(g) of Form N-1A (§§ 239.15A and 274.11A of this chapter), as applicable, as an exhibit to a form that contains the disclosure required by this section;
(3)Be submitted in accordance with the EDGAR Filer Manual and, as applicable, Item 601(b)(101) of Regulation S-K, Item 101 of the Instructions as to Exhibits of Form 20-F, or General Instruction C.3.(g) of Form N-1A; and
(4)Be posted on the electronic filer's corporate Web site, if any, in accordance with, as applicable, Item 601(b)(101) of Regulation S-K, Item 101 of the Instructions as to Exhibits of Form 20-F, or General Instruction C.3.(g) of Form N-1A. (b)(1) *Content—Categories of Information Presented.* If the electronic filer is not an open-end management investment company registered under the Investment Company Act of 1940, * * *
(i)* * *
(ii)* * *
(2)If the electronic filer is an open-end management investment company registered under the Investment Company Act of 1940, an Interactive Data File must consist of only a complete set of information for all periods required to be presented in the corresponding data in the Related Official Filing, no more and no less, from the risk/return summary information set forth in Items 2 and 3 of Form N-1A. Note to § 232.405: * * * For an issuer that is an open-end management investment company registered under the Investment Company Act of 1940, General Instruction C.3.(g) of Form N-1A specifies the circumstances under which an Interactive Data File must be submitted as an exhibit and be posted to the company's Web site, if any. PART 239—FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933 9. The authority citation for Part 239 continues to read in part as follows: Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78 *l* , 78m, 78n, 78o(d), 78u-5, 78w(a), 78 *ll* , 78mm, 80a-2(a), 80a-3, 80a-8, 80a-9, 80a-10, 80a-13, 80a-24, 80a-26, 80a-29, 80a-30, and 80a-37, unless otherwise noted. PART 270—RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940 10. The authority citation for Part 270 continues to read in part as follows: Authority: 15 U.S.C. 80a-1 *et seq.,* 80a-34(d), 80a-37, and 80a-39, unless otherwise noted. 11. Revise § 270.8b-33 to read as follows: § 270.8b-33 XBRL-Related Documents. A registrant that participates in the voluntary XBRL (eXtensible Business Reporting Language) program may submit, in electronic format as an exhibit to a filing on Form N-CSR (§§ 249.331 and 274.128 of this chapter) or Form N-Q (§§ 249.332 and 274.130 of this chapter) to which they relate, XBRL-Related Documents (§ 232.11 of this chapter). A registrant that submits XBRL-Related Documents as an exhibit to a form must name each XBRL-Related Document “EX 100” as specified in the EDGAR Filer Manual and submit the XBRL-Related Documents in such a manner that will permit the information for each series and, for any information that does not relate to all of the classes in a filing, each class of an investment company registrant and each contract of an insurance company separate account to be separately identified. A registrant may submit such exhibit with, or in an amendment to, the filing to which it relates. PART 274—FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940 12. The authority citation for Part 274 continues to read in part as follows: Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78 *l* , 78m, 78n, 78o(d), 80a-8, 80a-24, 80a-26, and 80a-29, unless otherwise noted. 13. Amend Form N-1A (referenced in §§ 239.15A and 274.11A) by adding a paragraph
(g)to General Instruction C.3. The addition is to read as follows: Note: The text of Form N-1A does not, and these amendments will not, appear in the Code of Federal Regulations. FORM N-1A GENERAL INSTRUCTIONS C. Preparation of the Registration Statement 3. Additional Matters:
(g)*Interactive Data File.* An Interactive Data File (§ 232.11 of this chapter) is required to be submitted to the Commission and posted on the Fund's Web site, if any, in the manner provided by Rule 405 of Regulation S-T (§ 232.405 of this chapter) for any registration statement or post-effective amendment thereto on Form N-1A that includes or amends information provided in response to Items 2 and/or 3. The Interactive Data File must be submitted as an exhibit to Form N-1A and must be named “EX-101” as specified in the EDGAR Filer Manual and be submitted in such a manner that will permit the information for each series and, for any information that does not relate to all of the classes in a filing, each class of the Fund to be separately identified. The Interactive Data File must be submitted as an amendment to the registration statement to which the Interactive Data File relates. The amendment must be submitted after the registration statement or post-effective amendment that contains the related information becomes effective but not later than 15 business days after the effective date of that registration statement or post-effective amendment. Dated: June 10, 2008. By the Commission. Florence E. Harmon, Acting Secretary. [FR Doc. E8-13356 Filed 6-20-08; 8:45 am] BILLING CODE 8010-01-P 73 121 Monday, June 23, 2008 Rules and Regulations Part III Department of Education 34 CFR Parts 668, 673, 674, et al. The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program and Other Federal Student Aid Programs; Final Rule DEPARTMENT OF EDUCATION/ 34 CFR Parts 668, 673, 674, 675, 676, 682, 685, 686, and 690 RIN 1840-AC93 [Docket ID ED-2008-OPE-0001] The Teacher Education Assistance for College and Higher Education (TEACH) Grant Program and Other Federal Student Aid Programs AGENCY: Office of Postsecondary Education, Department of Education. ACTION: Final regulations. SUMMARY: The Secretary amends title 34 of the Code of Federal Regulations to establish regulations for the Teacher Education Assistance for College and Higher Education (TEACH) Grant program. The TEACH Grant program is a non-need-based grant program that provides up to $4,000 per year to students who are enrolled in an eligible program and who agree to teach in a high-need field, at a low-income elementary or secondary school for at least four years within eight years of completing the program for which the TEACH Grant was awarded. If the grant recipient fails to complete the required teaching service, the TEACH Grant is treated as a Federal Direct Unsubsidized Stafford Loan (Federal Direct Unsubsidized Loan). The Secretary also amends the regulations related to the Student Assistance General Provisions; the General Provisions for the Federal Perkins Loan Program, Federal Work-Study Program, and Federal Supplemental Educational Opportunity Grant Program; the Federal Perkins Loan Program; the Federal Work-Study Program; the Federal Supplemental Educational Opportunity Grant Program; the Federal Family Education Loan
(FFEL)Program; the William D. Ford Federal Direct Loan Program; and the Federal Pell Grant Program to implement the TEACH Grant program. These regulations are needed to implement provisions of the Higher Education Act of 1965 (HEA), as amended by the College Cost Reduction and Access Act of 2007 (CCRAA). DATES: *Effective Date:* These regulations are effective July 1, 2008. FOR FURTHER INFORMATION CONTACT: Michelle Belton, U.S. Department of Education, 1990 K Street, NW., room 8031, Washington, DC 20006-8502. Telephone:
(202)502-7821 or via the Internet at: *Michelle.Belton@ed.gov* . If you use a telecommunications device for the deaf (TDD), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339. Individuals with disabilities can obtain this document in an alternative format ( *e.g.* , Braille, large print, audiotape, or computer diskette) on request to the contact person listed in this section. SUPPLEMENTARY INFORMATION: On March 21, 2008, the Secretary published a notice of proposed rulemaking
(NPRM)for the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program and Other Federal Student Aid Programs in the **Federal Register** (73 FR 15336). In the preamble to the NPRM, the Secretary discussed on pages 15337 through 15352 the major regulations proposed in that document to implement the TEACH Grant program authorized under Title IV of the HEA, including the following: • Amending § 668.164(g) to add the TEACH Grant program to the list of programs for which a student becomes ineligible when the student is no longer enrolled at the institution for the award year and to describe how TEACH Grant recipients may qualify for a late disbursement. • Amending § 668.183 to specify that a TEACH Grant that has been converted to a Federal Direct Unsubsidized Loan would not be included in calculating an institution's cohort default rate. • Amending § 673.5 to include the amount of any TEACH Grant in the types of funds that may be used to replace a student's expected family contribution (EFC). • Adding new § 686.2 to define the terms “Academic year or its equivalent for elementary and secondary schools (Elementary or secondary academic year),” “Annual award,” “Scheduled award,” “Elementary school,” “High-need field,” “Highly-qualified,” “Numeric equivalent,” “Post-baccalaureate program,” “Retiree,” “School serving low-income students (low-income school),” “Secondary school,” “Service Agreement,” “TEACH Grant-eligible institution,” “TEACH Grant-eligible program,” “Teacher,” and “Teacher preparation program.” • Adding new § 686.3 to establish the duration of student eligibility for a TEACH Grant based on the maximum amount of grant funds available to students under section 420M(d)(1) and
(2)of the HEA. • Adding new § 686.4 to give institutions the option to participate in the TEACH Grant program, to clarify that participation in the program is voluntary, and to describe the obligations of institutions if they cease to participate in the program. • Adding new § 686.5 to specify how an institution would treat correspondence courses for purposes of the TEACH Grant program. • Adding new § 686.6 to prohibit students from receiving TEACH Grant payments concurrently from more than one institution. • Adding new § 686.10 to describe the procedures that a student must follow when applying for a TEACH Grant, and, in particular, to require that a student submit a Free Application for Federal Student Aid (FAFSA), complete and sign a service agreement and promise to repay, and provide any additional information requested by the Secretary. • Adding new § 686.11 to establish student eligibility requirements for the TEACH Grant program. • Adding new § 686.12 to describe the agreement students must sign prior to receiving each TEACH Grant award, and to explain the service obligation that students must carry out for the TEACH Grant award not to convert to a Federal Direct Unsubsidized Loan. • Adding new § 686.20 to require a student to submit a valid Student Aid Report
(SAR)or for the student's institution to receive an Institutional Student Information Record
(ISIR)with an official EFC so that the institution can determine the appropriate amount of a student's TEACH Grant. • Adding new § 686.21 to provide that while a Scheduled Award for the TEACH Grant program is $4,000, students may receive lesser annual award amounts depending on their enrollment status and to clarify that a student's TEACH Grant award, combined with other estimated financial assistance, cannot exceed the cost of the student's attendance as determined by the institution. • *Adding new §§ 686.22 and 685.25 to:*
(1)Describe how an institution calculates a TEACH Grant payment for a payment period for an eligible student depending on the academic calendar of the eligible program, the student's enrollment status, and the amount of the student's annual award;
(2)establish the minimum payment for a payment period;
(3)require institutions to define the term “academic year” for purposes of calculating payments for payment periods; and
(4)allow institutions to use overlapping Scheduled Awards in a payment period. • Adding new § 686.23 to address how an institution calculates a TEACH Grant payment for an eligible student's payment period when the student is enrolled in a payment period that overlaps two award years. • Adding new § 686.24 to establish how an institution calculates a payment for an eligible student who transfers from another postsecondary institution within the same award year. • Adding new § 686.31 to delineate what an institution must do to determine whether a student is eligible to receive a TEACH Grant. • Adding new § 686.32 to describe the initial, subsequent, and exit counseling that institutions must provide to each TEACH Grant recipient. • Adding new § 686.33 to allow institutions to pay a student a TEACH Grant at such times and in such installments that best meet the student's needs. • Adding new § 686.37 to describe the information pertaining to a student's TEACH Grant eligibility that an institution must submit to the Department and to establish submission deadlines for this information. • Adding new § 686.40 to define how and when a TEACH Grant recipient must contact the Department to document fulfillment of his or her service obligation or, if the service obligation has not been met, the intent to fulfill the service obligation. • Adding new § 686.41 to define the conditions under which a TEACH Grant recipient will be able to request a suspension of his or her service obligation for a specified amount of time. • Adding new § 686.42 to require the discharge of a grant recipient's service obligation if the recipient dies or becomes totally and permanently disabled, and to clarify that the four-year service obligation still would apply to a recipient who is in a conditional discharge period. • Adding new § 686.43 to describe the various conditions under which a TEACH Grant would be converted into a Federal Direct Unsubsidized Loan, with interest accruing from the date of each grant disbursement and which a TEACH Grant recipient would be required to pay. Technical Corrections We are making minor technical changes, including the following, to correct errors that we identified during our review of the proposed regulations. Program Participation Agreement (§ 668.14(f)) We have revised § 668.14(f) to correct inaccurate cross-references. Specifically, § 668.14(f) has been amended to cross-reference paragraphs
(g)and
(h)of the section, rather than
(h)and
(i)of the section. We also have revised § 668.14(f)(3) to cross-reference paragraph (f), rather than paragraph (g), of the section. Teacher Loan Forgiveness Program (§§ 682.215 and 685.217) We have revised §§ 682.215(c)(7)(ii) and 685.217(c)(7)(ii) to correct inaccurate citations for the Family and Medical Leave Act of 1993 (FMLA). The correct citation for the FMLA is 29 U.S.C. 2601, *et seq.,* not 19 U.S.C. 2654. Analysis of Comments and Changes The regulations in this document were developed through negotiated rulemaking. Section 492 of the HEA requires that, before publishing any proposed regulations to implement programs under Title IV of the HEA, the Secretary must obtain public involvement in the development of the proposed regulations. After obtaining advice and recommendations, the Secretary must conduct a negotiated rulemaking process to develop the proposed regulations. All proposed regulations must conform to agreements resulting from the negotiated rulemaking process unless the Secretary reopens that process or explains any departure from the agreements to the negotiated rulemaking participants. These regulations were published in proposed form on March 21, 2008, in conformance with the consensus of the negotiated rulemaking committee. Under the committee's protocols, consensus meant that no member of the committee dissented from the agreed-upon language. The Secretary invited comments on the proposed regulations by April 21, and in response to the Secretary's invitation, 132 parties submitted comments on the proposed regulations. An analysis of the comments and the changes in the regulations since publication of the NPRM follows. We group major issues according to subject, with appropriate sections of the regulations referenced in parentheses. We discuss other substantive issues under the sections of the regulations to which they pertain. Generally, we do not address minor, non-substantive changes. General *Comment:* The Department received several general comments about the TEACH Grant program. Four commenters suggested that the program is inappropriately named and argued that the Department should change the name of the program to reflect the fact that it is, in their opinion, a loan forgiveness program rather than a grant program. Two commenters argued that the funds dedicated for the TEACH Grant program would better serve students if they were reallocated to the current Teacher Loan Forgiveness Program or to the Perkins Loan Program. The Department also received comments in support of the TEACH Grant program that did not address specific sections of the proposed regulations. *Discussion:* The name, purpose, and structure of the program are established by the HEA and cannot be changed by the Department. The Department is not authorized to reallocate funds Congress designates for the TEACH Grant program to another program. The Department is working to disseminate detailed information about the unique nature of the TEACH Grant program, including how TEACH Grants may, under certain circumstances, convert into Federal Unsubsidized Direct Loans, to institutions as well as to parents and students. *Changes:* None. Eligible Programs (§ 668.8) *Comment:* One commenter requested clarification about the relationship between the definition of eligible program in § 668.8 and the definition of TEACH Grant-eligible program in 34 CFR 686.2(d). The commenter questioned whether it is appropriate to add, in § 668.8(h)(3), a cross-reference to the definition of TEACH Grant-eligible program in 34 CFR 686.2(d). In addition, the commenter asked if programs that contribute to a student's ability to teach in a high-need field should be included in the definition of eligible program under § 668.8(h)(3)(i). *Discussion:* We agree that the connection between the definition of eligible program in § 668.8 and the definition of TEACH Grant-eligible program found in 34 CFR 686.2(d) needs clarification. For purposes of the TEACH Grant program, an educational program is an eligible program under § 668.8 only if it qualifies as a TEACH Grant-eligible program in accordance with 34 CFR 686.2(d). Rather than amend § 668.8 to restate the definitional requirements of a TEACH Grant-eligible program, we amended § 668.8 simply to cross-reference the definition in 34 CFR 686.2(d). A program that contributes to a student's ability to teach in a high-need field would be a TEACH Grant-eligible program if it is designed to prepare an individual to teach as a highly qualified teacher in a high-need field and leads to a baccalaureate or master's degree, or is a post-baccalaureate program of study. *Changes:* We amended § 668.8(h) to clarify that an educational program qualifies as an eligible program for purposes of the TEACH Grant program only if it is a TEACH Grant-eligible program in accordance with 34 CFR 686.2(d). Treatment of Title IV grant and loan funds when a student withdraws (§ 668.22) *Comment:* One commenter questioned the placement of TEACH Grants in the listing of unearned grant funds returned in the event a student withdraws from an institution during a payment period. The commenter believed that TEACH Grants should be placed at the beginning of the order for returning grant funds and asked that that placement be reconsidered. *Discussion:* As reflected in the NPRM, the Department believes that TEACH Grants should not be at the beginning of the order for returning grant funds. Under the regulations, TEACH Grants will be returned after Federal Pell Grants, Academic Competitiveness Grants, National SMART Grants, and FSEOG program assistance. This return order is prescribed by section 484B(b)(3)(B)(iii) of the HEA. *Changes:* None. Calculating and Applying Cohort Default Rates (§ 668.183) *Comment:* Several commenters supported § 668.183, which provides that a TEACH Grant that has been converted to a Federal Direct Unsubsidized Loan is not included in the calculation of an institution's cohort default rate. *Discussion:* We appreciate the commenters' support. *Changes:* None. Overaward (§ 673.5) *Comment:* One commenter supported the proposal that TEACH Grants be allowed to replace the EFC, believing that this approach fulfills the spirit of the legislation and will be helpful in making awards to students. *Discussion:* We appreciate the commenter's support. *Changes:* None. Maximum Loan Amounts (§§ 682.204 and 685.203) *Comment:* One commenter wrote to support the proposal to exclude a TEACH Grant that has been converted to a Federal Direct Unsubsidized Loan from a borrower's aggregate or annual loan limits in the Federal Family Education Loan
(FFEL)and Federal Direct Loan Programs. *Discussion:* We appreciate the commenter's support. *Changes:* None. Definitions (§ 686.2(d)) Agreement To Serve *Comment:* None. *Discussion:* The Department is changing the name of the agreement described in section 420N(b) of the HEA from “service agreement” to “agreement to serve” to be more consistent with the statute. *Change:* We have amended § 686.2(d) to change the name of the agreement under which a TEACH Grant recipient commits to meet the service obligation described in § 686.12 from “service agreement” to “agreement to serve.” High-Need Field *Comment:* A large number of commenters suggested that library media specialist should be included in the list of high-need fields. They argued that all 50 States require that a school library media specialist have a State teaching certificate, that library media specialists are considered teachers and are responsible for developing curriculum and instructing students, and that there are significant shortages of library media specialists across the country. Several commenters contended that early childhood education should be considered a high-need field because of the shortage of baccalaureate-degree-holding early childhood education teachers and the requirement that Head Start teachers have a bachelor's degree in early childhood education by 2013. *Discussion:* Under certain circumstances, library media specialist and early childhood education qualify as high-need fields and a grant recipient could fulfill the service obligation associated with receipt of a TEACH Grant by teaching in these fields. As specified in § 686.12(b), for each TEACH Grant-eligible program for which the student received TEACH Grant funds, the grant recipient must fulfill a service obligation by serving as a full-time teacher for a total of not less than four elementary or secondary academic years within eight calendar years after completing the program or otherwise ceasing to be enrolled in the program for which the recipient received the TEACH Grant in a low-income school, as a highly qualified teacher, and in a high-need field in the majority of classes taught during each elementary and secondary academic year. The definition of high-need field in § 686.2(d) reflects section 420N(b) of the HEA which specifically designates several fields as high-need and provides for the inclusion of other fields that are documented as high-need by the Federal Government, a State government or a local educational agency (LEA), and approved by the Secretary. The regulations explain that the additional high-need fields are those listed in the Department's annual Teacher Shortage Area Nationwide Listing (Nationwide List), which is available on the Department of Education's *Web site* at *http://www.ed.gov/about/offices/list/ope/pol/tsa.pdf* . The Nationwide List is based on information submitted to the Department by the States, and inclusion of a field on the Nationwide List indicates approval by the Department of Education. Some States have identified early childhood education and library media specialist as shortage areas in the Nationwide List. For purposes of the TEACH Grant program, a teacher is someone who provides direct classroom teaching or classroom-type teaching in a non-classroom setting in an elementary or secondary school. An elementary or secondary school is a nonprofit institutional day or residential school, including a public elementary or secondary charter school, that provides elementary or secondary education, as determined under State law. The individual must be teaching the majority of classes in the high-need field. In the case of service in early childhood education, to meet the criterion of being a highly qualified teacher the individual would need to be certified by the State in early childhood education. To meet the criterion of teaching in an elementary school, the service would need to take place in an elementary school and the State would need to consider early childhood education a component of the State's elementary school education system and have designated early childhood education as a high-need field. To meet the criterion of “highly qualified,” a library media specialist would need to be certified by the State as a library media specialist. To meet the criterion of “teacher,” the library media specialist would need to be performing direct classroom teaching or classroom-type teaching in a non-classroom setting for a majority of time in an elementary or secondary school. In addition, the State would have to designate library media specialist as a high-need field. In all cases, the service would need to be performed in a low-income school. *Changes:* None. *Comment:* A couple of commenters inquired whether elementary education could be included as a high-need field. One commenter requested that we provide specific information about how elementary school teachers could demonstrate that they are teaching in a high-need field. *Discussion:* As described in the discussion of library media specialist and early childhood education, elementary education could be a high-need field if it is designated as a high-need field by the State in which the recipient teaches. There are other limited circumstances under which a grant recipient can satisfy the service obligation by serving as an elementary school teacher including:
(1)Teaching the majority of his or her courses in a high-need field, such as math, science, or a foreign language;
(2)teaching in a foreign language immersion program;
(3)serving as a reading specialist, a special education teacher, or a bilingual education teacher, or teaching English language acquisition; or
(4)teaching in a low-income school in a State that has designated elementary education as a high-need field. *Changes:* None. *Comment:* A couple of commenters asked for clarification of the terms “bilingual education” and “English language acquisition.” One commenter questioned whether bilingual education includes immersion classrooms. *Discussion:* The National Clearinghouse for English Language Acquisition (NCELA) ( *http://www.ncela.gwu.edu* ), an online resource supported by the Department of Education's Office of English Language Acquisition, provides general definitions of these terms. Language acquisition is the process of acquiring a first or second language. Bilingual education is an educational program in which two languages are used to provide content matter instruction. In foreign language immersion programs the foreign language is the vehicle for content instruction and is not the subject of instruction. Therefore, bilingual education does not include foreign language immersion programs. *Changes:* We have added definitions of the terms “bilingual education” and “English language acquisition” to § 686.2(d). These definitions are taken from the NCELA. *Comment:* One commenter asked the Department to specify what major would lead to teaching English acquisition and English as a Second Language and who would make this determination. *Discussion:* The Department does not have the authority or expertise to specify which academic degrees would prepare an individual to teach in these, or any other, fields since that is an academic decision that rests with the institution. *Changes:* None. *Comment:* One commenter sought clarification of whether a foreign language is a high-need field and suggested that a K-12 foreign language immersion program should be considered part of the high-need foreign language field listed in the statute and regulations. *Discussion:* All foreign languages are high-need fields for purposes of the TEACH Grant program. We agree with the commenter that teaching in a foreign language immersion program would meet the requirement for teaching in a high-need field. *Changes:* None. Highly-Qualified *Comment:* A couple of commenters requested that the Department provide the specific requirements that must be met to satisfy the criterion for being a highly-qualified teacher rather than merely referencing the relevant statutes. *Discussion:* The requirements for being designated “highly qualified” are very complex and differ for the various states. The requirement that teachers be highly-qualified applies to all public elementary or secondary school teachers employed by a LEA who teach a core academic subject. Special education teachers who teach core academic subjects are included in this requirement. In general, “highly qualified” means that the teacher—
(1)Has obtained full State certification as a teacher or passed the State teacher licensing examination, holds a license to teach in the State, and has not had certification or licensure requirements waived on an emergency, temporary, or provisional basis (special education teachers must be certified in special education);
(2)Holds a minimum of a bachelor's degree; and
(3)Has demonstrated subject-matter competency in each of the academic subjects in which the teacher teaches, in a manner determined by the State and in compliance with section 9101(23) of the Elementary and Secondary Education Act of 1965, as amended (ESEA). The statutory definition of “highly qualified” includes additional elements that apply differently to veteran teachers and new teachers, and to elementary, middle, and secondary school teachers. The complete statutory definition of a “highly qualified” teacher is in section 9101(23) of the ESEA and in section 602(10) of the Individuals With Disabilities Education Act. The Department's regulations at 34 CFR 200.56 further define “highly qualified teacher.” Among other things, 34 CFR 200.56 clarifies when teachers who pursue State certification through an alternative-route program may be considered fully certified while they participate in that program. More guidance on the criterion for being a highly qualified teacher is available at *http://www.ed.gov/teachers/nclbguide/improve-quality.html* . *Changes:* None. Post-Baccalaureate Program *Comment:* A few commenters raised concerns about the phrase at the end of paragraph
(2)of the definition of post-baccalaureate program that they believe makes a post-baccalaureate program offered by an institution that also has an undergraduate teacher preparation program ineligible for the TEACH Grant program. They suggested that the post-baccalaureate program and an undergraduate teacher education program offered by the same institution should both be eligible programs for TEACH Grant purposes. One of these commenters noted that some institutions require their undergraduate education majors to complete a fifth year during which they take coursework necessary to earn a teaching credential. *Discussion:* The definition of post-baccalaureate program in § 686.2(d) is from section 420L(2) of the HEA. That definition limits the TEACH Grant eligibility of post-baccalaureate programs to those offered by institutions that do not have an undergraduate teacher preparation program. In the case of an institution that offers both an undergraduate teacher preparation program and a post-baccalaureate program, the institution would be eligible, and it could designate its teacher preparation program as a TEACH Grant-eligible program. We understand that some institutions' teacher preparation programs require students to complete a post-baccalaureate program after earning a baccalaureate degree in teacher education. However, the statute does not permit these post-baccalaureate programs to be eligible for the TEACH Grant program. *Changes:* None. TEACH Grant-Eligible Institution *Comment:* One commenter questioned the exclusion of institutions that fail to meet financial responsibility standards but that qualify to participate in all of the other Title IV, HEA programs under alternate standards from participation in the TEACH Grant program. *Discussion:* We agree with the commenter that the same standards should apply for an institution to qualify to participate in the TEACH Grant program as for all the other Title IV programs. Using the same standards will result in consistent treatment across all programs and reduce the administrative burden on both institutions and the Department. *Changes:* We have amended the definition of TEACH Grant-eligible institution to allow institutions that do not meet financial responsibility standards established in 34 CFR part 668, subpart L to participate in the TEACH Grant program by qualifying under an alternative standard in 34 CFR 668.175. *Comment:* One commenter thanked us for including in the definition of TEACH Grant-eligible institution institutions whose teacher preparation programs are approved by a State, include extensive pre-service clinical experience, and provide pedagogical coursework or the assistance in the provision of such coursework. *Discussion:* We appreciate the commenter's support. *Changes:* None. *Comment:* One commenter asked that we clarify what constitutes “high-quality” teacher preparation programs and what “extensive pre-service clinical experience” entails. *Discussion:* The definition of TEACH Grant-eligible institution in § 686.2(d) contains four components that constitute a “high-quality” teacher preparation program. The components are:
(1)Approval by a cognizant authority (either accreditation by a specialized accrediting agency or State approval);
(2)extensive pre-service clinical experience;
(3)direct provision of pedagogical coursework or assistance in providing such coursework; and
(4)provision of supervision and support services to teachers, or assistance in such provision. Institutions whose programs are accredited by one of the specialized accrediting agencies recognized by the Secretary for the accreditation of professional teacher education programs, which are listed on the Department's *Web site* at *http://www.ed.gov/admins/finaid/accred/accreditation_pg8.html#ed* , are considered to meet the requirements related to pre-service clinical experience and pedagogical coursework. While we did not specifically discuss a minimum length of time for pre-service clinical experience during negotiated rulemaking, a standard will be necessary from an operational standpoint so that we can determine whether or not an institution whose teacher preparation program is not accredited by a specialized accrediting agency meets this requirement. Accordingly, we reviewed the requirements of all the States and determined that a majority of States require at least 10 weeks of full-time pre-service clinical experience, while some require significantly less and a few require more. In addition, in testimony during a public hearing on the TEACH Grant program, the American Association of Colleges for Teacher Education recommended 10 weeks of full-time pre-service clinical experience as a minimum. Therefore, we have adopted 10 weeks of full-time pre-service clinical experience, or its equivalent, as the regulatory standard. We considered that a program might be designed so that students would complete their clinical experience on a part-time basis and will allow for the completion of the 10 weeks of full-time pre-service clinical experience on a part-time basis. *Changes:* We have revised paragraph (1)(i)(B) of the definition of TEACH Grant-eligible program in § 686.2(d) to specify that a teacher preparation program that is approved by a State must provide a minimum of 10 weeks of full-time pre-service clinical experience, or its equivalent. *Comment:* One commenter asked whether the reference to “teachers” in paragraph (1)(ii) of the definition of TEACH Grant-eligible institution refers to an employed teacher or a student teacher. *Discussion:* The phrase “provides supervision and support services to teachers, or assists in the provision of services to teachers” refers to employed teachers, not to student teachers. Faculty and other professional personnel at institutions with teacher preparation programs are expected to share their knowledge with working teachers as part of their education role. *Changes:* None. *Comment:* One commenter wondered what is meant in paragraph (1)(ii)(B) by the term “novice” in the description of the types of supervision and support services an institution might provide to teachers. The same commenter asked for further explanation and examples of ways an institution might meet the supervision and support services requirement. *Discussion:* In general, a novice is an individual who is new to a field or activity. In the case of teachers, a novice is normally considered to be one who is involved in the first, second, or third year of teaching. The regulations include a few illustrative examples of the types of supervision and support services an institution might provide to teachers. We believe that an exclusive list would be too restrictive on institutions. We expect that institutions with teacher preparation programs will be able to identify other types of services they provide that satisfy the requirement based on the illustrative examples. *Changes:* None. *Comment:* One commenter asked for more discussion and examples of how a community college can become a TEACH Grant-eligible institution. In particular, the individual wondered whether the community college must have an articulation agreement with each four-year institution to which a student would transfer. *Discussion:* In order to be a TEACH Grant-eligible institution, a community college must have an agreement with at least one four-year institution. The agreement need not be a formal articulation agreement. However, the agreement must demonstrate
(1)that the two-year program offered by the community college is acceptable for full credit in that institution's baccalaureate teacher education program, or
(2)that the two-year program is acceptable for full credit in a baccalaureate degree program in a high-need field at a TEACH Grant-eligible institution. An agreement that would demonstrate that the two-year program is acceptable for full credit into a baccalaureate degree in the high-need field of math, for example, would likely list several courses that would meet the four-year institution's general education requirements, some courses that could be electives, and a few lower-level math courses required for the major. Our expectation is that a student who follows a pathway established through an agreement would not have to take additional credits beyond the minimum required for graduation from the four-year institution. The agreement is used to establish institutional eligibility. It is not a requirement that each student enrolled in the two-year program attend the four-year institution with which the community college has the agreement. A community college does not have to have more than one agreement to establish its eligibility. *Changes:* None. TEACH Grant-Eligible Program *Comment:* A couple of commenters expressed their appreciation that the regulations permit institutions to define which programs will be eligible for the TEACH Grant. *Discussion:* We appreciate the support. *Changes:* None. *Comment:* One commenter asked that we explain the criterion of “fully-qualified” teacher in the context of preparation in an eligible program. *Discussion:* We agree with the commenter that the definition of TEACH Grant-eligible program should make it clear that the program should be designed to prepare an individual to teach as a highly-qualified teacher. Preparation of highly-qualified teachers is a key component of an eligible program, but we also recognize that, given the various pathways a student might follow to gain the knowledge needed to become a highly-qualified teacher, the student may need to complete more than one program. For example, a student may earn a baccalaureate degree in a high-need field, such as mathematics, and then enroll in a post-baccalaureate program for the courses needed to receive a professional certification or licensing credential. Subject area content knowledge and certification are both components of the definition of “highly-qualified” teacher and, in the situation just described, a single program would not provide both. With this clarification, we agree that the definition of TEACH Grant-eligible program should include a reference to the preparation of a highly-qualified teacher. *Changes:* We have amended the definition of a TEACH Grant-eligible program in § 686.2(d) to clarify that a TEACH Grant-eligible program must be designed to prepare an individual to teach as a highly-qualified teacher. *Comment:* Several commenters sought guidance on the amount of latitude institutions have in designating eligible programs. Some wondered if an institution could designate only its master's degree programs, and not its undergraduate programs, or only its teacher preparation programs or post-baccalaureate programs as TEACH Grant-eligible. *Discussion:* In making a determination of which programs to designate as TEACH Grant-eligible, an institution may differentiate between its master's degree programs and its undergraduate programs, making only its master's degree programs TEACH Grant-eligible. An institution may also choose to make only its teacher preparation programs TEACH Grant-eligible, and not include any programs in high-need fields. *Changes:* None. *Comment:* Several commenters asked whether institutions could limit participation in the TEACH Grant program to upper level undergraduate students. One commenter suggested that institutions should have the option to determine whether the first two years of a four-year program are part of an eligible program. *Discussion:* An institution may limit participation in the TEACH Grant program to students who have formally declared a major or who have been formally admitted to the teacher preparation program. In such cases, the TEACH Grant-eligible program could effectively involve only upper-level undergraduate students and the eligible program would not include the first two years of a four-year program. An institution could also determine that the first two years are not part of the TEACH Grant-eligible program. However, if the institution designates a program as TEACH Grant-eligible it cannot further discriminate among eligible students in that program. If, for example, an institution designates a program as TEACH Grant-eligible and that program begins in the freshman year, the institution may not limit TEACH Grant participation to upper-level undergraduates in the program. *Changes:* None. *Comment:* One commenter asked whether a two-year institution could restrict TEACH Grant-eligibility to programs with some relationship to teacher preparation and not include programs that transfer into four-year baccalaureate programs that include high-need majors. *Discussion:* An institution may designate only certain programs as TEACH Grant-eligible and not designate others, even though they may prepare a student to teach in a high-need field. *Changes:* None. *Comment:* In questioning whether an institution could require that a student must have declared an appropriate major, or have been accepted into a teacher preparation program, one commenter asked whether the practice would cross the line between program eligibility and student eligibility. *Discussion:* Program eligibility—where the institution may identify, within the parameters of the regulations, the scope of institutional programs that are TEACH Grant-eligible—and student eligibility—where the institution must adhere to the eligibility criteria identified in the regulations—are closely intertwined in the TEACH Grant program and there are instances, such as the situation the commenter describes, where the line between them is crossed. It is important to note that a program might be defined differently for general Title IV purposes and for TEACH Grant purposes with the consequence that, for some period of time, a student could receive financial assistance from other Title IV programs, but would not qualify for a TEACH Grant. Ultimately, it is up to the institution to decide, based on regulatory requirements, what programs are TEACH Grant-eligible and when a student is considered to be accepted into a TEACH Grant-eligible program. *Changes:* None. *Comment:* One commenter asked whether an institution can determine that only some of the programs for which it currently awards other Title IV aid are also eligible for TEACH Grant purposes, even if some programs it does not wish to make TEACH Grant-eligible meet the regulatory definition. *Discussion:* The institution has that discretion. *Changes:* None. *Comment:* Based on a concern that students will apply for and accept the TEACH Grant as a way of obtaining more loan funds with no intention of fulfilling the Agreement to Serve (ATS), one commenter asked the Secretary to provide more guidance, similar to the list of acceptable Classification of Instructional Programs
(CIP)codes in the National SMART Grant program, for students to determine which programs are TEACH Grant-eligible. *Discussion:* We recognize that institutions may not be able to control the type of behavior the commenter describes in all instances. Although an institution may limit the programs it designates as TEACH Grant-eligible, an institution can never know with certainty whether a student truly intends to fulfill his or her service obligation. Since designation of TEACH Grant-eligible programs is an institutional decision, we do not plan to provide more specific guidance or a list of CIP codes. *Changes:* None. *Comment:* One commenter asked if, prior to awarding a TEACH Grant, an institution could require that a student submit a plan to the institution describing the student's career goal and intended academic plan to that goal. *Discussion:* An institution may require a student to submit a plan such as the commenter describes. This may be particularly helpful in situations where the student is enrolled in a program that will not, by itself, enable the student to begin teaching as a highly-qualified teacher in a high-need field. However, the plan by itself would not establish a student's eligibility for a TEACH Grant. A student must be enrolled in a TEACH Grant-eligible program to receive a TEACH Grant. *Changes:* None. *Comment:* A few commenters wondered whether a program that prepares a student to teach in a high-need field would have to be in the high-need field in which an individual plans to teach in meeting the service obligation, or if it could contribute significantly to the TEACH Grant recipient's knowledge and instructional capacity in a high-need field. One commenter asked whether a master's degree program that is not a teacher preparation program would need to result in a degree in a high-need field to be considered eligible. *Discussion:* An institution has the authority to determine which of its programs meet the requirements to be TEACH Grant-eligible and may designate any program that contributes in any way to a student's preparation to teach in a high-need field as a TEACH Grant-eligible program. This approach would allow, for example, an institution to designate its Masters in Business Administration
(MBA)Program as a TEACH Grant-eligible program that will prepare a student to teach in the high-need field of mathematics, if it determines that the content of its MBA program would be good preparation for teaching mathematics. *Changes:* None. *Comment:* One commenter asked whether an institution could consider as TEACH Grant-eligible a two-year program that appears unrelated to a high-need field but that will transfer fully into a four-year TEACH Grant-eligible program. *Discussion:* We believe that the institution would have a basis on which to define such a program as TEACH Grant-eligible. *Changes:* None. *Comment:* One commenter inquired whether a two-year school could offer a TEACH Grant-eligible post-baccalaureate program. *Discussion:* These regulations do not restrict the authority of an institution of higher education to offer a post-baccalaureate program. If a community college offers such a program, the community college may use this as the means of establishing its institutional eligibility for the TEACH Grant program and would not, therefore, need to enter into an agreement with a four-year institution to establish eligibility. *Changes:* None. *Comment:* One commenter asked whether a student who returns to the institution only for teacher certification courses would be eligible for a grant. *Discussion:* A student must be enrolled in a TEACH Grant-eligible program, which could be either a post-baccalaureate program of study or a master's degree program assuming the student already has a baccalaureate degree. If the student is merely taking courses he or she needs for certification, but is not enrolled in a TEACH Grant-eligible program, then the student would not be eligible for a TEACH Grant. *Changes:* None. *Comment:* One commenter asked whether a current teacher who decides to pursue a master's degree in a field that would not result in that teacher adding a certified area to his or her teaching credential would be considered to be enrolled in a TEACH Grant-eligible program and, if so, if the service performed on the basis of the individual's undergraduate degree could be used to fulfill the teaching obligation associated with the TEACH Grant for the master's degree. *Discussion:* An institution designates which of its programs are TEACH Grant-eligible. As long as the student is enrolled in a TEACH Grant-eligible program that student could receive a TEACH Grant. Prior experience in the field will not strip a student of his or her eligibility. However, the teaching service performed prior to enrollment in the master's degree program cannot be used to meet the service obligation associated with the TEACH Grant. Full-Time teaching service while attending school to obtain a master's degree would count toward the service obligation for any TEACH Grants that were received for an undergraduate or post-baccalaureate program. The teaching service performed while the student is enrolled may not be counted against the service obligation for the program in which the student is enrolled because the statute specifies that the student must teach “after completing the course of study for which the applicant received a TEACH Grant.” *Changes:* None. *Comment:* One commenter asked whether a four-year baccalaureate program that does not include an education component could be considered TEACH Grant-eligible if a student is able to transfer out of it after two years, prior to declaring a major, into a teacher preparation program at the same institution or at another institution with which the student's first institution has an agreement. *Discussion:* The comment addresses institutional eligibility and program eligibility. In regard to institutional eligibility, an institution that has a teacher preparation program would not need to enter into an agreement with another institution to be a TEACH Grant-eligible institution. The institution could establish eligibility on the basis of its teacher preparation program, assuming that program meets the requirements contained in paragraph
(1)of the definition of TEACH Grant-eligible institution in § 686.2(d). In regard to program eligibility, it is not a requirement that a program include a teacher education component to be designated a TEACH Grant-eligible program. An institution may designate a program as TEACH Grant-eligible if it prepares an individual to teach as a highly-qualified teacher in a high-need field. In this example, if the institution has designated both its program that does not include a teacher education component and its teacher preparation program as TEACH Grant-eligible, and the student is admitted to its teacher preparation program in the third year of undergraduate study, then the student would be eligible for a TEACH Grant for a total of four years. Since both of the programs in this example are TEACH Grant-eligible, the student could receive a TEACH Grant for each year of enrollment in the baccalaureate program without the education component and for each year of enrollment in the program with the teacher education component. *Changes:* None. Teacher and Full-Time Teacher *Comment:* One commenter asked what a substitute teacher would need to do to meet the requirement of teaching full-time and other aspects of the service obligation. *Discussion:* A substitute teacher would need to satisfy the same requirements as a regular teacher as described in § 686.12(b)(1), (2), and (3). The substitute teaching service must be in a low-income school and the substitute must teach a majority of courses in a high-need field, as a highly-qualified teacher, for it to count toward meeting the service obligation. The substitute teacher must teach enough to meet the standard used by the State in defining full-time employment as a teacher. He or she could satisfy the requirement of teaching full-time by teaching in more than one low-income school and demonstrating that the combined teaching service was the equivalent of full-time. The substitute teacher would need to provide documentation as provided in § 686.40. *Changes:* None. *Comment:* One commenter noted that special education teachers and reading specialists often serve other teachers as a resource or as a literacy coach and inquired whether such individuals would be considered teachers for purposes of fulfilling the service obligation. *Discussion:* The definition of “teacher” specifically includes special education teachers and reading specialists. Service performed by special education teachers and reading specialists, such as serving as a literacy coach or resource to another teacher, either in the classroom or in a classroom-like setting, meets the definition of teacher. In order to meet the requirements of the service obligation, special education teachers and reading specialists must spend the majority of time teaching in a classroom or classroom-like setting, though they may also serve as a resource for other teachers. *Changes:* None. Duration of Student Eligibility (§ 686.3) *Comment:* One commenter asked whether a student who already has earned a baccalaureate degree in a non-TEACH Grant-eligible program could be considered eligible for a TEACH Grant if the student enrolled in a TEACH Grant-eligible baccalaureate degree program, since this would be that student's first such baccalaureate degree. The commenter asked the same question about post-baccalaureate programs. *Discussion:* Section 420M(d)(1) of the HEA provides that a student may receive grants for the period required for the completion of the first undergraduate or post-baccalaureate course of study. In reviewing proposed § 686.3, we have determined that § 686.3 could suggest that a student who already has a baccalaureate degree in a non-TEACH Grant-eligible program would be eligible for a TEACH Grant if the student enrolled in a TEACH Grant-eligible baccalaureate degree program. However, that is not what we intended so we have clarified the regulations. An undergraduate student can get a TEACH Grant only for their first baccalaureate degree. Post-baccalaureate programs are by definition TEACH Grant-eligible. A student can get a TEACH Grant for completion of only one post-baccalaureate program. *Changes:* We amended § 686.3(a) to clarify that a student who already has completed a baccalaureate or post-baccalaureate program of study and has enrolled in a TEACH Grant-eligible baccalaureate or post-baccalaureate program of study will not be able to receive a TEACH Grant. *Comment:* A commenter asked whether a student who has completed the requirements for teacher certification but elects to remain enrolled in the institution would continue to be eligible to receive TEACH Grants. *Discussion:* If a student has completed the requirements for teacher certification but remains enrolled in the institution, the student's eligibility for further TEACH Grants would depend on whether the student is still considered enrolled in his or her TEACH Grant-eligible program. If the student completed the requirements for the TEACH Grant-eligible program's degree or certificate, the student would no longer be eligible. *Changes:* None. Institutional Participation (§ 686.4) *Comment:* One commenter expressed appreciation that participation in the TEACH Grant program is optional for institutions. *Discussion:* We appreciate the support. *Changes:* None. *Comment:* One commenter suggested that the regulations should provide that if an institution ceases to participate in the TEACH Grant program, the TEACH Grant recipients at that institution would not be required to repay any TEACH Grant funds they received because it is the institution, not the student, that has withdrawn from the program. *Discussion:* Whether or not the institution continues to participate in the TEACH Grant program, a grant recipient is responsible for fulfilling the terms of the ATS that he or she signed. The student would still be able to continue a program of study to become a teacher, even if the institution no longer participated in the TEACH Grant Program, though the student would not receive additional TEACH Grants for that program. In addition, the student would also have the option to transfer to another institution to get a teaching credential. If the recipient fails to meet the requirements of the ATS, the TEACH Grants will convert to a Federal Direct Unsubsidized Loan. *Changes:* None. Application (§ 686.10) *Comment:* One commenter supported the Department's use of the FAFSA as the application for a TEACH Grant. *Discussion:* We appreciate the commenter's support. *Changes:* None. Eligibility To Receive a Grant (§ 686.11) *Comment:* Several comments were received on how admissions tests are treated as part of student eligibility for a TEACH Grant. One commenter asked whether an institution must first determine whether a student achieved a score above the 75th percentile on at least one of the batteries of a standardized admission test before determining TEACH Grant eligibility based on the student's grade point average (GPA). One commenter requested restricting admission test scores by educational level, while another commenter supported the approach in the proposed regulations regarding how admission test scores are considered as part of student eligibility. Another commenter wanted to know how to determine a home-schooled student's eligibility if the institution does not require an admissions test. Another commenter asked whether a test used for admission is acceptable for the 75th percentile determination even if it is also used as a placement test. Clarification on which nationally-normed tests qualify a student for a TEACH Grant and how a test is determined to be nationally-normed was also requested by a commenter. Finally, one commenter asked whether, in lieu of test score submissions by the testing entity, a student may submit documentation of test scores directly to the financial aid office. *Discussion:* Section 420N(a)(2)(A)(ii)(II) of the HEA requires an institution to determine whether the student displayed high academic aptitude by scoring above the 75th percentile of scores on at least one of the batteries from a nationally-normed standardized admissions test and does not restrict the use of admission test scores by undergraduate or graduate educational level. Because the test scores are intended to be a measure of high academic aptitude without being associated with a particular educational level, the Department does not believe that restricting qualification for a TEACH Grant by test score by educational level is appropriate. If the student did not achieve a qualifying test score, an otherwise eligible student may qualify based on the applicable GPA requirements. The student's qualifying test score does not need to be used by the institution as an admissions test at that school. In addition, a student may qualify based on a score on an admissions test that doubles as a placement test at the institution. While a home-schooled student may qualify by scoring above the 75th percentile on a standardized admissions test, he or she may also qualify based on his or her high school GPA as documented by the student's parent or other cognizant authority. Any student who does not qualify by test score or GPA is not eligible for a TEACH Grant. All nationally-normed tests are not eligible to qualify a student—only nationally-normed admission tests qualify. An admissions test is considered to be nationally-normed if the norming sample is nationally-representative, that is, individual student test performance can be compared to a nationally-drawn peer sample. For documentation purposes, a student may submit qualifying test scores directly to the financial aid office in lieu of having the testing entity send the test scores to the institution. However, if the institution has reason to believe that the test scores submitted directly by the student are incomplete or inaccurate, the institution must request test scores from the testing entity. *Changes:* None. *Comment:* Three commenters expressed concern about the GPA requirement to receive a TEACH Grant. One believed that the required 3.25 GPA is too high. Another commenter suggested that students who qualified for a TEACH Grant by meeting the admission test option should still have to meet the 3.25 cumulative GPA, or numeric equivalent, through the most recently completed payment period that is required of students who did not qualify under the admission test option. Another commenter recommended that GPA be checked once per year, not once each term. *Discussion:* Under section 420N(a)(2)(A)(ii)(I) of the HEA, achieving a 3.25 GPA on a 4.0 scale allows an otherwise eligible student who did not qualify via an undergraduate, postbaccalaureate, or graduate school admissions test score to qualify for a TEACH Grant. The statute does not require students who qualified using the admission test score option to maintain a 3.25 GPA in the eligible program, but does require that a student who qualified using the 3.25 cumulative GPA option to continue to maintain a GPA of at least 3.25 on a 4.0 scale. To document that such a student continues to meet the 3.25 GPA eligibility requirement, § 686.11(a)(1)(v) stipulates that the institution must check the student's GPA for the most recently completed payment period by the institution prior to disbursement. *Changes:* None. *Comment:* One commenter was concerned that the academic requirements to receive a TEACH Grant—qualifying test scores or GPA—would impose an additional burden on financial aid officers. *Discussion:* Section 420N(a)(2)(A)(ii)(I) and
(II)of the HEA established the qualifying admission test scores and GPA requirements for receiving a TEACH Grant that were reflected in the proposed regulations. Institutions are required to implement these requirements. The regulations do not specifically stipulate, however, that financial aid officers make the academic determinations. Rather, institutions should follow their own institutional policies and procedures to ensure that these student eligibility requirements are properly administered. *Changes:* None. *Comment:* One commenter requested clarification on the methods by which a former teacher may qualify for a TEACH Grant. *Discussion:* Under § 686.11(b), a former teacher is eligible for a TEACH Grant for a master's degree program or an alternative certification program as part of a master's degree program. In addition, a former teacher can qualify under § 686.11(a) for an eligible undergraduate, post-baccalaureate, or graduate degree program if he or she meets the academic requirements. *Changes:* None. Agreement To Serve (§ 686.12) *Comment:* Many commenters were concerned that the basic elements of the ATS would be difficult for most TEACH Grant recipients to satisfy, thereby increasing the probability that the majority of TEACH Grants would convert to Federal Direct Unsubsidized Loans. The commenters stated that it was not appropriate to expect students, especially lower classmen who either have not or cannot declare a major, to make a four-year commitment to serve in a low-income school as a highly-qualified full-time teacher in a high-need field at such a young age. The commenters cited the frequency with which students change majors or career goals upon exposure to coursework or, even later, after exposure to teaching experience. One commenter suggested that the Department include, in the ATS, the fact that the Congressional Budget Office has projected that 80 percent of TEACH Grants will convert to Federal Direct Unsubsidized Loans. *Discussion:* The teaching service requirements contained in the ATS and described in § 686.12(b) are mandated by section 420N(b) and
(c)of the HEA. In order to receive a TEACH Grant, the HEA requires that each TEACH Grant recipient agree to serve as a full-time teacher for a total of not less than four academic years within eight years of completing the course of study for which a TEACH Grant was received in a low-income school as a highly-qualified teacher in a high-need field. The HEA further requires that a grant recipient document each year of his or her teaching service in the form of a certification by the chief administrative officer of the school in which the recipient is teaching. Lastly, the HEA provides that if the recipient fails or refuses to carry out the service obligation, any TEACH Grants received are treated as a Federal Direct Unsubsidized Loan with interest accruing from the date that each TEACH Grant was disbursed. While we understand the commenters' concerns, the Secretary does not have the authority to change statutory requirements. We note, however, that the ATS that a TEACH Grant recipient must sign each year before receiving a TEACH Grant contains all of the terms and conditions a recipient must meet in order to prevent the grant from converting to a Federal Direct Unsubsidized Loan. Finally, the Secretary does not see the merit of including Congressional Budget Office projections in the ATS. *Changes:* None. *Comment:* Many commenters expressed concern that the regulations in § 686.12(b)(1) do not provide for partial fulfillment of a TEACH Grant recipient's ATS based on completion of less than four years of creditable teaching service. The commenters believed that requiring a teacher who fails to meet any part of the teaching service obligation to repay the entire amount of the grant award as a Federal Direct Unsubsidized Loan was unfair and punitive. The commenters strongly recommended that we allow TEACH Grant recipients to partially fulfill their ATS based on the number of years taught. For example, if a grant recipient received $16,000 in TEACH Grants and completed two years of creditable teaching service in accordance with his or her ATS, the grant recipient would owe $8,000 in TEACH Grants that would convert to Federal Direct Unsubsidized Loans. Other commenters did not believe that a student who receives TEACH Grants for only one award year while completing coursework necessary to begin a career in teaching should be required to perform four years of creditable teaching service in order to keep the TEACH Grants from converting to Federal Direct Unsubsidized Loans. The commenters believed that the teaching service obligation should be directly proportional to the number of years of TEACH Grant support received by a student. For example, if a student receives TEACH Grants for two award years, the teaching service obligation associated with the receipt of grant funds would also be two years. *Discussion:* Section 420N(b)(1) of the HEA states that a TEACH Grant recipient must serve as a full-time teacher for a total of not less than four academic years within eight years after completing the course of study for which the applicant received a TEACH Grant. The Secretary does not have the authority to change statutory requirements to allow for partial fulfillment of an ATS based on a teaching service obligation that is directly proportional to the number of years of TEACH Grant support received by a student. *Changes:* None. *Comment:* One commenter stated that requiring a TEACH Grant recipient to perform creditable teaching service in a low-income elementary or secondary school is a disservice to such schools because inexperienced teachers trying to satisfy their ATS would be teaching in an environment where more experienced teachers are needed. One commenter recommended that the final regulations provide relief to a TEACH Grant recipient who is unable to fulfill his or her ATS because there are no low-income elementary or secondary schools within a reasonable distance of the grant recipient's residence or because the grant recipient has not been hired by a low-income school. Finally, one commenter asked whether all of the elementary or secondary schools at which a grant recipient teaches must be considered low-income to satisfy the ATS if the grant recipient's full-time status as a teacher is achieved by employment at more than one school. *Discussion:* There is a shortage of teachers in elementary and secondary low-income schools that experienced teachers have not filled. The TEACH Grant program was established to address this need, among others, by providing incentives in the form of grants of up to $4,000 per year to students who make a commitment to teach in a public or private non-profit elementary or secondary low-income school. We believe that providing relief to a TEACH Grant recipient who does not live within a reasonable distance of a low-income school or who is not hired by a low-income school would be contrary to the intent of the TEACH Grant program. We believe that under the regulations, TEACH Grant recipients will receive enough information to make an informed choice regarding their ability to meet the requirements of the ATS, including the requirement to teach in a low-income school. Section 686.32 requires that a TEACH Grant recipient receive extensive counseling before grant funds are disbursed each year that emphasizes that by receiving TEACH Grant funds, a student is committing to a teaching service obligation. Both initial and exit counseling requirements in § 686.32(a)(3)(ii) and (c)(4)(iii), respectively, require a school to provide grant recipients with information on how to access the Directory of Low-Income Schools so that TEACH Grant recipients can familiarize themselves with the name and location of every designated low-income school in the United States. Moreover, section 420N(b)(1)(A) of the HEA allows a TEACH Grant recipient eight years to satisfy his or her teaching service obligation of four years. This eight-year timeframe builds in four years for TEACH Grant recipients who do not begin their teaching service immediately and provides them with ample time to locate and apply to teach in a low-income elementary or secondary school. Finally, all of the elementary or secondary schools at which a grant recipient teaches must be designated as low-income to satisfy the ATS if the grant recipient's full-time status as a teacher is achieved by employment at more than one school. This policy is consistent with the policy applied to borrowers in the Title IV, HEA loan programs with regard to teacher loan forgiveness. *Changes:* None. *Comment:* One commenter suggested that the Secretary include the definition of “highly-qualified teacher,” or a link to a Web site that contains the definition, in the ATS developed by the Department in accordance with § 686.12 so that TEACH Grant recipients know what requirements they must meet to be considered a highly-qualified teacher and to satisfy their teaching service obligation. *Discussion:* The Secretary agrees with the commenter that it is important for TEACH Grant recipients to have access to the definition of “highly-qualified teacher.” We will ensure that the initial version of the ATS includes the appropriate statutory cites so that a TEACH Grant recipient can research the definition of highly-qualified teacher. We will consider other options for providing this information when the Agreement is revised in the future. *Changes:* None. *Comment:* One commenter supported the provisions of § 686.12(c)(1) that allow creditable teaching service to apply to more than one ATS. One commenter believed that § 686.12(c)(1) should allow a student to incur only one ATS, instead of one ATS for each program of study for which a student received TEACH Grants, if a student must complete both a baccalaureate and a post-baccalaureate degree in order to begin a career in teaching. Another commenter requested that we clarify whether a teacher who received Stafford Loans as an undergraduate and who successfully completed five years of teaching service to obtain loan forgiveness on those loans could use the same teaching service to immediately satisfy an ATS associated with the receipt of TEACH Grants for a subsequent master's degree. *Discussion:* The Secretary agrees that, under certain circumstances, it is appropriate to apply creditable teaching service to more than one ATS and appreciates the commenter's support for this provision. For instance, if a grant recipient completes a TEACH Grant-eligible program at a TEACH Grant-eligible institution and immediately enrolls in another TEACH Grant-eligible program at a TEACH Grant-eligible institution before beginning a career in teaching, the recipient may request a suspension of the eight-year time period under § 686.41(a)(1) for the period of enrollment in the subsequent program and upon completion of the subsequent program, apply all qualified teaching service to both service obligations. Another example would be when a grant recipient completes a TEACH Grant-eligible program at a TEACH Grant-eligible institution and begins qualified teaching service to meet the service obligation before enrolling in a subsequent TEACH Grant-eligible program. In this case, the recipient may request a suspension of the eight-year time period associated with the first service obligation under § 686.41(a)(1) for the period of enrollment in a subsequent program and, upon completion of the subsequent program, apply qualified teaching service performed after the completion of the subsequent program to both service obligations. The qualified teaching service performed before the suspension would count only toward fulfillment of the first service obligation. The requirement in § 686.12(c)(1) that a TEACH Grant recipient must complete an ATS for each program of study for which the recipient received a TEACH Grant is based on section 420N(b)(1)(A) of the HEA. The Secretary does not have the authority to change a statutory requirement. Lastly, a TEACH Grant recipient can use only prospective, creditable teaching service performed after the student completed or ceased to be enrolled in the program for which the TEACH Grant was received to satisfy the requirements of the ATS, not teaching service performed before or during the time the student received a TEACH Grant. *Changes:* None. *Comment:* One commenter believed that § 686.12(b)(2), which requires a TEACH Grant recipient to annually submit documentation of creditable teaching service in the form of a certification by a chief administrative officer of the school, should provide protection to TEACH Grant recipients who fail to provide such documentation in a timely manner. *Discussion:* A TEACH Grant recipient must annually submit documentation of his or her teaching service or intent to teach within a timeframe necessary to keep the TEACH Grants from converting to Federal Direct Unsubsidized Loans in accordance with the provisions of §§ 686.40 and 686.43. The Secretary believes that these timeframes are reasonable for grant recipients to meet and protect the Federal fiscal interest by allowing for the conversion of TEACH Grants to loans when the Secretary cannot verify or document a grant recipient's intent to satisfy the ATS. *Changes:* None. *Comment:* Several commenters recommended that the Secretary amend § 686.12(d) to allow a TEACH Grant recipient who completes a TEACH Grant-eligible program in a field that is listed in the Nationwide List to satisfy the requirement to teach in a high-need field if the high-need field in which he or she prepared to teach is no longer listed in the Nationwide List for the State in which the grant recipient begins teaching. The commenters believed that a TEACH Grant recipient, who in good faith undertakes the coursework necessary to teach in a designated high-need field, should not be punished for circumstances that are beyond his or her control. *Discussion:* The HEA specifically states in section 420N(b)(1)(C) that a TEACH Grant recipient must “teach” in a high-need field in accordance with their ATS. We do not have the authority to allow a TEACH Grant recipient who completes a TEACH Grant-eligible program in a field that is listed in the Nationwide List to satisfy the requirement to teach in a high-need field if the high-need field in which he or she prepared to teach is no longer considered a high-need field in the recipient's state and is no longer included in the Nationwide List for the State in which the grant recipient begins teaching. If the high-need field in which a TEACH Grant recipient prepared to teach is included in the Nationwide List for a State other than the State in which the grant recipient planned to teach, the grant recipient may apply to teach in that State in order to fulfill his or her ATS. *Changes:* None. *Comment:* Several commenters were concerned that TEACH Grant recipients who intend to become elementary school teachers may not be able to meet their teaching service obligation because, as elementary school teachers, they may not be able to teach the majority of their classes in high-need fields as required by § 686.40(c)(1). The commenters suggested that § 686.12 specifically state how elementary school teachers can demonstrate that they are teaching in high-need fields. Another commenter suggested that, because the purpose of the TEACH Grant program is to provide an incentive to get highly-qualified teachers into low-income schools, it would be consistent with this purpose for the Secretary to define all classroom teaching in elementary schools that includes math, science, and other defined high-need fields as qualifying teaching service in a high-need field. One commenter suggested that the ATS include information alerting TEACH Grant recipients who intend to become elementary school teachers that they may not be able to meet their teaching service obligation to teach the majority of their classes in high-need fields so that students in a TEACH Grant eligible program can make a more informed decision regarding receipt of a grant. *Discussion:* Section 420N(b)(1)(C) of the HEA requires that a TEACH Grant recipient enter into an agreement in which he or she commits to teach in mathematics, science, a foreign language, bilingual education, special education, as a reading specialist, or in any other high-need field documented by the Federal government or a State or local government and approved by the Secretary in exchange for the grant. In recognition of the fact that TEACH Grant recipients who intend to become elementary school teachers may not be able to meet the requirement to teach in a high-need field because of the nature of elementary school curriculum, §§ 686.12(b)(1)(iii) and 686.40(c)(1)(i) and
(ii)permit a teacher to fulfill the requirement to teach in a high-need field if the majority of classes taught are in a high-need field. We believe that these provisions sufficiently address how an elementary school teacher can meet the requirements of his or her ATS. Because the statute requires a TEACH Grant recipient to teach in a high-need field, we do not believe that we have the authority to interpret this provision to consider all classroom teaching in elementary schools that includes math, science, and other defined high-need fields as qualifying teaching service in a high-need field. We also do not believe that it is appropriate to include a warning in the ATS that TEACH Grant recipients who intend to become elementary school teachers may not be able to meet their teaching service obligation unless they teach the majority of their classes in high-need fields. Instead, we will make it clear in the ATS that a teacher may fulfill the requirement to teach in a high-need field if the majority of classes taught are in a high-need field. It is important to note in this discussion that an elementary school teacher can also satisfy the requirement to teach in a high-need field if the State in which he or she teaches designates “elementary school teachers” as a high-need field. In this case, the designation alone satisfies the requirement to teach in a high-need field, regardless of whether the majority of the classes taught by the grant recipient were taught in a high-need field. An elementary school teacher can also satisfy the requirement to teach in a high-need field if he or she is a full-time teacher in mathematics, science, a foreign language, bilingual education, or special education or is a reading specialist. *Changes:* None. Submission Process and Deadline for a SAR or ISIR (§ 686.20) *Comment:* One commenter asked how an institution would have an official EFC computed by the Central Processing System
(CPS)and an accurate EFC without having a valid SAR or valid ISIR. The commenter also questioned whether the intent of the proposed regulations was to provide for an institutional or third-party need analysis. *Discussion:* As with the other Title IV, HEA programs, the EFC must be calculated using the Federal methodology need analysis provided in Title IV, Part F of the HEA (Federal Methodology). An institution may receive an official EFC computed by CPS that is not based on accurate information. To determine the amount of a student's TEACH Grant in accordance with § 686.21(c), an institution would need an EFC based on accurate information, even if the EFC is not computed by CPS. In lieu of a CPS-calculated EFC based on information from a valid SAR or valid ISIR, an institution may hand-calculate a Federal Methodology EFC based on accurate information, or the institution may use a vendor's product to calculate a Federal EFC. An institution may not use the EFC of a need analysis methodology other than the Federal Methodology. *Changes:* None. Calculation of a Grant and Calculation of a Grant for a Payment Period (§§ 686.21 and 686.22) *Comment:* One commenter was concerned with the relationship between payments for payment periods and a student's TEACH Grant Scheduled Awards. The commenter cited the example of a program that operates on a quarter schedule with three quarters in the fall through spring and a summer quarter, each with 11 weeks of instructional time, and the summer quarter is treated as part of the prior award year. In this example, the institution has defined its academic year as being 44 weeks of instructional time and 48 quarter hours and uses the payment methodology described in § 686.22(b), commonly referred to as Formula 1. A student attends three quarters starting in the fall quarter, full-time for the first quarter and half-time for the winter and spring quarters, and receives TEACH Grant disbursements of $1,000, $500, and $500 for each of the respective terms from an initial Scheduled Award. The commenter questioned whether the payment for full-time attendance in the following summer term would be $1,000 or the $2,000 balance of the Scheduled Award and, if the amount was $1,000, what would be the disposition of the remaining $1,000 of the student's Scheduled Award and future Scheduled Awards. *Discussion:* In a manner similar to the Academic Competitiveness Grant
(ACG)and National SMART Grant programs, and unlike the Federal Pell Grant program, a TEACH Grant Scheduled Award is not limited to an award year and remains available to a student until that Scheduled Award is completely disbursed. Payments of a Scheduled Award are calculated by payment period as provided in §§ 686.22 and 686.25. In the commenter's example, the student would receive a $1,000 disbursement in the summer term, the payment for the payment period as calculated under § 686.22(b). The remaining balance of $1,000 from the Scheduled Award remains available for the next payment period in which the student enrolls. As an example, assume a student is otherwise TEACH Grant-eligible and enrolls in the subsequent fall and winter quarters as a half-time student and then in the spring quarter as a full-time student. The student would receive $500 payments for the fall and winter quarters from the initial Scheduled Award partially disbursed in the prior award year and would complete the use of that Scheduled Award. In the subsequent spring quarter, the student would receive an initial $1,000 disbursement from the student's next Scheduled Award. *Changes:* None. *Comment:* One commenter asked for clarification of the relationship between the payment methodologies to calculate a grant under §§ 686.22 and 686.25 and the requirement that the grant, in combination with Federal and other student financial assistance that a student may receive, may not exceed the Title IV, HEA program cost of attendance (COA). The commenter also questioned the relationship between annual awards that take into account part-time attendance and full-time COA and part-time COA in determining the amount of a student's TEACH Grant. The commenter suggested that it would be simpler to follow the model of determining payments under the campus-based programs ( *i.e.* , Federal Perkins Loan Program and Federal Supplemental Educational Opportunity Grant Program). *Discussion:* An institution is required to calculate a TEACH Grant payment for each payment period. However, if the student's TEACH Grant in combination with other aid for the enrollment period covered by the aid, *e.g.* , a one-term period of enrollment, exceeds the student's COA for the enrollment period, the payment of the TEACH Grant must be reduced. This same principle would hold true in the treatment of a part-time COA in combination with a part-time TEACH Grant payment for a period of enrollment covered by the aid and COA. Section 401M(c)(1) of the HEA requires that a student's TEACH Grant payments must be reduced if the student is not attending full-time. The amount of the grant is reduced in proportion to the degree to which the student is not attending on a full-time basis. Similar adjustments must be made in the Federal Pell Grant, ACG, and National SMART Grant programs. There is no comparable adjustment required under the HEA for the campus-based programs. These regulations, therefore, use the same methodologies for calculating a payment for a payment period as do the Federal Pell Grant, ACG, and National SMART Grant programs. *Changes:* None. *Comment:* One commenter sought confirmation that it is the institution's option to use the grant as a replacement for EFC. *Discussion:* Under § 686.21(d), an institution is not required to replace a student's EFC with a TEACH Grant. If an institution does replace a student's EFC with a TEACH Grant, the amount of the grant that exceeds the student's EFC is considered estimated financial assistance under 34 CFR 673.5(c). *Changes:* None. Determination of Eligibility for Payment (§ 686.31) *Comment:* Several commenters expressed concern about the requirement in § 686.31(a)(2) that for each payment period, an institution may pay a TEACH Grant to an eligible student only after determining that the student has completed the relevant counseling. The commenters interpreted this provision to require recipients to receive counseling prior to each grant disbursement, which they believe to be excessive. *Discussion:* We intended § 686.31(a)(2) to require institutions to ensure that initial counseling is conducted prior to making the first disbursement of the student's first TEACH Grant and subsequent counseling is conducted prior to making the first disbursement of any subsequent TEACH Grant. Because these counseling requirements are triggered only by the first disbursement of a TEACH Grant, they are only required annually. For clarity, we have amended § 686.31(a)(2) to reflect the annual nature of the counseling. *Changes:* Section 686.31(a)(2) is amended by adding the words “initial or subsequent” before “counseling”. Counseling Requirements (§ 686.32) *Comment:* We received several comments suggesting that the TEACH Grant counseling requirements reflected in § 686.32 will place an additional burden on financial aid offices. Some commenters requested that the Department develop counseling materials for institutions to use or develop and make available to students applying for a TEACH Grant an online, interactive counseling program. One commenter requested that the Department make an online counseling program a priority so that it could be available for the 2008-2009 award year. A few commenters suggested that required counseling could be electronically connected to the ATS, which the student will complete online. Another commenter noted that many students already resist current financial aid counseling that is offered and, for that reason, they do not believe that students will embrace the additional TEACH Grant counseling requirements. One commenter supported comprehensive counseling while another commenter asked the Department to eliminate the subsequent counseling requirements in § 686.32(b) altogether. One commenter asked the Department to add a requirement that students have documentation, either from the Department or from a college financial aid office, showing that they completed the required counseling before an institution can disburse the TEACH Grant. Another commenter asked the Department to clarify what the timeframe is in which counseling must be provided to students. Finally, one commenter noted that there are slight differences between the TEACH Grant counseling requirements and the Stafford Loan counseling requirements and asked the Department to clarify whether or not these differences are intentional. *Discussion:* We appreciate the administrative burden associated with the counseling requirements, but we strongly believe that extensive counseling is necessary given the complex nature of the TEACH Grant program and, in particular, the potential for a grant under this program to convert to a Federal Direct Unsubsidized Loan. As mentioned in the preamble to the NPRM, the Department and the non-Federal negotiators who participated in the negotiated rulemaking sessions for the TEACH Grant program agreed that students should be given as much information as possible about the TEACH Grant program and its requirements. The Department believes that providing initial counseling for students is necessary so that each TEACH Grant recipient understands the rights and responsibilities that are attached to a grant award. Subsequent counseling sessions remind students of those rights and responsibilities. Exit counseling reminds students about their service obligation and gives them information similar to that given to loan recipients when they leave school. Students who do not complete the initial or subsequent counseling requirements, whichever is appropriate, will not be eligible to receive a TEACH Grant. Thus, students who are interested in receiving a TEACH Grant will have to complete the annual counseling requirement regardless of whether or not they agree with the requirement. The Department intends to provide online, interactive counseling that will be connected to the ATS. Once this online counseling is in place, students will be required to complete it before they can access and sign the ATS. Because students who do not complete an ATS are not eligible to receive a TEACH Grant, this ensures that all recipients will have completed the counseling. Unfortunately, the Department will not be able to provide online counseling during the 2008-2009 award year, but we are hopeful that on-line counseling will be available beginning with the 2009-2010 award year. Under § 686.32, an institution is required to ensure that initial, subsequent, and exit counseling is provided, as appropriate, to each TEACH Grant recipient. Institutions, therefore, will be required to provide counseling until the Department makes an online TEACH Grant counseling program available. At that time, to fulfill the requirements of § 686.32, institutions will be responsible not for providing the counseling, but instead for ensuring that the necessary counseling has been provided ( *i.e.* , obtaining documentation evidencing that the student received appropriate counseling). To provide institutions as much flexibility as possible, the Department has decided not to require institutions to collect a specific form from students to show that they have completed the required counseling. However, institutions can require their students to submit a specific form, if they choose. Once the Department begins to offer online counseling with the ATS, students will be able to print off a copy of the ATS, which could serve as proof that they have completed the online counseling (they will be unable to access and sign the ATS without first completing the online counseling session). If it chooses, an institution can request that each student provide a copy of his or her completed ATS for that student's file. Also, nothing in the regulations prohibits institutions from requiring students to receive additional in-person counseling, prior to receiving a TEACH Grant. The regulations indicate that an institution must ensure that a student receives either initial or subsequent counseling, whichever is appropriate, prior to the first disbursement of the grant award. While the Department would prefer that institutions provide initial and subsequent counseling to students before the students sign an ATS, we realize that this could be difficult and so the Department did not specify in the regulations the specific timeframe in which counseling must take place. We believe that this gives institutions flexibility and will allow them to provide counseling at a time that best suits their needs and the needs of their students so long as students receive counseling before the first disbursement of the TEACH Grant. The Department used the current counseling requirements for the William D. Ford Federal Direct Loan Program as an example when formulating the TEACH Grant counseling requirements. However, the requirements for the Direct Loan Program and the TEACH Grant program do differ slightly. These differences are intentional. For example, the initial counseling requirements for the Direct Loan Program state that the initial counseling must explain the use of a Master Promissory Note
(MPN)whereas, because the TEACH Grant program does not use a MPN, this requirement is not included in the TEACH Grant counseling requirements. Also, the exit counseling section of the Direct Loan regulations states that the exit counseling must inform the student borrower of the average anticipated monthly payment amount based on the student's overall indebtedness or on the average indebtedness of Direct Subsidized Loan and Federal Direct Unsubsidized Loan borrowers at the same school or in the same program of study. In the TEACH Grant regulations the Department requires that exit counseling inform the student of the average anticipated monthly amount based only on the student's TEACH Grant indebtedness, which could be in addition to any other loan indebtedness that the student may incur. This is due to the fact that institutions will not have an average indebtedness of TEACH Grant recipients. Most TEACH Grants that convert to a loan will not do so until several years after a TEACH Grant recipient has left the institution. *Changes:* None. Recalculation of TEACH Grant Award Amounts (§ 686.35) *Comment:* One commenter suggested that we change the title of this section to “Recalculation of eligibility for TEACH Grant award” to be consistent with a similar section of the Pell Grant Program regulations. *Discussion:* The Secretary agrees that the heading for this section should reflect better the substance of the section. Under this section, an institution can recalculate the amount of a TEACH Grant award in response to changes in the student's enrollment status and changes in the student's cost of attendance. *Changes:* The section heading of § 686.35 is changed to “Recalculation of TEACH Grant award amounts.” Documenting the Service Obligation (§ 686.40) and Periods of Suspension (§ 686.41) *Comment:* None. *Discussion:* After negotiated rulemaking was completed, the Department learned that two new military family leave provisions were added to the Family and Medical Leave Act
(FMLA)by the National Defense Authorization Act Fiscal Year 2008 (Pub. L. 110-181) and that the Department of Labor was in the process of receiving public comment on an NPRM for the FMLA implementing regulations, which included a description of the new military family leave provisions, a discussion of the issues, and a series of questions seeking public comment on subjects and issues to be addressed in final regulations. The Secretary committed in the TEACH Grant NPRM to consult with the Department of Labor when developing TEACH Grant final regulations so that the provisions in §§ 686.40(e)(1) and 686.41(a)(1) would accurately reflect qualifying reasons for leave under the FMLA, including qualifying leave reasons under the new military family leave provisions. At the time of publication of the final TEACH Grant program regulations, the Department of Labor was still reviewing the comments received on the FMLA NPRM and had not published revised final regulations. Additionally, it was brought to our attention that references to “conditions covered under the FMLA” could imply that the coverage, eligibility, notification, certification and other provisions of the FMLA might need to be met in order for the condition to be one which merited extension of the pay back time. It is not our intention that other qualifying criteria for employees to take leave under the FMLA apply, or even that leave be taken as a result of such condition. The criteria will be met if a TEACH Grant recipient is unable to meet obligations of the grant due to a condition that would be a qualifying reason for leave under the FMLA. Moreover, because the FMLA may change, as it did in 2008, by Congressional action in the future, we believe that it is appropriate for the TEACH Grant regulations to reference the applicable provisions of the FMLA, rather than to repeat those provisions in the text of the TEACH Grant program regulations. We believe that these references will be a more accurate source of information for TEACH Grant recipients who are seeking a suspension from the Secretary of the eight-year period for completion of the service obligation when complying with §§ 686.40 and 686.41 of the TEACH Grant regulations based on a condition that would be considered a qualifying reason for leave under the FMLA. *Changes:* We have amended §§ 686.40 and 686.41 by removing the “list of conditions covered” by the FMLA and adding, in its place, a reference to qualifying reasons for leave under the FMLA (29 U.S.C. 2612(a)(1) and (3)). Periods of Suspension (§ 686.41) *Comment:* Several commenters supported the addition of suspension periods to the TEACH Grant program as a measure of protection for grant recipients who, for reasons beyond their control, need an extension of the eight-year period for completion of the teaching service obligation. *Discussion:* The Secretary appreciates the commenters' support. *Changes:* None. *Comment:* Several commenters suggested that § 686.41(b) be amended to allow TEACH Grant recipients to request a suspension within a 12-month period—rather than a 6-month period—after the date that they either stop teaching or complete or otherwise cease enrollment in a TEACH Grant-eligible program. Another commenter noted that under current § 686.41(b), a TEACH Grant recipient must request a suspension within six months of ceasing enrollment in a TEACH Grant-eligible program and that this period of time conflicts with the trigger for conversion of a TEACH Grant to a Federal Direct Unsubsidized Loan in § 686.43(a)(2) because, under that provision, conversion occurs within 120 days of ceasing enrollment in the TEACH Grant-eligible program if the grant recipient fails to notify the Secretary that he or she is teaching or still intends to teach full-time in accordance with the ATS. The commenters suggested that the Secretary synchronize the timeframes for requesting a suspension and the timeframes under which a TEACH Grant could convert to a Federal Direct Unsubsidized Loan so that a grant is not converted to a loan before the TEACH Grant recipient has an opportunity to request a suspension. *Discussion:* We agree that the deadline by which a TEACH Grant recipient must request a suspension and the time that a TEACH Grant may convert to a Federal Direct Unsubsidized Loan should not conflict. However, we do not believe that amending the regulations to require TEACH Grant recipients to request a suspension within 12 months of completing or ceasing enrollment in a TEACH Grant-eligible program or stopping teaching service is appropriate because such a change would not resolve the conflicts between § 686.41(b), which gives a student 12 months to request a suspension, and § 686.43(a)(2), under which a TEACH Grant could convert to a Federal Direct Unsubsidized Loan 120 days after the recipient completes a TEACH Grant-eligible program if the student does not notify the Secretary. To address the potential conflict, we amended § 686.41(b) in two ways:
(1)By removing the requirement that a TEACH Grant recipient make a request for a suspension within six months of completing or otherwise ceasing enrollment or after he or she stops teaching; and
(2)by adding, in its place, a requirement that a TEACH Grant recipient request a suspension prior to being subject to any of the conditions under § 686.43(a)(1) through (a)(5) that would cause the TEACH Grant to convert to a Federal Direct Unsubsidized Loan. With these changes, a suspension request would have to be made by the TEACH Grant recipient within 120 days of ceasing enrollment in a TEACH Grant-eligible program if the grant recipient has failed to confirm with the Secretary, within the 120-day period, that he or she is or intends to be employed full-time in accordance with the terms and conditions of the student's ATS. If the recipient notifies the Secretary in accordance with § 686.40(a), he or she still may request a suspension, but must do so before any of the conditions identified in § 686.43(a)(1), (a)(3), (a)(4), and (a)(5) occur. *Changes:* We amended § 686.41(b) to require that a grant recipient must apply for a suspension prior to being subject to any conditions in § 686.43(a)(1) through (a)(5) that would convert the TEACH Grant to a Federal Direct Unsubsidized Loan. *Comment:* One commenter asked if it would be appropriate to add the phrase “as a highly-qualified teacher” to the end of § 686.41(a)(1)(i). The commenter believed this additional language would assist a TEACH Grant recipient by broadening the circumstances under which a suspension can be requested to include enrollment in programs that confer the status of “highly qualified.” *Discussion:* We do not believe it is necessary to add the phrase “as a highly-qualified teacher” to the end of § 686.41(a)(1)(i). If a student is seeking a suspension to enroll in a program of study that has been determined by a State to satisfy the requirements for certification or licensure to teach in the State's elementary or secondary schools, the program's course work must address the State-determined standards for highly-qualified teachers by definition. *Changes:* None. Obligation To Repay the Grant (§ 686.43) *Comment:* One commenter asked if the counseling requirements in § 686.32 require an institution to determine when a TEACH Grant converts to a Federal Direct Unsubsidized Loan and, if so, whether an institution would be required to participate in the Federal Direct Loan Program in order to participate in the TEACH Grant program. *Discussion:* The Secretary will determine when a TEACH Grant converts to a Federal Direct Unsubsidized Loan in accordance with § 686.43(a). The counseling requirements in § 686.32 in no way require an institution that participates in the TEACH Grant program to convert a TEACH Grant to a loan. Moreover, nothing in the TEACH Grant program regulations requires institutions that participate in the TEACH Grant program to participate in the Direct Loan Program. Under § 686.40(a), it is the responsibility of the TEACH Grant recipient to notify the Secretary within 120 days of completing or ceasing enrollment in a TEACH Grant-eligible program and annually thereafter about his or her plans to satisfy the ATS, to request a suspension, and to document creditable teaching service. The Secretary will track a TEACH Grant recipient's enrollment status and progress in meeting the terms and conditions of the recipient's ATS and will determine if and when a TEACH Grant converts to a Federal Direct Unsubsidized Loan based on this information. *Changes:* None. *Comment:* Several commenters were concerned that no appeal process is available to a TEACH Grant recipient whose TEACH Grant converts to a Federal Direct Unsubsidized Loan. The commenters believed that the regulations should provide for an appeal process so that a TEACH Grant recipient's individual circumstances that caused the recipient to fail to satisfy the terms and conditions of his or her ATS could be evaluated or so that a conversion of a TEACH Grant to a loan that was done in error could be corrected. *Discussion:* We do not believe that an appeals process is necessary because a number of protections are already built into the TEACH Grant program. First, under the HEA, recipients have eight years to complete a four-year service obligation—this builds in four extra years for recipients with “mitigating circumstances” to satisfy their service obligation. Moreover, suspensions of the service obligation requirements are available under a number of defined situations a recipient could face. For example, § 686.41(a) provides up to three years of eligibility for a suspension of the eight-year period in which a TEACH Grant recipient has to satisfy the conditions of his or her ATS based on enrollment in a TEACH Grant-eligible program or a program of study to obtain a State license to teach, or a condition that is a qualifying reason for leave under the FMLA. TEACH Grant recipients also may request a suspension for an unlimited period of time to meet certain military obligations. Finally, if a TEACH Grant is converted to a Federal Direct Unsubsidized Loan in error, the grant recipient may contact the Department of Education's Student Loan Ombudsman or other Department staff to resolve the matter. *Changes:* None. *Comment:* Several commenters recommended that the regulations permit a TEACH Grant recipient to cancel the TEACH Grant within a reasonable timeframe. The commenters noted that otherwise, a TEACH Grant recipient would be required to request conversion of the TEACH Grant to a Federal Direct Unsubsidized Loan under § 686.43(a)(1) if the recipient decided that he or she does not want the TEACH Grant. *Discussion:* We agree that a TEACH Grant recipient should be able to cancel all or part of a TEACH Grant within a reasonable time without having to request that the TEACH Grant be converted to a Federal Direct Unsubsidized Loan. We have added a new paragraph
(e)to § 686.31 and amended 34 CFR 668.165 to require that an institution provide the same notices and cancellation opportunities to TEACH Grant recipients that it provides to borrowers in the Title IV, HEA loan programs. *Changes:* We have added a new paragraph
(e)to § 686.31 of the TEACH Grant program regulations and amended 34 CFR 668.165(a)(2) to provide that, before disbursing a TEACH Grant for any award year, an institution must notify the student of the amount of TEACH Grant funds that the student is eligible to receive, how and when those funds will be disbursed, and the student's right to cancel all or a portion of the TEACH Grant. Under § 686.31(e)(1)(ii) and 34 CFR 668.165(a)(4), an institution must also return the TEACH Grant proceeds, cancel the TEACH Grant, or do both, if the institution receives a TEACH Grant cancellation request from the student no later than the first day of a payment period or 14 days after the date it notifies the student of his or her right to cancel all or a portion of a TEACH Grant. Under § 686.31(e)(2)(i) and 34 CFR 668.165(a)(4)(iii), if a student requests cancellation of a TEACH Grant after the first day of a payment period or 14 days after the date the institution notifies the student of his or her right to cancel, but within 120 days of the TEACH Grant disbursement date, the institution may return the TEACH Grant proceeds or cancel the TEACH Grant, or both. Finally, under § 686.31(e)(2)(ii), if the institution does not return the TEACH Grant proceeds, or cancel the TEACH Grant, the institution must notify the student that he or she may contact the Secretary to request that the TEACH Grant be converted to a Federal Direct Unsubsidized Loan. *Comment:* One commenter stated that interest should begin accruing on the date that a TEACH Grant is converted to a Federal Direct Unsubsidized Loan, not on the date that the TEACH Grant was disbursed. *Discussion:* Section 420N(c) of the HEA provides that interest accrues from the date that a TEACH Grant was disbursed. The Secretary does not have the authority to change this statutory requirement. *Changes:* None. *Comment:* One commenter asked whether the Department would assess origination or insurance fees on a Federal Direct Unsubsidized Loan that was originally a TEACH Grant. *Discussion:* The Secretary has no plans to assess origination or insurance fees on a Federal Direct Unsubsidized Loan that was originally a TEACH Grant. *Changes:* None. *Comment:* One commenter supported § 686.43(b), which exempts TEACH Grants that convert to Federal Direct Unsubsidized Loans from annual and aggregate loan limits, as an appropriate protection for TEACH Grant recipients who, for reasons beyond their control, may be unable to satisfy their ATS but still may need Federal student aid. Another commenter stated that the regulations exempting TEACH Grants that convert to Federal Direct Unsubsidized Loans from annual loan limits is unwise because students who have no plans to teach may accept TEACH Grants as a means of borrowing more than current annual loan limits allow. *Discussion:* There are many reasons why a TEACH Grant recipient may be unable to fulfill his or her ATS, thereby triggering conversion of TEACH Grants to Federal Direct Unsubsidized Loans. In some cases, TEACH Grant recipients whose grants convert to Federal Direct Unsubsidized Loans might immediately exceed aggregate loan limits and be declared ineligible for further Title IV, HEA aid until the loans are paid down. The Secretary believes this approach is overly punitive. As discussed earlier in this preamble, although an institution may limit the programs it designates as TEACH Grant-eligible, an institution can never know with certainty whether a student truly intends to fulfill his or her service obligation or whether the student applies for and receives a TEACH Grant only to circumvent loan limits in the Direct Loan Program. We also believe that the extensive counseling and materials provided to TEACH Grant recipients will ensure that only those students who intend to teach receive TEACH Grants. *Changes:* None. *Comment:* One commenter recommended that we amend the regulations in § 686.43(c) to provide a grace period for a grant recipient whose TEACH Grant has been converted to a Federal Direct Unsubsidized Loan. The commenter stated that the purpose of a grace period is to allow adequate time for a graduate to find employment before beginning repayment. The commenter believed that it was unfair to expect a TEACH Grant recipient to begin repayment immediately. *Discussion:* The Secretary agrees with the commenter. We have reviewed our initial budget assumptions and have determined that there is no cost associated with making a change to the final regulations and providing a grace period in § 686.43(c) to a grant recipient whose TEACH Grant has been converted to a Federal Direct Unsubsidized Loan. The provision of a grace period to a TEACH Grant recipient whose grant has converted to a loan also mirrors the terms of the Direct Loan Program with regard to entering repayment. *Changes:* We have amended § 686.43(c) to provide a grace period for a grant recipient whose TEACH Grant has been converted to a Federal Direct Unsubsidized Loan. *Comment:* One commenter recommended that § 686.43(c) specify that a grant recipient who is in school when his or her TEACH Grant converts to a Federal Direct Unsubsidized Loan is eligible for an in-school deferment so that such students do not have to begin making payments immediately upon conversion of the TEACH Grant. *Discussion:* A grant recipient whose TEACH Grant has been converted to a Federal Direct Unsubsidized Loan is eligible for most of the benefits of the Direct Loan Program. These benefits include an in-school deferment as long as the borrower is eligible under 34 CFR 685.204(b)(1). We agree that the regulations should highlight this benefit so that TEACH Grant recipients who are in school at the time of conversion are aware of it. *Changes:* We have amended § 686.43(c)(2) by adding the words “, including an in-school deferment” at the end of the paragraph. Executive Order 12866 Regulatory Impact Analysis Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and therefore subject to the requirements of the Executive Order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may
(1)have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2)create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3)materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4)raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive order. Pursuant to the terms of the Executive Order, it has been determined that this regulatory action will have an annual effect on the economy of more than $100 million. Therefore, this action is “economically significant” and subject to OMB review under section 3(f)(1) of Executive Order 12866. Accordingly, the Secretary has assessed potential costs and benefits of this regulatory action and has determined the benefits justify the costs. Need for Federal Regulatory Action As discussed in the NPRM, these regulations are needed to implement provisions of the HEA, as amended by the CCRAA, that established the TEACH Grant program. The Secretary has exercised limited discretion in implementing the CCRAA provisions in the following areas: • *Definition of elementary and secondary academic year:* The CCRAA provides that a grant recipient must serve as a full-time teacher for a total of not less than four academic years within eight years after completing the program of study for which he or she received a TEACH Grant. • *TEACH Grant-eligible institution:* The CCRAA provides that an eligible institution for purposes of the TEACH Grant program must be an institution of higher education as defined in section 102 of the HEA that is financially responsible and that provides: High-quality teacher preparation and professional development services, including extensive clinical experience as part of pre-service preparation; pedagogical coursework, or assistance in the provision of such coursework; and supervision and support services to teachers, or assistance in the provision of such services, or that provides a post-baccalaureate program of instruction. • *Calculation of Grade-Point Average for Transfer Students:* The CCRAA requires students to have a grade-point average of 3.25 on a 4.0 scale to be eligible to receive a TEACH Grant; and • *Counseling:* The CCRAA requires schools to provide counseling at a number of points to provide participating students with information on the program and, in particular, to underscore the student's responsibilities in the event the program's service requirements are not fulfilled. • *Discharge of Service Agreement:* The CCRAA does not address the discharge of a service obligation if a TEACH Grant recipient dies or becomes totally and permanently disabled. The following section addresses the alternatives that the Secretary considered in implementing these discretionary portions of the CCRAA provisions. Regulatory Alternatives Considered A broad range of alternatives to the regulations was considered as part of the negotiated rulemaking process. These alternatives were reviewed in detail in the preamble to the NPRM under both the *Regulatory Impact Analysis* and the *Reasons* sections accompanying the discussion of each proposed regulatory provision. To the extent they were addressed in response to comments received on the NPRM, alternatives are also considered elsewhere in the preamble to these final regulations under the *Discussion* sections related to each provision. No comments were received related to the *Regulatory Impact Analysis* discussion of these alternatives. Net Budget Impacts As noted in the NPRM, the TEACH Grant program is estimated to have a net budget impact of $7 million in 2008 and $74 million over FY 2008-2012. For budget, financial management, and cost estimation purposes, TEACH Grants will be operated as a loan program with 100 percent forgiveness of outstanding principal and interest upon completion of a student's service obligation. Consistent with the requirements of the Credit Reform Act of 1990, budget cost estimates for this program reflect the estimated net present value of all future non-administrative Federal costs associated with awards made in a given fiscal year. Details on how these estimates were developed are provided in the *Regulatory Impact Analysis* section of the NPRM. The administrative burden associated with §§ 686.4, 686.11, 686.32, and 686.34 of the TEACH Grant final regulation package has been estimated in accordance with the Paperwork Reduction Act of 1995 and Bureau of Labor Statistics wage information. The total increase in PRA burden associated with the regulations is estimated to be $2.6 million. This amount is comprised of $1.6 million in determining eligibility to receive a grant, $997,245 in complying with counseling requirements, $1,589 in determining institutional eligibility, and $16,775 in covering liability for and recovery of overpayments. Assumptions, Limitations, and Data Sources Because these regulations largely restate statutory requirements that would be self-implementing in the absence of regulatory action, impact estimates provided in the preceding section reflect a pre-statutory baseline in which the CCRAA and other statutory changes implemented in these regulations do not exist. Costs have been quantified for five years. In developing these estimates, a wide range of data sources were used, including the National Student Loan Data System, operational and financial data from Department of Education systems, and data from a range of surveys conducted by the National Center for Education Statistics, such as the Baccalaureate and Beyond, Schools and Staffing, and the 1996 Beginning Postsecondary Student surveys. No comments or additional data were received related to the estimates or discussions included in the NPRM. Elsewhere in this SUPPLEMENTARY INFORMATION section we identify and explain burdens specifically associated with information collection requirements. See the heading *Paperwork Reduction Act of 1995.* Accounting Statement As required by OMB Circular A-4 (available at *http://www.Whitehouse.gov/omb/Circulars/a004/a-4.pdf* ), in Table 2 below, we have prepared an accounting statement showing the classification of the expenditures associated with the provisions of these regulations. This table provides our best estimate of the changes in Federal student aid payments as a result of these regulations. Expenditures are classified as transfers to postsecondary students. Table 2.—Accounting Statement: Classification of Estimated Expenditures [In millions] Category Transfers Annualized Monetized Transfers $17. From Whom To Whom? Federal Government To Postsecondary Students. Waiver of Delayed Effective Date and Congressional Review Act The Administrative Procedure Act requires that a substantive rule be published at least 30 days before its effective date, except as otherwise provided for good cause (5 U.S.C. 553(d)(3)). The Secretary has determined that a delayed effective date for these final regulations is unnecessary and contrary to the public interest, and that good cause exists to waive the requirement for a delayed effective date. Pursuant to section 420O of the HEA, Congress directed the Secretary to make TEACH Grants available as of July 1, 2008. To fulfill the intent of Congress that TEACH Grants be available to eligible students beginning on July 1, 2008, the Secretary makes these regulations effective as of the date of publication to enable TEACH Grant-eligible institutions to prepare and forward student financial aid packages as early as possible following the availability of funds for this program. We note that delaying the effective date of the regulations also would prevent a significant number of otherwise eligible students enrolled during the 2008 summer term from being able to receive a TEACH Grant. These regulations have been determined to be major for purposes of the Congressional Review Act
(CRA)(5 U.S.C. 801, *et seq.* ). However, for the reasons outlined in the preceding paragraph, the Department has determined that, pursuant to section 808(2) of the CRA, the delay in the effective date generally required for congressional review is contrary to the public interest and waived for good cause. Regulatory Flexibility Act Certification The Secretary certifies that these final regulations will not have a significant economic impact on a substantial number of small entities. These final regulations will affect institutions of higher education and individual students and loan borrowers. The U.S. Small Business Administration Size Standards define institutions as “small entities” if they are for-profit or nonprofit institutions with total annual revenue below $5,000,000 or if they are institutions controlled by governmental entities with populations below 50,000. Individuals are also not defined as “small entities” under the Regulatory Flexibility Act. As noted in the NPRM, a significant percentage of the schools participating in the Federal student loan programs meet the definition of “small entities.” In general, the Department believes benefits under these final regulations outweigh the relatively small additional burdens, particularly given that institutions finding the program's requirements onerous have the option of not participating. This belief is strongly supported by the fact that the negotiated rulemaking committee reached consensus on the proposed regulations. In the NPRM, the Secretary invited comments from small institutions as to whether they believe the proposed regulations would have a significant economic impact on them and, if so, requested evidence to support that belief. No comments or data were received. Paperwork Reduction Act of 1995 Sections 668.165, 686.4, 686.10, 686.11, 686.12, 686.20, 686.31, 686.32, 686.34, 686.36, 686.37, 686.38, 686.40, 686.41, 686.42 and 686.43 contain information collection requirements. Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Department of Education has submitted a copy of these sections to OMB for its review. Section 668.165—Notices and Authorizations The final regulations modify the Student Assistance General Provisions by including the Teacher Education Assistance for College and Higher Education (TEACH) Grant program in subpart K of the Student Assistance General Provisions regulations in 34 CFR part 668 (Cash management). Before an institution disburses Title IV, HEA program funds for any award year, the institution must notify a student of the amounts of funds that the student can expect to receive and how and when those funds will be disbursed. The institution is required to notify, in writing, the recipient of a TEACH Grant of the student's right to cancel or reduce the amount of the TEACH Grant disbursement, as well as the procedures by which the student must notify the institution. We estimate that the requirements in § 668.165 will increase burden for institutions and individuals by 14,090 hours annually in OMB Control Number 1845-0038. Section 686.4—Institutional Participation The final regulations require an institution that ceases to participate in the TEACH Grant program or becomes ineligible to participate during an award year, to report to the Department within 45 days after the effective date of the loss of eligibility. The contents of the report must include the name of each TEACH Grant-eligible student; the amount of the TEACH Grant funds paid to each student for that award year; and the amount of TEACH Grant funds due each eligible student through the end of the payment period. Also, the institution must provide an accounting of all TEACH Grant expenditures for that award year to the date of termination. We estimate that the requirements in § 686.4 will increase burden for institutions by 81 hours in OMB Control Number 1845-XXXX. Section 686.10—Application Under the final regulations, a potential TEACH grant recipient must complete and submit an approved and signed application form, as designated by the Secretary prior to the published deadline. Currently, the FAFSA is the designated application form. All undergraduate and most graduate student applicants for Title IV, HEA program assistance must complete and submit the FAFSA. Because the TEACH Grant Program is not a need-based program, some applicants will be required to complete a FAFSA that otherwise may not have been required to complete a FAFSA, thereby generating additional burden. The estimated burden associated with these application requirements is contained in OMB Control Number 1845-0001. We estimate that the burden will increase for individuals by 1,000 hours. Section 686.11—Eligibility To Receive a Grant The final regulations establish that in addition to meeting the student eligibility requirements, in order to receive a TEACH Grant the applicant must submit the designated application, sign a TEACH Grant ATS, and enroll in a TEACH Grant-eligible institution. Grant recipients must maintain a GPA of 3.25 on a 4.0 scale during each payment period, score above the 75th percentile on at least one of a battery of nationally-normed standardized tests, or qualify as a current or retired teacher obtaining a master's degree in a TEACH Grant-eligible program. There are several categories of grant recipients who must maintain the cumulative GPA of 3.25 each payment period. Those categories are: I. During the initial payment period: The final cumulative high school GPA for a first term undergraduate recipient— The TEACH Grant-eligible institution must document the student's secondary school GPA from an LEA, an SEA or other State agency; a public or private high school; or in the case of a home schooled student, obtain documentation of the secondary school GPA from the parent or guardian. The undergraduate cumulative GPA for either the post-baccalaureate or graduate student recipient— The TEACH Grant-eligible institution must document the student's undergraduate school cumulative GPA. The transfer student cumulative GPA as determined by the current TEACH Grant-eligible institution— The TEACH Grant-eligible institution must document the student's cumulative GPA based upon the method established by the institution to accept coursework completed from any prior postsecondary institution that it accepts. II. Subsequent payment periods: The cumulative GPA based on courses taken at the TEACH Grant-eligible institution through the most recently completed payment period, or III. Alternatives to the cumulative GPA: Scoring above the 75th percentile of at least one of the battery of tests from a nationally-normed standardized test, or The TEACH grant recipient is currently a teacher or retiree who is applying for a TEACH Grant to obtain a master's degree in a TEACH Grant-eligible program. We estimate that the paperwork burden associated with § 686.11 will increase for individuals and institutions by 82,675 hours in OMB Control Number 1845-XXXX. Section 686.12—Agreement To Serve Under the final regulations, a student must sign an ATS before receiving a TEACH Grant. The ATS provides that a student must fulfill a service obligation for each program for which the student received a TEACH Grant. The ATS explains the terms of the service obligation and provides that if a TEACH Grant recipient does not fulfill the service obligation or otherwise does not meet the requirements of 34 CFR part 686, any TEACH Grant the student received will convert to a Federal Direct Unsubsidized Loan that the student must repay in full to the Secretary, with interest. The burden associated with the ATS will be reported under OMB Control Number 1845-0083. OMB granted emergency approval of the ATS on May 15, 2008. The ATS will be submitted for public comment under the regular clearance process. Section 686.20—Submission Process and Deadline for a SAR or ISIR The final regulations require that participating institutions who disburse TEACH Grant funds to students must electronically transmit data as required by the Secretary. The burden associated with the collection and transmission of the required data is assessed and attributed in 34 CFR 686.37. Therefore, there is no burden associated with this section of the final regulations. Section 686.31—Determination of Eligibility for Payment and Cancellation of a TEACH Grant Section 686.31 of the final regulations added notification requirements for an institution awarding TEACH Grants that are consistent with the changes made in 34 CFR 668.165—(Notices and authorizations). The estimated burden associated with these notification requirements is contained in OMB Control Number 1845-0038, as reported under the *Section 668.165—Notices and authorizations* heading. As a result, there is no additional burden associated with § 686.31. Section 686.32—Counseling requirements The final regulations require an institution to ensure that initial, subsequent, and exit counseling are provided to each TEACH Grant recipient. The initial counseling is required prior to making the first disbursement of the grant. Initial counseling must include, but is not limited to, explaining the terms and conditions of the TEACH Grant ATS; providing information on how to identify low-income schools and documented high need fields; informing grant recipients of the possibility of a suspension of the eight-year period for completion of the service obligation; and the conditions under which a suspension may be granted. Subsequent counseling, which must occur prior to the first disbursement of a TEACH Grant in a subsequent award year, must include, but is not limited to reviewing the terms and conditions of the ATS; and emphasizing that if the student fails or refuses to complete the service obligation, the TEACH Grant will convert into a Federal Direct Unsubsidized Loan. Under the final regulations, institutions must ensure that exit counseling is provided to each TEACH Grant recipient before the recipient ceases to attend the institution. Written exit counseling materials may be provided within 30 days after completing a study abroad program or after a student withdraws without notifying the institution. We estimate that the paperwork burden associated with § 686.32 will increase for individuals and institutions by 50,828 hours in OMB Control Number 1845-XXXX. Section 686.34—Liability for and Recovery of TEACH Grant Overpayments The final regulations require the institution to promptly provide written notification to a student requesting repayment of any overpayment that the institution does not have responsibility to repay. These final regulations also require that the institution refer the student to the Department if the student does not take positive action to promptly resolve the TEACH Grant overpayment. We estimate that § 686.34 will increase burden for individuals and institutions by 855 hours in OMB Control Number 1845-XXXX. Section 686.36—Fiscal Control and Accounting Procedures The final regulations provide that participating institutions must account for the receipt and expenditure of Title IV, HEA program funds in accordance with generally accepted accounting principles. Further, participating institutions must disburse TEACH Grant funds consistent with the cash management regulations in 34 CFR 668.164. Participating institutions must comply with these requirements for the other Title IV, HEA programs and, therefore, there is no additional burden placed upon institutions participating in the TEACH Grant program. Section 686.37—Institutional Reporting Requirements Under the final regulations, a participating institution must provide the Secretary information about each TEACH Grant recipient that includes, but is not limited to: The student's eligibility for a TEACH Grant, the amounts of the TEACH Grant disbursed, the anticipated and actual disbursement dates, and the disbursement amounts of the TEACH Grants provided. The initial disbursement information must be submitted to the Department no later than 30 days following the initial disbursement of TEACH Grant funds. Subsequent disbursements, cancellations, and adjustments must be submitted to the Department within 30 days of the transaction. Participating institutions must comply with these requirements for other Title IV, HEA programs and, therefore, there is no additional burden placed upon institutions participating in the TEACH Grant program. Section 686.38—Maintenance and Retention of Records The final regulations require participating institutions to maintain the fiscal records for the TEACH Grant program for three years after the end of the award year for which the TEACH Grant was awarded. Participating institutions must comply with these requirements for the other Title IV, HEA programs and, therefore, there is no additional burden placed upon institutions participating in the TEACH Grant program. Section 686.40—Documenting the Service Obligation Except as provided in §§ 686.40 and 686.42, the final regulations require a student to confirm to the Secretary in writing, within 120 days of completing or otherwise ceasing enrollment in a program for which the student received a TEACH Grant, that he or she is employed as a full-time teacher in accordance with the TEACH Grant ATS, or is not yet employed, but intends to meet the terms and conditions of the ATS. The burden associated with this notification requirement will be covered under a new collection. A separate 60-day information collection notice will be published in the **Federal Register** to solicit comment on a notification form once it is developed. Section 686.41—Periods of Suspension The final regulations provide that a TEACH Grant recipient may request a suspension of the 8-year period for completion of the TEACH Grant service obligation based on one of the conditions described in § 686.41. The grant recipient must apply for a suspension on a form approved by the Secretary. The burden associated with this notification requirement will be covered under a new collection. A separate 60-day information collection notice will be published in the **Federal Register** to solicit comment on a suspension request form once it is developed. Section 686.42—Discharge of Agreement To Serve Under the final regulations, a TEACH Grant recipient's service obligation will be discharged if the recipient dies, or if the recipient becomes totally and permanently disabled and meets the eligibility requirements for a total and permanent disability discharge in 34 CFR 685.213. The burden associated with the discharge of a TEACH Grant service obligation based on the grant recipient's death is covered under OMB Control Number 1845-0021 as the TEACH Grant will be recognized as an Federal Direct Unsubsidized Loan for the purposes of the loan discharge for death, consistent with § 685.212. We estimate that the burden will increase for individuals and loan holders by 23 hours in OMB Control Number 1845-0021. The burden associated with the discharge of a TEACH Grant service obligation based on the grant recipient's total and permanent disability is covered under OMB Control Number 1845-0065. Section 686.43—Obligation To Repay the Grant The final regulations specify the conditions under which a TEACH Grant will be converted to a Federal Direct Unsubsidized Loan that the grant recipient must repay. One of these conditions is when a TEACH Grant recipient who has completed a program for which he or she received a TEACH Grant does not notify the Secretary at least annually of his or her intent to satisfy the TEACH Grant service obligation. The burden associated with this notification requirement will be covered under the same new collection associated with the notification requirement in § 686.40. Consistent with the discussion in this *Paperwork Reduction Act of 1995* section, the following chart describes the sections of the final regulations involving information collections, the information being collected, and the collections the Department will submit to OMB for approval and public comment under the Paperwork Reduction Act of 1995. Regulatory section Information collection Collection 668.165 Before an institution disburses Title IV, HEA program funds for any award year, the institution must notify a student of the amounts of funds that the student can expect to receive and how and when those funds will be disbursed. The institution is required to notify in writing, the recipient of a TEACH Grant of the student's right to cancel or reduce the amount of the TEACH Grant disbursement, as well as the procedures by which the student must notify the institution OMB 1845-0038. This will be a revision of an existing collection which was submitted to OMB with these final regulations. 686.4 Institutions that cease participation in the TEACH Grant program or otherwise lose eligibility are required to report program data to the Department within 45 days of the change in eligibility OMB 1845-XXXX. This will be a new collection. 686.11 A TEACH Grant recipient must
(a)score above the 75th percentile on a standardized nationally-normed test,
(b)maintain a 3.25 cumulative GPA, or
(c)currently be a teacher or retiree obtaining a master's degree in an eligible TEACH Grant program OMB 1845-XXXX. This will be a new collection. 686.12 Before receiving a TEACH Grant, a student must sign an ATS. The ATS provides that student must fulfill a service obligation for each program for which the student received a TEACH Grant. The ATS explains the terms of the service obligation and provides that if a TEACH Grant recipient does not fulfill the service obligation or otherwise does not meet the requirements of 34 CFR part 686, any TEACH Grant the student received will be converted to a Federal Direct Unsubsidized Loan that the student must repay in full to the Secretary, with interest OMB 1845-0083. OMB granted emergency approval of the ATS on May 15, 2008. The ATS will be submitted for public comment under the regular clearance process in the near future. 686.31 An institution participating in the TEACH Grant program must, before disbursing Title IV, HEA program funds, notify the recipient in accordance with 34 CFR 668.165 The estimated burden associated with this section of the final regulations is recognized in OMB 1845-0038 Cash Management. 686.32 A participating institution must ensure that initial, subsequent, and exit counseling are provided for all TEACH Grant recipients OMB 1845-XXXX. This will be a new collection. 686.34 A participating institution must provide written notice to any TEACH Grant recipient when he or she owes a TEACH Grant overpayment. Moreover, if the recipient does not take positive action to resolve the overpayment within the deadline, the institution must report the overpayment to the Department OMB 1845-XXXX. This will be a new collection. 686.40 Except as provided in §§ 686.40 and 686.42, within 120-days of completing or otherwise ceasing enrollment in a program for which the student received a TEACH Grant, the student must confirm to the Secretary in writing that he or she is employed as a full-time teacher in accordance with the TEACH Grant ATS, or is not yet employed, but intends to meet the terms and conditions of the ATS OMB 1845-XXXX. This will be a new collection. A separate 60-day information collection notice will be published in the Federal Register to solicit comment on this form. The form will be put into the paperwork clearance process by October 2008. 686.41 A TEACH Grant recipient may request a suspension of the 8-year period for completion of the TEACH Grant service obligation based on one of the conditions described in § 686.41. The grant recipient must apply for a suspension on a form approved by the Secretary OMB 1845-XXXX. This will be a new collection. A separate 60-day information collection notice will be published in the Federal Register to solicit comment on this form. The form will be put into the paperwork clearance process by October 2008. 686.42 A TEACH Grant recipient's service obligation will be discharged if the recipient dies, or if the recipient becomes totally and permanently disabled and meets the eligibility requirements for a total and permanent disability discharge in 34 CFR 685.213 Discharge of a TEACH Grant service obligation based on the grant recipient's death is covered under OMB 1845-0021. Discharge of a TEACH Grant service obligation based on the grant recipient's total and permanent disability is covered under OMB 1845-0065. 686.43 One of the conditions under which a TEACH Grant will be converted to a Federal Direct Unsubsidized Loan is if a grant recipient who has completed a program for which he or she received a TEACH Grant does not notify the Secretary at least annually of his or her intent to satisfy the TEACH Grant service obligation This will be covered by the same new collection as described for § 686.40. Assessment of Educational Impact In the NPRM, and in accordance with section 411 of the General Education Provisions Act, 20 U.S.C. 1221e-4, we requested comments on whether the proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available. Based on the responses to the NPRM and on our review, we have determined that these final regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available. Electronic Access to This Document You may view this document, as well as all other Department of Education documents published in the **Federal Register** , in text or Adobe Portable Document Format
(PDF)on the Internet at the following site: *http://www.ed.gov/news/fedregister* . To use PDF you must have Adobe Acrobat Reader, which is available free at this site. If you have questions about using PDF, call the U.S. Government Printing Office (GPO), toll free, at 1-888-293-6498; or in the Washington, DC, area at
(202)512-1530. Note: The official version of this document is the document published in the **Federal Register** . Free Internet access to the official edition of the **Federal Register** and the Code of Federal Regulations is available on GPO Access at: *http://www.gopaccess.gov/nara/index.html* . (Catalog of Federal Domestic Assistance Numbers: 84.007 Federal Supplemental Educational Opportunity Grant Program; 84.032 Federal Family Education Loan Program; 84.033 Federal Work Study; 84.038 Federal Perkins Loan Program; 84.063 Federal Pell Grant Program; 84.069 Leveraging Education Assistance Partnerships; 84.268 William D. Ford Federal Direct Loan Program; 84.379 TEACH Grant program) List of Subjects 34 CFR Part 668 Administrative practice and procedure, Colleges and universities, Consumer protection, Education, Grant programs—education, Loan programs—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Parts 673, 675, and 676 Administrative practice and procedure, Colleges and universities, Consumer protection, Education, Employment, Grant programs—education, Loan programs—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Parts 674, 682, and 685 Administrative practice and procedure, Colleges and universities, Education, Loan programs—education, Reporting and recordkeeping requirements, Student aid, Vocational education. 34 CFR Part 686 Administrative practice and procedure, Colleges and universities, Education, Elementary and secondary education, Grant programs—education, Reporting and recordkeeping requirements, Student aid. 34 CFR Part 690 Grant programs—education, Reporting and recordkeeping requirements, Student aid. Dated: June 11, 2008. Margaret Spellings, Secretary of Education. For the reasons discussed in the preamble, the Secretary amends 34 CFR chapter VI as follows: PART 668—STUDENT ASSISTANCE GENERAL PROVISIONS 1. The authority citation for part 668 is revised to read as follows: Authority: 20 U.S.C. 1001, 1002, 1003, 1070g, 1085, 1088, 1091, 1092, 1094, 1099c, and 1099c-1, unless otherwise noted. 2. Section 668.1 is amended by: A. In paragraph (c)(10), removing the word “and” that appears after the punctuation “;”. B. In paragraph (c)(11), removing the punctuation “.” at the end of the paragraph and adding, in its place, the words “; and”. C. Adding a new paragraph (c)(12) to read as follows: § 668.1 Scope.
(c)* * *
(12)The Teacher Education Assistance for College and Higher Education (TEACH) Grant program. 3. Section 668.2 is amended by: A. In paragraph (b), adding, in alphabetical order, the definitions of “Teacher Education Assistance for College and Higher Education (TEACH) Grant program” and “TEACH Grant”. B. In paragraph (b), amending paragraph
(2)of the definition of “Undergraduate student” by: i. Removing the word “and” following “(ACG) Program”. ii. Adding “, and TEACH Grant program” after “(SMART) Grant Program”. iii. Adding “and 686.3(a)” after “690.6(c)(5)”. C. In paragraph (b), revising the authority citation for the definition of undergraduate student. The additions and revision read as follows: § 668.2 General definitions.
(b)* * * *Teacher Education Assistance for College and Higher Education (TEACH) Grant Program:* A grant program authorized by title IV of the HEA under which grants are awarded by an institution to students who are completing, or intend to complete, coursework to begin a career in teaching and who agree to serve for not less than four years as a full-time, highly-qualified teacher in a high-need field in a low-income school. If the recipient of a TEACH Grant does not complete four years of qualified teaching service within eight years of completing the course of study for which the TEACH Grant was received or otherwise fails to meet the requirements of 34 CFR 686.12, the amount of the TEACH Grant converts into a Federal Direct Unsubsidized Loan. (Authority: 20 U.S.C. 1070g) *TEACH Grant:* A grant authorized under title IV-A-9 of the HEA and awarded to students in exchange for prospective teaching service. (Authority: 20 U.S.C. 1070g) *Undergraduate student:* (Authority: 20 U.S.C. 1070g) § 668.4 [Amended] 4. Section 668.4(b)(1) is amended by removing the word “and” that appears after “FSEOG,” and adding “, and TEACH Grant” after “Perkins Loan”. 5. Section 668.8 is amended by: A. In the heading of paragraph (h), adding “TEACH Grant,” after “National SMART Grant,”. B. In paragraph (h)(1), removing the word “and” that appears after the punctuation “;”. C. In paragraph (h)(2), removing the punctuation “.” at the end of the paragraph and adding, in its place, the words “; and”. D. Adding a new paragraph (h)(3). E. Revising the authority citation. The addition and revision read as follows: § 668.8 Eligible programs.
(h)* * *
(3)An educational program qualifies as an eligible program for purposes of the TEACH Grant program if it satisfies the requirements of the definition of TEACH Grant-eligible program in 34 CFR 686.2(d). (Authority: 20 U.S.C. 1070a, 1070a-1, 1070b, 1070c-1, 1070c-2, 1070g, 1085, 1087aa-1087hh, 1088, 1091; 42 U.S.C. 2753) § 668.14 [Amended] 6. Section 668.14(f) is amended by: A. In paragraph (f)(1), removing the words “paragraphs
(h)and (i)” and adding, in their place, the words “paragraphs
(g)and (h)”. B. In paragraph (f)(3), removing the words “paragraph (g)” and adding, in their place, the words “paragraph (f)”. 7. Section 668.19 is amended by: A. In paragraph (a)(3), removing the word “or” the first two times this word appears after the acronym “ACG,” and in each instance, adding the words “, or a TEACH Grant” after “National SMART Grant”. B. In paragraph (a)(3), removing the word “or” the third time this word appears after the acronym “ACG,” and adding the words “, or TEACH Grant” after the third appearance of “National SMART Grant”. C. Revising the authority citation to read as follows: § 668.19 Financial aid history. (Authority: 20 U.S.C. 1070g, 1091, 1094) 8. Section 668.21 is amended by: A. In paragraph (a)(1), adding the words “TEACH Grant,” immediately after the word “FSEOG,”. B. Revising the authority citation to read as follows: § 668.21 Treatment of title IV grant and loan funds if the recipient does not begin attendance at the institution. (Authority: 20 U.S.C. 1070g, 1094) 9. Section 668.22 is amended by: A. In paragraph (a)(2), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. B. In paragraph (i)(2), adding a new paragraph (i)(2)(v). C. Revising the authority citation. The addition and revision read as follows: § 668.22 Treatment of title IV funds when a student withdraws.
(i)* * *
(2)* * *
(v)TEACH Grants. (Authority: 20 U.S.C. 1070g, 1091b) 10. Section 668.24 is amended by: A. In the introductory text of paragraph (e)(1), removing the word “or” which appears after “ACG”. B. In the introductory text of paragraph (e)(1), adding the words “, or TEACH Grant” immediately in front of the word “Program”. C. Revising the authority citation to read as follows: § 668.24 Record retention and examinations. (Authority: 20 U.S.C. 1070a, 1070a-1, 1070b, 1070g, 1078, 1078-1, 1078-2, 1078-3, 1082, 1087, 1087a, *et seq.* , 1087cc, 1087hh, 1088, 1094, 1099c, 1141, 1232f; 42 U.S.C. 2753; section 4 of Pub. L. 95-452, 92 Stat. 1101-1109) 11. Section 668.26 is amended by: A. In paragraph (d)(1), removing the word “or” the first time it appears and adding the words “, or TEACH Grant” immediately after the words “National SMART Grant”. B. In paragraph (e)(1), removing the word “and” the first time it appears and adding the words “, and TEACH Grant” immediately after the words “National SMART Grant”. C. Revising the authority citation to read as follows: § 668.26 End of an institution's participation in the title IV, HEA programs. (Authority: 20 U.S.C. 1070g, 1094, 1099a-3) 12. Section 668.32 is amended by: A. In paragraph (c)(2)(ii), removing the word “and”. B. In paragraph (c)(3), adding the word “and” after the punctuation “;”. C. Adding a new paragraph (c)(4). D. Adding a new paragraph (k)(9). E. Revising the authority citation. The additions and revision read as follows: § 668.32 Student eligibility—general.
(c)* * *
(4)For the purposes of the TEACH Grant program—
(i)For an undergraduate student other than a student enrolled in a post-baccalaureate program, has not completed the requirements for a first baccalaureate degree; or
(ii)For the purposes of a student in a first post-baccalaureate program, has not completed the requirements for a post-baccalaureate program as described in 34 CFR 686.2(d);
(k)* * *
(9)34 CFR 686.11 for the TEACH Grant program; and (Authority: 20 U.S.C. 1070g, 1091; 28 U.S.C. 3201(e)) 13. Section 668.35 is amended by: A. Redesignating paragraph (g)(4) as paragraph (g)(5). B. Adding a new paragraph (g)(4). C. Revising the authority citation. The addition and revision read as follows: § 668.35 Student debts under the HEA and to the U.S.
(g)* * *
(4)A student is not liable for a TEACH Grant overpayment received in an award year if—
(i)The institution can eliminate that overpayment by adjusting subsequent title IV, HEA program (other than Federal Pell Grant, ACG, National SMART Grant, or TEACH Grant) payments in that same award year; or
(ii)The institution cannot eliminate the overpayment under paragraph (g)(4)(i) of this section but can eliminate that overpayment by adjusting subsequent TEACH Grant payments in that same award year. (Authority: 20 U.S.C. 1070g, 1091; 11 U.S.C. 523, 525) 14. Section 668.138 is amended by: A. In paragraph (a), removing the word “or” the first time it appears. B. In paragraph (a), adding the words “, or TEACH Grant” immediately after the words “National SMART Grant”. C. Revising the authority citation to read as follows: § 668.138 Liability. (Authority: 20 U.S.C. 1070g, 1091, 1094) 15. Section 668.139 is amended by: A. In paragraph (c), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. B. Revising the authority citation to read as follows: § 668.139 Recovery of payments and loan disbursements to ineligible students. (Authority: 20 U.S.C. 1070g, 1091, 1094) 16. Section 668.161 is amended by: A. In paragraph (a)(3)(i), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. B. Revising the authority citation to read as follows: § 668.161 Scope and purpose. (Authority: 20 U.S.C. 1070g, 1094) 17. Section 668.162 is amended by: A. In paragraph (d)(1), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. B. Revising the authority citation to read as follows: § 668.162 Requesting funds. (Authority: 20 U.S.C. 1070g, 1094) 18. Section 668.163 is amended by: A. In paragraph (c)(2), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. B. In the introductory text of paragraph (c)(3), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. C. In paragraph (c)(4), adding the words “TEACH Grant,” immediately after the words “National SMART Grant,”. D. Revising the authority citation to read as follows: § 668.163 Maintaining and accounting for funds. (Authority: 20 U.S.C. 1070g, 1091, 1094) 19. Section 668.164 is amended by: A. In paragraph (g)(1)(ii), by removing the word “and” after “FSEOG,” and adding the words “, and TEACH Grant,” immediately after the words “Federal Perkins Loan,”. B. In paragraph (g)(2)(ii)(A), removing the word “or” that appears after the punctuation “;”. C. In paragraph (g)(2)(ii)(B), removing the “.” after the words “to the student” and adding in its place “; or”. D. Adding a new paragraph (g)(2)(ii)(C). E. Revising the authority citation. The addition and revision read as follows: § 668.164 Disbursing funds.
(g)* * *
(2)* * *
(ii)* * *
(C)For an award under the TEACH Grant program, the institution originates the award to the student. (Authority: 20 U.S.C. 1070g, 1094) § 668.165 [Amended] 20. Section 668.165 is amended by: A. In the introductory text of paragraph (a)(2), removing the word “or” the first time it appears and adding the words “, or TEACH Grant” after “Federal Perkins Loan”. B. In paragraph (a)(2)(ii), removing the word “or” the third time it appears and adding the punctuation “,” in its place, adding the words “, TEACH Grant, or TEACH Grant disbursement” immediately after the words “loan disbursement”, and adding the words “, or the TEACH Grant proceeds returned to the Secretary” after the words “and have the loan proceeds returned to the holder of that loan”. C. In paragraph (a)(2)(iii), removing the word “or” before the words “loan disbursement” and adding, in its place the punctuation “,” and by adding the words “, TEACH Grant, or TEACH Grant disbursement” immediately after the words “loan disbursement”. D. In paragraph (a)(4)(i) removing the word “or” before the words “loan disbursement” and adding, in its place the punctuation “,” and adding the words “, TEACH Grant, or TEACH Grant disbursement” after the words “loan disbursement”. E. In the introductory text of paragraph (a)(4)(ii), adding the words “or TEACH Grant” before the word “proceeds”, after the words “cancel the loan”, and before the words “cancellation request”. F. In paragraph (a)(4)(ii)(A), adding the words “or TEACH Grant” after the words “or a portion of a loan”. G. In paragraph (a)(4)(iii), adding the words “or TEACH Grant” before the word “proceeds” and after the words “cancel the loan”. H. In paragraph (a)(6)(i), adding the words “. The process under which the TEACH Grant program is administered is considered to be an affirmative confirmation process” after the words “loan funds”. I. In paragraph (a)(6)(ii), adding the words “or TEACH Grant” before the word “proceeds”. 21. Section 668.183 is amended by: A. In paragraph (b)(1), removing the word “Your” the first time it appears and adding, in its place, the words “Except as provided in paragraph (b)(3) of this section, your” at the beginning of the first sentence. B. Adding a new paragraph (b)(3). C. Revising the authority citation. The addition and revision read as follows: § 668.183 Calculating and applying cohort default rates.
(b)* * *
(3)A TEACH Grant that has been converted to a Federal Direct Unsubsidized Loan is not considered for the purpose of calculating and applying cohort default rates. (Authority: 20 U.S.C. 1070g, 1082, 1085, 1094, 1099c) PART 673—GENERAL PROVISIONS FOR THE FEDERAL PERKINS LOAN PROGRAM, FEDERAL WORK-STUDY PROGRAM, AND FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM 22. The authority citation for part 673 is revised to read as follows: Authority: 20 U.S.C. 421-429, 1070b-1070b-3, 1070g, 1087aa-1087ii; 42 U.S.C. 2751-2756b, unless otherwise noted. 23. Section 673.5 is amended by: A. In paragraph (c)(2)(iii), adding the words “TEACH Grants,” immediately after the words “the amounts of any” and by removing the word “loan” which appears after the words “if the sum of the”. B. Revising the authority citation to read as follows: § 673.5 Overaward. (Authority: 20 U.S.C. 1070b-1, 1070g, 1087dd, 1087hh; 42 U.S.C. 2753) PART 674—FEDERAL PERKINS LOAN PROGRAM 24. The authority citation for part 674 is revised to read as follows: Authority: 20 U.S.C. 421-429, 1070g, 1087aa-1087hh, unless otherwise noted. 25. Section 674.2 is amended by: A. In paragraph (a), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. Revising the authority citation to read as follows: § 674.2 Definitions. (Authority: 20 U.S.C. 1070g, 1094) 26. Section 674.61 is amended by: A. In paragraph (b)(2)(ii), adding the words “a new TEACH Grant or” immediately after the words “does not receive”. B. Revising the authority citation to read as follows: § 674.61 Discharge for death or disability. (Authority: 20 U.S.C. 425, 1070g, 1087dd; sec. 130(g)(2) of the Education Amendments of 1976, Pub. L. 94-482) PART 675—FEDERAL WORK-STUDY PROGRAMS 27. The authority citation for part 675 is revised to read as follows: Authority: 20 U.S.C. 1070g; 42 U.S.C. 2751-2756b; unless otherwise noted. 28. Section 675.2 is amended by: A. In paragraph (a), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. Revising the authority citation to read as follows: § 675.2 Definitions. (Authority: 20 U.S.C. 1070g, 1087aa-1087ii) PART 676—FEDERAL SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANT PROGRAM 29. The authority citation for part 676 continues to read as follows: Authority: 20 U.S.C. 1070b-1070b-3, 1070g, unless otherwise noted. 30. Section 676.2 is amended by: A. In paragraph (a), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. Revising the authority citation to read as follows: § 676.2 Definitions. (Authority: 20 U.S.C. 1070g, 1087aa-1087ii) PART 682—FEDERAL FAMILY EDUCATION LOAN
(FFEL)PROGRAM 31. The authority citation for part 682 is revised to read as follows: Authority: 20 U.S.C 1070g, 1071 to 1087-2, unless otherwise noted. 32. Section 682.200 is amended by: A. In paragraph (a)(1), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. In paragraph (b), in paragraph
(2)of the definition of “Estimated financial assistance,” adding the words “TEACH Grant,” after the words “the amounts of any” and removing the word “loan” immediately following the words “if the sum of the”. 33. Section 682.204 is amended by: A. In paragraph (c), adding before the “.” the following words “, except that any TEACH Grants that have been converted to Federal Direct Unsubsidized Loans are not counted against annual or any aggregate loan limits under this section.” B. Adding an authority citation to read as follows: § 682.204 Maximum loan amounts. (Authority: 20 U.S.C. 1070g, 1078, 1078-2, 1078-3, 1078-8) § 682.215 [Amended] 34. Section 682.215(c)(7)(ii) is amended by removing the citation “(19 U.S.C. 2654)” and adding in its place, the citation “(29 U.S.C. 2601, *et seq.* )”. 35. Section 682.402 is amended by: A. In paragraph (c)(1)(ii)(B), adding the words “a new TEACH Grant or” immediately after the words “does not receive”. B. Revising the authority citation to read as follows: § 682.402 Death, disability, closed school, false certification, unpaid refunds, and bankruptcy payments. (Authority: 20 U.S.C. 1070g, 1078, 1078-1, 1078-2, 1078-3, 1082, 1087) PART 685—WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM 36. The authority citation for part 685 is revised to read as follows: Authority: 20 U.S.C 1070g, 1087a, *et seq.* , unless otherwise noted. 37. Section 685.102 is amended by: A. In paragraph (a)(1), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. In paragraph (b), in paragraph (2)(i) of the definition of “Estimated financial assistance,” adding the words “TEACH Grant,” after the words “the amounts of any” and removing the word “loan” immediately following the words “if the sum of the”. C. Revising the authority citation to read as follows: § 685.102 Definitions. (Authority: 20 U.S.C. 1070g, 1087a, *et seq.* ) 38. Section 685.203 is amended by: A. In paragraph (b), adding before the “.” the words “, except that any TEACH Grants that have been converted to Federal Direct Unsubsidized Loans are not counted against annual or any aggregate loan limits under this section”. B. Revising the authority citation to read as follows: § 685.203 Loan limits. (Authority: 20 U.S.C. 1070g, 1087a, *et seq.* ) 39. Section 685.213 is amended by: A. In paragraph (c)(2), adding the words “a new TEACH Grant or” immediately after the words “does not receive”. B. Revising the authority citation to read as follows: § 685.213 Total and permanent disability discharge. (Authority: 20 U.S.C. 1070g, 1087a, *et seq.* ) § 685.217 [Amended] 40. Section 685.217(c)(7)(ii) is amended by removing the citation “(19 U.S.C. 2654)” and adding, in its place, the citation “(29 U.S.C. 2601, *et seq.* )”. 41. A new part 686 is added to read as follows: Subpart A—Scope, Purpose and General Definitions Sec. 686.1 Scope and purpose. 686.2 Definitions. 686.3 Duration of student eligibility. 686.4 Institutional participation. 686.5 Enrollment status for students taking regular and correspondence courses. 686.6 Payment from more than one institution. Subpart B—Application Procedures 686.10 Application. 686.11 Eligibility to receive a grant. 686.12 Agreement to serve. Subpart C—Determination of Awards 686.20 Submission process and deadline for a SAR or ISIR. 686.21 Calculation of a grant. 686.22 Calculation of a grant for a payment period. 686.23 Calculation of a grant for a payment period that occurs in two award years. 686.24 Transfer student: attendance at more than one institution during an award year. 686.25 Correspondence study. Subpart D—Administration of Grant Payments 686.30 Scope. 686.31 Determination of eligibility for payment and cancellation of a TEACH Grant. 686.32 Counseling requirements. 686.33 Frequency of payment. 686.34 Liability for and recovery of TEACH Grant overpayments. 686.35 Recalculation of TEACH Grant award amounts. 686.36 Fiscal control and fund accounting procedures. 686.37 Institutional reporting requirements. 686.38 Maintenance and retention of records. Subpart E—Service and Repayment Obligations 686.40 Documenting the service obligation. 686.41 Periods of suspension. 686.42 Discharge of agreement to serve. 686.43 Obligation to repay the grant. Authority: 20 U.S.C. 1070g, *et seq.* , unless otherwise noted. Subpart A—Scope, Purpose, and General Definitions § 686.1 Scope and purpose. The TEACH Grant program awards grants to students who intend to teach, to help meet the cost of their postsecondary education. In exchange for the grant, the student must agree to serve as a full-time teacher in a high-need field, in a school serving low-income students for at least four academic years within eight years of completing the program of study for which the student received the grant. If the student does not satisfy the service obligation, the amounts of the TEACH Grants received are treated as a Federal Direct Unsubsidized Stafford Loan (Federal Direct Unsubsidized Loan) and must be repaid with interest. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.2 Definitions.
(a)Definitions for the following terms used in this part are in the regulations for Institutional Eligibility under the Higher Education Act of 1965, as amended,
(HEA)34 CFR part 600: Award year Clock hour Correspondence course Eligible institution Institution of higher education (institution) Regular student Secretary State Title IV, HEA program
(b)Definitions for the following terms used in this part are in subpart A of the Student Assistance General Provisions, 34 CFR part 668: Academic year Enrolled Expected family contribution
(EFC)Full-time student Graduate or professional student Half-time student HEA Payment period Three-quarter-time student Undergraduate student William D. Ford Federal Direct Loan (Direct Loan) Program
(c)Definitions for the following terms used in this part are in 34 CFR part 77: Local educational agency
(LEA)State educational agency
(d)Other terms used in this part are defined as follows: *Academic year or its equivalent for elementary and secondary schools (elementary or secondary academic year):*
(1)One complete school year, or two complete and consecutive half-years from different school years, excluding summer sessions, that generally fall within a 12-month period.
(2)If a school has a year-round program of instruction, the Secretary considers a minimum of nine consecutive months to be the equivalent of an academic year. *Agreement to serve (ATS):* An agreement under which the individual receiving a TEACH Grant commits to meet the service obligation described in § 686.12 and to comply with notification and other provisions of the agreement. *Annual award:* The maximum TEACH Grant amount a student would receive for enrolling as a full-time, three-quarter-time, half-time, or less-than-half-time student and remaining in that enrollment status for a year. *Bilingual education:* An educational program in which two languages are used to provide content matter instruction. *Elementary school:* A nonprofit institutional day or residential school, including a public elementary charter school, that provides elementary education, as determined under State law. *English language acquisition:* The process of acquiring English as a second language. *Full-time teacher:* A teacher who meets the standard used by a State in defining full-time employment as a teacher. For an individual teaching in more than one school, the determination of full-time is based on the combination of all qualifying employment. *High-need field:* Includes the following:
(1)Bilingual education and English language acquisition.
(2)Foreign language.
(3)Mathematics.
(4)Reading specialist.
(5)Science.
(6)Special education.
(7)Another field documented as high-need by the Federal Government, a State government or an LEA, and approved by the Secretary and listed in the Department's annual Teacher Shortage Area Nationwide Listing (Nationwide List) in accordance with 34 CFR 682.210(q). *Highly-qualified:* Has the meaning set forth in section 9101(23) of the Elementary and Secondary Education Act of 1965, as amended
(ESEA)or in section 602(10) of the Individuals With Disabilities Education Act. *Institutional Student Information Record (ISIR):* An electronic record that the Secretary transmits to an institution that includes an applicant's—
(1)Personal identification information;
(2)Application data used to calculate the applicant's EFC; and
(3)EFC. *Numeric equivalent:*
(1)If an otherwise eligible program measures academic performance using an alternative to standard numeric grading procedures, the institution must develop and apply an equivalency policy with a numeric scale for purposes of establishing TEACH Grant eligibility. The institution's equivalency policy must be in writing and available to students upon request and must include clear differentiations of student performance to support a determination that a student has performed at a level commensurate with at least a 3.25 GPA on a 4.0 scale in that program.
(2)A grading policy that includes only “satisfactory/unsatisfactory”, “pass/fail”, or other similar nonnumeric assessments qualifies as a numeric equivalent only if—
(i)The institution demonstrates that the “pass” or “satisfactory” standard has the numeric equivalent of at least a 3.25 GPA on a 4.0 scale awarded in that program, or that a student's performance for tests and assignments yielded a numeric equivalent of a 3.25 GPA on a 4.0 scale; and
(ii)For an eligible institution, the institution's equivalency policy is consistent with any other standards the institution may have developed for academic and other title IV, HEA program purposes, such as graduate school applications, scholarship eligibility, and insurance certifications, to the extent such standards distinguish among various levels of a student's academic performance. *Payment data:* An electronic record that is provided to the Secretary by an institution showing student disbursement information. *Post-baccalaureate program:* A program of instruction for individuals who have completed a baccalaureate degree, that—
(1)Does not lead to a graduate degree;
(2)Consists of courses required by a State in order for a student to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary school or secondary school in that State, except that it does not include any program of instruction offered by a TEACH Grant-eligible institution that offers a baccalaureate degree in education; and
(3)Is treated as an undergraduate program of study for the purposes of title IV of the HEA. *Retiree:* An individual who has decided to change his or her occupation for any reason and who has expertise, as determined by the institution, in a high-need field. *Scheduled Award:* The maximum amount of a TEACH Grant that a full-time student could receive for a year. *School serving low-income students (low-income school):* An elementary or secondary school that—
(1)Is in the school district of an LEA that is eligible for assistance pursuant to title I of the ESEA;
(2)Has been determined by the Secretary to be a school in which more than 30 percent of the school's total enrollment is made up of children who qualify for services provided under title I of the ESEA; and
(3)Is listed in the Department's Annual Directory of Designated Low-Income Schools for Teacher Cancellation Benefits. The Secretary considers all elementary and secondary schools operated by the Bureau of Indian Education
(BIE)in the Department of the Interior or operated on Indian reservations by Indian tribal groups under contract or grant with the BIE to qualify as schools serving low-income students. *Secondary school:* A nonprofit institutional day or residential school, including a public secondary charter school, that provides secondary education, as determined under State law, except that the term does not include any education beyond grade 12. *Student Aid Report (SAR):* A report provided to an applicant by the Secretary showing the amount of his or her expected family contribution. *TEACH Grant-eligible institution:* An eligible institution as defined in 34 CFR part 600 that meets financial responsibility standards established in 34 CFR part 668, subpart L, or that qualifies under an alternative standard in 34 CFR 668.175 and—
(1)Provides a high-quality teacher preparation program at the baccalaureate or master's degree level that— (i)(A) Is accredited by a specialized accrediting agency recognized by the Secretary for the accreditation of professional teacher education programs; or
(B)Is approved by a State and includes a minimum of 10 weeks of full-time pre-service clinical experience, or its equivalent, and provides either pedagogical coursework or assistance in the provision of such coursework; and
(ii)Provides supervision and support services to teachers, or assists in the provision of services to teachers, such as—
(A)Identifying and making available information on effective teaching skills or strategies;
(B)Identifying and making available information on effective practices in the supervision and coaching of novice teachers; and
(C)Mentoring focused on developing effective teaching skills and strategies;
(2)Provides a two-year program that—
(i)Is acceptable for full credit in a baccalaureate teacher preparation program of study offered by an institution described in paragraph
(1)of this definition, as demonstrated by the institutions; or
(ii)Is acceptable for full credit in a baccalaureate degree program in a high-need field at an institution described in paragraph
(3)of this definition, as demonstrated by the institutions;
(3)Offers a baccalaureate degree that, in combination with other training or experience, will prepare an individual to teach in a high-need field as defined in this part and has entered into an agreement with an institution described in paragraphs
(1)or
(4)of this definition to provide courses necessary for its students to begin a career in teaching; or
(4)Provides a post-baccalaureate program of study. *TEACH Grant-eligible program:* An eligible program, as defined in 34 CFR 668.8, is a program of study that is designed to prepare an individual to teach as a highly-qualified teacher in a high-need field and leads to a baccalaureate or master's degree, or is a post-baccalaureate program of study. A two-year program of study that is acceptable for full credit toward a baccalaureate degree is considered to be a program of study that leads to a baccalaureate degree. *Teacher:* A person who provides direct classroom teaching or classroom-type teaching in a non-classroom setting, including special education teachers and reading specialists. *Teacher preparation program:* A State-approved course of study, the completion of which signifies that an enrollee has met all the State's educational or training requirements for initial certification or licensure to teach in the State's elementary or secondary schools. A teacher preparation program may be a regular program or an alternative route to certification, as defined by the State. For purposes of a TEACH Grant, the program must be provided by an institution of higher education. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.3 Duration of student eligibility.
(a)An undergraduate or post-baccalaureate student enrolled in a TEACH Grant-eligible program may receive the equivalent of up to four Scheduled Awards during the period required for the completion of the first undergraduate baccalaureate program of study and first post-baccalaureate program of study combined.
(b)A graduate student is eligible to receive the equivalent of up to two Scheduled Awards during the period required for the completion of a TEACH Grant-eligible master's degree program of study. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.4 Institutional participation.
(a)A TEACH Grant-eligible institution that offers one or more TEACH Grant-eligible programs may elect to participate in the TEACH Grant program.
(b)If an institution begins participation in the TEACH Grant program during an award year, a student enrolled at and attending that institution is eligible to receive a grant under this part for the payment period during which the institution begins participation and any subsequent payment period.
(c)If an institution ceases to participate in the TEACH Grant program or becomes ineligible to participate in the TEACH Grant program during an award year, a student who was attending the institution and who submitted a SAR with an official EFC to the institution, or for whom the institution obtained an ISIR with an official EFC, before the date the institution became ineligible will receive a TEACH Grant for that award year for—
(1)The payment periods that the student completed before the institution ceased participation or became ineligible to participate; and
(2)The payment period in which the institution ceased participation or became ineligible to participate.
(d)An institution that ceases to participate in the TEACH Grant program or becomes ineligible to participate in the TEACH Grant program must, within 45 days after the effective date of the loss of eligibility, provide to the Secretary—
(1)The name and other student identifiers as required by the Secretary of each eligible student under § 686.11 who, during the award year, submitted a SAR with an official EFC to the institution or for whom it obtained an ISIR with an official EFC before it ceased to participate in the TEACH Grant program or became ineligible to participate;
(2)The amount of funds paid to each student for that award year;
(3)The amount due each student eligible to receive a grant through the end of the payment period during which the institution ceased to participate in the TEACH Grant program or became ineligible to participate; and
(4)An accounting of the TEACH Grant program expenditures for that award year to the date of termination. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.5 Enrollment status for students taking regular and correspondence courses.
(a)If, in addition to regular coursework, a student takes correspondence courses from either his or her own institution or another institution having an arrangement for this purpose with the student's institution, the correspondence work may be included in determining the student's enrollment status to the extent permitted under paragraph
(b)of this section.
(b)Except as noted in paragraph
(c)of this section, the correspondence work that may be included in determining a student's enrollment status is that amount of work that—
(1)Applies toward a student's degree or post-baccalaureate program of study or is remedial work taken by the student to help in his or her TEACH Grant-eligible program;
(2)Is completed within the period of time required for regular coursework; and
(3)Does not exceed the amount of a student's regular coursework for the payment period for which enrollment status is being calculated. (c)(1) Notwithstanding the limitation in paragraph (b)(3) of this section, a student who would be a half-time student based solely on his or her correspondence work is considered a half-time student unless the calculation in paragraph
(b)of this section produces an enrollment status greater than half-time.
(2)A student who would be a less-than-half-time student based solely on his or her correspondence work or a combination of correspondence work and regular coursework is considered a less-than-half-time student.
(d)The following chart provides examples of the application of the regulations set forth in this section. It assumes that the institution defines full-time enrollment as 12 credits per term, making half-time enrollment equal to six credits per term. Under § 686.5 No. of credit hours regular work No. of credit hours correspondence Total course load in credit hours to determine enrollment status Enrollment status (b)(3) 3 3 6 Half-time. (b)(3) 3 6 6 Half-time. (b)(3) 3 9 6 Half-time. (b)(3) 6 3 9 Three-quarter-time. (b)(3) 6 6 12 Full-time. (b)(3) and
(c)2 6 6 Half-time.
(c)* Less-than-half-time. * Any combination of regular and correspondence work that is greater than zero, but less than six hours. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.6 Payment from more than one institution. A student may not receive grant payments under this part concurrently from more than one institution. (Authority: 20 U.S.C. 1070g, *et seq.* ) Subpart B—Application Procedures § 686.10 Application.
(a)To receive a grant under this part, a student must—
(1)Complete and submit an approved signed application, as designated by the Secretary. A copy of this application is not acceptable;
(2)Complete and sign an agreement to serve and promise to repay; and
(3)Provide any additional information and assurances requested by the Secretary.
(b)The student must submit an application to the Secretary by—
(1)Sending the completed application to the Secretary; or
(2)Providing the application, signed by all appropriate family members, to the institution which the student attends or plans to attend so that the institution can transmit the application information to the Secretary electronically.
(c)The student must provide the address of his or her residence.
(d)For each award year, the Secretary, through publication in the **Federal Register** , establishes deadline dates for submitting to the Department the application and additional information and for making corrections to the information provided. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.11 Eligibility to receive a grant.
(a)*Undergraduate, post-baccalaureate, and graduate students.*
(1)Except as provided in paragraph
(b)of this section, a student who meets the requirements of 34 CFR part 668, subpart C, is eligible to receive a TEACH Grant if the student—
(i)Has submitted a completed application;
(ii)Has signed an agreement to serve as required under § 686.12;
(iii)Is enrolled in a TEACH Grant-eligible institution in a TEACH Grant-eligible program;
(iv)Is completing coursework and other requirements necessary to begin a career in teaching or plans to complete such coursework and requirements prior to graduating; and
(v)Has—
(A)If the student is in the first year of a program of undergraduate education as determined by the institution— ( *1* ) A final cumulative secondary school grade point average
(GPA)upon graduation of at least 3.25 on a 4.0 scale, or the numeric equivalent; or ( *2* ) A cumulative GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent, based on courses taken at the institution through the most-recently completed payment period;
(B)If the student is beyond the first year of a program of undergraduate education as determined by the institution, a cumulative undergraduate GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent, through the most recently completed payment period;
(C)If the student is a graduate student during the first payment period, a cumulative undergraduate GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent;
(D)If the student is a graduate student beyond the first payment period, a cumulative graduate GPA of at least 3.25 on a 4.0 scale, or the numeric equivalent, through the most-recently completed payment period; or
(E)A score above the 75th percentile of scores achieved by all students taking the test during the period the student took the test on at least one of the batteries from a nationally-normed standardized undergraduate, graduate, or post-baccalaureate admissions test, except that such test may not include a placement test. (2)(i) An institution must document the student's secondary school GPA under § 686.11(a)(1)(v)(A) using—
(A)Documentation provided directly to the institution by the cognizant authority; or
(B)Documentation from the cognizant authority provided by the student.
(ii)A cognizant authority includes, but is not limited to—
(A)An LEA;
(B)An SEA or other State agency; or
(C)A public or private secondary school.
(iii)A home-schooled student's parent or guardian is the cognizant authority for purposes of providing the documentation of a home-schooled student's secondary school GPA.
(iv)If an institution has reason to believe the documentation provided by a student under paragraph (a)(2)(i)(B) of this section is inaccurate or incomplete, the institution must confirm the student's grades by using documentation provided directly to the institution by the cognizant authority.
(b)*Current or former teachers or retirees.* A student who has submitted a completed application and meets the requirements of 34 CFR part 668, subpart C, is eligible to receive a TEACH Grant if the student—
(1)Has signed an agreement to serve as required under § 686.12;
(2)Is a current teacher or retiree who is applying for a grant to obtain a master's degree or is or was a teacher who is pursuing certification through a high-quality alternative certification route; and
(3)Is enrolled in a TEACH Grant-eligible institution in a TEACH Grant-eligible program during the period required for the completion of a master's degree.
(c)*Transfer students.* If a student transfers from one institution to the current institution and does not qualify under § 686.11(a)(1)(v)(E), the current institution must determine that student's eligibility for a TEACH Grant for the first payment period using either the method described in paragraph (c)(1) of this section or the method described in paragraph (c)(2) of this section, whichever method coincides with the current institution's academic policy. For an eligible student who transfers to an institution that—
(1)Does not incorporate grades from coursework that it accepts on transfer into the student's GPA at the current institution, the current institution, for the courses accepted upon transfer—
(i)Must calculate the student's GPA for the first payment period of enrollment using the grades earned by the student in the coursework from any prior postsecondary institution that it accepts; and
(ii)Must, for all subsequent payment periods, apply its academic policy and not incorporate the grades from the coursework that it accepts on transfer into the GPA at the current institution; or
(2)Incorporates grades from the coursework that it accepts on transfer into the student's GPA at the current institution, the current institution must use the grades assigned to the coursework accepted by the current institution as the student's cumulative GPA to determine eligibility for the first payment period of enrollment and all subsequent payment periods in accordance with its academic policy. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.12 Agreement to serve.
(a)*General.* A student who meets the eligibility requirements in § 686.11 may receive a TEACH Grant only after he or she signs an agreement to serve provided by the Secretary and receives counseling in accordance with § 686.32.
(b)*Contents of the agreement to serve.* The agreement provides that, for each TEACH Grant-eligible program for which the student received TEACH Grant funds, the grant recipient must fulfill a service obligation by performing creditable teaching service by—
(1)Serving as a full-time teacher for a total of not less than four elementary or secondary academic years within eight calendar years after completing the program or otherwise ceasing to be enrolled in the program for which the recipient received the TEACH Grant—
(i)In a low-income school;
(ii)As a highly-qualified teacher; and
(iii)In a high-need field in the majority of classes taught during each elementary and secondary academic year.
(2)Submitting, upon completion of each year of service, documentation of the service in the form of a certification by a chief administrative officer of the school; and
(3)Complying with the terms, conditions, and other requirements consistent with §§ 686.40-686.43 that the Secretary determines to be necessary.
(c)*Completion of more than one service obligation.*
(1)A grant recipient must complete a service obligation for each program of study for which he or she received TEACH Grants. Each service obligation begins following the completion or other cessation of enrollment by the student in the TEACH Grant-eligible program for which the student received TEACH Grant funds. However, creditable teaching service may apply to more than one service obligation.
(2)A grant recipient may request a suspension, in accordance with § 686.41, of the eight-year time period in paragraph (b)(1) of this section.
(d)*Majoring and serving in a high-need field.* A grant recipient who completes a TEACH Grant-eligible program in a field that is listed in the Nationwide List cannot satisfy his or her service obligation to teach in that high-need field unless the high-need field in which he or she has prepared to teach is listed in the Nationwide List for the State in which the grant recipient begins teaching at the time the recipient begins teaching in that field.
(e)*Repayment for failure to complete service obligation.* If a grant recipient fails or refuses to carry out the required service obligation described in paragraph
(b)of this section, the TEACH Grants received by the recipient must be repaid and will be treated as a Federal Direct Unsubsidized Loan, with interest accruing from the date of each TEACH Grant disbursement, in accordance with applicable sections of subpart B of 34 CFR part 685. (Authority: 20 U.S.C. 1070g, *et seq.* ) Subpart C—Determination of Awards § 686.20 Submission process and deadline for a SAR or ISIR.
(a)*Submission process.*
(1)Except as provided in paragraph (a)(2) of this section, an institution must disburse a TEACH Grant to a student who is eligible under § 686.11 and is otherwise qualified to receive that disbursement and electronically transmit disbursement data to the Secretary for that student if—
(i)The student submits a SAR with an official EFC to the institution; or
(ii)The institution obtains an ISIR with an official EFC for the student.
(2)In determining a student's eligibility to receive a grant under this part, an institution is entitled to assume that the SAR information or ISIR information is accurate and complete except under the conditions set forth in 34 CFR 668.16(f).
(b)*SAR or ISIR deadline.* Except as provided in 34 CFR 668.164(g), for a student to receive a grant under this part in an award year, the student must submit the relevant parts of the SAR with an official EFC to his or her institution or the institution must obtain an ISIR with an official EFC by the earlier of—
(1)The last date that the student is still enrolled and eligible for payment at that institution; or
(2)By the deadline date established by the Secretary through publication of a notice in the **Federal Register** . (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.21 Calculation of a grant. (a)(1)(i) The Scheduled Award for a TEACH Grant for an eligible student is $4,000.
(ii)Each Scheduled Award remains available to an eligible student until the $4,000 is disbursed. (2)(i) The aggregate amount that a student may receive in TEACH Grants for undergraduate and post-baccalaureate study may not exceed $16,000.
(ii)The aggregate amount that a student may receive in TEACH Grants for a master's degree may not exceed $8,000.
(b)The annual award for—
(1)A full-time student is $4,000;
(2)A three-quarter-time student is $3,000;
(3)A half-time student is $2,000; and
(4)A less-than-half-time student is $1,000.
(c)Except as provided in paragraph
(d)of this section, the amount of a student's grant under this part, in combination with the other student financial assistance available to the student, including the amount of a Federal Pell Grant for which the student is eligible, may not exceed the student's cost of attendance at the TEACH Grant-eligible institution. Other student financial assistance is estimated financial assistance, as defined in 34 CFR 673.5(c).
(d)A TEACH Grant may replace a student's EFC, but the amount of the grant that exceeds the student's EFC is considered estimated financial assistance, as defined in 34 CFR 673.5(c).
(e)In determining a student's payment for a payment period, an institution must include—
(1)In accordance with 34 CFR 668.20, any noncredit or reduced credit courses that an institution determines are necessary—
(i)To help a student be prepared for the pursuit of a first undergraduate baccalaureate or post-baccalaureate degree or certificate; or
(ii)In the case of English language instruction, to enable the student to utilize already existing knowledge, training, or skills; and
(2)In accordance with 34 CFR 668.5, a student's participation in a program of study abroad if it is approved for credit by the home institution at which the student is enrolled. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.22 Calculation of a grant for a payment period.
(a)*Eligibility for payment formula* —(1) *Programs using standard terms with at least 30 weeks of instructional time.* A student's grant for a payment period is calculated under paragraph
(b)or
(d)of this section if—
(i)The student is enrolled in an eligible program that—
(A)Measures progress in credit hours;
(B)Is offered in semesters, trimesters, or quarters; and (C)( *1* ) For an undergraduate student, requires the student to enroll for at least 12 credit hours in each term in the award year to qualify as a full-time student; or ( *2* ) For a graduate student, each term in the award year meets the minimum full-time enrollment status established by the institution for a semester, trimester, or quarter; and
(ii)The program uses an academic calendar that provides at least 30 weeks of instructional time in—
(A)Two semesters or trimesters in the fall through the following spring, or three quarters in the fall, winter, and spring, none of which overlaps any other term (including a summer term) in the program; or
(B)Any two semesters or trimesters, or any three quarters where— ( *1* ) The institution starts its terms for different cohorts of students on a periodic basis ( *e.g.* , monthly); ( *2* ) The program is offered exclusively in semesters, trimesters, or quarters; and ( *3* ) Students are not allowed to be enrolled simultaneously in overlapping terms and must stay with the cohort in which they start unless they withdraw from a term (or skip a term) and reenroll in a subsequent term.
(2)*Programs using standard terms with less than 30 weeks of instructional time.* A student's payment for a payment period is calculated under paragraph
(c)or
(d)of this section if—
(i)The student is enrolled in an eligible program that—
(A)Measures progress in credit hours;
(B)Is offered in semesters, trimesters, or quarters; (C)( *1* ) For an undergraduate student, requires the student to enroll in at least 12 credit hours in each term in the award year to qualify as a full-time student; or ( *2* ) For a graduate student, each term in the award year meets the minimum full-time enrollment status established by the institution for a semester, trimester, or quarter; and
(D)Is not offered with overlapping terms; and
(ii)The institution offering the program—
(A)Provides the program using an academic calendar that includes two semesters or trimesters in the fall through the following spring, or three quarters in the fall, winter, and spring; and
(B)Does not provide at least 30 weeks of instructional time in the terms specified in paragraph (a)(2)(ii)(A) of this section.
(3)*Other programs using terms and credit hours.* A student's payment for a payment period is calculated under paragraph
(d)of this section if the student is enrolled in an eligible program that—
(i)Measures progress in credit hours; and
(ii)Is offered in academic terms other than those described in paragraphs (a)(1) and
(2)of this section.
(4)*Programs not using terms or using clock hours.* A student's payment for any payment period is calculated under paragraph
(e)of this section if the student is enrolled in an eligible program that—
(i)Is offered in credit hours but is not offered in academic terms; or
(ii)Is offered in clock hours.
(5)*Programs for which an exception to the academic year definition has been granted under 34 CFR 668.3.* If an institution receives a waiver from the Secretary of the 30 weeks of instructional time requirement under 34 CFR 668.3, an institution may calculate a student's payment for a payment period using the following methodologies:
(i)If the program is offered in terms and credit hours, the institution uses the methodology in—
(A)Paragraph
(b)of this section provided that the program meets all the criteria in paragraph (a)(1) of this section, except that in lieu of meeting the requirements in paragraph (a)(1)(ii)(B) of this section, the program provides at least the same number of weeks of instructional time in the terms specified in paragraph (a)(1)(ii)(A) of this section as are in the program's academic year; or
(B)Paragraph
(d)of this section.
(ii)The institution uses the methodology described in paragraph
(e)of this section if the program is offered in credit hours without terms.
(b)*Programs using standard terms with at least 30 weeks of instructional time.* The payment for a payment period, *i.e.* , an academic term, for a student in a program using standard terms with at least 30 weeks of instructional time in two semesters or trimesters or in three quarters as described in paragraph (a)(1)(ii) of this section, is calculated by—
(1)Determining his or her enrollment status for the term;
(2)Based upon that enrollment status, determining his or her annual award; and
(3)Dividing the amount described in paragraph (b)(2) of this section by—
(i)Two at institutions using semesters or trimesters or three at institutions using quarters; or
(ii)The number of terms over which the institution chooses to distribute the student's annual award if—
(A)An institution chooses to distribute all of the student's annual award determined under paragraph (b)(2) of this section over more than two terms at institutions using semesters or trimesters or more than three quarters at institutions using quarters; and
(B)The number of weeks of instructional time in the terms, including the additional term or terms, equals the weeks of instructional time in the program's academic year.
(c)*Programs using standard terms with less than 30 weeks of instructional time.* The payment for a payment period, *i.e.* , an academic term, for a student in a program using standard terms with less than 30 weeks of instructional time in two semesters or trimesters or in three quarters as described in paragraph (a)(2)(ii)(A) of this section, is calculated by—
(1)Determining his or her enrollment status for the term;
(2)Based upon that enrollment status, determining his or her annual award;
(3)Multiplying his or her annual award determined under paragraph (c)(2) of this section by the following fraction as applicable:
(i)In a program using semesters or trimesters— The number of weeks of instructional time offered in *the program in the fall and spring semesters or trimesters* The number of weeks in the program's academic year
(ii)In a program using quarters— ER23JN08.023 ; and (4)(i) Dividing the amount determined under paragraph (c)(3) of this section by two for programs using semesters or trimesters or three for programs using quarters; or
(ii)Dividing the student's annual award determined under paragraph (c)(2) of this section by the number of terms over which the institution chooses to distribute the student's annual award if—
(A)An institution chooses to distribute all of the student's annual award determined under paragraph (c)(2) of this section over more than two terms for programs using semesters or trimesters or more than three quarters for programs using quarters; and
(B)The number of weeks of instructional time in the terms, including the additional term or terms, equals the weeks of instructional time in the program's academic year definition.
(d)*Other programs using terms and credit hours.* The payment for a payment period, *i.e.* , an academic term, for a student in a program using terms and credit hours, other than those described in paragraph (a)(1) or
(2)of this section, is calculated by—
(1)Determining his or her enrollment status for the term;
(2)Based upon that enrollment status, determining his or her annual award; and
(3)Multiplying his or her annual award determined under paragraph (d)(2) of this section by the following fraction: ER23JN08.024
(e)*Programs using credit hours without terms or clock hours.* The payment for a payment period for a student in a program using credit hours without terms or using clock hours is calculated by multiplying the Scheduled Award by the lesser of—
(1)ER23JN08.025 ; or
(2)ER23JN08.026
(f)*Maximum disbursement.* A single disbursement may not exceed 50 percent of an award determined under paragraph
(d)or
(e)of this section. If a payment for a payment period calculated under paragraph
(d)or
(e)of this section would require the disbursement of more than 50 percent of a student's annual award in that payment period, the institution must make at least two disbursements to the student in that payment period. The institution may not disburse an amount that exceeds 50 percent of the student's annual award until the student has completed the period of time in the payment period that equals, in terms of weeks of instructional time, 50 percent of the weeks of instructional time in the program's academic year.
(g)*Minimum payment.* No payment for a payment period as determined under this section or § 686.25 may be less than $25.
(h)*Definition of academic year.* For purposes of this section and § 686.25, an institution must define an academic year—
(1)For each of its TEACH Grant-eligible undergraduate programs of study, including post-baccalaureate programs of study, in terms of the number of credit or clock hours and weeks of instructional time in accordance with the requirements of 34 CFR 668.3; and
(2)For each of its TEACH Grant-eligible master's degree programs of study in terms of the number of weeks of instructional time in accordance with the requirements of 34 CFR 668.3 and the minimum number of credit or clock hours a full-time student would be expected to complete in the weeks of instructional time of the program's academic year.
(i)*Payment period completing a Scheduled Award.* In a payment period, if a student is completing a Scheduled Award, the student's payment for the payment period—
(1)Is calculated based on the total credit or clock hours and weeks of instructional time in the payment period; and
(2)Is the remaining amount of the Scheduled Award being completed plus an amount from the next Scheduled Award, if available, up to the payment for the payment period. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.23 Calculation of a grant for a payment period that occurs in two award years. If a student enrolls in a payment period that is scheduled to occur in two award years—
(a)The entire payment period must be considered to occur within one award year;
(b)The institution must determine for each TEACH Grant recipient the award year in which the payment period will be placed subject to the restriction set forth in paragraph
(c)of this section;
(c)The institution must place a payment period with more than six months scheduled to occur within one award year in that award year;
(d)If the institution places the payment period in the first award year, it must pay a student with funds from the first award year; and
(e)If the institution places the payment period in the second award year, it must pay a student with funds from the second award year. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.24 Transfer student: attendance at more than one institution during an award year.
(a)If a student who receives a TEACH Grant at one institution subsequently enrolls at a second institution, the student may receive a grant at the second institution only if—
(1)The student submits a SAR with an official EFC to the second institution; or
(2)The second institution obtains an ISIR with an official EFC.
(b)The second institution must calculate the student's award in accordance with § 686.22 or 686.25.
(c)The second institution may pay a TEACH Grant only for that period in which a student is enrolled in a TEACH Grant-eligible program at that institution.
(d)The student's TEACH Grant for each payment period is calculated according to the procedures in § 686.22 or 686.25 unless the remaining balance of the Scheduled Award at the second institution is the balance of the student's last Scheduled Award and is less than the amount the student would normally receive for that payment period.
(e)A transfer student must repay any amount received in an award year that exceeds the amount which he or she was eligible to receive. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.25 Correspondence study.
(a)An institution calculates a TEACH Grant for a payment period for a student in a program of study offered by correspondence courses without terms, but not including any residential component, by—
(1)Using the half-time annual award; and
(2)Multiplying the half-time annual award by the lesser of—
(i)ER23JN08.027 ; or
(ii)ER23JN08.028
(b)For purposes of paragraph
(a)of this section—
(1)An academic year as measured in credit or clock hours must consist of two payment periods—
(i)The first payment period must be the period of time in which the student completes the lesser of the first half of his or her academic year or program; and
(ii)The second payment period must be the period of time in which the student completes the lesser of the second half of the academic year or program; and (2)(i) The institution must make the first payment to a student for an academic year, as calculated under paragraph
(a)of this section, after the student submits 25 percent of the lessons or otherwise completes 25 percent of the work scheduled for the program or the academic year, whichever occurs last; and
(ii)The institution must make the second payment to a student for an academic year, as calculated under paragraph
(a)of this section, after the student submits 75 percent of the lessons or otherwise completes 75 percent of the work scheduled for the program or the academic year, whichever occurs last.
(c)In a program of correspondence study offered by correspondence courses using terms but not including any residential component—
(1)The institution must prepare a written schedule for submission of lessons that reflects a workload of at least 30 hours of preparation per semester hour or 20 hours of preparation per quarter hour during the term; (2)(i) If the student is enrolled in at least six credit hours that commence and are completed in that term, the half-time annual award is used; or
(ii)If the student is enrolled in less than six credit hours that commence and are completed in that term the less-than-half-time annual award is used;
(3)A payment for a payment period is calculated using the formula in § 686.22(d) except that paragraphs (c)(1) and
(2)of this section are used in lieu of § 686.22(d)(1) and (2), respectively; and
(4)The institution must make the payment to a student for a payment period after that student completes 50 percent of the lessons or otherwise completes 50 percent of the work scheduled for the term, whichever occurs last.
(d)Payments for periods of residential training must be calculated under § 686.22(d) if the residential training is offered using terms and credit hours or under § 686.22(e) if the residential training is offered using credit hours without terms or clock hours. (Authority: 20 U.S.C. 1070g, *et seq.* ) Subpart D—Administration of Grant Payments § 686.30 Scope. This subpart deals with TEACH Grant program administration by a TEACH Grant-eligible institution. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.31 Determination of eligibility for payment and cancellation of a TEACH Grant.
(a)For each payment period, an institution may pay a grant under this part to an eligible student only after it determines that the student—
(1)Is eligible under § 686.11;
(2)Has completed the relevant initial or subsequent counseling as required in § 686.32;
(3)Has signed an agreement to serve as described in § 686.12;
(4)Is enrolled in a TEACH Grant-eligible program; and
(5)If enrolled in a credit-hour program without terms or a clock-hour program, has completed the payment period, as defined in 34 CFR 668.4, for which he or she has been paid a grant. (b)(1) If an institution determines at the beginning of a payment period that a student is not maintaining satisfactory progress, but changes that determination before the end of the payment period, the institution may pay a TEACH Grant to the student for the entire payment period.
(2)If an institution determines at the beginning of a payment period that a student enrolled in a TEACH Grant-eligible program is not maintaining the required GPA for a TEACH Grant under § 686.11 or is not pursuing a career in teaching, but changes that determination before the end of the payment period, the institution may pay a TEACH Grant to the student for the entire payment period.
(c)If an institution determines at the beginning of a payment period that a student is not maintaining satisfactory progress or the necessary GPA for a TEACH Grant under § 686.11 or is not pursuing a career in teaching, but changes that determination after the end of the payment period, the institution may not pay the student a TEACH Grant for that payment period or make adjustments in subsequent payments to compensate for the loss of aid for that period.
(d)An institution may make one disbursement for a payment period to an otherwise eligible student if— (1)(i) The student's final high school GPA is not yet available; or
(ii)The student's cumulative GPA through the prior payment period under § 686.11 is not yet available; and
(2)The institution assumes liability for any overpayment if the student fails to meet the required GPA to qualify for the disbursement. (e)(1) In accordance with 34 CFR 668.165, before disbursing a TEACH Grant for any award year, an institution must—
(i)Notify the student of the amount of TEACH Grant funds that the student is eligible to receive, how and when those funds will be disbursed, and the student's right to cancel all or a portion of the TEACH Grant; and
(ii)Return the TEACH Grant proceeds, cancel the TEACH Grant, or both, if the institution receives a TEACH Grant cancellation request from the student by the later of the first day of a payment period or 14 days after the date it notifies the student of his or her right to cancel all or a portion of a TEACH Grant. (2)(i) If a student requests cancellation of a TEACH Grant after the period of time in paragraph (e)(1)(ii) of this section, but within 120 days of the TEACH Grant disbursement date, the institution may return the TEACH Grant proceeds, cancel the TEACH Grant, or do both.
(ii)If the institution does not return the TEACH Grant proceeds, or cancel the TEACH Grant, the institution must notify the student that he or she may contact the Secretary to request that the TEACH Grant be converted to a Federal Direct Unsubsidized Loan. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.32 Counseling requirements.
(a)*Initial counseling* .
(1)An institution must ensure that initial counseling is conducted with each TEACH Grant recipient prior to making the first disbursement of the grant.
(2)The initial counseling must be in person, by audiovisual presentation, or by interactive electronic means. In each case, the institution must ensure that an individual with expertise in title IV, HEA programs is reasonably available shortly after the counseling to answer the student's questions. As an alternative, in the case of a student enrolled in a correspondence program of study or a study-abroad program of study approved for credit at the home institution, the student may be provided with written counseling materials before the grant is disbursed.
(3)The initial counseling must—
(i)Explain the terms and conditions of the TEACH Grant agreement to serve as described in § 686.12;
(ii)Provide the student with information about how to identify low-income schools and documented high-need fields;
(iii)Inform the grant recipient that, in order for the teaching to count towards the recipient's service obligation, the high-need field in which he or she has prepared to teach must be—
(A)One of the six high-need fields listed in § 686.2; or
(B)A high-need field listed in the Nationwide List at the time and for the State in which the grant recipient begins teaching in that field.
(iv)Inform the grant recipient of the opportunity to request a suspension of the eight-year period for completion of the agreement to serve and the conditions under which a suspension may be granted in accordance with § 686.41;
(v)Explain to the student that conditions, such as conviction of a felony, could preclude the student from completing the service obligation;
(vi)Emphasize to the student that if the student fails or refuses to complete the service obligation contained in the agreement to serve or any other condition of the agreement to serve—
(A)The TEACH Grant must be repaid as a Federal Direct Unsubsidized Loan; and
(B)The TEACH Grant recipient will be obligated to repay the full amount of each grant and the accrued interest from each disbursement date;
(vii)Explain the circumstances, as described in § 686.43, under which a TEACH Grant will be converted to a Federal Direct Unsubsidized Loan;
(viii)Emphasize that, once a TEACH Grant is converted to a Federal Direct Unsubsidized Loan, it cannot be reconverted to a grant;
(ix)Review for the grant recipient information on the availability of the Department's Student Loan Ombudsman's office;
(x)Describe the likely consequences of loan default, including adverse credit reports, garnishment of wages, Federal offset, and litigation; and
(xi)Inform the student of sample monthly repayment amounts based on a range of student loan indebtedness.
(b)*Subsequent counseling* .
(1)If a student receives more than one TEACH Grant, the institution must ensure that the student receives additional counseling prior to the first disbursement of each subsequent TEACH Grant award.
(2)Subsequent counseling may be in person, by audiovisual presentation, or by interactive electronic means. In each case, the institution must ensure that an individual with expertise in title IV, HEA programs is reasonably available shortly after the counseling to answer the student's questions. As an alternative, in the case of a student enrolled in a correspondence program of study or a study-abroad program of study approved for credit at the home institution, the student may be provided with written counseling materials before the grant is disbursed.
(3)Subsequent counseling must—
(i)Review the terms and conditions of the TEACH Grant agreement to serve as described in § 686.12;
(ii)Emphasize to the student that if the student fails or refuses to complete the service obligation contained in the agreement to serve or any other condition of the agreement to serve—
(A)The TEACH Grant must be repaid as a Federal Direct Unsubsidized Loan; and
(B)The TEACH Grant recipient will be obligated to repay the full amount of the grant and the accrued interest from the disbursement date;
(iii)Explain the circumstances, as described in § 686.34, under which a TEACH Grant will be converted to a Federal Direct Unsubsidized Loan;
(iv)Emphasize that, once a TEACH Grant is converted to a Federal Direct Unsubsidized Loan, it cannot be reconverted to a grant; and
(v)Review for the grant recipient information on the availability of the Department's Student Loan Ombudsman's office.
(c)*Exit counseling* .
(1)An institution must ensure that exit counseling is conducted with each grant recipient before he or she ceases to attend the institution at a time determined by the institution.
(2)The exit counseling must be in person, by audiovisual presentation, or by interactive electronic means. In each case, the institution must ensure that an individual with expertise in title IV, HEA programs is reasonably available shortly after the counseling to answer the grant recipient's questions. As an alternative, in the case of a grant recipient enrolled in a correspondence program of study or a study-abroad program of study approved for credit at the home institution, the grant recipient may be provided with written counseling materials within 30 days after he or she completes the TEACH Grant-eligible program.
(3)Within 30 days of learning that a grant recipient has withdrawn from the institution without the institution's knowledge, or from a TEACH Grant-eligible program, or failed to complete exit counseling as required, exit counseling must be provided either in-person, through interactive electronic means, or by mailing written counseling materials to the grant recipient's last known address.
(4)The exit counseling must—
(i)Inform the grant recipient of the four-year service obligation that must be completed within the first eight calendar years after completing a TEACH Grant-eligible program in accordance with § 686.12;
(ii)Inform the grant recipient of the opportunity to request a suspension of the eight-year period for completion of the service obligation and the conditions under which a suspension may be granted in accordance with § 686.41;
(iii)Provide the grant recipient with information about how to identify low-income schools and documented high-need fields;
(iv)Inform the grant recipient that, in order for the teaching to count towards the recipient's service obligation, the high-need field in which he or she has prepared to teach must be—
(A)One of the six high-need fields listed in § 686.2; or
(B)A high-need field listed in the Nationwide List at the time and for the State in which the grant recipient begins teaching in that field.
(v)Explain that the grant recipient will be required to submit to the Secretary each year written documentation of his or her status as a highly-qualified teacher in a high-need field at a low-income school or of his or her intent to complete the four-year service obligation until the date that the service obligation has been met or the date that the grant becomes a Federal Direct Unsubsidized Loan, whichever occurs first;
(vi)Explain the circumstances, as described in § 686.43, under which a TEACH Grant will be converted to a Federal Direct Unsubsidized Loan;
(vii)Emphasize that once a TEACH Grant is converted to a Federal Direct Unsubsidized Loan it cannot be reconverted to a grant;
(viii)Inform the grant recipient of the average anticipated monthly repayment amount based on a range of student loan indebtedness if the TEACH Grants convert to a Federal Direct Unsubsidized Loan;
(ix)Review for the grant recipient available repayment options if the TEACH Grant converts to a Federal Direct Unsubsidized Loan, including the standard repayment, extended repayment, graduated repayment, income-contingent and income-based repayment plans, and loan consolidation;
(x)Suggest debt-management strategies to the grant recipient that would facilitate repayment if the TEACH Grant converts to a Federal Direct Unsubsidized Loan;
(xi)Explain to the grant recipient how to contact the Secretary;
(xii)Describe the likely consequences of loan default, including adverse credit reports, garnishment of wages, Federal offset, and litigation;
(xiii)Review for the grant recipient the conditions under which he or she may defer or forbear repayment, obtain a full or partial discharge, or receive teacher loan forgiveness if the TEACH Grant converts to a Federal Direct Unsubsidized Loan;
(xiv)Review for the grant recipient information on the availability of the Department's Student Loan Ombudsman's office; and
(xv)Inform the grant recipient of the availability of title IV loan information in the National Student Loan Data System (NSLDS).
(5)If exit counseling is conducted through interactive electronic means, an institution must take reasonable steps to ensure that each grant recipient receives the counseling materials and participates in and completes the exit counseling.
(d)*Compliance* . The institution must maintain documentation substantiating the institution's compliance with this section for each TEACH Grant recipient. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.33 Frequency of payment.
(a)In each payment period, an institution may pay a student at such times and in such installments as it determines will best meet the student's needs.
(b)The institution may pay funds in one lump sum for all the prior payment periods for which the student was eligible under § 686.11 within the award year as long as the student has signed the agreement to serve prior to disbursement of the TEACH Grant. The student's enrollment status must be determined according to work already completed. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.34 Liability for and recovery of TEACH Grant overpayments. (a)(1) Except as provided in paragraphs (a)(2) and
(3)of this section, a student is liable for any TEACH Grant overpayment made to him or her.
(2)The institution is liable for a TEACH Grant overpayment if the overpayment occurred because the institution failed to follow the procedures set forth in this part or in 34 CFR part 668. The institution must restore an amount equal to the overpayment to its TEACH Grant account.
(3)A student is not liable for, and the institution is not required to attempt recovery of or refer to the Secretary, a TEACH Grant overpayment if the amount of the overpayment is less than $25 and is not a remaining balance. (b)(1) Except as provided in paragraph (a)(3) of this section, if an institution makes a TEACH Grant overpayment for which it is not liable, it must promptly send a written notice to the student requesting repayment of the overpayment amount. The notice must state that failure to make the requested repayment, or to make arrangements satisfactory to the holder of the overpayment debt to repay the overpayment, makes the student ineligible for further title IV, HEA program funds until final resolution of the TEACH Grant overpayment.
(2)If a student objects to the institution's TEACH Grant overpayment determination, the institution must consider any information provided by the student and determine whether the objection is warranted.
(c)Except as provided in paragraph (a)(3) of this section, if the student fails to repay a TEACH Grant overpayment or make arrangements satisfactory to the holder of the overpayment debt to repay the TEACH Grant overpayment, after the institution has taken the action required by paragraph
(b)of this section, the institution must refer the overpayment to the Secretary for collection in accordance with procedures required by the Secretary. After referring the TEACH Grant overpayment to the Secretary under this section, the institution need make no further efforts to recover the overpayment. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.35 Recalculation of TEACH Grant award amounts.
(a)*Change in enrollment status* .
(1)If the student's enrollment status changes from one academic term to another academic term within the same award year, the institution must recalculate the TEACH Grant award for the new payment period taking into account any changes in the cost of attendance. (2)(i) If the student's projected enrollment status changes during a payment period after the student has begun attendance in all of his or her classes for that payment period, the institution may (but is not required to) establish a policy under which the student's award for the payment period is recalculated. Any such recalculations must take into account any changes in the cost of attendance. In the case of an undergraduate or post-baccalaureate program of study, if such a policy is established, it must be the same policy that the institution established under 34 CFR 690.80(b) for the Federal Pell Grant Program and it must apply to all students in the TEACH Grant-eligible program.
(ii)If a student's projected enrollment status changes during a payment period before the student begins attendance in all of his or her classes for that payment period, the institution must recalculate the student's enrollment status to reflect only those classes for which he or she actually began attendance.
(b)*Change in cost of attendance* . If the student's cost of attendance changes at any time during the award year and his or her enrollment status remains the same, the institution may, but is not required to, establish a policy under which the student's TEACH Grant award for the payment period is recalculated. If such a policy is established, it must apply to all students in the TEACH Grant-eligible program. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.36 Fiscal control and fund accounting procedures.
(a)An institution must follow the provisions for maintaining general fiscal records in this section and in 34 CFR 668.24(b).
(b)An institution must maintain funds received under this section in accordance with the requirements in 34 CFR 668.164. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.37 Institutional reporting requirements.
(a)An institution must provide to the Secretary information about each TEACH Grant recipient that includes but is not limited to—
(1)The student's eligibility for a TEACH Grant, as determined in accordance with §§ 686.11 and 686.31;
(2)The student's TEACH Grant amounts; and
(3)The anticipated and actual disbursement date or dates and disbursement amounts of the TEACH Grant funds.
(b)An institution must submit the initial disbursement record for a TEACH Grant to the Secretary no later than 30 days following the date of the initial disbursement. The institution must submit subsequent disbursement records, including adjustment and cancellation records, to the Secretary no later than 30 days following the date the disbursement, adjustment, or cancellation is made. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.38 Maintenance and retention of records.
(a)An institution must follow the record retention and examination provisions in this part and in 34 CFR 668.24.
(b)For any disputed expenditures in any award year for which the institution cannot provide records, the Secretary determines the final authorized level of expenditures. (Authority: 20 U.S.C. 1070g, *et seq.* ) Subpart E—Service and Repayment Obligations § 686.40 Documenting the service obligation.
(a)Except as provided in §§ 686.41 and 686.42, within 120 days of completing or otherwise ceasing enrollment in a program of study for which a TEACH Grant was received, the grant recipient must confirm to the Secretary in writing that—
(1)He or she is employed as a full-time teacher in accordance with the terms and conditions of the agreement to serve described in § 686.12; or
(2)He or she is not yet employed as a full-time teacher but intends to meet the terms and conditions of the agreement to serve described in § 686.12.
(b)If a grant recipient is performing full-time teaching service in accordance with the agreement to serve, or agreements to serve if more than one agreement exists, the grant recipient must, upon completion of each of the four required elementary or secondary academic years of teaching service, provide to the Secretary documentation of that teaching service on a form approved by the Secretary and certified by the chief administrative officer of the school in which the grant recipient is teaching. The documentation must show that the grant recipient is teaching in a low-income school. If the school at which the grant recipient is employed meets the requirements of a low-income school in the first year of the grant recipient's four elementary or secondary academic years of teaching and the school fails to meet those requirements in subsequent years, those subsequent years of teaching qualify for purposes of this section for that recipient. (c)(1) In addition to the documentation requirements in paragraph
(b)of this section, the documentation must show that the grant recipient—
(i)Taught a majority of classes during the period being certified in any of the high-need fields of mathematics, science, a foreign language, bilingual education, English language acquisition, special education, or as a reading specialist; or
(ii)Taught a majority of classes during the period being certified in a State in another high-need field designated by that State and listed in the Nationwide List, except that teaching service does not satisfy the requirements of the agreement to serve if that teaching service is in a geographic region of a State or in a specific grade level not associated with a high-need field of a State designated in the Nationwide List as having a shortage of elementary or secondary school teachers.
(2)If a grant recipient begins qualified full-time teaching service in a State in a high-need field designated by that State and listed in the Nationwide List and in subsequent years that high-need field is no longer designated by the State in the Nationwide List, the grant recipient will be considered to continue to perform qualified full-time teaching service in a high-need field of that State and to continue to fulfill the service obligation.
(d)Documentation must also provide evidence that the grant recipient is a highly-qualified teacher.
(e)For purposes of completing the service obligation, the elementary or secondary academic year may be counted as one of the grant recipient's four complete elementary or secondary academic years if the grant recipient completes at least one-half of the elementary or secondary academic year and the grant recipient's school employer considers the grant recipient to have fulfilled his or her contract requirements for the elementary or secondary academic year for the purposes of salary increases, tenure, and retirement if the grant recipient is unable to complete an elementary or secondary academic year due to—
(1)A condition that is a qualifying reason for leave under the Family and Medical Leave Act of 1993
(FMLA)(29 U.S.C. 2612(a)(1) and (3)); or
(2)A call or order to active duty status for more than 30 days as a member of a reserve component of the Armed Forces named in 10 U.S.C. 10101, or service as a member of the National Guard on full-time National Guard duty, as defined in 10 U.S.C. 101(d)(5), under a call to active service in connection with a war, military operation, or a national emergency.
(f)A grant recipient who taught in more than one qualifying school during an elementary or secondary academic year and demonstrates that the combined teaching service was the equivalent of full-time, as supported by the certification of one or more of the chief administrative officers of the schools involved, is considered to have completed one elementary or secondary academic year of qualifying teaching. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.41 Periods of suspension. (a)(1) A grant recipient who has completed or who has otherwise ceased enrollment in a TEACH Grant-eligible program for which he or she received TEACH Grant funds may request a suspension from the Secretary of the eight-year period for completion of the service obligation based on—
(i)Enrollment in a program of study for which the recipient would be eligible for a TEACH Grant or in a program of study that has been determined by a State to satisfy the requirements for certification or licensure to teach in the State's elementary or secondary schools;
(ii)A condition that is a qualifying reason for leave under the FMLA; or
(iii)A call or order to active duty status for more than 30 days as a member of a reserve component of the Armed Forces named in 10 U.S.C. 10101, or service as a member of the National Guard on full-time National Guard duty, as defined in 10 U.S.C. 101(d)(5), under a call to active service in connection with a war, military operation, or a national emergency.
(2)A grant recipient may receive a suspension described in paragraphs (a)(1)(i) and
(ii)of this section in one-year increments that—
(i)Does not exceed a combined total of three years under both paragraphs (a)(1)(i) and
(ii)of this section; or
(ii)Ends upon the completion of the military service in paragraph (a)(1)(iii) of this section.
(b)A grant recipient must apply for a suspension in writing on a form approved by the Secretary prior to being subject to any of the conditions under § 686.43(a)(1) through (a)(5) that would cause the TEACH Grant to convert to a Federal Direct Unsubsidized Loan.
(c)A grant recipient must provide the Secretary with documentation supporting the suspension request as well as current contact information including home address and telephone number. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.42 Discharge of agreement to serve.
(a)*Death* . If a grant recipient dies, the Secretary discharges the obligation to complete the agreement to serve based on an original or certified copy of the grant recipient's death certificate, an accurate and complete photocopy of the original or certified copy of the grant recipient's death certificate, or, on a case-by-case basis, reliable documentation acceptable to the Secretary.
(b)*Total and permanent disability* .
(1)A grant recipient's agreement to serve is discharged if the recipient becomes totally and permanently disabled, as defined in 34 CFR 682.200(b), and the grant recipient applies for and satisfies the eligibility requirements for a total and permanent disability discharge in accordance with 34 CFR 685.213.
(2)The eight-year time period in which the grant recipient must complete the service obligation remains in effect during the conditional discharge period described in 34 CFR 685.213(c)(2) unless the grant recipient is eligible for a suspension based on a condition that is a qualifying reason for leave under the FMLA in accordance with § 686.41(a)(1)(ii)(D).
(3)Interest continues to accrue on each TEACH Grant disbursement unless and until the TEACH Grant recipient's agreement to serve is discharged.
(4)If the grant recipient satisfies the criteria for a total and permanent disability discharge during and at the end of the three-year conditional discharge period, the Secretary discharges the grant recipient's service obligation.
(5)If, at any time during or at the end of the three-year conditional discharge period, the Secretary determines that the grant recipient does not meet the eligibility criteria for a total and permanent disability discharge, the Secretary ends the conditional discharge period and the grant recipient is once again subject to the terms of the agreement to serve. (Authority: 20 U.S.C. 1070g, *et seq.* ) § 686.43 Obligation to repay the grant.
(a)The TEACH Grant amounts disbursed to the recipient will be converted into a Federal Direct Unsubsidized Loan, with interest accruing from the date that each grant disbursement was made and be collected by the Secretary in accordance with the relevant provisions of subpart A of 34 CFR part 685 if—
(1)The grant recipient, regardless of enrollment status, requests that the TEACH Grant be converted into a Federal Direct Unsubsidized Loan because he or she has decided not to teach in a qualified school or field or for any other reason;
(2)Within 120 days of ceasing enrollment in the institution prior to completing the TEACH Grant-eligible program, the grant recipient has failed to notify the Secretary in accordance with § 686.40(a);
(3)Within one year of ceasing enrollment in the institution prior to completing the TEACH Grant-eligible program, the grant recipient has not—
(i)Been determined eligible for a suspension of the eight-year period for completion of the service obligation as provided in § 686.41;
(ii)Re-enrolled in a TEACH Grant-eligible program; or
(iii)Begun creditable teaching service as described in § 686.12(b);
(4)The grant recipient completes the course of study for which a TEACH Grant was received and does not actively confirm to the Secretary, at least annually, his or her intention to satisfy the agreement to serve; or
(5)The grant recipient has completed the TEACH Grant-eligible program but has failed to begin or maintain qualified employment within the timeframe that would allow that individual to complete the service obligation within the number of years required under § 686.12.
(b)A TEACH Grant that converts to a loan, and is treated as a Federal Direct Unsubsidized Loan, is not counted against the grant recipient's annual or any aggregate Stafford Loan limits.
(c)A grant recipient whose TEACH Grant has been converted to a Federal Direct Unsubsidized Loan—
(1)Enters a six-month grace period prior to entering repayment, and
(2)Is eligible for all of the benefits of the Direct Loan Program, including an in-school deferment.
(d)A TEACH Grant that is converted to a Federal Direct Unsubsidized Loan cannot be reconverted to a grant. (Authority: 20 U.S.C. 1070g, *et seq.* ) PART 690—FEDERAL PELL GRANT PROGRAM 42. The authority citation for part 690 is revised to read as follows: Authority: 20 U.S.C. 1070a, 1070g, unless otherwise noted. 43. Section 690.2 is amended by: A. In paragraph (b), adding, in alphabetical order, the terms “Teacher Education Assistance for College and Higher Education (TEACH) Grant Program” and “TEACH Grant”. B. Revising the authority citation to read as follows: § 690.2 Definitions. (Authority: 20 U.S.C. 1070a, 1070g) [FR Doc. E8-13587 Filed 6-20-08; 8:45 am] BILLING CODE 4000-01-P 73 121 Monday, June 23, 2008 Proposed Rules Part IV Department of Commerce National Oceanic and Atmospheric Administration 50 CFR Part 216 Taking and Importing Marine Mammals; U.S. Navy Training in the Hawaii Range Complex; Proposed Rule DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 216 [Docket No. 080519680-8684-01] RIN 0648-AW86 Taking and Importing Marine Mammals; U.S. Navy Training in the Hawaii Range Complex AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Proposed rule; request for comments. SUMMARY: NMFS has received a request from the U.S. Navy
(Navy)for authorization to take marine mammals incidental to training activities conducted within the Hawaii Range Complex
(HRC)for the period of December 2008 through December 2013. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is proposing regulations to govern that take and requesting information, suggestions, and comments on these proposed regulations. DATES: Comments and information must be received no later than July 23, 2008. ADDRESSES: You may submit comments, identified by 0648-AW86, by any one of the following methods: • *Electronic Submissions:* Submit all electronic public comments via the Federal eRulemaking Portal: *http://www.regulations.gov* . • Hand delivery or mailing of paper, disk, or CD-ROM comments should be addressed to Michael Payne, Chief, Permits, Conservation and Education Division, Office of Protected Resources, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910-3225. *Instructions:* All comments received are a part of the public record and will generally be posted to *http://www.regulations.gov* without change. All Personal Identifying Information (for example, name, address, etc.) voluntarily submitted by the commenter may be publicly accessible. Do not submit Confidential Business Information or otherwise sensitive or protected information. NMFS will accept anonymous comments. Attachments to electronic comments will be accepted in Microsoft Word, Excel, WordPerfect, or Adobe PDF file formats only. Comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule should be submitted in writing to Michael Payne at the address above and to David Rostker, OMB, by e-mail at *David_Rostker@omb.eop.gov* or by fax to 202-395-7285. FOR FURTHER INFORMATION CONTACT: Jolie Harrison, Office of Protected Resources, NMFS,
(301)713-2289, ext. 166. SUPPLEMENTARY INFORMATION: Availability A copy of the Navy's application may be obtained by writing to the address specified above (See ADDRESSES ), telephoning the contact listed above (see FOR FURTHER INFORMATION CONTACT ), or visiting the Internet at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* . The Navy's Final Environmental Impact Statement
(FEIS)for the Hawaii Range Complex was published on May 9, 2008, and may be viewed at *http://www.govsupport.us/hrc* . NMFS participated in the development of the Navy's FEIS as a cooperating agency under NEPA. Last, NMFS is preparing a Draft Environmental Assessment
(EA)that analyzes the environmental effects of several different mitigation alternatives for the potential issuance of the proposed rule. The Draft EA will be posted on the following Web site as soon as it is complete: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* . Background Sections 101(a)(5)(A) and
(D)of the MMPA (16 U.S.C. 1361 *et seq.* ) direct the Secretary of Commerce (Secretary) to allow, upon request, the incidental, but not intentional taking of marine mammals by U.S. citizens who engage in a specified activity (other than commercial fishing) during periods of not more than five consecutive years each if certain findings are made and regulations are issued or, if the taking is limited to harassment, notice of a proposed authorization is provided to the public for review. Authorization shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses, and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such taking are set forth. NMFS has defined “negligible impact” in 50 CFR 216.103 as: An impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival. The National Defense Authorization Act of 2004
(NDAA)(Public Law 108-136) removed the “small numbers” and “specified geographical region” limitations and amended the definition of “harassment” as it applies to a “military readiness activity” to read as follows (Section 3(18)(B) of the MMPA):
(i)Any act that injures or has the significant potential to injure a marine mammal or marine mammal stock in the wild [Level A Harassment]; or
(ii)Any act that disturbs or is likely to disturb a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns, including, but not limited to, migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered [Level B Harassment]. Summary of Request On June 25, 2007, NMFS received an application from the Navy requesting authorization for the take of 24 species of marine mammals incidental to upcoming Navy training activities to be conducted within the HRC, which covers 235,000 nm 2 around the Main Hawaiian Islands (see map on page 17 of the application), over the course of 5 years. These training activities are classified as military readiness activities. The Navy states that these training activities may incidentally take marine mammals present within the HRC by exposing them to sound from mid-frequency or high frequency active sonar (MFAS/HFAS) or to underwater detonations at levels that NMFS associates with the take of marine mammals. The Navy requests authorization to take individuals of 24 species of marine mammals by Level B Harassment. Further, though they do not anticipate it to occur, the Navy requests authorization to take, by injury or mortality, up to 10 individuals each of 10 species over the course of the 5-year period (bottlenose dolphin, *Kogia spp.* , melon-headed whale, pantropical spotted dolphin, pygmy killer whale, short-finned pilot whale, striped dolphin, and Cuvier's, Longman's, and Blainville's beaked whale). Background of Navy Request The Navy's mission is to maintain, train, and equip combat-ready naval forces capable of winning wars, deterring aggression, and maintaining freedom of the seas. Title 10, U.S. Code (U.S.C.) section 5062 directs the Chief of Naval Operations to train all naval forces for combat. The Chief of Naval Operations meets that direction, in part, by conducting at-sea training exercises and ensuring naval forces have access to ranges, operating areas (OPAREAs) and airspace where they can develop and maintain skills for wartime missions and conduct research, development, test, and evaluation (RDT&E) of naval weapons systems. The HRC, where the Navy has, for more than 40 years, routinely conducted training and major exercises in the waters around the Hawaiian Islands, is a critical part of the Navy's mission, especially as it relates to training, for several reasons. Centrally located in the Pacific Ocean between the west coast of the United States and the naval stations in the western Pacific, and surrounding the most isolated islands in the world, the HRC has the infrastructure (i.e., extensive existing range assets and training capabilities) to support a large number of forces in a location both remote and under U.S. control. The range surrounds the major homeport of Naval Station Pearl Harbor, enabling re-supply and repairs to submarines and surface ships alike. The isolation of the range offers an invaluable facility on which to conduct missile testing and training. Able to link with the U.S. Army's Pohakuloa Training Area, as well as U.S. Air Force and U.S. Marine Corps bases where aircraft basing and amphibious training may occur, the HRC provides a superior joint training environment for all the U.S. armed services and advanced missile testing capability. Among the important assets of the HRC is the Pacific Missile Range Facility (PMRF), which is the world's largest instrumented, multi-environment, military test range capable of supporting subsurface, surface, air, and space training, and RDT&E. It consists of instrumented underwater ranges, controlled airspace, and a temporary operating area covering 2.1 million square nautical miles (nm 2 ) of ocean area. The Navy must have the flexibility and capacity to quickly surge required combat power in the event of a national crisis or contingency operation. Because of its location, training for sustained deployment at the HRC, rather than at ranges on the west coast, saves 10 transit days to the western Pacific from the west coast of the United States. The HRC complex consists of targets and instrumented areas, airspace, surface OPAREAS, and land range facilities. The Navy's proposed action includes conducting current and emerging training in the HRC. Although the Navy plans to conduct many different types of RDT&E on the land, in the air, and in the water, as well as implement infrastructure improvements (addressed comprehensively in the Navy's FEIS), this document specifically analyzes those activities in the HRC for which the Navy seeks MMPA incidental take authorization, i.e., those training activities that the Navy predicts would result in the generation of levels of sound in the water that NMFS has indicated are likely to result in the take of marine mammals (not counting SURTASS LFA sonar, for which the Navy has already obtained an MMPA authorization), either through the use of sonar (mid-frequency active sonar
(MFAS)or high frequency active sonar (HFAS)) or from the use of live ordnance, including the detonation of explosives in the water. Table 1-1 in the Navy's application presents a summary of the training and RDT&E activities that will occur in the HRC and indicates the exercise types that the Navy's modeling indicated would likely result in the take of marine mammals. Description of the Specified Activities As mentioned above, the Navy has requested MMPA authorization to take marine mammals incidental to training activities in the HRC that would result in the generation of sound in the water, at or above levels that NMFS has determined will likely result in take (see Acoustic Take Criteria Section), either through the use of MFAS/HFAS or the detonation of explosives in the water. Activities Utilizing Active Tactical Sonar Sources For this operating area (HRC), the training activities that utilize active tactical sonar sources fall into the category of Anti-submarine Warfare
(ASW)exercises. This section includes a description of the active acoustic devices used in ASW exercises, as well as the exercise types in which these acoustic sources are used. Acoustic Sources Used for ASW Exercises in the HRC Tactical military sonars are designed to search for, detect, localize, classify, and track submarines. There are two types of sonars, passive and active: • Passive sonars only listen to incoming sounds and, since they do not emit sound energy in the water, lack the potential to acoustically affect the environment. • Active sonars generate and emit acoustic energy specifically for the purpose of obtaining information concerning a distant object from the received and processed reflected sound energy. Modern sonar technology includes a multitude of sonar sensor and processing systems. In concept, the simplest active sonars emit omni-directional pulses (“pings”) and time the arrival of the reflected echoes from the target object to determine range. More sophisticated active sonar emits an omni-directional ping and then rapidly scans a steered receiving beam to provide directional, as well as range, information. More advanced sonars transmit multiple preformed beams, listening to echoes from several directions simultaneously and providing efficient detection of both direction and range. The tactical military sonars to be deployed during testing and training in the HRC are designed to detect submarines in tactical training scenarios. This task requires the use of the sonar mid-frequency range (1 kilohertz [kHz] to 10 kHz) predominantly, as well as one source in the high frequency range (above 10 kHz) that operates at a level high enough to be considered in the modeling. The high frequency source will contribute a comparatively very small amount to the total amount of active sonar that marine mammals will be exposed to during the Navy's proposed activities, however, for this document we will refer to the collective high and mid-frequency sonar sources as MFAS/HFAS. A narrative description of the types of acoustic sources used in ASW training exercises is included below. Table 1 (below) summarizes the nominal characteristics of the acoustic sources used in the modeling to predict take of marine mammals. EP23JN08.001 *Surface Ship Sonars* —A variety of surface ships participate in testing and training events. Some ships (e.g., aircraft carriers, amphibious assault ships) do not have any onboard active sonar systems, other than fathometers. Others, like guided missile cruisers, are equipped with active as well as passive tactical sonars for mine avoidance and submarine detection and tracking. Within Navy ASW exercises in the HRC, two types of hull-mounted sonar sources account for the majority of the estimated impacts to marine mammals. The AN/SQS-53 hull-mounted sonar, which has a nominal source level of 235 decibels
(dB)re 1 μPa and transmits at center frequencies of 2.6 kHz and 3.3 kHz, is the Navy's most powerful sonar source used in ASW exercises in the HRC. The AN/SQS-56 hull-mounted sonar has a nominal source level of 225 dB re 1 μPa and transmits at a center frequency of 7.5 kHz. Sonar ping transmission durations were modeled as lasting 1 second per ping and omni-directional, which is a conservative assumption that may overestimate potential effects. Actual ping durations will be less than 1 second. Details concerning the tactical use of specific frequencies and the repetition rate for the sonar pings is classified but was modeled based on the required tactical training setting. The AN/SQS-53 and the AN/SQS-56 were modeled using the number of hours of predicted use (typically at two pings per minute; meaning an hour of sonar operation results in approximately 120 one-second pings). Based on modeling results, the Navy anticipates that the operation of these two sources will likely result in take of marine mammals (see Estimated Take of Marine Mammals Section). Hull-mounted sonars occasionally operate in a mode called “Kingfisher,” which is designed to better detect smaller objects. The Kingfisher mode uses the same source level and frequency as normal search modes, however, it uses a different waveform (designed for small objects), a shorter pulse length (< 1 sec), a higher pulse repetition rate (due to the short ranges), and the ping is not omnidirectional, but directed forward. All Kingfisher use in the HRC (approximately 27 hours/year) was modeled as AN/SQS-53, though the less powerful AN/SQS-56 likely accounts for part of the total Kingfisher use as well. *Submarine Sonars* —Submarine sonars (AN/BQQ-10, AN/BQQ-5, or AN/BSY-1) are used to detect and target enemy submarines and surface ships. Because they are trying to avoid being detected, a submarine's use of MFAS is generally rare, very brief, using minimal power, and may be narrowly focused. Modeling for the AN/BQQ-10 (all three submarine types were modeled as AN/BQQ-10, the most powerful submarine sonar source) assumes sonar use of two pings an hour (which is higher than typical), for one second each, at 235 dB re 1 μPa, and using an omni-directional transmission. The AN/BQQ-10 was modeled using the number of hours of predicted use (at two pings per hour). Based on modeling results, the Navy anticipates that the operation of this source may result in some take of marine mammals (see Estimated Take of Marine Mammals Section). *Aircraft Sonar Systems* —Aircraft sonar systems that would operate in the HRC include sonobuoys (SSQ-62) and dipping sonar (AN/AQS-22). A sonobuoy is an expendable device, which may be deployed by maritime patrol aircraft or helicopters, used for the detection of underwater acoustic energy and for conducting vertical water column temperature measurements. Most sonobuoys are passive, but some, like the SSQ-62, can also generate active acoustic signals. The SSQ-62 has a nominal source level of 201 dB re 1 μPa and transmits at a center frequency of 8 kHz. Dipping sonar is an active or passive sonar device lowered on cable helicopters to detect or maintain contact with underwater targets. During ASW training, these systems active modes are only used briefly for localization of contacts and are not used in primary search capacity. The AN/AQS-22 has a nominal source level of 217 dB re 1 μPa and transmits at a center frequency of 4.1 kHz. Based on modeling results, the Navy anticipates that the operation of these two sources may result in some take of marine mammals (see Estimated Take of Marine Mammals Section). *Torpedoes* —Torpedoes are the primary ASW weapon used by surface ships, aircraft, and submarines. The guidance systems of these weapons can be autonomous (acoustically based) or electronically controlled from the launching platform through an attached wire. They operate either passively, exploiting the emitted sound energy by the target, or actively, ensonifying the target and using the received echoes for guidance. We know that the MK-48 operates in the high frequency range (>10 kHZ), however, the nominal source level and the center frequency are classified. Based on modeling results, the Navy anticipates that the operation of this source may result in some take of marine mammals (see Estimated Take of Marine Mammals Section). In addition to the HFA sonar source used to guide the torpedo, the MK-48 is discussed in the “Activities Utilizing Underwater Detonations” Section. *Other Acoustic Sources* —The Navy uses other acoustic sources in ASW exercises. However, based on operational characteristics (such as frequency and source level), the Navy determined that use of the following acoustic sources would not likely result in the take of marine mammals: • Acoustic Device Countermeasures (ADC)—submarine simulators that make sound to act as decoys to avert localization and/or torpedo attacks. • Training Targets—ASW training targets consisting of MK-30 and/or MK-39 Expendable Mobile ASW Training Target (EMATT) are used to simulate opposition submarines. They are equipped with one or a combination of the following devices:
(1)Acoustic projectors emanating sounds to simulate submarine acoustic signatures;
(2)echo repeaters to simulate the characteristics of the echo of a particular sonar signal reflected from a specific type of submarine; and
(3)magnetic sources to trigger magnetic detectors. • Range pingers are active acoustic devices that allow inwater platforms on the range (e.g., submarines, target simulators, and exercise torpedoes) to be tracked by hydrophones on the seafloor such as those at the underwater instrumented range at PMRF. The range hydrophones are also tied in with transducer nodes that are capable of transmitting acoustic signals for a limited set of functions, including submarine warning signals, acoustic commands to submarine target simulators (acoustic command link), and occasional voice or data communications (received by participating ships and submarines on range). Types of ASW Exercises in the HRC ASW training conducted within the HRC involves the use of surface ships, submarines, aircraft, non-explosive and explosive exercise weapons, and other training-related devices. ASW training involves the use of active and passive acoustic devices with training activities occurring in both offshore (<12 nm (22 km) from shore) and open ocean (>12 nm (22 km) from shore) areas. A description of the different exercise types is provided below. Table 2 lists the types of ASW exercises and indicates the areas they are conducted in, the average duration of an exercise, the average number of exercises/per year, and the time of year they are conducted. Table 3, at the end of this section, indicates the total number of hours for each source type anticipated for each year for each exercise type. EP23JN08.002 *Anti-Submarine Warfare Tracking Exercise (ASW TRACKEX)* —An ASW TRACKEX trains aircraft, ship, and submarine crews in tactics, techniques, and procedures for search, detection, and tracking of submarines. No torpedoes are fired during a TRACKEX. ASW TRACKEX includes ships, fixed wing aircraft, helicopters, torpedo targets, submarines, and weapons recovery boats and/or helicopters. As a unit-level exercise, an aircraft, ship, or submarine is typically used versus one target submarine or simulated target. TRACKEXs can include the use of hull-mounted sonar, submarines, or sonobuoys. No explosive ordnance is used in TRACKEX exercises. The target may be non-evading while operating on a specified track or it may be fully evasive, depending on the state of training of the ASW unit. Duration of a TRACKEX is highly dependent on the tracking platform and its available on-station time. A maritime patrol aircraft can remain on station for eight hours, and typically conducts tracking exercises that last three to six hours. An ASW helicopter has a much shorter on-station time, and conducts a typical TRACKEX in one to two hours. Surface ships and submarines, which measure their on-station time in days, conduct tracking exercises exceeding eight hours and averaging up to 18 hours. For modeling purposes, TRACKEX and TORPEX (explained in next section) sonar hours are averaged, resulting in a sonar time of 13.5 hours. ASW TRACKEX events are conducted on ranges within PMRF Warning Area W-188, the Hawaii Offshore Areas and/or the open ocean. Whenever aircraft use the ranges for ASW training, range clearance procedures include a detailed visual range search for marine mammals and unauthorized boats and planes by the aircraft releasing the inert torpedoes, range safety boats/aircraft, and range controllers. TRACKEXs can include the use of hull-mounted sonar, submarines, or sonobuoys, which can result in the take of marine mammals. *Anti-Submarine Warfare Torpedo Exercises (ASW TORPEX)* —Anti-Submarine Warfare Torpedo Exercises (ASW TORPEX) train crews in tracking and attack of submerged targets, firing one or more Recoverable Exercise Torpedoes. TORPEX targets used in the Offshore Areas include submarines, MK-30 ASW training targets, and MK-39 Expendable Mobile ASW Training Targets. The target may be non-evading while operating on a specified track, or it may be fully evasive, depending on the training requirements. Submarines periodically conduct torpedo firing training exercises within the Hawaii Offshore OPAREA. Typical duration of a submarine TORPEX event is 22.7 hours, while air and surface ASW platform TORPEX events are considerably shorter. For modeling purposes, TRACKEX and TORPEX sonar hours are averaged resulting in a sonar time of 13.5 hours. TORPEXs can include the use of hull-mounted sonar, submarines, sonobuoys, or MK-48 torpedoes (inert), which can result in the take of marine mammals. *Rim of the Pacific (RIMPAC)* —RIMPAC is a multi-threat maritime exercise where submarines, surface ships, and aircraft from the U.S. and other countries conduct many different exercise events, including ASW against opposition submarine targets to improve coordination and interoperability of combined, bilateral and joint forces of participating nations. RIMPAC occurs during the summer over a 1-month period every other year (currently in even numbered years). Submarine targets include real submarines, targets that simulate the operations of an actual submarine including those described previously under TORPEX, and virtual submarines interjected into the training events by exercise controllers. ASW training events are complex and highly variable. For RIMPAC, the primary event involves a Surface Action Group (SAG), consisting of one to five surface ships equipped with sonar, with one or more helicopters, and a P-3 aircraft searching for one or more submarines. There will be approximately four to eight SAGs for a typical RIMPAC. For the purposes of analysis, each SAG event is counted as an ASW training activity. One or more ASW events may occur simultaneously within the HRC. There will be approximately 44 ASW training events during a typical RIMPAC, with an average event length of approximately 12 hours (ranging from 2-24 hours). In addition to including potential training with of all of the acoustic sources mentioned previously, RIMPAC includes training events that involve underwater detonations (described in the next section: Activities Utilizing Underwater Detonations), including Sinking Exercise, Air-to-Surface Gunnery Exercise, Surface-to-Surface Gunnery Exercise, Naval Surface Fire Support, Air-to-Surface Missile Exercise, Surface-to-Surface Missile Exercise, Bombing Exercise, Mine Neutralization Exercise, and IEER/EER Exercise. Both the use of the acoustic sources as well as the underwater detonations could result in the take of marine mammals. These exercises involving underwater detonations do not overlap in space and time with sonar exercises. Explosives from RIMPAC have been included in the training events described in the next Section. *Undersea Warfare Exercise (USWEX)* —Carrier Strike Groups
(CSGs)and Expeditionary Strike Groups
(ESGs)that deploy from the west coast of the United States will experience realistic submarine combat conditions and assess submarine warfare training capabilities postures in the HRC prior to their deployment to real world operations elsewhere. As a combined force, submarines, surface ships, and aircraft will conduct ASW against opposition submarine targets, which include real submarines, targets that simulate the operations of an actual submarine, and virtual submarines interjected into the training events by exercise controllers. USWEX training events are complex and highly variable. The primary event involves from one to five surface ships equipped with sonar, with one or more helicopters, and a P-3 aircraft searching for one or more submarines. A total of five exercises using MFAS/HFAS, lasting three to four days each, could occur throughout the year for USWEX. In addition to the use of hull-mounted sonar (AN/SQS-53 and AN/SQS-56), submarine sonar, helicopter dipping sonar, and sonobuoys, USWEX includes training events that involve underwater detonations as described in the next section (Activities Utilizing Underwater Detonations), including Air-to-Surface Gunnery Exercise, Air-to-Surface Missile Exercise, and Bombing Exercise. Both the use of the acoustic sources as well as the underwater detonations could result in the take of marine mammals. These exercises utilizing underwater detonations do not overlap in space and time with sonar exercises. Explosives from USWEX have been included in the training events described in the next section. *Multiple Strike Group Exercise* —A Multiple Strike Group Exercise consists of events that involve Navy assets engaging in a schedule of events battle scenario, with U.S. forces (blue forces) pitted against a notional opposition force (red force). Participants use and build upon previously gained training skill sets to maintain and improve the proficiency needed for a mission-capable, deployment-ready unit. The exercise would occur over a 5-day to 10-day period at any time during the year. As described above for USWEX, as a combined force, submarines, surface ships, and aircraft will conduct ASW against opposition submarine targets. In addition to the use of hull-mounted sonar (AN/SQS-53 and AN/SQS-56), submarine sonar, helicopter dipping sonar, and sonobuoys , the Multiple Strike Group Exercise includes training events that involve underwater detonations as described in the next Section (Activities Utilizing Underwater Detonations), including Sinking Exercise, Air-to-Surface Missile Exercise, Mine Neutralization Exercise, and EER/IEER Exercise. Both the use of the acoustic sources as well as the underwater detonations could result in the take of marine mammals. These exercises utilizing underwater detonations do not overlap in space and time with sonar exercises. Explosives from the Multiple Strike Group Exercise have been included in the events described in the next Section. EP23JN08.003 Activities Utilizing Underwater Detonations Underwater detonation activities can occur at various depths depending on the activity (sinking exercise [SINKEX] and mine neutralization), but may also include activities which may have detonations at or just below the surface (SINKEX, gunnery exercise [GUNEX], or missile exercise [MISSILEX]). When the weapons hit the target except for live torpedo shot, there is no explosion in the water, and so a “hit” is not modeled (i.e., the energy (either acoustic or pressure) from the hit is not expected to reach levels that would result in take of marine mammals). When a live weapon misses, it is modeled as exploding below the water surface at 1 ft (5-inch naval gunfire, 76mm rounds), 2 meters (Maverick, Harpoon, MK-82, MK-83, MK-84), or 50-ft (MK-48 torpedo) as shown in Appendix A of the Navy's application, Table A-7 (the depth is chosen to represent the worst case of the possible scenarios as related to potential marine mammals impacts). Exercises may utilize either live or inert ordnance of the types listed in Table 4. Additionally, successful hit rates are known to the Navy and are utilized in the effects modeling. Training events that involve explosives and underwater detonations occur throughout the year and are described below and summarized in Table 5 at the end of this section. EP23JN08.004 *Sinking Exercise (SINKEX)* —In a SINKEX, a specially prepared, deactivated vessel is deliberately sunk using multiple weapons systems. The exercise provides training to ship and submarine and aircraft crews in delivering both live and inert ordnance on a real target. These target vessels are remediated to standards set by the Environmental Protection Agency. A SINKEX target is towed to sea and set adrift at the SINKEX location. The duration of a SINKEX is unpredictable since it ends when the target sinks, sometimes immediately after the first weapon impact and sometimes only after multiple impacts by a variety of weapons. Typically, the exercise lasts for four to eight hours over one to two days. SINKEXs typically occur only once or twice a year in the HRC. Underwater detonation of several different explosive types could result in the take of marine mammals. Some or all of the following weapons may be employed in a SINKEX: Three HARPOON surface-to-surface and air-to-surface missiles; two to eight air-to-surface Maverick missiles; two to four MK-82 General Purpose Bombs; two Hellfire air-to-surface missiles; one SLAM-ER air-to-surface missile; two-hundred and fifty rounds for a 5-inch gun; and one MK-48 heavyweight submarine-launched torpedo. *Surface-to-Surface Gunnery Exercise (S-S GUNEX)* —Surface gunnery exercises (GUNEX) take place in the open ocean to provide gunnery practice for Navy and Coast Guard ship crews. GUNEX training events conducted in the Offshore OPAREA involve stationary targets such as a MK-42 FAST or a MK-58 marker (smoke) buoy. The gun systems employed against surface targets include the 5-inch, 76 millimeter (mm), 25-mm chain gun, 20-mm Close-in Weapon System (CIWS), and .50 caliber machine gun. Typical ordnance expenditure for a single GUNEX is a minimum of 21 rounds of 5-inch or 76-mm ammunition, and approximately 150 rounds of 25-mm or .50-caliber ammunition. Both live and inert training rounds are used. After impacting the water, the rounds and fragments sink to the bottom of the ocean. A S-S GUNEX lasts approximately two to four hours, depending on target services and weather conditions. Detonation of the live 5-inch and 76-mm rounds could result in the take of marine mammals. *Naval Surface Fire Support Exercise* —Navy surface combatants conduct fire support exercise (FIREX) training events at PMRF on a virtual range against “Fake Island”, located on Barking Sands Tactical Underwater Range (BARSTUR). Fake Island is unique in that it is a virtual landmass simulated in three dimensions. Ships conducting FIREX training against targets on the island are given the coordinates and elevation of targets. PMRF is capable of tracking fired rounds to an accuracy of 30 feet (9.1 m). Detonation of the live 5-inch and 76-mm rounds fired into ocean during this exercise could result in the take of marine mammals. *Air-to-Surface Missile Exercise (A-S MISSILEX)* —The A-S MISSILEX consists of the attacking platform releasing a forward-fired, guided weapon at the designated towed target. The exercise involves locating the target, then designating the target, usually with a laser. A-S MISSILEX training can take place without the release of a live weapon if the attacking platform is carrying a captive air training missile
(CATM)simulating the weapon involved in the training. The CATM MISSILEX is identical to a live-fire exercise in every aspect except that a weapon is not released, nor does it contain any explosives or propellant. The event requires a laser-safe range as the target is designated just as in a live-fire exercise. From 1 to 16 aircraft, carrying live, inert, or CATMs, or flying without ordnance (dry runs) are used during the exercise. At sea, seaborne powered targets (SEPTARs), Improved Surface Towed Targets (ISTTs), and decommissioned hulks are used as targets. A-S MISSILEX assets include helicopters and/or one to 16 fixed wing aircraft with air-to-surface missiles and anti-radiation missiles (electromagnetic radiation source seeking missiles). When a high-speed anti-radiation missile
(HARM)is used, the exercise is called a HARMEX. Targets include SEPTARs, ISTTs, and decommissioned ship hulks. Detonation of live ordnance could result in the take of marine mammals. *Surface-to-Surface Missile Exercise (S-S MISSILEX)* —Surface-to-surface missile exercise (S-S MISSILEX) involves the attack of surface targets at sea by use of cruise missiles or other missile systems, usually by a single ship conducting training in the detection, classification, tracking and engagement of a surface target. Engagement is usually with Harpoon missiles or Standard missiles in the surface-to-surface mode. Targets could include virtual targets or the SEPTAR or ship deployed surface target. S-S MISSILEX training is routinely conducted on individual ships with embedded training devices. A S-S MISSILEX could include four to 20 surface-to-surface missiles, SEPTARs, a weapons recovery boat, and a helicopter for environmental and photo evaluation. All missiles are equipped with instrumentation packages or a warhead. Surface-to-air missiles can also be used in a surface-to-surface mode. S-S MISSILEX activities are conducted within PMRF Warning area W-188. Each exercise typically lasts five hours, though future S-S MISSILEXs could range from four to 35 hours. Missile detonation could result in the take of marine mammals. *Bombing Exercise (BOMBEX)* —Fixed-wing aircraft conduct BOMBEX events against stationary targets (MK-42 FAST or MK-58 smoke buoy) at sea. An aircraft will clear the area, deploy a smoke buoy or other floating target, and then set up a racetrack pattern, dropping on the target with each pass. At PMRF, a range boat might be used to deploy the target for an aircraft to attack. A BOMBEX may involve either live or inert ordnance. Underwater detonation of live ordnance could result in the take of marine mammals. *Mine Neutralization* —Mine Neutralization events involve the detection, identification, evaluation, rendering safe, and disposal of mines and unexploded ordnance
(UXO)that constitutes a threat to ships or personnel. Mine neutralization training can be conducted by a variety of air, surface and subsurface assets. Tactics for neutralization of ground or bottom mines involve a diver placing a specific amount of explosives, which when detonated underwater at a specific distance from a mine results in neutralization of the mine. Floating, or moored, mines involve the diver placing a specific amount of explosives directly on the mine. Floating mines encountered by Fleet ships in open ocean areas will be detonated at the surface. Inert dummy mines are used in the exercises. The total net explosive weight used against each mine ranges from less than one pound to 20 pounds (0.5 to 9.1 kg). Mine neutralization training takes place offshore in Puuloa Underwater Range, Lima Landing, Naval Inactive Ship Maintenance Facility, MCBH, MCTAB, Barters Point Range, Ewa Training Minefield; and in open-ocean areas. Detonation of live ordnance could result in the take of marine mammals. All demolition activities are conducted in accordance with current Navy directives and approved standard operating procedures. Before any explosive is detonated, divers are transported a safe distance away from the explosive. Standard practices for tethered mines in Hawaiian waters require ground mine explosive charges to be suspended 10 feet (3.0 m) below the surface of the water. *EER/IEER AN/SSQ-110A* —The Extended Echo Ranging and Improved Extended Echo Ranging (EER/IEER) Systems are air-launched ASW systems used in conducting “large area” searches for submarines. These systems are made up of airborne avionics ASW acoustic processing and sonobuoy types that are deployed in pairs. The IEER System's active sonobuoy component, the AN/SSQ-110A Sonobuoy, would generate a “ping” (small detonation) and the passive AN/SSQ-101 ADAR Sonobuoy would “listen” for the return echo of the sonar ping that has been bounced off the surface of a submarine. These sonobuoys are designed to provide underwater acoustic data necessary for naval aircrews to quickly and accurately detect submerged submarines. The expendable and commandable sonobuoy pairs are dropped from a fixed-wing aircraft into the ocean in a predetermined pattern (array) with a few buoys covering a very large area. Upon command from the aircraft, the bottom payload is released to sink to a designated operating depth. A second command is required from the aircraft to cause the second payload to release and detonate generating a “ping”. There is only one detonation in the pattern of buoys at a time. Detonation of the buoys could result in the take of marine mammals. *Air-to-Surface Gunnery Exercise (A-S GUNEX)* —Air-to-Surface GUNEX events are conducted by rotary-wing aircraft against stationary targets (Floating at-sea Target [FAST] and smoke buoy). Rotary-wing aircraft involved in this training activity would include a single SH-60 using either 7.62-mm or .50-caliber door-mounted machine guns. A typical A-S GUNEX will last approximately one hour and involve the expenditure of approximately 400 rounds of 50-caliber or 7.62-mm ammunition. Due to the use of small, inert rounds, A-S GUNEXs are not expected to result in the take of marine mammals. EP23JN08.005 Additional information on the Navy's proposed activities may be found in the LOA Application and the FEIS (Section 2 and Appendices D, E, and J). Description of Marine Mammals in the Area of the Specified Activities There are 27 marine mammal species with possible or confirmed occurrence in the HRC. As indicated in Table 6, there are 25 cetacean species (7 mysticetes and 18 odontocetes) and two pinnipeds. Table 6 also includes the estimated abundance, estimated group size, and estimated probability of detection (based on Barlow 2006) of the species that occur in the HRC. Seven marine mammal species listed as federally endangered under the Endangered Species Act
(ESA)occur in the HRC: the humpback whale, North Pacific right whale, sei whale, fin whale, blue whale, sperm whale, and Hawaiian monk seal. The most abundant marine mammals appear to be dwarf sperm whales, striped dolphins, and Fraser's dolphins. The most abundant large whales are sperm whales. BILLING CODE 3510-22-P EP23JN08.006 The Navy has compiled information on the abundance, behavior, status and distribution, and vocalizations of marine mammal species in the Hawaiian waters from peer reviewed literature, the Navy Marine Resource Assessment, NMFS Stock Assessment Reports, and marine mammal surveys using acoustics or visual observations from aircraft or ships. This information may be viewed in the Navy's LOA application and/or the Navy's FEIS for the HRC (see Availability). Additional information is available in NMFS Stock Assessment Reports, which may be viewed at: *http://www.nmfs.noaa.gov/pr/sars/species.htm.* Based on their rare occurrence in the HRC, the Navy and NMFS do not anticipate any effects to Blue whales, North Pacific right whales, or Northern elephant seals and, therefore, they are not addressed further in this document. Important Reproductive Areas Because the consideration of areas where marine mammals are known to selectively breed or calve are important to both the negligible impact finding necessary for the issuance of an MMPA authorization and the need for NMFS to put forth the means of effecting the least practicable adverse impact paying particular attention to rookeries, mating grounds, and other areas of similar significance, we are emphasizing important reproductive areas within this section. Little is known about the breeding and calving behaviors of many of the marine mammals that occur in the HRC. Some delphinid species have calving peaks once or twice a year, but give birth throughout their ranges. The mysticete species that may occur in the HRC are generally thought to migrate from higher to lower latitudes to breed and calve in the winter. With one notable exception, no breeding or calving areas have been identified in the HRC for the species that occur there. However, the main Hawaiian Islands constitute one of the world's most important habitats for the endangered humpback whale. Nearly two-thirds of the entire North Pacific population of humpback whales migrates to Hawaii each winter to engage in breeding, calving and nursing activities important for the survival of their species. The available sighting information and the known preferred breeding habitat (shallow water) indicates that humpback whale densities are much higher (up to almost four whales/square mile) in certain areas and that humpback mothers and calves are concentrated within the 200-m isobath. The Hawaiian Humpback Whale National Marine Sanctuary worked with Dr. Joe Mobley to compile a figure that generally illustrates humpback whale survey data collected between 1993 and 2003 and indicates areas of high and low density (Mobley 2004, Figure 1). EP23JN08.007 BILLING CODE 3510-22-C A Brief Background on Sound An understanding of the basic properties of underwater sound is necessary to comprehend many of the concepts and analyses presented in this document. A summary is included below. Sound is a wave of pressure variations propagating through a medium (for the sonar considered in this proposed rule, the medium is marine water). Pressure variations are created by compressing and relaxing the medium. Sound measurements can be expressed in two forms: intensity and pressure. Acoustic intensity is the average rate of energy transmitted through a unit area in a specified direction and is expressed in watts per square meter (W/m 2 ). Acoustic intensity is rarely measured directly, it is derived from ratios of pressures; the standard reference pressure for underwater sound is 1 microPascal (μPa); for airborne sound, the standard reference pressure is 20 μPa (Richardson *et al.* , 1995). Acousticians have adopted a logarithmic scale for sound intensities, which is denoted in decibels (dB). Decibel measurements represent the ratio between a measured pressure value and a reference pressure value (in this case 1 μPa or, for airborne sound, 20 μPa). The logarithmic nature of the scale means that each 10 dB increase is a ten-fold increase in power ( *e.g.* , 20 dB is a 100-fold increase, 30 dB is a 1,000-fold increase). Humans perceive a 10-dB increase in noise as a doubling of sound level, or a 10 dB decrease in noise as a halving of sound level. The term “sound pressure level” implies a decibel measure and a reference pressure that is used as the denominator of the ratio. Throughout this document, NMFS uses 1 microPascal (denoted re: 1 μPa) as a standard reference pressure unless noted otherwise. It is important to note that decibels underwater and decibels in air are not the same and cannot be directly compared. To estimate a comparison between sound in air and underwater, because of the different densities of air and water and the different decibel standards (i.e., reference pressures) in water and air, a sound with the same intensity (i.e., power) in air and in water would be approximately 63 dB quieter in air. Thus a sound that is 160 dB loud underwater would have the same approximate effective intensity as a sound that is 97 dB loud in air. Sound frequency is measured in cycles per second, or Hertz (abbreviated Hz), and is analogous to musical pitch; high-pitched sounds contain high frequencies and low-pitched sounds contain low frequencies. Natural sounds in the ocean span a huge range of frequencies: from earthquake noise at 5 Hz to harbor porpoise clicks at 150,000 Hz (150 kHz). These sounds are so low or so high in pitch that humans cannot even hear them; acousticians call these infrasonic and ultrasonic sounds, respectively. A single sound may be made up of many different frequencies together. Sounds made up of only a small range of frequencies are called “narrowband”, and sounds with a broad range of frequencies are called “broadband”; airguns are an example of a broadband sound source and tactical sonars are an example of a narrowband sound source. When considering the influence of various kinds of sound on the marine environment, it is necessary to understand that different kinds of marine life are sensitive to different frequencies of sound. Based on available behavioral data, audiograms derived using auditory evoked potential, anatomical modeling, and other data, Southall *et al* .
(2007)designate “functional hearing groups” and estimate the lower and upper frequencies of functional hearing of the groups. Further, the frequency range in which each group's hearing is estimated as being most sensitive is represented in the flat part of the M-weighting functions developed for each group. More specific data is available for certain species (Table 17). The functional groups and the associated frequencies are indicated below: • Low frequency cetaceans (13 species of mysticetes): Functional hearing is estimated to occur between approximately 7 Hz and 22 kHz. • Mid-frequency cetaceans (32 species of dolphins, six species of larger toothed whales, and 19 species of beaked and bottlenose whales): Functional hearing is estimated to occur between approximately 150 Hz and 160 kHz. • High frequency cetaceans (eight species of true porpoises, six species of river dolphins, *Kogia* , the franciscana, and four species of cephalorhynchids): Functional hearing is estimated to occur between approximately 200 Hz and 180 kHz. • Pinnipeds in Water: Functional hearing is estimated to occur between approximately 75 Hz and 75 kHz, with the greatest sensitivity between approximately 700 Hz and 20 kHz. • Pinnipeds in Air: Functional hearing is estimated to occur between approximately 75 Hz and 30 kHz. Because ears adapted to function underwater are physiologically different from human ears, comparisons using decibel measurements in air would still not be adequate to describe the effects of a sound on a whale. When sound travels away from its source, its loudness decreases as the distance traveled (propagates) by the sound increases. Thus, the loudness of a sound at its source is higher than the loudness of that same sound a kilometer distant. Acousticians often refer to the loudness of a sound at its source (typically measured one meter from the source) as the source level and the loudness of sound elsewhere as the received level. For example, a humpback whale three kilometers from an airgun that has a source level of 230 dB may only be exposed to sound that is 160 dB loud, depending on how the sound propagates. As a result, it is important not to confuse source levels and received levels when discussing the loudness of sound in the ocean. As sound travels from a source, its propagation in water is influenced by various physical characteristics, including water temperature, depth, salinity, and surface and bottom properties that cause refraction, reflection, absorption, and scattering of sound waves. Oceans are not homogeneous and the contribution of each of these individual factors is extremely complex and interrelated. The physical characteristics that determine the sound's speed through the water will change with depth, season, geographic location, and with time of day (as a result, in actual sonar operations, crews will measure oceanic conditions, such as sea water temperature and depth, to calibrate models that determine the path the sonar signal will take as it travels through the ocean and how strong the sound signal will be at a given range along a particular transmission path). As sound travels through the ocean, the intensity associated with the wavefront diminishes, or attenuates. This decrease in intensity is referred to as propagation loss, also commonly called transmission loss. Metrics Used in This Document This section includes a brief explanation of the two sound measurements (sound pressure level
(SPL)and sound exposure level (SEL)) frequently used in the discussions of acoustic effects in this document. SPL Sound pressure is the sound force per unit area, and is usually measured in micropascals (μPa), where 1 Pa is the pressure resulting from a force of one newton exerted over an area of one square meter. SPL is expressed as the ratio of a measured sound pressure and a reference level. The commonly used reference pressure level in underwater acoustics is 1 μPa, and the units for SPLs are dB re: 1 μPa. SPL (in dB) = 20 log (pressure/reference pressure) SPL is an instantaneous measurement and can be expressed as the peak, the peak-peak, or the root mean square (rms). Root mean square, which is the square root of the arithmetic average of the squared instantaneous pressure values, is typically used in discussions of the effects of sounds on vertebrates and all references to SPL in this document refer to the root mean square. SPL does not take the duration of a sound into account. SPL is the applicable metric used in the risk continuum, which is used to estimate behavioral harassment takes (see Level B Harassment Risk Function (Behavioral Harassment) Section). SEL SEL is an energy metric that integrates the squared instantaneous sound pressure over a stated time interval. The units for SEL are dB re: 1 μPa 2 s. SEL = SPL + 10log(duration in seconds) As applied to tactical sonar, the SEL includes both the SPL of a sonar ping and the total duration. Longer duration pings and/or pings with higher SPLs will have a higher SEL. If an animal is exposed to multiple pings, the SEL in each individual ping is summed to calculate the total SEL. The total SEL depends on the SPL, duration, and number of pings received. The thresholds that NMFS uses to indicate at what received level the onset of temporary threshold shift
(TTS)and permanent threshold shift
(PTS)in hearing are likely to occur are expressed in SEL. Potential Effects of Specified Activities on Marine Mammals Exposure to MFAS/HFAS The Navy has requested authorization for the take of marine mammals that may occur incidental to training activities in the HRC utilizing MFAS/HFAS or underwater explosives. The Navy has analyzed other Navy activities in the HRC, both ongoing and proposed, and in consultation with NMFS as a cooperating agency for the HRC EIS, has determined that take of marine mammals incidental to other Navy activities is unlikely and, therefore, has not requested authorization for take of marine mammals that might occur incidental to any other activities. Therefore, NMFS will analyze the potential effects on marine mammals from MFAS/HFAS and underwater detonations, but not from other activities. For the purposes of MMPA authorizations, NMFS's effects assessments have three primary purposes:
(1)To put forth the permissible methods of taking within the context of MMPA Level B Harassment (behavioral harassment), Level A Harassment (injury), and mortality (i.e., identify the number and types of take that will occur);
(2)to determine whether the specified activity will have a negligible impact on the affected species or stocks of marine mammals (based on the likelihood that the activity will adversely affect the species or stock through effects on annual rates of recruitment or survival); and
(3)to determine whether the specified activity will have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (however, there are no subsistence communities that would be affected in the HRC, so this determination is inapplicable for the HRC). More specifically, for activities involving active tactical sonar or underwater detonations, NMFS's analysis will identify the probability of lethal responses, physical trauma, sensory impairment (permanent and temporary threshold shifts and acoustic masking), physiological responses (particular stress responses), behavioral disturbance (that rises to the level of harassment), and social responses that would be classified as behavioral harassment or injury and/or would be likely to adversely affect the species or stock through effects on annual rates of recruitment or survival. In this section, we will focus qualitatively on the different ways that MFAS/HFAS and underwater explosive detonations may affect marine mammals (some of which NMFS would not classify as harassment). Then, in the Estimated Take of Marine Mammals Section, NMFS will relate the potential effects to marine mammals from MFAS/HFAS and underwater detonation of explosives to the MMPA regulatory definitions of Level A and Level B Harassment and attempt to quantify those effects. In its April 14, 2008, Biological Opinion of the U.S. Navy's proposal to conduct four training exercises in the Cherry Point, Virginia Capes, and Jacksonville, Range Complexes NMFS presented a conceptual model of the potential responses of endangered and threatened species upon being exposed to active sonar and the pathways by which those responses might affect the fitness of individual animals that have been exposed, which may then affect the reproduction and/or survival of those individuals. Literature supporting the framework, with examples drawn from many taxa (both aquatic and terrestrial) was included in the “Application of this Approach” and “Response Analyses” sections of that document (available at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* ). This conceptual framework may also be used to describe the responses and pathways for non-endangered and non-threatened species and is included in this document for reference (Figure 2). BILLING CODE 3510-22-P EP23JN08.008 BILLING CODE 3510-22-C Direct Physiological Effects Based on the literature, there are two basic ways that MFAS/HFAS might directly result in physical trauma or damage: Noise-induced loss of hearing sensitivity (more commonly-called “threshold shift”) and acoustically mediated bubble growth. Separately, an animal's behavioral reaction to an acoustic exposure might lead to physiological effects that might ultimately lead to injury or death, which is discussed later in the Stranding section. Threshold Shift (Noise-Induced Loss of Hearing) When animals exhibit reduced hearing sensitivity (i.e., sounds must be louder for an animal to recognize them) following exposure to a sufficiently intense sound, it is referred to as a noise-induced threshold shift (TS). An animal can experience temporary threshold shift
(TTS)or permanent threshold shift (PTS). TTS can last from minutes or hours to days (i.e., there is recovery), occurs in specific frequency ranges (i.e., an animal might only have a temporary loss of hearing sensitivity between the frequencies of 1 and 10 kHz)), and can be of varying amounts (for example, an animal's hearing sensitivity might be reduced by only 6 dB or reduced by 30 dB). PTS is permanent (i.e., there is no recovery), but also occurs in a specific frequency range and amount as mentioned. The following physiological mechanisms are thought to play a role in inducing auditory TSs: Effects to sensory hair cells in the inner ear that reduce their sensitivity, modification of the chemical environment within the sensory cells, residual muscular activity in the middle ear, displacement of certain inner ear membranes, increased blood flow, and post-stimulatory reduction in both efferent and sensory neural output (Southall *et al.* , 2007). The amplitude, duration, frequency, temporal pattern, and energy distribution of sound exposure all affect the amount of associated TS and the frequency range in which it occurs. As amplitude and duration of sound exposure increase, so, generally, does the amount of TS. For continuous sounds, exposures of equal energy (the same SEL) will lead to approximately equal effects. For intermittent sounds, less TS will occur than from a continuous exposure with the same energy (some recovery will occur between exposures) (Kryter *et al.* , 1966; Ward, 1997). For example, one short but loud (higher SPL) sound exposure may induce the same impairment as one longer but softer sound, which in turn may cause more impairment than a series of several intermittent softer sounds with the same total energy (Ward, 1997). Additionally, though TTS is temporary, very prolonged exposure to sound strong enough to elicit TTS, or shorter-term exposure to sound levels well above the TTS threshold, can cause PTS, at least in terrestrial mammals (Kryter, 1985) (although in the case of MFAS/HFAS, animals are not expected to be exposed to levels high enough or durations long enough to result in PTS). PTS is considered auditory injury (Southall *et al.* , 2007). Irreparable damage to the inner or outer cochlear hair cells may cause PTS, however, other mechanisms are also involved, such as exceeding the elastic limits of certain tissues and membranes in the middle and inner ears and resultant changes in the chemical composition of the inner ear fluids (Southall *et al.* , 2007). Although the published body of scientific literature contains numerous theoretical studies and discussion papers on hearing impairments that can occur with exposure to a loud sound, only a few studies provide empirical information on the levels at which noise-induced loss in hearing sensitivity occurs in nonhuman animals. For cetaceans, published data are limited to the captive bottlenose dolphin and beluga (Finneran *et al.* , 2000, 2002b, 2005a; Schlundt *et al.* , 2000; Nachtigall *et al.* , 2003, 2004). For pinnipeds in water, data is limited to Kastak *et al.* 's measurement of TTS in one harbor seal, one elephant seal, and one California sea lion. Marine mammal hearing plays a critical role in communication with conspecifics, and interpreting environmental cues for purposes such as predator avoidance and prey capture. Depending on the degree (dB), duration, and frequency range of TTS, and the context in which it is experienced, TTS can have effects on marine mammals ranging from discountable to serious (similar to those discussed in auditory masking, below). For example, a marine mammal may be able to readily compensate for a brief, relatively small amount of TTS in a non-critical frequency range that takes place during a time when the animal is traveling through the open ocean, where ambient noise is lower and there are not as many competing sounds present. Alternatively, a larger amount and longer duration of TTS sustained during time when communication is critical for successful mother/calf interactions could have more serious impacts. Also, depending on the degree and frequency range, the effects of PTS on an animal could range in severity, although it is considered generally more serious because it is a long term condition. Of note, reduced hearing sensitivity as a simple function of development and aging has been observed in marine mammals, as well as humans and other taxa (Southall *et al.* , 2007), so we can infer that strategies exist for coping with this condition to some degree, though likely not without cost. There is no empirical evidence that exposure to MFAS/HFAS can cause PTS in any marine mammals; instead the probability of PTS has been inferred from studies of TTS (see Richardson *et al.* 1995). Acoustically Mediated Bubble Growth One theoretical cause of injury to marine mammals is rectified diffusion (Crum and Mao, 1996), the process of increasing the size of a bubble by exposing it to a sound field. This process could be facilitated if the environment in which the ensonified bubbles exist is supersaturated with gas. Repetitive diving by marine mammals can cause the blood and some tissues to accumulate gas to a greater degree than is supported by the surrounding environmental pressure (Ridgway and Howard, 1979). The deeper and longer dives of some marine mammals (for example, beaked whales) are theoretically predicted to induce greater supersaturation (Houser *et al.* , 2001b). If rectified diffusion were possible in marine mammals exposed to high-level sound, conditions of tissue supersaturation could theoretically speed the rate and increase the size of bubble growth. Subsequent effects due to tissue trauma and emboli would presumably mirror those observed in humans suffering from decompression sickness. It is unlikely that the short duration of sonar pings would be long enough to drive bubble growth to any substantial size, if such a phenomenon occurs. Recent work conducted by Crum *et al.*
(2005)demonstrated the possibility of rectified diffusion for short duration signals, but at sound exposure levels and tissue saturations levels that are improbable to occur in a diving marine mammal. However, an alternative but related hypothesis has also been suggested: Stable bubbles could be destabilized by high-level sound exposures such that bubble growth then occurs through static diffusion of gas out of the tissues. In such a scenario the marine mammal would need to be in a gas-supersaturated state for a long enough period of time for bubbles to become of a problematic size. Yet another hypothesis (decompression sickness) has speculated that rapid ascent to the surface following exposure to a startling sound might produce tissue gas saturation sufficient for the evolution of nitrogen bubbles (Jepson *et al.* , 2003; Fernandez *et al.* , 2005). In this scenario, the rate of ascent would need to be sufficiently rapid to compromise behavioral or physiological protections against nitrogen bubble formation. Collectively, these hypotheses can be referred to as “hypotheses of acoustically mediated bubble growth.” Although theoretical predictions suggest the possibility for acoustically mediated bubble growth, there is considerable disagreement among scientists as to its likelihood (Piantadosi and Thalmann, 2004; Evans and Miller, 2003). Crum and Mao
(1996)hypothesized that received levels would have to exceed 190 dB in order for there to be the possibility of significant bubble growth due to supersaturation of gases in the blood (i.e., rectified diffusion). More recent work conducted by Crum *et al.*
(2005)demonstrated the possibility of rectified diffusion for short duration signals, but at SELs and tissue saturation levels that are highly improbable to occur in diving marine mammals. To date, Energy Levels
(ELs)predicted to cause in vivo bubble formation within diving cetaceans have not been evaluated (NOAA, 2002b). Although it has been argued that traumas from some recent beaked whale strandings are consistent with gas emboli and bubble-induced tissue separations (Jepson *et al.* , 2003), there is no conclusive evidence of this. However, Jepson *et al.* (2003, 2005) and Fernandez *et al.* (2004, 2005) concluded that in vivo bubble formation, which may be exacerbated by deep, long-duration, repetitive dives may explain why beaked whales appear to be particularly vulnerable to sonar exposures. Further investigation is needed to further assess the potential validity of these hypotheses. More information regarding hypotheses that attempt to explain how behavioral responses to MFAS/HFAS can lead to strandings is included in the Behaviorally Mediated Bubble Growth Section, after the summary of strandings. Acoustic Masking Marine mammals use acoustic signals for a variety of purposes, which differ among species, but include communication between individuals, navigation, foraging, reproduction, and learning about their environment (Erbe and Farmer, 2000; Tyack, 2000). Masking, or auditory interference, generally occurs when sounds in the environment are louder than and of a similar frequency to, auditory signals an animal is trying to receive. Masking is a phenomenon that affects animals that are trying to receive acoustic information about their environment, including sounds from other members of their species, predators, prey, and sounds that allow them to orient in their environment. Masking these acoustic signals can disturb the behavior of individual animals, groups of animals, or entire populations. The extent of the masking interference depends on the spectral, temporal, and spatial relationships between the signals an animal is trying to receive and the masking noise, in addition to other factors. In humans, significant masking of tonal signals occurs as a result of exposure to noise in a narrow band of similar frequencies. As the sound level increases, though, the detection of frequencies above those of the masking stimulus decreases also. This principle is expected to apply to marine mammals as well because of common biomechanical cochlear properties across taxa. Richardson *et al.* (1995b) argued that the maximum radius of influence of an industrial noise (including broadband low frequency sound transmission) on a marine mammal is the distance from the source to the point at which the noise can barely be heard. This range is determined by either the hearing sensitivity of the animal or the background noise level present. Industrial masking is most likely to affect some species' ability to detect communication calls and natural sounds (i.e., surf noise, prey noise, etc.; Richardson *et al.* , 1995). The echolocation calls of toothed whales are subject to masking by high frequency sound. Human data indicate low frequency sound can mask high frequency sounds (i.e., upward masking). Studies on captive odontocetes by Au *et al.* (1974, 1985, 1993) indicate that some species may use various processes to reduce masking effects (e.g., adjustments in echolocation call intensity or frequency as a function of background noise conditions). There is also evidence that the directional hearing abilities of odontocetes are useful in reducing masking at the high frequencies these cetaceans use to echolocate, but not at the low-to-moderate frequencies they use to communication (Zaitseva *et al.,* 1980). As mentioned previously, the functional hearing ranges of mysticetes, odontocetes, and pinnipeds all encompass the frequencies of the sonar sources used in the Navy's training exercises. Additionally, almost all species vocal repertoires span across the frequencies of the sonar sources used by the Navy. The closer the characteristics of the masking signal to the signal of interest, the more likely masking is to occur. However, due to the pulse length and duty cycle of the MFAS/HFAS signal, masking is unlikely to occur as a result of exposure to MFAS/HFAS during the training exercises in the HRC. Impaired Communication In addition to making it more difficult for animals to perceive acoustic cues in their environment, anthropogenic sound presents separate challenges for animals that are vocalizing. When they vocalize, animals are aware of environmental conditions that affect the “active space” of their vocalizations, which is the maximum area within which their vocalizations can be detected before it drops to the level of ambient noise (Brenowitz, 2004; Brumm *et al.* , 2004; Lohr *et al.* , 2003). Animals are also aware of environmental conditions that affect whether listeners can discriminate and recognize their vocalizations from other sounds, which are more important than detecting a vocalization (Brenowitz, 1982; Brumm *et al.* , 2004; Dooling, 2004; Marten and Marler, 1977; Patricelli *et al.* , 2006). Most animals that vocalize have evolved with an ability to make vocal adjustments to their vocalizations to increase the signal-to-noise ratio, active space, and recognizability of their vocalizations in the face of temporary changes in background noise (Brumm *et al.* , 2004; Patricelli *et al.* , 2006). Vocalizing animals will make one or more of the following adjustments to their vocalizations: Adjust the frequency structure; Adjust the amplitude; Adjust temporal structure; or Adjust temporal delivery (see Biological Opinion). Many animals will combine several of these strategies to compensate for high levels of background noise. Anthropogenic sounds that reduce the signal-to-noise ratio of animal vocalizations, increase the masked auditory thresholds of animals listening for such vocalizations, or reduce the active space of an animal's vocalizations impair communication between animals. Most animals that vocalize have evolved strategies to compensate for the effects of short-term or temporary increases in background or ambient noise on their songs or calls. Although the fitness consequences of these vocal adjustments remain unknown, like most other trade-offs animals must make, some of these strategies probably come at a cost (Patricelli *et al.* , 2006). For example, vocalizing more loudly in noisy environments may have energetic costs that decrease the net benefits of vocal adjustment and alter a bird's energy budget (Brumm, 2004; Wood and Yezerinac, 2006). Shifting songs and calls to higher frequencies may also impose energetic costs (Lambrechts, 1996). Stress Responses Classic stress responses begin when an animal's central nervous system perceives a potential threat to its homeostasis. That perception triggers stress responses regardless of whether a stimulus actually threatens the animal; the mere perception of a threat is sufficient to trigger a stress response (Moberg, 2000; Sapolsky *et al.* , 2005; Seyle, 1950). Once an animal's central nervous system perceives a threat, it mounts a biological response or defense that consists of a combination of the four general biological defense responses: behavioral responses, autonomic nervous system responses, neuroendocrine responses, or immune response. In the case of many stressors, an animal's first and most economical (in terms of biotic costs) response is behavioral avoidance of the potential stressor or avoidance of continued exposure to a stressor. An animal's second line of defense to stressors involves the autonomic nervous system and the classical “fight or flight” response which includes the cardiovascular system, the gastrointestinal system, the exocrine glands, and the adrenal medulla to produce changes in heart rate, blood pressure, and gastrointestinal activity that humans commonly associate with “stress.” These responses have a relatively short duration and may or may not have significant long-term effect on an animal's welfare. An animal's third line of defense to stressors involves its neuroendocrine or sympathetic nervous systems; the system that has received the most study has been the hypothalmus-pituitary-adrenal system (also known as the HPA axis in mammals or the hypothalamus-pituitary-interrenal axis in fish and some reptiles). Unlike stress responses associated with the autonomic nervous system, virtually all neuro-endocrine functions that are affected by stress—including immune competence, reproduction, metabolism, and behavior—are regulated by pituitary hormones. Stress-induced changes in the secretion of pituitary hormones have been implicated in failed reproduction (Moberg, 1987; Rivier, 1995) and altered metabolism (Elasser *et al.,* 2000), reduced immune competence (Blecha, 2000) and behavioral disturbance. Increases in the circulation of glucocorticosteroids (cortisol, corticosterone, and aldosterone in marine mammals; see Romano *et al.* , 2004) have been equated with stress for many years. The primary distinction between stress (which is adaptive and does not normally place an animal at risk) and distress is the biotic cost of the response. During a stress response, an animal uses glycogen stores that can be quickly replenished once the stress is alleviated. In such circumstances, the cost of the stress response would not pose a risk to the animal's welfare. However, when an animal does not have sufficient energy reserves to satisfy the energetic costs of a stress response, energy resources must be diverted from other biotic function, which impairs those functions that experience the diversion. For example, when mounting a stress response diverts energy away from growth in young animals, those animals may experience stunted growth. When mounting a stress response diverts energy from a fetus, an animal's reproductive success and its fitness will suffer. In these cases, the animals will have entered a pre-pathological or pathological state which is called “distress” (sensu Seyle 1950) or “allostatic loading” (sensu McEwen and Wingfield, 2003). This pathological state will last until the animal replenishes its biotic reserves sufficient to restore normal function. Relationships between these physiological mechanisms, animal behavior, and the costs of stress responses have also been documented fairly well through controlled experiment; because this physiology exists in every vertebrate that has been studied, it is not surprising that stress responses and their costs have been documented in both laboratory and free-living animals (for examples see, Holberton *et al.* , 1996; Hood *et al.* , 1998; Jessop *et al.* , 2003; Krausman *et al.* , 2004; Lankford *et al.* , 2005; Reneerkens *et al.* , 2002; Thompson and Hamer, 2000). Although no information has been collected on the physiological responses of marine mammals to exposure to anthropogenic sounds, studies of other marine animals and terrestrial animals would lead us to expect some marine mammals to experience physiological stress responses and, perhaps, physiological responses that would be classified as “distress” upon exposure to mid-frequency and low-frequency sounds. For example, Jansen
(1998)reported on the relationship between acoustic exposures and physiological responses that are indicative of stress responses in humans (for example, elevated respiration and increased heart rates). Jones
(1998)reported on reductions in human performance when faced with acute, repetitive exposures to acoustic disturbance. Trimper *et al.*
(1998)reported on the physiological stress responses of osprey to low-level aircraft noise while Krausman *et al.*
(2004)reported on the auditory and physiology stress responses of endangered Sonoran pronghorn to military overflights. Smith *et al.* (2004a, 2004b) identified noise-induced physiological transient stress responses in hearing-specialist fish that accompanied short- and long-term hearing losses. Welch and Welch
(1970)reported physiological and behavioral stress responses that accompanied damage to the inner ears of fish and several mammals. Hearing is one of the primary senses cetaceans use to gather information about their environment and to communicate with conspecifics. Although empirical information on the relationship between sensory impairment (TTS, PTS, and acoustic masking) on cetaceans remains limited, it seems reasonable to assume that reducing an animal's ability to gather information about its environment and to communicate with other members of its species would be stressful for animals that use hearing as their primary sensory mechanism. Therefore, we assume that acoustic exposures sufficient to trigger onset PTS or TTS would be accompanied by physiological stress responses because terrestrial animals exhibit those responses under similar conditions (NRC, 2003). More importantly, marine mammals might experience stress responses at received levels lower than those necessary to trigger onset TTS. Based on empirical studies of the time required to recover from stress responses (Moberg, 2000), we also assume that stress responses are likely to persist beyond the time interval required for animals to recover from TTS and might result in pathological and pre-pathological states that would be as significant as behavioral responses to TTS. Behavioral Disturbance Behavioral responses to sound are highly variable and context-specific. Exposure of marine mammals to sound sources can result in (but is not limited to) the following observable responses: Increased alertness; orientation or attraction to a sound source; vocal modifications; cessation of feeding; cessation of social interaction; alteration of movement or diving behavior; habitat abandonment (temporary or permanent); and, in severe cases, panic, flight, stampede, or stranding, potentially resulting in death (Southall *et al.* , 2007). Many different variables can influence an animals perception of and response to (nature and magnitude) an acoustic event. An animals prior experience with a sound type effects whether it is less likely (habituation) or more likely (sensitization) to respond to certain sounds in the future (animals can also be innately pre-disposed to respond to certain sounds in certain ways) (Southall *et al.* , 2007). Related to the sound itself, the perceived nearness of the sound, bearing of the sound (approaching vs. retreating), similarity of a sound to biologically relevant sounds in the animal's environment (i.e., calls of predators, prey, or conspecifics), and familiarity of the sound may effect the way an animal responds to the sound (Southall *et al.* , 2007). Individuals (of different age, gender, reproductive status, etc.) among most populations will have variable hearing capabilities, and differing behavioral sensitivities to sounds that will be affected by prior conditioning, experience, and current activities of those individuals. Often, specific acoustic features of the sound and contextual variables (i.e., proximity, duration, or recurrence of the sound or the current behavior that the marine mammal is engaged in or its prior experience), as well as entirely separate factors such as the physical presence of a nearby vessel, may be more relevant to the animal's response than the received level alone. There are few empirical studies of avoidance responses of free-living cetaceans to mid-frequency sonars. Much more information is available on the avoidance responses of free-living cetaceans to other acoustic sources, like seismic airguns and low frequency sonar, than mid-frequency active sonar. Richardson *et al.* ,
(1995)noted that avoidance reactions are the most obvious manifestations of disturbance in marine mammals. Behavioral Responses (Southall et al. (2007)) Southall *et al.* ,
(2007)reports the results of the efforts of a panel of experts in acoustic research from behavioral, physiological, and physical disciplines that convened and reviewed the available literature on marine mammal hearing and physiological and behavioral responses to man-made sound with the goal of proposing exposure criteria for certain effects. This compilation of literature is very valuable, though Southall *et al.* note that not all data is equal, some have poor statistical power, insufficient controls, and/or limited information on received levels, background noise, and other potentially important contextual variables—such data were reviewed and sometimes used for qualitative illustration, but were not included in the quantitative analysis for the criteria recommendations. In the Southall *et al.,*
(2007)report, for the purposes of analyzing responses of marine mammals to anthropogenic sound and developing critieria, the authors differentiate between single pulse sounds, multiple pulse sounds, and non-pulse sounds. MFAS/HFAS sonar is considered a non-pulse sound. Southall *et al.,*
(2007)summarize the reports associated with low and mid-frequency cetacean and pinniped responses to non-pulse sounds (there are no high frequency cetaceans in Hawaii) in Appendix C of their report (incorporated by reference and summarized in the three paragraphs below). The reports that address responses of low frequency cetaceans to non-pulse sounds include data gathered in the field and related to several types of sound sources (of varying similarity to MFAS/HFAS) including: Vessel noise, drilling and machinery playback, low frequency M-sequences (sine wave with multiple phase reversals) playback, low frequency active sonar playback, drill ships, Acoustic Thermometry of Ocean Climate
(ATOC)source, and non-pulse playbacks. These reports generally indicate no (or very limited) responses to received levels in the 90 to 120 dB re: 1 Pa range and an increasing likelihood of avoidance and other behavioral effects in the 120 to 160 dB range. As mentioned earlier, though, contextual variables play a very important role in the reported responses and the severity of effects are not linear when compared to received level. Also, though, few of the laboratory or field datasets had common conditions, behavioral contexts or sound sources, so it is not surprising that responses differ. The reports that address responses of mid-frequency cetaceans to non-pulse sounds include data gathered both in the field and the laboratory and related to several different sound sources (of varying similarity to MFAS/HFAS) including: Pingers, drilling playbacks, ship and ice-breaking noise, vessel noise, Acoustic Harassment Devices (AHDs), Acoustic Deterrent Devices (ADDs), MFAS, and non-pulse bands and tones. Southall *et al.* were unable to come to a clear conclusion regarding these reports. In some cases, animals in the field showed significant responses to received levels between 90 and 120 dB, while in other cases these responses were not seen in the 120 to 150 dB range. The disparity in results was likely due to contextual variation and the differences between the results in the field and laboratory data (animals responded at lower levels in the field). The reports that address the responses of pinnipeds in water to non-pulse sounds include data gathered both in the field and the laboratory and related to several different sound sources (of varying similarity to MFAS/HFAS) including: AHDs, ATOC, various non-pulse sounds used in underwater data communication; underwater drilling, and construction noise. Few studies exist with enough information to include them in the analysis. The limited data suggested that exposures to non-pulse sounds between 90 and 140 dB generally do not result in strong behavioral responses in pinnipeds in water and no data exist at higher received levels. In addition to summarizing the available data, the authors of Southall *et al.*
(2007)developed a severity scaling system with the intent of ultimately being able to assign some level of biological significance to a response. Following is a summary of their scoring system, a comprehensive list of the behaviors associated with each score may be found in the report: • 0-3 (Minor and/or brief behaviors) includes, but is not limited to: No response; minor changes in speed or locomotion (but with no avoidance); individual alert behavior; minor cessation in vocal behavior; minor changes in response to trained behaviors (in laboratory). • 4-6 (Behaviors with higher potential to affect foraging, reproduction, or survival) includes, but is not limited to: Moderate changes in speed, direction, or dive profile; brief shift in group distribution; prolonged cessation or modification of vocal behavior (duration > duration of sound), minor or moderate individual and/or group avoidance of sound; brief cessation of reproductive behavior; or refusal to initiate trained tasks (in laboratory). • 7-9 (Behaviors considered likely to affect the aforementioned vital rates) includes, but is not limited to: Extensive of prolonged aggressive behavior; moderate, prolonged or significant separation of females and dependent offspring with disruption of acoustic reunion mechanisms; long-term avoidance of an area; outright panic, stampede, stranding; threatening or attacking sound source (in laboratory). In Table 7 we have summarized the scores that Southall *et al* .
(2007)assigned to the papers that reported behavioral responses of low-frequency cetaceans, mid-frequency cetaceans, and pinnipeds in water to non-pulse sounds. EP23JN08.009 Potential Effects of Behavioral Disturbance The different ways that marine mammals respond to sound are sometimes indicators of the ultimate effect that exposure to a given stimulus will have on the well-being (survival, reproduction, etc.) of an animal (see Figure 2). There is little marine mammal data quantitatively relating the exposure of marine mammals to sound to effects on reproduction or survival, though data exists for terrestrial species to which we can draw comparisons for marine mammals. Attention is the cognitive process of selectively concentrating on one aspect of an animal's environment while ignoring other things (Posner, 1994). Because animals (including humans) have limited cognitive resources, there is a limit to how much sensory information they can process at any time. The phenomenon called “attentional capture” occurs when a stimulus (usually a stimulus that an animal is not concentrating on or attending to) “captures” an animal's attention. This shift in attention can occur consciously or unconsciously (for example, when an animal hears sounds that it associates with the approach of a predator) and the shift in attention can be sudden (Dukas, 2002; van Rij, 2007). Once a stimulus has captured an animal's attention, the animal can respond by ignoring the stimulus, assuming a “watch and wait” posture, or treat the stimulus as a disturbance and respond accordingly, which includes scanning for the source of the stimulus or “vigilance” (Cowlishaw *et al.* , 2004). Vigilance is normally an adaptive behavior that helps animals determine the presence or absence of predators, assess their distance from conspecifics, or to attend cues from prey (Bednekoff and Lima,1998; Treves, 2000). Despite those benefits, however, vigilance has a cost of time: when animals focus their attention on specific environmental cues, they are not attending to other activities such a foraging. These costs have been documented best in foraging animals, where vigilance has been shown to substantially reduce feeding rates (Saino, 1994; Beauchamp and Livoreil, 1997; Fritz *et al.* , 2002). Animals will spend more time being vigilant, which may translate to less time foraging or resting, when disturbance stimuli approach them more directly, remain at closer distances, have a greater group size (for example, multiple surface vessels), or when they co-occur with times that an animal perceives increased risk (for example, when they are giving birth or accompanied by a calf). Most of the published literature, however, suggests that direct approaches will increase the amount of time animals will dedicate to being vigilant. For example, bighorn sheep and Dall's sheep dedicated more time being vigilant, and less time resting or foraging, when aircraft made direct approaches over them (Frid, 2001; Stockwell *et al.* , 1991). Several authors have established that long-term and intense disturbance stimuli can cause population declines by reducing the body condition of individuals that have been disturbed, followed by reduced reproductive success, reduced survival, or both (Daan *et al.* , 1996; Madsen, 1994; White, 1983). For example, Madsen
(1994)reported that pink-footed geese ( *Anser brachyrhynchus* ) in undisturbed habitat gained body mass and had about a 46-percent reproductive success compared with geese in disturbed habitat (being consistently scared off the fields on which they were foraging) which did not gain mass and has a 17 percent reproductive success. Similar reductions in reproductive success have been reported for mule deer ( *Odocoileus hemionus* ) disturbed by all-terrain vehicles (Yarmoloy *et al.* , 1988), caribou disturbed by seismic exploration blasts (Bradshaw *et al.* , 1998), caribou disturbed by low-elevation military jet-fights (Luick *et al.* , 1996), and caribou disturbed by low-elevation jet flights (Harrington and Veitch, 1992). Similarly, a study of elk ( *Cervus elaphus* ) that were disturbed experimentally by pedestrians concluded that the ratio of young to mothers was inversely related to disturbance rate (Phillips and Alldredge, 2000). The primary mechanism by which increased vigilance and disturbance appear to affect the fitness of individual animals is by disrupting an animal's time budget and, as a result, reducing the time they might spend foraging and resting (which increases an animal's activity rate and energy demand). For example, a study of grizzly bears ( *Ursus horribilis* ) reported that bears disturbed by hikers reduced their energy intake by an average of 12 kcal/min (50.2 × 103kJ/min), and spent energy fleeing or acting aggressively toward hikers (White *et al.* 1999). On a related note, many animals perform vital functions, such as feeding, resting, traveling, and socializing, on a diel cycle (24-hr cycle). Substantive behavioral reactions to noise exposure (such as disruption of critical life functions, displacement, or avoidance of important habitat) are more likely to be significant if they last more than one diel cycle or recur on subsequent days (Southall *et al.* , 2007). Consequently, a behavioral response lasting less than one day and not recurring on subsequent days is not considered particularly severe unless it could directly affect reproduction or survival (Southall *et al.* , 2007). Stranding and Mortality When a live or dead marine mammal swims or floats onto shore and becomes “beached” or incapable of returning to sea, the event is termed a “stranding” (Geraci *et al.* , 1999; Perrin and Geraci, 2002; Geraci and Lounsbury, 2005; National Marine Fisheries Service, 2007p). The legal definition for a stranding within the United States is that “a marine mammal is dead and is
(i)on a beach or shore of the United States; or
(ii)in waters under the jurisdiction of the United States (including any navigable waters); or
(B)a marine mammal is alive and is
(i)on a beach or shore of the United States and is unable to return to the water;
(ii)on a beach or shore of the United States and, although able to return to the water, is in need of apparent medical attention; or
(iii)in the waters under the jurisdiction of the United States (including any navigable waters), but is unable to return to its natural habitat under its own power or without assistance.” (16 U.S.C. 1421h). Marine mammals are known to strand for a variety of reasons, such as infectious agents, biotoxicosis, starvation, fishery interaction, ship strike, unusual oceanographic or weather events, sound exposure, or combinations of these stressors sustained concurrently or in series. However, the cause or causes of most stranding are unknown (Geraci *et al.* , 1976; Eaton, 1979, Odell *et al.* , 1980; Best, 1982). Numerous studies suggest that the physiology, behavior, habitat relationships, age, or condition of cetaceans may cause them to strand or might pre-dispose them the strand when exposed to another phenomenon. These suggestions are consistent with the conclusions of numerous other studies that have demonstrated that combinations of dissimilar stressors commonly combine to kill an animal or dramatically reduce its fitness, even though one exposure without the other does not produce the same result (Chroussos, 2000; Creel, 2005; DeVries *et al.* , 2003; Fair and Becker, 2000; Foley *et al.* , 2001; Moberg, 2000; Relyea, 2005a; 2005b, Romero, 2004; Sih *et al.* , 2004). Several sources have published lists of mass stranding events of cetaceans during attempts to identify relationships between those stranding events and military sonar (Hildebrand, 2004; IWC, 2005; Taylor *et al.* , 2004). For example, based on a review of stranding records between 1960 and 1995, the International Whaling Commission
(2005)identified ten mass stranding events of Cuvier's beaked whales had been reported and one mass stranding of four Baird's beaked whales ( *Berardius bairdii* ). The IWC concluded that, out of eight stranding events reported from the mid-1980s to the summer of 2003, seven had been associated with the use of mid-frequency sonar, one of those seven had been associated with the use of low-frequency sonar, and the remaining stranding event had been associated with the use of seismic airguns. Most of the stranding events reviewed by the International Whaling Commission involved beaked whales. A mass stranding of Cuvier's beaked whales in the eastern Mediterranean Sea occurred in 1996 (Frantzis, 1998) and mass stranding events involving Gervais' beaked whales, Blainville's beaked whales, and Cuvier's beaked whales occurred off the coast of the Canary Islands in the late 1980s (Simmonds and Lopez-Jurado, 1991). The stranding events that occurred in the Canary Islands and Kyparissiakos Gulf in the late 1990s and the Bahamas in 2000 have been the most intensively-studied mass stranding events and have been associated with naval maneuvers that were using sonar. Between 1960 and 2006, 48 strandings (68 percent) involved beaked whales, 3 (4 percent) involved dolphins, and 14 (20 percent) involved other whale species. Cuvier's beaked whales were involved in the greatest number of these events (48 or 68 percent), followed by sperm whales (7 or 10 percent), and Blainville's and Gervais' beaked whales (4 each or 6 percent). Naval activities that might have involved active sonar are reported to have coincided with 9 (13 percent) or 10 (14 percent) of those stranding events. Between the mid-1980s and 2003 (the period reported by the International Whaling Commission), we identified reports of 44 mass cetacean stranding events of which at least 7 were coincident with naval exercises that were using mid-frequency sonar. Strandings Associated With MFAS Over the past 12 years, there have been five stranding events coincident with military mid-frequency sonar use that are believed to most likely have been caused by exposure to the sonar: Greece (1996); the Bahamas (2000); Madeira (2000); Canary Islands (2002); and Spain (2006). In 2004, during the RIMPAC exercises, between 150-200 usually pelagic melon-headed whales occupied the shallow waters of the Hanalei Bay, Kaua'i, Hawaii for over 28 hours. NMFS determined that the mid-frequency sonar was a plausible, if not likely, contributing factor in what may have been a confluence of events that led to the Hanalei Bay stranding. A number of other stranding events coincident with the operation of mid-frequency sonar and resulting in the death of beaked whales or other species (Minke whales, dwarf sperm whales, pilot whales) have been reported; however, the majority have not been investigated to the degree necessary to determine the cause of the stranding. Greece
(1996)Twelve Cuvier's beaked whales stranded atypically (in both time and space) along a 38.2-kilometer strand of the coast of the Kyparissiakos Gulf on May 12 and 13, 1996 (Frantzis, 1998). From May 11 through May 15, the NATO research vessel Alliance was conducting sonar tests with signals of 600 Hz and 3 kHz and rms SPL of 228 and 226 dB re: 1 μPa, respectively (D'Amico and Verboom, 1998; D'Spain *et al.* , 2006). The timing and the location of the testing encompassed the time and location of the whale strandings (Frantzis, 1998). Necropsies of eight of the animals were performed, but were limited to basic external examination and sampling of stomach contents, blood, and skin. No ears or organs were collected, and no histological samples were preserved. No apparent abnormalities or wounds were found (Frantzis, 2004). Examination of photos of the animals revealed that the eyes of at least four of the individuals were bleeding. Photos were taken soon after their death (Frantzis, 2004). Stomach contents contained the flesh of cephalopods, indicating that feeding had recently taken place (Frantzis, 1998). All available information regarding the conditions associated with this stranding was compiled, and many potential causes were examined including major pollution events, important tectonic activity, unusual physical or meteorological events, magnetic anomalies, epizootics, and conventional military activities (International Council for the Exploration of the Sea, 2005a). However, none of these potential causes coincided in time with the mass stranding, or could explain its characteristics (International Council for the Exploration of the Sea, 2005a). The robust condition of the animals, plus the recent stomach contents, is not consistent with pathogenic causes (Frantzis, 2004). In addition, environmental causes can be ruled out as there were no unusual environmental circumstances or events before or during this time period (Frantzis, 2004). It was determined that because of the rarity of this mass stranding of Cuvier's beaked whales in the Kyparissiakos Gulf (first one in history), the probability for the two events (the military exercises and the strandings) to coincide in time and location, while being independent of each other, was extremely low (Frantzis, 1998). However, because full necropsies had not been conducted, and no abnormalities were noted, the cause of the strandings could not be precisely determined (Cox *et al.* , 2006). The analysis of this stranding event provided support for, but no clear evidence for, the cause-and-effect relationship of sonar training activities and beaked whale strandings (Cox *et al.* , 2006). Bahamas
(2000)NMFS and the Navy prepared a joint report addressing the multi-species stranding in the Bahamas in 2000, which took place within 24 hours of U.S. Navy ships using MFAS as they passed through the Northeast and Northwest Providence Channels on March 15-16, 2000. The ships, which operated both AN/SQS-53C and AN/SQS-56, moved through the channel while emitting sonar pings approximately every 24 seconds. Of the 17 cetaceans that stranded over a 36-hr period (Cuvier's beaked whales, Blainville's beaked whales, Minke whales, and a spotted dolphin), 7 animals died on the beach (5 Cuvier's beaked whales, 1 Blainville's beaked whale, and the spotted dolphin) and the other 10 were returned to the water alive (though their fate is unknown). Necropsies were performed on five beaked whales. All five necropsied beaked whales were in good body condition, showing no signs of infection, disease, ship strike, blunt trauma, or fishery related injuries, and three still had food remains in their stomachs. Auditory structural damage was discovered in four of the whales, specifically bloody effusions or hemorrhaging around the ears. Bilateral intracochlear and unilateral temporal region subarachnoid hemorrhage with blood clots in the lateral ventricles were found in two of the whales. Three of the whales had small hemorrhages in their acoustic fats (located along the jaw and in the melon). A comprehensive investigation was conducted and all possible causes of the stranding event were considered, whether they seemed likely at the outset or not. Based on the way in which the strandings coincided with ongoing naval activity involving tactical mid-frequency sonar use, in terms of both time and geography, the nature of the physiological effects experienced by the dead animals, and the absence of any other acoustic sources, the investigation team concluded that mid-frequency sonars aboard U.S. Navy ships that were in use during the sonar exercise in question were the most plausible source of this acoustic or impulse trauma. This sound source was active in a complex environment that included the presence of a surface duct, unusual and steep bathymetry, a constricted channel with limited egress, intensive use of multiple, active sonar units over an extended period of time, and the presence of beaked whales that appear to be sensitive to the frequencies produced by these sonars. The investigation team concluded that the cause of this stranding event was the confluence of the Navy mid-frequency sonar and these contributory factors working together, and further recommended that the Navy avoid operating mid-frequency sonar in situations where these five factors would be likely to occur. This report does not conclude that all five of these factors must be present for a stranding to occur, nor that beaked whales are the only species that could potentially be affected by the confluence of the other factors. Based on this, NMFS believes that the presence of surface ducts, steep bathymetry, and/or constricted channels added to the operation of mid-frequency sonar in the presence of cetaceans (especially beaked whales and, potentially, deep divers) may increase the likelihood of producing a sound field with the potential to cause cetaceans to strand, and therefore, suggests the need for increased vigilance while operating MFAS/HFAS. Madeira, Spain
(2000)From May 10-14, 2000, three Cuvier's beaked whales were found atypically stranded on two islands in the Madeira archipelago, Portugal (Cox *et al.* , 2006). A fourth animal was reported floating in the Madeiran waters by fisherman, but did not come ashore (Woods Hole Oceanographic Institution, 2005). Joint NATO amphibious training peacekeeping exercises involving participants from 17 countries and 80 warships took place in Portugal during May 2-15, 2000. The bodies of the three stranded whales were examined post mortem (Woods Hole Oceanographic Institution, 2005), though only one of the stranded whales was fresh enough (24 hours after stranding) to be necropsied (Cox *et al.* , 2006). Results from the necropsy revealed evidence of hemorrhage and congestion in the right lung and both kidneys (Cox *et al.* , 2006). There was also evidence of intercochlear and intracranial hemorrhage similar to that which was observed in the whales that stranded in the Bahamas event (Cox *et al.* , 2006). There were no signs of blunt trauma, and no major fractures (Woods Hole Oceanographic Institution, 2005). The cranial sinuses and airways were found to be quite clear with little or no fluid deposition, which may indicate good preservation of tissues (Woods Hole Oceanographic Institution, 2005). Several observations on the Madeira stranded beaked whales, such as the pattern of injury to the auditory system, are the same as those observed in the Bahamas strandings. Blood in and around the eyes, kidney lesions, pleural hemorrhages, and congestion in the lungs are particularly consistent with the pathologies from the whales stranded in the Bahamas, and are consistent with stress and pressure related trauma. The similarities in pathology and stranding patterns between these two events suggest that a similar pressure event may have precipitated or contributed to the strandings at both sites (Woods Hole Oceanographic Institution, 2005). Even though no definitive causal link can be made between the stranding event and naval exercises, certain conditions may have existed in the exercise area that, in their aggregate, may have contributed to the marine mammal strandings (Freitas, 2004): Exercises were conducted in areas of at least 547 fathoms (1000 m) depth near a shoreline where there is a rapid change in bathymetry on the order of 547 to 3,281 fathoms (1000-6000 m) occurring across a relatively short horizontal distance (Freitas, 2004); multiple ships were operating around Madeira, though it is not known if MFA sonar was used, and the specifics of the sound sources used are unknown (Cox *et al.* , 2006, Freitas, 2004); exercises took place in an area surrounded by landmasses separated by less than 35 nm (65 km) and at least 10 nm (19 km) in length, or in an embayment. Exercises involving multiple ships employing MFA near land may produce sound directed towards a channel or embayment that may cut off the lines of egress for marine mammals (Freitas, 2004). Canary Islands, Spain
(2002)The southeastern area within the Canary Islands is well known for aggregations of beaked whales due to its ocean depths of greater than 547 fathoms (1000 m) within a few hundred meters of the coastline (Fernandez *et al.* , 2005). On September 24, 2002, 14 beaked whales were found stranded on Fuerteventura and Lanzarote Islands in the Canary Islands (International Council for Exploration of the Sea, 2005a). Seven whales died, while the remaining seven live whales were returned to deeper waters (Fernandez *et al.* , 2005). Four beaked whales were found stranded dead over the next 3 days either on the coast or floating offshore. These strandings occurred within near proximity of an international naval exercise that utilized MFAS and involved numerous surface warships and several submarines. Strandings began about 4 hours after the onset of MFA sonar activity (International Council for Exploration of the Sea, 2005a; Fernandez *et al.* , 2005). Eight Cuvier's beaked whales, one Blainville's beaked whale, and one Gervais' beaked whale were necropsied, six of them within 12 hours of stranding (Fernandez *et al.,* 2005). No pathogenic bacteria were isolated from the carcasses (Jepson *et al.,* 2003). The animals displayed severe vascular congestion and hemorrhage especially around the tissues in the jaw, ears, brain, and kidneys, displaying marked disseminated microvascular hemorrhages associated with widespread fat emboli (Jepson *et al.,* 2003; International Council for Exploration of the Sea, 2005a). Several organs contained intravascular bubbles, although definitive evidence of gas embolism in vivo is difficult to determine after death (Jepson *et al.,* 2003). The livers of the necropsied animals were the most consistently affected organ, which contained macroscopic gas-filled cavities and had variable degrees of fibrotic encapsulation. In some animals, cavitary lesions had extensively replaced the normal tissue (Jepson *et al.,* 2003). Stomachs contained a large amount of fresh and undigested contents, suggesting a rapid onset of disease and death (Fernandez *et al.,* 2005). Head and neck lymph nodes were enlarged and congested, and parasites were found in the kidneys of all animals (Fernandez *et al.,* 2005). The association of NATO MFA sonar use close in space and time to the beaked whale strandings, and the similarity between this stranding event and previous beaked whale mass strandings coincident with sonar use, suggests that a similar scenario and causative mechanism of stranding may be shared between the events. Beaked whales stranded in this event demonstrated brain and auditory system injuries, hemorrhages, and congestion in multiple organs, similar to the pathological findings of the Bahamas and Madeira stranding events. In addition, the necropsy results of the Canary Islands stranding event lead to the hypothesis that the presence of disseminated and widespread gas bubbles and fat emboli were indicative of nitrogen bubble formation, similar to what might be expected in decompression sickness (Jepson *et al.,* 2003; Fernandez *et al.,* 2005). Spain
(2006)The Spanish Cetacean Society reported an atypical mass stranding of four beaked whales that occurred January 26, 2006, on the southeast coast of Spain, near Mojacar (Gulf of Vera) in the Western Mediterranean Sea. According to the report, two of the whales were discovered the evening of January 26 and were found to be still alive. Two other whales were discovered during the day on January 27, but had already died. The fourth animal was found dead on the afternoon of May 27, a few kilometers north of the first three animals. From January 25-26, 2006, Standing North Atlantic Treaty Organization
(NATO)Response Force Maritime Group Two (five of seven ships including one U.S. ship under NATO Operational Control) had conducted active sonar training against a Spanish submarine within 50 nm (93 km) of the stranding site. Veterinary pathologists necropsied the two male and two female Cuvier's beaked whales. According to the pathologists, the most likely primary cause of this type of beaked whale mass stranding event was anthropogenic acoustic activities, most probably anti-submarine MFAS used during the military naval exercises. However, no positive acoustic link was established as a direct cause of the stranding. Even though no causal link can be made between the stranding event and naval exercises, certain conditions may have existed in the exercise area that, in their aggregate, may have contributed to the marine mammal strandings (Freitas, 2004): Exercises were conducted in areas of at least 547 fathoms (1000 m) depth near a shoreline where there is a rapid change in bathymetry on the order of 547 to 3,281 fathoms (1000-6000 m) occurring across a relatively short horizontal distance (Freitas, 2004); Multiple ships (in this instance, five) were operating MFAS in the same area over extended periods of time (in this case, 20 hours) in close proximity; Exercises took place in an area surrounded by landmasses, or in an embayment. Exercises involving multiple ships employing MFA sonar near land may have produced sound directed towards a channel or embayment that may have cut off the lines of egress for the affected marine mammals (Freitas, 2004). Hanalei Bay
(2004)On July 3-4, 2004, approximately 150-200 melon-headed whales occupied the shallow waters of the Hanalei Bay, Kaua'i, Hawaii for over 28 hours. Attendees of a canoe blessing observed the animals entering the Bay in a single wave formation at 7 a.m. on July 3, 2004. The animals were observed moving back into the shore from the mouth of the Bay at 9 a.m. The usually pelagic animals milled in the shallow bay and were returned to deeper water with human assistance beginning at 9:30 a.m. on July 4, 2004, and were out of sight by 10:30 a.m. Only one animal, a calf, was known to have died following this event. The animal was noted alive and alone in the Bay on the afternoon of July 4, 2004 and was found dead in the Bay the morning of July 5, 2004. A full necropsy, magnetic resonance imaging, and computerized tomography examination were performed on the calf to determine the manner and cause of death. The combination of imaging, necropsy and histological analyses found no evidence of infectious, internal traumatic, congenital, or toxic factors. Although cause of death could not be definitively determined, it is likely that maternal separation, poor nutritional condition, and dehydration contributed to the final demise of the animal. Although we do not know when the calf was separated from its mother, the movement into the Bay, the milling and re-grouping may have contributed to the separation or lack of nursing especially if the maternal bond was weak or this was a primiparous calf. Environmental factors, abiotic and biotic, were analyzed for any anomalous occurrences that would have contributed to the animals entering and remaining in Hanalei Bay. The Bay's bathymetry is similar to many other sites within the Hawaiian Island chain and dissimilar to sites that have been associated with mass strandings in other parts of the United States. The weather conditions appeared to be normal for that time of year with no fronts or other significant features noted. There was no evidence of unusual distribution or occurrence of predator or prey species, or unusual harmful algal blooms. Weather patterns and bathymetry that have been associated with mass strandings elsewhere were not found to occur in this instance. A separate event involving melon-headed whales and rough-toothed dolphins took place over the same period of time in the Northern Mariana Islands (Jefferson *et al.,* 2006), which is several thousand miles from Hawaii. Some 500-700 melon-headed whales came into Sasanhaya Bay on 4 July 2004 on the island of Rota and then left of their own accord after 5.5 hours; no known active sonar transmissions occurred in the vicinity of that event. Global reports of these types of events or sightings are of great interest to the scientific community and continuing efforts to enhance reporting in island nations will contribute to our increased understanding of animal behavior and potential causes of stranding events. Exactly what, if any, relationship this event has to the simultaneous events in Hawai'i and whether they might be related to some common factor (e.g., there was a full moon on July 2, 2004) is and will likely remain unknown. However, these two synchronous, nearshore events involving a rarely-sighted species are curious and may point to the range of potential contributing factors for which we lack detailed understanding and which the authors acknowledged might have played some role in the “confluence of events” in Hanalei Bay. The Hanalei event was spatially and temporally correlated with RIMPAC. Official sonar training and tracking exercises in the Pacific Missile Range Facility
(PMRF)warning area did not commence until approximately 8 a.m. on July 3 and were thus ruled out as a possible trigger for the initial movement into the Bay. However, six naval surface vessels transiting to the operational area on July 2 intermittently transmitted active sonar (for approximately 9 hours total from 1:15 p.m. to 12:30 a.m.) as they approached from the south. The potential for these transmissions to have triggered the whales' movement into Hanalei Bay was investigated. Analyses with the information available indicated that animals to the south and east of Kaua'i could have detected active sonar transmissions on July 2, and reached Hanalei Bay on or before 7 a.m. on July 3, 2004. However, data limitations regarding the position of the whales prior to their arrival in the Bay, the magnitude of sonar exposure, behavioral responses of melon-headed whales to acoustic stimuli, and other possible relevant factors preclude a conclusive finding regarding the role of sonar in triggering this event. Propagation modeling suggest that transmissions from sonar use during the July 3 exercise in the PMRF warning area may have been detectable at the mouth of the Bay. If the animals responded negatively to these signals, it may have contributed to their continued presence in the Bay. The U.S. Navy ceased all active sonar transmissions during exercises in this range on the afternoon of July 3, 2004. Subsequent to the cessation of sonar use, the animals were herded out of the Bay. While causation of this stranding event may never be unequivocally determined, we consider the active sonar transmissions of July 2-3, 2004, a plausible, if not likely, contributing factor in what may have been a confluence of events. This conclusion is based on:
(1)The evidently anomalous nature of the stranding;
(2)its close spatiotemporal correlation with wide-scale, sustained use of sonar systems previously associated with stranding of deep-diving marine mammals;
(3)the directed movement of two groups of transmitting vessels toward the southeast and southwest coast of Kauai;
(4)the results of acoustic propagation modeling and an analysis of possible animal transit times to the Bay; and
(5)the absence of any other compelling causative explanation. The initiation and persistence of this event may have resulted from an interaction of biological and physical factors. The biological factors may have included the presence of an apparently uncommon, deep-diving cetacean species (and possibly an offshore, non-resident group), social interactions among the animals before or after they entered the Bay, and/or unknown predator or prey conditions. The physical factors may have included the presence of nearby deep water, multiple vessels transiting in a directed manner while transmitting active sonar over a sustained period, the presence of surface sound ducting conditions, and/or intermittent and random human interactions while the animals were in the Bay. Association Between Mass Stranding Events and Exposure to MFAS Several authors have noted similarities between some of these stranding incidents: they occurred in islands or archipelagoes with deep water nearby, several appeared to have been associated with acoustic waveguides like surface ducting, and the sound fields created by ships transmitting mid-frequency sonar (Cox *et al.,* 2006, D'Spain *et al.,* 2006). Although Cuvier's beaked whales have been the most common species involved in these stranding events (81 percent of the total number of stranded animals and see Figure 3), other beaked whales (including *Mesoplodon europeaus, M. densirostris* , and *Hyperoodon ampullatus* ) comprise 14 percent of the total. Other species ( *Stenella coeruleoalba, Kogia breviceps* and *Balaenoptera acutorostrata* ) have stranded, but in much lower numbers and less consistently than beaked whales. Based on the evidence available, however, we cannot determine whether
(a)Cuvier's beaked whale is more prone to injury from high-intensity sound than other species,
(b)their behavioral responses to sound makes them more likely to strand, or
(c)they are more likely to be exposed to mid-frequency active sonar than other cetaceans (for reasons that remain unknown). Because the association between active sonar exposures and marine mammals mass stranding events is not consistent—some marine mammals strand without being exposed to sonar and some sonar transmissions are not associated with marine mammal stranding events despite their co-occurrence—other risk factors or a groupings of risk factors probably contribute to these stranding events. Behaviorally Mediated Responses to MFAS/HFAS That May Lead to Stranding Although the confluence of Navy mid-frequency active tactical sonar with the other contributory factors noted in the report was identified as the cause of the 2000 Bahamas stranding event, the specific mechanisms that led to that stranding (or the others) are not understood, and there is uncertainty regarding the ordering of effects that led to the stranding. It is unclear whether beaked whales were directly injured by sound (acoustically mediated bubble growth, addressed above) prior to stranding or whether a behavioral response to sound occurred that ultimately caused the beaked whales be injured and strand. Although causal relationships between beaked whale stranding events and active sonar remain unknown, several authors have hypothesized that stranding events involving these species in the Bahamas and Canary Islands may have been triggered when the whales changed their dive behavior in a startled response to exposure to active sonar or to further avoid exposure (Cox *et al.,* 2006, Rommel *et al.* , 2006). These authors proposed two mechanisms by which the behavioral responses of beaked whales upon being exposed to active sonar might result in a stranding event. These include: gas bubble formation caused by excessively fast surfacing; remaining at the surface too long when tissues are supersaturated with nitrogen; or diving prematurely when extended time at the surface is necessary to eliminate excess nitrogen. More specifically, beaked whales that occur in deep waters that are in close proximity to shallow waters (for example, the “canyon areas” that are cited in the Bahamas stranding event; see D'Spain and D'Amico, 2006), may respond to active sonar by swimming into shallow waters to avoid further exposures and strand if they were not able to swim back to deeper waters. Second, beaked whales exposed to active sonar might alter their dive behavior. Changes in their dive behavior might cause them to remain at the surface or at depth for extended periods of time which could lead to hypoxia directly by increasing their oxygen demands or indirectly by increasing their energy expenditures (to remain at depth) and increase their oxygen demands as a result. If beaked whales are at depth when they detect a ping from an active sonar transmission and change their dive profile, this could lead to the formation of significant gas bubbles, which could damage multiple organs or interfere with normal physiological function (Cox *et al.,* 2006; Rommel *et al.,* 2006; Zimmer and Tyack, 2007). Baird *et al* .
(2005)found that slow ascent rates from deep dives and long periods of time spent within 50 m of the surface were typical for both Cuvier's and Blainville's beaked whales, the two species involved in mass strandings related to naval sonar. These two behavioral mechanisms may be necessary to purge excessive dissolved nitrogen concentrated in their tissues during their frequent long dives (Baird *et al.* , 2005). Baird *et al.*
(2005)further suggests that abnormally rapid ascents or premature dives in response to high-intensity sonar could indirectly result in physical harm to the beaked whales, through the mechanisms described above (gas bubble formation or non-elimination of excess nitrogen). Because many species of marine mammals make repetitive and prolonged dives to great depths, it has long been assumed that marine mammals have evolved physiological mechanisms to protect against the effects of rapid and repeated decompressions. Although several investigators have identified physiological adaptations that may protect marine mammals against nitrogen gas supersaturation (alveolar collapse and elective circulation; Kooyman *et al.* , 1972; Ridgway and Howard, 1979), Ridgway and Howard
(1979)reported that bottlenose dolphins ( *Tursiops truncatus* ) that were trained to dive repeatedly had muscle tissues that were substantially supersaturated with nitrogen gas. Houser *et al* .
(2001)used these data to model the accumulation of nitrogen gas within the muscle tissue of other marine mammal species and concluded that cetaceans that dive deep and have slow ascent or descent speeds would have tissues that are more supersaturated with nitrogen gas than other marine mammals. Based on these data, Cox *et al.*
(2006)hypothesized that a critical dive sequence might make beaked whales more prone to stranding in response to acoustic exposures. The sequence began with
(1)very deep (to depths as deep as 2 kilometers) and long (as long as 90 minutes) foraging dives with
(2)relatively slow, controlled ascents, followed by
(3)a series of “bounce” dives between 100 and 400 meters in depth (also see Zimmer and Tyack, 2007). They concluded that acoustic exposures that disrupted any part of this dive sequence (for example, causing beaked whales to spend more time at surface without the bounce dives that are necessary to recover from the deep dive) could produce excessive levels of nitrogen supersaturation in their tissues, leading to gas bubble and emboli formation that produces pathologies similar to decompression sickness. Recently, Zimmer and Tyack
(2007)modeled nitrogen tension and bubble growth in several tissue compartments for several hypothetical dive profiles and concluded that repetitive shallow dives (defined as a dive where depth does not exceed the depth of alveolar collapse, approximately 72 m for *Ziphius* ), perhaps as a consequence of an extended avoidance reaction to sonar sound, could pose a risk for decompression sickness and that this risk should increase with the duration of the response. Their models also suggested that unrealistically rapid ascent rates of ascent from normal dive behaviors are unlikely to result in supersaturation to the extent that bubble formation would be expected. Tyack *et al.*
(2006)suggested that emboli observed in animals exposed to mid-frequency range sonar (Jepson *et al.* , 2003; Fernandez *et al.* , 2005) could stem from a behavioral response that involves repeated dives shallower than the depth of lung collapse. Given that nitrogen gas accumulation is a passive process (i.e. nitrogen is metabolically inert), a bottlenose dolphin was trained to repetitively dive a profile predicted to elevate nitrogen saturation to the point that nitrogen bubble formation was predicted to occur. However, inspection of the vascular system of the dolphin via ultrasound did not demonstrate the formation of asymptomatic nitrogen gas bubbles (Houser *et al.* , 2007). If marine mammals respond to a Navy vessel that is transmitting active sonar in the same way that they might respond to a predator, their probability of flight responses should increase when they perceive that Navy vessels are approaching them directly, because a direct approach may convey detection and intent to capture (Burger and Gochfeld, 1981, 1990; Cooper, 1997, 1998). The probability of flight responses should also increase as received levels of active sonar increase (and the ship is, therefore, closer) and as ship speeds increase (that is, as approach speeds increase). For example, the probability of flight responses in Dall's sheep ( *Ovis dalli dalli* ) (Frid 2001a, b), ringed seals ( *Phoca hispida* ) (Born *et al.* , 1999), Pacific brant ( *Branta bernic nigricans* ) and Canada geese ( *B. Canadensis* ) increased as a helicopter or fixed-wing aircraft approached groups of these animals more directly (Ward *et al.* , 1999). Bald eagles ( *Haliaeetus leucocephalus* ) perched on trees alongside a river were also more likely to flee from a paddle raft when their perches were closer to the river or were closer to the ground (Steidl and Anthony, 1996). Despite the many theories involving bubble formation (both as a direct cause of injury (see Acoustically Mediated Bubble Growth Section) and an indirect cause of stranding (See Behaviorally Mediated Bubble Growth Section), Southall *et al.* ,
(2007)summarizes that scientific agreement or complete lack of information exists regarding the following important points:
(1)Received acoustical exposure conditions for animals involved in stranding events;
(2)pathological interpretation of observed lesions in stranded marine mammals;
(3)acoustic exposure conditions required to induce such physical trauma directly;
(4)whether noise exposure may cause behavioral reactions (such as atypical diving behavior) that secondarily cause bubble formation and tissue damage; and
(5)the extent the post mortem artifacts introduced by decomposition before sampling, handling, freezing, or necropsy procedures affect interpretation of observed lesions. During the HRC training exercises there will be use of multiple sonar units in an area where three species of beaked whale species may be present. A surface duct may be present in a limited area for a limited period of time. Although most of the ASW training events will take place in the deep ocean, some will occur in areas of high bathymetric relief. However, none of the training events will take place in a location having a constricted channel with limited egress similar to the Bahamas (because none exist in the HRC). Consequently, not all five of the environmental factors believed to contribute to the Bahamas stranding (mid-frequency sonar, beaked whale presence, surface ducts, steep bathymetry, and constricted channels with limited egress) will be present during HRC ASW exercises. However, as mentioned previously, NMFS recommends caution when steep bathymetry, surface ducting conditions, or a constricted channel is present in addition to the operation of mid-frequency tactical sonar and the presence of cetaceans (especially beaked whales). Exposure Underwater Detonation of Explosives Some of the Navy's training exercises include the underwater detonation of explosives. For many of the exercises discussed, inert ordnance is used for a subset of the exercises. For exercises that involve “shooting” at a target that is above the surface of the water, underwater explosions only occur when the target is missed, which is the minority of the time (the Navy has historical hit/miss ratios and uses them in their exposure estimates). The underwater explosion from a weapon would send a shock wave and blast noise through the water, release gaseous by-products, create an oscillating bubble, and cause a plume of water to shoot up from the water surface. The shock wave and blast noise are of most concern to marine animals. Depending on the intensity of the shock wave and size, location, and depth of the animal, an animal can be injured, killed, suffer non-lethal physical effects, experience hearing related effects with or without behavioral responses, or exhibit temporary behavioral responses or tolerance from hearing the blast sound. Generally, exposures to higher levels of impulse and pressure levels would result in worse impacts to an individual animal. Injuries resulting from a shock wave take place at boundaries between tissues of different density. Different velocities are imparted to tissues of different densities, and this can lead to their physical disruption. Blast effects are greatest at the gas-liquid interface (Landsberg, 2000). Gas-containing organs, particularly the lungs and gastrointestinal tract, are especially susceptible (Goertner, 1982; Hill, 1978; Yelverton *et al.* , 1973). In addition, gas-containing organs including the nasal sacs, larynx, pharynx, trachea, and lungs may be damaged by compression/expansion caused by the oscillations of the blast gas bubble (Reidenberg and Laitman, 2003). Intestinal walls can bruise or rupture, with subsequent hemorrhage and escape of gut contents into the body cavity. Less severe gastrointestinal tract injuries include contusions, petechiae (small red or purple spots caused by bleeding in the skin), and slight hemorrhaging (Yelverton *et al.* , 1973). Because the ears are the most sensitive to pressure, they are the organs most sensitive to injury (Ketten, 2000). Sound-related damage associated with blast noise can be theoretically distinct from injury from the shock wave, particularly farther from the explosion. If an animal is able to hear a noise, at some level it can damage its hearing by causing decreased sensitivity (Ketten, 1995) (See Noise-induced Threshold Shift Section above). Sound-related trauma can be lethal or sublethal. Lethal impacts are those that result in immediate death or serious debilitation in or near an intense source and are not, technically, pure acoustic trauma (Ketten, 1995). Sublethal impacts include hearing loss, which is caused by exposures to perceptible sounds. Severe damage (from the shock wave) to the ears includes tympanic membrane rupture, fracture of the ossicles, damage to the cochlea, hemorrhage, and cerebrospinal fluid leakage into the middle ear. Moderate injury implies partial hearing loss due to tympanic membrane rupture and blood in the middle ear. Permanent hearing loss also can occur when the hair cells are damaged by one very loud event, as well as by prolonged exposure to a loud noise or chronic exposure to noise. The level of impact from blasts depends on both an animal's location and, at outer zones, on its sensitivity to the residual noise (Ketten, 1995). There have been fewer studies addressing the behavioral effects of explosives on marine mammals than MFAS/HFAS. However, though the nature of the sound waves emitted from an explosion is different (in shape and rise time) from MFAS/HFAS, we still anticipate the same sorts of behavioral responses (see Exposure to MFAS/HFAS:Behavioral Disturbance Section) to result from repeated explosive detonations (a smaller range of likely less severe responses would be expected to occur as a result of exposure to a single explosive detonation). Mitigation In order to issue an incidental take authorization
(ITA)under Section 101(a)(5)(A) of the MMPA, NMFS must set forth the “permissible methods of taking pursuant to such activity, and other means of effecting the least practicable adverse impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.” The National Defense Authorization Act
(NDAA)of 2004 amended the MMPA as it relates to military-readiness activities and the incidental take authorization process such that “least practicable adverse impact” shall include consideration of personnel safety, practicality of implementation, and impact on the effectiveness of the “military readiness activity”. The training activities described in the HRC LOA application are considered military readiness activities. NMFS reviewed the proposed HRC activities and the proposed HRC mitigation measures (which the Navy refers to as Protective Measures) presented in the Navy's application to determine whether the activities and mitigation measures were capable of achieving the least practicable adverse effect on marine mammals. NMFS determined that further discussion was necessary regarding:
(1)Humpback whales congregating in the winter in the shallow areas of the HRC in high densities to calve and breed; and
(2)the potential relationship between the operation of MFAS/HFAS and marine mammal strandings. NMFS worked with the Navy to identify additional practicable and effective mitigation measures, which included a careful balancing of the likely benefit of any particular measure to the marine mammals with the likely effect of that measure on personnel safety, practicality of implementation, and impact on the “military-readiness activity”. NMFS and the Navy developed two additional mitigation measures that address the concerns mentioned above, including a humpback whale cautionary area and a Stranding Response Plan. Included below are the mitigation measures the Navy initially proposed (see “Mitigation Measures Proposed in the Navy's LOA Application”) and the additional measures that NMFS and the Navy developed (see “Additional Measures Developed by NMFS and the Navy” below). Separately, NMFS has previously received comments from the public expressing concerns regarding potential delays between when marine mammals are visually detected by watchstanders and when the sonar is actually powered or shut down. NMFS and the Navy have discussed this issue and determined the following: Naval operators and lookouts are aware of the potential for a very small delay (up to about 4 seconds) between detecting a marine mammal and powering down or shutting down sonar and will take the actions necessary to ensure that sonar is powered down or shut down when detected animals are within the specified distance (for example, by initiating shut-down when animals are approaching, but not quite within the designated distance). Mitigation Measures Proposed in the Navy's LOA Application This section includes the protective measures proposed by the Navy and is taken directly from their application (with the exception of headings, which have been modified for increased clarity within the context of this proposed rule). Navy's Protective Measures for MFAS/HFAS Current protective measures employed by the Navy include applicable training of personnel and implementation of activity specific procedures resulting in minimization and/or avoidance of interactions with protected resources. Navy shipboard lookout(s) are highly qualified and experienced observers of the marine environment. Their duties require that they report all objects sighted in the water to the Officer of the Deck (e.g., trash, a periscope, a marine mammal) and all disturbances (e.g., surface disturbance, discoloration) that may be indicative of a threat to the vessel and its crew. There are personnel serving as lookouts on station at all times (day and night) when a ship or surfaced submarine is moving through the water. Navy lookouts undergo extensive training in order to qualify as a watchstander. This training includes on-the-job instruction under the supervision of an experienced watchstander, followed by completion of the Personal Qualification Standard program, certifying that they have demonstrated the necessary skills (such as detection and reporting of partially submerged objects and night observation techniques). In addition to these requirements, many Fleet lookouts periodically undergo a 2-day refresher training course. The Navy includes marine species awareness as part of its training for its bridge lookout personnel on ships and submarines. Marine Species Awareness Training
(MSAT)was updated in 2005, and the additional training materials are now included as required training for Navy lookouts. This training addresses the lookout's role in environmental protection, laws governing the protection of marine species, Navy stewardship commitments, and general observation information to aid in avoiding interactions with marine species. Marine species awareness and training is reemphasized by the following means: • Bridge personnel on ships and submarines—Personnel utilize marine species awareness training techniques as standard operating procedure, they have available a marine species visual identification aid when marine mammals are sighted, and they receive updates to the current marine species awareness training as appropriate. • Aviation units—Pilots and air crew personnel whose airborne duties during Anti-Submarine Warfare
(ASW)training activities include searching for submarine periscopes would be trained in marine mammal spotting. These personnel would also be trained on the details of the mitigation measures specific to both their platform and that of the surface combatants with which they are associated. • Sonar personnel on ships, submarines, and ASW aircraft—Both passive and active sonar operators on ships, submarines, and aircraft utilize protective measures relative to their platform. The Navy issues a Letter of Instruction for each Major Exercise which mandates specific actions to be taken if a marine mammal is detected, and these actions are standard operating procedure throughout the exercise. Implementation of these protective measures is required of all units. The activities undertaken on a Navy vessel or aircraft are highly controlled. The chain of command supervises these activities. Failure to follow orders can result in disciplinary action. Personnel Training
(a)All lookouts onboard platforms involved in ASW training events will review the NMFS-approved Marine Species Awareness Training
(MSAT)material prior to use of midfrequency active sonar.
(b)All Commanding Officers, Executive Officers, and officers standing watch on the Bridge will have reviewed the MSAT material prior to a training event employing the use of mid-frequency active sonar.
(c)Navy lookouts will undertake extensive training in order to qualify as a watchstander in accordance with the Lookout Training Handbook (NAVEDTRA, 12968-D).
(d)Lookout training will include on-the-job instruction under the supervision of a qualified, experienced watchstander. Following successful completion of this supervised training period, Lookouts will complete the Personal Qualification Standard program, certifying that they have demonstrated the necessary skills (such as detection and reporting of partially submerged objects). This does not forbid personnel being trained as lookouts from being counted as those listed in previous measures so long as supervisors monitor their progress and performance.
(e)Lookouts will be trained in the most effective means to ensure quick and effective communication within the command structure in order to facilitate implementation of mitigation measures if marine species are spotted. Lookout and Watchstander Responsibilities
(a)On the bridge of surface ships, there will always be at least three people on watch whose duties include observing the water surface around the vessel.
(b)All surface ships participating in ASW exercises will, in addition to the three personnel on watch noted previously, have at all times during the exercise at least two additional personnel on watch as lookouts.
(c)Personnel on lookout and officers on watch on the bridge will have at least one set of binoculars available for each person to aid in the detection of marine mammals.
(d)On surface vessels equipped with mid-frequency active sonar, pedestal mounted “Big Eye” (20x110) binoculars will be present and in good working order to assist in the detection of marine mammals in the vicinity of the vessel.
(e)Personnel on lookout will employ visual search procedures employing a scanning methodology in accordance with the Lookout Training Handbook (NAVEDTRA 12968-B).
(f)After sunset and prior to sunrise, lookouts will employ Night Lookouts Techniques in accordance with the Lookout Training Handbook.
(g)Personnel on lookout will be responsible for reporting all objects or anomalies sighted in the water (regardless of the distance from the vessel) to the Officer of the Deck, since any object or disturbance (e.g., trash, periscope, surface disturbance, discoloration) in the water may be indicative of a threat to the vessel and its crew or indicative of a marine species that may need to be avoided as warranted. Operating Procedures
(a)A Letter of Instruction, Mitigation Measures Message or Environmental Annex to the Operational Order will be issued prior to the exercise to further disseminate the personnel training requirement and general marine mammal mitigation measures.
(b)Commanding Officers will make use of marine species detection cues and information to limit interaction with marine species to the maximum extent possible consistent with safety of the ship.
(c)All personnel engaged in passive acoustic sonar operation (including aircraft, surface ships, or submarines) will monitor for marine mammal vocalizations and report the detection of any marine mammal to the appropriate watch station for dissemination and appropriate action.
(d)During mid-frequency active sonar training activities, personnel will utilize all available sensor and optical systems (such as Night Vision Goggles) to aid in the detection of marine mammals.
(e)Navy aircraft participating in exercises at sea will conduct and maintain, when operationally feasible and safe, surveillance for marine species of concern as long as it does not violate safety constraints or interfere with the accomplishment of primary operational duties.
(f)Aircraft with deployed sonobuoys will use only the passive capability of sonobuoys when marine mammals are detected within 200 yards of the sonobuoy.
(g)Marine mammal detections will be immediately reported to assigned Aircraft Control Unit for further dissemination to ships in the vicinity of the marine species as appropriate where it is reasonable to conclude that the course of the ship will likely result in a closing of the distance to the detected marine mammal.
(h)Safety Zones—When marine mammals are detected by any means (aircraft, shipboard lookout, or acoustically) the Navy will ensure that MFAS transmission levels are limited to at least 6 dB below normal operating levels if any detected marine mammals are within 1,000 yards (914 m) of the sonar dome (the bow).
(i)Ships and submarines will continue to limit maximum MFAS transmission levels by this 6-dB factor until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards (1828 m) beyond the location of the last detection.
(ii)The Navy will ensure that MFAS transmissions will be limited to at least 10 dB below the equipment's normal operating level if any detected animals are within 500 yards (457 m) of the sonar dome. Ships and submarines will continue to limit maximum ping levels by this 10-dB factor until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards (1828 m) beyond the location of the last detection.
(iii)The Navy will ensure that MFAS transmissions are ceased if any detected marine mammals are within 200 yards (183 m) of the sonar dome. MFAS will not resume until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards (1828 m) beyond the location of the last detection.
(iv)Special conditions applicable for dolphins and porpoises only: If, after conducting an initial maneuver to avoid close quarters with dolphins or porpoises, the Officer of the Deck concludes that dolphins or porpoises are deliberately closing to ride the vessel's bow wave, no further mitigation actions are necessary while the dolphins or porpoises continue to exhibit bow wave riding behavior.
(v)If the need for power-down should arise as detailed in “Safety Zones” above, Navy shall follow the requirements as though they were operating at 235 dB—the normal operating level (i.e., the first power-down will be to 229 dB, regardless of at what level above 235 sonar was being operated).
(i)Prior to start up or restart of active sonar, operators will check that the Safety Zone radius around the sound source is clear of marine mammals.
(j)Sonar levels (generally)—Navy will operate sonar at the lowest practicable level, not to exceed 235 dB, except as required to meet tactical training objectives.
(k)Helicopters shall observe/survey the vicinity of an ASW Operation for 10 minutes before the first deployment of active (dipping) sonar in the water.
(l)Helicopters shall not dip their sonar within 200 yards (183 m) of a marine mammal and shall cease pinging if a marine mammal closes within 200 yards (183 m) after pinging has begun.
(m)Submarine sonar operators will review detection indicators of close-aboard marine mammals prior to the commencement of ASW training activities involving active mid-frequency sonar. Navy's Protective Measures for IEER The following are protective measures for use with Extended Echo Ranging/Improved Extended Echo Ranging (EER/IEER) given an explosive source generates the acoustic wave used in this sonobuoy.
(a)Crews will conduct visual reconnaissance of the drop area prior to laying their intended sonobuoy pattern. This search should be conducted below 500 yards (457 m) at a slow speed, if operationally feasible and weather conditions permit. In dual aircraft training activities, crews are allowed to conduct coordinated area clearances.
(b)Crews shall conduct a minimum of 30 minutes of visual and acoustic monitoring of the search area prior to commanding the first post detonation. This 30-minute observation period may include pattern deployment time.
(c)For any part of the briefed pattern where a post (source/receiver sonobuoy pair) will be deployed within 1,000 yards (914 m) of observed marine mammal activity, deploy the receiver ONLY and monitor while conducting a visual search. When marine mammals are no longer detected within 1,000 yards (914 m) of the intended post position, co-locate the explosive source sonobuoy (AN/SSQ-110A) (source) with the receiver.
(d)When able, crews will conduct continuous visual and aural monitoring of marine mammal activity. This is to include monitoring of own-aircraft sensors from first sensor placement to checking off station and out of communication range of these sensors.
(e)Aural Detection: If the presence of marine mammals is detected aurally, then that should cue the aircrew to increase the diligence of their visual surveillance. Subsequently, if no marine mammals are visually detected, then the crew may continue multi-static active search.
(f)Visual Detection:
(i)If marine mammals are visually detected within 1,000 yards (914 m) of the explosive source sonobuoy (AN/SSQ-110A) intended for use, then that payload shall not be detonated. Aircrews may utilize this post once the marine mammals have not been re-sighted for 30 minutes, or are observed to have moved outside the 1,000 yards (914 m) safety buffer.
(ii)Aircrews may shift their multi-static active search to another post, where marine mammals are outside the 1,000 yards (914 m) safety buffer.
(g)Aircrews shall make every attempt to manually detonate the unexploded charges at each post in the pattern prior to departing the operations area by using the “Payload 1 Release” command followed by the “Payload 2 Release” command. Aircrews shall refrain from using the “Scuttle” command when two payloads remain at a given post. Aircrews will ensure that a 1,000 yards (914 m) safety buffer, visually clear of marine mammals, is maintained around each post as is done during active search operations.
(h)Aircrews shall only leave posts with unexploded charges in the event of a sonobuoy malfunction, an aircraft system malfunction, or when an aircraft must immediately depart the area due to issues such as fuel constraints, inclement weather, and in-flight emergencies. In these cases, the sonobuoy will self-scuttle using the secondary or tertiary method.
(i)Ensure all payloads are accounted for. Explosive source sonobuoys (AN/SSQ-110A) that cannot be scuttled shall be reported as unexploded ordnance via voice communications while airborne, then upon landing via naval message.
(j)Mammal monitoring shall continue until out of own-aircraft sensor range. Navy's Protective Measures for Underwater Detonations To ensure protection of marine mammals during underwater detonation training and Mining Laying Training, the operating area must be determined to be clear of marine mammals prior to detonation. Implementation of the following mitigation measures continue to ensure that marine mammals would not be exposed to temporary threshold shift (TTS), PTS or injury from physical contact with training mine shapes during Major Exercises. Demolitions (DEMOs) and Mine Countermeasure
(MCM)Training (Up to 20 lb) *Exclusion Zones* —All mine warfare and mine countermeasure
(MCM)training activities involving the use of explosive charges must include exclusion zones for marine mammals to prevent physical and/or acoustic effects to those species. These exclusion zones shall extend in a 700-yard (640 m) arc radius around the detonation site. *Pre-Exercise Surveys* —For MCM training activities, pre-exercise survey shall be conducted within 30 minutes prior to the commencement of the scheduled explosive event. The survey may be conducted from the surface, by divers, and/or from the air, and personnel shall be alert to the presence of any marine mammal or sea turtle. Should such an animal be present within the survey area, the exercise shall be paused until the animal voluntarily leaves the area. *Post-Exercise Surveys* —Surveys within the same radius shall also be conducted within 30 minutes after the completion of the explosive event. *Reporting* —Any evidence of a marine mammal that may have been injured or killed by the action shall be reported immediately to NMFS and Commander, Pacific Fleet and Commander, Navy Region Southwest, Environmental Director. *Mine Laying Training* —Mine Laying Training involves aerial drops of inert training shapes on floating targets. Aircrews are scored for their ability to accurately hit the target although this operation does not involve live ordnance, marine mammals have the potential to be injured if they are in the immediate vicinity of a floating target; therefore, the safety zone shall be clear of marine mammals and sea turtles around the target location. Pre- and post-surveys and reporting requirements outlined for underwater detonations shall be implemented during Mine Laying Training. To the maximum extent feasible, the Navy shall retrieve inert mine shapes dropped during Mine Laying Training. SINKEX, GUNEX, MISSILEX, and BOMBEX The selection of sites suitable for sinking exercises (SINKEXs) involves a balance of operational suitability, requirements established under the MPRSA permit granted to the Navy (40 CFR 229.2), and the identification of areas with a low likelihood of encountering endangered species act
(ESA)listed species. To meet operational suitability criteria, locations must be within a reasonable distance of the target vessels' originating location. The locations should also be close to active military bases to allow participating assets access to shore facilities. For safety purposes, these locations should also be in areas that are not generally used by non-military air or watercraft. The MPRSA permit requires vessels to be sunk in waters which are at least 1000 fathoms (3000 m) deep and at least 50 nm (92 km) from land. In general, most listed species prefer areas with strong bathymetric gradients and oceanographic fronts for significant biological activity such as feeding and reproduction. Typical locations include the continental shelf and shelf-edge. Although the siting of the location for the exercise is not regulated by a permit, the range clearance procedures used for gunnery exercise (GUNEX), missile exercise (MISSILEX), and bombing exercise (BOMBEX) are the same as those described immediately below for a SINKEX. The Navy has developed range clearance procedures to maximize the probability of sighting any ships or protected species in the vicinity of an exercise, which are as follows:
(a)All weapons firing would be conducted during the period 1 hour after official sunrise to 30 minutes before official sunset.
(b)Extensive range clearance training activities would be conducted in the hours prior to commencement of the exercise, ensuring that no shipping is located within the hazard range of the longest-range weapon being fired for that event.
(c)Prior to conducting the exercise, remotely sensed sea surface temperature maps would be reviewed. SINKEX and air to surface missile
(ASM)Training activities would not be conducted within areas where strong temperature discontinuities are present, thereby indicating the existence of oceanographic fronts. These areas would be avoided because concentrations of some listed species, or their prey, are known to be associated with these oceanographic features.
(d)An exclusion zone with a radius of 1.0 nm (1.8 km) would be established around each target. This exclusion zone is based on calculations using a 449 kg (990 lb) H6 NEW high explosive source detonated 5 feet (1.5 m) below the surface of the water, which yields a distance of 0.85 nm (1.57 km) (cold season) and 0.89 nm (1.65 km) (warm season) beyond which the received level is below the 182 dB re: 1 Pa sec2 threshold established for the WINSTON S. CHURCHILL (DDG 81) shock trials. An additional buffer of 0.5 nm (0.9 km) would be added to account for errors, target drift, and animal movements. Additionally, a safety zone, which extends from the exclusion zone at 1.0 nm (1.8 km) out an additional 0.5 nm (0.9 km), would be surveyed. Together, the zones extend out 2 nm (3.6 km) from the target.
(e)A series of surveillance over-flights would be conducted within the exclusion and the safety zones, prior to and during the exercise, when feasible. Survey protocol would be as follows:
(i)Overflights within the exclusion zone would be conducted in a manner that optimizes the surface area of the water observed. This may be accomplished through the use of the Navy's Search and Rescue
(SAR)Tactical Aid (TACAID). The SAR TACAID provides the best search altitude, ground speed, and track spacing for the discovery of small, possibly dark objects in the water based on the environmental conditions of the day. These environmental conditions include the angle of sun inclination, amount of daylight, cloud cover, visibility, and sea state.
(ii)All visual surveillance activities would be conducted by Navy personnel trained in visual surveillance. At least one member of the mitigation team would have completed the Navy's marine mammal training program for lookouts.
(iii)In addition to the overflights, the exclusion zone would be monitored by passive acoustic means, when assets are available. This passive acoustic monitoring would be maintained throughout the exercise. Potential assets include sonobuoys, which can be utilized to detect any vocalizing marine mammals (particularly sperm whales) in the vicinity of the exercise. The sonobuoys would be re-seeded as necessary throughout the exercise. Additionally, passive sonar onboard submarines may be utilized to detect any vocalizing marine mammals in the area. The OCE would be informed of any aural detection of marine mammals and would include this information in the determination of when it is safe to commence the exercise.
(iv)On each day of the exercise, aerial surveillance of the exclusion and safety zones would commence two hours prior to the first firing.
(v)The results of all visual, aerial, and acoustic searches would be reported immediately to the OCE (Officer Conducting the Exercise). No weapons launches or firing would commence until the OCE declares the safety and exclusion zones free of marine mammals.
(vi)If a marine mammal observed within the exclusion zone is diving, firing would be delayed until the animal is re-sighted outside the exclusion zone, or 30 minutes has elapsed. After 30 minutes, if the animal has not been re-sighted it would be assumed to have left the exclusion zone. This is based on a typical dive time of 30 minutes for traveling marine mammals. The OCE would determine if the marine mammal is in danger of being adversely affected by commencement of the exercise.
(vii)During breaks in the exercise of 30 minutes or more, the exclusion zone would again be surveyed for any marine mammals. If marine mammals are sighted within the exclusion zone, the OCE would be notified, and the procedure described above would be followed.
(viii)Upon sinking of the vessel, a final surveillance of the exclusion zone would be monitored for two hours, or until sunset, to verify that no marine mammals were harmed.
(f)Aerial surveillance would be conducted using helicopters or other aircraft based on necessity and availability. The Navy has several types of aircraft capable of performing this task; however, not all types are available for every exercise. For each exercise, the available asset best suited for identifying objects on and near the surface of the ocean would be used. These aircraft would be capable of flying at the slow safe speeds necessary to enable viewing of marine mammals with unobstructed, or minimally obstructed, downward and outward visibility. The exclusion and safety zone surveys may be cancelled in the event that a mechanical problem, emergency search and rescue, or other similar and unexpected event preempts the use of one of the aircraft onsite for the exercise.
(g)Every attempt would be made to conduct the exercise in sea states that are ideal for marine mammal sighting, Beaufort Sea State 3 or less. In the event of a 4 or above, survey efforts would be increased within the zones. This would be accomplished through the use of an additional aircraft, if available, and conducting tight search patterns.
(h)The exercise would not be conducted unless the exclusion zone could be adequately monitored visually.
(i)In the unlikely event that any marine mammals are observed to be harmed in the area, a detailed description of the animal would be documented, the location noted, and if possible, photos taken. This information would be provided to NMFS via the Navy's regional environmental coordinator for purposes of identification. Additional Mitigation Measures Developed by NMFS and the Navy As mentioned above, NMFS worked with the Navy to identify additional practicable and effective mitigation measures to address the following two issues of concern:
(1)Humpback whales congregating in the winter in the shallow areas of the HRC in high densities to calve and breed; and
(2)the potential relationship between the operation of MFAS/HFAS and marine mammal strandings. Any mitigation measure prescribed by NMFS should be known to accomplish, have a reasonable likelihood of accomplishing (based on current science), or contribute to the accomplishment of one or more of the general goals listed below:
(a)Avoidance or minimization of injury or death of marine mammals wherever possible (goals b, c, and d may contribute to this goal).
(b)A reduction in the numbers of marine mammals (total number or number at biologically important time or location) exposed to received levels of MFAS/HFAS, underwater detonations, or other activities expected to result in the take of marine mammals (this goal may contribute to a, above, or to reducing harassment takes only).
(c)A reduction in the number of times (total number or number at biologically important time or location) individuals would be exposed to received levels of MFAS/HFAS, underwater detonations, or other activities expected to result in the take of marine mammals (this goal may contribute to a, above, or to reducing harassment takes only).
(d)A reduction in the intensity of exposures (either total number or number at biologically important time or location) to received levels of MFAS/HFAS, underwater detonations, or other activities expected to result in the take of marine mammals (this goal may contribute to a, above, or to reducing the severity of harassment takes only).
(e)A reduction in adverse effects to marine mammal habitat, paying special attention to the food base, activities that block or limit passage to or from biologically important areas, permanent destruction of habitat, or temporary destruction/disturbance of habitat during a biologically important time.
(f)For monitoring directly related to mitigation—an increase in the probability of detecting marine mammals, thus allowing for more effective implementation of the mitigation (shut-down zone, etc.). NMFS and the Navy had extensive discussions regarding mitigation, in which we explored several mitigation options and their respective practicability (these alternatives and their practicability are analyzed in NMFS' Draft Environmental Assessment of the Mitigation Measures to be used in the Issuance of the HRC LOA). Ultimately, NMFS and the Navy developed two additional measures (below), a humpback whale cautionary area and a Stranding Response Plan, which we believe support (or contribute to) the goals mentioned in a-e above. These measures are described below. Humpback Whale Cautionary Area Humpback whales migrate to the Hawaiian Islands each winter to rear their calves and mate. Data indicate that, historically, humpbacks have clearly concentrated in high densities in certain areas around the Hawaiian Islands. NMFS has reviewed the Navy's data on MFA sonar training in these dense humpback areas since June 2006 and found it to be rare and infrequent. While past data is no guarantee of future activity, it documents a history of low level MFA sonar activity in dense humpback areas. In order to be successful at operational missions and against the threat of quiet, diesel-electric submarines, the Navy has, for more than 40 years, routinely conducted anti-submarine warfare
(ASW)training in major exercises in the waters off the Hawaiian Islands, including the Humpback Whale National Marine Sanctuary. During this period, no reported cases of harmful effects to humpback whales attributed to MFA sonar use have occurred. Coincident with this use of MFA sonar, abundance estimates reflect an annual increase in the humpback whales migrating to Hawaii (Mobely, 2001, 2004). NMFS and the Navy explored ways of affecting the least practicable impact (which includes a consideration of practicality of implementation and impacts to training fidelity) to humpbacks from exposure to MFA sonar. Proficiency in ASW requires that sailors gain and maintain expert skills and experience in operating MFA sonar in myriad marine environments. Exclusion zones or restricted areas are impracticable and adversely impact MFA sonar training fidelity. The Hawaiian Islands, including areas in which humpback whales concentrate, contain unique bathymetric features the Navy needs to ensure sailors gain critical skills and experience by training in littoral waters. Sound propagates differently in shallow water. No two shallow water areas are the same. Each shallow water area provides a unique training experience that could be critical to address specific future training and assessment requirements. Given the finite littoral areas in the Hawaiian Islands area, maintaining the possibility of using all shallow water training areas is required to ensure sailors receive the necessary training to develop and maintain critical MFA sonar skills. In real world events, crew members will be working in these types of areas and these are the types of areas where the adversary's quiet diesel-electric submarines will be operating. Without the critical ASW training in a variety of different near-shore environments, crews will not have the skills and varied experience needed to successfully operate MFA sonar in these types of waters, negatively affecting vital military readiness. The Navy recognizes the significance of the Hawaiian Islands for humpback whales. The Navy has designated a humpback whale cautionary area (described below), which consists of a 5-km buffer zone around an area that has been identified as having one of the highest concentrations of humpback whales during the critical winter months. The Navy has agreed that training exercises in the humpback whale cautionary area will require a much higher level of clearance than is normal practice in planning and conducting MFA sonar training. Should national security needs require MFA sonar training and testing in the cautionary area between December 15 and April 15, it shall be personally authorized by the Commander, U.S. Pacific Fleet (CPF). The CPF shall base such authorization on the unique characteristics of the area from a military readiness perspective, taking into account the importance of the area for humpback whales and the need to minimize adverse impacts on humpback whales from MFA sonar whenever practicable. Approval at this level for this type of activity is extraordinary. CPF is a four-star Admiral and the highest ranking officer in the United States Pacific Fleet. This case-by-case authorization cannot be delegated and represents the Navy's commitment to fully consider and balance mission requirements with environmental stewardship. Further, CPF will provide specific direction on required mitigation prior to operational units transiting to and training in the cautionary area. This process will ensure the decisions to train in this area are made at the highest level in the Pacific Fleet, heighten awareness of humpback activities in the cautionary area, and serve to reemphasize that mitigation measures are to be scrupulously followed. The Navy will provide NMFS with advance notification of any such activities. Stranding Response Plan for Major Navy Training Exercises in the HRC NMFS and the Navy have developed a draft Stranding Response Plan for Major Exercises in the HRC (available at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* ). Pursuant to 50 CFR Section 216.105, the plan will be included as part of (attached to) the Navy's MMPA Letter of Authorization (LOA), which indicates the conditions under which the Navy is authorized to take marine mammals pursuant to training activities involving MFAS or explosives in the Hawaii Range Complex (HRC). The Stranding Response plan is specifically intended to outline the applicable requirements the authorization is conditioned upon in the event that a marine mammal stranding is reported in the Hawaii Range Complex
(HRC)during a major training exercise
(MTE)(see glossary below). As mentioned above, NMFS considers all plausible causes within the course of a stranding investigation and this plan in no way presumes that any strandings in the HRC are related to, or caused by, Navy training activities, absent a determination made in a Phase 2 Investigation as outlined in Paragraph 7 of this plan, indicating that MFAS or explosive detonation in the HRC were a cause of the stranding. This plan is designed to address the following three issues: • *Mitigation* —When marine mammals are in a situation that can be defined as a stranding (see glossary of plan), they are experiencing physiological stress. When animals are stranded, and alive, NMFS believes that exposing these compromised animals to additional known stressors would likely exacerbate the animal's distress and could potentially cause its death. Regardless of the factor(s) that may have initially contributed to the stranding, it is NMFS' goal to avoid exposing these animals to further stressors. Therefore, when live stranded cetaceans are in the water and engaged in what is classified as an Uncommon Stranding Event
(USE)(see glossary of plan), the shutdown component of this plan is intended to minimize the exposure of those animals to MFAS and explosive detonations, regardless of whether or not these activities may have initially played a role in the event. • *Monitoring* —This plan will enhance the understanding of how MFAS or explosive detonations (as well as other environmental conditions) may, or may not, be associated with marine mammal injury or strandings. Additionally, information gained from the investigations associated with this plan may be used in the adaptive management of mitigation or monitoring measures in subsequent LOAs, if appropriate. • *Compliance* —The information gathered pursuant to this protocol will inform NMFS' decisions regarding compliance with Sections 101(a)(5)(B and C) of the MMPA. The Stranding Response Plan has several components: *Shutdown Procedures* —When an uncommon stranding event (USE— defined in the plan) occurs during a major exercise in the HRC, and a live cetacean(s) is in the water exhibiting indicators of distress (defined in the plan), NMFS will advise the Navy that they should cease MFAS/HFAS operation and explosive detonations within 14 nm (26 km) of the live animal involved in the USE (NMFS and Navy will maintain a dialogue, as needed, regarding the identification of the USE and the potential need to implement shutdown procedures). This distance (14 nm) (26 km) is the distance at which sound from the sonar source is anticipated to attenuate to approximately 140-145 dB (SPL). The risk function predicts that less than 1 percent of the animals exposed to sonar at this level (mysticete or odontocete) would respond in a manner that NMFS considers Level B Harassment. Memorandum of Agreement (MOA)—The Navy and NMFS will develop an MOA, or other mechanism consistent with federal fiscal law requirements (and all other applicable laws), that allows the Navy to assist NMFS with the Phase 1 and 2 Investigations of USEs through the provision of in-kind services, such as (but not limited to) the use of plane/boat/truck for transport of stranding responders or animals, use of Navy property for necropsies or burial, or assistance with aerial surveys to discern the extent of a USE. The Navy may assist NMFS with the Investigations by providing one or more of the in-kind services outlined in the MOA, when available and logistically feasible and when the provision does not negatively affect Fleet operational commitments. *Communication Protocol* —Effective communication is critical to the successful implementation of this Stranding Response Plan. Very specific protocols for communication, including identification of the Navy personnel authorized to implement a shutdown and the NMFS personnel authorized to advise the Navy of the need to implement shutdown procedures (NMFS Protected Resources HQ—senior administrators) and the associated phone trees, etc. are currently in development and will be refined and finalized for the Stranding Response Plan prior to the issuance of a final rule (and updated yearly). *Stranding Investigation* —The Stranding Response Plan also outlines the way that NMFS intends to investigate any strandings that occur during major training exercises in the HRC. Mitigation Conclusions NMFS believes that the range clearance procedures and shutdown/safety zone/exclusion zone measures the Navy has proposed will enable the Navy to avoid injuring any marine mammals and will enable them to minimize the numbers of marine mammals exposed to levels associated with TTS for the following reasons: MFAS/HFAS The Navy's standard protective measures indicate that they will ensure powerdown MFAS/HFAS 6 dB when a marine mammal is detected within 1000 yd (.914 km), powerdown 4 more dB (or 10 dB total) when a marine mammal is detected within 500 yd (.457 km), and cease MFAS/HFAS transmissions when a marine mammal is detected within 200 yd (.183 km). *PTS/Injury* —NMFS believes that the proposed mitigation measures will allow the Navy to avoid exposing marine mammals to received levels of MFAS/HFAS sound that would result in injury for the following reasons: • The estimated distance from the source at which an animal would receive a level of 215 dB SEL (threshold for PTS/injury/Level A Harassment) is approximately 10 m (10.9 yd). • NMFS believes that the probability that a marine mammal would approach within 10 m (10.9 yd) of the sonar dome (to the sides or below) without being seen by the watchstanders (who would then activate a shutdown if the animal was within 200 yd (183 m) is very low, especially considering that the model did not predict any animals (see Table 15) would be exposed to a 215 dB SEL of MFAS/HFAS and animals would likely avoid approaching a source transmitting at that level at that distance. *TTS* —NMFS believes that the proposed mitigation measures will allow the Navy to minimize exposure of marine mammals to received levels of MFAS/HFAS sound associated with TTS for the following reasons: • The estimated range of distances from the source at which an animal would receive 195 dB SEL (the TTS threshold) is from 110-165 m (120-180 yd) from the source. • Based on the size of the animals, average group size, behavior, and average dive time, NMFS believes that the probability that Navy watchstanders will visually detect mysticetes or sperm whales, dolphins, and social pelagic species (pilot whales, melon-headed whales, etc.) at some point within the 1000 yd (.914 km) safety zone before they are exposed to the TTS threshold levels is high, which means that the Navy would be able to shutdown or powerdown to avoid exposing these species to levels associated with TTS. • However, more cryptic, deep-diving species (beaked whales and *Kogia* sp.) are less likely to be visually detected and could potentially be exposed to levels of MFAS/HFAS expected to cause TTS. Additionally, the Navy's bow-riding mitigation exception for dolphins may sometimes allow dolphins to be exposed to levels of MFAS/HFAS likely to result in TTS. Underwater Explosives The Navy utilizes exclusion zones (wherein explosive detonation will not begin/continue if animals are within the zone) for explosive exercises. Table 8 indicates the various explosives, the estimated distance at which animals will receive levels associated with take (see Acoustic Take Criteria Section), and the exclusion zone associated with the explosive types. *Mortality and Injury* —NMFS believes that the mitigation measures will allow the Navy to avoid exposing marine mammals to underwater detonations that would result in injury or mortality for the following reasons: • Surveillance for large charges (which includes aerial and passive acoustic detection methods, when available, to ensure clearance) begins two hours before the exercise and extends to 2 nm (3704 m) from the source. • Animals would need to be within less than 1023 m (1118 yd) (large explosives) or 305 m (334 yd) (smaller charges) from the source to be injured. • Unlike for sonar, an animal would need to be present at the exact moment of the explosion(s) (except for the short series of gunfire example in GUNEX) to be taken. • The model predicted only 3 animals would be exposed to levels associated with injury (though for the reasons above, NMFS does not believe they will be exposed) to those levels). • When the implementation of the exclusion zones (i.e., not starting or continuing to detonate explosives if an animal is detected within the exclusion zone) is combined with the above bullets, NMFS believes that the Navy's mitigation will be effective for avoiding injury and mortality to marine mammals from explosives. *TTS* —NMFS believes that the proposed mitigation measures will allow the Navy to minimize the exposure of marine mammals to underwater detonations that would result in TTS for the following reasons: • Very few animals were predicted to be exposed to explosive levels that would result in TTS—and for the reasons above, NMFS believes that most modeled TTS takes can be avoided, especially dolphins, mysticetes and sperm whales, and social pelagic species. • However, more cryptic, deep-diving species (beaked whales and *Kogia* sp.) are less likely to be visually detected and could potentially be exposed to explosive levels expected to cause TTS. • Additionally, for two of the explosive types (MK-84 and MK-48), though the distance to the presuure threshold is within the exclusion zone, the distance at which an animal would be expected to receive SEL levels associated with TTS (182 dB SEL) is larger than the exclusion zone, which means that for those two explosive types, any species could potentially be exposed to levels associated with TTS if it was detected in the limited area outside of the exclusion zone, but inside the distance to 182 dB SEL. EP23JN08.010 The Stranding Response Plan will minimize the probability of distressed live-stranded animals responding to the proximity of sonar in a manner that further stresses them or increases the potential likelihood of mortality. The Humpback Whale Cautionary Area is intended to reduce the number and intensity of potential humpback exposures to MFAS/HFAS. NMFS has preliminarily determined that the Navy's proposed mitigation measures (from the LOA application), along with the Humpback Whale Cautionary Area and the Stranding Response Plan (and when the Adaptive Management (see Adaptive Management below) component is taken into consideration) are adequate means of effecting the least practicable adverse impacts on marine mammals species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, while also considering personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity. These mitigation measures may be refined, modified, removed, or added to prior to the issuance of the final rule based on the comments and information received during the public comment period. Research and Conservation Measures for Marine Mammals The Navy is working towards a better understanding of marine mammals and sound in ways that are not directly related to the MMPA process. The Navy highlights some of those ways in the section below. Further, NMFS is working on a long-term stranding study that will be supported by the Navy by way of a funding and information sharing component (see below). Navy's Conservation Measures The Navy will continue to fund ongoing marine mammal research in the Hawaiian Islands. Results of conservation efforts by the Navy in other locations will also be used to support efforts in the Hawaiian Islands. The Navy is coordinating both short and long term monitoring/studies of marine mammals on various established ranges and operating areas to determine the response of marine mammals to Navy sound sources and the effectiveness of mitigation measures: • Coordinating with NMFS to conduct surveys within the selected Hawaiian Islands Operating Area as part of a baseline monitoring program. • Implementing a long-term monitoring program of marine mammal populations in the Hawaiian Islands Operating Area, including evaluation of trends. • Implementing a marine mammal monitoring program in the HRC during training exercises. • Continuing Navy research and Navy contribution to university/external research to improve the state of the science regarding marine species biology and acoustic effects. • Sharing data with NMFS and via the literature for research and development efforts. Long-Term Prospective Study Apart from this proposed rule, NMFS, with input and assistance from the Navy and several other agencies and entities, will perform a longitudinal observational study of marine mammal strandings to systematically observe for and record the types of pathologies and diseases and investigate the relationship with potential causal factors (e.g., sonar, seismic, weather). The study will not be a true “cohort” study, because we will be unable to quantify or estimate specific sonar or other sound exposures for individual animals that strand. However, a cross-sectional or correlational analyses, a method of descriptive rather than analytical epidemiology, can be conducted to compare population characteristics, e.g., frequency of strandings and types of specific pathologies between general periods of various anthropogenic activities and non-activities within a prescribed geographic space. In the long term study, we will more fully and consistently collect and analyze data on the demographics of strandings in specific locations and consider anthropogenic activities and physical, chemical, and biological environmental parameters. This approach in conjunction with true cohort studies (tagging animals, measuring received sounds, and evaluating behavior or injuries) in the presence of activities and non-activities will provide critical information needed to further define the impacts of MTEs and other anthropogenic and non-anthropogenic stressors. In coordination with the Navy and other federal and non-federal partners, the comparative study will be designed and conducted for specific sites during intervals of the presence of anthropogenic activities such as sonar transmission or other sound exposures and absence to evaluate demographics of morbidity and mortality, lesions found, and cause of death or stranding. Additional data that will be collected and analyzed in an effort to control potential confounding factors include variables such as average sea temperature (or just season), meteorological or other environmental variables (e.g., seismic activity), fishing activities, etc. All efforts will be made to include appropriate controls (i.e., no sonar or no seismic); environmental variables may complicate the interpretation of “control” measurements. The Navy and NMFS along with other partners are evaluating mechanisms for funding this study. Monitoring In order to issue an ITA for an activity, Section 101(a)(5)(A) of the MMPA states that NMFS must set forth “requirements pertaining to the monitoring and reporting of such taking”. The MMPA implementing regulations at 50 CFR Section 216.104(a)(13) indicate that requests for LOAs must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present. Monitoring measures prescribed by NMFS should accomplish one or more of the following general goals:
(a)An increase in the probability of detecting marine mammals, both within the safety zone (thus allowing for more effective implementation of the mitigation) and in general to generate more data to contribute to the analyses mentioned below.
(b)An increase in our understanding of how many marine mammals are likely to be exposed to levels of MFAS (or explosives or other stimuli) that we associate with specific adverse effects, such as behavioral harassment, TTS, or PTS.
(c)An increase in our understanding of how marine mammals respond to MFAS (at specific received levels), explosives, or other stimuli expected to result in take and how anticipated adverse effects on individuals (in different ways and to varying degrees) may impact the population, species, or stock (specifically through effects on annual rates of recruitment or survival) through any of the following methods: • Behavioral observations in the presence of MFAS compared to observations in the absence of sonar (need to be able to accurately predict received level and report bathymetric conditions, distance from source, and other pertinent information. • Physiological measurements in the presence of MFAS compared to observations in the absence of sonar (need to be able to accurately predict received level and report bathymetric conditions, distance from source, and other pertinent information), and/or • Pre-planned and thorough investigation of stranding events that occur coincident to naval activities. • Distribution and/or abundance comparisons in times or areas with concentrated MFAS versus times or areas without MFAS.
(d)An increased knowledge of the effected species.
(e)An increase in our understanding of the effectiveness of certain mitigation and monitoring measures. Proposed Monitoring Plan for the HRC The Navy has submitted a draft Monitoring Plan for the HRC, which may be viewed at NMFS' Web site: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm.* NMFS and the Navy have worked together on the development of this plan in the months preceding the publication of this proposed rule; however, we are still refining the plan and anticipate that it will contain more details by the time it is finalized in advance of the issuance of the final rule. Additionally, the plan may be modified or supplemented based on comments or new information received from the public during the public comment period. A summary of the primary components of the plan follows. The draft Monitoring Plan for the HRC has been designed as a collection of focused “studies” (described fully in the HRC Monitoring Plan) to gather data that will allow the Navy to address the following questions:
(a)Are marine mammals exposed to mid-frequency active sonar (MFAS), especially at levels associated with adverse effects (i.e., based on NMFS'criteria for behavioral harassment, TTS, or PTS)? If so, at what levels are they exposed?
(b)If marine mammals are exposed to MFAS in the HRC, do they redistribute geographically as a result of continued exposure? If so, how long does the redistribution last?
(c)If marine mammals are exposed to MFAS, what are their behavioral responses to various levels?
(d)What are the behavioral responses of marine mammals that are exposed to explosives at specific levels?
(e)Is the Navy's suite of mitigation measures for MFAS and explosives (e.g., PMAP, major exercise measures agreed to by the Navy through permitting) effective at avoiding TTS, injury, and mortality of marine mammals? Data gathered in these studies will be collected by qualified, professional marine mammal biologists that are experts in their field. They will use a combination of the following methods to collect data: BILLING CODE 3510-22-P EP23JN08.011 In addition to the Monitoring Plan for the HRC, by the end of 2009, the Navy will have completed an Integrated Comprehensive Monitoring Program (ICMP). The ICMP will provide the overarching structure and coordination that will, over time, compile data from both range specific monitoring plans (such as HRC, the Atlantic Fleet Active Sonar Training Range (AFAST), or the Southern California Range Complex) as well as Navy funded research and development (R&D) studies. The primary objectives of the ICMP are: • To monitor Navy training events, particularly those involving mid-frequency sonar and underwater detonations, for compliance with the terms and conditions of ESA Section 7 consultations or MMPA authorizations; • To collect data to support estimating the number of individuals exposed to sound levels above current regulatory thresholds; • To assess the efficacy of the Navy's current marine species mitigation; • To add to the knowledgebase on potential behavioral and physiological effects to marine species from mid-frequency active sonar and underwater detonations; and, • To assess the practicality and effectiveness of a number of mitigation tools and techniques (some not yet in use). More information about the ICMP may be found in the draft Monitoring Plan for the HRC. Past Monitoring in the HRC Since RIMPAC 2006, which was the first Navy training activity utilizing MFAS to receive an MMPA authorization and an incidental take statement pursuant to the ESA, NMFS has received four monitoring reports (one covering two exercises) addressing MFAS use in the HRC, including the RIMPAC after action report (AAR). The Navy's AARs may be viewed at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* . For three of the exercises, the reports describe observations by the watchstanders (who are involved in the training exercise) only. For two of the exercises (RIMPAC and the most recent USWEX), independent marine mammal observers were used to collect data before, during, and after the exercises. NMFS has reviewed these reports and has summarized the results, as related to marine mammal observations, below. RIMPAC 2006 During the RIMPAC exercises in July 2006, the Navy operated MFAS hull-mounted sonar for 472 hours. They operated active sonobuoys for 115 hours and helicopter dipping sonar for 110 hours, however, these sources do not ping continuously and put far less sound in the water per hour than hull-mounted sonar. A map in the AAR showing the locations of the marine mammal sightings indicates that the exercises covered a very large area, both to the north and south of the islands, with the majority of the sightings of marine mammals occurring in the open ocean (not near shore). *Observations by Exercise Participants* —Table 10 summarizes the marine mammals sighted by exercise participants and whether or not sonar was shut down. The Navy indicates in its report that no evidence of behavioral effects was observed. EP23JN08.012 BILLING CODE 3510-22-C *Observations by Marine Mammal Observers* —The Navy contracted marine mammal observers to conduct aerial surveys, and their summary and conclusions of the monitoring are described here. A total of six aerial surveys of marine mammals were performed on dates corresponding with scheduled dates for “choke point” maneuvers of the RIMPAC exercises. Three surveys were performed in the vicinity of the Kaulakahi Channel (between Kauai and Niihau) (July 16, 17 and 20) and three were performed in the Alenuihaha Channel (between Hawaii and Maui) (July 24-26). The mission of the surveys was to detect, locate and identify all marine mammal species in the target areas using methods consistent with modern distance sampling theory. Marine mammals were sighted on four of the six surveys, comprising a total of 13 groups. All sightings consisted of small- to medium-sized odontocetes (toothed cetaceans), including one sighting each of bottlenose dolphins, spotted dolphins, Cuvier's beaked whale, false killer whale, unidentified beaked whale and eight sightings of unidentified delphinid species. Encounter rates of odontocete sightings (sightings/km surveyed) in this series were identical to those seen during earlier survey series (1993-03), though at different times of the year. No unusual observations ( *e.g.* , sightings of unusual behavior or aggregations, near strandings, or stranded or dead animals) were noted during the total of approximately 18 hrs. of survey effort. USWEX 06-04 During this three-day exercise, which was conducted from September 19-21, 2006 and in which the hours of sonar use were not reported, no marine mammals were sighted by the exercise participants. USWEX 07-02 This exercise was conducted from April 10-11, 2007 and involved 5 MFAS-equipped ships, one non-MFAS equipped ship, and 8-12 helicopters. Other participating units representing support and opposition forces, which did not utilize sonar, included 2 submarines and 3 MFA-equipped ships. During the exercise, 265.5 hours of sonar use were reported. No marine mammals were sighted by the participants during the exercise. USWEX 07-03 This exercise was conducted from April 17-18, 2007, and involved 3 MFAS-equipped ships, 3 non-MFAS equipped ships, and 6 helicopters. Other participating units representing support and opposition forces, which did not utilize sonar, included 2 submarines and 2 MFA-equipped ships. During this exercise 50.1 hours of sonar use were reported. One large whale was sighted by Navy watchstanders at a distance of approximately 300 yds when MFAS was not operating. USWEX 08-1 USWEX 08-1 was conducted from November 13-15, 2007, and involved 3 MFAS-equipped ships, several other non-MFAS-equipped ships, and 2-4 helicopters with dipping sonar. During the exercise, a total of 77 hours of MFAS time was reported from all sources, including hull-mounted, helicopter dipping, and DICASS sonobuoys. The exercise was primarily conducted to the Northeast (extending far out to sea) of Oahu (a map is available in the AAR). Observations by Exercise Participants There were no sightings of marine mammals within 2000 yds by Navy personnel engaged in the training during USWEX 08-01. Sea states were high during some of the exercise period, which may have limited sightings of smaller marine mammals. Observations of Marine Mammal Observers Aerial Survey A pre- and post-exercise aerial survey was conducted by a civilian science crew from 1 to 12 November and 15 to 17 November. The purpose of these surveys was to detect, locate, and identify all marine mammals and sea turtles observed within a 2384 mi 2 (6175 km 2 ) grid (to the east and northeast of Oahu); and during circumnavigation of the islands of Oahu and Molokai. Over 17 hours of survey time was conducted, involving a linear distance of approximately 1,701 nm (3150 km). There were 26 marine mammal sightings (six at sea with the remaining 20 observed nearshore), including short-finned pilot whales, Hawaiian spinner dolphins, bottlenose dolphins, Hawaiian monk seals, and three unidentified species ( *Stenella* sp., dolphin and baleen whale) (see Table 11). Time was spent characterizing behavior at the time of the sightings and no indications of distressed or unusual behavior were documented. Additionally, there were no observations of any stranded or floating dead marine mammals. More information regarding the findings of these aerial surveys may be found in Appendix B of the USWEX 08-01 Monitoring report, which is posted on the NMFS Web site, at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm.* EP23JN08.013 Vessel Survey A civilian science-based research vessel conducted a visual monitoring survey for cetaceans and sea turtles from November 11-17, 2007. The purpose of these surveys was to monitor, identify, and report surface behavior of marine mammals observed before, during, and after the scheduled training exercise; particularly any injured or harmed marine mammals and/or unusual behavior or changes in behavior, distribution and numbers of animals. Another goal was to attempt to remain within view of any opportunistically encountered Navy vessels while conducting surveys and focal follows sessions. The effort was focused in the same designated survey box as the aerial survey team, to the east and northeast of Oahu. A total of 66 hours and approximately 911 km (492 nm) were visually surveyed over seven days with a total of eight cetacean groups sighted. Line surveys were conducted over 817 km (441 nm) (with 105 km (57 nm) while Navy vessels were within view) and animals were focally followed for a total of approximately 63 km (34 nm). None of the whales followed during the focal sessions exhibited any notable evasive or disturbance behavior related to the observation vessel or as defined under the MMPA. No injured or dead whales were detected. A summary of the marine mammals sighted and their associated behaviors (including those that occurred during four focal follows) is presented in Table 12. The observers documented the first occurrence of Bryde's whale near the main Hawaiian islands, previous verified sightings have only occurred in the leeward Northwestern chain of the Hawaiian Islands. A Navy vessel was operating MFAS at approximately the same time as the Bryde's whale focal follow, at approximately 50 nm (93 km) away. Post exercise modeling predicted that the Bryde's whale may have been exposed to received levels of up to 141dB (SPL), though, as mentioned previously, no unusual behaviors were observed. The vessel survey report, which is included in Appendix C of the Navy's AAR, and available at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* , draws some conclusions regarding the efficacy of certain monitoring techniques and makes recommendations for future monitoring plans. The Navy has taken this information into consideration in developing the monitoring plan for the HRC that is proposed here. EP23JN08.014 BILLING CODE 3510-22-C General Conclusions Drawn From Review of Monitoring Reports Because NMFS has received relatively few monitoring reports from sonar training in the HRC, and even fewer that have utilized independent aerial or vessel-based observers, it is too early to draw any biological conclusions. However, NFMS can draw some general conclusions from the content of the monitoring reports:
(a)The data gathered by independent observers contains far more detail than the data gathered by watchstanders. Data from watchstanders is generally useful to indicate the presence or absence of marine mammals within the safety zones (and sometimes without) and to document the implementation of mitigation measures, but does not provide useful species' specific information or behavioral data. Data gathered by independent observers can provide very valuable information at a level of detail not possible with watchstanders, such as the presence of sub-adult sei whales in the Hawaiian islands in fall, potentially indicating the use of the area for breeding.
(b)More marine mammal sightings per hour of effort were reported by independent observers than by Navy watchstanders. Out of approximately 1100 hours of sonar operation, the Navy watchstanders reported 30 sightings of marine mammals. Out of approximately 100 hours of observation, the independent observers reported 47 sightings of marine mammals (if the observations and hours that were specifically near shore or in channels are removed (likely higher density of marine mammals), the independent observers had 14 sightings in 80 hours of effort: 6 sightings in 14 hours of aerial and 8 sightings in 66 hours of vessel-based). There are a couple of possible explanations for this:
(i)MFAS was likely operating in much closer proximity to and for a significantly larger percentage of the time when watchstanders were reporting marine mammal sightings as compared to when independent observers were reporting them. Marine mammals may have been avoiding the sonar source and therefore been present in lower numbers immediately around the watchstanders (usually on the same platform as the sonar source itself), or within the distance that the watchstanders could easily detect them. Alternatively, MFAS was not necessarily operating in the immediate vicinity of the independent observers, and even when so, the source was at least a few miles away.
(ii)Because of their experience and training, independent vessel-based marine mammal observers may see a higher percentage of the animals at the surface than the Navy watchstanders (0.12 sightings/hour versus 0.03 sightings/hour, respectively).
(c)Though it is by no means conclusory, it is worth noting that no instances of obvious behavioral disturbance were observed either by the Navy watchstanders or the independent observers (and a portion of the independent observations were reported within the vicinity of operating MFAS) in the 1200+ hours of effort in which 77 sightings of marine mammals were made. Though of course, these observations only cover the animals that were at the surface (or slightly below in the case of aerial surveys) and within the distance that the observers can see with the big-eye binoculars or from the aircraft.
(d)NMFS and the Navy need to more carefully designate what information should be gathered during monitoring, as some reports contain different information, making cross-report comparisons difficult. For example, some reports indicate marine mammals seen within the safety zones, while others indicate marine mammals detected within any distance. Adaptive Management Adaptive Management was addressed above in the context of the Stranding Response Plan because that Section will be a stand-alone document. More specifically, the final regulations governing the take of marine mammals incidental to Navy training exercises in the HRC will contain an adaptive management component. Our understanding of the effects of MFAS/HFAS on marine mammals is still in its relative infancy, and yet the science in this field is evolving fairly quickly. These circumstances make the inclusion of an adaptive management component both valuable and necessary within the context of 5-year regulations for activities that have been associated with marine mammal mortality in certain circumstances and locations (though not the HRC). The use of adaptive management will give NMFS the ability to consider new data from different sources to determine (in coordination with the Navy), on an annual basis if new or modified mitigation or monitoring measures are appropriate for subsequent annual LOAs. Following are some of the possible sources of applicable data: • Results from the Navy's monitoring from the previous year (either from the HRC or other locations). • Results from specific stranding investigations (either from the HRC or other locations, and involving coincident MFAS training or not involving coincident use). • Results from the Long Term Prospective Study described below. • Results from general marine mammal and sound research (funded by the Navy (described below) or otherwise). Mitigation measures could be modified or added if new data suggests that such modifications would have a reasonable likelihood of reducing adverse effects to marine mammals and if the measures were practicable. NMFS could also coordinate with the Navy to modify or add to the existing monitoring requirements if the new data suggest that the addition of a particular measure would likely fill in a specifically important data gap. Reporting In order to issue an ITA for an activity, Section 101(a)(5)(A) of the MMPA states that NMFS must set forth “requirements pertaining to the monitoring and reporting of such taking”. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring. Some of the reporting requirements are still in development and the final rule may contain additional details not contained in the proposed rule. Additionally, proposed reporting requirements may be modified, removed, or added based on information or comments received during the public comment period. Currently, there are several different reporting requirements pursuant to these proposed regulations: General Notification of Injured or Dead Marine Mammals Navy personnel will ensure that NMFS (regional stranding coordinator) is notified immediately (or as soon as clearance procedures allow) if an injured or dead marine mammal is found during or shortly after, and in the vicinity of, any Navy training exercise utilizing MFAS, HFAS, or underwater explosive detonations. The Navy will provide NMFS with species or description of the animal (s), the condition of the animal(s) (including carcass condition if the animal is dead), location, time of first discovery, observed behaviors (if alive), and photo or video (if available). The Stranding Response Plan contains more specific reporting requirements for specific circumstances. SINKEX, GUNEX, MISSILEX, BOMBEX, and IEER A yearly report detailing the exercise's timeline, the time the surveys commenced and terminated, amount, and types of all ordnance expended, and the results of survey efforts for each event will be submitted to NMFS. MFAS Mitigation/Navy Watchstanders The Navy will submit an After Action Report to the Office of Protected Resources, NMFS, within 120 days of the completion of a Major Training Exercise (RIMPAC, USWEX, and Multi Strike Group). For other ASW exercises (TRACKEX and TORPEX), the Navy will submit a yearly summary report. These reports will, at a minimum, include the following information: • The estimated number of hours of sonar operation, broken down by source type. • If possible, the total number of hours of observation effort (including observation time when sonar was not operating). • A report of all marine mammal sightings (at any distance—not just within a particular distance) to include, when possible and to the best of their ability, and if not classified: ○ Species. ○ Number of animals sighted. ○ Location of marine mammal sighting. ○ Distance of animal from any operating sonar sources. ○ Whether animal is fore, aft, port, starboard. ○ Direction animal is moving in relation to source (away, towards, parallel). ○ Any observed behaviors of marine mammals. • The status of any sonar sources (what sources were in use) and whether or not they were powered down or shut down as a result of the marine mammal observation. • The platform that the marine mammals were sighted from. Monitoring Report Although the draft Monitoring Plan for the HRC contains a general description of the monitoring that the Navy plans to conduct (and that NMFS has analyzed) in the HRC, the detailed analysis and reporting protocols that will be used for the Hawaii monitoring plan are still being refined at this time. The draft HRC Monitoring plan may be viewed at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* . Standard marine species sighting forms will be used by Navy lookouts and biologists to standardize data collection and data collection methods will be standardized across ranges to allow for comparison in different geographic locations. Reports of the required monitoring will be submitted to NMFS on an annual basis as well as in the form of a multi-year report that compiles all five years worth of monitoring data (reported at end of fourth year of rule—in future rules will include the last year of the prior rule). HRC Comprehensive Report The Navy will submit to NMFS a draft report that analyzes and summarizes *all* of the multi-year marine mammal information gathered during ASW and explosive exercises for which individual reports are required in § 216.175 (d-f). This report will be submitted at the end of the fourth year of the rule (November 2012), covering activities that have occurred through June 1, 2012. The Navy will respond to NMFS comments on the draft comprehensive report if submitted within 3 months of receipt. The report will be considered final after the Navy has addressed NMFS' comments, or three months after the submittal of the draft if NMFS does not comment by then. Comprehensive National ASW Report The Navy will submit a draft Comprehensive National ASW Report that analyzes, compares, and summarizes the data gathered from the watchstanders and pursuant to the implementation of the Monitoring Plans for the HRC, the Atlantic Fleet active Sonar Training (AFAST), and the Southern California (SOCAL) Range Complex. The Navy will respond to NMFS comments on the draft comprehensive report if submitted within 3 months of receipt. The report will be considered final after the Navy has addressed NMFS' comments, or three months after the submittal of the draft if NMFS does not comment by then. Estimated Take of Marine Mammals As mentioned previously, for the purposes of MMPA authorizations, NMFS' effects assessments have two primary purposes (in the context of the HRC LOA, where subsistence communities are not present):
(1)To put forth the permissible methods of taking within the context of MMPA Level B Harassment (behavioral harassment), Level A Harassment (injury), and mortality (i.e., identify the number and types of take that will occur); and
(2)to determine whether the specified activity will have a negligible impact on the affected species or stocks of marine mammals (based on the likelihood that the activity will adversely affect the species or stock through effects on annual rates of recruitment or survival). In the Potential Effects of Exposure of Marine Mammal to MFAS/HFAS and Underwater Detonations section, NMFS' analysis identified the lethal responses, physical trauma, sensory impairment (permanent and temporary threshold shifts and acoustic masking), physiological responses (particular stress responses), and behavioral responses that could potentially result from exposure to MFAS/HFAS or underwater explosive detonations. In this section, we will relate the potential effects to marine mammals from MFAS/HFAS and underwater detonation of explosives to the MMPA regulatory definitions of Level A and Level B Harassment and attempt to quantify the effects that might occur from the specific training activities that the Navy is proposing in the HRC. Definition of Harassment As mentioned previously, with respect to military readiness activities, Section 3(18)(B) of the MMPA defines “harassment” as:
(i)Any act that injures or has the significant potential to injure a marine mammal or marine mammal stock in the wild [Level A Harassment]; or
(ii)any act that disturbs or is likely to disturb a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns, including, but not limited to, migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered [Level B Harassment]. Level B Harassment Of the potential effects that were described in the Potential Effects of Exposure of Marine Mammal to MFAS/HFAS and Underwater Detonations Section, following are the types of effects that fall into the Level B Harassment category: *Behavioral Harassment* —Behavioral disturbance that rises to the level described in the definition above, when resulting from exposures to MFAS/HFAS or underwater detonations, is considered Level B Harassment. Some of the lower level physiological stress responses discussed in the Potential Effects of Exposure of Marine Mammal to MFAS/HFAS and Underwater Detonations Section: Stress Section will also likely co-occur with the predicted harassments, although these responses are more difficult to detect and fewer data exist relating these responses to specific received levels of sound. When Level B Harassment is predicted based on estimated behavioral responses, those takes may have a stress-related physiological component as well. In the effects section above, we described the Southall *et al.* ,
(2007)severity scaling system and listed some examples of the three broad categories of behaviors: (0-3: Minor and/or brief behaviors); 4-6 (Behaviors with higher potential to affect foraging, reproduction, or survival); 7-9 (Behaviors considered likely to affect the aforementioned vital rates). Generally speaking, MMPA Level B Harassment, as defined in this document, would include the behaviors described in the 7-9 category, and a subset, dependent on context and other considerations, of the behaviors described in the 4-6 categories. Behavioral harassment does not include behaviors ranked 0-3 in Southall *et al.* , (2007). *Acoustic Masking and Communication Impairment* —Acoustic masking is considered Level B Harassment as it can disrupt natural behavioral patterns by interrupting or limiting the marine mammal's receipt or transmittal of important information or environmental cues. *TTS* —As discussed previously, TTS can effect how an animal behaves in response to the environment, including conspecifics, predators, and prey. The following physiological mechanisms are thought to play a role in inducing auditory fatigue: Effects to sensory hair cells in the inner ear that reduce their sensitivity, modification of the chemical environment within the sensory cells, residual muscular activity in the middle ear, displacement of certain inner ear membranes, increased blood flow, and post-stimulatory reduction in both efferent and sensory neural output. Ward
(1997)suggested that when these effects result in TTS rather than PTS, they are within the normal bounds of physiological variability and tolerance and do not represent a physical injury. Additionally, Southall *et al.*
(2007)indicate that although PTS is a tissue injury, TTS is not because the reduced hearing sensitivity following exposure to intense sound results primarily from fatigue, not loss, of cochlear hair cells and supporting structures and is reversible. Accordingly, NMFS classifies TTS (when resulting from exposure to either MFAS/HFAS or underwater detonations) as Level B Harassment, not Level A Harassment (injury). Level A Harassment Of the potential effects that were described in the Potential Effects of Exposure of Marine Mammal to MFAS/HFAS and Underwater Detonations Section, following are the types of effects that fall into the Level A Harassment category: *PTS* —PTS (resulting either from exposure to MFAS/HFAS or explosive detonations) is irreversible and considered an injury. PTS results from exposure to intense sounds that cause a permanent loss of inner or outer cochlear hair cells or exceed the elastic limits of certain tissues and membranes in the middle and inner ears and result in changes in the chemical composition of the inner ear fluids. *Acoustically Mediated Bubble Growth* —A few theories suggest ways in which gas bubbles become enlarged through exposure to intense sounds (MFAS/HFAS) to the point where tissue damage results. In rectified diffusion, exposure to a sound field would cause bubbles to increase in size. Alternately, bubbles could be destabilized by high-level sound exposures such that bubble growth then occurs through static diffusion of gas out of the tissues. Tissue damage from either of these processes would be considered an injury. *Behaviorally Mediated Bubble Growth* —Several authors suggest mechanisms in which marine mammals could behaviorally respond to exposure to MFAS/HFAS by altering their dive patterns in a manner (unusually rapid ascent, unusually long series of surface dives, etc.) that might result in unusual bubble formation or growth ultimately resulting in tissue damage (emboli, etc.) *Physical Disruption of Tissues Resulting from Explosive Shock Wave* —Physical damage of tissues resulting from a shock wave (from an explosive detonation) is classified as an injury. Blast effects are greatest at the gas-liquid interface (Landsberg, 2000) and gas-containing organs, particularly the lungs and gastrointestinal tract, are especially susceptible (Goertner, 1982; Hill 1978; Yelverton *et al.* , 1973). Nasal sacs, larynx, pharynx, trachea, and lungs may be damaged by compression/expansion caused by the oscillations of the blast gas bubble (Reidenberg and Laitman, 2003). Severe damage (from the shock wave) to the ears can include tympanic membrane rupture, fracture of the ossicles, damage to the cochlea, hemorrhage, and cerebrospinal fluid leakage into the middle ear. Acoustic Take Criteria For the purposes of an MMPA incidental take authorization, three types of take are identified: Level B Harassment; Level A Harassment; and mortality (or serious injury leading to mortality). The categories of marine mammal responses (physiological and behavioral) that fall into the two harassment categories were described in the previous section. Because the physiological and behavioral responses of the majority of the marine mammals exposed to MFAS/HFAS and underwater detonations cannot be detected or measured (not all responses visible external to animal, portion of exposed animals underwater (so not visible), many animals located many miles from observers and covering very large area, etc.) and because NMFS must authorize take prior to the impacts to marine mammals, a method is needed to estimate the number of individuals that will be taken, pursuant to the MMPA, based on the proposed action. To this end, NMFS developed acoustic criteria that estimate at what received level (when exposed to MFAS/HFAS or explosive detonations) Level B Harassment, Level A Harassment, and mortality (for explosives) of marine mammals would occur. The acoustic criteria for MFAS/HFAS and Underwater Detonations are discussed below. MFAS/HFAS Acoustic Criteria Because relatively few applicable data exist to support acoustic criteria specifically for HFAS and because such a small percentage of the sonar pings that marine mammals will likely be exposed to incidental to this activity come from a HFAS source (the vast majority come from MFAS sources), NMFS will apply the criteria developed for the MFAS to the HFAS as well. NMFS utilizes three acoustic criteria for MFAS/HFAS: PTS (injury—Level A Harassment), TTS (Level B Harassment), and behavioral harassment (Level B Harassment). Because the TTS and PTS criteria are derived similarly and the PTS criteria was extrapolated from the TTS data, the TTS and PTS acoustic criteria will be presented first, before the behavioral criteria. For more information regarding these criteria, please see the Navy's FEIS for the HRC. Level B Harassment Threshold
(TTS)As mentioned above, behavioral disturbance, acoustic masking, and TTS are all considered Level B Harassment. Marine mammals would usually be behaviorally disturbed at lower received levels than those at which they would likely sustain TTS, so the levels at which behavioral disturbance is likely to occur are considered the onset of Level B Harassment. The behavioral responses of marine mammals to sound are variable, context specific, and, therefore, difficult to quantify (see Risk Function section, below). TTS is a physiological effect that has been studied and quantified in laboratory conditions. Because data that support an estimate of at what received levels marine mammals will TTS exist, NMFS also uses an acoustic criteria to estimate the number of marine mammals that might sustain TTS incidental to a specific activity (in addition to the behavioral criteria). A number of investigators have measured TTS in marine mammals. These studies measured hearing thresholds in trained marine mammals before and after exposure to intense sounds. The existing cetacean TTS data are summarized in the following bullets. • Schlundt *et al.*
(2000)reported the results of TTS experiments conducted with 5 bottlenose dolphins and 2 belugas exposed to 1-second tones. This paper also includes a reanalysis of preliminary TTS data released in a technical report by Ridgway *et al.* (1997). At frequencies of 3, 10, and 20 kHz, sound pressure levels
(SPLs)necessary to induce measurable amounts (6 dB or more) of TTS were between 192 and 201 dB re 1 μPa (EL = 192 to 201 dB re 1 μPa2-s). The mean exposure SPL and EL for onset-TTS were 195 dB re 1 μPa and 195 dB re 1 μPa 2 -s, respectively. • Finneran *et al.* (2001, 2003, 2005) described TTS experiments conducted with bottlenose dolphins exposed to 3-kHz tones with durations of 1, 2, 4, and 8 seconds. Small amounts of TTS (3 to 6 dB) were observed in one dolphin after exposure to ELs between 190 and 204 dB re 1 μPa 2 -s. These results were consistent with the data of Schlundt *et al.*
(2000)and showed that the Schlundt *et al.*
(2000)data were not significantly affected by the masking sound used. These results also confirmed that, for tones with different durations, the amount of TTS is best correlated with the exposure EL rather than the exposure SPL. • Nachtigall *et al.*
(2003)measured TTS in a bottlenose dolphin exposed to octave-band sound centered at 7.5 kHz. Nachtigall *et al.* (2003a) reported TTSs of about 11 dB measured 10 to 15 minutes after exposure to 30 to 50 minutes of sound with SPL 179 dB re 1 μPa (EL about 213 dB re μPa 2 -s). No TTS was observed after exposure to the same sound at 165 and 171 dB re 1 μPa. Nachtigall *et al.*
(2004)reported TTSs of around 4 to 8 dB 5 minutes after exposure to 30 to 50 minutes of sound with SPL 160 dB re 1 μPa (EL about 193 to 195 dB re 1 μPa 2 -s). The difference in results was attributed to faster post-exposure threshold measurement—TTS may have recovered before being detected by Nachtigall *et al.* (2003). These studies showed that, for long-duration exposures, lower sound pressures are required to induce TTS than are required for short-duration tones. • Finneran *et al.* (2000, 2002) conducted TTS experiments with dolphins and belugas exposed to impulsive sounds similar to those produced by distant underwater explosions and seismic waterguns. These studies showed that, for very short-duration impulsive sounds, higher sound pressures were required to induce TTS than for longer-duration tones. • Kastak *et al.* (1999a, 2005) conducted TTS experiments with three species of pinnipeds, California sea lion, northern elephant seal and a Pacific harbor seal, exposed to continuous underwater sounds at levels of 80 and 95 dB SPL at 2.5 and 3.5 kHz for up to 50 minutes. Mean TTS shifts of up to 12.2 dB occurred with the harbor seals showing the largest shift of 28.1 dB. Increasing the sound duration had a greater effect on TTS than increasing the sound level from 80 to 95 dB. Some of the more important data obtained from these studies are onset-TTS levels (exposure levels sufficient to cause a just-measurable amount of TTS) often defined as 6 dB of TTS (for example, Schlundt *et al.* , 2000) and the fact that energy metrics (sound exposure levels (SEL), which include a duration component) better predict when an animal will sustain TTS than pressure
(SPL)alone. NMFS' TTS criteria (which indicate the received level at which onset TTS (>6dB) is induced) for MFAS/HFAS are as follows: • Cetaceans—195 dB re 1 μPa 2 -s (based on mid-frequency cetaceans—no published data exist on auditory effects of noise in low or high frequency cetaceans (Southall *et al.* (2007)). • Pinnipeds (monk seals)—204 dB re 1 μPa 2 -s (based on data from elephant seals, which are the most closely related to the monk seal). A detailed description of how TTS criteria were derived from the results of the above studies may be found in Chapter 3 of Southall *et al.* (2007), as well as the Navy's HRC LOA application. Level A Harassment Threshold
(PTS)For acoustic effects, because the tissues of the ear appear to be the most susceptible to the physiological effects of sound, and because threshold shifts tend to occur at lower exposures than other more serious auditory effects, NMFS has determined that PTS is the best indicator for the smallest degree of injury that can be measured. Therefore, the acoustic exposure associated with onset-PTS is used to define the lower limit of the Level A harassment. PTS data do not currently exist for marine mammals and are unlikely to be obtained due to ethical concerns. However, PTS levels for these animals may be estimated using TTS data from marine mammals and relationships between TTS and PTS that have been discovered through study of terrestrial mammals. NMFS uses the following acoustic criteria for injury: • Cetaceans—215 dB re 1 μPa 2 -s (based on mid-frequency cetaceans—no published data exist on auditory effects of noise in low or high frequency cetaceans (Southall *et al.* (2007)). • Pinnipeds (monk seals)—224 dB re 1 μPa 2 -s (based on data from elephant seals, which are the most closely related to the monk seal). These criteria are based on a 20 dB increase in SEL over that required for onset-TTS. Extrapolations from terrestrial mammal data indicate that PTS occurs at 40 dB or more of TS, and that TS growth occurs at a rate of approximately 1.6 dB TS per dB increase in EL. There is a 34-dB TS difference between onset-TTS (6 dB) and onset-PTS (40 dB). Therefore, an animal would require approximately 20dB of additional exposure (34 dB divided by 1.6 dB) above onset-TTS to reach PTS. A detailed description of how TTS criteria were derived from the results of the above studies may be found in Chapter 3 of Southall *et al.* (2007), as well as the Navy's HRC LOA application. Southall *et al.*
(2007)recommend a precautionary dual criteria for TTS (230 dB re 1 μPa
(SPL)in addition to 215 re 1 μPa 2 -s (SEL)) to account for the potentially damaging transients embedded within non-pulse exposures. However, in the case of MFAS/HFAS, the distance at which an animal would receive 215
(SEL)is farther from the source than the distance at which they would receive 230
(SPL)and therefore, it is not necessary to consider 230 dB. We note here that behaviorally mediated injuries (such as those that have been hypothesized as the cause of some beaked whale strandings) could potentially occur in response to received levels lower than those believed to directly result in tissue damage. As mentioned previously, data to support a quantitative estimate of these potential effects (for which the exact mechanism is not known and in which factors other than received level may play a significant role) do not exist. However, based on the number of years (more than 40) and number of hours of MFAS per year that the U.S. (and other countries) has operated compared to the reported (and verified) cases of associated marine mammal strandings, NMFS believes that the probability of these types of injuries is very low. Level B Harassment Risk Function (Behavioral Harassment) In 2006, NMFS issued the only MMPA authorization that has, as yet, authorized the take of marine mammals incidental to MFAS. For that authorization, NMFS used 173 SEL as the criterion for the onset of behavioral harassment (Level B Harassment). This type of single number criterion is referred to as a step function, in which (in this example) all animals estimated to be exposed to received levels above 173 SEL would be predicted to be taken by Level B Harassment and all animals exposed to less than 173 SEL would not be taken by Level B Harassment. As mentioned previously, marine mammal behavioral responses to sound are highly variable and context specific (affected by differences in acoustic conditions; differences between species and populations; differences in gender, age, reproductive status, or social behavior; or the prior experience of the individuals), which does not support the use of a step function to estimate behavioral harassment. Unlike step functions, acoustic risk continuum functions (which are also called “exposure-response functions,” “dose-response functions,” or “stress-response functions” in other risk assessment contexts) allow for probability of a response that NMFS would classify as harassment to occur over a range of possible received levels (instead of one number) and assume that the probability of a response depends first on the “dose” (in this case, the received level of sound) and that the probability of a response increases as the “dose” increases (see Figure 3a). The Navy and NMFS have previously used acoustic risk functions to estimate the probable responses of marine mammals to acoustic exposures for other training and research programs. Examples of previous application include the Navy FEISs on the SURTASS LFA sonar (U.S. Department of the Navy, 2001c); the North Pacific Acoustic Laboratory experiments conducted off the Island of Kauai (Office of Naval Research, 2001), and the Supplemental EIS for SURTASS LFA sonar (U.S. Department of the Navy, 2007d). As discussed in the Effects section, factors other than received level (such as distance from or bearing to the sound source) can affect the way that marine mammals respond; however, data to support a quantitative analysis of those (and other factors) do not currently exist. NMFS will continue to modify these criteria as new data becomes available. The particular acoustic risk functions developed by NMFS and the Navy (see Figures 3a and b) estimate the probability of behavioral responses to MFAS/HFAS (interpreted as the percentage of the exposed population) that NMFS would classify as harassment for the purposes of the MMPA given exposure to specific received levels of MFA sonar. The mathematical function (below) underlying this curve is a cumulative probability distribution adapted from a solution in Feller
(1968)and was also used in predicting risk for the Navy's SURTASS LFA MMPA authorization as well. EP23JN08.000 Where: R = Risk (0—1.0) L = Received level (dB re: 1 μPa) B = Basement received level = 120 dB re: 1 μPa K = Received level increment above B where 50 percent risk = 45 dB re: 1 μPa A = Risk transition sharpness parameter = 10 (odontocetes) or 8 (mysticetes) In order to use this function to estimate the percentage of an exposed population that would respond in a manner that NMFS classifies as Level B Harassment, based on a given received level, the values for B, K and A need to be identified. *B Parameter (Basement)* —The B parameter is the estimated received level below which the probability of disruption of natural behavioral patterns, such as migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered approaches zero for the MFAS/HFAS risk assessment. At this received level, the curve would predict that the percentage of the exposed population that would be taken by Level B Harassment approaches zero. For MFAS/HFAS, NMFS has determined that B = 120 dB. This level is based on a broad overview of the levels at which many species have been reported responding to a variety of sound sources. *K Parameter (representing the 50 percent Risk Point)* —The K parameter is based on the received level that corresponds to 50 percent risk, or the received level at which we believe 50 percent of the animals exposed to the designated received level will respond in a manner that NMFS classifies as Level B Harassment. The K parameter (K = 45 dB) is based on three datasets in which marine mammals exposed to mid-frequency sound sources were reported to respond in a manner that NMFS would classify as Level B Harassment. There is widespread consensus that marine mammal responses to MFA sound signals need to be better defined using controlled exposure experiments (Cox *et al.* , 2006; Southall *et al.* , 2007). The Navy is contributing to an ongoing behavioral response study in the Bahamas that is expected to provide some initial information on beaked whales, the species identified as the most sensitive to MFAS. NMFS is leading this international effort with scientists from various academic institutions and research organizations to conduct studies on how marine mammals respond to underwater sound exposures. Additionally, the Navy plans to tag whales in conjunction with the 2008 RIMPAC exercises. Until additional data is available, however, NMFS and the Navy have determined that the following three data sets are most applicable for the direct use in establishing the K parameter for the MFAS/HFAS risk function. These data sets, summarized below, represent the only known data that specifically relate altered behavioral responses (that NMFS would consider Level B Harassment) to exposure to MFAS sources. Even though these data are considered the most representative of the proposed specified activities, and therefore the most appropriate on which to base the K parameter (which basically determines the midpoint) of the risk function, these data have limitations, which are discussed in Appendix J of the Navy's FEIS for the HRC. 1. Controlled Laboratory Experiments with Odontocetes (SSC Dataset)—Most of the observations of the behavioral responses of toothed whales resulted from a series of controlled experiments on bottlenose dolphins and beluga whales conducted by researchers at SSC's facility in San Diego, California (Finneran *et al.* , 2001, 2003, 2005; Finneran and Schlundt, 2004; Schlundt *et al.* , 2000). In experimental trials (designed to measure TTS) with marine mammals trained to perform tasks when prompted, scientists evaluated whether the marine mammals performed these tasks when exposed to mid-frequency tones. Altered behavior during experimental trials usually involved refusal of animals to return to the site of the sound stimulus, but also included attempts to avoid an exposure in progress, aggressive behavior, or refusal to further participate in tests. Finneran and Schlundt
(2004)examined behavioral observations recorded by the trainers or test coordinators during the Schlundt *et al.*
(2000)and Finneran *et al.* (2001, 2003, 2005) experiments. These included observations from 193 exposure sessions (fatiguing stimulus level > 141 dB re 1Pa) conducted by Schlundt *et al.*
(2000)and 21 exposure sessions conducted by Finneran *et al.* (2001, 2003, 2005). The TTS experiments that supported Finneran and Schlundt
(2004)are further explained below: • Schlundt *et al.*
(2000)provided a detailed summary of the behavioral responses of trained marine mammals during TTS tests conducted at SSC San Diego with 1-sec tones and exposure frequencies of 0.4 kHz, 3 kHz, 10 kHz, 20 kHz and 75 kHz. Schlundt *et al.*
(2000)reported eight individual TTS experiments. The experiments were conducted in San Diego Bay. Because of the variable ambient noise in the bay, low-level broadband masking noise was used to keep hearing thresholds consistent despite fluctuations in the ambient noise. Schlundt *et al.*
(2000)reported that “behavioral alterations,” or deviations from the behaviors the animals being tested had been trained to exhibit, occurred as the animals were exposed to increasing fatiguing stimulus levels. • Finneran *et al.* (2001, 2003, 2005) conducted 2 separate TTS experiments using 1-sec tones at 3 kHz. The test methods were similar to that of Schlundt *et al.*
(2000)except the tests were conducted in a pool with very low ambient noise level (below 50 dB re 1 μPa 2 /hertz [Hz]), and no masking noise was used. In the first, fatiguing sound levels were increased from 160 to 201 dB SPL. In the second experiment, fatiguing sound levels between 180 and 200 dB SPL were randomly presented. Bottlenose dolphins exposed to 1-second
(sec)intense tones exhibited short-term changes in behavior above received sound levels of 178 to 193 dB re 1 μPa (rms), and beluga whales did so at received levels of 180 to 196 dB and above. 2. Mysticete Field Study (Nowacek *et al.* , 2004)—The only available and applicable data relating mysticete responses to exposure to mid-frequency sound sources is from Nowacek *et al.* (2004). Nowacek *et al.*
(2004)documented observations of the behavioral response of North Atlantic right whales exposed to alert stimuli containing mid-frequency components in the Bay of Fundy. Investigators used archival digital acoustic recording tags
(DTAG)to record the behavior (by measuring pitch, roll, heading, and depth) of right whales in the presence of an alert signal, and to calibrate received sound levels. The alert signal was 18 minutes of exposure consisting of three 2-minute signals played sequentially three times over. The three signals had a 60 percent duty cycle and consisted of:
(1)Alternating 1-sec pure tones at 500 Hz and 850 Hz;
(2)a 2-sec logarithmic down-sweep from 4,500 Hz to 500 Hz; and
(3)a pair of low (1,500 Hz)-high (2,000 Hz) sine wave tones amplitude modulated at 120 Hz and each 1-sec long. The purposes of the alert signal were
(a)to pique the mammalian auditory system with disharmonic signals that cover the whales' estimated hearing range;
(b)to maximize the signal to noise ratio (obtain the largest difference between background noise) and c) to provide localization cues for the whale. The maximum source level used was 173 dB SPL. Nowacek *et al.*
(2004)reported that five out of six whales exposed to the alert signal with maximum received levels ranging from 133 to 148 dB re 1 μPa significantly altered their regular behavior and did so in identical fashion. Each of these five whales:
(i)Abandoned their current foraging dive prematurely as evidenced by curtailing their ‘bottom time';
(ii)executed a shallow-angled, high power (i.e. significantly increased fluke stroke rate) ascent;
(iii)remained at or near the surface for the duration of the exposure, an abnormally long surface interval; and
(iv)spent significantly more time at subsurface depths (1-10 m) compared with normal surfacing periods when whales normally stay within 1 m (1.1 yd) of the surface. 3. Odontocete Field Data (Haro Strait—USS SHOUP)—In May 2003, killer whales ( *Orcinus orca* ) were observed exhibiting behavioral responses generally described as avoidance behavior while the U.S. Ship
(USS)SHOUP was engaged in MFAS in the Haro Strait in the vicinity of Puget Sound, Washington. Those observations have been documented in three reports developed by Navy and NMFS (NMFS, 2005; Fromm, 2004a, 2004b; DON, 2003). Although these observations were made in an uncontrolled environment, the sound field that may have been associated with the sonar operations was estimated using standard acoustic propagation models that were verified (for some but not all signals) based on calibrated in situ measurements from an independent researcher who recorded the sounds during the event. Behavioral observations were reported for the group of whales during the event by an experienced marine mammal biologist who happened to be on the water studying them at the time. The observations associated with the USS SHOUP provide the only data set available of the behavioral responses of wild, non-captive animal upon actual exposure to AN/SQS-53 sonar. U.S. Department of Commerce (National Marine Fisheries, 2005a); U.S. Department of the Navy (2004b); Fromm (2004a, 2004b) documented reconstruction of sound fields produced by USS SHOUP associated with the behavioral response of killer whales observed in Haro Strait. Observations from this reconstruction included an approximate closest approach time which was correlated to a reconstructed estimate of received level (which ranged from 150 to 180 dB) at an approximate whale location with a mean value of 169.3 dB SPL. Calculation of K Paramenter—NMFS and the Navy used the mean of the following values to define the midpoint of the function:
(1)The mean of the lowest received levels (185.3 dB) at which individuals responded with altered behavior to 3 kHz tones in the SSC data set;
(2)the estimated mean received level value of 169.3 dB produced by the reconstruction of the USS SHOUP incident in which killer whales exposed to MFA sonar (range modeled possible received levels: 150 to 180 dB); and
(3)the mean of the 5 maximum received levels at which Nowacek *et al.*
(2004)observed significantly altered responses of right whales to the alert stimuli than to the control (no input signal) is 139.2 dB SPL. The arithmetic mean of these three mean values is 165 dB SPL. The value of K is the difference between the value of B (120 dB SPL) and the 50 percent value of 165 dB SPL; therefore, K=45. *A Parameter (Steepness)* —NMFS determined that a steepness parameter (A)=10 is appropriate for odontocetes and pinnipeds and A=8 is appropriate for mysticetes. The use of a steepness parameter of A=10 for odontocetes for the MFAS/HFAS risk function was based on the use of the same value for the SURTASS LFA risk continuum, which was supported by a sensitivity analysis of the parameter presented in Appendix D of the SURTASS/LFA FEIS (U.S. Department of the Navy, 2001c). As concluded in the SURTASS FEIS/EIS, the value of A=10 produces a curve that has a more gradual transition than the curves developed by the analyses of migratory gray whale studies (Malme *et al.* , 1984; Buck and Tyack, 2000; and SURTASS LFA Sonar EIS, Subchapters 1.43, 4.2.4.3 and Appendix D, and National Marine Fisheries Service, 2008). NMFS determined that a lower steepness parameter (A=8), resulting in a shallower curve, was appropriate for use with mysticetes and MFAS/HFAS. The Nowacek *et al.*
(2004)dataset contains the only data illustrating mysticete behavioral responses to a mid-frequency sound source. A shallower curve (achieved by using A=8) better reflects the risk of behavioral response at the relatively low received levels at which behavioral responses of right whales were reported in the Nowacek *et al.*
(2004)data. Compared to the odontocete curve, this adjustment results in an increase the proportion of the exposed population of mysticetes being classified as behaviorally harassed at lower RLs, such as those reported in and is supported by the only dataset currently available. BILLING CODE 3510-22-P EP23JN08.015 BILLING CODE 3510-22-C *Basic Application of the Risk Function* —The risk function is used to estimate the percentage of an exposed population that is likely to exhibit behaviors that would qualify as harassment (as that term is defined by the MMPA applicable to military readiness activities, such as the Navy's testing and training with MFA sonar) at a given received level of sound. For example, at 165 dB SPL (dB re: 1 μPa rms), the risk (or probability) of harassment is defined according to this function as 50 percent, and Navy/NMFS applies that by estimating that 50 percent of the individuals exposed at that received level are likely to respond by exhibiting behavior that NMFS would classify as behavioral harassment. The risk function is not applied to individual animals, only to exposed populations. The data primarily used to produce the risk function (the K parameter) were compiled from four species that had been exposed to sound sources in a variety of different circumstances. As a result, the risk function represents a general relationship between acoustic exposures and behavioral responses that is then applied to specific circumstances. That is, the risk function represents a relationship that is deemed to be generally true, based on the limited, best-available science, but may not be true in specific circumstances. In particular, the risk function, as currently derived, treats the received level as the only variable that is relevant to a marine mammal's behavioral response. However, we know that many other variables—the marine mammal's gender, age, and prior experience; the activity it is engaged in during an exposure event, its distance from a sound source, the number of sound sources, and whether the sound sources are approaching or moving away from the animal—can be critically important in determining whether and how a marine mammal will respond to a sound source (Southall *et al.* , 2007). The data that are currently available do not allow for incorporation of these other variables in the current risk functions; however, the risk function represents the best use of the data that are available. As more specific and applicable data become available for MFAS/HFAS sources, NMFS can use these data to modify the outputs generated by the risk function to make them more realistic. Ultimately, data may exist to justify the use of additional, alternate, or multi-variate functions. For example, as mentioned previously, the distance from the sound source and whether it is perceived as approaching or moving away can affect the way an animal responds to a sound (Wartzok *et al.* , 2003). In the HRC example, animals exposed to received levels between 120 and 130 dB may be more than 65 nautical miles (131,651 yards (120,381 m)) from a sound source (Table 16); those distances could influence whether those animals perceive the sound source as a potential threat, and their behavioral responses to that threat. Though there are data showing marine mammal responses to sound sources at that received level, NMFS does not currently have any data that describe the response of marine mammals to sounds at that distance, much less data that compare responses to similar sound levels at varying distances (much less for MFAS/HFAS). However, if data were to become available, NMFS would re-evaluate the risk function and to incorporate any additional variables into the “take” estimates. Explosive Detonation Criteria The criteria for mortality, Level A Harassment, and Level B Harassment resulting from explosive detonations were initially developed for the Navy's Sea Wolf and Churchill ship-shock trials and have not changed since other MMPA authorizations issued for explosive detonations. The criteria, which are applied to cetaceans and pinnipeds, are summarized in Table 13. Additional information regarding the derivation of these criteria is available in the Navy's FEIS for the HRC and in the Navy's CHURCHILL FEIS (U.S. Department of the Navy, 2001c). EP23JN08.016 Take Calculations Estimating the take that will result from the proposed activities entails the following four steps: Propagation model estimates animals exposed to sources at different levels; further modeling determines number of exposures to levels indicated in criteria above ( *i.e.* , number of takes); post-modeling corrections refine estimates to make them more accurate; mitigation is taken into consideration. More information regarding the models used, the assumptions used in the models, and the process of estimating take is available in Appendix J of the Navy's FEIS for the HRC. BILLING CODE 3510-22-P EP23JN08.017
(1)In order to quantify the types of take described in previous sections that are predicted to result from the Navy's specified activities, the Navy first uses a sound propagation model that predicts the number of animals that will be exposed to a range of levels of pressure and energy (of the metrics used in the criteria) from MFAS/HFAS and explosive detonations based on several important pieces of information, including: • Characteristics of the sound sources. ○ Sonar source characteristics include: Source level (with horizontal and vertical directivity corrections), source depth, center frequency, source directivity (horizontal/vertical beam width and horizontal/vertical steer direction), and ping spacing. ○ Explosive source characteristics include: The weight of an explosive, the type of explosive, the detonation depth, number of successive explosions. • Transmission loss (in 20 representative environmental provinces across 8 sonar modeling areas) based on: Water depth; sound speed variability throughout the water column (presume surface duct is present in HRC); bottom geo-acoustic properties (bathymetry); and wind speed. • The density of each marine mammal species in the HRC (see Table 14), horizontally distributed uniformly and vertically distributed according to dive profiles based on field data.
(2)Next, the criteria discussed in the previous section are applied to the estimated exposures to predict the number of exposures that exceed the criteria, i.e., the number of takes by Level B Harassment, Level A Harassment, and mortality.
(3)During the development of the EIS for the HRC, NMFS and the Navy determined that the output of the model could be made more realistic by applying post-modeling corrections to account for the following: • Acoustic footprints for sonar sources must account for land masses (by subtracting them out). • Acoustic footprints for sonar sources should not be added independently, rather, the degree to which the footprints from multiple ships participating in the same exercise would typically overlap needs to be taken into consideration. • Acoustic modeling should account for the maximum number of individuals of a species that could potentially be exposed to sonar within the course of 1 day or a discreet continuous sonar event if less than 24 hours.
(4)Mitigation measures are taken into consideration. For example, in some cases the raw modeled numbers of exposures to levels predicted to result in Level A Harassment from exposure to sonar might indicate that 1 fin whale would be exposed to levels of sonar anticipated to result in PTS—However, a fin whale would need to be within approximately 10 m of the source vessel in order to be exposed to these levels. Because of the mitigation measures (watchstanders and shutdown zone), size of fin whales, and nature of fin whale behavior, it is highly unlikely that a fin whale would be exposed to those levels, and therefore the Navy would not request authorization for Level A Harassment of 1 fin whale. Table 15 contains the Navy's estimated take estimates.
(5)Last, the Navy's specified activities have been described based on best estimates of the number of MFAS/HFAS hours that the Navy will conduct. The exact number of hours may vary from year to year, but will not exceed the 5-year total indicated in Table 3 (by multiplying the yearly estimate by 5) by more than 10 percent. NMFS estimates that a 10-percent increase in sonar hours would result in approximately a 10 percent increase in the number of takes, and we have considered this possibility in our analysis. EP23JN08.018 BILLING CODE 3510-22-C Mortality Evidence from five beaked whale strandings, all of which have taken place outside the HRC, and have occurred over approximately a decade, suggests that the exposure of beaked whales to mid-frequency sonar in the presence of certain conditions (e.g., multiple units using tactical sonar, steep bathymetry, constricted channels, strong surface ducts, etc.) may result in strandings, potentially leading to mortality. Although these physical factors believed to contribute to the likelihood of beaked whale strandings are not present, in their aggregate, in the Hawaiian Islands, scientific uncertainty exists regarding what other factors, or combination of factors, may contribute to beaked whale strandings. Accordingly, to allow for scientific uncertainty regarding contributing causes of beaked whale strandings and the exact behavioral or physiological mechanisms that can lead to the ultimate physical effects (stranding and/or death), the Navy has requested authorization for take, by serious injury or mortality, of 10 individuals of each of the following species over the course of the five-year rule: bottlenose dolphin, *Kogia* spp., melon-headed whale, pantropical spotted dolphin, pygmy killer whale, short-finned pilot whale, striped dolphin, Cuvier's, Longman's, and Blainville's beaked whales. Neither NMFS nor the Navy anticipates that marine mammal strandings or mortality will result from the operation of mid-frequency sonar during Navy exercises within the HRC. “Take” Interpretation For explosive detonations, a “take” (as reported in the take table and proposed to be authorized), is very simply, an instance of exposure of a marine mammal to levels above those indicated in the criteria. Every separate take does necessarily represent effects to a separate animal, some of the takes may be takes that occur to the same animal, either within one day and one exercise, or on different days from different exercise types. For MFAS/HFAS, TTS and PTS takes can be described the same as the explosive detonation takes described above. Alternately, for behavioral harassment a take is slightly different from that described above. Within the context of exposure to continuous ASW within exercises that last less than 24 hrs (they typically last less than 16 hrs), one behavioral harassment take might include more than one exposure to MFAS/HFAS levels above those identified on the risk continuum within the 11-16-hr. Then, however, the estimated numbers of take (in the take table) represent instances of take. Again, every separate take does necessarily represent effects to a separate animal, some animals may be taken (which, as mentioned above, may include multiple exposures within one day) more than one time on different days as a result of exposure to different exercises. Effects on Marine Mammal Habitat There are no areas within the HRC that are specifically considered as important physical habitat for marine mammals. The nearshore areas in and around the Hawaiian Humpback Whale National Marine Sanctuary contain very important breeding and calving habitat for the humpback whale, however effects in this area have been analyzed previously in this document in the context of the whales themselves. Additionally, in 2007, the Navy only conducted sonar training in the areas where humpback whales are known to be densest for a total of approximately 30-40 hours. The prey of marine mammals are considered part of their habitat. The Navy's FEIS for the HRC contains a detailed discussion of the potential effects to fish from MFAS/HFAS and explosive detonations. Below is a summary of conclusions regarding those effects. Effects on Fish From MFAS/HFAS The extent of data, and particularly scientifically peer-reviewed data, on the effects of high intensity sounds on fish is limited. In considering the available literature, the vast majority of fish species studied to date are hearing generalists and cannot hear sounds above 500 to 1,500 Hz (depending upon the species), and, therefore, behavioral effects on these species from higher frequency sounds are not likely. Moreover, even those fish species that may hear above 1.5 kHz, such as a few sciaenids and the clupeids (and relatives), have relatively poor hearing above 1.5 kHz as compared to their hearing sensitivity at lower frequencies. Therefore, even among the species that have hearing ranges that overlap with some mid- and high-frequency sounds, it is likely that the fish will only actually hear the sounds if the fish and source are very close to one another. And, finally, since the vast majority of sounds that are of biological relevance to fish are below 1 kHz (e.g., Zelick *et al.* , 1999; Ladich and Popper, 2004), even if a fish detects a mid-or high-frequency sound, these sounds will not mask detection of lower frequency biologically relevant sounds. Based on the above information, there will likely be few, if any, behavioral impacts on fish. Alternatively, it is possible that very intense mid- and high-frequency signals, and particularly explosives, could have a physical impact on fish, resulting in damage to the swim bladder and other organ systems. However, even these kinds of effects have only been shown in a few cases in response to explosives, and only when the fish has been very close to the source. Such effects have never been indicated in response to any Navy sonar. Moreover, at greater distances (the distance clearly would depend on the intensity of the signal from the source) there appears to be little or no impact on fish, and particularly no impact on fish that do not have a swim bladder or other air bubble that would be affected by rapid pressure changes. Effects on Fish From Explosive Detonations Underwater detonations are possible during SINKEX, EER/IEER, A-S MISSILEX, S-S MISSILEX, BOMBEX, S-S GUNEX, and NSFS. The weapons used in most missile and Live Fire Exercises pose little risk to fish unless the fish were near the surface at the point of impact. Machine guns (50 caliber) and close-in weapons systems (anti-missile systems) fire exclusively non-explosive ammunition. The same applies to larger weapons firing inert ordnance for training (e.g., 5-inch guns and 76-mm guns). The rounds pose an extremely low risk of a direct hit and potential to directly affect a marine species. Target area clearance procedures will again reduce this risk. A SINKEX uses a variety of live fire weapons. These rounds pose a risk only at the point of impact. Several factors determine a fish's susceptibility to harm from underwater detonations. Most injuries in fish involve damage to air-or gas-containing organs (i.e., the swim bladder). Fish with swim bladders are vulnerable to effects of explosives, while fish without swim bladders are much more resistant (Yelverton, 1981; Young, 1991). Research has focused on the effects on the swim bladder from underwater detonations but not the ears of fish (Edds-Walton and Finneran, 2006). For underwater demolition training, the effects on fish from a given amount of explosive depend on location, season, and many other factors. O'Keeffe
(1984)provides charts that allow estimation of the potential effect on swim-bladder fish using a damage prediction method developed by Goertner (1982). O'Keeffe's parameters include the size of the fish and its location relative to the explosive source, but are independent of environmental conditions (e.g., depth of fish, explosive shot, frequency content). Based on O'Keeffe's parameters, potential impacts on fish from underwater demolition detonations would be negligible. A small number of fish are expected to be injured by detonation of explosive, and some fish located in proximity to the initial detonations can be expected to die. However, the overall impacts on water column habitat would be localized and transient. As training begins, the natural reaction of fish in the vicinity would be to leave the area. When training events are completed, the fish stock would be expected to return to the area. Essential Fish Habitat
(EFH)Determination EFH is defined as “those waters and substrates necessary to fish for spawning, breeding, feeding or growth to maturity.” Adverse effects on EFH are defined further as “any impact that reduces the quality and/or quantity of EFH” and may include “site specific or habitat-wide impacts, including individual, cumulative or synergistic consequences of actions”, as well as direct or indirect physical, chemical, or biological alterations of the waters or substrate and loss of, or injury to, benthic organisms, prey species and their habitat, and other ecosystem components, if such modifications reduce the quality and/or quantity of EFH. The HRC is located in an area that has been identified as essential fish habitat under the following Western Pacific Regional Fishery Management Council (WPRFMC) Fishery Management Plans (FMPs): Pelagics (eggs, larvae, juveniles, and adults), Bottomfish (eggs, larvae, juveniles, and adults), Crustaceans (eggs, larvae, juveniles, and adults), Coral Reef Ecosystem (eggs, larvae, juveniles, and adults) and Precious Corals. The Navy does not anticipate permanent, adverse impacts on EFH components since training activities are conducted to avoid potential impacts; however, there are temporary unavoidable impacts associated with several training activities that may result in temporary and localized impacts. In addition, a single operation may potentially have multiple effects on EFH. The current and proposed training activities in the HRC have the potential to result in the following impacts: • Physical disruption of open ocean habitat. • Physical destruction or adverse modification of benthic habitats. • Alteration of water or sediment quality from debris or discharge. • Cumulative impacts. Each impact and operation associated with those impacts are discussed in a separate document, Essential Fish Habitat and Coral Reef Assessment for the Hawaii Range Complex EIS/OEIS (U.S. Department of the Navy, 2007b) and a summary for each proposed activity is provided. Potential impacts on FMP species include direct and indirect effects from sonar and shock waves (see discussion above and EFH document, U.S. Department of the Navy, 2007a). Numerous training activities may affect benthic habitats from debris, and there may also be temporary impacts on water quality from increased turbidity or release of materials. However, due to the mitigation measures implemented to protect sensitive habitats, and the localized and temporary impacts of the Proposed Action, the Navy concluded that the potential impact of the Proposed Action and alternatives on EFH for the five major FMPs and their associated management units would be minimal. Additional detail is provided in the Navy's FEIS on effects on EFH. NMFS reviewed the Navy's Essential Fish Habitat and Coral Reef Assessment for the Hawaii Range Complex EIS/OEIS
(2007)in accordance with the Fish and Wildlife Coordination Act (16 U.S.C. Section 662(a)), the Magnuson-Stevens Fishery Conservation and Management Act
(MSA)(16 U.S.C. Section 1855(b)(2)), the Coral Reef Executive Order 13089, and NMFS” essential fish habitat
(EFH)regulations (50 CFR 600.905-930). The Navy proposed the following mitigation measures to minimize impacts to EFH: conducting training activities in open ocean away from sensitive EFH, avoiding areas of live coral during inshore training activities, and restricting amphibious landing to specific areas of designated beaches. NMFS concurred that it is unlikely that the proposed project would have adverse impacts to EFH for the various WPRFMC FMPs, provided the proposed mitigation measures were implemented to protect EFH in the area of operation. Analysis and Negligible Impact Determination Pursuant to NMFS regulations implementing the MMPA, an applicant is required to estimate the number of animals that will be “taken” by the specified activities (i.e., takes by harassment only, or takes by harassment, injury, and/or death). This estimate informs the analysis that NMFS must perform to determine whether the activity will have a “negligible impact” on the species or stock. Level B (behavioral) harassment occurs at the level of the individual(s) and does not assume any resulting population-level consequences, though there are known avenues through which behavioral disturbance of individuals can result in population-level effects (for example: pink-footed geese ( *Anser brachyrhynchus* ) in undisturbed habitat gained body mass and had about a 46 percent reproductive success compared with geese in disturbed habitat (being consistently scared off the fields on which they were foraging) which did not gain mass and has a 17 percent reproductive success). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (i.e., population-level effects). An estimate of the number of Level B harassment takes, alone, is not enough information on which to base an impact determination. In addition to considering estimates of the number of marine mammals that might be “taken” through behavioral harassment, NMFS must consider other factors, such as the likely nature of any responses (their intensity, duration, etc.), the context of any responses (critical reproductive time or location, migration, etc.), or any of the other variables mentioned in the first paragraph (if known), as well as the number and nature of estimated Level A takes, the number of estimated mortalities, and effects on habitat. Generally speaking, and especially with other factors being equal, the Navy and NMFS anticipate more severe effects from takes resulting from exposure to higher received levels (though this is in no way a strictly linear relationship throughout species, individuals, or circumstances) and less severe effects from takes resulting from exposure to lower received levels. The Navy's specified activities have been described based on best estimates of the number of MFAS/HFAS hours that the Navy will conduct. The exact number of hours may vary from year to year, but will not exceed the 5-year total indicated in Table 3 (by multiplying the yearly estimate by 5) by more than 10 percent. NMFS estimates that a 10 percent increase in sonar hours would result in approximately a 10 percent increase in the number of takes, and we have considered this possibility in our analysis. Taking the above into account, and considering the sections discussed below, NMFS has preliminarily determined that Navy training exercises utilizing MFAS/HFAS and underwater detonations will have a negligible impact on the marine mammal species and stocks present in the HRC. Behavioral Harassment As discussed in the Potential Effects of Exposure of Marine Mammals to MFAS/HFAS and Underwater Detonations Section and illustrated in the conceptual framework (Figure 2), marine mammals can respond to MFAS/HFAS in many different ways, a subset of which qualify as harassment (see Behavioral Harassment Section). One thing that the take estimates do not take into account is the fact that most marine mammals will likely avoid the source to one extent or another. Although an animal that avoids the sound source might still be taken in some instances (such as if the avoidance results in a missed opportunity to feed, interruption of reproductive behaviors, etc.) in other cases avoidance may result in fewer instances of take than were estimated or in the takes resulting from exposure to a lower received level than was estimated, which could result in a less severe response. For MFAS/HFAS, the Navy provided information (Table 16) estimating what percentage of the total takes occur within the 10-dB bins (without considering mitigation or avoidance) that are within the received levels considered in the risk continuum and for TTS and PTS. As mentioned above, an animal's exposure to a higher received level is more likely to result in a behavioral response that is more likely to adversely affect the health of the animal. EP23JN08.019 Because the Navy has only been monitoring specifically to discern the effects of MFAS/HFAS on marine mammals since 2006, and because of the overall datagap regarding the effects MFAS/HFAS on marine mammals, not a lot is known regarding, specifically, how marine mammals in the Hawaiian Islands will respond to MFAS/HFAS. For the five MTEs for which NMFS has received a monitoring report, no instances of obvious behavioral disturbance were observed either by the Navy watchstanders or the independent observers (and a portion of the independent observations were reported within the vicinity of operating MFAS) in the 1,200+ hours of effort in which 77 sightings of marine mammals were made. One cannot conclude from these results that marine mammals were not harassed from MFAS/HFAS, as certainly a portion of animals within the area of concern were not seen (especially those more cryptic deep-diving species, such as beaked whales or Kogia sp.) and some of the non-biologist watchstanders might not be well-qualified to characterize behaviors. However, one can say that the animals that were observed, which in the case of the watchstanders observations were the ones closest to the source and likely exposed to the highest levels, did not respond in any of the obviously more severe ways, such as panic, aggression, or anti-predator response. In addition to the monitoring that will be required pursuant to this LOA, which is specifically designed to help us better understand how marine mammals respond to sound, the Navy and NMFS have developed, funded, and begun conducting a controlled exposure experiment with beaked whales in the Bahamas. Diel Cycle As noted previously, many animals perform vital functions, such as feeding, resting, traveling, and socializing, a diel cycle (24-hr cycle). Substantive behavioral reactions to noise exposure (such as disruption of critical life functions, displacement, or avoidance of important habitat) are more likely to be significant if they last more than one diel cycle or recur on subsequent days (Southall *et al.* , 2007). Consequently, a behavioral response lasting less than one day and not recurring on subsequent days is not considered particularly severe unless it could directly affect reproduction or survival (Southall *et al.* , 2007). In the previous section, we discussed the fact that potential behavioral responses to MFAS/HFAS that fall into the category of harassment could range in severity. By definition, the takes by behavioral harassment involve the disturbance of a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns (such as migration, surfacing, nursing, breeding, feeding, or sheltering) to a point where such behavioral patterns are abandoned or significantly altered. These reactions would, however, be more of a concern if they were expected to last over 24 hours or be repeated in subsequent days, which is not expected. Because of the need to train in a large variety of situations, the Navy does not typically conduct successive MTEs or other ASW exercises in the same locations (with the exception of the Navy's permanent instrumented ranges, such as PMRF located off Kaui). Within one multi-day exercise, the participants could potentially stay in one general area for multiple days, but the area would typically cover something like 5000 mi 2 . Separately, the average length of ASW exercises (times of continuous sonar use) is approximately 12-16 hours and the vessels involved are typically moving at a speed of 10-12 knots. When this is combined with the fact that the majority of the cetaceans in the HRC would not likely remain in an area for successive days (especially an area in waters deeper than 2000 m, which is where the majority of the exercises take place), it is unlikely that animal would be exposed to MFAS/HFAS at levels likely to result in a substantive response that would then be carried on for more than one day or on successive days. TTS NMFS and the Navy have estimated that individuals of a few species of marine mammals may sustain some level of TTS (from MFAS or explosives). As mentioned previously, TTS can last from a few minutes to days, be of varying degree, and occur across various frequency bandwidths. Table 15 indicates the estimated number of animals that might sustain TTS from exposure to MFAS or explosives (fewer are likely to have TTS from explosives). TTS is primarily classified by three characteristics: • Frequency—Available data (of mid-frequency hearing specialists exposed to mid to high frequency sounds—Southall *et al.* , 2007) suggest that most TTS occurs in the frequency of the source up to one octave higher than the source (with the maximum at 1/2 octave above). The two hull-mounted MFAS sources (from which the TTS was modeled) have center frequencies of 3.5 and 7.5 kHz, which suggests that TTS induced by either of these sources would be in a frequency band somewhere between approximately 2 and 20 kHz. Tables 17a and b summarize the vocalization data for each species. • Degree of the shift (i.e., how many dB is the sensitivity of the hearing reduced by)—generally, both the degree of TTS and the duration of TTS will be greater if the marine mammal is exposed to a higher level of energy (which would occur when the peak dB level is higher or the duration is longer). The threshold for the onset of TTS (> 6 dB) is 195 (SEL), which might be received at distances of up to 120 m from the MFAS source. An animal would have to approach closer to the source or remain in the vicinity of the sound source appreciably longer to increase the received SEL, which would be difficult considering the watchstanders and the nominal speed of a sonar vessel (15 knots). Of all TTS studies, some using exposures of almost an hour in duration or up to 217 SEL, most of the TTS induced was 15 dB or less, though Finneran *et al.* ,
(2007)induced 43 dB of TTS with a 64-sec exposure to a 20 kHZ source (MFAS only pings 2 times/minute). • Duration of TTS (Recovery time)—see above. Of all TTS laboratory studies, some using exposures of almost an hour in duration or up to 217 SEL, almost all recovered within in 1 day (or less, often in minutes), though in one study (Finneran *et al.* , (2007)), recovery took 4 days. BILLING CODE 3510-22-P EP23JN08.020 EP23JN08.021 BILLING CODE 3510-22-C Based on the range of degree and duration of TTS reportedly induced by exposures to non-pulse sounds of energy higher than that to which free-swimming marine mammals in the field are likely to be exposed during MFAS/HFAS training exercises, it is unlikely that marine mammals would sustain a TTS from MFAS that alters their sensitivity by more than 20 dB for more than a few days (and the majority would be far less severe). Additionally (see Tables 17a and 17b), though the frequency range of TTS that marine mammals might sustain would overlap with some of their vocalization types, this frequency range of TTS would not usually span the entire frequency range of one vocalization type, much less span all types of vocalizations. It is worth noting that TTS from MFAS could potentially result in reduced sensitivity to the vocalizations of killer whales (potential predators). However, if impaired, marine mammals would typically be aware of their impairment and implement behaviors to compensate for it (see Communication Impairment Section). Acoustic Masking or Communication Impairment Table 17 is also informative regarding the nature of the masking or communication impairment that could potentially occur from MFAS (again, center frequencies are 3.5 and 7.5 kHz). However, masking only occurs during the time of the signal (and potential secondary arrivals of indirect rays), versus TTS, which occurs continuously for its duration. MFAS/HFAS pings last for about one second and occur about once every 24-30 seconds for hull-mounted sources. Though some of the vocalizations that marine mammals make are less than one second long, there is only a 1 in 24 chance that they would occur exactly when the ping was received, and when vocalizations are longer than one second, only parts of them are masked. Masking effects from MFAS/HFAS are expected to be minimal. If masking or communication impairment were to occur briefly, it would be in the frequency range of MFAS, which overlaps with some marine mammal vocalizations, however, it would likely not mask the entirety of any particular vocalization or communication series because of the pulse length and duty cycle of the MFAS signal. PTS, Injury, or Mortality No animals were predicted (through modeling) to be exposed to levels of MFAS/HFAS that would result in direct physical injury. Further, NMFS believes that many marine mammals would deliberately avoid exposing themselves to the received necessary to induce injury levels (i.e., approaching to within approximately 10 m (10.9 yd) (of the source) by moving away from or at least modifying their path to avoid a close approach. Last, in the unlikely event that an animal approaches the sonar vessel at a close distance, NMFS believes that the mitigation measures (i.e., shutdown/powerdown zones for MFAS/HFA) further ensure that animals would be not be exposed to injurious levels of sound. The Navy has indicated that they are capable of effectively monitoring a 1000-meter (1093-yd) safety zone at night using night vision goggles, infrared cameras, and passive acoustic monitoring. The Navy's model estimated that 3 animals (one humpback whale, one spotted dolphin, and one striped dolphin) would be exposed to explosive detonations at levels that would result in injury—however, those estimates do not consider mitigation measures. Surveillance during the exercises for which injury was estimated (which includes aerial and passive acoustic detection methods, when available, to ensure clearance) begins two hours before the exercise and extends to 2 nm (3704 m) from the source. Because of the behavior and visibility of these species and the two hours of monitoring that occurs prior to detonation, NMFS does not think that any animals will be exposed to levels of sound or pressure that will result in injury from explosive detonations. As discussed previously, marine mammals could potentially respond to MFAS at a received level lower than the injury threshold in a manner that indirectly results in the animals stranding. The exact mechanisms, behavioral or physiological are not known. However, based on the number of occurrences where strandings have been definitively associated with military sonar versus the number of hours of sonar that have been conducted, we suggest that the probability is small that this will occur. Additionally, proposed monitoring of shorelines before and after major exercises combined with a shutdown protocol for live, in water, strandings minimize the chances that live milling events turn into mortalities. Though NMFS does not expect it to occur, because of the uncertainty surrounding the mechanisms that link exposure to MFAS to stranding (especially in beaked whales), NMFS is proposing to authorize the injury or mortality of 10 total individuals of each of these species each over the course of the 5-yr rule: bottlenose dolphin, *Kogia* spp., melon-headed whale, pantropical spotted dolphin, pygmy killer whale, short-finned pilot whale, striped dolphin, and Cuvier's, Longman's, and Blainville's beaked whale. Resident Populations/Additional Management Units Studies of several odontocete species within the HRC suggest demographically isolated populations might exist within the EEZ and that some species show site-fidelity. Though only one stock is designated for the HRC, both genetic testing and analysis of movement suggest that a demographically isolated inshore population of false killer whales exists within the Hawaiian EEZ and that individuals from the offshore (genetically separate) Eastern North Pacific population are also seen regularly within the Hawaii EEZ. Results from Baird *et al.'s* , (in press) analysis of interisland movements of bottlenose dolphins suggest that within the main Hawaiian Islands there are as many as four discrete populations corresponding to the four main island groupings (Nihau/Kaui, Oahu, 4-island:Molokai/Lanai/Maui/Kaho'olawe, Hawaii). McSweeney *et al.*
(2007)analyzed a 21-yr photographic record of Cuvier's and Blainville's beaked whales and found evidence of long-term (15-yr), multi-season site-fidelity on the west side of Hawaii. If the nature of the Navy's training exercises was such that they were disproportionately conducting sonar in a certain fairly large area that largely overlapped with a particular demographically isolated population, stock, or resident population, additional analysis might be needed to determine what additional impacts might occur. However, due to the Navy's need to train in a variety of bathymetric conditions and in the vicinity of a variety of other resources throughout the Main Hawaiian Islands, the location of the Navy's training exercises are highly variable, with the exception of the Navy's ranges (PMRF, etc.). 40 Years of Navy Training Exercises Using MFAS/HFAS in the HRC The Navy has been conducting MFAS/HFAS training exercises in the HRC for over 40 years. During this time, NMFS found that sonar was a plausible, if not likely, contributor to one milling/stranding event that occurred in Hanalei Bay (see Stranding section: Hanalei), though the cause of the event was not definitively determined. Though monitoring specifically to determine the effects of sonar on marine mammals was not being conducted prior to 2006 and the symptoms indicative of potential acoustic trauma were not as well recognized prior to the mid-nineties, people have been collecting stranding data in Hawaii for 25 years. Though not all dead or injured animals are expected to end up on the shore (some may be eaten or float out to sea), one might expect that if marine mammals were being harmed by sonar with any regularity, more evidence would have been detected over the 40-yr period. Similarly, though population trends are not available for the vast majority of the cetacean stocks in the HRC, data indicate that humpback whale numbers are generally increasing both in Hawaii (7 percent rate of increase between 1993 and 2007: Mobley, 2004) and in Southeast Alaska (Caretta *et al.* , 2007), where the majority of the Hawaii humpback whales feed over the summer. Species Conclusions Mysticetes (Except Humpback Whale) Bryde's whales, fin whales, sei whales, and Minke whales are not expected to be encountered very often in the HRC. 64 instances each of behavioral harassment of Bryde's and Minke whales, and 46 instances each of behavioral harassment of fin and sei whales are estimated to result from exposure to MFAS/HFAS (though this number does not take the potential avoidance of the sound source into consideration). When the numbers of behavioral takes are compared to the estimated abundance and if one assumes that each “take” happens to a separate animal, less than 20 percent of each of these Hawaiian stocks would be behaviorally harassed during the course of a year (each animal one time per year). No areas of specific importance for reproduction or feeding for these species have been identified in the HRC. The modeling indicates that these species will not be exposed to levels associated with TTS or any type of injury as a result of the Navy's action. Further, NMFS believes that many marine mammals would avoid exposing themselves to the received levels necessary to induce injury (i.e., avoid getting as close to the vessel as they would need to: within approximately 10 m) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures, including range clearance procedures for explosives and shutdown/exclusion zones for MFAS/HFAS and explosives would be effective at avoiding injurious exposures to animals that approach the safety zone, especially in the case of these large animals. Sperm Whales The modeling estimates that 767 instances of sperm whale behavioral harassment will occur as a result of MFAS/HFAS training (758—though this number does not take the potential avoidance of the sound source into consideration) or underwater detonations (9). When the numbers of behavioral takes are compared to the estimated abundance and if one assumes that each “take” happens to a separate animal (and each animal one time per year), less than 11 percent of the sperm whale stock would be behaviorally harassed during the course of a year. More likely, slightly fewer animals are harassed and a subset are taken more than one time per year. No areas of specific importance for reproduction or feeding for sperm whales have been identified in the HRC. The Navy's model predicted that 9 sperm whales might be exposed to received levels of MFAS expected to cause TTS. However, due to the large size of an individual, large average group size, and pronounced blow of the sperm whale and the distance within which TTS levels are expected to occur, watchstanders will very likely detect these whales in time to shut down and prevent their exposures to levels of MFAS associated with TTS. The model also predicted that some animals might experience TTS as a result of exposure to explosive detonations. For the same reasons listed above, NMFS anticipates that the Navy watchstanders would detect these species and implement the mitigation to avoid exposure. However, two of the largest explosives (MK-84s and MK-48s) used in the training exercises have a range to TTS that is larger than the exclusion zone (see Table 8), which means that in the types of exercises that utilize these explosives, it is possible that animals could experience TTS as a result of being exposed beyond 1 nm (1.9 km) from the explosion. Therefore, we estimate TTS could still occur incidental to exercise types that utilize the two largest explosive types these explosives (the Navy provided NMFS with take estimates broken down to the exercise level), which results in an estimate of 4 sperm whales taken by TTS from explosive detonations. The modeling indicates that sperm whales will not be exposed to levels associated with any type of injury or death as a result of the Navy's action. Further, NMFS believes that many marine mammals would deliberately avoid exposing themselves to MFAS/HFAS at the received levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures to animal that approached within the safety zone, especially in the case of these large animals. Cryptic, Deep Diving Species The modeling predicts that the following numbers of behavioral harassments (Level B Harassment) of the associated species will occur: 2074 (dwarf sperm whales), 846 (pygmy sperm whales), 1136 (Cuvier's beaked whales), 104 (Longmans's beaked whales), and 349 (Blainvilles beaked whales). When the numbers of behavioral takes are compared to the estimated abundance and if one assumes that each “take” happens to a separate animal (one time per year), less than 13 percent of each of these stocks would be behaviorally harassed during the course of a year. More likely, fewer individuals would be taken, but a subset would be taken more than one time per year. No areas of specific importance for reproduction or feeding for these species have been identified in the HRC. The Navy's model predicted that the following number of each of the species would sustain TTS (Level B Harassment) from exposure to MFAS: 35 (dwarf sperm whales), 14 (pygmy sperm whales), 5 (Cuvier's beaked whales), 1 (Longmans's beaked whales), and 6 (Blainvilles beaked whales). Though some of these predicted takes might be avoided if the animals avoided the source or if they were sighted by the watchstanders, because the species are all deep divers that are cryptic at the surface, we will assume that they actually sustain the TTS takes that are modeled. As mentioned above, some beaked whale vocalizations might overlap with the MFAS/HFAS TTS frequency range (2-20 kHz), but the limited information for *Kogia* sp. indicates that their echolocation clicks are at a much higher frequency and that their maximum hearing sensitivity is between 90 and 150 kHz. It is worth noting that TTS in the range induced by MFAS would reduce sensitivity in the band that killer whales click and echolocate in. However, as noted previously, NMFS does not anticipate TTS of a long duration or severe degree to occur as a result of exposure to MFA/HFAS. The model also predicted TTS takes from explosive detonations: 13 (dwarf sperm whales), 5 (pygmy sperm whales), 8 (Cuvier's beaked whales), and 2 (Blainvilles beaked whales). The modeling indicates that none of these species would be injured as a result of the Navy's action. Further, NMFS believes that many marine mammals would deliberately avoid exposing themselves to the received MFAS/HFAS levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures (which would only occur within approximately 10 m (10.9 yd) of the vessel) if an animal did happen to approach that closely. Although NMFS does not expect mortality of any of these five species to occur as a result of the MFAS/HFAS training exercises (see Mortality paragraph above), because we intend to authorize mortality, we consider the 10 potential mortalities of each of these species over the course of 5 years in our negligible impact determination. Social Pelagic Species The modeling predicts that the following numbers of behavioral harassments of the associated species will occur: 46 (false killer whales), 46 (killer whales), 192 (Pygmy killer whales), 1753 (short-finned pilot whales), and 583 (melon-headed whales). When the numbers of behavioral takes are compared to the estimated abundance and if one assumes that each “take” happens to a separate animal, less than 22 percent of each of these stocks would be behaviorally harassed during the course of a year (one time per animal). More likely, fewer individuals would be taken and a small subset would be harassed more than one time per year. No areas of specific importance for reproduction or feeding for these species have been identified in the HRC. The Navy's model predicted that these species might be exposed to received levels of MFAS expected to cause TTS. However, because of the average group size, large animal size, and the distance from the vessel in which TTS levels are expected to occur (120-160m), watchstanders will very likely detect these whales in time to shut down and prevent their exposures to levels of MFAS associated with TTS. The model also predicted that melon-headed whales and short-finned pilot whales might experience TTS as a result of explosive detonations. For the same reasons listed above, NMFS anticipates that the Navy watchstanders would detect these species and implement the mitigation to avoid exposure. However, two of the largest explosives (MK-84s and MK-48s) used in the training exercises have a range to TTS that is larger than the exclusion zone (see Table 8), which means that in the types of exercises that utilize these explosives, it is possible that animals could experience TTS as a result of being exposed beyond 1 nm from the explosion. Therefore, we estimate TTS takes could still occur incidental to exercise types that utilize two largest explosive types (the Navy provided NMFS with take estimates broken down to the exercise level), which results in the following estimates of take from explosive detonations: 1 short-finned pilot whale. As mentioned previously, TTS from MFAS is anticipated to occur primarily in the 2-20 kHz range. If any individuals of these species were to experience TTS from MFAS/HFAS, the information in Table 7 indicates that the TTS would likely overlap with some of the vocalizations of conspecifics, and not with others. However, as noted previously, NMFS does not anticipate TTS of a long duration or severe degree to occur as a result of exposure to MFA/HFAS. The modeling indicates that none of these species would be injured as a result of the Navy's action. Further, NMFS believes that many marine mammals would deliberately avoid exposing themselves to the received levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: Within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures (which would only occur within approximately 10 m (10.9 yd) of the vessel) if an animal did happen to approach that closely. Although NMFS does not expect mortality of any of these three species to occur as a result of the MFAS/HFAS training exercises (see Mortality paragraph above), because we intend to authorize mortality, we consider the 10 total potential mortalities (over the course of 5 years) of melon-headed whales, pygmy killer whales, and short-finned pilot whales in our negligible impact determination. Dolphins The modeling predicts that the following numbers of behavioral harassments of the associated species will occur: 716 (bottlenose dolphins), 486 (Risso's dolphins), 1055 (rough-toothed dolphin), 1222 (Fraser's dolphin), and 2144 (pantropical spotted dolphin), 412 (spinner dolphin), and 3128 (striped dolphin). When the numbers of behavioral takes are compared to the estimated abundance and if one assumes that each “take” happens to a separate animal (one time per year), 12-24 percent of each of these stocks would be behaviorally harassed during the course of a year. More likely, slightly fewer individuals are harassed, but a subset are harassed more than one time during the course of the year. No areas of specific importance for reproduction or feeding for these species have been identified in the HRC, though several bays have been identified as important resting areas for spinner dolphins (the Navy conducts the majority of exercises in water deeper than 2000 m). The Navy's model predicted that a certain number of individuals of these dolphin species would sustain TTS as a result of exposure to MFAS. Though the group size and behavior of these species makes it likely that watchstanders would detect them and implement shutdown if appropriate, the proposed mitigation has a provision that allows them to continue operation of MFAS if the animals are clearly bow-riding even after the Navy has initially maneuvered to try and avoid closing with the animals. Since these animals sometimes bow-ride and they would be close enough to sustain TTS, we estimate that half of the number of animals modeled for MFAS/HFAS TTS might actually sustain TTS: 9 (bottlenose dolphins), 5 (Risso's dolphins), 9 (rough-toothed dolphin), 10 (Fraser's dolphin), and 25 (pantropical spotted dolphin), 4 (spinner dolphin), and 37 (striped dolphin). As mentioned above, many of the recorded dolphin vocalizations overlap with the MFAS/HFAS TTS frequency range (2-20kHz), however, as noted above, NMFS does not anticipate TTS of a serious degree or extended duration to occur. It is worth noting that TTS is in the range induced by MFAS would reduce sensitivity in the band that killer whales click and echolocate in. The model also predicted that individuals of this species would experience TTS from explosives. For the same reasons listed above, NMFS anticipates that the Navy watchstanders would detect these species and implement the mitigation to avoid exposure. However, as mentioned in the Social Pelagic Section, the range to TTS for the two largest explosives is larger than the exclusion zone (see Table 8), and therefore NMFS anticipates that TTS might not be entirely avoided during those exercises, which results in the following predicted TTS takes from explosives: 2 (rough-toothed dolphin), 3 (Fraser's dolphin), 1 (spinner dolphin), and 2 (striped dolphin). The modeling indicates that none of these species would be injured as a result of exposure to MFAS/HFAS. Further, NMFS believes that many marine mammals would deliberately avoid exposing themselves to the received levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures (which would only occur within approximately 10 m (10.9 yd) of the vessel) if an animal did happen to approach that closely. The model predicted that one pantropical spotted dolphin and one striped dolphin would be exposed to injurious levels of energy or pressure from an explosive detonation. However, as stated previously, the relatively small area in which an animal would have to be to be injured (12-1023 m) and the visibility of these species, coupled with the 1862-m (2036-yd) exclusion zone (no explosives detonated if animals are in there), which is surveyed up to 2 hours in advance of the exercise by vessel-based observers, as well as aerial and passive acoustic means (when available), support the determination that individuals of these species will not likely be injured by explosive detonations. Although NMFS does not expect mortality of any of these species to occur as a result of the MFAS/HFAS training exercises (see Mortality paragraph above), because we intend to authorize mortality, we must consider the 10 total potential mortalities (over the course of 5 years) of bottlenose dolphin, pantropical spotted dolphins, and striped dolphins in our negligible impact determination. Monk Seals The modeling predicts 104 instances of behavioral harassments of monk seals. When the number of behavioral takes is compared to the estimated abundance and if one assumes that each “take” happens to a separate animal, approximately 8.3 percent of the stock would be behaviorally harassed during the course of a year. More likely, a smaller number of individuals would be harassed, and a subset would be harassed more than one time. More than likely, also, the 77 animals that reside in the main Hawaiian Islands would be the animals harassed. No areas of specific importance for reproduction or feeding for these species have been identified in waters of the HRC. The Navy's model predicted that monk seals might be exposed to received levels of MFAS expected to cause TTS 3 times. Monk seals generally forage at depths of less than 100 m (109 yd), but occasionally dive to depths of over 500 m (546 yd). The majority of ASW training in the HRC, however, takes place in waters 4 to 8 times deeper than even this known (500-m (546-yd)) maximum and it is very rare for ASW training to take place in waters as shallow as 100 m (109 yd) in depth. So, generally, monk seals are less likely to be in the vicinity of ASW activities, and we believe that watchstanders are likely to spot the seals before they could close within the distance necessary to sustain TTS, which would be less than 100 m (109 yd). For these reasons we do not believe that any monk seals will experience TTS. The Navy's model also predicted that 3 monk seals might be exposed to explosive levels that would result in the TTS. However, because of the likelihood of spotting these animals within the distance necessary to avoid TTS and implementing the exclusion zone (i.e., not detonating explosives) and the fact that the TTS takes that were modeled were not incidental to exercises using the two largest explosives, NMFS does not anticipate that any monk seals will experience TTS. The model-estimates that individuals of this species would not be injured as a result of the Navy's action. Further, NMFS believes that monk seals would deliberately avoid exposing themselves to the received levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Last, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures (which would only occur within approximately 10 m (10.9 yd) of the vessel) if an animal did happen to approach that closely. Humpback Whales The modeling estimates that 9,682 instances of humpback whale behavioral harassment would occur as a result of Navy training. This may be an overestimate. The Hawaiian Humpback Whale National Marine Sanctuary worked with Dr. Joe Mobley to compile a figure that illustrates 10 years worth of humpback density data (Figure 2). This map generally shows the distribution of humpbacks throughout the Main Hawaiian Islands over 10 years and clearly depicts several “hot spots” where the density (on average—over 4 surveys) far exceeds the density elsewhere in the HRC (high density areas are up to 3.8 animals/square mile (Mobley, pers. comm)). However, the Navy applied a uniform distribution of humpback whales within 25 km (46.3 nm) of shore to estimate take in their model. Additionally, the Navy has indicated that, historically, they have conducted a very small amount of MFAS/HFAS transmissions in the dense humpback areas (they estimate approximately 30 hours of hull-mounted sonar were conducted in these areas in 2007), although they cannot commit to any particular levels of MFAS/HFAS use in the areas in the future because of the need for flexibility in training (every area has different characteristics and exercise participants need to be exposed to a large variety of training scenarios). As described in the monk seal section, the Navy has indicated that the majority of ASW training in the HRC takes place in waters 2000-4000 m (2187-4374 yd) deep and it is very rare for ASW training to take place in waters as shallow as 100 m (109 yd) in depth. Based on the bathymetry of the islands and the map of the densest areas of humpbacks, this means that the majority of the exercises are 2-15 km (1-8 nm), or farther, out from the densest areas of humpbacks, which would suggest, based on table 16, that the majority of behavioral takes of humpbacks would occur at received levels less than 150-160 dB. This suggests that the overall potential severity of the effects is likely less than one would anticipate if humpbacks were not selectively using the shallower, inshore areas and the Navy were not conducting the majority of their exercises in deeper areas. Additionally, the Navy has designated a cautionary area in the Maui Basin (see Mitigation) which the Navy recognizes as an area of importance to humpback whales. As noted above, the Navy has agreed that training exercises in the humpback whale cautionary area will require a much higher level of clearance than is normal practice in planning and conducting MFA sonar training. Any determination by the Commander, Pacific Fleet, to conduct training exercises in the cautionary area will be based on the unique characteristics of the area from a military readiness perspective, taking into account the importance of the area for humpback whales. The model results suggest that each humpback whale in the HRC may be harassed somewhere between approximately 1 and 3 times per year, though more than likely some will not be harassed at all and a subset will be harassed more than 3 times/year. However, as mentioned previously, the estimated takes do not factor in the fact that a portion of the animals will likely avoid the sound to some degree. The Navy's model predicted that 199 humpback whales might be exposed to received levels of MFAS expected to cause TTS. However, due to the large size and social behavior of humpback whales and the distance within which TTS levels are expected to occur, watchstanders will very likely detect these whales in time to shut down and prevent their exposures to levels of MFAS associated with TTS. If TTS were to occur in some humpbacks, desensitization at the frequencies of humpback vocalizations could occur due to the MFAS/HFAS TTS frequency range (2-20 kHz), however, as noted above, NMFS does not anticipate TTS of serious degree or extended duration to occur. Additionally of note, recent measurements of humpback whale calf calls, which were measured at frequencies of 140Hz to 4 kHz, with a mean frequency of 220 Hz, suggest that if a humpback did have TTS from MFAS exposure, it would not overlap with the majority of the range of the call that a calf might make, suggesting that the temporary impairment would not increase the risk of cow/calf separation. The model also predicted that TTS takes from explosives that might occur. For the same reasons listed above, NMFS anticipates that the Navy watchstanders would detect these species and implement the mitigation to avoid exposure. However, as mentioned in the Social Pelagic Section, the range to TTS for the two largest explosives is larger than the exclusion zone (see Table 8), and therefore NMFS anticipates that TTS might not be entirely avoided during those exercises, which results in 4 predicted TTS takes of humpbacks from explosive detonations. The modeling indicates that humpback whales will not be exposed to levels associated with any type of injury as a result of exposure to MFAS/HFAS. Further, NMFS believes that many marine mammals would avoid exposing themselves to the received levels necessary to induce injury (and avoid getting as close to the vessel as they would need to: within approximately 10 m (10.9 yd)) by moving away from or at least modifying their path to avoid a close approach. Also, NMFS believes that the mitigation measures would be effective at avoiding injurious exposures to animal that approached within the safety zone, especially in the case of these large animals. The model predicts that 1 humpback would be injured by an explosive detonation. However, as stated previously, the relatively small area within which an animal would have to be present at a particular moment to be injured (12 to 1023 m (13 to 1119 yd)) and the visibility of these species, coupled with the 1862-m (2036-yd) exclusion zone (no explosives detonated if animals are in there), which is surveyed up to 2 hours in advance of the exercise by vessel-based observers, as well as aerial and passive acoustic means (when available), support the determination that no humpback whales will be injured by explosive detonations. Last, as mentioned above, humpback whale numbers are reported to be increasing both in Hawaii and in Alaska, where the majority of the Hawaii humpback whales feed in the summer. Subsistence Harvest of Marine Mammals NMFS has preliminarily determined that the issuance of an LOA for Navy training exercises in the HRC would not have an unmitigable adverse impact on the availability of the affected species or stocks for subsistence use, since there are no such uses in the specified area. ESA There are seven marine mammal species and five sea turtle species that are listed as endangered under the ESA with confirmed or possible occurrence in the study area: humpback whale, North Pacific right whale, sei whale, fin whale, blue whale, sperm whale, and Hawaiian monk seal, loggerhead sea turtle, the green sea turtle, hawksbill sea turtle, leatherback sea turtle, and olive ridley sea turtle. The Navy has begun consultation with NMFS pursuant to section 7 of the ESA, and NMFS will also consult internally on the issuance of an LOA under section 101(a)(5)(A) of the MMPA for training exercises in the HRC. Consultation will be concluded prior to a determination on the issuance of the final rule and an LOA. NEPA NMFS has participated as a cooperating agency on the Navy's Final Environmental Impact Statement
(FEIS)for the Hawaii Range Complex, which was published on May 9th, 2008. Additionally, NMFS is preparing a Draft Environmental Assessment
(EA)tiered off the Navy's FEIS that analyzes the environmental effects of several different mitigation alternatives for the potential issuance of the HRC proposed rule and LOA. The Draft EA will be posted on NMFS' Web site as soon as it is complete: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm* . The Navy's FEIS is also posted on NMFS website. NMFS intends to adopt the Navy's FEIS, if adequate and appropriate, and we believe that the Navy's FEIS and NMFS' final EA will allow NMFS to meet its responsibilities under NEPA for the issuance of an LOA for training activities in the HRC. If the Navy's FEIS were not adequate, NMFS would supplement the existing analysis and documents to ensure that we comply with NEPA prior to the issuance of the final rule or LOA. Preliminary Determination Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat and dependent upon the implementation of the mitigation measures, NMFS preliminarily finds that the total taking from Navy training exercises utilizing MFAS/HFAS and underwater explosives in the HRC will have a negligible impact on the affected species or stocks. NMFS has proposed regulations for these exercises that prescribe the means of affecting the least practicable adverse impact on marine mammals and their habitat and set forth requirements pertaining to the monitoring and reporting of that taking. Classification This action does not contain a collection of information requirement for purposes of the Paperwork Reduction Act. Pursuant to the procedures established to implement section 6 of Executive Order 12866, the Office of Management and Budget has determined that this proposed rule is significant. Pursuant to the Regulatory Flexibility Act, the Chief Counsel for Regulation of the Department of Commerce has certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The Regulatory Flexibility Act requires Federal agencies to prepare an analysis of a rule's impact on small entities whenever the agency is required to publish a notice of proposed rulemaking. However, a Federal agency may certify, pursuant to 5 U.S.C. section 605 (b), that the action will not have a significant economic impact on a substantial number of small entities. The Navy is the entity that will be affected by this rulemaking, not a small governmental jurisdiction, small organization or small business, as defined by the Regulatory Flexibility Act. Any requirements imposed by a Letter of Authorization issued pursuant to these regulations, and any monitoring or reporting requirements imposed by these regulations, will be applicable only to the Navy. Because this action, if adopted, would directly affect the Navy and not a small entity, NMFS concludes the action would not result in a significant economic impact on a substantial number of small entities. List of Subjects in 50 CFR Part 216 Exports, Fish, Imports, Incidental take, Indians, Labeling, Marine mammals, Navy, Penalties, Reporting and recordkeeping requirements, Seafood, Sonar, Transportation. Dated: June 13, 2008. Samuel D. Rauch III Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service. For reasons set forth in the preamble, 50 CFR part 216 is proposed to be amended as follows: PART 216—REGULATIONS GOVERNING THE TAKING AND IMPORTING OF MARINE MAMMALS 1. The authority citation for part 216 continues to read as follows: Authority: 16 U.S.C. 1361 *et seq.* 2. Subpart P is added to part 216 to read as follows: Subpart P—Taking Marine Mammals Incidental to U.S. Navy Training in the Hawaii Range Complex
(HRC)Sec. 216.170 Specified activity and specified geographical region. 216.171 Effective dates and definitions. 216.172 Permissible methods of taking. 216.173 Prohibitions. 216.174 Mitigation. 216.175 Requirements for monitoring and reporting. 216.176 Applications for Letters of Authorization. 216.177 Letters of Authorization. 216.178 Renewal of Letters of Authorization. 216.179 Modifications to Letters of Authorization. Table 1 to Part 216, Subpart P—Summary of Monitoring Effort Proposed in Monitoring Plan for Hawaii Range Complex Subpart P—Taking Marine Mammals Incidental to U.S. Navy Training in the Hawaii Range Complex
(HRC)§ 216.170 Specified activity and specified geographical region.
(a)Regulations in this subpart apply only to the U.S. Navy for the taking of marine mammals that occurs in the area outlined in paragraph
(b)of this section and that occur incidental to the activities described in paragraph
(c)of this section
(b)The taking of marine mammals by the Navy is only authorized if it occurs within the Hawaii Operational Area, which extends from 16 to 43o N. lat. and from 150-179° degrees W. long.,
(c)The taking of marine mammals by the Navy is only authorized if it occurs incidental to the following activities within the designated amounts of use:
(1)The use of the following mid-frequency active sonar
(MFAS)and high frequency active sonar
(HFAS)sources for U.S. Navy anti-submarine warfare
(ASW)training in the amounts indicated below (± 10 percent):
(i)AN/SQS-53 (hull-mounted sonar)—up to 6420 hours over the course of 5 years (an average of 1284 hours per year)
(ii)AN/SQS-56 (hull-mounted sonar)—up to 1915 hours over the course of 5 years (an average of 383 hours per year)
(iii)AN/AQS-22 (helicopter dipping sonar)—up to 5050 dips over the course of 5 years (an average of 1010 dips per year)
(iv)SSQ-62 (sonobuoys)—up to 12115 sonobuoys over the course of 5 years (an average of 2423 sonobuoys per year)
(v)MK-48 (torpedoes)—up to 1565 topedoes over the course of 5 years (an average of 313 torpedoes per year)
(vi)AN/BQQ-10 (submarine mounted sonar)—up to 1,000 hours over the course of 5 years (an average of 200 per year)
(2)The detonation of the underwater explosives indicated in paragraph (c)(2)(i) of this section conducted as part of the training exercises indicated in paragraph (c)(2)(ii) of this section:
(i)Underwater Explosives:
(A)5” Naval Gunfire (9.5 lbs)
(B)76 mm rounds (1.6 lbs)
(C)Maverick (78.5 lbs)
(D)Harpoon (448 lbs)
(E)MK-82 (238 lbs)
(F)MK-83 (574 lbs)
(G)MK-84 (945 lbs)
(H)MK-48 (851 lbs)
(I)Demolition Charges (20 lbs)
(J)EER/IEER (5 lbs)
(ii)Training Events:
(A)Mine Neutralization—up to 310 exercises over the course of 5 years (an average of 62 per year).
(B)Air-to-Surface MISSILEX—up to 180 exercises over the course of 5 years (an average of 36 per year).
(C)Surface-to-Surface MISSILEX—up to 35 exercises over the course of 5 years (an average of 7 per year).
(D)BOMBEX—up to 180 exercises over the course of 5 years (an average of 35 per year).
(E)SINKEX—up to 30 exercises over the course of 5 years (an average of 6 per year).
(F)Surface-to-Surface GUNEX—up to 345 exercises over the course of 5 years (an average of 69 per year).
(G)Naval Surface Fire Support—up to 110 exercises over the course of 5 years (an average of 22 per year). § 216.171 Effective dates and definitions.
(a)Regulations in this subpart become effective upon issuance of the final rule.
(b)The following definitions are utilized in this subpart:
(1)Uncommon Stranding Event (USE)—A stranding event that takes place during a major training exercise and involves any one of the following:
(i)Two or more individuals of any cetacean species (not including mother/calf pairs, unless of species of concern listed in next bullet) found dead or live on shore within a two day period and occurring on same shore lines or facing shorelines of different islands.
(ii)A single individual or mother/calf pair of any of the following marine mammals of concern: Beaked whale of any species, kogia sp., Risso's dolphin, melon-headed whale, pilot whales, humpback whales, sperm whales, blue whales, fin whales, sei whales, or monk seal.
(iii)A group of 2 or more cetaceans of any species exhibiting indicators of distress.
(2)Shutdown—The cessation of MFAS operation or detonation of explosives within 14 nm of any live, in the water animal involved in a USE. § 216.172 Permissible methods of taking.
(a)Under Letters of Authorization issued pursuant to §§ 216.106 and 216.177, the Holder of the Letter of Authorization may incidentally, but not intentionally, take marine mammals within the area described in § 216.170(b), provided the activity is in compliance with all terms, conditions, and requirements of these regulations and the appropriate Letter of Authorization.
(b)The activities identified in § 216.170(c) must be conducted in a manner that minimizes, to the greatest extent practicable, any adverse impacts on marine mammals and their habitat.
(c)The incidental take of marine mammals under the activities identified in § 216.170
(c)is limited to the following species, by the indicated method of take the indicated number of times:
(1)Level B Harassment (+/−10 percent):
(i)Mysticetes:
(A)Humpback whale ( *Megaptera novaeangliae* )—9893.
(B)Minke whale ( *Balaenoptera acutorostrata* )—64.
(C)Sei whale ( *Balaenoptera borealis* )—46.
(D)Fin whale ( *Balaenoptera physalus* )—46.
(E)Bryde's whale ( *Balaenoptera edeni* )—64.
(ii)Odontocetes:
(A)Sperm whales ( *Physeter macrocephalus* )—781.
(B)Pygmy sperm whales ( *Kogia breviceps* )—865.
(C)Dwarf sperm whale ( *Kogia sima* )—2122.
(D)Cuvier's beaked whale ( *Ziphius cavirostris* )—1149.
(E)Blainville's beaked whale ( *Mesoplodon densirostris* )—357.
(F)Longman's beaked whale ( *Indopacetus pacificus* )—105.
(G)Rough-toothed dolphin ( *Steno bredanensis* )—1077.
(H)Bottlenose dolphin ( *Tursiops truncatus* )—734.
(I)Pan-tropical dolphins ( *Stenella attenuata* )—2199.
(J)Spinner dolphins ( *Stenella longirostris* )—421.
(K)Striped dolphins ( *Stenella coeruleoalba* ).—3209.
(L)Risso's dolphin ( *Grampus griseus* )—497.
(M)Melon-headed whale ( *Peponocephala electra* )—597.
(N)Fraser's dolphin ( *Lagenodelphis hosei* )—1247.
(O)Pygmy killer whale ( *Feresa attenuata* )—196.
(P)False killer whale ( *Pseudorca crassidens* )—46.
(Q)Killer whale ( *Orcinus orca* )—46.
(R)Short-finned pilot whale ( *Globicephala macrorynchus* )—1,798.
(iii)Pinnipeds: Hawaiian monk seal ( *Monachus schauinslandi* )—110.
(2)Level A Harassment and/or mortality of no more than 10 individuals total of each of the species listed below over the course of the 5-year regulations: Bottlenose dolphin ( *Tursiops truncatus* ), Pygmy and Dwarf sperm whales ( *Kogia breviceps* and *sima* ), Melon-headed whale ( *Peponocephala electra* ), Pantropical spotted dolphin ( *Stenella attenuata* ), Pygmy killer whale ( *Feresa attenuata* ), Short-finned pilot whale ( *Globicephala macrorynchus* ), Striped dolphin ( *Stenella coeruleoalba* ), and Cuvier's beaked whale ( *Ziphius cavirostris* ), Blainville's beaked whale, ( *Mesoplodon densirostris* ), Longman's beaked whale ( *Indopacetus pacificus* ). § 216.173 Prohibitions. Notwithstanding takings contemplated in § 216.172 and authorized by a Letter of Authorization issued under §§ 216.106 and 216.177, no person in connection with the activities described in § 216.170 may:
(a)Take any marine mammal not specified in § 216.172(c);
(b)Take any marine mammal specified in § 216.172(c) other than by incidental take as specified in § 216.172(c)(1) and (2);
(c)Take a marine mammal specified in § 216.172(c) if such taking results in more than a negligible impact on the species or stocks of such marine mammal; or
(d)Violate, or fail to comply with, the terms, conditions, and requirements of these regulations or a Letter of Authorization issued under §§ 216.106 and 216.177. § 216.174 Mitigation.
(a)The activity identified in § 216.170(a) must be conducted in a manner that minimizes, to the greatest extent practicable, adverse impacts on marine mammals and their habitats. When conducting training activities identified in § 216.170(a), the mitigation measures contained in the Letter of Authorization issued under §§ 216.106 and 216.177 must be implemented. These mitigation measures include (but are not limited to):
(1)*Mitigation Measures for ASW training:*
(i)All lookouts onboard platforms involved in ASW training events will review the NMFS-approved Marine Species Awareness Training
(MSAT)material prior to use of mid-frequency active sonar.
(ii)All Commanding Officers, Executive Officers, and officers standing watch on the Bridge will have reviewed the MSAT material prior to a training event employing the use of mid-frequency active sonar.
(iii)Navy lookouts will undertake extensive training in order to qualify as a watchstander in accordance with the Lookout Training Handbook (NAVEDTRA, 12968-B).
(iv)Lookout training will include on-the-job instruction under the supervision of a qualified, experienced watchstander. Following successful completion of this supervised training period, Lookouts will complete the Personal Qualification Standard program, certifying that they have demonstrated the necessary skills (such as detection and reporting of partially submerged objects).
(v)Lookouts will be trained in the most effective means to ensure quick and effective communication within the command structure in order to facilitate implementation of mitigation measures if marine species are spotted.
(vi)On the bridge of surface ships, there will always be at least three people on watch whose duties include observing the water surface around the vessel.
(vii)All surface ships participating in ASW exercises will, in addition to the three personnel on watch noted previously, have at all times during the exercise at least two additional personnel on watch as lookouts.
(viii)Personnel on lookout and officers on watch on the bridge will have at least one set of binoculars available for each person to aid in the detection of marine mammals.
(ix)On surface vessels equipped with mid-frequency active sonar, pedestal mounted “Big Eye” (20x110) binoculars will be present and in good working order.
(x)Personnel on lookout will employ visual search procedures employing a scanning methodology in accordance with the Lookout Training Handbook (NAVEDTRA 12968-B).
(xi)After sunset and prior to sunrise, lookouts will employ Night Lookouts Techniques in accordance with the Lookout Training Handbook.
(xii)Personnel on lookout will be responsible for reporting all objects or anomalies sighted in the water (regardless of the distance from the vessel) to the Officer of the Deck.
(xiii)A Letter of Instruction, Mitigation Measures Message or Environmental Annex to the Operational Order will be issued prior to each exercise to further disseminate the personnel training requirement and general marine mammal mitigation measures.
(xiv)Commanding Officers will make use of marine species detection cues and information to limit interaction with marine species to the maximum extent possible consistent with safety of the ship.
(xv)All personnel engaged in passive acoustic sonar operation (including aircraft, surface ships, or submarines) will monitor for marine mammal vocalizations and report the detection of any marine mammal to the appropriate watch station for dissemination and appropriate action.
(xvi)During mid-frequency active sonar training activities, personnel will utilize all available sensor and optical systems (such as Night Vision Goggles) to aid in the detection of marine mammals.
(xvii)Navy aircraft participating in exercises at sea will conduct and maintain, when operationally feasible and safe, surveillance for marine species of concern as long as it does not violate safety constraints or interfere with the accomplishment of primary operational duties. (xviii) Aircraft with deployed sonobuoys will use only the passive capability of sonobuoys when marine mammals are detected within 200 yards (182 m) of the sonobuoy.
(xix)Marine mammal detections will be immediately reported to assigned Aircraft Control Unit for further dissemination to ships in the vicinity of the marine species as appropriate where it is reasonable to conclude that the course of the ship will likely result in a closing of the distance to the detected marine mammal.
(xx)Safety Zones—When marine mammals are detected by any means (aircraft, shipboard lookout, or acoustically) the Navy will ensure that MFA transmission levels are limited to at least 6 dB below normal operating levels if any detected marine mammals are within 1,000, yards (914 m) of the sonar dome (the bow).
(A)Ships and submarines will continue to limit maximum MFAS transmission levels by this 6-dB factor until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards (1828 m) beyond the location of the last detection.
(B)The Navy will ensure that MFAS transmissions will be limited to at least 10 dB below the equipment's normal operating level if any detected animals are within 500 yards (457 m) of the sonar dome. Ships and submarines will continue to limit maximum ping levels by this 10-dB factor until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards (1828 m) beyond the location of the last detection.
(C)The Navy will ensure that MFAS transmissions are ceased if any detected marine mammals are within 200 yards of the sonar dome. MFAS transmissions will not resume until the marine mammal has been seen to leave the area, has not been detected for 30 minutes, or the vessel has transited more than 2,000 yards beyond the location of the last detection.
(D)Special conditions applicable for dolphins and porpoises only: If, after conducting an initial maneuver to avoid close quarters with dolphins or porpoises, the Officer of the Deck concludes that dolphins or porpoises are deliberately closing to ride the vessel's bow wave, no further mitigation actions are necessary while the dolphins or porpoises continue to exhibit bow wave riding behavior.
(E)If the need for power-down should arise as detailed in “Safety Zones” above, Navy shall follow the requirements as though they were operating at 235 dB—the normal operating level (i.e., the first power-down will be to 229 dB, regardless of at what level above 235 sonar was being operated).
(xxi)Prior to start up or restart of active sonar, operators will check that the Safety Zone radius around the sound source is clear of marine mammals.
(xxii)Sonar levels (generally)—Navy will operate sonar at the lowest practicable level, not to exceed 235 dB, except as required to meet tactical training objectives. (xxiii) Helicopters shall observe/survey the vicinity of an ASW Operation for 10 minutes before the first deployment of active (dipping) sonar in the water.
(xxiv)Helicopters shall not dip their sonar within 200 yards (183 m) of a marine mammal and shall cease pinging if a marine mammal closes within 200 yards (183 m) after pinging has begun.
(xxv)Submarine sonar operators will review detection indicators of close-aboard marine mammals prior to the commencement of ASW training activities involving active mid-frequency sonar.
(xxvi)Humpback Whale Cautionary Area: An area extending 5 km (2.7 nm) from a line drawn from Kaunakakai on the island of Molokai to Kaena Point on the Island of Lanai; and an area extending 5 km (2.7 nm) from a line drawn from Kaunolu on the Island of Lanai to the most Northeastern point on the Island of Kahoolawe; and within a line drawn from Kanapou Bay on the Island of Kahoolawe to Kanahena Point on the Island of Maui and a line drawn from Cape Halawa on the Island of Molokai to Lipo Point on the Island of Maui, excluding the existing submarine operating area.
(A)Should national security needs require MFA sonar training and testing in the cautionary area between 15 December and 15 April, it must be personally authorized by the Commander, U.S. Pacific Fleet based on his determination that training and testing in that specific area is required for national security purposes. This authorization shall be documented by the CPF in advance of transiting and training in the cautionary area, and the determination shall be based on the unique characteristics of the area from a military readiness perspective, taking into account the importance of the area for humpback whales and the need to minimize adverse impacts on humpback whales from MFA sonar whenever practicable. Further, Commander, U.S. Pacific Fleet will provide specific direction on required mitigation measures prior to operational units transiting to and training in the cautionary area.
(B)The Navy will provide advance notification to NMFS of any such activities (listed in paragraph (a)(1)(xxvi)(A) of this section).
(C)The Navy will include in its periodic reports for compliance with the MMPA whether or not activities occurred in the Humpback Cautionary Area above and any observed effects on humpback whales due to the conduct of these activities. (xxvii) The Navy will abide by the letter of the “Stranding Response Plan for Major Navy Training Exercises in the HRC” (available at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm),* to include the following measures:
(A)Shutdown Procedures—When an Uncommon Stranding Event (USE—defined in § 216.171) occurs during a Major Training Exercise (MTE, including RIMPAC, USWEX, or Multi-Strike Group Exercise) in the HRC, the Navy will implement the procedures described below. ( *1* ) The Navy will implement a Shutdown (as defined in § 216.171) when advised by a NMFS Office of Protected Resources Headquarters Senior Official designated in the HRC Stranding Communication Protocol that a USE involving live animals has been identified and that at least one live animal is located in the water. NMFS and Navy will maintain a dialogue, as needed, regarding the identification of the USE and the potential need to implement shutdown procedures. ( *2* ) Any shutdown in a given area will remain in effect in that area until NMFS advises the Navy that the subject(s) of the USE at that area die or are euthanized, or that all live animals involved in the USE at that area have left the area (either of their own volition or herded). ( *3* ) If the Navy finds an injured or dead animal floating at sea during an MTE, the Navy shall notify NMFS immediately or as soon as operational security considerations allow. The Navy will provide NMFS with species or description of the animal(s), the condition of the animal(s) including carcass condition if the animal(s) is/are dead), location, time of first discovery, observed behaviors (if alive), and photo or video (if available). Based on the information provided, NMFS will determine if, and advise the Navy whether a modified shutdown is appropriate on a case-by-case basis. ( *4* ) In the event, following a USE, that: qualified individuals are attempting to herd animals back out to the open ocean and animals are not willing to leave, or animals are seen repeatedly heading for the open ocean but turning back to shore, NMFS and the Navy will coordinate (including an investigation of other potential anthropogenic stressors in the area) to determine if the proximity of MFAS training activities or explosive detonations, though farther than 14 nm from the distressed animal(s), is likely decreasing the likelihood that the animals return to the open water. If so, NMFS and the Navy will further coordinate to determine what measures are necessary to further minimize that likelihood and implement those measures as appropriate.
(B)Within 72 hours of NMFS notifying the Navy of the presence of a USE, the Navy will provide available information to NMFS (per the HRC Communication Protocol) regarding the location, number and types of acoustic/explosive sources, direction and speed of units using MFAS, and marine mammal sightings information associated with training activities occurring within 80 nm (148 km) and 72 hours prior to the USE event. Information not initially available regarding the 80 nm (148 km), 72 hours, period prior to the event will be provided as soon as it becomes available. The Navy will provide NMFS investigative teams with additional relevant unclassified information as requested, if available.
(C)Memorandum of Agreement (MOA)—The Navy and NMFS will develop an MOA, or other mechanism consistent with federal fiscal law requirements (and all other applicable laws), that allows the Navy to assist NMFS with the Phase 1 and 2 Investigations of USEs through the provision of in-kind services, such as (but not limited to) the use of plane/boat/truck for transport of stranding responders or animals, use of Navy property for necropsies or burial, or assistance with aerial surveys to discern the extent of a USE. The Navy may assist NMFS with the Investigations by providing one or more of the in-kind services outlined in the MOA, when available and logistically feasible and when the assistance does not negatively affect Fleet operational commitments.
(2)*Mitigation for IEER* —The following are protective measures for use with Extended Echo Ranging/Improved Extended Echo Ranging (EER/IEER) given an explosive source generates the acoustic wave used in this sonobuoy.
(i)Crews will conduct visual reconnaissance of the drop area prior to laying their intended sonobuoy pattern. This search should be conducted below 500 yards (457 m) at a slow speed, if operationally feasible and weather conditions permit. In dual aircraft training activities, crews are allowed to conduct coordinated area clearances.
(ii)Crews shall conduct a minimum of 30 minutes of visual and acoustic monitoring of the search area prior to commanding the first post detonation. This 30-minute observation period may include pattern deployment time.
(iii)For any part of the briefed pattern where a post (source/receiver sonobuoy pair) will be deployed within 1,000 yards (914 m) of observed marine mammal activity, deploy the receiver ONLY and monitor while conducting a visual search. When marine mammals are no longer detected within 1,000 yards (914 m) of the intended post position, co-locate the explosive source sonobuoy (AN/SSQ-110A) (source) with the receiver.
(iv)When able, crews will conduct continuous visual and aural monitoring of marine mammal activity. This is to include monitoring of own-aircraft sensors from first sensor placement to checking off station and out of communication range of these sensors.
(v)Aural Detection: If the presence of marine mammals is detected aurally, then that should cue the aircrew to increase the diligence of their visual surveillance. Subsequently, if no marine mammals are visually detected, then the crew may continue multi-static active search.
(vi)Visual Detection:
(A)If marine mammals are visually detected within 1,000 yards (914 m) of the explosive source sonobuoy (AN/SSQ-110A) intended for use, then that payload shall not be detonated. Aircrews may utilize this post once the marine mammals have not been re-sighted for 30 minutes, or are observed to have moved outside the 1,000 yards (914 m) safety buffer.
(B)Aircrews may shift their multi-static active search to another post, where marine mammals are outside the 1,000 yards (914 m) safety buffer.
(vii)Aircrews shall make every attempt to manually detonate the unexploded charges at each post in the pattern prior to departing the operations area by using the “Payload 1 Release” command followed by the “Payload 2 Release” command. Aircrews shall refrain from using the “Scuttle” command when two payloads remain at a given post. Aircrews will ensure that a 1,000 yard (914 m) safety buffer, visually clear of marine mammals, is maintained around each post as is done during active search operations.
(viii)Aircrews shall only leave posts with unexploded charges in the event of a sonobuoy malfunction, an aircraft system malfunction, or when an aircraft must immediately depart the area due to issues such as fuel constraints, inclement weather, and in-flight emergencies. In these cases, the sonobuoy will self-scuttle using the secondary or tertiary method.
(ix)Ensure all payloads are accounted for. Explosive source sonobuoys (AN/SSQ-110A) that cannot be scuttled shall be reported as unexploded ordnance via voice communications while airborne, then upon landing via naval message.
(x)Mammal monitoring shall continue until out of own-aircraft sensor range.
(3)*Mitigation for Demolitions (DEMOs) and Mine Countermeasure
(MCM)Training (Up to 20 lb).*
(i)*Exclusion Zones* —Explosive charges will not be detonated if a marine mammal is detected within 700 yards (640 m) of the detonation site.
(ii)*Pre-Exercise Surveys* —For MCM training activities, the Navy will conduct a pre-exercise survey within 30 minutes prior to the commencement of the scheduled explosive event. The survey may be conducted from the surface, by divers, and/or from the air. If a marine mammal is detected within the survey area, the exercise shall be suspended until the animal voluntarily leaves the area.
(iii)*Post-Exercise Surveys* —Surveys within the same radius shall also be conducted within 30 minutes after the completion of the explosive event.
(iv)*Reporting* —Any evidence of a marine mammal that may have been injured or killed by the action shall be reported immediately to NMFS.
(v)*Mine Laying Training* —Though mine laying training operations involve aerial drops of inert training shapes on floating targets, measures 1, 2, and 3 for Demolitions and Mine countermeasures (above) will apply to mine laying training. To the maximum extent feasible, the Navy shall retrieve inert mine shapes dropped during Mine Laying Training.
(4)*Mitigation for SINKEX, GUNEX, MISSILEX, and BOMBEX.*
(i)All weapons firing would be conducted during the period 1 hour after official sunrise to 30 minutes before official sunset.
(ii)Extensive range clearance operations would be conducted in the hours prior to commencement of the exercise, ensuring that no shipping is located within the hazard range of the longest-range weapon being fired for that event.
(iii)Prior to conducting the exercise, remotely sensed sea surface temperature maps would be reviewed. SINKEX and air to surface missile
(ASM)Training activities would not be conducted within areas where strong temperature discontinuities are present, thereby indicating the existence of oceanographic fronts. These areas would be avoided because concentrations of some listed species, or their prey, are known to be associated with these oceanographic features.
(iv)An exclusion zone with a radius of 1.0 nm (1.85 km) would be established around each target. This exclusion zone is based on calculations using a 449 kg H6 NEW high explosive source detonated 5 feet below the surface of the water, which yields a distance of 0.85 nm (1.57 km) (cold season) and 0.89 nm (1.64 km) (warm season) beyond which the received level is below the 182 dB re: 1 Pa sec2 threshold established for the WINSTON S. CHURCHILL (DDG 81) shock trials. An additional buffer of 0.5 nm (0.93 km) would be added to account for errors, target drift, and animal movements. Additionally, a safety zone, which extends from the exclusion zone at 1.0 nm (1.85 km) out an additional 0.5 nm (0.93 km), would be surveyed. Together, the zones extend out 2 nm (3.7 km) from the target.
(v)A series of surveillance over-flights would be conducted within the exclusion and the safety zones, prior to and during the exercise, when feasible. Survey protocol would be as follows:
(A)Overflights within the exclusion zone would be conducted in a manner that optimizes the surface area of the water observed. This may be accomplished through the use of the Navy's Search and Rescue
(SAR)Tactical Aid (TACAID). The SAR TACAID provides the best search altitude, ground speed, and track spacing for the discovery of small, possibly dark objects in the water based on the environmental conditions of the day. These environmental conditions include the angle of sun inclination, amount of daylight, cloud cover, visibility, and sea state.
(B)All visual surveillance activities would be conducted by Navy personnel trained in visual surveillance. At least one member of the mitigation team would have completed the Navy's marine mammal training program for lookouts.
(C)In addition to the overflights, the exclusion zone would be monitored by passive acoustic means, when assets are available. This passive acoustic monitoring would be maintained throughout the exercise. Potential assets include sonobuoys, which can be utilized to detect any vocalizing marine mammals in the vicinity of the exercise. The sonobuoys would be re-seeded as necessary throughout the exercise. Additionally, passive sonar onboard submarines may be utilized to detect any vocalizing marine mammals in the area. The OCE would be informed of any aural detection of marine mammals and would include this information in the determination of when it is safe to commence the exercise.
(D)On each day of the exercise, aerial surveillance of the exclusion and safety zones would commence two hours prior to the first firing.
(E)The results of all visual, aerial, and acoustic searches would be reported immediately to the OCE (Officer Conducting the Exercise). No weapons launches or firing would commence until the OCE declares the safety and exclusion zones free of marine mammals.
(F)If a marine mammal observed within the exclusion zone is diving, firing would be delayed until the animal is re-sighted outside the exclusion zone, or 30 minutes has elapsed. After 30 minutes, if the animal has not been re-sighted it would be assumed to have left the exclusion zone and firing would commence.
(G)During breaks in the exercise of 30 minutes or more, the exclusion zone would again be surveyed for any marine mammals. If marine mammals are sighted within the exclusion zone, the OCE would be notified, and the procedure described above would be followed.
(H)Upon sinking of the vessel, a final surveillance of the exclusion zone would be monitored for two hours, or until sunset, to verify that no marine mammals were harmed.
(vi)Aerial surveillance would be conducted using helicopters or other aircraft based on necessity and availability. The Navy has several types of aircraft capable of performing this task; however, not all types are available for every exercise. For each exercise, the available asset best suited for identifying objects on and near the surface of the ocean would be used. These aircraft would be capable of flying at the slow safe speeds necessary to enable viewing of marine mammals with unobstructed, or minimally obstructed, downward and outward visibility. The exclusion and safety zone surveys may be cancelled in the event that a mechanical problem, emergency search and rescue, or other similar and unexpected event preempts the use of one of the aircraft onsite for the exercise.
(vii)Every attempt would be made to conduct the exercise in sea states that are ideal for marine mammal sighting, Beaufort Sea State 3 or less. In the event of a 4 or above, survey efforts would be increased within the zones. This would be accomplished through the use of an additional aircraft, if available, and conducting tight search patterns.
(viii)The exercise would not be conducted unless the exclusion zone could be adequately monitored visually.
(ix)In the unlikely event that any marine mammals are observed to be harmed in the area, a detailed description of the animal would be documented, the location noted, and if possible, photos taken. This information would be provided to NMFS.
(b)[Reserved] § 216.175 Requirements for monitoring and reporting.
(a)The Holder of the Letter of Authorization issued pursuant to §§ 216.106 and 216.177 for activities described in § 216.170(b) is required to cooperate with the NMFS, and any other Federal, state or local agency monitoring the impacts of the activity on marine mammals.
(b)As outlined in the HRC Stranding Communication Plan, the Holder of the Authorization must notify NMFS immediately (or as soon as clearance procedures allow) if the specified activity identified in § 216.170(b) is thought to have resulted in the mortality or injury of any marine mammals, or in any take of marine mammals not identified in § 216.170(c).
(c)The Holder of the Letter of Authorization must conduct all monitoring and/or research required under the Letter of Authorization including abiding by the letter of the HRC Monitoring Plan, which requires the Navy implement, at a minimum, the monitoring activities summarized in Table 1 to this subpart (and described in more detail in the HRC Monitoring Plan, which may be viewed at: *http://www.nmfs.noaa.gov/pr/permits/incidental.htm).*
(d)Report from Monitoring required in paragraph
(c)of this section—The Navy will submit a report annually on September 1 describing the implementation and results (through June 1 of the same year) of the monitoring required in paragraph
(c)of this section. Standard marine species sighting forms will be use to standardize data collection and data collection methods will be standardized across ranges to allow for comparison in different geographic locations.
(e)SINKEX, GUNEX, MISSILEX, BOMBEX, and IEER exercises—A report detailing the timelines of the exercises conducted, the time the surveys commenced and terminated, amount and types of all ordnance expended, and the results of survey efforts for each event will be submitted to NMFS yearly.
(f)MFAS/HFAS exercises—The Navy will submit an After Action Report to the Office of Protected Resources, NMFS, within 120 days of the completion of any Major Training Exercise (RIMPAC, USWEX, and Multi Strike Group). For other ASW exercises (TRACKEX and TORPEX), the Navy will submit a yearly summary report. These reports will, at a minimum, include the following information:
(1)The estimated number of hours of sonar operation, broken down by source type
(2)If possible, the total number of hours of observation effort (including observation time when sonar was not operating)
(3)A report of all marine mammal sightings (at any distance—not just within a particular distance) to include, when possible, and if not classified:
(i)Species.
(ii)Number of animals sighted.
(iii)Geographic location of marine mammal sighting.
(iv)Distance of animal from any ship with observers.
(v)Whether animal is fore, aft, port, or starboard.
(vi)Direction of animal movement in relation to boat (towards, away, parallel).
(vii)Any observed behaviors of marine mammals.
(4)The status of any sonar sources (what sources were in use) and whether or not they were powered down or shut down as a result of the marine mammal observation.
(5)The platform that the marine mammals were sighted from.
(g)HRC Comprehensive Report—The Navy will submit to NMFS a draft report that analyzes and summarizes all of the multi-year marine mammal information gathered during ASW and explosive exercises for which individual reports are required in § 216.175
(d)through
(f)of this section. This report will be submitted at the end of the fourth year of the rule (November 2012), covering activities that have occurred through June 1, 2012.
(h)The Navy will respond to NMFS comments on the draft comprehensive report if submitted within 3 months of receipt. The report will be considered final after the Navy has addressed NMFS' comments, or three months after the submittal of the draft if NMFS does not comment by then.
(i)Comprehensive National ASW Report—The Navy will submit a draft National Report that analyzes, compares, and summarizes the data gathered from the watchstanders and pursuant to the implementation of the Monitoring Plans for the HRC, the Atlantic Fleet active Sonar Training (AFAST), and the Southern California (SOCAL) Range Complex.
(j)The Navy will respond to NMFS comments on the draft comprehensive report if submitted within 3 months of receipt. The report will be considered final after the Navy has addressed NMFS' comments, or three months after the submittal of the draft if NMFS does not comment by then. § 216.176 Applications for Letters of Authorization. To incidentally take marine mammals pursuant to these regulations, the U.S. citizen (as defined by § 216.103) conducting the activity identified in § 216.170(a) (the U.S. Navy) must apply for and obtain either an initial Letter of Authorization in accordance with §§ 216.177 or a renewal under § 216.178. § 216.177 Letter of Authorization.
(a)A Letter of Authorization, unless suspended or revoked, will be valid for a period of time not to exceed the period of validity of this subpart, but must be renewed annually subject to annual renewal conditions in § 216.178.
(b)Each Letter of Authorization will set forth:
(1)Permissible methods of incidental taking;
(2)Means of effecting the least practicable adverse impact on the species, its habitat, and on the availability of the species for subsistence uses ( i.e., mitigation); and
(3)Requirements for mitigation, monitoring and reporting.
(c)Issuance and renewal of the Letter of Authorization will be based on a determination that the total number of marine mammals taken by the activity as a whole will have no more than a negligible impact on the affected species or stock of marine mammal(s). § 216.178 Renewal of Letters of Authorization.
(a)A Letter of Authorization issued under § 216.106 and § 216.177 for the activity identified in § 216.170(c) will be renewed annually upon:
(1)Notification to NMFS that the activity described in the application submitted under § 216.176 will be undertaken and that there will not be a substantial modification to the described work, mitigation or monitoring undertaken during the upcoming 12 months;
(2)Timely receipt of the monitoring reports required under § 216.175(b); and
(3)A determination by the NMFS that the mitigation, monitoring and reporting measures required under § 216.174 and the Letter of Authorization issued under §§ 216.106 and 216.177, were undertaken and will be undertaken during the upcoming annual period of validity of a renewed Letter of Authorization.
(b)If a request for a renewal of a Letter of Authorization issued under §§ 216.106 and 216.178 indicates that a substantial modification to the described work, mitigation or monitoring undertaken during the upcoming season will occur, the NMFS will provide the public a period of 30 days for review and comment on the request. Review and comment on renewals of Letters of Authorization are restricted to:
(1)New cited information and data indicating that the determinations made in this document are in need of reconsideration, and
(2)Proposed changes to the mitigation and monitoring requirements contained in this subpart or in the current Letter of Authorization.
(c)A notice of issuance or denial of a renewal of a Letter of Authorization will be published in the **Federal Register** . § 216.179 Modifications to Letters of Authorization.
(a)Except as provided in paragraph
(b)of this section, no substantive modification (including withdrawal or suspension) to the Letter of Authorization by NMFS, issued pursuant to §§ 216.106 and 216.177 and subject to the provisions of this subpart shall be made until after notification and an opportunity for public comment has been provided. For purposes of this paragraph, a renewal of a Letter of Authorization under § 216.178, without modification (except for the period of validity), is not considered a substantive modification.
(b)If the Assistant Administrator determines that an emergency exists that poses a significant risk to the well-being of the species or stocks of marine mammals specified in § 216.170(b), a Letter of Authorization issued pursuant to §§ 216.106 and 216.177 may be substantively modified without prior notification and an opportunity for public comment. Notification will be published in the **Federal Register** within 30 days subsequent to the action. BILLING CODE 3510-22-P EP23JN08.022 [FR Doc. 08-1371 Filed 6-17-08; 1:56 pm]
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  • Pub. L. 105-277
  • 14 CFR 301.201
  • Pub. L. 109-59
  • 23 USC 507
  • 49 CFR 18
  • 49 CFR 193.2301
  • 49 CFR 192.745
  • 49 CFR 192.635(b)
  • 49 CFR 192.1
  • 49 CFR 192.611
  • 49 CFR 1.53
  • 17 CFR 232.401
  • 17 CFR 270.8
  • 17 CFR 239.15
  • 17 CFR 270.18
  • 17 CFR 232.402(b)
  • 17 CFR 240.10
  • 17 CFR 232.401(b)(1)
  • 17 CFR 232.401(d)(1)(ii)
  • 5 CFR 1320.11
  • 17 CFR 274.11
  • 17 CFR 274.130
  • 19 USC 2654
  • 34 CFR 200.56
  • 34 CFR 668
  • Pub. L. 110-181
  • 34 CFR 686
  • 34 CFR 690
  • Pub. L. 95-452
  • 20 USC 421-429
  • 42 USC 2751-2756b
  • 20 USC 425
  • Pub. L. 94-482
  • 20 USC 1070b-1070b
  • 34 CFR 600
  • 34 CFR 77
  • 34 CFR 685
  • 50 CFR 216
  • 50 CFR 216.103
  • Pub. L. 108-136
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Amendment 2
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C.F.R.§ 121.406
C.F.R.§ 121.1202
U.S.C.§ 5330
U.S.C.§ 60118
U.S.C.§ 605
C.F.R.§ 230.485
C.F.R.§ 232.11
C.F.R.§ 232.202
Pub. L.Pub. L. 105-277
Cite14 CFR 301.201
Pub. L.Pub. L. 109-59
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